Page 174 - RusRPTSept21

Rosseti The company reported a 14% y/y increase in the top line, 45% in EBITDA and 142% in net income in 2Q21. In 1Q21, these lines grew only 9%, 4% and 7% y/y, respectively. The 2Q21 results were driven by higher revenues from electricity transmission services (+12%) and electricity sales (+15%). This was due to growth of energy consumption, stronger revenues from the high-margin services of technological connection (+39% y/y, thanks to a more favorable connection schedule) and growth in other revenues (mainly from construction services, up 74%). The solid y/y growth of the bottom line in 2Q21 was additionally supported by a decrease in the loss from impairments of fixed assets (from R5.3bn to R0.3bn) caused by the recognition of a loss by Rosseti Lenenergo in 2Q20. As a result, Rosseti's net income grew 41% y/y to R71.3bn, which, in our view, implies upside to our current full-year 2021 forecast of R110bn. However, the company's dividend payments are regulated by a special government decree that allows it to deduct sizable components, such as revenues from technological connections and spending to support subsidiaries, from the dividend base. As a result, the effective payout ratio is likely to be below the 50% requested of state-controlled companies (as was the case for the 2020 dividends). Therefore, we do not expect Rosseti's 2021 dividend yield to be generous. Our current projection is 2.5%, but we see upside for a yield of up to 4%, which is still below the sector average level.
FGC. The company's top line and EBITDA grew 9% and 4% y/y, while the bottom line decreased 4% y/y in 2Q21. In 1Q21, these lines were up 6%, flat and down 2%, respectively. The slower growth of EBITDA and decrease in net income were driven by faster growth of operating costs due to the commissioning of new capacities (a R2.3bn increase in D&A), and higher expenditures on power purchases as compensation for power losses in the network on the back of higher spot electricity prices. All in all, the company's net income declined 2% y/y in 1H21, which broadly corresponds to our 2021 forecast of a 6% y/y decrease (to R56.1bn). On our estimates, the stock offers a 9.1% dividend yield, which looks attractive.
Mosenergo reported its 2Q21 IFRS results on 9 August. During the quarter, revenue was up 19.5% y/y to RUB39.6bn and EBITDA was up 6.8% y/y to RUB5.5bn, while the company’s net loss reached RUB400mn (vs. net income of RUB900mn in 2Q20). Mosenergo’s 2Q21 top line rose 19.5% y/y in 2Q21 to RUB39.6bn due to the 15.1% y/y increase in operating results to 12.2mn MWh; 16.7% y/y growth in electricity prices in the European part of Russia; and c. 20% y/y increase in the KOM capacity price. Operating expenses were up 19.2% y/y to RUB39.7bn, fuel expenses were up 18.8% y/y and depreciation was up 3.9% y/y to RUB5.9bn. EBITDA was up 6.8% y/y to RUB5.5bn, while the company’s net loss reached RUB400mn in 2Q21 (vs. net income of RUB900mn in 2Q20) mainly due to the 63.4% y/y drop in net financial income
174 RUSSIA Country Report September 2021 www.intellinews.com