Financial results of Belarusian companies in 2021

Introduction

Over recent years we have collected more than a thousand financial statements of Belarusian companies. For more than 150 companies we have data for 2019, 2020 and 2021, so we decided to look at how their indicators changed over time.

Key figures from the statements

In 2020 we saw a serious drop in the main indicators for the companies in the group: total equity shrank from $6 billion to $4.6 billion. In 2021 we saw growth, but total assets and equity still did not return to 2019 levels. On the other hand, net profit grew by 62% year on year. This growth was driven largely by higher profits at a few large enterprises, which we discuss below.

Profitability

In 2021 the share of profitable companies rose to 89.6%, but did not reach the 90.9% seen in 2019.

Interestingly, average return on equity fell by 29% year on year to 10.1%.

Return on assets, on the other hand, grew by 23% to 6%.

Leverage

In 2021 the share of equity on companies' balance sheets increased on average. Over the 3 years, equity averaged 45% of the balance sheet.

The correlation between leverage and ROE was only 0.22, which suggests there is no strict link between return on equity and the amount borrowed.

Valuation of state-owned companies

Only 8 companies had statements for 2021. Belaruskali stopped publishing statements back in 2019. We wrote to all 12 remaining companies asking for their statements and received exactly zero replies, so we used the latest statements available.

I decided to update the figures from Maksim Adaskevich's excellent presentation on the 2019 results. Here is one of the slides:

Which model was used? Initially we took a P/E multiple of 8, typical for the Russian market, as Maksim did. Data on Russian multiples on the Moscow Exchange can be found here: fs.moex.com/files/22659. If a company had no profit, or profit was less than 1/100 of revenue, the value was calculated using P/BV = 1. For comparison, at the end we added a calculation with alternative (new) multiples: P/E = 4 and P/B = 0.5.

Here we see that the total profit of the largest state-owned enterprises fell by 34% in the latest statements compared with 2019. Note that most of the latest statements were for 2020. Aggregated valuation data is shown below:

Translated from Russian. First published in the “Belarusian Issuers” Telegram channel. Charts and screenshots are in Russian. This is not investment advice.