NLMK - 2Q19 IFRS In Line; Strong Dividend
Today, NLMK reported 2Q19 IFRS results, slightly beating our and consensus forecasts on EBITDA and coming in line with our leveraged FCF estimate. The announced quarterly dividend of $350 mln for a 2.4% yield (around 135% of leveraged FCF) has surprised to the upside and takes the total for 1H19 to $1 bln. At spot commodity prices and the current USD/RUB rate, NLMK is trading at a 2020E dividend yield of 10.5% and LFCF yield of 7%. We reiterate our HOLD recommendation.
Novolipetsk Steel is a vertically integrated steel manufacturing and production group based in Russia. Co. specializes in the manufacturing of high-quality hot and cold rolled steel in a variety of grades and sizes. Co. is also engaged in production and sales of flat steel products including slabs, hot rolled and cold rolled sheet, electrical steel, galvanized steel, cold rolled sheet with polymeric coatings. In addition, Co.'s areas of manufacturing include sintering, coke production, blast furnace production, steel-making, hot and cold-rolled flat steel production, galvanized and prepainted steel production. Co. exports its products to 70 countries around the world.
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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