Page 79 - RusRPTDec19

Etalon
ETLN LI
$4.7/GD 32% R
This year should be a strong for the company in terms of earnings growth: we expect EBITDA and EPS to increase by 53% and 50%, respectively, driven by falling inventories from built flats. The share of more value-added projects in Moscow has increased to 50% of total portfolio, which in turn should lead to better margins. Finally, debt burden is the lowest vs other developers, allowing Etalon to boost its dividends. We believe Etalon’s dividend yield may reach 9% for 2017, overtaking LSR Group.
Rosneft ROSN LI $7.3/GD 24% The highly likely approval of MET benefits for the Samotlor high
R watercut field in the coming months could become a strong trigger for the name: we estimate a +5-6% effect on annual EBITDA. The
dividend payout increase to 50% is an additional supportive factor.
MMK MAGN RUB41.5/ 24% RX GDR
MMK’s shares have fallen 20% from the 1Q17 high and it remains one of the cheapest steel names globally at 3.8x EV/EBITDA for 2017. Steel industry is recovering and the steel over bulks premium in China is expanding; MMK, which has the lowest integration into raw materials, is the key beneficiary.
Novatek NVTK LI $133/GD 17% The stock has been considerably oversold on the back of the crude R oil slump and has not yet recovered. Timely launch of Yamal LNG
along with the new strategy presentation in 2H17 are key drivers for a re-rating, in our view.
Globaltrans
GLTR LI
$8.7/GD 13% R
This year should be successful for the company, because the deficit of gondola cars on the rail network has led to rising tariffs, which have already achieved RUB1,500 per rail car per day. As a result, we see upside risk to our earnings estimates. Additionally, the company may pay interim dividends for 1H17, while the annual dividend yield is close to
8.3.2 ​ Dividends dynamics
● Oil & gas
Lukoil​ announced new divi policy, according to the company’s press release and conference call​. Lukoil has shifted its focus to dividend payouts and plans to distribute 100% of adj FCF via dividends and buy back – with the latter become more of an option than a preference. The policy has already been applied to 2019 interim dividends. Also, the company will finance M&A activity via debt, which will not affect DPS, while dividends will be funded only from adj FCF. The company is ready to increase investments into both up- and downstream, as soon as fiscal stimuli are high enough. Lukoil may now pay 8% DY for 2019 and the entire CFY (15-16% M2M) in 2020+, assuming limited buyback expenses in the future. In addition, the cancelation of 25mn T-shares may increase Lukoil’s weight in MSCI Indices, which may provide passive money inflows of c$80mn.
The board of Russian regional oil major ​Tatneft​ recommended paying RUB64.47/share in dividends for 9M19​, including the RUB40.11/share already paid for 1H19. The CEO of the company Nail Maganov said that the payout for 2019 is expected to be at least as large as the RUB84.91 per share paid for 2018. Tatneft pays dividends based on free cash flow generation and the payment for 3Q19 will be financed from 1Q20 free cash flow (FCF), when it will be actually paid. Tatneft will pay all of its 2018 FCF ($2.3bn) in dividends in
79​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com