Translated material
A fork for Sechin
That Sberbank wrote about the prospects of Rosneft in the October report and why the report was greatly edited
Photo: NK "Rosneft"
In early November, the analysts of the Sberbank investment division had to rule the already released client report, some of which are devoted to the prospects for the development of the Rosneft business, and send it again. The form of the document is corrected, the essence remains. Sberbank CIB claims: after 2019, the largest oil state-owned company in Russia has no opportunity to grow rapidly in its business, and she will probably be forced to look for a new business strategy for herself. The old, according to analysts, did not justify herself very much - at least if you look at it through the eyes of a private investor.
"We need to talk about Igor"
The scandals around the reports of analysts of the Investbank structures have become commonplace. The story of the October report on the Oil and gas sector of the Sberbank Investbank division, Sberbank Cib, could have been louder if the publication of the second version of the story did not fall on a long series of weekends in honor of the 405th anniversary of the liberation of either the Kremlin from Polish occupiers, or the 100th anniversary of the cleaning of the Zim Palace from the Kerensky government. In Russia, on November 4–6, few people understand that the Sberbank CIB report, written in pure and rather expressive English, was intended mainly by non -Russian -speaking public - the multi -page text was released initially on October 19 on November 3 with another, slightly more neutral. All this cannot be compared with the noise around the August report by the manager of Alfa-Bank, who contributed to the actual nationalization of the Otkritie Bank. However, the phenomenon is one and the same.
Until recently, the investment battalion in their reports was stiff, but time takes its own: both a good, to a place, an anecdote, and an acute comparison increase confidence in the interlocutor, and confidence in the investmentBank is a profit. In addition, it is somehow easier to joke in English, in Russia, among those who write and read on it, no, no, and a feeling of some almost secret fraternity of a little understanding is created. This sensation is false: in fact, everything and everything, the speed of dissemination of the information is very high, the audience of the paddock to small sensations, and the authorities of state -owned companies do not love them very much - we are not up to secret fraternities here.
Some passages from Rosneft's presentations were named by Stalinist fairy tales, Rosneft’s corporate slogan “for the good of Russia” is qualified as “Borat's slogan”
Photo: BrokerNews.ru
To begin with, we inform us that it has changed to the Day of Celebration of National Unity in the Sberbank CIB report, which was urgently recognized as the leadership of Sberbank not compliance with corporate standards. Not too much. The subtitle “We need to talk about Igor” (I mean the head of Rosneft Igor Sechin). Several passages about the personal ambitions of Igor Sechin, which may affect the corporate strategy of Rosneft until 2023. The text of the report has several more quite piquant turns - for example, some passages from Rosneft's presentations are named by Stalinist fairy tales, Rosneft’s corporate slogan “for the benefit of Russia” is qualified as “Bauron Coena’s satirical film”, and Rosneft's purchases) Icorn and silver spoons for a corporate helicopter are tenderly described as expenses “in the spirit of the good old Gazprom”. In general, they had a little fun - although Sberbank does not contain any very sharp attacks, readers of the Investbank reports saw and not that, right there, the majority grunted and shrugged - in fact the text did not produce a splash.
However, he was noticed. And not so much because of "Stalinist fairy tales" as due to content.
