NLMK - 3Q19 Trading Update Review and Earnings Preview
As we had expected, NLMK reported a modest trading update today, showing lower output and sales volumes but a better sales product mix. We expect EBITDA to decrease 11% Q-o-Q to $655 mln in 3Q19, for a 25% margin. We model 3Q19 leveraged FCF of around $275 mln, for a 2.3% yield, and expect around $300-350 mln in 3Q19 dividends, for 2.5-3.0% yield. At spot commodity prices and the current USD/RUB, NLMK is trading at a 2020E LFCF yield of around 6% and dividend yield (paid in 2020) of circa 9.5%.
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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