OREANDA-NEWS. August 03, 2010. INTER RAO published its 2009 IFRS financial results. The highlights are outlined below, reported the press-centre of OTKRITIE Financial Corporation.

View:
 Top line decreased by 8% YoY to EUR1.5bn in 2009 on the back of lower electricity demand. We forecast revenue of EUR1.3bn, but the difference stems mainly from the trading segment and thus exerts little impact on EBITDA.

After adjusting for one-time non-cash items like revaluation of PP&E (both by the company and its associates or jointly controlled entities), INTER RAO’s 2009 EBITDA was EUR169m, down 44% YoY and in line with our estimates. Its adjusted net income amounted to USD35m, down 62% YoY.

INTER RAO is involved in numerous acquisitions in the utilities sector, evolving into a fundamentally different company, hence we believe that the 2009 results will have limited importance for the market. In our view, the upcoming (4Q10-1Q11) share issue could increase INTER RAO’s market cap more than fourfold and holds significant dilution risks for minorities.

Vedomosti reported today that INTER RAO may also receive from the ESN Group controlling stakes in electricity retail companies Rusenergsbyt and Rusenergoresurs and close to a 40% in TGK-14.

Valuation: INTER RAO trades at an EV/installed capacity of USD171/kW (including TGK-11 and OGK-1), versus the Russian thermal generation average of USD266/kW.

Action: We see the news as neutral for INTER RAO’s shares and reiterate our HOLD rating.