Page 143 - RusRPTDec21

be 5% lower than we had expected. As a result, operating income came broadly in line with our expectation. Net income at RUB142.2bn was additionally supported by the RUB30bn FX gain and exceeded our forecast. The bottom line implies a RUB1.31/share 3Q21 contribution to the 2021 prefs DPS (non-annualised 3.43% contribution to FY21 DY). For FY21, we expect a 7.9% DY for Surgut’s prefs. The company distributes dividends on an annual basis.
Preliminary RAS data show SurgutNG’s net cash position hit $54bn in 3Q21. Interfax reported. We expected it to be a good quarter, but the cash jump is extraordinary. SurgutNG ended 2Q21 with a then-record $51.1bn on the balance sheet, a $3.5bn q/q jump. This is not the strongest quarterly jump in recent years – 3Q17 saw SurgutNG add $3.6bn to the ‘cash pile’ – but it is close. Even assuming no addition in 4Q21, the $4.5bn added ytd through the first nine months of the year look to make 2021e one of the strongest cash addition years in company history, behind only 2019’s $5.1bn and on-par with the additions seen in 2007 and 2008 (see chart below).
Tatneft reported its 3Q21 IFRS results on November 29. Revenue was slightly ahead of expectations, while EBITDA and net income came in 5% and 3% below consensus. Tatneft’s 9M21 net income of RUB144.3bn would imply DPS of RUB31/share vs. the declared dividend payout of RUB26.5/share. We think the company’s yield at 50% of IFRS net income could be in the 9% range for FY21.
Tatneft’s oil production was up 3% q/q and 14% y/y to 7.2mnt in 3Q21. Refined product output at Taneco was down 19% q/q and 8% y/y to 2.5mnt on the back of seasonal maintenance in July. Volumes of crude oil sales were up 4% q/q and 22% y/y to 4.9mnt. Tatneft booked a 21% q/q and y/y increase in non-FSU exports, and it did not book any CIS exports this quarter. Domestic sales of crude were down 5% q/q but up 37% y/y. Refined product sales were down 21% q/q and 6% y/y to 2.9mnt. The decline in refining dragged revenue, which was up just 4% q/q to RUB323.8bn vs. a 6% q/q increase in the average Brent price. In y/y terms, revenue was up 73% due to the low base of 2020. Revenue came in 1% ahead of our and consensus estimates.
Total non-banking costs were up 6% q/q and 87% y/y. Operating costs grew 27% q/q and 34% y/y due to an increase in lifting costs and refining expenses. Cost of other sales in the operating line more than doubled q/q to RUB17bn, which looks to be in part due to the production of polyethylene terephthalate at the petrochemical plant acquired in 2Q21. Purchases, transportation and SG&A all decreased q/q, while exploration expenses more than doubled but were at just RUB643mn. Taxes other than income grew 5% q/q and more than 3x y/y to RUB139bn. Mineral extraction tax increased 4% q/q, and Tatneft reported tax on additional income as a separate line for the first time, coming in at RUB1.1bn. Tatneft saw a total positive benefit of RUB9.9bn from the reverse excise tax. EBITDA was down 1% q/q and up 28% y/y to RUB74.5bn, which is behind expectations. Our main miss came from the increase in operating costs.
Above the bottom line, total net interest, fees and commissions from
143 RUSSIA Country Report December 2021 www.intellinews.com