Page 153 - RusRPTAug22

very solid y/y (RAS results should be out today, the IFRS release is scheduled for 2 August). Moreover, Unipro is on the way to beat our Rb35bn EBITDA/Rb21bn net profit FY target.
Investors’ focus is future of control over the company. While production trends are clearly quite important (together with capacity payments), we still think that investors focus their attention on different matters – specifically, on the future of controlling shareholder (Uniper/Fortum). Previously, Kommersant reported that Fortum was seeking exit from Russia by 1 July, the deadline has passed, but we see no news in the public space. We remind that fundamentally Unipro looks strong (hence our Buy recommendation) – low capex, substantial cashflow, the company is clearly awash with cash and may start collecting cash on the balance sheet, as does Inter RAO.
Unipro published its 2Q/1H22 RAS results, that came out strong thanks to production trends and low base of 1H21. If not for Rb32bn in impairment charge, the company would have reported net profit for the 1H22 as well. Assets impairment is linked to changing macroeconomic forecasts and geopolitical situation. Nonetheless, 2Q22 net profit was up by 45% to Rb5.9bn. As costs were mainly under control – gross profit in 2Q22 was up 37.3% y/y, while in 1H22 it was up by 61% y/y. Given that the company did not pay dividends, we see accumulation of cash on its balance sheet (practically no debt), while cash went up to Rb11.9bn as of the end of 1H22.
RusHydro published RAS results, earnings up. Given that dividend policy calculates dividends from adjusted net profit (50%), we follow the bottom line. Consolidated numbers are to be released at the end of August, however these RAS hydro units’ results are also an important guidance.
RusHydro released its operating statistics for 2Q22. Output in Siberia decreased by 42% y/y (halved at Sayano-Shushenskaya), but was up 9% y/y in European Russia. Given that hydrology is an external factor, RusHydro has no clout over its production levels in its main hydro unit. Drop in production to be compensated by higher sale prices, hence net effect could be neutral on financials. For RusHydro, we note that earnings in 1Q22 came under pressure from costs, particularly fuel costs at thermal stations. Given that in 2Q22, system is less reliant on thermal output, the cost pressure could abate (hopefully). While company paid Rb23bn in dividends, we are concerned about future dividends and earnings profile (especially by coal price inflation). Overall, we keep our Sell recommendation for now.
153 RUSSIA Country Report October 2020 www.intellinews.com