Daily analyst comments

Silvinit accounts for 2009 according to IFRS


	Silvinit

Capitalization: 6 143 219 100,00 $

Common shares
Price	660,00 $
Target price	1 174,00 $

Price changing
week	month	year
-0,8%	1,5%	59,0%

Preferred shares
Price	375,00 $
Target price	704,00 $

Price changing
week	month	year
1,9%	-2,6%	33,0%

05.07.10 10:43

We are upbeat on the FY2009 IFRS financial report from the company, which shows its ability to maintain robust profit margins in a crisis-ridden year and keep debt leverage under control. The actual financial results from the company for 2009 are generally in line with our estimates.

Silvinit has disclosed its financials calculated to IFRS for FY2009. The financials released may not be of great interest, given that the company has long released its financial results for FY2009 and 1Q2010 according to RAS, and its RAS and IFRS financials do not differ much. We note that the actual results on revenue, EBITDA and net income have only slightly missed our estimates. We also point out that Silvinit profit margins were impaired insignificantly in 2009, although the year has brought hardships to the industry. EBITDA margin has shrunk 5 pp to 62% and net margin has narrowed by 1 pp to 31%.

Differences in the company’s RAS and IFRS financials are reflected on its balance sheet, as practically the entire financial debt of the company (of RUB 49 bn) is kept on the books of its subsidiary, the Kama mining company, and is shown only in the IFRS financial statement. As of 31.12.09, Silvinit had a net debt of RUB 45.5 bn, down 5% from the end of 2008. The company’s debt leverage is at a rather comfortable level, as is shown by its net debt/EBITDA 2009 ratio of just 2.1

We are upbeat on the 2009 IFRS financials from the company, as the company maintained robust profit margins in a crisis-ridden year, and also exercises stringent controls over its debt leverage. The actual financial results for 2009 are generally in line with our estimates. We reiterate our BUY rating for Silvinit common and preferred shares, as well as our target prices for the shares, at USD 1,174 per common share and USD 704 per pref at the end of 2011.

Table. Silvinit: IFRS financial results, mn RUB

Indicator	2008F	2009F	2008/2009	2009 Finam estimate	2009/2009 Finam estimate
Revenue	55 402	33 994	-39%	34 057	-0,20%
Gross income	45 199	25 303	-44%	26 896	-5.9%
Commercial expenses	-5412	-3166	-42%	-3766	-15.9%
Export duties	-2013	-260	-87%	-264	-1.5%
Other income and	-2 721	-3 457	27%	-2 389	44.7%
Operating income	35 053	18 420	-47%	20 476	-10.0%
EBITDA	37 088	21 241	-43%	22 766	-6.7%
EBITDA margin	67%	62%	-5 pp	67%	-5 pp
Financial income	148	151	2%	148	2.0%
Financial expenses	-10 440	-3 991	-62%	-6 695	-40.4%
Share in income of associates	49	62	27%	63	-1.6%
Profit before taxation	24 810	14 642	-41%	13 992	4.6%
Income tax	-7 127	-4 124	-42%	-3 218	28.1%
Net income	17 683	10 518	-41%	10 774	-2.4%
Net margin	32%	31%	-1 pp	32%	-1 pp
Net debt	47685	45536	-5%
ND/EBITDA	1.3	2.1

Source: Silvinit data, Finam estimates

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