Sistema JSFC (MOEX:AFKS) is a private Russian investment company, asset portfolio of which 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, Sistema presented 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, Agroholding "Steppe" and Segezha Group, as well as by consolidating the results of Binnopharm Group.
Adjusted OIBDA added only 5% up to 75.029 billion rubles. Lower growth rates in comparison with revenue are explained by the fact that, that the loss in Ozon increased, as well as due to the sale of shares of Detsky Mir 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, corporate-wide 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 p.p. |
| 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 singled out its digital businesses into separate companies, to make it easier to sell them to a private investor in the future. If this fails, then the second option would be an IPO.
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 p.p. |
| Adjusted net income attributable to AFK Sistema | 9,436 | 8,283 | −12,2% |
Ozone. The main growth story of Sistema. The online store showed triple-digit growth in the third quarter: 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 the scale of the business due to the development of its own infrastructure., which in the current quarter year-on-year increased by 150%.
The flip side of triple-digit growth was Ozon's huge investment in its development. This led to the fact that, that the net loss of the retailer in the third quarter of 2021 increased to minus 14 billion rubles, and adjusted EBITDA fell to minus 11.3 billion rubles.
Segezha Group. Leading Russian timber holding. In the third quarter, the company showed strong results due to increased demand from the construction industry and higher prices for all products of the company. Main events:
- the holding acquired two assets in Siberia - Inter Forest Rus and Novoeniseisky 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 attributable to 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 Sistema's subsidiaries for this period. The main reason is the strong base of last year, when there was a rush 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% |
Agroholding "Step". The largest non-public asset of AFK Sistema in terms of financial results. In the third quarter, the company showed impressive results due to a record grain harvest and rising world prices for wheat: revenue increased by 88%, OIBDA - on 134%.
Medsey. Largest private medical network. In the third quarter, the company showed neutral financial results against the background of a strong base last year, when there was increased demand due to COVID-19. The largest drop was noted in net profit, which has been reduced 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 p.p. |
| Adjusted net income attributable to AFK Sistema | 0,963 | 0,791 | −17,9% |
"Binnopharm group". Large Russian pharmaceutical company, which AFK Sistema is preparing for an IPO. In the current quarter, the company showed a strong increase in its financial results due to the growth in 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 repurchased from the market, what constitutes 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 R, in 2023 - at least 0,52 R.
What's 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 has fallen out of favor with investors due to an unsatisfactory new dividend policy and the postponement of the IPO of non-public assets: "Steppes", Medsi and Binnopharm.
But in 2022, everything should change - after the announcement of AFK Sistema about preparations for an IPO, for example, 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 debt, is now 457 billion rubles., and the value 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.
