OREANDA-NEWS. July 23, 2010. Metafrax, Russia’s largest producer of methanol and its derivatives (used in construction and furniture industries), reported preliminary 1H10 results, revealing revenue growth of 43.3% to RUB3.627bn and a 64.8% increase in net income to RUB414m., reported the press-centre of OTKRITIE Financial Corporation.

View: The preliminary 1H10 results are a significant improvement YoY, but still far below the figures of 1H08. Revenue and net income underperformed 1H08 by 18% and 58%, respectively. Given that the primary consumers of Metafrax products are still suffering the effects of the crisis, we do not expect a strong recovery in the near future. Nevertheless, by the end of 2010 we anticipate revenue growth of 30% and net profit of about 60% (both in rubles terms).

Valuation: While we have no specific recommendation on this stock, we believe that the company is undervalued relative to its peers. Metafrax trades on a 2010 EV/EBITDA of 2.8x and a 2010 P/E of 8.5x. The corresponding figures for Methanex, its closest peer, are 7.8x and 16.7x, respectively.