Hi all!
This week turned out to be quite bright... a lot of events, reports, speeches, but the red background still prevailed. If anyone doesn’t know, Mr. Trump introduced tariffs on steel and aluminum. After that, Trump signed a memorandum on trade measures against China, adding even more fire. Many publications called this a trade war. And the markets reacted as follows:
Here's what China's global exports look like:
China is ahead of everyone, but after the introduction of duties of 25% on 10% of all imported products, the picture, I think, will change. The most offensive thing is that China is afraid to respond, I draw this conclusion for the following reason: the United States introduced duties for $60 billion, and China - drum roll - for $3 billion (20 times less). Of course, there is no smell of symmetry here.
The second point worth paying attention to is the expulsion of diplomats around the world because of the Skripal case, this situation worsens the already languid mood on the Russian stock market.
Well, probably the only ray of light is mother oil, which has broken through the $70 mark per barrel, which is holding back the fall of the entire market.
Now let's return to the corporate background. And I’ll start with Raspadskaya, which went into a steep dive this week:
The reason for this drop was the recommendation of the board of directors not to distribute profits and not pay dividends. But these are all emotions, let’s put them aside and analyze Raspadskaya’s strongest report.
Revenue and profit grew year-on-year by 72-73%. But this is not the most important thing. The main thing is a sharp reduction in the debt burden - the company's total debt decreased over the year by $396 million, amounting to 38 million versus 434 million a year earlier. Net debt has completely gone negative. This indicates a decrease in interest payable.
The company paid $23 million in interest last year. Only on 7.75% Eurobonds the interest was $10 million, but these bonds were successfully repaid on April 27, 2017. Accordingly, this year these payments will not eat up the money earned by the company and we should expect better results. 
Another reason why we should expect better results is the reduction in the production of cheap GO/GZhO coal in favor of the production of premium and expensive OS grade coal, which produces high-quality metallurgical coke and contains less sulfur, which reduces harmful emissions into the atmosphere. Mining OS grade coal will be one of the company’s key areas.
Regarding dividends. Of course, I expected that they would still be there, and the recommendation from the SD was a surprise for me. But on the other hand, the company has risks in the form of sanctions and lower steel prices, so management decided to first pay off the debt (done), look at the dynamics of coal prices (and price volatility was quite high: over the course of two years prices fluctuated from 90 up to $189 per ton) and only then pay dividends. Of course, waiting for dividends for another year is a so-so prospect, but I decided to wait in anticipation of an increase in quotes and financial indicators. In general, you should wait for the AGM, which will be held on May 17, and the conference call, which will be on Monday.
Here let's look at why our profits increased:
We see a barely noticeable increase in the bank’s loan portfolio, but it’s worth digging deeper and seeing why it grew and decreased. So, first is the growth of mortgages and car loans from physicists. Secondly, this is the growth of investment loans and loans to enterprises financed by the state. Now we should consider which sectors take loans:
And what do we see!? Growth is taking place in the most promising sectors: oil and gas, trade and construction. This is a good call in my opinion. As for securities available for sale, the bank spoiled its share in shares and bonds of constituent entities of the Russian Federation, while reducing investments in corporate bonds, OFZs and corporate Eurobonds.
At the same time, we can also notice a decrease in interest income by 1.6 billion, while for Sberbank and VTB this figure is growing.
As a result, what we have: the bank is still quite cheap, the bank’s loan portfolio inspires optimism, but the decrease in interest income is a little confusing. But I was pleased with the very optimistic strategy until 2020.
According to the bank's dividend policy, dividends should be 20% of profit under RAS, which is equal to 1.63 rubles per share.
For LUKOIL the situation is more complicated. I didn’t have time to study the presentation yet after the investor day, it is really huge (111 pages). So let's look at the report first:
Net profit doubled at first glance, but we understand that the growth was only 31.5%. And the rest of the profit came from the sale of Arkhangelskgeoldobycha JSC in the second quarter. That is, this is a one-time profit, but an increase of 31.5% is also not a bad indicator.
