Daily analyst comments
Baltika reports 51% boost in net 2009 income
09.04.10 10:28
As a result of its performance in 2009, Baltika saw net income advance 51% and net margin increase to 25% up from 17% in 2008. The results affirm the company’s high efficiency and its appeal in the eyes of investors. We also expect investors to be pleased with high dividend yields on Baltika shares. Given the share price on the latest cut-off date, a dividend yield on the shares stands at 13.1% on commons and 13% on prefs. We expect a strong dividend yield on Baltika shares in the future as well.
Baltika reported a 50.7% jump in consolidated net income in FY2009 to RUB 23.4 billion, based on IFRS. Meanwhile, revenue climbed by a modest 1.2% y-o-y to RUB 93.6 billion. Net margin widened from 16.8% in 2008 to 25% in 2009. The key factors behind the company’s business profitability growth are a competent brand portfolio optimization strategy and highly-effective investments in distribution channels and key regions.
Following a sharp rise in net income, an AGM has approved dividends for 2009 on commons and prefs, at RUB 128 per share, a 50.4% gain over a dividend for 2008. Given the price of the shares on the latest cut-off date, a dividend yield on the shares stands at 13.1% on commons and 13% on prefs.
We are upbeat on the financial results reported by the brewer and believe that its investments last year in production expansion and modernization, to the tune of RUB 3.7 billion, will help boost output and cut operating expenses, due to the application of more up-to-date technology. The company presently controls over 40% of the Russian beer market and its market share is set to grow as the brewer boosts production capacity. We expect a strong dividend yield on Baltika shares in the future as well, which should please investors. We look upon Baltika commons and prefs as one of the most appealing vehicles for investment in the Russian consumer sector. Based on a peer group valuation model, our target prices for Baltika are USD 58.4 per common and USD 43.8 per pref, which implies an upside of 92% and 44%, respectively, to the current stock valuations.