Page 79 - RusRPTNov18

8.3.2 Dividends dynamics
State firm dividend schemes increasingly incoherent. Sources for Kommersant point to growing divisions within the government over how to approach dividend payouts for state corporations.
The growth of individualized policy schemes to handle different state
corporations' dividend payments speaks to a broader, systemic breakdown of Moscow policymakers' ability to juggle the interests and needs of different sectors affected differently by sanctions. The decreasing systematization of dividend payments suggests state firms have generally increased their bargaining power while ministries have lost out, largely due to infighting and personal networks linked to said companies. Finance Minister Anton Siluanov spoke with Vice Premier Dmitry Kozak to hammer out a unified position on dividends. The Ministry of Finance and MinEkonomiki want to fix dividends at 50% of IFRS profit, while Dmitry Kozak and the sectoral ministries—the Ministry of Transport and the Ministry of Energy—insist on linking dividend payments with investment programs. The latter cite Transneft as justification for their position: the company reduced its investment program for 2017-20 by 180bn rubles ($2.7bn) due to dividend requirements. The situation is further complicated by individual schemes. The Ministry of Energy, for instance, wants to calculate Rosseti’s dividend payments from the real cash flow of its subsidiaries.
Lukoil's BoD recommended an interim dividend for 9m18 of RUB95 per share. The record date is December 21. The dividend represents a R10 per share (12%) increase on the interim payment for 2017, which is in line with what we had expected and follows the trend of RUB10 increases observed over the past three years. Lukoil's dividend policy recommends either a 25% payout or growth of total annual DPS in line with Russian inflation. We currently expect Lukoil to pay out at least R237 per share for the whole of 2018 (a 10% increase y/y), for a 5% yield.
Detsky Mir Board of Directors has recommended 9mo18 dividends of RUB 3.2bn, implying DPS of RUB 4.39. The announcement is in line with management’s original guidance for an interim dividend at a 100% of RAS payout ratio. The stated amount implies a dividend yield of 5%, while our 12-month forecast is 10% annualised. The company remains the highest dividend payer in our retail coverage universe and is also maintaining its rapid expansion pace (revenues up 15% y/y in 2018F and CAGR of 12% over the next five years). The stock demands 2018F EV/EBITDA of 6.5x.
79 RUSSIA Country Report November 2018 www.intellinews.com