Gazprom Energoholding: Solid recovery in 1H21 supports our positive view despite gradual CSA expirations

We update our target prices and ratings for GEH-controlled gencos (TGK-1, OGK-2, Mosenergo) in light of 1H21 IFRS results, electricity market trends and share price dynamics. The results indicated solid YoY financial and operational recovery for all three gencos, primarily driven by recovery in electricity demand and Day Ahead Market (DAM) prices compared to the depressed base of 1H20. We raise our recommendation on OGK-2 to OVERWEIGHT while reiterating our OVERWEIGHT and NEUTRAL ratings on Mosenergo and TGK-1, respectively. Two of the gencos (Mosenergo and TGK-1) find themselves at the stage of declining CSA contributions, while the third (OGK-2) has entered the period of peak CSA contributions, which will end in 2024.