Page 117 - RUSRptApr17

positive surprise. The company managed to sell its coal products with a 12-15% premium to Russian domestic price, which creates upside risk to our earnings estimates for 1H17. Steel prices were up 18% Q/q, volumes gain 4% Q/q. In 1Q17, Evraz managed to increase steel volumes Q/q during the off-season and saw the highest pace of prices growth among peers. The largest volume increase was in tubular and construction products in North America (71% and 37% up Q/q, respectively) albeit from a low base. Coal segment outperforms expectations. Coal volumes were up 6% Q/q, expectedly, ending up with flat dynamics y/y. Prices, however, gained 32% Q/q and 200% y/y. The price was 12-15% above market average for semi-hard coking coal (with deviations in previous years of 3-5%) and creates upside risk to our earnings estimates for 1H17.
Russian diamond miner Alrosa's 1Q17 trading update was slightly below our expectations on prices, but this was compensated by a strong 5mncts inventory release . Therefore, while both earnings and EBITDA are set to underperform y/y (due to high base), analysts expect FCF generation to recover sharply Q/q, with further leverage decline to 0.3xND/EBITDA. Meanwhile, 2Q-3Q prices are to recover both due to seasonality and mix normalisation, in our view. Analysts retain a positive view on Alrosa, given its undemanding EV/EBITDA 2017F of 3.7x and strong diamond market fundamentals.
9.2.8 Transport corporate news
Globaltrans has published strong 2016 IFRS results, beating consensus expectations . While adjusted revenues came close to both forecasts (RUB 44.2bn, +5% YoY, 2% above), the outperformance in EBITDA (RUB 17.7bn, +10% YoY) was more pronounced, being 10% above us and 11% above consensus. Net income of RUB 4.5bn exceeded our and the consensus numbers by 18% and 14%, respectively. Moreover, the company has changed its dividend policy, with the payout now linked to FCF rather than net income, and declared a high dividend of RUB 39.2/GDR, implying a 10% dividend yield. While a short-term positive reaction is possible, the 20% gain in the share price over the last month means that we now see the stock as fairly valued at the current levels. 2016 results. Adjusted revenues (net of third-party services) grew 4.9% over 2016 to RUB 44,249mn, just slightly above (2%) our and the consensus expectations. The top line growth was driven by a 10% increase in revenue-ton-kilometers (RTK), including a 14% rise for cargos other than oil and oil products, and an 11% decline in oil and oil products, as well as a 1% drop in rouble yields. The latter was a mix of the 17% YoY growth in gondola tariffs to RUB 0.17/tkm and the 2% YoY decline in oil and oil products’ yields to RUB 0.83/tkm. Cost efficiency was impressive and allowed the company to limit opex growth to 1.8% over 2016. Empty run costs increased only 5% YoY (vs. the growth in RTK and the 9% regulated tariff hike) on better empty run ratios (38% for gondolas and 99% for tank cars vs. 39% and 104% in 2015). EBITDA spiked 10% YoY to RUB 17.7bn, outperforming expectations by 10-11%. Net income of RUB 4.5 bn beat our forecasts by 14% and the market’s by 18%. 2H16. The outperformance on 2H16 was even stronger: 4-5% on sales, while 2H16 EBITDA of RUB 10bn (+30% YoY) was 17-22% stronger than forecasts. The bottom line (RUB 2.9bn) beat expectations by 24-31%.
Russia’s fourth largest airport Pulkovo sold a 25% stake to a consortium
117 RUSSIA Country Report April 2017 www.intellinews.com