State companies about state -owned companies
The text of Alex Fak (no, FAK is written, and not as you thought), Valeria Nesterov and Anna Kotelnikova generally came out quite sarcastically not only in relation to Rosneft itself - it got into it more or less, for example, the reasoning that the “lines D” of the Transasian gas pipeline of the Russian Federation -Chinese, most likely, contain, apparently more non -standard and sober assessments in relation to Gazprom, Novatek and their business, which is customary in the financial world. Nevertheless, nothing particularly unusual in content in the part of Rosneft, which is devoted to a separate head of the 60-page document, did not write Sberbank Cib. In particular, the document does not predict either the collapse of Rosneft, nor a sharp reduction in its profitability, nor the collapse of its shares - the main idea of the document can be reduced to the phrase, which after November 3 remained in the report on the merits: “After 2019, Rosneft will not be able to grow so fast as to satisfy its own ambitions, so the company will change the nature of its activity and, possibly, will be less Oil and gas and will be more invested in other types of business, which may not like its current minority shareholders. ”
“After 2019, Rosneft will not be able to grow so fast as to satisfy its own ambitions, so the company will change the nature of its activity”
In general, in order to evaluate the whole irony of what is happening, it is necessary to evaluate not only the object of attacks of analysts, but also the employer of these analysts. Sberbank CIB - a division of the largest bank in Russia, which, alas, like Rosneft, is a state company: a controlling stake in Sberbank belongs to the Bank of Russia, a control package of Rosneft shares - the state holding Rosneftegaz, almost to the same extent dependent and to the same extent independent of the state as the Central Bank of the Government. Of course, when representatives of one state -owned company boldly and without reverence discuss the features of the managerial style of another state -owned company, it is doubly offended by another state -owned company. And yourself, who yourself!? And in this resentment there is a rational grain. Apparently, the weakest place of the Sberbank CIB report is a fundamental refusal to see in Rosneft not just a public joint -stock company, but a strategic asset of the Motherland, working in higher geopolitical interests, all with a capital letter! - The company’s business, led by Igor Sechin, is analyzed in the document as if it is a completely ordinary, albeit large, business, whose task is to maximize profit for its owners.
In this sense, we can endlessly argue that Sberbank under the leadership of Herman Gref and Rosneft under the leadership of Igor Sechin are fundamentally different phenomena. Yes, state -owned companies in Russia have two main strategies by 2017. The first is to distance himself as much as possible from the wishes of the state in relation to their affairs, to stay away from direct state funding, if possible, to pretend that the holder of the control package is just another shareholder in the general row, to develop business as if you are a well -deserved shark of capitalism, and drink tea with the founder of Alibaba Jack Ma, and even with Indian spiritual guru in search of leadership in the XXI century. This is one extreme. The other is to be the most useful state in the form that the state considers useful for itself, to endlessly ask the state support to return the same support to its expenses for its purposes, on the one hand, a hired manager, and on the other, a prominent statesman. The price of this difference is clarified, for example, in such conflicts, like around the Sberbank CIB report, when it comes to political accusations, it is better not to demand complete freedom of speech for its analysts (which satisfies the needs of clients as much as possible), and to quietly fix the too daring piece of paper. This is the difference between hospitalism and the usual market-you can’t justify everything with business interests, the state selects a little efficiency from you in exchange for its entertainment.
However, the Sberbank CIB itself is more interesting than its sharpness - he suggests that Igor Sechin does not have many opportunities in Rosneft, as follows from the company's reports.
Seven questions with one answer
In the chapter, previously called “We need to talk about Igor”, and now just called “Rosneft”, the most acute issues that are asked by co -owners of the Rosneft shares are discussed in great detail and with our own estimates by Sberbanka CIB. They can be reduced to seven issues, and they are given their own answers to the analysts of Sberbank.
The first question is - can Rosneft, after a large series of acquisitions in 2011-2017, grow in the oil sector further at the same speed as before, if oil prices remain at $ 50 per barrel? The overall withdrawal of analysts, based on the analysis of oil production in the old and new deposits of the company, - Rosneft production until 2023 will grow by no more than 2% per year, and this is not enough to fulfill the previously declared Rosneft's unofficial goals - to become Russian Exxon. According to Sberbank CIB, the company, despite government benefits in old deposits, is limited to the possibilities of relatively inexpensively increasing production on samotlor and other produced deposits, and new investments are not so promising to grow faster.
