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Colour Investment

Dividends of PJSC Bashneft and the expectations didn't materialize

May 15, 2020, 08:05 PM • ☕️ 2 min read


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On May 15, after the closing of the Moscow Exchange, the information appeared on the recommendations of the Board of Directors of Bashneft on dividends for 2019:

To recommend dividends for 2019 in the amount of 107.81 rubles per 1 share (ordinary / preferred).

Thus, the dividend yield to the closing price on May 15 (1,770 / 1,462 rubles) is 6.1% and 7.4%.

Such dividends may again disappoint investors who expected at least to keep dividends at the level of previous years (150-168 rubles / share), which provided a 10-11% dividend yield to prefs. Note that on dividend expectations, stocks rose over the past month by more than 10%. It is likely that in the future, dividends may be cut even further due to the high pressure of low oil prices, or not recommended for payment for 2020.

The view on Bashneft remains cautious and neutral. The company is no longer part of PJSC AFK Sistema and cannot be comparable with such companies as NLMK, Severstal or Lukoil in terms of investor relations, transparency and openness.

Separately, it is worth noting the next unfulfilled forecast for the channel’s telegrams Sources of RDV (MarketsMoneyVlast): the creators of the channel have been promoting this campaign for more than a year, since the summer of that year they have been forecasting the company’s transition to dividends of 50% of Net Profit, motivating this by sources in the company, internal expectations and “that all state-owned companies have already done this” (do not forget the case of Inter RAO PJSC, which still pays 25% of the dividend base and does not plan to change the dividend policy).

Sources of the WFD forecasted dividends of 250-270 rubles per share in addition to high forecasts for net income. As a result, the company’s profit for 2019 did not increase, and dividends decreased by 30%. The WFD sources again did not guess with their insider forecasts. We still do not recommend using this channel as information for action - what to buy and what to sell, most of the channel’s conclusions on their ideas are primitive and one-sided, often do not correspond to reality, and forecasts, as already noted, are almost not fulfilled.

Earlier, we already did a review on the forecasts and effectiveness of the ideas of the RDV. The first part of the analysis can be found at this link. The second part of the review is also available with an analysis of more ideas - this version is available at link.

Thus, the shares of PJSC Bashneft dried up to be a dividend paper with great potential - dividends are reduced, as well as dividend yield, the price of shares has not been growing for several years (in the direction of 1,400-1,800 rubles), competitors are switching to quarterly and semi-annual dividends, providing higher dividend yield and having great fundamental potential for growth (PJSC Lukoil, PJSC Rosneft, PJSC Gazpromneft, PJSC Tatneft), the shares very slowly close the dividend gap.

**The research is not an individual investment recommendation: each makes its own decision on the purchase / sale of these shares, based on its own assessment of the risks of investing in company data and knowledge of the operating and financial performance of these companies. **