Also, according to the report, we noticed an increase in capital expenditures, but the positive thing is that this growth, firstly, was only 2.9%, and secondly, it was in the production and geological exploration segment, which indicates the development of new fields and, as a result, growth production At the same time, costs decreased in the Refining segment, and this despite an increase in processing volumes by 2%.
And here, of course, special attention should be paid to the doubling of production at high-margin projects. Well, the last thing I will pay attention to is the company's debt load.
Net debt continues to decline year on year, which of course also indicates the success of the company and the effectiveness of management.
In general, all that can be said about LUKOIL is that the company is very cool, and this is confirmed by the following image:
Well, in conclusion, one more positive news: LUKOIL plans to allocate half of the income received from the sale of oil at prices above $50 per barrel to the reverse buy back program.
Well, as usual, let’s look at the state of our portfolio:
LSR again went into negative territory against the backdrop of general market stagnation, and Ethereum also went into negative territory. But in any case, I continue to keep all the papers. As new ideas come in, I will publish them in the group.
Industrial-territorial complex of OJSC "Raspadskaya" is engaged in the extraction of hard coal and its enrichment. It is stationed in the Kemerovo region, with headquarters in Mezhdurechensk. The southwestern territories of the Kuznetsk coal basin are licensed to the enterprise for exploration and mining operations. These are very vast areas where up to 75% of Russian coking coal is mined. The structure of OJSC Raspadskaya looks like this:
The Raspadskaya mine, which is the largest in the Russian Federation. Production volumes are up to 8 million tons every year.
OJSC MUK-96, annual production of raw materials is about 1 million tons annually. Coal grade GZh.
CJSC Raspadskaya Koksovaya, annual production of raw materials is up to 3 million tons annually. Coal grade K and KO.
CJSC Razrez Raspadsky uses open-pit mining technology to produce up to 3 million tons annually.
CJSC Raspadskaya Concentrating Plant, annual production volumes are 7.5 million tons.
OJSC Raspadskaya also owns a mining and tunneling department, a transport company, and a sales and marketing company. was formed on the basis of a Soviet coal mine in 1991, having gone through the privatization procedure. In 2004, the Cypriot company Corber Enterprises Ltd became the main shareholder of OJSC Raspadskaya.
The company's turnover in 2013 amounted to 545 million US dollars.
Art. Pavlova Yu.V., Serova T.E.
Scientific supervisor: associate professor Kiselev A.B.
Kuzbass State Technical University named after. T.F.Gorbachev, Russia
Development prospects for OJSC Raspadskaya
OJSC Raspadskaya is a Russian coal company, one of the largest Russian producers of coking coal. Currently, Raspadskaya OJSC is one of the top five most promising coal mining companies in Russia. This is one of the largest and most productive enterprises in the coal mining industry, occupying a leading position in the Russian coking coal market.
OJSC Raspadskaya is the largest enterprise in Russia with underground coal mining. The high quality and relatively low cost of commercial products ensures their high competitiveness in all territorial coking coal markets in the country.
This company unites a group of enterprises, including:
- Raspadskaya is a four-wall mine, the company’s largest mine and the largest underground mine in Russia
- OJSC "MUK-96" is a mine in which one longwall is mined
- CJSC Razrez Raspadsky is an open-pit mine that was the first in Russia to use the system of deep seam development (DSHF)
- ZAO Raspadskaya Koksovaya is a mine under construction that will mine valuable coal grades “K” and “KO” underground.
- CJSC "OF "Raspadskaya" is a modern processing plant operating using the latest technologies
- Five transport and production infrastructure enterprises, as well as a sales and marketing company and a management company
It is important to note that three quarters of Russian coking coal is mined by Raspadskaya OJSC. Therefore, the company actively cooperates with such metallurgical enterprises as MMK (Magnitogorsk Iron and Steel Works), NLMK (Novolipetsk Iron and Steel Works) and EvrazGroup enterprises. Raspadskaya also exports its products to Ukraine and Eastern European countries. The company is also actively exploring prospects for entering the markets of the Asia-Pacific region.