The second question is - can for Rosneft the production and export of gas become the replacement of the main, oil, business? Until 2023, analysts cannot be stated in the current conditions: the Rosneft gas business is less profitable than that of Gazprom and Novatek, even to fulfill the current Rosneft supplies, it is now necessary to buy decent gas volumes from third -party manufacturers - and part of the produced condensate, mixing with oil. LNG projects in the Far East should not fundamentally change the picture, they will not be able to make Rosneft more profitable.
Rosneft's extraction until 2023 will grow by no more than 2% per year, and this is not enough to fulfill the previously declared Rosneft's unofficial goals - to become Russian Exxon
The third question is - can the international expansion of Rosneft and its international alliances change the situation? And here Sberbank analysts are skeptical. Buying an Egyptian gas project “ZOR”, they believe, is made at the peak of value, the “Rosneft” investment in the Indian project of Essar is above the estimated fair price for this asset, and even the purchase of “Bashneft”, if we count it entirely (along with the redemption of the shares of minoritarians, etc.), possibly produced at too high the price so that it was beneficial for shareholders to shareholders. Rosneft. Moreover, Sberbank CIB draws attention to the fact that Rosneft in recent years has sold its own assets (non-controls in Vankora, Taas-Yuryakha and Upper Projects) by $ 7.2 billion, but acquired assets of $ 7.7 billion-but during this expansion in the short term did not change the balance of oil production at all at all (from these transactions, its production has not changed), and in the long -term rather lost in terms of oil flows - it was possible to invest in longer projects with potentially more “long” and promising prey.
The fourth question is how rational the Rosneft investments in Venezuela? Analysts are extremely skeptical, $ 8.5 billion loans and investments in projects in this country, including the purchase from Lukoil and Surgutneftegaz, most likely, Rosneft shareholders from a financial point of view. If the government of Nicholas Maduro remains in power, they believe in Sberbank CIB, Rosneft seems to be a net Donor of Venezuela for a long time, not receiving profits from these projects. If the government of Maduro falls, then Rosneft with a high probability will lose assets in Venezuela.
The fifth question is how great the Rosneft’s duty is, how much it is overshadowing the prospects for paying the company larger than during the expansion of 2011-2017 dividends, and can the company quickly change the strategy, reducing the amount of Zasreditanism? It is known that part of the debt of the Rosneft group is hidden in prepayments received by the company under various transactions of 2013-2015 - from the Chinese CNPC, with Vitol, Glencore and Trafigura traders, with BP. The officially net debt of Rosneft, according to the reporting data, is $ 37.5 billion, taking into account the prepaids directly recorded on the balance of prepayments - $ 67 billion, according to Sberbank Cib estimates, and taken into account non -standard, as well as the loss of Rosneft from the devaluation of the ruble in hedges, which will be extinguished to 2020 years - the total net debt is in the range from $ 73 billion to $ 81 billion. This is not a disaster, but this makes Rosneft's further expansion very difficult.
The sixth question-can the company buy something? Sberbank believes that I would like to, in itself, the idea to make Rosneft de factopolist in the Russian oil market for Rosneft’s management, apparently, like it. Analysts are approaching this issue with a very simple criterion - suppose that this is Igor Sechin’s strategy, what will happen if it is executed? Sberbank CIB calculations show that in purely commercial terms, transactions such as attempts to absorb “Lukoil” or “Surgutneftegaz” are not very profitable for the Rosneft shareholders, this will many times increase the company's limitations and, apparently, will reduce the cost of total assets. An alternative option-a rapid reduction in the company's costs, entering the period of dedication during the period of decrease in the castle and completing the integration of previously acquired in the Rosneft structure-is unlikely, suggest in Sberbank CIB, in any case, the difficulties of the Rosneft management team are known with such activity, but for now, in their actions it does not show that such a task will actually be someone set.
