OREANDA-NEWS. June 22, 2010. Holding MRSK published its 2009 IFRS financial results. Please see the commentary and table below for highlights, reported the press-centre of OTKRITIE Financial Corporation.

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The results strongly outpaced management’s preliminary guidance, the Bloomberg consensus, and our estimates.

Revenues were up 16% YoY, driven by a 21% distribution tariff rise, while EBITDA was up 24% YoY to RUB86bn, implying a 19% margin.

The major reason for exceeding forecasts was higher revenues from connection fees (RUB30bn vs. our expected RUB24bn), and higher electricity distribution and sales revenues (RUB420bn vs. our forecast of RUB401bn).

Holding MRSK’s operating costs (RUB416bn) were in line with our forecast of RUB419bn, which resulted in EBITDA beating our estimates by RUB30bn, and net income by RUB18bn. Preliminary guidance for FY09 EBITDA was RUB60bn.

Holding MRSK’s net debt amounted to RUB122bn at YE09, implying a net debt/EBITDA ratio of 1.4x, down from 1.8x in 2008.

Valuation: Holding MRSK trades at an EV/RAB of 0.42x, which represents a significant discount to the 1.2x average of international peers.

Action: We expect positive market reaction on results, even though in 2009 the company operated largely under old cost-plus tariff system. Holding MRSK is our top pick in the sector and we see the 1 July transfer of new regions to RAB tariffs as the next positive trigger.