OREANDA-NEWS. October 11, 2010. Mostotrest published strong 1H10 IFRS results and revealed details of its future IPO and additional share issue. In 1H10 Mostotrest increased its revenues to RUB32.4bn, implying growth of 6.8% YoY. The company also significantly boosted its margins: EBITDA margin climbed from 11.4% to 17.6% while net margin rose from 2.4% to 8.0%. The company's majority shareholder, Marc O’Polo Investments Ltd, is slated to launch an international offering of ordinary shares (25% of Mostotrest’s existing equity) in 4Q10. Marc O'Polo plans to use part of the funds attracted to repurchase Mostotrest shares in an additional issue that will follow the IPO, reported the press-centre of OTKRITIE Financial Corporation.

View: We take this news as positive, particularly the growth of the company's margins, as well as the subsequent increase in the liquidity of shares. According to the Mostotrest’s CEO, the funds raised will be used for general corporate purposes, such as the acquisition of production facilities and equipment, as well as for working capital. In this regard, we expect that Mostotrest will continue its regional expansion and diversification in related industry segments, such as the construction of marine ports and airports. Among the main drivers of growth are its support from the state and the dynamic development of the public-private partnership scheme.

Valuation: Mostotrest trades on a 2010 EV/EBITDA of 7.5x and a 2010 P/E of 11.5x. While this is in line with global peers, fundamentally Mostotrest looks very attractive.