OREANDA-NEWS. October 07, 2010. Aeroflot published its 1H10 IFRS results, revealing revenue growth of 27.4% YoY, which was 6% below Interfax consensus estimates and nearly 3% below our forecast. EBITDA rose 55% to USD281m, which was in line with our estimates, though higher than consensus. Net income increased by 24% YoY to reach USD17.5m., reported the press-centre of OTKRITIE Financial Corporation.

The Group’s EBITDA margin climbed from 12.5% a year ago to 15%. Net debt decreased by 43%, with the net debt/EBITDA ratio dipping from 3.9x (YE09) to 2.7x. Excluding the debt taken on for the new terminal, Aeroflot’s net debt/EBITDA ratio is around 1.2x.

View: We see these results as mostly neutral for the stock. Market reaction was negative regarding net income, which was considerably below forecasts (USD70.2m), though this miss can primarily be attributed to payments on the terminal (USD76.3m) which will be deconsolidated in 2011-2012. Thus we see this as a non-recurring loss. On the cash flow side, the company increased CFO before changes in WC by 1.5x, which we think is a positive development.

Valuation: The stock is trading at roughly an 18% discount to its emerging market peers on a 2010 EV/EBITDA. Our target price is currently under review.