Page 117 - RusRPTApr21

Mobile TeleSystems (MTS) announces generous dividends and share buy back. Dividend and buyback should be supportive. We project a DPS of R30 (9.7% yield for the ADRs and 9.5% for the commons) for 2021, above the minimum dividend of R28 stipulated in the current dividend policy for 2019-21. We expect the BoD to decide on a new dividend policy next spring. MTS's current dividend yield is the largest among Russian telecom peers (Rostelecom's 4.6% for the common shares) and is attractive in the general Russian context (6.4% average for companies under SberCIB Investment Research coverage). MTS is also planning a voluntary buyback for up to R15 bln by the end of 2021, which at the current share price implies 2.8% of the outstanding shares and 5.5% of the free float. That said, MTS has in the past bought back stock pro-rata from both minorities and Sistema (about a 50% share). MTS is also carrying out a mandatory buyback offer (with a March 31 deadline) following the EGM on February 15. The buyback price is R328.18, and we estimate that MTS could buy back up to 3.7% of the free float given the regulatory limit on the value to be spent is set at 10% of net assets.
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Russian hydropower giant RusHydro expects record dividends of RUB23.3 billion to be paid for 2020, the company said in a presentation published on Tuesday. “An all-time high payout in the company’s history expected for 2020 (of around) 23.3 billion,” the presentation read. The years of 2021 and 2022 will be free from any impairments, this is why the target dividend payout exceeds 20 billion per year in the period, the company said. “The current dividend policy will be reviewed by the board of directors in 2021,” RusHydro said, adding that the board may prolong the policy. RusHydro’s shareholders previously approved paying RUB0.03568039 per share, or around RUB15.67 billion, in dividends for 2019. The Russian government owns 61.73% in RusHydro, while the country’s second largest bank VTB has 12.95%, and LLC Avitrans has 5.31%. The free-float is 19%. In 2019, the company approved a new dividend policy, which envisages paying 50% of the International Financial Reporting Standards (IFRS) net profit, but no less than a 3-year average, in dividends.
The Russian Ministry of Finance is insisting that InterRAO pay dividends at the level of 50% of the payout for 2020. The ministry is requesting this annually, but the company continues to reiterate its 25% payout dividend policy. InterRAO commented that this decision was up to the shareholders and that the Board’s recommendation could be announced today (after it met yesterday). MinFin noted that it was Rosimushestvo, together with the Ministry of Energy, that had provided the directive, but that its own view on the 50% payout still held.
On 17 March, the InterRAO Board of Directors recommended RUB 18.9bn of dividends (RUB 0.18 per share) for 2020. This amount represents a 25% payout of IFRS net income, in line with the current dividend policy. The record date was set for 7 June. The recommendation suggests a 3.4% dividend yield, and was fully in line with the guidance management provided during its FY20 conference call. However, the news came on the same day as Kommersant reported the Ministry of Finance was insisting on a 50% payout for the. InterRAO could easily pay more, despite its pipeline of projects. Nevertheless, our base case is that it will not do so. Analysts see the next trigger for the story as being the announcement of details of further investments, including with the specifics on the participation in Vostok Oil (which are likely to arrive soon).
117 RUSSIA Country Report April 2021 www.intellinews.com