Page 200 - RusRPTApr23

Rise in exports to “friendly” countries. Rising Turkish and Chinese prices may bring export margins back to positive. Severstal may recover its export levels from the 2022 lows caused by the combination of unfavourable export prices and the strength of the ruble.
BCS expect Severstal to resume dividends in the medium-term BCS Ruble appreciation. Ruble depreciation (+18% versus USD in the last 3 months) supports export margins and contributes to stronger domestic prices which follow global benchmarks with a lag. Ruble appreciation may hit revenues and dilute margins.
Weaker ruble, higher steel prices to increase the profits. The key role in the Severstal’s financials since our last upgrade played ruble and uptick in steel prices.
TP raised primarily on ruble depreciation and higher steel prices. Our DCF-based TP for CHMF upped 7% to Rb1,600/sh versus Rb1,500/sh. Hence, BCS expects 52% an upside potential and rate the name with a BUY.
BCS increase NLMK’s target price by 18% to RUB200/sh and reiterate its Buy recommendation. The company should benefit from strong steel prices on Chinese GDP acceleration, weak and resilient domestic demand.
Local steel market is on the rise, backed up by strong global benchmarks. Upcoming seasonal increase in construction sector demands, Turkish post-earthquake recovery and expected Chinese economy acceleration in 2023 are supporting the name. Domestic steel prices are rising but have further upside. NLMK may potentially resume dividends in the medium-term.
Strong seasonal momentum in domestic demand. HRC and rebar prices already increased (+8% and +24% for the last 3 months) but discount to export parity stays at around 15-20%. Construction season is starting and should support further upward price revision in both flats and longs.
Chinese economy acceleration. In 2022, China's GDP grew by 3%. However, in 2023, the government aims to achieve the targeted 5% growth rate, with potential support from economic stimuli. If successful, this could result in robust activity within the industrial and construction sectors, which may help maintain steel prices at or above their current levels.
Rise in exports to ‘friendly’ countries. Rising Turkish and Chinese prices may bring export margins back to positive territory. NLMK may restore its exports from 2022 lows caused by low export prices and strong rouble.
NLMK may potentially resume dividends in the medium-term.
200 RUSSIA Country Report Russia April 2023 www.intellinews.com