vk.com/id446425943

Evraz - BUY

Renaissance Capital

14 January 2019

Metals & Mining

Figure 116: Evraz, $mn (unless otherwise stated)
Evraz	EVRE.L / EVR LN	Target price, GBp:	620
Market capitalisation, GBPmn:	6,834	Last price, GBp:	475
Enterprise value, GBPmn:	10,176	Potential 12-month return:	45.4%

Dec-YE	2016	2017	2018E	2019E	2020E
Income statement
Revenue	7,713	10,827	12,162	10,168	9,626
Underlying EBITDA	1,542	2,624	3,896	2,943	2,529
Underlying EBIT	1,021	2,063	3,310	2,303	1,847
Other items	-629	-496	96	0	0
Equity accounted income	-23	11	13	12	9
Net interest expense	-461	-423	-367	-373	-373
Taxation	-96	-396	-700	-388	-297
Profit after tax	-188	759	2,353	1,553	1,187
Attributable profit	-215	699	2,278	1,498	1,145
Basic EPS, USc	-15	53	158	104	79
Thomson Reuters consensus EPS, USc			146	113	97
DPS declared, USc	0	60	109	92	50
Thomson Reuters consensus DPS, USc			89	60	50
Underlying EBIT, $mn
Coal - EBIT	503	1,059	1,375	1,246	833
EBIT margin - Coal	38%	48%	53%	50%	36%
Russian & CIS steel - EBIT	785	1,228	2,217	1,468	1,519
EBIT margin - Russian & CIS	14%	16%	26%	20%	21%
North American steel - EBIT	-127	-74	-70	-133	-246
EBIT margin - North American steel	-9%	-4%	-3%	-7%	-15%
Other - EBIT	-140	-150	-211	-279	-259
Total - EBIT	1,021	2,063	3,310	2,303	1,847
EBIT margin	13%	19%	27%	23%	19%
Income statement ratios
EBITDA margin	20%	24%	32%	29%	26%
EBIT margin	13%	19%	27%	23%	19%
EPS growth	66%	453%	198%	-34%	-24%
Dividend payout ratio	0%	113%	69%	88%	63%
Input assumptions (steel)
Iron ore fines (62% Fe, CIF China), $/t	58	71	66	62	62
Semi soft coking coal, $/t	101	131	144	115	104
Hard coking coal, $/t	144	188	206	178	160
Hot rolled coil - CIS, $/t	382	502	552	468	471
RUB/$	67	58	62	67	68
Steel sales realisations, $/t	517	698	814	676	644
EBITDA per tonne, $/t	115	191	291	214	184
Capex/tonne, $	28	43	47	60	72
FCF/tonne, $	71	119	138	121	87
Sales volumes, kt
Coal products	9,867	10,499	10,982	12,447	14,900
Iron ore products	4,222	2,937	2,026	2,024	2,024
Vanadium products	20,428	22,319	18,609	19,650	19,788
Steel products
Semi-finished products	5,601	5,742	5,381	5,730	5,730
Construction products	4,416	3,991	3,780	3,722	3,722
Railway products	1,455	1,657	1,765	1,853	1,853
Flat-rolled products	887	1,023	1,045	910	894
Tubular products	534	749	838	968	968
Other	571	602	594	557	557
Total	13,464	13,764	13,404	13,739	13,723
Growth	-7%	2%	-3%	3%	0%
Contribution to FY18E underlying EBITDA
			North American
Russian & CIS				steel
steel				2%
60%