As one of the leading suppliers of coal products, Raspadskaya OJSC identifies the following as its main strategic goals:
- increasing the efficiency and safety of developing coking coal reserves;
- completion of restoration work at the Raspadskaya mine;
- further strengthening of the position on the Russian coal market;
- increasing sales volumes of coal concentrate outside Russia;
- maintaining financial discipline and increasing profitability.
To achieve these goals, at the end of 2005, the Strategic Development Program for 2006-2015 was adopted, which links into a single whole all production, financial, investment plans and budgets and aims the production, technical and management team of the Company at the long-term development of the core business.
When analyzing the prospects for coal mining, the reserves of OJSC Raspadskaya (with its subsidiaries, hereinafter referred to as the Group) were assessed and a report was prepared by IEEC LLC (International Economic and Energy Consulting), confirming that the Group has more than 1.3 billion tons of reserves of high-quality coking coal. enough coal to mine for more than 90 years.
A key point in the development of the company’s activities was the signing of a Memorandum on October 8, 2012 with Hyundai Steel Company on long-term cooperation since 2013. Subsequently, on March 5, 2013, a five-year contract was concluded between the companies for the supply of coal products with a gradual increase in annual volumes to 300,000 tons per year in relation to international pricing.
Recently, the largest coking coal miner in the CIS, the Russian company Raspadskaya, was put up for sale. Experts believe that Evraz Group and the management of Raspadskaya OJSC, which now owns this asset, could be replaced by one of the international mining giants such as Rio Tinto and BHP Billiton, or one of the world steel leaders like ArcelorMittal, or a large Russian metallurgical company. The structure of supplies of this type of raw material, primarily to Ukraine, will depend on the change of owner.
Taking into account the current situation regarding the supply of coking coal to domestic consumers, this issue becomes especially acute. Since, according to plans for the current year, Ukrainian steelmakers intend to increase production volumes by 6-16%. Moreover, even with a growth of 6%, they will need at least 24 million tons of coal concentrate, of which 11.2 million tons will have to be imported.
The situation is complicated by the fact that, according to previously made forecasts, this year there should be a sharp reduction in coking coal production in Ukraine itself. However, along with this, as Vasily Kharakhulakh, general director of PHO Metallurgprom, clarified at the last balance meeting of representatives of the mining and metallurgical complex, the volume of imports of this type of raw material this year may be less than planned and amount to approximately 8.5 million tons.
In any case, according to the general director of the Ukrkoks association, Anatoly Starovoit, at present, a significant decrease in domestic coal production has already made itself felt and has led to an increase in the volume of its imports. In general, from the point of view of other analysts, the change of owners of Raspadskaya will be a positive rather than a negative factor for the domestic coking coal market.
In turn, managing partner of the auditing company Kreston GCG A. Katchik recalls that after the accident in May last year, Raspadskaya did not export its products at all. “But even before this, the company’s management focused its efforts on maximizing the volume of coal exports to Asian countries, and as a result, reduced the volume of their supplies to Ukraine,” the expert clarifies. “And today the priorities of the current owners of the asset have not changed. According to With the recently approved medium-term production development program of the company for 2011-2015, exports will be resumed mainly in the Asian direction."
As we see, today, Raspadskaya OJSC is the undisputed leader of the Russian coal industry, as well as one of the largest exporters. This is a dynamically growing company that is constantly improving its production base in accordance with international standards. Thus, by continuing to develop and update its strategic program, as well as improve coal mining technology, this company will exist for many decades without losing its position in the world market.
