Analysis of financial results of AFK Sistema for 3 neighborhood

Разбор финансовых результатов АФК «Система» за 3 квартал

Sistema JSFC (MOEX:AFKS) Is a private Russian investment company, whose asset portfolio consists of many businesses: telecommunication company "MTS", Ozon online store, construction group "Etalon", timber holding Segezha Group, agricultural holding "Step", private medical network "Medsi", pharmaceutical manufacturer Binnopharm Group and other small subsidiaries.

Financial results

In early December, AFK Sistema presented its financial results for the third quarter of 2021, after the publication of which the company announced its intention to extend its own buyback program.

Key financial indicators of the third quarter. Sistema's revenue increased by 22% from 184.89 billion rubles to 225.118 billion rubles. This was mainly due to the growth of key assets: MTS, agricultural holding "Step" and Segezha Group, and also due to the consolidation of the results of Binnopharm Group.

Adjusted OIBDA added only 5% up to 75.029 billion rubles. Lower growth rates compared to revenues are explained by the, that the loss in Ozon has increased, and also due to the sale of Detsky Mir shares in the third quarter of 2020.

The corporate center's net debt increased by 6% from 210.1 billion rubles to 223.2 billion rubles in comparison with the previous quarter. The main reason is the placement of two new issues of ruble bonds, money from which the company will spend on investments, general corporate goals and refinancing of current liabilities.

Main financial indicators of Sistema JSFC, billion rubles

3к2020 3к2021 The change
Revenue 184,890 225,118 21,8%
Adjusted OIBDA 71,662 75,029 4,7%
OIBDA margin 39% 33% −6 pp.
Net profit 2,334 0,888 −61,9%
Adjusted net income 2,598 2,292 −11,8%
Corp net debt. center 171,6 223,2 30%

MTS. In the third quarter, the telecommunications company paid a dividend to its shareholders for the first half of 2021 and consolidated 100% UK «Sistema kapital». MTS has separated its digital businesses into separate companies, so that in the future it will be easier to sell them to a private investor. If this fails, then the second option would be to conduct an IPO.

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Key financial indicators of MTS in 3 quarter, billion rubles

3к2020 3к2021 The change
Revenue 127,508 138,165 8,4%
Adjusted OIBDA 59,120 61,506 4%
OIBDA margin 46,4% 44,5% −1.8 pp.
Adjusted net income in the share of AFK Sistema 9,436 8,283 −12,2%

Ozone. The main growth story of Sistema. In the third quarter, the online store showed three-digit growth rates: GMV increased by 145%, gross profit - by 104%, revenue — on 84,9%, the number of new orders and customers increased by 238,6% and 86,8%.

The main reason for such impressive results is the increase in business scale due to the development of its own infrastructure., which in the current quarter year-on-year increased by 150%.

The flip side of three-digit growth was Ozon's huge investment in its development. This led to, that the retailer's net loss in the third quarter of 2021 increased to minus RUB 14 billion, and adjusted EBITDA fell to minus 11.3 billion rubles.

Разбор финансовых результатов АФК «Система» за 3 квартал

Segezha Group. Leading Russian timber holding. In the third quarter, the company showed strong results due to increased demand from the construction industry and an increase in prices for all of the company's products.. Main events:

  • the holding acquired two assets in Siberia - Inter Forest Rus and Novoyeniseisky LHK;
  • the group announced the construction of a plant for glued timber structures;
  • Segezha Group's Board of Directors announced the payment of dividends in the amount of 0,42 P per share.

Segezha Group's Key Financial Indicators 3 quarter, billion rubles

3к2020 3к2021 The change
Revenue 25,609 18,966 35%
Adjusted OIBDA 10,508 5,079 106,9%
OIBDA margin 41% 26,8% 14,2 p.p..
Adjusted net income in the share of AFK Sistema 3,974 −3,319
Net debt 34,1 49,7 −31,4%

"Reference". Russian construction company, which in the third quarter of 2021 showed the weakest results among the subsidiaries of AFK Sistema for this period. The main reason is the strong base of the last year, when there was a rush of demand due to the preferential mortgage program from the state.

Basic financial indicators of Etalon in 3 quarter

3к2020 3к2021 The change
New sales, thousand m2 150,451 96,470 −36%
New sales, billion rubles 23,983 18,390 −23%
Cash receipts, billion rubles 21,235 19,308 −9%
average price, rubles per m² 159 405 190 633 20%
Commissioning, м² 15,570 181 071 1063%
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Agroholding "Step". Sistema JSFC's largest non-public asset in terms of financial results. In the third quarter, the company showed impressive results due to a record harvest of grain crops and an increase in world prices for wheat: revenue increased by 88%, OIBDA - on 134%.

Разбор финансовых результатов АФК «Система» за 3 квартал

Разбор финансовых результатов АФК «Система» за 3 квартал

Medsey. Largest private medical network. In the third quarter, the company showed neutral financial results against the background of a high base last year., when there was increased demand due to COVID-19. The largest drop was noted in net profit, which decreased by 18% due to the decrease in the average check by 8% and growth of amortization and interest expenses.

Key financial indicators of Medsi in 3 quarter, billion rubles

3к2020 3к2021 The change
Revenue 6,749 7,179 6,4%
Adjusted OIBDA 1,835 1,821 −0,8%
OIBDA margin 27,2% 25,4% −1.9 pp.
Adjusted net income in the share of AFK Sistema 0,963 0,791 −17,9%

"Binnopharm group". Large Russian pharmaceutical company, which Sistema is preparing for the IPO. In the current quarter, the company showed a strong increase in its financial indicators thanks to the growth of sales of its own products..

Key financial indicators of Binnopharm Group in 3 quarter, billion rubles

3к2020 3к2021 The change
Revenue 6,827 5,335 28%
Adjusted OIBDA 2,209 1,538 43,7%
OIBDA margin 32,4% 28,8% 3,6 p.p..
Net profit 1,202 0,648 85,4%

Dividends

Historically AFK Sistema has distributed small dividends, which the company has recently supplemented with a buyback. for example, in the third quarter of 2021, 74.7 million shares were purchased from the market, what is 0,77% from the authorized capital of the company.

The current dividend policy is fixed until 2023 and assumes payment in 2022 in the amount of at least 0,41 Р, in 2023 - at least 0,52 Р.

Разбор финансовых результатов АФК «Система» за 3 квартал

What is the bottom line

AFK Sistema showed generally good financial results in the third quarter, but the market completely ignored them. Since April 2021, the company fell out of favor with investors due to an unsatisfactory new dividend policy and the transfer of IPO of non-public assets.: "Steppes", Medsi and Binnofarm.

But in 2022, everything must change - after the announcement of AFK Sistema on preparations for an IPO, eg, agricultural holding "Step" or pharmaceutical manufacturer "Binnopharm group" the market may again see a strong underestimation of the company. The current value of the company together with the debt is now 457 billion rubles., and the cost of shares owned by AFK, only traded companies - 50,3% MTS, 31,8% Ozone, 29,8% "Etalon" and 70,9% Segezha Group, is equal to 609 billion rubles.

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