Page 12 - bne_newspaper_June_07_2019

bne Invest
June 7, 2019 www.intellinews.com I Page 12
Gazprom posts solid results in 1Q19 following dividend promise
Russia's natural gas giant Gazprom reported 24% year-on-year gain in net income under IFRS to $8bn in 1Q19, despite revenues and Ebitda declining by 8% y/y and 13% y/y, respectively. Nevertheless, Gazprom's Ebitda beat the forecasts of the analysts, mostly due to lower gas purchase costs and a sizable $2.8bn foreign exchange gain, VTB Capital commented on May 31.
The company continued to increase gas sales
to Europe, but posted lower net revenues for the FSU countries and domestically due to lower tax netbacks. On this background the Ebitda was supported by much lower gas purchase prices than VTBC had expected, as well as lower goods for resale, which reduced the operating expenses in the reporting quarter.
The company posted a free cash flow of $3.7bn, which implies an annual FCF yield of 19%. "Incorpo- rating Gazprom’s published operating and financial numbers into our model leads to a 12% increase in our 12-month target price, to $3.80," VTBC wrote.
Together with the 8% expected dividend yield we expect, this implies a 27% estimated total return (ETR) with a Buy recommendation reiterated by VTB analysts.
As reported by bne IntelliNews, this week Gazprom's stocks soared 30% in a matter of days in May after the management doubled its dividend payout from RUB8 per share to RUB16.6 under pressure from the Ministry of Finance.
Read the full story here
Russia's RDIF could acquire share in agro major Rusagro
The Russian Direct Investment Fund (RDIF),
a sovereign fund with $10bn of own funds
and $40bn of co-investments, could acquire
a stake in Rusagro agriculture major of Vadim Moshkovich, Kommersant daily said on June 5 citing the head of the fund Kirill Dmitriev.
Reportedly RDIF is interested in the asset and is in "advanced negotiations" with Rusagro, which is interested in company's projects that focus on exports to China.
Rusagro is one of Russia's largest producers
of sugar, meat, vegetable oil and mayonnaise. It is owned by the family of ex-senator of Vadim Moshkovich that control 71.9% of the shares, and a minority stake of 7.3% is held by the company's head Maksim Basov. The rest of the shares is freefloat.
The company more than doubled both revenues and Ebitda in 1Q19 under IFRS. Previously in the fourth quarter of 2018 Rusagro showed positive dynamics across all sectors, but was somewhat undermined by continuing weakness in sugar prices.