En+ - More Power to You
We reinitiate coverage of En+ with a BUY recommendation and a target price of $10.97 per share. We see limited upside for aluminum prices from current levels given weak global demand and no evident cost push that could stimulate capacity closures to tighten the market. We focus on two elements for the valuation. First is the power segment, which is a stable cash-generating business that should secure a 5.1-6.5% dividend yield in 2021-23, in our view. Second is the Nornickel stake held by Rusal, which accounts for roughly 90% of our fair value for Rusal. We expect the dividend stream from this stake to help Rusal to deleverage and enable it to pay dividends starting next year, providing an additional 3.9-4.4 pp of dividend yield for En+ shareholders after 2021.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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