On September 25, the Far Eastern communications operator, Dalsvyaz, published its 1H 2008 financials audited to IFRS.
In general, we view the results as strong. In the reporting period, the operator’s revenue grew by 7% y-o-y, a 3% upside to our forecast for FY 2008.
The OIBDA margin rose by 4% to 37%, which is in line with our expectations for FY 2008 and a very high value: in 6M 08, the company managed to reach the expected margin level. However, the performance of the operator’s main expenditure item, labor costs, was slightly below the 1Q 08 indicators, down 2% against a 7% downturn in 1Q. We hope that the company’s management will be able to preserve margins at a high level in FY 2008.
The operator’s net profit skyrocketed 2.6x and thus brought the net profit margin to 15%, which is an unexpectedly high value for Dalsvyaz. However, in our opinion, net profit growth will not be so impressive at the year-end.
Dalsvyaz: Financials 1H 2008, RUB million
| | 1H2007 | 1H2008 | 1H2008/1H2007 | 2008/2007, forecast |
|---|
| Revenue | 7.256 | 7.774 | 7% | 4% |
| OIBDA | 2.365 | 2.859 | 21% | 18% |
| OIBDA margin | 33% | 37% | 4 p.p. | 4 p.p. |
| Net profit | 424 | 1.115 | 163% | 18% |
| Net profit margin | 6% | 14% | 8 p.p. | 1 p.p. |
Source: company data, Finam forecasts and estimates
We reiterate our Buy recommendation for both Dalsvyaz commons and prefs, with the target prices at USD 6.7 and USD 6.44 per share, respectively. In current conditions, Dalsvyaz, as well as other interregional companies, looks very attractive from the fundamental point of view.
0.569
0.073
