Daily analyst comments
Mostotrest raises stake in Inzhtransstroy
30.06.10 11:11
Mostotrest has raised its equity stake in Corporation Inzhtransstroy to a controlling interest and is now in a position to consolidate the strong financial results from the company into its financial statement under IFRS. We estimate the news as upbeat for Mostotrest, as the company will now be able to show investors far stronger financial results during the IPO, compared to those under RAS.
Mostotrest on June 28 raised its equity stake in Corporation Inzhtransstroy from 50% to 51%. In May 2010, Mostotrest acquired 50% in the road-building holding company Corporation Inzhtransstroy, which enjoyed revenues in 2009 nearly twice as high as those of Mostotrest itself.
Under IFRS standards, a parent company cannot fully consolidate the financial results of a subsidiary, in which it holds a stake less than a controlling interest. For Mostotrest, which is currently drawing up a consolidated financial report according to IFRS, it would be critically important to consolidate the strong financial results from Inzhtransstroy and now that its stake in the company has risen to a controlling interest, it is well placed to do so.
We estimate the news as upbeat for Mostotrest, as the company will now be able to show investors far stronger financial results during the IPO, compared to those under RAS. Our 12-month target price for Mostotrest common shares is USD 1,423 per share, which implies a 47% upside to the current stock valuations.