|
We are upbeat on Uralsvyazinform (URSI) preliminary 2007 IAS financials. The company reported strong profit margin growth, even though its revenue missed our expectations. The management has demonstrated its ability to fight for business transparency, which is to enhance the company’s attractiveness for investors.
On March 19, URSI released preliminary 2007 financials audited to IAS. We point to the incomplete authenticity of the data presented, as IAS is an inadequate gauge for the objective valuation of subsidiary business, EBITDA and net profit indices. However, in the case with URSI, the figures released make it possible to make conclusions about the company’s pace of growth and effectiveness of its operations.
The disclosed results are mixed. On one hand, the revenue growth of 16% in ruble terms fell 3% short of our expectations. On the other, the EBITDA margin grew by 4% to 33%, exceeding our expectations by 2%. Net margin growth also surpassed our expectations. The spectacular growth in profit margins is attributed to massive lay-offs. The company lost about 15% of its workforce over the year, against a projected 5%.
URSI: Key Financials mn RUB
| | 2006 | 2007 | Valuation for 2007 under IAS | 2007/2006 |
|---|
| Revenue | 33.851 | 39.153 | 40.594 | 16% | | EBITDA | 9.880 | 13.095 | 12.767 | 33% | | OIBDA margin | 29% | 33% | 31% | 4%. | | Net profit | 2.085 | 3.529 | 3.345 | 69% | | Net margin | 6% | 9% | 8% | 3% |
Source: company data, Finam estimates
We are moderately upbeat on the financial results in general. The company made progress on enhancing the cost-effectiveness of its business. However, we leave our estimate of the fair value of URSI shares intact before the company discloses in detail its finances to IAS. We estimate the target price for one common share at USD 0.064 and one preferred share at USD 0.04 and assign BUY recommendation on both.
|
Uralsvyazinform
Capitalization: $401 347 233,06
Common shares:
Price: $0,012
Delta week: 4,8%
Delta month: -10,3%
Delta year: -81,8%
Preferred shares:
Price: $0,0064
Delta week: 3,4%
Delta month: -33,4%
Delta year: -83,8%
|
0.553
1.6
