Page 153 - RusRPTOct20

programme (rate of return is to be defined by the end of 2020). Nor are there plans to construct inefficient capacity in the Russian Far East. The financing for the second stage of Pevek-Bilibino has not been decided yet. The company has signed a cooperation agreement on the construction of Krapivinskaya HPP.
· Renewables.​ RusHydro is planning to take part in the renewables auction in December 2020, with 42.6MW of capacity.
· Additional share issues.​ No further additional share issues are planned at the moment.
· Ownership structure.​ No major changes to the ownership structure are expected so far.
· ESG.​ RusHydro is working on improving its ESG profile and, if possible, moving coal-fired generation to gas.
Apart from the conference, it was disclosed that Nikolai Shulginov’s contract as CEO had been prolonged by two more years. While contracts are normally extended for a standard five-year term, the company noted that this was the period during which the CEO had to tackle a number of issues: adopt the company’s new strategy through 2035, start implementing the four modernisation projects in the Russian Far East and finalise work on the programme to develop grids in the Russian Far East.
The messages are neutral for RusHydro and we had expected them. The company passed the low point of its profitability cycle in 2019 and is on the recovery path. Lower write-offs, profit growth driven by high water levels, the positive revaluation of the VTB forward, and the completion of projects are just some of the ingredients of this profit recovery, which we think could translate into higher dividends for shareholders as well. At the current share price of RUB 0.76/share, we expect a dividend yield of 4.8% for FY20F, 6.5% for FY21F and 7.1% for FY22F, which would be one of the strongest dividend growth paths among Russian utilities. VTBC reiterates its Buy recommendation for the stock.
9.2.11 ​Metallurgy & mining corporate news
● Gold & Diamonds
According to an​ ​Alrosa​ press release, the company's sales increased 12% y/y in August to $202.1mn, recording a 45% y/y decline in 8mo20. The company noted that demand for rough diamonds is picking up; it expects seasonal growth of market activity in 4Q20. Sales results in August were strong, given 12% y/y growth in August compared with an 86-96% y/y decline in the four previous months. Strong recovery was in line with the recent Bloomberg​ announcement and was driven by the prices cut and midstream restocking as well. Actual numbers of August sales beat our estimates by 35%. Assuming strong ($300mn) results in October, we see a 69% upside risk to our
153 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com