Coal 38%

Dec-YE	2016	2017		2018E	2019E	2020E
Balance sheet
Net operating assets	5,521	6,054		6,476	6,674	6,973
Investments less provisions	-107	-103		-130	-134	-141
Equity	491	1,784		2,266	2,438	2,867
Minority interest BS	186	242		282	309	330
Net debt (cash)	4,737	3,925		3,798	3,793	3,634
Balance sheet ratios
Gearing*	91%	69%		63%	61%	56%
Net debt to EBITDA	3.07x	1.50x		0.97x	1.29x	1.44x
RoCE	18%	35%		51%	34%	26%
RoIC (after tax)	13%	23%		35%	22%	19%
RoE	-69%	61%		112%	64%	43%
Cash flow statement
Operating cash flow	1,222	2,024		2,650	2,492	2,188
Capex	-382	-595		-629	-829	-985
Other - CF	111	214		-175	-6	-9
FCF	951	1,643		1,845	1,657	1,193
Equity shareholders' cash	582	1,305		1,531	1,331	874
Dividends and share buy backs	-35	-469		-1,419	-1,326	-716
Advances (repayments) of debt	-765	-527		-646	0	0
Increase (decrease) in cash	-218	309		-534	6	158
Cash flow ratios
Capex/EBITDA	25%	23%		16%	28%	39%
FCF yield	12.5%	18.7%		14.9%	12.9%	9.4%
Cash conversion ratio	-2.7x	1.9x		0.7x	0.9x	0.8x
Equity shareholders' yield	21.8%	28.2%		18.5%	15.2%	10.0%
Working capital days**	7	11		27	26	26
Valuation
Calculation of target price (TP)					$mn	GBp/share
Coal					7,271	380
Russian & CIS steel					11,768	614
North American steel					-554	-29
Other					-2,399	-125
Enterprise value					16,086	840
Investments less provisions					-103	-5
Net debt as at 31 December 2017					-3,925	-205
Minority interest as at 31 December 2017					-242	-13
Equity value					11,816	617
Plus: one-year forward equity shareholders' cash						1
Less: dividends paid						-1
Rounded to						620
Share price on 7/1/2019						475
Expected share price return						30.4%
Plus: expected dividend yield						15.0%
Total implied one-year return						45.4%
Share price range, GBp:
12-month high on 4-10-2018	590	12-month low on 9-2-2018				331
Price move since high	-19.4%	Price move since low				43.8%
Calculation of discount rate
WACC	11.3%	Cost of debt				5.0%
Risk-free rate	4.0%	Tax rate				20%
Equity risk premium	7.0%	After-tax cost of debt				0.8%
Beta	1.30	Debt weighting				20%
Cost of equity	13.1%	Terminal growth rate				3.0%
Valuation ratios
Dec-YE	2016	2017		2018E	2019E	2020E
P/E multiple	-12.6x	6.1x		3.6x	5.9x	7.7x
Dividend yield	0.0%	18.5%		18.9%	15.1%	8.2%
EV/EBITDA	4.9x	3.4x		3.2x	4.4x	5.0x
P/B	5.4x	2.6x		3.7x	3.6x	3.1x
NAV per share, $	0.35	1.25		1.58	1.69	1.99

*Gearing defined as net debt/(net debt +equity)

**Working capital days is defined as (working capital/revenue)*365

Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates

81

vk.com/id446425943

MMK – BUY

Renaissance Capital

14 January 2019

Metals & Mining

Figure 117: MMK, $mn (unless otherwise stated)

Magnitogorsk Iron & Steel Works (MMK)	MAGNq.L / MAGN.MM	Target price, $:	9.6
Market capitalisation, $mn:	7,054	Last price, $:	8.4
Enterprise value, $mn:	7,058	Potential 12-month return:	21.9%

Dec-YE		2016	2017	2018E	2019E	2020E
Income statement
Revenue		5,630	7,546	8,041	6,946	7,194
Underlying EBITDA		1,956	2,032	2,217	1,388	1,664
Underlying EBIT		1,477	1,488	1,666	835	1,099
Other items		-32	36	-73	0	0
Equity accounted income		1	5	1	4	5
Net interest		-104	-34	-15	-22	-32
Taxation		-231	-306	-351	-182	-239
Profit after tax		1,111	1,189	1,228	636	834
Basic EPS, $/GDR		1.29	1.38	1.43	0.74	0.97
Thomson Reuters consensus EPS, $				1.61	1.28	1.19
DPS declared, $/GDR		0.21	0.72	1.18	0.60	0.46
Thomson Reuters consensus DPS, $				1.25	1.10	1.00
Underlying EBIT, $mn
Coal segment		49	77	128	127	98
EBIT margin	Coal segment	25%	24%	36%	38%	33%
Russian steel		1,451	1,431	1,599	814	1,108
EBIT margin	Russian steel	27%	20%	21%	12%	16%
Turkey steel	EBIT	-21	-11	-63	-101	-102
EBIT margin	Turkey steel	-4%	-2%	-11%	-25%	-24%
Other - EBIT		-2	-9	3	-4	-5
EBIT margin - Other		0%	1%	-1%	1%	1%
Total - EBIT		1,477	1,488	1,666	835	1,099
EBIT margin		26%	20%	21%	12%	15%
Income statement ratios
EBITDA margin		35%	27%	28%	20%	23%
EBIT margin		26%	20%	21%	12%	15%
EPS growth		161%	7%	4%	-48%	31%
Dividend payout ratio		16%	53%	83%	81%	47%
Input assumptions (steel)
Iron ore fines (62% Fe, CIF China), $/t		58	71	66	62	62
Hard coking coal, $/t		144	188	206	178	160
Hot rolled coil - CIS, $/t		382	502	552	468	471
RUB/$		67	58	63	67	68
$/EUR		1.11	1.13	1.18	1.17	1.21
Steel sales realisations, $/t		462	615	659	557	577
EBITDA per tonne, $/t		161	166	182	111	133
Capex/tonne, $		-38	-54	-68	-68	-68
FCF/tonne, $		127	57	87	45	47
Sales volumes, kt
Slabs and billets		104	4	0	0	0
Long products		1,730	1,787	1,828	1,893	1,893
Flat & plate products		7,730	7,699	7,548	7,856	7,856
Downstream products		2,616	2,770	2,819	2,718	2,718
Total sales		12,180	12,260	12,195	12,467	12,467
Volume growth		3%	1%	-1%	2%	0%

