OREANDA-NEWS. May 18, 2010. Mostotrest published 1Q2010 financial results. Revenue declined 32% q-o-q, while EBITDA and net income surged 4.5x and 7x q-o-q. In comparison with 1Q2009, all key indicators show a 24-60% downturn.

In the reporting period, the company enjoyed fairly robust profit margins, exceeding the average figures for 2009. The decline in revenue is attributable to an increase in the volume of uncompleted work, as shown by a rise in receivables, which increased from RUB 7 bn to RUB 12.7 bn in January-March. This opens up good prospects for growth in subsequent quarters.

Table 1. Mostotrest: Key financials, mn RUB  

                            1Q2010      4Q2009      1Q2009       1Q2010/4Q2009          1Q2010/1Q2009

Revenue                  5886          8684           7776                  32%                        -24%
EBITDA                  1196           261             2553                358%                         53%
EBITDA margin         20%          3%             33%                   -                                -
EBIT                       1031          147            2439                 601% -                       58%
Operating margin      18%          2%              31%                   -                               -
Net income              683           -164           1726                    -                              -60%
Net margin               12%          -2%            22%                     -                              -


The financials are generally in line with our expectations and are within the targets set by management for 2010. The company has targeted revenues of RUB 33 bn and net income at RUB 2.5 bn in 2010.

We estimate 1Q financials as moderately positive, while noting that business expansion through takeovers will continue to act as a key driver for Mostotrest shares in the near term. Our 12-month target price for Mostotrest shares is USD 1,423, with a 59% upside.