OREANDA-NEWS. May 13, 2010. Metafrax released FY09 and 1Q10 RAS financials. The company’s FY09 EBITDA plummeted 58% YoY to USD 29m and EBITDA margin fell from 28% to 17%. Free cash flow in 2009 was positive (USD 7.3m), while in 2008 it was negative (-USD 4m), reported the press-centre of OTKRITIE Financial Corporation.

Free cash flow improved thanks to the decrease in investments by 56% YoY to USD 28m. On the positive side, 1Q10 revenue surged 90% to USD 60.5m YoY. Nevertheless, net income fell 34% YoY to USD 4.7m because of a six-fold decrease in non-operating incomes (forex gain and income from the disposal of assets).

View: The company’s FY09 financials came as no surprise because Metafrax had earlier unveiled some preliminary financials. It is noteworthy that Metafrax’s strong 1Q financials reflect not only positive trends in prices and an increase in output volumes, but also the management’s effort of overcoming the crisis and the increase of capacity utilization.

Valuation and Action: Metafrax’s stock trades on a 2010 EV/EBITDA of 4.8x, which is a 34% discount to international peers. We reiterate our BUY rating for the stock.