Sensation exchange

Do not read business news if their authors promise “fried” facts

A stormy week in the currency and stock market, which fell and grew up after the news from the Crimea, forced the Russians to closely monitor the exchange news. Sensation numbers were most popular on Monday: in one day the country allegedly “lost” two trillion rubles. At the same time, for some reason, no one wrote on Tuesday that she suddenly “returned” almost half of this amount. Although in that and in another case, it was about the total capitalization of public Russian companies in the domestic market. Is it surprising that even less intelligible comments in the press appear when it comes to financial indicators of individual companies.

To begin with, we will fix a simple and important thing: the price of shares is an indicator that is important primarily for those who buy and sell them. According to the Ministry of Finance, about 1% of Russians play in the stock market, so from the point of view of the welfare of the vast majority of Russians, exchange quotes are no more important than the weather forecast for Somalia.

If we multiply the cost of one share by their total number, we will get capitalization - the cost of selling the company determined by the market at the moment. It is believed that if the capitalization is growing, especially with a pace exceeding the “average temperature” in the market, then the company’s affairs are going well and its management works effectively. And if the company loses in value, then the managers are underdeveloped (and in Russia, especially in state -owned companies, they are also being touched, according to intuitive opinion of the layman).

In fact, capitalization can dramatically grow and fall after the market that reacts to the mood of investors and external shocks. Which we, in fact, saw on Monday and Tuesday. Many “blue chips” were first among the most affected by news from the Crimea, their fall was calculated by two -digit quantities, but then they turned out to be similar to growth leaders. What does this have to do with their business?

If the market is in a fever, investors do not play even unconditionally positive corporate news. For example, it was on Monday of RusHydro OJSC, the largest Russian company, which owns assets in the hydropower, represented financial results on Russian accounting standards for the parent company, which concentrated the largest assets of the holding in 2013. At a press briefing, the Chairman of the Board Yevgeny Dod called them “excellent”, and it is difficult to argue with him. The net profit of RusHydro for 2013 amounted to 35 billion rubles, and this is 140% more than a year earlier. At the same time, the company's revenue over the same period increased by 15%, and the production of hydroelectric power plants by 17%, that is, both production and financial indicators improved.

And what about capitalization? According to the results of 2013, it decreased by 23%, although the company increased 2.4 times net profit. The reason is that the year turned out to be poor for all companies in the electric power sector: the industry index “MMEVB-Energetics” fell by 41%, and this is the worst indicator among all industries. The fact is that in the electric power industry, pricing is rigidly tied to tariffs determined by the state. And his policy is not always consistent and in general in recent years, including the solution of the problems of socio-economic development, increasing the competitiveness of processing production and preventing the sharp growth in prices for the population, which can often be made only by limiting the price for the final consumer. Last year, a political decision was made at all to freeze tariffs of natural monopolies for a year.

Can shareholders be a dissatisfied decrease in capitalization? It depends on which. A shareholder who specializes in speculation and short -term fluctuations in quotations, perhaps. A long -term investor (which is the state), which deeply analyzing the business of the company, which sees its fundamental value and growth factors, this issue can be a lesser extent. What interests him in the long run is the stability of a business model, confident development and income that can be obtained from dividends. This year, according to Evgeny Doda, RusHydro plans to pay 25% of net profit to shareholders. An additional 6 billion rubles will hardly interfere with the budget, and private investors will not remain in vni.

RusHydro stands in terms of privatization, and here a decrease in capitalization, it would seem, can play a negative role. But this is if you sell shares in the market, through public placement. In the case of RusHydro, the option is rather possible with the involvement of a strategic investor, which will evaluate the financial and production indicators of the company, their dynamics in the future, and not just the current cost of shares. And this is the competence of shareholders, primarily the states - what price will seem acceptable to him.

Any potential investor will be interested in the prospects for the development of the asset that he intends to acquire. RusHydro has a very ambitious investment program, the budget of which for 2014-2018 is almost 361 billion rubles (however, adjustments are possible in connection with the requirement of the government to reduce the expenses of state -owned companies by 10%). A significant part of this money will go to the technical re -equipment of power plants built during the USSR, as well as for the construction of new facilities and the implementation of priority projects in the Far East.

In a word, financial markets are not show business, and here you need to look for “sensational” news, but a calm business analysis.

Alexey Barinov

Direct speech

Andrey Bugrov, Independent Director, Member of the Board of Directors of OJSC RusHydro

- How do you evaluate the financial results for RAS for 2013? Do you agree with the estimates of Mr. Doda, who called them “excellent”?

- Look at the reporting, the numbers speak for themselves. The company's revenue for 2013 increased by 15% (up to 108.8 billion rubles), EBITDA by 26% (up to 61.8 billion rubles), margin in terms of EBITDA for 2013 is 57% (+4.8 percentage points). Net profit for 2013 increased by 140% (to 35.3 billion rubles).

The results are really very worthy. The company demonstrates good financial dynamics, I am sure that it will remain in the future. Of course, such results are largely the merit of company management, headed by Evgeny Dod.

- According to what key criteria does the Board of Directors evaluate the activities of the management of OJSC RusHydro? Which one has a greater specific gravity - the capitalization of the company or pure revenue?

- Currently, key annual indicators of management effectiveness include indicators such as reducing the cost of purchasing goods, works and services per unit of products; The reliability criterion, including the prevention of the number of accidents of more maximum and the coefficient of readiness, the level of EBITDA, execution of capacities input and the plan for financing and mastering capital investments.

- In 2013, net profit for RAS increased by 140%, adjusted net profit - by 40%with an increase in revenue by 15%. How can you explain this phenomenon, due to which the growth of profit significantly ahead of the growth of revenue?

- The growth of marginality occurred for several reasons. This is a significant increase in electricity production at hydroelectric power plants, which, working in the margin market without fuel costs, have the opportunity to generate a significant operational cash flow. Plus, the growth of total costs below inflation and significantly lower than the growth of revenue as a result of high optimization work to reduce administrative and management costs, salaries of non -surgical personnel and costs of buying electricity and capacity.

- How do you assess the RusHydro policy on the financial reward of members of the board? Is it somehow related to the financial and production results of the company?

- I think that it is adequate to those tasks that stood and are facing management. The key among them is the completion of the restoration of the Sayano-Shushenskaya hydroelectric power station, the introduction of the Boguchanskaya hydroelectric power station and the increase in the safety of all facilities of the company. It is also necessary to mention the development, contract and the beginning of the implementation of projects as part of the complex of comprehensive modernization, integration and improvement of the financial condition of the company Holding East of the RAO East, a set of work on four thermal generation projects in the Far East and ensuring stable and safe operation of existing stations.