Daily analyst comments
Uralsvyazinform comes out with upbeat 9M07 RAS financials
08.11.07 08:02
We view URSI's results as farily robust. However, RAS financials are not fully reflective of the company's operations. We therefore have no plans to revise the company's financial model until IAS financials are released.
On August 6, Uralsvyazinform released 9M07 RAS financials. We have repeatedly noted that these accounting standards do not fully reflect operating data. However, we can draw some conclusions based on the operator's results.
The company's performance turned out to be strong in the reporting period. URSI's revenue climbed 18% year-on-year. Furthermore, the share of earnings from mobile segment (+1%) and Internet access (+2%) grew, i.e. from deregulated services. As a result, EBITDA margin rose 2% to 36% and net profit margin jumped 2% to 12%.
What's more, the pace of headcount reduction is really impressive, since the company's headcount dropped 16%, which resulted in lower payrolls and uniform social tax expenses.
Uralsvyazinform's RAS financials, Rub mln
Overall, we are upbeat on these results. However, until Uralsvyazinform releases its IAS financials, we reiterate our Sell recommendation on commons with a target price of $0.064 per share and Hold recommendation on prefs with a target price of $0.039 per share. Overall, we have an upbeat outlook on URSI. However, we do not currently view it as a suitable investment option for investors focused on higher asset value.