Sistema 1Q21 IFRS: Solid results driven by MTS, Segezha, Steppe, Medsi. OVERWEIGHT maintained

Sistema reported expectedly solid 1Q21 results, with consolidated OIBDA rising 7% YoY due to its growth at major assets, including MTS, Segezha, Steppe and Medsi. Taking into account the absence of material monetizations and dividend inflows during the quarter, the Corporate Center's FCF was negative at -RUB 16 bln, which triggered an increase in net debt to RUB 195 bln. We slightly reduce our SOTP-based target price for Sistema to RUB 41 p/s ($11/DR) and maintain our OVERWEIGHT recommendation. Based on the market value of Sistema's stakes in MTS, Ozon, Segezha and Etalon, we still see the holding's valuation as attractive as it implies an estimated Mcap/NAV discount of more than 40% compared with the estimated fair level of ~30%. While the updated 2021-2023 dividend policy was mildly positive news for investors, Sistema's DY will likely remain modest at ~2% in the medium term.