Page 95 - RusRPTJune18

nomination for NorNickel's board .
The supervisory board of Russian diamond mining giant Alrosa has approved acquisition of 100% in state-owned diamond polisher Kristall , the company said in a statement on Friday. The board ordered ALROSA CEO Sergei Ivanov to prepare suggestions for technical specifications of estimating Kirstall’s price, and to send them to the Federal State Property Management Agency and to the Finance Ministry. In March, Deputy Finance Minister Alexei Moiseyev said that the ministry was considering privatization of 100% in Kristall. The plant specializes in mass production of polished diamonds of the triple excellent class.
The supervisory board of Russia's uncut diamond major Alrosa recommended paying 50% of IFRS net profit or RUB38.6bn ($0.6bn) for 2017 , the company said. While the payment ratio remained unchanged, the total dividend declined by 41% as compared to RUB65.8bn paid for 2016. State property agency Rosimushestvo holds 33% in the company, with 25% plus one share held by the regional government of Yakutia, 8% by local communities, with 34% of shares in free float. Alrosa might also update its dividend policy by June 29 to switch to interim dividends. VTB Capital on May 4 commented that news of possible interim dividends suggest that bank's expectations of upside to dividends might materialise. Alrosa is expected to post negative Net debt to Ebitda for 2018, with the company's free cash flow yield before the sale of asset is forecasted by VTB Capital at 21%, and remaining at 17-20% in the long-term. Alrosa saw revenues slip by 1% y/y in the fourth quarter of 2017 to RUB61bn ($1bn), but had 2% y/y Ebitda growth to RUB27bn at a margin of 44% and net income of RUB13bn, up by 8% y/y. VTB Capital on March 16 saw Alrosa's results as neutral, with net income matching consensus estimates, and Ebitda beating expectations "on inventory movements" and lower cost of sales.
Magnitogorsk Iron and Steel Works (MMK) has released its the first quarter of 2018 IFRS, with EBITDA just missing the consensus forecast. FCF was subdued, a bit below our expectations, at $145mn, hurt by the $86mn working capital build-up and peaking development capex. Meanwhile, the Board of Directors recommended $145mn in dividend payments for the first quarter of 2018 (USc 17/GDR, a 1.8% yield), 100% of FCF, as we had expected. This, in our view, might lead to the highest dividend yield among Russian peers in future, once the investment cycle is over. Our unchanged 12-month Target Price of $12/GDR implies a 38% ETR; Buy reiterated. EBITDA misses estimates by 2-3%. the first quarter of 2018 EBITDA was $560mn, down 5% QoQ (2% below our estimates and 3% below consensus), as costs growth outpaced revenue growth. The major reason for the high costs growth was the 10-12% QoQ increase in the prices of the main raw materials, which resulted in 7% QoQ growth in slab cash costs. FCF subdued on high capex, WC build-up. The company accelerated the construction of its investment projects, including the new coke batteries and sintering plant, thus exceeding the guided capex run-rate in the first quarter of 2018. The long-term capex guidance remains at $600-800mn, although the 2018-20 figures are likely to arrive at the top of the range, according to management, due to investment accelerating (we concur with this view). Working capital increased $86mn during the quarter, despite the inventory sell-off. Dividend payout at 100% FCF. MMK's BoD recommended $145mn in dividend payments (USc 17/GDR, 1.8% yield), 100% of FCF, in line with our expectations. In our view, this payout might lead to the highest dividend yield among Russian peers once the investment cycle is over.
95 RUSSIA Country Report June 2018 www.intellinews.com