May
28
NOVATEK’s net income by IAS 2007 rose +33.1% versus 2006 to 18.736 bn RUR – announced company’s report. Although results exceeded our forecast by +8.5% (17.254 bn RUR), as market’s general forecast formed 19.325 bn RUR.
Sales of the company expanded +26.2% to 62.32 bn RUR and appeared +3.8% over our estimates. EBITDA grew +27.2% to 29.033 bn RUR, EBIT added +32.4% to a total of 25.365 bn RUR.
The growth of financial values of 2007 become possible due to a more than simply positive price environment for natural gas and liquid hydrocarbons in whole 2007 and 4Q 2007 in particular. More to that throughout all of 2007 company was successful at keeping costs at a decent level, making them grow below sales growth rate.
Thanks to costs management and a significant growth of sales, company’s effectiveness had also been expanded in 2007. EBITDA margin has formed 46.6% in 2007, appearing above past result up +0.4 p.p., net income margin has formed 30.1%, which is 1.7 p.p. over previous value.
In general we estimate issued reports as positive for company and its shares, even considering the fact that company did not met market’s overrated expectations on results of 2007.
We have corrected NOVATEK’s model, adding several changes to it. In particular we have changed capital investments of the company upwards, on par with production plans of NOVATEK and macroeconomic parameters.
We have also revaluated NOVATEK’s model, adding results of financial report of 2007 and issued a new fair price of the company, which formed 9.17 USD per share, which is 9% above previously forecasted price of 8.41 USD. We see current potential for growth of NOVATEK’s shares forms 20%. Due to this we confirm “BUY” recommendation on company’s stock.
NOVATEK: Market rejects positive results - May 28, 2008 (PDF)