Page 105 - RusRPTDec19

cash flow yield in 2020 vs 2019, assuming the same market conditions
● Other
Russian development bank Vnesheconombank (VEB.RF) opened a credit line for the gas-chemical complex in the Baltic port of Ust-Luga, ​without disclosing the amount of the financing. As reported by ​bne IntelliNews i​ n September, VEB was previously granted RUB200bn ($3.1bn) of federal budget funds as a five-year deposit from the Finance Ministry, ​which was likely destined for the support for Ust Luga complex​. The government and the ​VEB previously backed the idea to support​ the major gas processing and petrochemical projects on the Baltic Sea by natural gas giant Gazprom and RusGazDobycha.
Russian regional oil major ​Tatneft​ increased IFRS revenues in 3Q19 by 9% quarter-on-quarter to $3.74bn​, Ebitda by 9% q/q to $1.3bn, and net income by 8% q/q to $905mn. The company exceeded the bottom line expectations by 4% and ​bounced back from the 2Q19​ when its performance was compromised by ​oil quality problems in Druzhba pipeline and Ust-Luga port​. The revenues in 3Q19 increased despite 10% lower q/q oil price thanks to 9% export duty q/q decrease and 24%/7% crude/products sales volume spike q/q, BCS Global Markets commented on November 29. BCS GM notes that the same factors helped Tatneft's Ebitda growth of 9% q/q beat that of Rosneft (6% q/q), Lukoil (-1% q/q) and Gazprom Neft (-1% q/q) in 3Q19. "The major positive surprise was on FCF level, which in 3Q19 stood at circa $1.3bn well ahead of our forecast and 2Q 19 metrics as working capital release in 3Q 19 (circa $130mn) was just partly undercut by 9% higher capex q/q," BCS GM noted, estimating the cash flow yield (CFY) at 19%.
Russian oil pipeline operator ​Transneft​ reported net profit decline of 30% quarter-on-quarter to $607mn under IFRS in 3Q19​, while revenues gained 5% q/q and Ebitda 10%. Despite the decline, the net profit still exceeded the consensus expectations by 14%. BCS Global Markets believes that the market has overestimated the amount of compensatory reserves due to the Druzhba contamination issue. As reported by ​bne IntelliNews,​ Transneft is ​resolving the issues with paying compensations​ for oil contamination in exports pipeline Druzhba and Ust-Luga port. The pipeline operator is also ​locked in the conflict with domestic oil majors​ over diluting the contaminated oil from Druzhba that has been pumped back to Russia. Ebitda in the reporting quarter outperformed the consensus by 5% due to lower export duties and on the back of lower costs. About $500mn working capital release brought the free cash flow down by 25% q/q. BCS GM maintained the Hold recommendation for Transneft with a target price of RUB180,000 per share.
9.2.2 ​Automotive corporate news
The owners of the largest car dealer in Russia Rolf are looking for buyers for 100% in the company​, ​Vedomosti d​ aily reported on November 14 citing the founder of the dealer Sergei Petrov. Petrov’s son Alexander controls 98.32% in the Cyprus-registered Delance Limited that controls the dealer. One of Russia’s oldest car dealerships, the company was set up by former taxi driver Petrov in the early 90s. Petrov built the company up from nothing by doing honest business and offering value for money at a time when the car sales and import business was highly corrupt, he told ​bne IntelliNews​ in an
105​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com