Alrosa - 1Q19 Trading Update Weakish, As Expected
Today, as expected, Alrosa reported a weakish trading update for 1Q19. It seems that the gem-quality sales mix worsened, given that the gem-quality average realized price was down 19% Q-o-Q. However, as sales volumes of industrial diamonds turned out lower than we expected, the overall average realized price was slightly above our estimate. While we see upside to the upper bound of our 1Q19 EBITDA estimate ($420-450 mln), we reiterate our 1Q19 LFCF estimate of $200 mln and 2H18 dividend forecast of $450-500 mln (for a yield of around 4.5%). At the spot USD/RUB rate, Alrosa trades at a 2019 dividend yield of 10%. We reiterate our HOLD recommendation.AK Alrosa PAO. AK Alrosa PAO (Aktsionernaya kompaniya ALROSA PAO or ALROSA Company PJSC), formerly AK Alrosa OAO, is a Russia-based company which is principally engaged in the exploration, mining, manufacture and sales of diamonds. Its operations include five Integrated Mining and Processing Complexes: Mirny, Udachny, Aikhal, Anabar and Nyurba located in the Sakha Republic; sorting divisions and diamond cutting and polishing division. The Company is a member of variable diamonds associations. It operates through several representative offices, branches and subsidiaries, including Alrosa-Nyurba OAO, Almazy Anabara OAO and Severalmaz OAO.
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