Contribution to FY18E underlying EBITDA

Russian steel 93%

Coal segment 7%

Dec-YE	2016	2017		2018E	2019E	2020E
Balance sheet
Net operating assets	5,356	6,188		5,695	5,838	6,167
Investments less provisions	53	11		9	10	10
Equity	4,694	5,691		5,520	5,190	5,717
Minority interest - BS	18	27		23	26	30
Net debt (cash)	234	-12		-279	160	-75
Balance sheet ratios
Gearing*	5%	0%		-5%	3%	-1%
Net debt to EBITDA	0.12x	-0.01x		-0.13x	0.11x	-0.05x
RoCE	30%	26%		28%	14%	18%
RoIC (after tax)	27%	20%		22%	13%	15%
RoE	28%	23%		22%	12%	15%
Cash flow statement
Operating cash flow	1,644	1,439		2,047	1,396	1,422
Capex	-463	-664		-830	-850	-850
Other - CF	365	-82		-155	10	13
FCF	1,546	693		1,062	556	585
Equity shareholders' cash	1,424	652		1,043	530	546
Dividends and share buy backs	-180	-406		-776	-969	-311
Advances (repayments) of debt	-1,347	44		-203	353	0
Increase (decrease) in cash	-103	290		64	-85	235
Cash flow ratios
Capex/EBITDA	24%	33%		37%	61%	51%
FCF yield	33%	9%		13%	8%	8%
Cash conversion ratio	1.3x	0.6x		0.8x	0.8x	0.7x
Equity shareholders' yield	32%	9%		13%	7%	8%
Working capital days**	59	57		46	48	48
Valuation
Calculation of target price (TP)					$mn	$/GDR
Coal segment					694	0.8
Russian steel					8,561	10.0
Turkey steel					-483	-0.6
Other					-500	-0.6
Enterprise value					8,272	9.6
Investments					11	0.0
Net cash (debt) as at 31 December 2017					12	0.0
Minority interest as at 31 December 2017					-27	0.0
Equity value					8,268	9.6
Plus: one-year forward equity shareholders' cash						0.6
Less: dividends paid						-0.6
Rounded to						9.6
Share price on 7-1-2019						8.4
Expected share price return						14.7%
Plus: expected dividend yield						7.2%
Total implied one-year return						21.9%
Share price range, $:
12-month high on 27-2-2018	11.12	12-month low on 27-12-2018				7.75
Price move since high	-24.7%	Price move since low				8.0%
Calculation of discount rate
WACC	11.3%	Cost of debt				4.0%
Risk-free rate	4.0%	Tax rate				20%
Equity risk premium	7.0%	After-tax cost of debt				11.3%
Beta	1.30	Debt weighting				20%
Cost of equity	13.1%	Terminal growth rate				2.0%
Valuation ratios
Dec-YE, $mn	2016	2017		2018E	2019E	2020E
PE multiple	4.0x	6.2x		6.7x	11.3x	8.6x
Dividend yield	4%	9%		12%	7%	5%
EV/EBITDA	2.4x	3.6x		3.6x	5.3x	4.3x
P/B	0.9x	1.3x		1.5x	1.4x	1.3x
NAV per share, $	5.5	6.6		6.4	6.0	6.7

*Gearing defined as net debt/(net debt +equity)

**Working capital days is defined as (working capital/revenue)*365

Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates

82

vk.com/id446425943

NLMK – BUY

Renaissance Capital

14 January 2019

Metals & Mining

Figure 118: NLMK, $mn (unless otherwise stated)

