Page 75 - RusRPTDec18

MMK MAGN RUB41.5/ 24% RX GDR
MMK’s shares have fallen 20% from the 1Q17 high and it remains one of the cheapest steel names globally at 3.8x EV/EBITDA for 2017. Steel industry is recovering and the steel over bulks premium in China is expanding; MMK, which has the lowest integration into raw materials, is the key beneficiary.
Novatek NVTK LI $133/GD 17% The stock has been considerably oversold on the back of the crude R oil slump and has not yet recovered. Timely launch of Yamal LNG
along with the new strategy presentation in 2H17 are key drivers for a re-rating, in our view.
Globaltrans
GLTR LI
$8.7/GDR 13%
This year should be successful for the company, because the deficit of gondola cars on the rail network has led to rising tariffs, which have already achieved RUB1,500 per rail car per day. As a result, we see upside risk to our earnings estimates. Additionally, the company may pay interim dividends for 1H17, while the annual dividend yield is close to
8.3.3 Dividends dynamics
Russian utility Unipro announced on November 2 that the Board of Directors had recommended an interim dividend of RUB 0.111/share, with the record date set at 18 December. This recommendation is both positive and expected, as management had previously guided for RUB7bn of dividends to be paid in December 2018-January 2019. The recommended DPS implies a 4% interim dividend yield. Together with the residual dividend for the year, bankers expect a total DPS for FY18F of RUB 0.22 and a dividend yield of 8%, on par with the total payment for the previous year.
On 8 November, Gazprom Neft’s Board of Directors recommended that shareholders approve dividends for 9mo18 of RUB 22.05/share, according to Interfax. The record date for dividends has been set as 28 December. The extraordinary shareholders meeting is scheduled for 14 December, with registration closing on 19 November. The recommended dividends of RUB 22.05/share for 9mo18 are broadly in line with our expectations of RUB 21.80/share and imply an interim dividend yield of 5.8%. This translates into net income of RUB 132.2bn ($2.0bn) in 3Q18 under a 35% IFRS net income payout ratio, up 70% y/y. We anticipate the company’s DPS for FY18Y reaching RUB 27.60 under the current oil futures curve, implying a FY18 DY of 7.3%.
VTB Group may be forced to cut dividends in response to new capital requirements that come into force next year, said Andrey Kostin, the head of Russia’s state-controlled lender. Kostin conceded defeat to the central bank this week in his efforts to adjust the introduction of higher capital requirements for Russia’s systemically important lenders in line with Basel III regulations. He has estimated the new rules will cost his bank about 150bn rubles ($2.3bn) in 2019. “I don’t think we can afford 50% of profit” Kostin said, referring to the proportion of this year’s earnings that will be paid as dividends, in an interview with Bloomberg TV. “That would be enough for us to be in line with Basel III regulations, but I don’t think in this case we will be ready to pay 50% dividends.” At the annual VTB Russia Calling! Conference Kostin compared Basel III to brain cancer – only worse.
Gazprom’s management is going to make a suggestion to the company’s Board of Directors to increase dividends per share for FY18 potentially to a double-digit number in roubles, according to Interfax, citing the Deputy Chairman of its Executive Board, Andrey Kruglov. Higher dividends might be included in the company's budget for next year. The Board of Directors meeting on this is to take place in mid-December, according to the newswire.
Phosagro’s BoD has recommended 3Q18 dividends at RUB 72/share which is 60% above projections (RUB 45/share) and implies a 6.8% NTM
75 RUSSIA Country Report December 2018 www.intellinews.com