Literature:
1. Site materials: http://www.finam.ru/files/news260711-01.pdf
2. Site materials: http://www.metaprom.ru/factories/raspadskaya.html
3. Site materials: http://www.raspadskaya.ru/business/
4. Site materials: http://www.raspadskaya.ru/company/
5. Site materials: http://www.raspadskaya.ru/upload/files/
Introduction
Today there are not many interesting ideas left on the stock market that could bring good profits. In 2016-2017 We would like to bet on a company well known to everyone - Raspadskaya. We believe that it will soon become the absolute favorite in terms of annual profitability.
A little about the Raspadskaya company
Raspadskaya is a production company engaged in coal mining and processing. Speaking about Raspadskaya, it should be understood that it deals specifically with coking coal - not thermal coal. The lion's share of coking coal produced in Russia falls on Raspadskaya. The company consists of a group of enterprises:
- Raspadskaya mine;
- Mine “MUK-96”;
- Mine “Razrez Raspadsky”;
- Raspadskaya processing plant;
- Coke mine (under construction);
It is very important when we study Raspadskaya to look at the report according to IFRS, since reports under RAS are reports only for the Raspadskaya mine.
The coal produced by the company is sold to such metallurgical giants as MMK, NLMK and Evraz. In addition to Russian producers, Raspadskaya exports coal to Romania, Hungary, Ukraine, and Bulgaria.
Currently, the company is exploring options for entering the markets of Japan, Korea and other countries.
Raspadskaya dividends
Just a few years ago, the company was a heavyweight and expensive: company shares cost approximately 200 - 220 rubles. At that time, coking coal was also in price and was reaching its highest levels. The company reported good results every year and was loyal to its investors, not skimping on dividends. Raspadskaya paid dividends and quite good ones. The table below shows Raspadskaya's dividends by year:
The idea of purchasing shares of the Raspadskaya company
In 2016, the cost of coal began to rise. Prices are steadily rising. The devaluation of the ruble plays into the hands of Raspadskaya. The company publishes reports that show significant progress. And most importantly, Raspadskaya became profitable in 2016. For example, according to Raspadskaya’s RAS report (Raspadskaya mine) made a profit in the first half of 2016 of over 7 billion rubles, which is 7.3 times higher than the result of the same period last year.
The company's shares are incredibly undervalued and have enormous potential, which could be realized by the time the IFRS financial statements are released, which will be almost explosive in a good sense of the word. All this will push investors and the quotes of the not very liquid Raspadskaya will be able to return to their fair values (70-90 rubles per share). Also, according to our forecast, Raspadskaya will finally be able to return to the practice of paying dividends and pay shareholders about 3-5 rubles per share for 2016. Raspadskaya's dividends for 2017 may increase to 5-7 rubles per share. It should be noted that now the shares cost about 33 rubles and it is not difficult to calculate how high the dividend yield will be.
Addition
Today's news
MOSCOW, April 27 - PRIME. In the first quarter of 2017, Raspadskaya increased sales of coal concentrate by 11% compared to the same period last year, to 1.696 million tons, the company said in a statement. Including supplies of coal concentrate for export increased by 10% and amounted to 1.018 million tons, sales in Russia increased by 13%, to 678 thousand tons.
April 27, Moscow. The task set by management to maintain maximum sales volumes during a period of revival in demand and favorable prices was successfully completed. This was reported by the press service of PJSC Raspadskaya.
http://www.raspadskaya.ru/docs/RASP_PR_1Q2017_RUS_final_.pdf
The production report shows (see figure) that with the increase in sales, the price also increased from 3,208 rubles per ton to 7,294 rubles per ton. 1Q 2017 to 1Q 2016. This is about 124-129 dollars per ton, the price of coal (http://quotes.ino.com/exchanges/contracts.html?r=CLRP_ALW) has increased noticeably in the first quarter and this will affect sales prices in 2016 quarter 2017, and accordingly on the company’s performance.
