Page 188 - RusRPTApr21

However, VSC showed positive dynamics, as its TEU turnover was up 1.8% y/y. Global Ports reported a negative monthly result for the second month in a row (GLPR saw a 13.8% y/y decline in January) after having outperformed the market since mid-2019.
Total turnover for Russian ports was up 2.8% y/y to 425,200 TEUs in February, while exports (+3.9% y/y to 179,000 TEUs) and imports (+6.6% y/y to 180,800 TEUs) were also up during the month.
Sovkomflot was reporting all-time record financials, with EBITDA an inch below USD 1bn (see detailed comments in the table below), its share price was bottoming out at RUB 91.VTBC reports:
The current market price assumes that the 10y historical freight rate lows of 4Q20 will remain for 9 years (!), we calculate.
March 2021 rates, however, have already doubled from that level.
With newbuilds holding at low levels, management was confident that rates above those in 4Q20 could be sustained throughout 2021.
We remind investors that the conventional segment represents a progressively lower share of Sovcomflot’s profits. It had fallen from 60% of EBITDA in 2015 to 41% in 2020.
Such a business model change is bearing fruit, in our view. If 4Q20 rates hold for the whole of 2021, the company would post a net profit of USD 109mn vs.
USD 110-42mn losses during the previous trough of the cycle, in 2017-2018.
First, we have had USD 150mn growth in industrial revenues since then.
Secondly, there have been USD 50mn savings from implemented cost-cutting initiatives.
To provide the whole colour, our 12-mo TP would be RUB 120 under such a scenario, which would still suggest an ETR of +40%.
Management reiterated its focus on the industrial segment during the conference call, stating that there were a number of projects under consideration, which might be announced in May-July 2021.
We note that the latest industrial contract was with Total, for one LNG carrier in 2023, and with an option for two more. Its exercising would
188 RUSSIA Country Report April 2021 www.intellinews.com