Page 34 - Uzbekistan rising bne IntelliNews special report

34 I Special Report: Uzbekistan Rising bne December 2021
a lot of work to do, as the company also reported an 11.9% rise in receivables that “contributed to QZSM’s cash crunch and [indicate] that the country’s rapid economic recovery is not evenly distributed among the construction companies,” says Bluestone. Demand is high and sales are strong but companies still need to collect the payments on time, and that is not always easy.
The one bone of contention is the company’s failure to pay dividends, due to the cash crunch. After using its cash to retire some of its long-term debt obligations in 2019 the company took out a fresh UZS240bn of long- term debt, denominated in dollars, this year, ostensibly to pay out dividends of UZS660 per share but to the chagrin of shareholders it failed to pay. The company has borrowed a total of $112mn but its overall level of debt
to equity ratio remains an extremely modest 0.10, according to Bluestone.
“Despite Qizilqumsement's large-scale investment in a fourth production line, on May 22 the company announced
it would allocate 75% of 2020 net profits to dividends at UZS989 per share. However, the company
failed to pay the dividends within the 60 days stipulated by the regulations due to cash needs for construction,” Bluestone reports.
The management called an EGM at
the end of August and voted to reduce the dividend payments to UZS660 per share to free up more cash to pay for
its capital investment, but it wasn't enough. In September the management announced that it was suspending
the dividend payment altogether.
Despite these growing pains portfolio investors remain keen on the company. The Tashkent-based, but foreign managed, AFC Capital says that Qizilqumsement accounts for a third of its portfolio on its own and Bluestone also has a Buy recommendation
on the stock, estimating the shares still have a 14% upside. When the fourth production line comes online the capex should drop to nothing and the revenues will increase; the company's financials could improve dramatically in the New Year.
“Our price target is a conservative forecast that could be revised significantly upwards if the fourth cement production line opens in December 2021, as the company indicated in 2020, and the company resolves its dividend and cash flow issues,” Bluestone said in a note.
Ben aris in Tashkent
Uzbekistan under its new president, Shavkat Mirziyoyev, is a country gearing up
for a bright future – in that the president wants to make sure there
is enough power to keep all the
lights on as both the economy and the population are growing fast.
“Now the situation is very dynamic. There is rapid economic growth and the energy sector will not be able to meet all the needs. Today we have
15 GW of capacity and the plan is to increase this to 30 GW by 2030 of which 25% will be renewables,” Azim Akhmedkhadjaev, the newly appointed First Deputy Energy Minister told bne IntelliNews in an exclusive interview.
The president launched
a comprehensive five-year energy reform plan in 2019 that is, after the bank sector reforms, probably the most advanced of all the country’s reforms.
Investments into power and electricity infrastructure have accelerated in
the last four years, during which
time investments into electricity
Uzbek energy reforms focus on energy saving, high efficiency in the first phase
www.bne.eu