Finally, the seventh question - what is actually in Rosneft, and not in words, are going to do, given that from the inside of the company, apparently, all of the above circumstances are known better than outside? The main assumption of Sberbank’s analysts is the current management of Rosneft, led by Igor Sechin, is generally prone to control the entire value chain, regardless of whether such a strategy for Rosneft shareholders is beneficial. Therefore, in 2018-2019, the company will continue investing in the oil and gas chemical project FEPCO in the Far East, will be invested in the Indonesian Tuban NPP in exchange for the share of the Indonesian Petromina in the Russian deposit, try to build an oil pipeline in the Kurdistan, invest in the Zvezda shipyard. That is - do what before. In the future, they believe in Sberbank CIB, such a strategy will simply reduce the capabilities of Rosneft to invest in himself-and Igor Sechin will come up with something.
But what he comes up with is unlikely to at least somehow correlate with the interests of Rosneft's minority shareholders, analysts believe. Glencore and Katar Qia at the Sberbank Cib, the Rosneft with the Chinese CEFC fund. There, in general, they believe that the Chinese fund will be only a transit shareholder of Rosneft, and then the shares will be found a new owner - the management team of the Russian state -owned company is unlikely to agree.
In general, analysts have to do all these complex considerations only in order to make a simple and clear statement. Sberbank CIB has no reason to trust the recommendations “Buy Rosneft”, rather rationally rationally “hold” these shares, in any case, the hope that the Igor Sechin team leads private shareholders of Rosneft to large dividend payments and the high cost of shares in the next few years, and is controversial.
The value of the Sberbank CIB report, cleared of discussing personal professional ambitions Igor Sechin, has grown or decreased, for Sberbank investment customers? In fact, and no.
Matisse style creativity
In the main analysts of Sberbank, and apparently, even in Rosneft, they are right - the prospects of the company are now completely inseparable from how Igor Sechin intends to develop it, and, therefore, from the fact that he generally thinks about how to develop it.
If we assume for a second that Rosneft will be controlled by a colorless clerk-robot, for example, from the Ministry of Energy, then all Sberbank CIB’s reasoning is meaningless: the state-owned company’s strategy would definitely not be the same, like Sberbank, it would not be the current Sberbank, do not lead Herman Gref. Hospitalism in an authoritarian political regime cannot but import personalist practices into the corporate standards of Gosao. Further, much depends on what CEO reads-solid philosophical and geopolitical works, closed FSB reports, Swedish detectives or non-Fiction about Agile and artificial intelligence.
Much depends, but not all. Having removed the passages about Igor from the report, the analysts actually made their conclusions more convincing about the high predetermination of the future shares of Rosneft as a private investment. Можно убедить впечатлительных инвесторов краткосрочно, но экономику убедить невозможно — если цифры предсказывают, что к 2019 году менеджменту «Роснефти» будет банально скучно иметь дело с ограничениями, которые накладывают на свободу его экономической фантазии законы физики и экономические условия, то с большой вероятностью эта скука транслируется в творчество. Каким может быть творчество руководства «Роснефти» — Игорь Сечин уже говорил в интервью Financial Times в июне 2017 года. Главе компании (он комментировал сделку с Essar) нравится стиль Анри Матисса.
Но Матисс очень разнообразен, несмотря на узнаваемый стиль. Хорошо, если это стиль «Парусников» 1906 года, сейчас находящихся в частной коллекции. Чуть более рискован стиль краснофигурного «Танца» Матисса из коллекции Эрмитажа. Скучны, но понятны хранящийся в Вашингтоне «Интерьер с египетской занавеской» или «Залив Ниццы», украшающий скромную, но небедную анонимную виллу в Антибе. А что, например, если «Роснефть» вдохновляют не апельсины, не пальмы, не подсолнухи и не обнаженные в странных позах — а аппликации Матисса из лондонской галереи Тэйт? Вот не так широко известные «Сани». Там некто в синем падает куда-то глубоко под землю, расцвеченную взрывами? Тут любой инвестор схватится за голову — упаси нас, Господи, от высокого искусства.