OREANDA-NEWS. May 25, 2010. MRSK of Center published its 2009 IFRS financials and held a meeting with investors and analysts during which management provided 2010 guidance, reported the press-centre of OTKRITIE Financial Corporation.

View: Key takeaways:

2009 revenue amounted to RUB49bn, 2.5% below our forecast, while EBITDA was RUB8.2bn, 12% higher than our forecast. The difference mainly comes from higher connection fee revenue (RUB1.7bn in 2009) than we expected, as the connection services have more than an 80% gross margin.

In 2010 the company expects revenues of RUB58bn (3% above our forecast) and EBITDA of RUB10.9bn (12% above our forecast). RUB1.6bn of revenue is expected to come from connection fees, which will be eliminated from 2011.

We model MRSK of Center’s cash flows only as part of our DCF model of Holding MRSK. Currently we do not see sufficient reason to alter our financial forecasts for the Holding.
Management’s latest expectation of IRAB is RUB118bn, which is below what Holding MRSK guided at the end of 2009 (RUB135bn). The final parameters will be approved by 1 July.

Valuation: MRSK of Center trades at an EV/preliminary RAB of 0.49x, vs. a 0.45x average for Russian MRSKs and 1.2x average of EM peers.

Action: MRSK of Center remains among the most transparent companies in the segment, and we expect positive market reaction on these results. Our fair price estimate for the company of ў6.1 implies a 66% upside.