Page 159 - RusRPTNov21

behind. Enel Russia's 9mo21 results are going to be down y/y, mainly driven by the end of elevated DPM capacity payments for the two units. At the same time, we note that the 21% y/y production growth YTD, coupled with the 16% y/y day-ahead Zone I electricity price growth (19% y/y in 3Q21 alone) eased the profitability slump for shareholders.
The launch of the first wind farm on 1 May, and the moderation in finance expenses, helped the company to recover as it goes through the painful green transformation. As such, we estimate that Enel Russia is going to post 9% y/y revenue growth to RUB34,877mn (increasing the pace of growth from 3% y/y in 1H21) while reducing its adjusted EBITDA 25% y/y to RUB5,457mn (better than the 29% y/y slide in 1H21). Net income for 9mo21 is to decline 23% y/y to RUB2,447mn vs. the slide of 28% y/y in 1H21. The 3Q21 numbers are going to look solid, with adjusted EBITDA down only 14% y/y and a 17% y/y increase in net income.
Transformation mode on. The first shoots of profit growth for coal-free Enel Russia are the long-awaited change of paradigm for its shareholders. The genco is on a path to delivering close to a 10% dividend yield for FY21F, and next year the launch of the Murmansk wind farm could substantially improve the company's financial viability. Nevertheless, we note that the current modus operandi still implies excessive negative free cash flow, even before the dividends. We believe that any significant delay to the 200MW wind project next year would put the dividends at risk. We reiterate our 12-month Target Price of RUB 1.00 with an ETR of 23%, Buy.
En+ published a mixed set of operating results for 3Q21. The highlights are as follows.
Power segment. Total electricity production increased by 13% y/y and 5.3% q/q to 21.8bn kWh in 3Q21, driven by higher output at HPPs (+14.5% y/y) thanks to favorable water inflow conditions. Heat production grew 10.7% y/y to 3.1mn Gcal, though it was down 35% q/q due to seasonal factors. Spot electricity prices in the Irkutsk and Krasnoyarsk regions, the core operating regions of the company, decreased by 3.3% and 1.9% q/q.
Metals segment. Aluminum production edged up 0.4% y/y and 0.7% q/q, while aluminum sales were down 9.2% y/y and 11.8% q/q to 943
159 RUSSIA Country Report November 2021 www.intellinews.com