Велес Капитал ИК

investment company

Rushydro

IFRS results: preview

December 10, 2019

RusHydro is to report its IFRS results on December 12. Mildly negative.

The company is due to present the results after 2:00 pm MSK and to hold a conference call at 4:00 pm MSK on the same day.

Water ratio made record highs in 3Q 2019. RusHydro production was at its many-year high in 3Q, providing for a serious decline in prices of the electric energy as the cheap production by HEPS inevitably leads to a dip in the wholesale prices of electric energy. Wholesale day-ahead electricity prices were down by almost one third in annual terms. As for the other negative factors, we highlight a rise of coal prices and the negative re-estimation of the forward contract caused by reduced capitalization within the reported period. We assume the given factors led to EBITDA tumbling 20% and the net profit – 25%.

As for the conference call, we are to focus on the number of facilities the company manages to commission until the end of the year as the volume of the remaining investment programs depends on that number, and on the volume of principal assets devaluation that is to be shown for 2019 FY. As RusHydro stated in its recent presentation, the company planed commissioning sum 472 MW capacity of generation facilities. The management planed commissioning Zaramagskaya HEPS with 346 WW capacity, Sakhalinskaya GRES-2 with 120 MW this year and Sovgavanskaya TPP commissioning has been rescheduled to 2020.

We expect a mildly negative reaction to the results release. The company is currently passing the peak of its investment cycle and for now, we observe no short-term growth triggers.

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