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We are positive about the company’s plans to improve its financials in FY 2008. If Sibirtelecom meets its target of bringing the EBITDA margin to 33%, this could be viewed as a spectacular achievement. At the same time, it would be difficult to achieve such results without taking concrete steps. We, therefore, are neutral about the news.
On March 27, Sibirtelecom’s management disclosed its financial targets for FY 2008. The company expects revenue of RUB 38 bn, EBITDA of RUB 12.5 bn and net profit of around RUB 3 bn. The EBITDA margin is to grow from 31% (Finam’s forecast for FY 2007) to 33%.
The targets are generally in line with our expectations, except that for the net profit. The 36% improvement (our forecasts are more pessimistic) is likely to be achieved by toughening controls over expenses and reducing the interest payments due.
Sibirtelecom’s IFRS financials: projections by the company’s management and Finam, RUB bn
| | 2008 (management) | 2008 (Finam) | Divergence |
|---|
| Revenue | 38 | 38,1 | 0% | | EBITDA | 12.5 | 11.95 | -4% | | EBITDA margin | 33% | 31% | -2% | | Net profit | 3 | 2 | -36% | | Net margin | 8% | 5% | -3 % |
Source: company data, Finam estimates
We are cautious about the management’s upbeat projections. Before the release of its FY 2007 financials under IAS, we reiterate our Buy recommendation on its common and preferred shares, with the respective target prices of USD 0.15 and USD 0.1 per share.
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SiberiaTelecom
Capitalization: $51 095 601,96
Common shares:
Price: $0,013
Delta week: -3,9%
Delta month: -28,8%
Delta year: -89,0%
Preferred shares:
Price: $0,0099
Delta week: -5,4%
Delta month: -31,1%
Delta year: -87,7%
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0.234
30.89
