Page 74 - RusRPTJuly18

season,” MOEX said in a note to clients.
The traders at BCS must be feeling pleased with themselves after recommending investors to “buy the panic” in April after the US Treasury Department (USTD) slapped a new and damaging round of sanctions on some of the biggest businessmen in Russia.
BCS has a dividend basket product where the average dividend yield is an extraordinary 10.5% at the moment.
The dividends are a function of how much extra cash a company has to share with its shareholders and with Russia’s economy on the mend those companies have more cash to share.
BCS reassessed its portfolio and upgraded the companies that are expected to improve the amount they pay as dividends. “The largest upgrades were for Severstal (34% vs the previous estimate on better fundamentals), Aeroflot (23%, company decision on dividends), Etalon Group (18%, also a positive company decision), NLMK (12%, on strong fundamentals) and Norilsk Nickel (9% on high metals prices),” BCS wrote in a note.
Severstal is top dog at the moment with a 13.2% dividend payout that made its owner Alexei Mordashov Russia’s richest man until recently, when he was overtaken by Mikhail Lisin for the title, the owner of another steel plant Novolipetsk Metallurgical Kombinat (NLMK) that is also a top 10 dividend payer.
A Russian metals major, NLMK saw its earnings hit a ten-year high after it posted $2.8bn in revenues for the first quarter of 2018, Ebitda of $812mn and net income of $502mn, leading it to promise bumper dividends.
Polyus has been returned to the basket after the board recommended paying out a total of $550mn of dividends, including interim payments, which is in line with the policy of paying 30% of annual Ebitda a year. The stock has been hot as the company has been trading at a discount to its global gold-producing peers even before considering its dividend yield.
Despite all the good news there is still not a lot of clarity over what the biggest state-owned enterprises (SOEs) will do – but it is clear that few will fulfil the Ministry of Finance order to pay out half their profits as dividends.
At least the state-owned retail banking giant Sberbank has been making an effort. The bank has been responsible for the entire banking sector’s profit on its own for several years and has increased its dividend payments from 25% in 2016 to 36% for the 2017 payout. The bank made a record-high net profit of RUB749bn and will pay RUB271bn ($4.4) in dividends, doubling the 2016 payout of RUB135bn in absolute terms. "I think [Sberbank shares] were one of the most profitable investments of last year," Gref boasted in April.
Gazprom is another one that is dodging the 50% dividend order, claiming that it needs to spend extra cash on several huge pipeline projects. The company had a weak 2017 posting negative free cash flow but has had a much stronger
RUSSIA Country Report July 2018 www.intellinews.com