OREANDA-NEWS. August 09, 2010. Mosenergo published 1H10 RAS results. Please see below for the highlights from the RAS reporting, reported the press-centre of OTKRITIE Financial Corporation.

View: 1H10 Revenue came at RUB74bn, which reflects 24% growth YoY. Growth came from higher electricity prices on an increased share of the liberalized electricity market, and a rise in electricity output. Operating expenses rose 34% to RUB68.5bn, mainly due to higher (+44% YoY) fuel prices. In 2009, natural gas tariffs increased on a quarterly basis, so fuel costs were significantly lower in 1H09.

Also, Mosenergo had to buy extra volumes of fuel for higher prices due to the abnormally cold winter, which pushed its EBITDA down by 17% YoY in 1H10. The EBITDA margin was 14%. The current figures for 1H10 revenue and EBITDA comprise 56% and 52% of our FY10 IFRS forecasts, respectively, hence we see no need to change our model. Mosenergo’s 1H10 net income showed a 46% drop YoY, though we expect a divergence of net income under IFRS versus RAS, and thus await the IFRS results (expected in August-September).

Valuation: Mosenergo trades at an EV/installed capacity of USD411/kW, versus the genco average of USD274/kW. We think that the existing premium is appropriate due to the high efficiency of Mosenergo’s generating assets.

Action: We view this news neutral for the stock and await IFRS results.