Novolipetsk Steel (NLMK)	NLMKq.L / NLMK.MM	Target price, $:	26.4
Market capitalisation, $mn:	13,583	Last price, $:	22.9
Enterprise value, $mn:	14,258	Potential 12-month return:	27.9%

Dec-YE		2016	2017	2018E	2019E	2020E
Income statement
Revenue		7,636	10,065	11,876	10,260	10,175
Underlying EBITDA		1,941	2,655	3,463	2,672	2,672
Underlying EBIT		1,485	2,031	2,876	2,082	2,074
Other items		-185	-60	-57	0	0
Equity accounted income		-61	-90	-65	-52	-58
Net interest		-66	-58	-53	-63	-67
Taxation		-233	-371	-519	-404	-401
Minority interest		4	2	-4	1	1
Attributable profit		943	1,454	2,177	1,563	1,549
Underlying earnings		1,089	1,455	2,156	1,563	1,549
Underlying EPS, $/GDR		1.82	2.43	3.60	2.61	2.58
Thomson Reuters consensus EPS, $				3.74	2.82	2.64
DPS declared, $/GDR		1.53	2.38	3.30	2.82	2.61
Thomson Reuters consensus DPS, $				3.40	2.72	2.45
Underlying EBIT, $mn
Mining - EBIT		275	524	848	695	680
EBIT margin	g	46%	56%	67%	62%	61%
Flat - EBIT		1,051	1,357	1,744	1,215	1,345
EBIT margin		19%	18%	21%	18%	19%
Long		91	77	202	65	54
EBIT margin	g	7%	4%	9%	3%	3%
NLMK USA		117	139	234	183	70
EBIT margin	SA	10%	8%	11%	10%	4%
Dansteel		-7	-6	-20	-13	-13
EBIT margin	l	-2%	-1%	-4%	-3%	-3%
Other		-42	-60	-132	-63	-63
EBIT margin	Other	2%	2%	3%	2%	2%
Total		1,485	2,031	2,876	2,082	2,074
EBIT margin		19%	20%	24%	20%	20%
Income statement ratios
EBITDA margin		25%	26%	29%	26%	26%
EBIT margin		19%	20%	24%	20%	20%
EPS growth		-3%	54%	50%	-28%	-1%
Dividend payout ratio		97%	98%	91%	108%	101%
Input assumptions (steel)
Iron ore fines (62% Fe, CIF China), $/t		58	71	66	62	62
Hard coking coal, $/t		144	188	206	178	160
Hot rolled coil - CIS, $/t		382	502	552	468	471
Cold rolled coil - CIS, $/t		434	559	615	573	579
RUB/$		67	58	63	67	68
$/EUR		1.11	1.13	1.18	1.17	1.21
Steel sales realisations, $/t		479	610	689	592	587
EBITDA per tonne, $/t		122	161	201	154	154
Capex/tonne, $		35	37	38	40	40
FCF/tonne, $		65	71	104	105	91
Utilisation rate		91%	94%	97%	97%	97%
Sales volumes, kt
Pig iron		365	429	762	645	645
Slab		2,697	2,605	2,428	2,198	2,198
Billets		612	686	786	807	807
Flat		10,065	10,501	10,676	10,679	10,679
Long		2,196	2,277	2,573	3,005	3,005
Total sales		15,935	16,498	17,225	17,334	17,334

