Daily analyst comments
Dalsvyaz announces strong 1Q 2009 IFRS results
26.06.09 10:50
The excellent 1Q 2009 IFRS results from Dalsvyaz came as no surprise: the operator’s earlier released RAS report clearly demonstrated that the crisis had not had any grave impact on the company’s financial results. We continue to rate the company’s stock as a very appealing investment vehicle.
On June 25, Russian far-eastern communication operator, Dalsvyaz (RTS: ESPK, ESPKP) published its 1Q 2009 financial report audited to IFRS.
In general, the 1Q 2009 report from Dalsvyaz has once again confirmed the conclusions we made after the release of the operator’s 3M 2009 RAS report (see our daily published May 7, 2009). In the reporting period, the operator’s IFRS revenue grew by 9% y-o-y, which is an excellent result, given the weakness of the company’s mobile business. The indexation of tariffs for local communication services had little impact on the company’s revenue, as rates were not raised until nearly the end of the quarter, on March 1, by only 9.4% for private subscribers and 7.3% for corporate customers.
New communication services (broadband, ISDN and IP) accounted for 27% of Dalsvyaz 1Q 2009 revenue, a record value for a Svyazinvest subsidiary. Once again, we note the logical and timely character of the operator’s strategy to boost income from non-regulated high-margin communication services.
Dalsvyaz: 1Q 2009 IFRS financials, RUB mn
We are positive about Dalsvyaz’ future and assign a BUY rating to both the operator’s commons and preferred shares, with a target price of USD 2.60 and USD 1.90 per share, respectively.