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June 7, 2019 www.intellinews.com I Page 2
King of the castle: Gazprom overtakes Sberbank to become Russia’s most valuable company
crease it again under pressure from the Ministry of Finance to RUB16.6 a few days later – effectively doubling the dividend payout to what is now a 27% dividend yield. The shares of Russia’s biggest companies are extremely under-valued because of management’s reluctance to share their profits with shareholders and their propensity to take all their spare money and plough it into the ground in the form of never-ending capex programmes.
Changes are afoot at the gas behemoth as it has seen several senior managers replaced recently and the government has also threatened to take direct control of its massive investment pro- gramme. Investors have been wondering if the increase in the dividend payout this year is a one- off, but comments by the company since suggest that something more fundamental is happening.
“The market has reacted positively since the changes in Gazprom’s management and the upward revision to suggested dividends, which,
at the time of the announcement, provided for a sizable DY of 10%. The company’s commitment (finally) to adopt the new dividend policy by the year-end and its stated intention to move to a 50% of IFRS net income payout in two-three years, have also been welcomed by investors. For now, though, we think that the market has started to price in further potential changes in corporate governance, providing ‘credit’ for them to the company in advance,” Dmitry Loukashov, oil and gas analyst for VTB Capital (VTBC), said in a note.
Shares of Gazprom grew by 4.14% as of June 3, driving the market capitalisation of the company to $82.bn (RUB5.38 trillion) and so overtaking the
Russian Market Data Value
1M YTD
Equity Indices
RTSI
1,303
4%
21.8
MOEX
2,702
5%
14.0
MSCI EM
1,005
-7%
4.0%
S&P
2,826
-4%
14.0%
NASDAQ
7,575
-7%
15.0%
DAX
11,981
-3%
13.0%
FTSE
7,220
-2%
7.0%
Commodities
Price, $
1M YTD
Brent
60.5
-15%
12%
WTI
51.7
-17%
14%
Urals
74.2
-4%
65%
Gold
1,330
4%
4%
Silver
14.8
-1%
-4%
Nickel
11,760
-3%
11%
Copper
5,832
-6%
-2%
Aluminum
1,766
-1%
-6%
FOREX
Value
Russia sectors performance % YTD
1M YTD
EUR/RUB
73.3
1%
-8%
Russia sectors performance % YTD
Oil & Gas Utilities Financials Consumers Telecoms
M&M RTS MOEX
18
23
21
21.8
15 16
7
14.0
0 5 10 15 20 25
Source: MOEX, BCS GM
source: MOEX, BCS GM
Sectors: % return YTD