Daily analyst comments
MOESK and Lenenergo may switch to RAB in 2010
30.06.09 10:32
Announcements made by MRSK Holding management should have a neutral impact on electricity distributor’s stock valuations, but may exert a positive speculation-driven effect on Lenenergo and MOESK.
On June 29, shareholders of MRSK Holding (RTS: MRKH) gathered for an annual general meeting, where the company’s general director, Nikolay Shvets, made a number of important announcements.
Firstly, the size of MRSK Holding’s 2009 investment program was estimated at RUB 112.6 billion, compared with the scheduled RUB 138 billion. One of the key reasons behind the investment program cut was the actual spending of RUB 106 billion in investments instead of the scheduled RUB 95 billion. The key funding sources that the holding uses for its investment projects are money from electricity tariffs and connection fees, as well as borrowed funds.
Secondly, Lenenergo (RTS: LSNG), Tyumenenergo, and the Moscow Integrated Electricity Distribution Company (MOESK; RTS: MSRS) may switch to RAB in 2010. At the same time, the possibility of MOESK and Lenenergo’s adoption of an RAB-based tariff regime has been discussed several times already, and the two companies are expected to switch to RAB in 2009.
In our opinion, this event should have only a neutral impact on MRSK Holding stock valuations as the size of the company’s investment program is already known. At the same time, the news about the possible adoption of an RAB tariff-setting system by Lenenergo and MOESK may positively affect these companies’ stock valuations. However, in our opinion, Lenenergo and MOESK are unlikely to switch to RAB in 2010 as an RAB-based tariff system implies a significant increase in tariffs for regulated companies, which would be inappropriate at a time when the government is trying to limit tariff growth as much as possible.