Page 116 - RusRPTDec19

growth and 9.5% y/y increase in the grid connection, while earnings improved on positive cost trends.
Net IFRS profit of Russian utility major​ ​Unipro​ declined by 15% year-on-year in 3Q19​, missing the consensus expectations by 13%. Revenues of the company declined by 4.3% y/y in the reporting quarter as expected, due to the negative price dynamics on electricity. Ebitda of Unipro declined by 2% missing the expectations by 9%. Unipro is in focus as​ ​Fortum has recently reached an agreement to acquire 20.5% in German Uniper​ from hedge funds Elliott and Knight Vinke for €2.3bn, making it the largest shareholder in the company with 70.5% stake. Uniper, in turn, controls 83.7% in Russian utility major Unipro. BCS Global Markets commented on November 12 that the weakness in the financial performance in 3Q19 was expected, on the back of drop in electricity output and lower electricity prices. The analysts see the results as neutral as the dividend per share (DPS) is pre-defined for the next 3 years according to the dividend policy, while affirming the Buy call on Unipro’s shares with the target price of RUB3.7 per share. As reported by bne IntelliNews​, U​ nipro had a successful first half of 2019​, reported its second best quarter on record, driven by robust operating results and the supportive pricing environment.
OGK-2 ​has released strong 3Q19 IFRS results. ​The good trends in EBITDA and net income continued. Actual 9m19 net income represents about 88% of our full-year forecast and actual 9m19 EBITDA about 80% of our forecast, so the company looks to be on track to outperform our current estimates. In the seasonally weak 3Q, revenues came in 11% lower y/y (owing to a lower load for less efficient units), but EBITDA was up 10% y/y. At the upcoming Gazprom Energoholding investor day, which has been preliminarily scheduled for December, we expect to hear more details about the company's financial projections and a potential revision to the dividend policy to put it in line with that of the parent company.
Russian state utility major ​InterRAO​ increased its revenues by 2.6% year-on-year in 3Q19 under IFRS, ​but saw its Ebitda slip by 1% y/y and net income decline by 4% y/y. Nevertheless, the earnings and the bottom line beat the consensus expectations by 4% in the reporting quarter.
Russian state grid operator ​Federal Grip Company​ reported net income jump of 14% year-on-year ​under IFRS in 3Q19, with Ebitda gaining 4.9% y/y. As reported by ​bne IntelliNews​, Federal Grid is one of the ​best-paying dividend names in utilities universe​ and previously reported a ​23% profit jump in 2Q19​. 80% in the company is controlled by Rosseti (Russian Grids), which is also revising its dividend strategy​ and ​reportedly preparing an SPO​.
RusHydro​ launched its third federal project in the Russian Far East, Sakhalinskaya GRES-2​. At the ceremony, the company's managers made several important statements. The Head of the company’s Board, and Deputy Prime Minister of Russia, Yuri Trutnev, confirmed that the Russian Far East surcharge (currently RUB30bn per annum), through, which electricity tariffs in the Russian Far East are lowered to the Russian average, will be rolled into 2020 unchanged. Prolonging it until 2028 has been approved in principle, but the mechanism is still being fine-tuned, with the aim of channelling the electricity subsidy only to those consumers, which need it. That would ensure economic growth in the territory.
116​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com