Apr
30
Yesterday CTC Media published its US GAAP report of 1Q 2008. The sales versus 1Q 2007 formed 31.3% and reached 137 mn USD. OIBDA dropped slightly (-2.1 p.p.) and formed 40.4%. In general – quarter values of company fall within annual targets of CTC Media’s management (sales of 600-650 mn USD, OIBDA margin at 45-48%).
We must note though, company gradually changes its income structure. If not so long before the lion’s share of sales was generated by CTC channel, now it is steadily succeeded by Domashny channel. The benefits of such development – coverage of a much wider group of viewers through showing more programs, therefore – company diversifies its income.
Among negative issues we must point out the ongoing decrease of viewers’ share of CTC channel – during quarter company lost another 0.1 p.p. of its viewers, while channel’s total share formed 8.8%. However – this fall has been compensated by increase of Domashny’s share (2.3%, +0.3 p.p.). More to that, on par with purchase of DTV channel – company’s presence over Russia’s TV market grew to 13%. However – this value is still below CTC Media’s closest competitor – NTV channel.
We save our financial model of CTC Media intact, while we add corrections into discount rate only. The changes are brought by issue of new long-term credit rating by Standard and Poor’s at BB-. However – the influence of given correction is minimal. We keep our fair price for CTC Media at 32.9 USD at year’s end. Though growth potential has been expanded lately, therefore we now upgrade our recommendation from “ACCUMULATE” to “BUY”.
CTC Media: Sticking to the plan - April 30, 2008 (PDF Stock Report)