Contribution to FY18E underlying EBITDA

	Flat	Long
	58%
		7%
		USA
		8%
		Mining
		27%

Dec-YE	2016	2017		2018E	2019E	2020E
Balance sheet
Net operating assets	7,177	7,858		7,431	7,217	7,229
Investments	255	248		284	290	295
Equity	6,653	7,166		6,559	6,427	6,413
Minority interest - BS	18	17		15	13	12
Net debt (cash)	761	923		1,142	1,067	1,099
Balance sheet ratios
Gearing*	10%	11%		15%	14%	15%
Net debt to EBITDA	0.39x	0.35x		0.33x	0.40x	0.41x
RoCE	21%	26%		36%	27%	28%
RoIC (after tax)	19%	23%		30%	23%	24%
RoE	14%	20%		33%	24%	24%
Cash flow statement
Operating cash flow	1,674	1,860		2,659	2,527	2,290
Capex	-559	-603		-650	-700	-700
Other - CF	-86	-87		-218	-6	-5
FCF	1,030	1,170		1,791	1,821	1,584
Equity shareholders' cash	979	1,122		1,746	1,770	1,531
Dividends and share buy backs	-579	-1,284		-1,965	-1,695	-1,563
Advances (repayments) of debt	-407	12		-462	573	6
Increase (decrease) in cash	-7	-150		-681	648	-27
Cash flow ratios
Capex/EBITDA	29%	23%		19%	26%	26%
FCF yield	11.8%	8.7%		11.0%	12.3%	10.7%
Cash conversion ratio	1.0x	0.8x		0.8x	1.1x	1.0x
Equity shareholders' yield	12.3%	9.0%		11.6%	12.9%	11.2%
Working capital days**	77	75		70	71	71
Valuation
Calculation of target price (TP)					$mn	$/share
Mining					5,882	9.8
Flat					9,943	16.6
Long					922	1.5
USA					992	1.7
Dansteel					-165	-0.3
Other					-1,123	-1.9
Enterprise value					16,452	27.5
Financial instruments as at 31 December 2017					248	0.4
Net debt as at 31 December 2017					-923	-1.5
Equity value					15,777	26.3
Plus: one-year forward equity shareholders' cash						2.9
Less: dividends paid						-2.8
Rounded to						26.4
Share price on 7/1/2019						22.85
Expected share price return						15.5%
Plus: expected dividend yield						12.3%
Total implied one-year return						27.9%
Share price range, $
12-month high on 6-6-2018	28.03	12-month low on 17-3-2017				21.73
Price move since high	-18.5%	Price move since low				5.2%
Calculation of discount rate
WACC	11.3%	Cost of debt				4.0%
Risk-free rate	4.0%	Tax rate				20%
Equity risk premium	7.0%	After-tax cost of debt				0.8%
Beta	1.30	Debt weighting				20%
Cost of equity	13.1%	Terminal growth rate				2.0%
Valuation ratios
Dec-YE	2016	2017		2018E	2019E	2020E
P/E multiple	7.3x	8.6x		7.0x	8.8x	8.8x
Dividend yield	11.6%	11.5%		13.1%	12.4%	11.4%
EV/EBITDA	4.5x	5.0x		4.7x	5.5x	5.5x
P/B	1.2x	1.7x		2.3x	2.1x	2.1x
NAV per share, $	1.11	1.20		1.09	1.07	1.07

*Gearing defined as net debt/(net debt +equity)

**Working capital days is defined as (working capital/revenue)*365

Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates

83

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Severstal - BUY

Renaissance Capital

14 January 2019

Metals & Mining

Figure 119: Severstal, $mn (unless otherwise stated)

Severstal	SVSTq.L / CHMF.MM	Target price, $:	17.1
Market capitalisation, $mn:	11,582	Last price, $:	14.3
Enterprise value, $mn:	12,430	Potential 12-month return:	31.4%

Dec-YE	2016	2017	2018E	2019E	2020E
Income statement
Revenue	5,916	7,848	8,427	7,388	7,563
Underlying EBITDA	1,911	2,577	2,985	2,290	2,384
Underlying EBIT	1,569	2,174	2,588	1,898	1,978
Other items	294	-266	-137	0	0
Equity accounted income	14	10	12	6	6
Net interest	-160	-154	-108	-109	-166
Taxation	-97	-409	-458	-359	-364
Minority interest	1	1	0	0	0
To owners of the parent	1,621	1,356	1,897	1,436	1,454
Underlying earnings	1,268	1,547	1,976	1,436	1,454
Underlying EPS, USc	156	191	242	175	178
Thomson Reuters consensus EPS, USc			250	206	186
DPS declared, USc	124	187	255	169	178
Thomson Reuters consensus DPS, USc			208	167	146
Underlying EBIT, $mn
Resources - EBIT	282	678	821	718	698
EBIT margin - resources	24%	39%	44%	41%	40%
Russian steel - EBIT	1,315	1,493	1,817	1,200	1,299
EBIT margin - Russian steel	24%	21%	24%	18%	19%
Other - EBIT	-28	3	-50	-20	-20
Underlying EBIT	1,569	2,174	2,588	1,898	1,978
EBIT margin	27%	28%	31%	26%	26%
Income statement ratios
EBITDA margin	32%	33%	35%	31%	32%
EBIT margin	27%	28%	31%	26%	26%
EPS growth	167%	-17%	39%	-24%	1%
Dividend payout ratio	79%	98%	105%	96%	100%
Input assumptions	58	71	66	62	62
Iron ore fines (62% Fe, CIF China), $/t
Hard coking coal, $/t	144	188	206	178	160
Hot rolled coil - CIS, $/t	382	502	552	468	471
Cold rolled coil - CIS, $/t	434	559	615	573	579
RUB/$	67	58	63	67	68
Steel sales realisations, $/t	506	655	684	597	607
EBITDA per tonne, $/t	178	235	266	205	214
Capex/tonne, $	51.3	53.9	68.1	125.4	89.5
FCF/tonne, $	1.2	1.8	2.4	0.9	1.3
Utilisation rate	86%	87%	90%	90%	90%
Sales volumes, kt
Coking coal	827	200	308	152	495
Steam coal	2,030	1,583	1,209	1,088	1,088
Total coal	2,857	1,783	1,517	1,240	1,583
Iron ore pellets	6,028	6,514	6,363	6,914	7,115
Iron ore concentrate	120	131	768	723	1,213
Total iron ore	6,149	6,645	7,131	7,636	8,328
Semi-finished products	724	519	679	566	566
Rolled products	8,120	8,579	8,733	8,681	8,681
Downstream products	1,871	1,862	1,818	1,921	1,921
Total steel sales	10,715	10,959	11,230	11,167	11,167

