Report

OGK-2 confirmed at BUY, TP RUB 0.80 - Strong FCF and DY ensured by final CSA-1 payments

Final years of CSA-1 payments ensure high FCFY (26-30%) and DY (13%) in 2021-24e
Excluding new guaranteed-return investments (neutral for DCF valuation), FCF in 2021-24e could exceed the current market cap by over 50% combined
50% discount to MSCI RU on EV/EBITDA 22e, related to expiration of CSA-1 guaranteed returns after 2024e (to be later mitigated by CSA-2 guaranteed returns)
BUY confirmed, target price down to RUB 0.8 on higher risk-free rates, fuel costs and capex
Underlying
OGK-2

OGK-2 JSC is primarily engaged in the generation and sale of electric and heat power. Co. consists of the following power stations (plants): Troitskaya GRES, Stavropolskaya GRES, Pskovskaya GRES, Serovskaya GRES, Surgutskaya GRES-1, Kirishkaya GRES, Ryazanskaya GRES, Novochercasskaya GRES, Krasnoyarskaya GRES-2, and Cherepovetskaya GRES.

Provider
Raiffeisen Bank International AG - Institutional Equity
Raiffeisen Bank International AG - Institutional Equity

The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.

The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.

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