The financial results of the energy holding “Inter RAO” for the first half of the year exceeded analysts’ expectations: the company’s revenue grew by 19%, exceeding 566 billion rubles, and profit increased by 27%, to 53.3 billion rubles. The positive dynamics occurred due to a sharp increase in electricity consumption in Russia by almost 6% yoy, as well as due to a jump in exchange prices for electricity and the start of higher payments for capacity for new facilities. Against the background of the heat and rising prices in Europe, Inter RAO increased its supplies to Finland, Lithuania and Latvia several times. At the same time, the company increased its forecast for electricity exports to 19 billion kWh at the end of the year, which, according to analysts, is quite realistic.
Inter RAO increased its IFRS net profit for the first half of the year: this figure increased from RUB 42 billion to RUB 53.3 billion. (an increase of 26.8%), follows from the reporting of the company. Revenue for six months increased by 18.8%, to 566.2 billion rubles. EBITDA – by 31.7%, to 80.9 billion rubles. The growth in indicators turned out to be higher than the consensus forecast of analysts. After the publication of the report, the shares of Inter RAO on the Moscow Exchange at the moment grew by 3.5%, to 4.59 rubles. for the paper. As of 17:40, the share price was 4.52 rubles.
The dynamics of the company’s financial results was significantly influenced by growth in electricity consumption in the Unified Energy System (UES) of Russia by 5.8% after a serious failure last year. As a result, power plants of Inter RAO in Russia with a total capacity of 28 GW increased their output by 14.6% year-on-year, to 54.6 billion kWh. Station utilization increased to 42.7%. At the same time, amid growing demand due to cold winter and abnormal summer heat, electricity prices in the day-ahead market (DAM) in the European part of the country and in the Urals increased by 14%. The sales companies of Inter RAO also increased their productive supply by 7.8%, which made it possible to increase the sales segment’s revenue by 11.7% to RUB 382.6 billion.
Another important factor is fast restoration of export supplies… The segment’s revenue grew 2.4 times, reaching RUB 50.9 billion. The total volume of exports in the first half of the year exceeded 10.24 billion kWh, while for the entire last year Inter RAO supplied 11.7 billion kWh abroad. In six months, supplies to Finland jumped 2.4 times, to 3.85 billion kWh, and to Latvia and Lithuania – 2.1 times, to 2.96 billion kWh.
Inter RAO increased supplies to these countries due to the rise in prices on the European Nord Pool stock exchange amid first a cold winter and then a hot summer, a decrease in the output of local hydroelectric power plants and an increase in quotations for CO2 emissions, which limited the utilization of European coal generation.
In general, by the end of the year, Inter RAO hopes to export 19 billion kWh. For comparison, in 2015–2018 the company supplied about 17 billion kWh abroad, and in 2019 – more than 19 billion kWh. Vladimir Sklyar of VTB Capital considers export forecasts realistic. “But we would not rush to project such results for future periods: the surge was caused more by operational factors than by a fundamental trend. We expect the normalization of supply volumes in the range of 14-16 billion kWh annually until the Baltic states leave the BRELL energy ring (Belarus, Russia, Estonia, Latvia, Lithuania), ”the analyst says.
According to Vladimir Sklyar, Inter RAO in 2021 may show the best financial results in its history. “However, we continue to see limited triggers for stock growth in the short term: despite improving financial results, investments are also growing, and the cash position even declined after the acquisition of construction and IT companies in May 2021. At the same time, we do not expect a change in the dividend policy and the launch of an option program for management in 2021. Under these conditions, Inter RAO shares look fundamentally undervalued. The factors for reducing this underestimation could be acquisitions in wholesale generation, a change in the approach to profit distribution, or greater clarity regarding profitability in large projects such as Vostok Oil, ”says Vladimir Sklyar.
Sergey Garamita of Raiffeisenbank expects EBITDA to grow by more than 20% over the year, taking into account the company’s forecast. However, he does not yet see any new interesting triggers for shares: “Neither for future investments (in addition to already acquired engineering projects and well-known plans within the framework of the program for the modernization of old thermal power plants), nor for dividends (so far there are no further changes in the dividend policy)”.
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