Interaction with analysts

Analytical coverage of PJSC Inter RAO in 2018 was provided by nine experts from leading Russian and international banks who worked on updating financial models, and most of them raised their target prices and recommendations for PJSC Inter RAO shares. In 2018, major international and local banks such as VTB Capital, Sova Capital, and Gazprombank initiated and resumed their coverage of Inter RAO.

Investment bank analysts have high praise for the development potential of the Inter RAO Group and believe it is undervalued and has the greatest potential compared with other companies in the energy industry.

Renaissance Capital

In the medium term, the Company has fairly high potential for growth in retail and trading, but the generating business will remain the main source of revenue. We see fundamentally strong prospects in its shares and believe that the market undervalues the Company due to its net cash position.

Raiffeisen

At present, the Company’s shares are the most undervalued in the sector (the projected EV/EBITDA multiplier in 2019 is 1.3x; for comparison, Enel Russia’s is 3.5x and RusHydro’s is 2.7x)

Gazprombank

We believe accumulating financial resources is a reasonable approach in the current conditions, especially considering the high-yield investment opportunities under the auspices of the modernization program. We maintain a positive outlook for the shares due to good balance sheet indicators and the high yield of free cash flow (> 20%).

VTB Capital

The Company’s current strategy is calculated until 2020, and all the key objectives in it have been fulfilled. We maintain our target price for Inter RAO shares for the next 12 months at the level of RUB 8.4 rubles, which corresponds to growth potential of 117%.

Events for investors and analysts in 2018

Q1

• Webcast/conference call for investors and analysts on the Group’s operational and financial performance for 2017 (Moscow)

Q2

• Participation in the Exchange Forum and meetings with investors at the annual Renaissance Capital Conference (Moscow)
• Road shows (London, Stockholm, Frankfurt, and Vienna)
• Webcast/conference call for investors and analysts on the Group’s operational and financial performance for Q1 2018 (Moscow)
• Site visit to a supply asset on the theme ‘Innovative development of the supply business using the example of the Inter RAO Group’s supply assets’ (Moscow)

Q3

• Webcast/conference call for investors and analysts on the Group’s operational and financial performance for H1 2018 (Moscow)
• Participation in the annual Prosperity Conference (Moscow)
• Road shows (Tallinn, Helsinki, Frankfurt, and Stockholm)
• Meetings with investors at the ATON Energy Day annual conference (Moscow)

Q4

• Participation in the Russia Calling! VTB Capital annual investment conference (Moscow)
• Webcast/conference call for investors and analysts on the Group’s operational and financial performance for 9M 2018 (Moscow)
• Investor Day, site visit to the Sochinskaya TPP

The most large-scale group meetings were held at conferences organized in Moscow by such investment houses as Renaissance Capital, VTB Capital, and ATON. A significant number of investment community representatives attended Investor Day and the site visit that was held by the Inter RAO Group in Sochi in December 2018.

During the reporting year, the key themes for interaction with the investment community at events included:

• the results of operational and financial activities and measures to improve operational efficiency
• the dividend policy and dividend payments
• the strategic priorities and long-term development forecast of the Inter RAO Group
• targets for the use of idle cash
• M&A activities of the Group
• the launch of a new long-term management incentive program
• the buyback of treasury shares and the use of the treasury block
• the modernization of generating equipment and the long-term competitive capacity auction (CCA)
• export potential in the Russian power industry
• the development of the wholesale capacity market
• the completion of the CDA program and construction of facilities in the Kaliningrad Region
• the development of a standard supply model
• the sustainable development of the Inter RAO Group and others