Six debates in Russian energy: Our views on key developments
SOE dividends: Will Gazprom increase the payout?
Gazprom’s higher-than-expected FCF in 2015 and strong balance sheet gives scope to pay a higher dividend for 2015. The government is pushing for a 50% payout but management might try to negotiate this down. We think the market is currently pricing in a payout of c.30%, factoring in a c.20% probability of a 50% payout.
- We upgrade Gazprom to Neutral.
- We upgrade Novatek to Buy and add it to the CEEMEA Focus List.
- We downgrade Bashneft to Neutral post the recent rally as we believe an M&A premium is priced in.
- We like Lukoil for its high dividend yield and keep a Buy rating, but remove the stock from CEEMEA Focus List.