Jun
23
Late May Dalsvyaz output its annual consolidated report by IAS. For now almost all IRCs have reported already. At the background of the other companies, Dalsvyaz looks strong, but not without negative of course.
As a strong moment we outline the most significant sales growth. The main input of the given estimate’s upping was provided by the increase of subscribers of broadband access (BBA) services – within a year their number upped by 74% to 309 thousand. Nevertheless, by OIBDA margin estimate the company occupies poor positions.
Also we should call the comfortable debt load a very positive feature of the company. By Debt/SE (0.49) and Debt/OIBDA (1.16) coefficients the company occupies not the first place though, but those figures are lower than the branch average. Also we should mention that Dalsvyaz has no currency debts. Meaning that the company has no loss (no profit also) from currency exchange, which appear when ruble versus dollar or euro rates change, and that excludes “paper” affects on the net profit. Besides, the company has liabilities in the currency, in which it gains almost all the income.
Note that Dalsvyaz, unlike the other IRCs, reduced its plans on investment program insignificantly, which is a consequence of a more stable financial situation. That means the company will not lower the development rates and will keep its confident position at the market, first of all in BBA segment.
Nevertheless, despite all the values of Dalsvyaz, there are serious risks for the company’s share market that are related to the possible restructuring of Svyazinvest and the company joining Rostelecom.
We revised our model of Dalsvyaz and our estimation of its shares. Our new estimates form 3.4860 USD per common and 2.6145 USD per preferred share (former estimates – 2.3992 USD and 1.7994 USD respectively). Considering the current market quotes, the company’s shares obtain significant growth potential and we confirm our recommendation BUY for both share types. However, we make a reservation that the given estimation does not consider any possible changes in the structure of Svyazinvest and has been formed only including the fundamental estimates of the company.
Dalsvyaz: Low debt provides for growth - June 22, 2009 (PDF)