Page 77 - RusRPTMay19

Rosneft ROSN LI $7.3/GDR 24% The highly likely approval of MET benefits for the Samotlor high watercut field in the coming months could become a strong trigger for the name: we estimate a +5-6% effect on annual EBITDA. The
dividend payout increase to 50% is an additional supportive factor.
MMK MAGN RUB41.5/ 24% RX GDR
MMK’s shares have fallen 20% from the 1Q17 high and it remains one of the cheapest steel names globally at 3.8x EV/EBITDA for 2017. Steel industry is recovering and the steel over bulks premium in China is expanding; MMK, which has the lowest integration into raw materials, is the key beneficiary.
Novatek NVTK LI $133/GD 17% The stock has been considerably oversold on the back of the crude R oil slump and has not yet recovered. Timely launch of Yamal LNG
along with the new strategy presentation in 2H17 are key drivers for a re-rating, in our view.
Globaltrans
GLTR LI
$8.7/GDR 13%
This year should be successful for the company, because the deficit of gondola cars on the rail network has led to rising tariffs, which have already achieved RUB1,500 per rail car per day. As a result, we see upside risk to our earnings estimates. Additionally, the company may pay interim dividends for 1H17, while the annual dividend yield is close to
8.3.2 Dividends dynamics
● OIl and gas
Russia's pipeline monopoly Transneft could pay 25-40% of IFRS net profit in dividends, the CEO of the company Nikolai Tokarev told the press on April 8. He added that the company will adjust the net income base for one- off factors, to make the dividend policy more predictable. The dividend payment of up to 40% would make a compromise with the government request for a 50% payout that was previously argued by the company to put pressure on the investment programme. bne IntelliNews reported in detail on Transneft's upbeat outlook and guidance in January 2019. At the same time, the company is looking for a way to both abide by its infrastructure obligations and improve investment attractiveness, and suggests to include the dividend in the transportation tariff calculation. Thus, the dividend decision is "probably still a long way away," the bank believes, while estimating the indicated payout range for 2018 at RUB6,000-9,600 per preferred share, implying an "uninspiring" 3.5- 5.6% yield.
The board of Russia's second-largest oil producer independent Lukoil recommended a final dividend of RUB155 per share for 2018 on April 26, making a total dividend including interim payments at RUB250 per share. Sberbank CIB views Lukoil dividend announcement as moderately positive, as the company's general approach to FCF [free cash flow] distribution remains the same. In addition to the dividends, Lukoil has spent $1.639bn on its $3bn share buyback programme so far, acquiring 2.87% of its shares, the company said on March 12. The RUB155 final dividend beat the analysts' forecast by RUB13 per share.
The board of Russia’s second-largest natural gas producer and liquefied natural gas (LNG) runner-up Novatek will pay a record high dividend of over 34% of normalized IFRS net profit of RUB233bn ($3.6bn) in 2018, making a total payout of RUB79bn ($1.2bn). This is the company’s highest ever dividend payout, almost double that of RUB45.4bn paid in 2017, RUB42.2bn in 2016, and RUB41bn in 2015, and will further boost the investment case of Novatek. Novatek has become an investors’ darling. As bne IntelliNews recently reported in an article “King of the castle” the share price of the heavyweight state-owned blue chip stocks have stagnated, but those of the independent energy companies Novatek, and privately owned oil major Lukoil, have doubled in value in the last year. Once the financing for the
77 RUSSIA Country Report May 2019 www.intellinews.com