Rusal - 2Q19 Trading Update Strong on Volumes; Product Mix Better
Rusal has released a trading update for 2Q19, reporting 21% Q-o-Q growth in sales volumes on the back of a guided inventory release and an improved product mix. We expect EBITDA to grow 37% Q-o-Q to $310 mln and leveraged FCF (excluding dividends from Nornickel) to rise to $85 mln, for a 1.2% yield. At current spot commodity prices and USD/RUB, the stock is trading at a 2020E EV/EBITDA of around 6.0 (EBITDA including Nornickel dividends), close to historical levels.
United Company Rusal is a producer of aluminium and alloys. Co.'s production chain include bauxite and nepheline ore mines, alumina refineries, aluminium smelters and casting houses, foil mills and packaging production centres. Co. operates in four reportable segments: Aluminium, which is involved in the production and sale of primary aluminium; Alumina, which involved in the mining and refining of bauxite into alumina and the sale of alumina; Energy, which include the mining and sale of coal and the generation and transmission of electricity; Mining and Metals, which includes the equity investment in Co.'s joint venture, PJSC MMC Norilsk Nickel.
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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