Enel Russia - Strategy: Growth Over Dividends?
Enel Russia's capital markets day revealed one major surprise: a change in the company's attitude toward the balance between dividends and growth projects. The company announced that it was ready to lower dividends in order to pursue new growth projects (e.g. modernization or further renewables projects if new tenders are announced). Yet we believe that this would not apply until the dividend payment in 2021 (for 2020), as before that any meaningful new capex is unlikely to appear, in our opinion. The updated guidance for 2019-20 was close to our forecasts, and the company is quite upbeat regarding the results of 2021-22 in comparison with our estimates. We keep our BUY recommendation.PJSC Enel Russia is a wholesale generation company in Russia. Co.'s main areas of operation are production of power and heat, supply (sale) of power and heat, receipt (purchase) of power and heat from the wholesale power (capacity) market. Co. is active in four production branches around Russia: in the Ural region - Reftinskaya GRES, Sredneuralskaya GRES, in the northern Caucasus - Nevinnomysskaya GRES, and in Central Russia - Konakovskaya GRES. Co.'s aggregate installed capacity is 9,677 MW for power and 2,382 GCal/h for heat. Co. provides power and heat to both industrial enterprises and household consumers via local power distribution networks.
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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