We are raising our target price for Lenenergo from 0.6$/share (end of 2003) to $0.68/share (end of 2004) and downgrading our recommendation to Hold.
We are raising our target price for Lenenergo from 0.6$/share (end of 2003; for details, see our research report entitled “From Monopoly to Monopoly”) to $0.68/share (end of 2004) and downgrading our recommendation to Hold. The current price of Lenenergo’s stocks is 8% higher than our target price. Although we see no negative changes in the company and maintain an upbeat outlook on its performance, current price levels seem overly high to us.
We still view the company’s generation as an interesting opportunity for taking part in power exports to the Scandinavian electric power market Nordpool. Since Russia’s power prices are considerably lower than Nordpool’s, exports would help shore up the value of the company’s generating assets.
Heat generation business accounts for a significant part of the company’s value – 43%, by our estimates. Lenenergo may be a rather expensive vehicle for participating in the consolidated TGC, which could push its shares down.
Increasing risks linked with the sector’s restructuring make power companies less attractive.
| Indicator | 2002 | 2003 E |
| Revenue, $mln |
811 |
1057 |
| EBITDA, $mln |
114 |
148 |
| Net profit, $mln |
-134 |
11 |
| Capitalization, $mln* |
190 |
582 |
| EV, $ |
240 |
671 |
|
| 2002 | 2003 E |
| EV/EBITDA |
2,1 |
4,5 |
| P/E |
neg |
50 |
| EV/S |
0,3 |
0,6 |
| P/Book Value |
0,11 |
0,35 |
|
Recommendation history
S – sell Í – hold  – buy
Sergey Arinin
* Short overviews of equity research reports and sector reports are posted on the website http://www.finamrus.com with a 1-day delay after their full versions are emailed to the company’s clients. To get overviews on the day of their release, please contact your manager at Finam to sign up for full versions of research reports.
Sector: Power Utilities, Distribution Grids
Company: Lenenergo
All Research Notes >>
0.168
1.32
