TGK-1 - 2Q19 IFRS: Heat Subsidies Support the Bottom Line
TGK-1 has reported 2Q19 IFRS results. Although they are not fully comparable owing to the introduction of IFRS 16 this year, lower hydropower output appears to have been offset by higher heat subsidies. We believe that new heat subsidies (R2 bln in 1H19, R0.97 bln in 2Q19) explain most of the increase in the bottom line, and this more favorable setup for the heating business represents a substantial positive for TGK-1.Territorial Generating Company - 1 is a producer of electricity and heat energy in the North-West region of Russia. Co. incorporates generating enterprises from the Baltic Sea to the Barents Sea. Generated electricity is delivered to the domestic wholesale market of electricity and capacity as well as exported to Finland and Norway. Co. is a strategic supplier of heat energy in Saint Petersburg, Petrozavodsk, Murmansk, Kirovsk in the Leningrad Oblast, and Apatity in the Murmansk Oblast.
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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