OAO RusHydro, the Russian renewable energy producer that sank to a record low in London yesterday, will extend declines as a second year of sliding revenue dims dividend prospects, according to VTB Capital.
RusHydro, urged last month by President Vladimir Putin to investigate missing building funds, slid in London and Moscow yesterday and is the second-biggest decliner this year among the most-traded Russian stocks in New York. The Bloomberg Russia-US Equity Index (RUS14BN) fell 0.4 percent to 100.33, while futures on Moscow’s RTS Index slipped 0.1 percent to 152,890.
The company, Russia’s biggest alternative energy producer, will post a 25 percent contraction in sales for 2012 when it reports earnings in international standards April 1, according to the mean of 15 analysts’ estimates compiled by Bloomberg. The government, seeking to steady support after protests around elections last year, wants to limit power costs, with Putin saying utility tariff growth will be capped at 6 percent, RIA Novosti reported Feb. 25.
“It’s quite predictable that the company will report another decline in revenue as electricity tariffs are stagnating,” Mikhail Rasstrigin, an analyst at VTB Capital, a unit of Russia’s second-biggest bank, said by phone from Moscow yesterday. “Without better dividends, the stock has no chance to be of any interest to investors.”
Rasstrigin recommends selling RusHydro (HYDR)’s Moscow-listed stock and expects it to drop 6.9 percent from current levels.
RusHydro’s 12-month gross dividend yield was at 1.2 percent yesterday, the lowest level among the most-traded Russian equities in New York, data compiled by Bloomberg show.
During an energy commission meeting with industry leaders last month, Putin told RusHydro’s Chief Executive Officer Evgeny Dod to investigate the disappearance of “billions of rubles” in a construction project in Moscow. The Interior Ministry opened an investigation into suspected embezzlement of funds in Karachaevo-Cherkessia region on March 7.
“Investigation into the company’s finances has created a certain nervousness,” Vladimir Sklyar, an analyst at Renaissance Capital in Moscow, said by phone yesterday.
RusHydro fell 0.8 percent to $2.14 in London yesterday. The shares settled at a 2.6 percent discount to its Moscow-listed stock yesterday, the widest since Jan. 15. The company’s American Depositary Receipts were little changed at $2.13 yesterday. Shares on Russia’s Micex Index fell 0.2 percent to 67.69 kopeks, or 2.2 U.S. cents.
George Rizhinashvili, a deputy chairman at RusHydro, said on a Jan. 18 conference call with investors and analysts that business “was under pressure of sluggish power prices Europe and Russia.” The government owned 60.5 percent of the company as of June 30 according to RusHydro’s website.
Sales in 2012 probably fell to 272 billion rubles ($8.83 billion) from 363 billion rubles in 2011, according to the mean estimate of 15 analysts surveyed by Bloomberg.
The Market Vectors Russia ETF, the biggest U.S.-traded exchange-traded fund that holds Russian shares, fell 0.9 percent to $28.65 in New York yesterday, the lowest level since March 4. The RTS Volatility Index, which measures expected swings in the stock futures, rose 0.7 percent to 20.44.
ADRs of OAO Sberbank (SBRCY), Russia’s biggest lender, fell 1.8 percent to $13.59 in New York yesterday. Ten-day volatility jumped to an almost two-week high. Sberbank futures, which were little changed in U.S. hours, expire today, stoking price swings as investors decide whether to roll over the contracts or take delivery of shares, Luis Saenz, head of equity sales at BCS Financial Group in London, said in an e-mail yesterday.
Futures expiring in March on Russia’s ruble showed the currency falling less than 0.1 percent to 30.831 per dollar, after losing 0.3 percent to 30.7940 in Moscow yesterday. The currency was little changed at 34.9052 against the dollar-euro basket used by the central bank.
Crude for April delivery settled little changed at $92.52 a barrel on the New York Mercantile Exchange yesterday. Brent for April settlement dropped 1 percent to $108.52 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia’s major export blend, decreased 0.5 percent to $106.26.
United Co. Rusal, the world’s largest aluminum producer, dropped 2.2 percent to HK$4.04 in Hong Kong trading as of 12:32 p.m. local time. The MSCI Asia Pacific Index fell 0.4 percent.
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