WOOD Flash – NLMK: 2Q19 financial results - in line with consensus but FCF and dividends lower qoq
NLMK has published its 2Q19 financial results, with EBITDA of USD 735m, 4% above consensus of USD 706m, and up 6% qoq. FCF fell 62% qoq to USD 258m, however, due to higher capex and a USD 151m build-up in working capital (vs. a USD 262m release in 1Q19). We believe this is likely to be reversed later in the year, so we do not see this as negative for the share price. NLMK also recommended a dividend of RUB 3.68/share, or USD 0.58/GDR, down from the RUB 7.34 recommended for 1Q19. This represents a c.2.4% quarterly yield based on the GDR price, vs. the c.2.5% yield announced by Severstal for 2Q19 last Thursday. Overall, we see the results as neutral for the share price, in our view.NLMK is currently close to our price target, but iron ore prices have exceeded our expectations so far in 2019 and the numbers are yet to factor in many of the plans announced at the Capital Markets Day. NLMK appears fairly valued, given the current macro environment and operations, but we believe its plan to grow EBITDA by USD 1.25bn in the next five years has the potential to expand dividends meaningfully, and support NLMK’s share price in the medium term.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.