Page 84 - RusRPTJun19

8.3.2 Dividends dynamics
The MSCI Russia dividend yield remains above 7% (7.2% as of the end of April). The MSCI EM DY was slightly down MoM at 3.0%. The Russia DY spread vs. EM is 414bp, close to its widest ever levels.
BCS Global Markets has updated its Dividend Basket portfolio recommendation for Russian equities, adding the shares of Globaltrans (GLTR) container operator replacing the mobile major MTS. GLTR has been added on higher dividends, improved visibility, solid liquidity and price pullback, BCS GM commented.
Together with GLTR the basket that yields a 12-month dividend yield of 13.7% now includes such names as VEON mobile major (VEON), Alrosa uncut diamond monopoly (ALRS), preferred shares of Tatneft regional oil major (TATNP), and preferred shares of oil "dinosaur" Surgutneftegaz (SNGSP). Overall Russian equities are expected to deliver a dividend yield of 6.8% in 2019, making the best dividend offer in Emerging Markets.
"We have added Globaltrans to the Dividend Basket, as its 12MF dividend yield has surpassed 12% and enjoys improved visibility, liquidity hitting above $1mn per day and the recent price pullback," BCS GM commented.
Despite the recent downgrade from Buy to Hold, the analysts note good visibility for dividend payments for the next 12 months.
Also, despite the removal of MTS from the Dividend Basket (as per the rules – its 12MF DY is currently 10.7%, the lowest in the Basket), BCS GM notes that MTS shares remain one of the "favorites in the TMT sector as a top dividend play, providing another 3-4% per year in share buybacks."
As reported by bne IntelliNews, in January Globaltrans confirmed plans of paying RUB16bn ($241mn) in 2018 dividends. The company posted revenue growth of 15% year-on-year to RUB30.8bn in 2H18, in line with analyst expectations.
Ebitda of Globaltrans was up 21% y/y to RUB16.6bn, 5% above the estimates of Sberbank CIB, though marking a slowdown from the 37% y/y seen in 1H18. Bottom line came in at RUB9.8bn, the same as in 1H18.
● Oil & gas
Russian oil minor Bashneft BoD May 8 recommended a dividend payout for 2018 of R28,235mn, or R158.95 per share for both commons and prefs. The record date was set for June 24. The payout comes to 29% of 2018 IFRS net income and implies a flat DPS y/y, which is what analysts had expected. The implied dividend yield is 7.7% for commons and 8.7% for prefs. For 2019, analysts expect the payout to stay close to 30% of net income at around $0.6bn, which would imply 10% and 11% yields for commons and prefs. It would amount to just half of the $1.2bn in free cash flow that the company is expected to generate this year.
The management of Russian state gas major Gazprom recommended a RUB16.6 per share dividend for 2018, which is more than 1.5-fold higher than the previously suggested RUB10.43 per share, making a potential total payout of RUB393bn ($6bn) to be approved by the board and the shareholder meeting on June 28. Gazprom shares jumped by over 10% on the announcement on May 14, bringing the capitalisation up to RUB4.3 trillion in Moscow. The proposed dividend accounts for 42% of the company's RAS (Russian Accounting Standards) net profit, which is above Gazprom's dividend policy of 17.5%-35% payout. Gazprom doubled down on its previous April dividend announcement, which made the biggest dividend payout in Gazprom's history, record-high total dividend for Russia, and the first time that the per-share dividend payout has climbed into double-digits. The proposed
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