OGK-2 - Closing Our Trade Idea
On October 31, we issued a trade idea to buy OGK-2, citing what we expected to be strong 3Q19 results and potential comments on dividends as the main potential drivers. The results turned out strong, and the CEO of parent company Gazprom Energoholding (GEH) recently guided for "very strong" full-year results from its subsidiaries. In addition, though GEH's capital markets day that had been scheduled for December was seemingly canceled, the GEH CEO commented that the plan is to increase the DPS of subsidiaries for 2019 relative to the level for dividends paid from the 2018 results and then to gradually move to a 50% payout from IFRS net income. We believe that the main triggers for the stock have already materialized. We have therefore decided to close the trade idea and lock in the 11.6% return to date. We still keep our long-term BUY recommendation on 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.
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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