Australian coking coal prices 
https://www.e-disclosure.ru/portal/files.aspx?id=942&type=3
Report for 1Q 2017 
Net profit under RAS for the 1st quarter of 2017 also increased significantly from 1.5 billion to 5.7 billion rubles. The second quarter should be expected to be better than the first, and the company's management's goal of repaying debt will most likely be successfully achieved.
http://sia.ru/?section=501&action=show_news&id=341558
MOSCOW (Reuters) - Raspadskaya will repay $170-180 million of debt in the second quarter of 2017 and may consider additional debt repayments during the year against the backdrop of high coal prices, the general director of the coal company controlled by Russia’s largest coking coal producer, Evraz Holding, told reporters. “We now want to pay off about $180 million of Raspadskaya’s debt,” Sergei Stepanov told reporters at the Coal of Russia and CIS summit. “If there is free cash flow, it is possible that we will pay off faster.” As of December 31, 2016, Raspadskaya's net debt was $399 million. The company's total debt was $434 million, which mainly consists of Eurobonds due in April 2017. The majority holder is Evraz. The company planned to repay the Eurobonds in April using its own funds, as well as from funds from Evraz. Rising world prices for coking coal will affect the price of Raspadskaya contracts for the second quarter, said Stepanov, who also heads the coal division of Evraz as vice president. “ We believe that in the second quarter we will have to perform above our price expectations,” he said.
Let me remind you that the capitalization of Raspadskaya (at a price of 71 rubles per share) is 50 billion rubles; if coal prices remain high, the company’s report for 2017 will be better than 2016. The net profit of Raspadskaya, one of the largest producers of coking coal in the Russian Federation, according to IFRS in In 2016, it amounted to $185 million versus a loss of $126 million a year earlier, according to the company’s report.
Coal prices are at a high level and are not going to fall (due to cyclones in Australia), Raspadskaya’s report for the 1st half of the year will be even better, they will pay off part of the debt, and analysts will look at the company differently, without debt, with excellent profitability.
Raspadskaya schedule
But is the company really cheap, if you look at coal prices in 2011, when Raspadskaya shares were at their peak of 236 rubles per share, metallurgical coal cost $365 at its peak,
The dollar exchange rate was 28-30 rubles per dollar in 2011 at a price of $330 per ton (9900 rubles per ton), the share price was 200 rubles (6.6 $), now the price is $150 per ton (this does not take into account the increase after Hurricane Debbie) at exchange rate is 56 rubles per dollar (8400 rubles per ton); the share price is 74 rubles ($1.3).
If we recall the company’s debt in 2011, the situation was not much different from the current one. 
In May 2010, an accident occurred at the Raspadskaya mine, the total cost of restoring the Raspadskaya mine was about US $280 million during 2010-2012. Then the company makes a share repurchase with the wording: “The Company’s Board of Directors believes that the current low share price does not reflect the fundamental value of share capital and provides an opportunity to pursue a share acquisition.” 
That is, in fact, the company of 2010, after the mine accident and with a dollar of 30 rubles and $140 per ton of coal, was worth three to four times more expensive (in $) than now with a dollar of 57 and a coal price of $124.
These are the prices of those days 
That is, despite the rise in coal prices, it is difficult to compare the company with 2011; it was expensive, but it paid dividends and had less debt. Now the company is cheap, the debt is being paid off, and coal prices are rising. The graphs show that the company almost did not “use” that devaluation of 2014, since raw material prices were at their lowest. The strengthening of the ruble in 2016-2017, of course, influenced the company’s quotes, but the sharp increase in coal prices “overtook” the creeping strengthening of the ruble, which had a positive effect on quotes. 
PS In any case, by choosing companies that are at the bottom of the commodity cycle (or a number of news, factors indicate growth in raw materials), we are insured against the impact of the strengthening of the ruble (on the company’s financial indicators and, accordingly, quotes), rising prices for the underlying asset (coal, fertilizers, metal, etc.) Although in the short term, if the export currency exchange rate falls, shares may fall. The goal of repaying Raspadskaya’s debt will be achieved and perhaps we will see dividends for 2017, and certainly the stock will be at other levels if force majeure is avoided.