OREANDA-NEWS. February 01, 2010. ITE Group released a trading update for the first quarter of its current fiscal year (1 October through 31 December 2009).  Revenue for that period was GBP15.1m, down 23% from the previous year.  As of 25 January 2010, bookings for the year amounted to GBP69m., reported the press-centre of OTKRITIE Financial Corporation.

This implies that 67% of expected 2010 revenue has already been contracted, which is in line with results posted at the same time of previous years.  The company’s current cash on hand is GBP29m. 

View: The results are in line with the expectations of management, as well as with our forecast and general consensus figures.  We expect realized revenue to improve in the second half of the year, with FY10 revenues at approximately -11% YoY, which is consistent with the Street.  In our view, solid growth in the coming years will be supported by a strong economic recovery in Russia and the CIS, the capacity of cash-rich ITE to grow through acquisitions, and its ability to sustain high profit margins. 

Valuation: The stock currently trades on a 2010E EV/EBITDA of 8.3x. Our target price is GBp200. 

Action: We expect a neutral reaction from the market on this news, but reiterate our BUY rating (45% upside).  Although the Street still sees upside in the stock, our target price remains substantially higher than the consensus.  This is in part due to our optimism about the potential for attractively-priced acquisitions, which could be triggers for upward movement in the stock price.