Unipro confirmed at HOLD, TP RUB 2.85 - COVID hits indirectly but hard

Apart from an already serious production drop (-14% yoy in 1H 20), COVID-19 presents a major indirect threat to the companys FCF risking further delaying the Berezovskaya 3 relaunch costing RUB 4.2 bn in EBITDA per quarter in 21e and implying a possible extra bump in capex (historically RUB 1/bn per quarter of delay reflecting the maintenance costs of the construction site). In our model, we have already cut our 2021e EBITDA by 19% mainly accounting for the recent two consecutive delays from end-3Q 20e to end-20e and then till 1H 21e, with 1Q 21e targeted, though there is no ruling out a possibility of another delay till mid-21e given the COVID-19 prolongation risks. Furthermore, there is still no complete certainty regarding the fate of Berezovskaya after 2021e and the external risks still exist (incl. the management reshuffle). Nevertheless, we do not expect DY in 20-21e to fall below 8% (RUB 14 bn/year), though 11% DY next year (RUB 20 bn currently forecast by Unipro, subject to EBITDA not below RUB 30 bn according to management) could easily be revised down. Still, given the DY higher than the 6% Russian average, we consider it too early to downgrade the stock any further, keeping our HOLD recommendation while reducing our DCF TP to RUB 2.85/share from RUB 3.05 on lower FCF.