Page 164 - RusRPTDec21

Bratsk ferroalloy plant’s furnaces – up 13% y/y.
9.2.12 Transport corporate news
Sovcomflot’s (FLOT) top line and profit came in 4.4% and 18.7% below Interfax consensus and 5.8% and 46.5% below our forecast, respectively. FLOT’s 3Q21 EBITDA came in 1.7% better thanInterfax consensus and 2.2% better than our estimate. FLOT’s net debt at the end of 3Q21 was $2.4bn. ND/LTM EBITDA was at 3.5x, which is in line with the company’s 6M21 ND/LTM EBITDA. In the short term, FLOT could start to benefit from the increased consumption of oil globally and the recovery in freight rates. In the long term, the company should benefit from the expansion of its industrial segment. Nevertheless, we see downside risk to our NTM dividend expectations of $0.044/share (dividend yield of 3.8%), as FLOT’s 9M21 adjusted net profit was $87.4mn vs. our FY21 expectation of $211mn.
9.2.13 Other sector corporate news
Russian forest firm Segezha reports revenue was up 36% y/y to RUB68.3bn in 9M21 mainly due to the strong pricing environment for Segezha’s products. The average selling price for sawn timber was up 80% y/y, while prices for birch plywood and glulam rose 54% y/y and 56% y/y, respectively. Sack paper prices were up 16% y/y. At the same time, Segezha saw paper production decrease in 3Q21 (-9% q/q) due to the planned maintenance of Segezha PPM.
EBITDA more than doubled y/y. EBITDA was up 110% y/y to RUB23.7bn (+92% y/y when including management compensation for the IPO) thanks to Segezha’s revenue performance and cost control. Segezha generated net profit of c. RUB11.1bn in 9M21 vs. a net loss of RUB5.5bn in 9M20. Apart from the stronger EBITDA performance, the positive FX gain supported the net income dynamics.
The company’s FCF was negative RUB12bn for 9M21 (+4x y/y) mainly due to the 38% y/y increase in capex, as well as due to M&A activity and adverse changes in working capital (WC). That said, Segezha expects its WC to decrease going forward. Segezha’s management confirmed that the company remains committed to its dividend policy, and there should be more clarity on dividends after the BoD meeting on Wednesday, 10 November.
Segezha expects a slowdown in pricing dynamics in 4Q21, especially given the decrease in construction activity in winter. The company has seen prices for sawn timber and birch plywood already go down 25% vs. their picks, although they are still above 2020 levels. Prices for sack paper remain stable, while paper sack prices could even increase (as they lag sack paper prices by around six months), which could offset some price corrections in sawn timber and birch plywood. Segezha’s management thinks that prices in general could remain at 4Q21 levels in 1H22 before there is scope for prices to increase.
European Medical Center published its 9m21 trading update. The key
164 RUSSIA Country Report December 2021 www.intellinews.com