Page 78 - RusRPTMay19

second Novatek’s LNG project Arctic-2 is secured, the company also promises to revise the dividend policy that now set the payout at minimum 30% of IFRS net profit. Analysts surveyed by Vedomosti daily expect the payout to gradually increase to 50%.
Gazprom’s Board of Directors (BoD) recommended 2018 dividends of RUB10.43/share, or total dividends of RUB246.9bn ($3.8bn) for 2018, according to a company press release. The annual shareholders meeting is to decide on dividends on 28 June, with registration on 26 and 28 June. According to Vedomosti, citing unnamed sources, the Ministry of Finance is not satisfied with the announced dividends and might increase the MET rate for Gazprom in 2019. Dividends of RUB10.43/share imply a dividend yield of 6.6% and a 19.4% payout of 2018E IFRS net income, we calculate. The BoD’s recommendation matches the plan announced earlier by management and our estimates. Therefore, we deem the news as not market-moving for the name. The Ministry of Finance has already announced the budget for 2019, expecting a 50% IFRS payout from Gazprom in 2019, or RUB215bn based on the 38.37% share in the company (implies DPS of RUB25.40). We also note that in 2017 and 2018, the government retained its budgeted dividends from Gazprom through the MET rate increase for the company, with a negative effect of 2.8% and 3.5% on 2017A and 2018E EBITDA, respectively.
Gazprom Neft, the oil arm of Russian gas major Gazprom, has recommended a final dividend for 2018 at RUB30 per share, making 38% of unadjusted net income or 9% dividend yield. While Gazprom Neft lagged behind state oil major Rosneft that has just announced a 50% of IFRS net profit payout, the final dividend came ahead of expectations of Sberbank CIB and marks another increase in the payout.
Rosneft pays out 50% of IFRS incomes as dividend. Rosneft's BoD yesterday recommended a final dividend of RUB11.33 per share for 2018, implying a 2.6% yield. The record date is June 17. The AGM will take place on June 4. “The final dividend is in line with our expectations. The total dividend for 2018 therefore amounts to RUB25.9 per share (including a the first half of 2018 interim DPS of RUB14.58), or 50% of IFRS net income, in line with the dividend policy. This implies a total dividend yield of 6.0% for 2018,” Andrey Gromadin of VTB Capital (VTBC) said in a note. “We expect the company to continue paying out dividends in keeping with its dividend policy, projecting total yields of 7% and 9% for 2019 and 2020, respectively. We forecast annual free cash flow (FCF) generation of $12-13bn in 2019-20, almost double our expected dividend payout.”
• Banks
The board of Russia’s biggest lender Sberbank has recommended paying RUB16 per share as dividends for 2018, or a total of RUB361.391bn (5.6bn), CEO German Gref told reporters on April 16. The payout is more than last year and accounts for 43.5% of the bank’s net profit calculated under International Financial Reporting Standards (IFRS), but it is still shy of the 50% mandated by the Ministry of Finance for all state-owned enterprises. In 2018, the bank paid RUB12 per share, or a total of RUB271.043bn, in dividends for 2017, which accounted for 36.2% of the bank’s IFRS net profit for the year. The central bank owns a 50% plus one share stake in Sberbank, non-Russian resident companies 45.64%, resident companies 1.52%, and private investors 2.84%.
Russian bank VTB may pay out 15% of net profit as dividend, well below the mandatory 50%, justified by the need to satisfy tighter capital regulation, according to newspaper speculations. This implies a decrease from the 61% payout in 2017. Still, discussions are in process, with the final decision to be taken by the Supervisory Board in April. The 15% payout implies common dividend per share (DPS) of Rb0.000977 on an equalized basis and c3% DY, which is a 70% decline y/y and 2x lower v BCSe. We expected a 50% payout, as net profit grew 50% y/y to Rb179bn, promising stronger returns.
78 RUSSIA Country Report May 2019 www.intellinews.com