RusHydro cut to REDUCE, TP RUB 0.63 - Not interesting at current price levels

We downgrade RusHydros ordinaries to REDUCE from HOLD on the back of the stock price recovery (by 25% since our Nov 2019 update) initially fuelled by a media-rumoured proposal of RusHydros reorganisation that was subsequently confronted by management. The company still has interesting triggers ahead, but at current price levels (>4x EV/EBITDA 20e vs the Russian average 3.8-3.9x) we see cheaper alternatives with higher DY, such as Enel Russia. For the next two years, notwithstanding the hydropower operating results, DY would probably stay at 5-6%, far below the 8%+ MSCI RU average for 20e (vs Enel Russias 9%) with a 9% DY only after impairments are over (starting for 21e). Modernisation plans could already be in the price, which leaves only the Zagorskaya restoration holding promise (>RUB 70 bn already invested, or 25% of market cap). If Zagorskaya is restored, all capex, spent and new, would be paid off via capacity tariffs with guaranteed returns but, according to the management, it would only become clear in 2022e whether this is achievable or not. Anyway, we still raise our DCF TP slightly to 0.63/share (from RUB 0.58) mostly on modernisation projects and lower risk-free rates.