May
13
On Thursday, May 7, CTC Media output report for 1Q 2009 according to US GAAP. Sales totaled 105 mn USD, OIBDA – 39 mn USD, net profit – 23 mn USD.
1Q 2009 should characterized as negative for the Russian advertisement market. As states the message of CTC, the market reduced by 20% and the issued report indicates results of the company operating under those conditions. Along with that the results of CTC are relatively not bad. So, ruble sales of the group’s principal capital – CTC channel – in ruble terms added 2% versus 1Q 2008, which likely was due to “residential” effect after market growth in 2008. Along with that versus 4Q 2008 the results look terrible – in addition to the seasonal income decrease came the ruble drop versus dollar, in which the company reported.
As for the profitability, decline was indicated versus 1Q and 4Q 2008. The data is slightly higher than it was under “normal” conditions. Evidently, the profitability dynamics was affected by crisis also. However, we should not forget about the new purchases of CTC Media, which might have also “blur” the effectiveness of the holding significantly.
As for the remaining items, we assume the company closed the quarter not quite bad – the profitability still is at the high level, the investments have been cut-off for improving the cash flow, debt load remained at the same level of late last year. Note that in our estimation of CTC Media we expect sales lowering in dollar terms in 2009 by 20%. Due to that we suppose the results of 1Q 2009 on income mainly meet our expectations. Along with that, as for the expenses part, we approach the estimation conservatively and input a serious decline of profitability to our model of the company. As for the operating estimates, the main channels of the company, except for Domashniy, keep the share of audience at the 1Q 2008 levels.
We corrected our model of the company and upped the estimation of CTC Media’a shares by the end of the year to the level of 11.06 USD (former estimate – 10.84 USD). We confirm the recommendation BUY for the shares of the company. Note however that the fundamental underestimation and growth potential are insignificant.
CTC Media: CTC absorbs the punch of crisis - May 13, 2009 (PDF)