OREANDA-NEWS. Transneft reported strong 1H07 IFRS results this morning, showing 14% revenue growth and a 27% y-o-y EBITDA increase after tariffs and volumes advanced in 2007. EBITDA margin grew by 6 pp as the company once again demonstrated a well-organized business structure and sound operational management. The company's net income declined by 33% vs. 6M06, mainly due to the anticipated increase in interest charges associated with financing the company's main ongoing project, the Eastern Siberia-Pacific Ocean (ESPO) pipeline.

The Aton Capital research department's analysts highlight the rising operating margin as the key take-away: Transneft's profitability should be the main factor determining the future returns on its substantial investments in current (ESPO) and potential (BTS-2) projects. "We have a Buy recommendation on Transneft preferred shares, with a 12-month target price of $2,656," the experts state.