Severstal - IFRS Results for 2Q19 In Line Across the Board
Severstal has reported 2Q19 IFRS results that were in line with our and consensus estimates across the board. The BoD proposed a quarterly dividend of around $350 mln yesterday (2.5% yield), for a payout of around 130% of FCF, in line with the company's policy to distribute more than 100% during the 2019-22 capex cycle. At current spot commodity prices and USD/RUB, Severstal is trading at a 2020E dividend yield of around 11.5% and LFCF yield of around 6.5%, slightly more attractive than peers on dividend yield. We reiterate our HOLD recommendation.
PAO Severstal is an integrated Iron & Steel works company with a range of products: hot and cold rolled steel, roll-formed shapes and pipes, rolled sections, a large group of coke products and by-products. Co. also has various social responsibilities such as the operation and maintenance of sports complexes, holiday and recreational facilities and public housing. Co.'s operations are organized along three principal divisions: Severstal Russian Steel engaged in crude steel production; Severstal Resources engaged in the production of iron ore concentrate, pellets and coking coal; and Severstal International engaged in the production of high-quality flat-rolled products.
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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