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Dalsvyaz FY 2007 results audited to IFRS were slightly above our forecasts, which is good news, since we are extremely upbeat about the company's prospects on the local market.
On July 2, the Far Eastern local and zone communications operator, Dalsvyaz, released its FY 2007 financial report audited to IFRS.
The posted results were generally above our expectations in all key economic indicators. The company's revenue grew by 38% against the predicted 36%. This abnormally high growth of revenue for a fixed-line operator was due to the acquisition of Sakhatelecom. Without consolidation of Sakhatelecom's results, Dalsvyaz revenue would have risen by 10.8%, which seems quite satisfactory.
The OIBDA margin showed an incredibly high upturn and rose by 5% to 31%, which is a very good result for a wired communications operator. For example, Sibirtelecom's OIBDA margin for FY 2007 amounted to 34% with account for the highly remunerative subsidiary cellular business. Dalsvyaz's net profit margin was at a very worthy level of 9%.
Dalsvyaz: IFRS Financials FY 2007
| | 2006 | 2007 | 2007/2006 | 2007/2007, forecast |
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| Revenue | 10898 | 15001 | 38% | 36% | | OIBDA | 2873 | 4652 | 62% | 4320 | | OIBDA margin | 26% | 31% | 5 п.п. | 29% | | Net profit | 115 | 1 360 | 1083% | 1 043 | | Net profit margin | 1% | 9% | 8 п.п. | 7% |
Source: company data, Finam's forecasts and estimates
Although the company's results were slightly above our forecasts, we reiterate our BUY recommendation for both the operator's commons and prefs. Our target price for Dalsvyaz is USD 6.7 per common share and USD 6.44 per preferred share.
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Far East Telecom
Capitalization: $175 788 269,85
Common shares:
Price: $1,35
Target price: $6,70
Recommendation: Buy
Delta week: 0,00%
Delta month: -41,3%
Delta year: -73,3%
Preferred shares:
Price: $1,50
Target price: $6,44
Recommendation: Buy
Delta week: 0,00%
Delta month: -40,6%
Delta year: -66,5%
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11.8
12.74