Contribution to FY18E underlying EBITDA

Resources	Russian steel
31%	69%

Dec-YE	2016	2017		2018E	2019E	2020E
Balance sheet
Net operating assets	3,656	4,237		4,003	4,815	5,346
Investments	250	229		28	35	40
Equity	3,032	3,389		3,399	3,308	3,355
Minority interest - BS	15	15		14	14	14
Net debt (cash)	859	1,062		618	1,529	2,017
Balance sheet ratios
Gearing*	22%	24%		15%	32%	38%
Net debt to EBITDA	0.45x	0.41x		0.21x	0.67x	0.85x
RoCE	46%	53%		59%	40%	36%
RoIC (after tax)	28%	33%		40%	27%	24%
RoE	48%	48%		58%	43%	44%
Cash flow statement
Operating cash flow	1,578	2,107		2,689	2,028	2,007
Capex	-550	-591		-765	-1,400	-1,000
Other - CF	-89	-82		22	75	44
FCF	939	1,434		1,946	703	1,051
Equity shareholders' cash	864	1,347		1,870	616	919
Dividends and share buy backs	-918	-1,550		-1,426	-1,527	-1,407
Advances (repayments) of debt	-439	80		-325	584	565
Increase (decrease) in cash	-493	-123		120	-327	77
Cash flow ratios
Capex/EBITDA	29%	23%		26%	61%	42%
Cash conversion ratio	0.5x	1.0x		1.0x	0.4x	0.6x
FCF yield	9.3%	11.2%		14.5%	5.3%	7.7%
Equity shareholders' yield	9.4%	11.4%		14.7%	5.3%	7.8%
Working capital days**	48	46		38	41	42
Valuation
Calculation of target price (TP)					$mn	$/GDR
Resources					4,911	6.0
Russian steel					10,652	13.0
Other					85	0.1
Enterprise value					15,648	19.1
Financial instruments as at 31 December 2017					229	0.3
Net debt as at 31 December 2017					-1,062	-1.3
Minority interest					-15	0.0
Equity value					14,800	18.1
Plus: one-year forward equity shareholders' cash						0.8
Less: dividends paid						-1.7
Rounded to						17.1
Share price on 7/1/2019						14.3
Expected share price return						19.6%
Plus: expected dividend yield						11.8%
Total implied one-year return						31.4%
Share price range, $
12-month high on 15-1-2018	27.93	12-month low on 17-3-2017				17.17
Price move since high	-8.4%	Price move since low				49.0%
Calculation of discount rate
WACC	11.3%	Cost of debt				5.0%
Risk-free rate	4.0%	Tax rate				20%
Equity risk premium	7.0%	After-tax cost of debt				4.0%
Beta	1.30	Debt weighting				20%
Cost of equity	13.1%	Terminal growth rate				3.0%
Valuation ratios
Dec-YE, $mn	2016	2017		2018E	2019E	2020E
P/E multiple	7.3x	7.6x		6.4x	8.2x	8.0x
Dividend yield	10.8%	12.9%		16.3%	11.8%	12.4%
EV/EBITDA	5.3x	5.0x		4.5x	5.8x	5.8x
P/B	3.0x	3.5x		3.8x	3.5x	3.5x
NAV per share, $	3.74	4.18		4.15	4.04	4.10

*Gearing defined as net debt/(net debt +equity)

**Working capital days is defined as (working capital/revenue)*365

Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates

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