Page 148 - RusRPTSept21

2H21 net income of RUB 105.8bn vs. RUB 92.2bn in 1H21, which may be on the optimistic side.
In 2Q21, Tatneft’s capex came in at RUB 24.9bn, up 43% QoQ and flat YoY. Most of the spending increase came in the upstream, with investments up from RUB 1.6bn in 1Q21 to RUB 6.6bn in 2Q21. Operating cash flow was up QoQ and YoY but below our forecast at RUB 52.4bn. Even with capex of RUB 24.9bn vs. our forecast of RUB 30bn, FCF was below our expectation at RUB 27.5bn.
Tatneft moved back to net debt, albeit just slightly. The company’s debt was down just barely QoQ and vs. YE20 at RUB 32.6bn, but cash came down significantly to RUB 26bn vs. RUB 61bn in 1Q21. The decrease in cash stems from an increase in investing cash flows (3x QoQ and 4x YoY), which incorporated the increase in bank deposits and M&A. As a reminder, Tatneft acquired 100% of BaltTekhProm, as well as EcoPet. The company’s net debt stands at RUB 6.6bn.
The BoD’s dividend recommendation was viewed negatively by the market, and we do not expect a material reaction to the results despite them mostly coming in ahead of consensus. We think Tatneft will re-rate only if there is a change in their dividend payouts. However, we fundamentally still see upside in the stock, and we reiterate our BUY.
Tatneft released 2Q21 IFRS with mixed to positive numbers vs expectations. Total 2Q21 revenue was $4.20bn, +6% vs BCS estimates and +5% vs Interfax consensus. Headline EBITDA of $1.02bn was +16% vs BCS and +2% vs the Street. Net income came in at $0.66mn, +5% vs BCS and -2% vs the Street. FCF came in at c$0.38bn, +25% vs an average of +$0.30bn/q the previous 6 periods, but equal to the $0.38bn of 1Q21. CapEx of $0.34bn was +44% q/q but -9% vs. the $0.37bn average of the previous 6 quarters.
9.2.3 Aviation corporate news
Aeroflot reported its 2Q21 RAS financials on 2 August, with revenue up 4.4x to RUB 91bn. The airline’s gross loss decreased 87.5% to RUB 4.2bn, while its net loss dropped 94.5% YoY to RUB 1.4bn. Aeroflot does not consolidate the results of Pobeda and Rossiya in its RAS financials. The growth in its 2Q21 financials is due to the improvement of operating results from the low base of 2Q20 when COVID-19 restrictions were imposed. AFLT’s financials for 2Q21 reflect Aeroflot Russian Airline’s increase of operating results, which included a 4.8x growth in PAX traffic to 5mn PAX (45% decline
148 RUSSIA Country Report September 2021 www.intellinews.com