Page 147 - RusRPTJan21

· The throughput plan for 2021 is 440-450mmt, or close to the 2020 level, and depends on the OPEC+ decisions. The plan might be reconsidered once there are more details on the OPEC+ forecast in 1Q21.
he inflation minus approach to Transneft’s tariffs, which envisages increasing them by 99.9% of expected annual inflation in 2021-30, was approved by the government back in October. As Transneft’s major investment projects (e.g.
ESPO-1 and ESPO-2 capacity expansion) have mostly been concluded, the company’s guidance that maintenance capex will comprise a greater share of overall capex and approach depreciation was expected and is largely in line with our forecast (although in the medium term we expect the company to increase its capex in compensation for lowering capital spending in 2020-21). Our throughput forecast for 2021F stands at 430mnt, assuming that Russian oil production, on average, complies with the effective OPEC+ quota for Russia. If OPEC+ restrictions in 2021 allow companies to increase oil production vs. 4Q20, then we might see upside risks to our forecasts.
TMK​ reported its 3Q20 IFRS results 7 December, and held a call on the results. ​Revenue was down 10% q/q and 28% y/y to RUB51.2bn, while EBITDA nearly doubled q/q and y/y to RUB17.6bn, showing an impressive 34% margin thanks to the Russian division booking a RUB8.6bn FX gain from operations. Net income came in at RUB4.8bn, helped by a RUB5.6bn FX gain. The company’s total debt increased to RUB207.4bn vs. RUB184.5bn at the end of 2Q20, on our calculations, while the company reported total debt at RUB205.6bn. Net debt increased to RUB108.7bn vs. RUB154.9bn at YE19, according to the company. The company now includes short-term assets in the net debt calculation, bringing net debt down to 2.38x. During the conference call, our main takeaway was that management said it was not aware of any plans by the company’s main shareholder to buy out the remaining shareholders. The free float is now around 5%. Management also highlighted its acquisition of Truby 2000, which makes pipes for the nuclear industry, which should increase TMK’s cooperation with Rosatom. The company also purchased a casting and rolling complex that makes rebar and continuous cast billets for rolling. The two acquisitions cost a total of around RUB15bn, and they are part of the company’s goal to diversify away from oil and gas (upstream) to some extent. These assets are long-term, and the addition to EBITDA over the next two to three years could be in the low single-digitbn rubles. The company will discontinue issuing operational press releases since there was a bit of a mismatch, as the operating releases reported shipments vs. sales, which are reported in the company’s financial results. TMK could add
147 ​RUSSIA Country Report​ January 2021 www.intellinews.com