TGK-1 (RTS:TGKA) reported its operating and financial results in 1Q 2008.
TGK-1 financial results in 3M 2008 USD mn
| Indicator | 3M2008 | 3M2007 | 3M2008/3M2007 |
|---|
| Revenue | 414 | 330 | 25% |
| COGS | 366 | 285 | 28% |
| Gross profit | 48 | 45 | 7% |
| Net profit | 36 | 25 | 42% |
Source: company data, Finam estimates
The following key factors have impacted the company's performance in 1Q 2008 :
1.- Faster growth in fuel prices than in electricity prices;
2.
- Abnormaly high winter air temperatures, which have caused the company to scale down its thermal power generation and lower its production expenditure;
3.
- A rise in heating power generation by the genco's own power plants, enabling the company to lower its purchases of electricity under contracts on the wholesale market.
The faster growth of operating expenses as compared to revenue growth has impaired the copmany's profit margins. At the same time, the net margin has widened as the company's non-sales revenue grew faster than its non-sales expenses.
TGK-1 margins in 3M 2008
| Indicator | 3M2008 | 3M2007 | 3M2008/3M2007 |
|---|
| Net margin | 9% | 8% | 1% |
| Operating margin | 12% | 14% | -2% |
Source: company data, Finam estimates
The company generated 7,921.7 mn Kwh of electricity in the quarter, up 3.3% y-o-y, and 9,453,900 Gcal of thermal power, down 4.5% y-o-y.
Given the mixed factors that have affected the company's performance, we are moderately positive about its 1Q 2008 results which, however, may exert only insignificant impact on its stock valuations, given the heightened volatility and downward trends on the market for electricity company shares.
We estimate the fair value of TGK-1 shares at USD 0.0011 per share and assign SELL recommendation.
0.553
1.6
