Page 130 - RusRPTNov19

the company recorded a further increase of the write-off related to the Reftinskaya GRES reclassification, to RUB8.6bn. Net finance expenses declined 23% y/y. Thus, the bottom line for 9mo19 was a loss of only RUB27mn. However, net ordinary income (the base case for dividends) was up 22% y/y at RUB5,971mn. Net debt/EBITDA was 1.1x, reports VTBC. Management guides to exceed its FY19 guidance, despite the sale of Reftinskaya GRES (with zero contribution from the unit in 4Q19) on the back of efficiency gains, production performance and the RSV price trend. Enel Russia’s FY19 guidance was for RUB15bn in EBITDA and RUB6.7bn in net ordinary income (vs. RUB6bn reported for 9mo19). Our current EBITDA forecast is RUB16bn.
Uniper CEO says no sale of Unipro yet. The CEO’s comments suggest the likelihood of two key risks are low –the sale of Unipro and a delay in the launch of the 3rd unit at BGRES – both supporting our positive view on the name. Uniper’s CEO Andreas Schierenbeck gave comments to journalists. Key takeaways, as reported in Interfax, are as follows: The company has no interest in selling Unipro, especially the whole company. There were no offers to buy the company FAS will consider Fortum’s initiative to increase its share in Uniper to over 50%. FAS did not previously approve the deal as Uniper owns a Russian strategic asset (water service company) and its sale is almost impossible Launch of 3rd unit at Berezovskaya GRES should be on schedule. In August, the commissioning date was postponed to 1Q20. Further plans to modernize the plant will be discussed later.
9.2.11 Metallurgy & mining corporate news
● Gold & Diamonds
Polyus Gold published a strong 3Q19 trading update on October 22. It posted record quarterly production and is on track to meet its full-year production guidance. Bankers expect the 3Q19 financials to be strong, with EBITDA rising 16% q/q to $700mn and LFCF of around $285mn, for a 2% yield. At spot gold prices and $/RUB, Polyus is trading at a 2020E EV/EBITDA of 7.0, leveraged FCF yield of 7% and dividend yield of 5% (based on dividends to be paid in 2020). Consolidated gold output in 3Q19 grew 9% y/y to 753 koz. The recovery rate at Olimpiada increased a further 3.3 pp y/y and 0.4 pp q/q to 82.5% (versus guidance of an 83% rate by the end of the year), which together with slightly higher ore throughput offset a continued decline in the processing grade (to 4.0 g/t in 3Q19, down 3% y/y), bringing dore gold production at Olimpiada to 356 koz, up 3% y/y. At Natalka, annual ore throughput capacity reached 11.3 mtpa in 3Q19, 10% above the initially designed capacity of 10.3 mtpa, which allowed dore gold production to rise 3% q/q to 100 koz. The recovery rate at Natalka improved slightly, coming in at 71.6% in 3Q19, up just 0.2 pp q/q and still below the 76% target for mid-2020. All in all, we believe that Polyus should meet its full-year production guidance of around 2.8 moz. Polyus's gold sales increased 6% q/q to 729 koz, while the average realized gold price jumped 13% q/q, causing revenues from gold to jump 20% q/q $1.06bn. Given the seasonal rise in production from the high-cost alluvials, we think that TCC should be up around 18% q/q to $415/oz. We expect EBITDA to increase 16% q/q to $700mn, for a 65% margin. Polyus has already reported a 9% q/q decrease in net debt to $3,317mn (down $322mn q/q). We expect a quarterly FX gain on ruble debt of around $40mn due to the ruble depreciation, so we project leveraged FCF at
130 RUSSIA Country Report November 2019 www.intellinews.o