Jun
26
NOVATEK’s IAS-compliant net income of 1Q of 2008 increased by 72.6% in comparison with the same period of 2007 – to 7.503 bn RUR, indicates the company’s report and it is higher than our forecasts by 5.3% (7.116 bn RUR).
S NOVATEK’s income rose by +36.8% – to 20.876 bn RUR and appeared to be higher our expectations by 5.4%. Company’s oil and gas sales increased by 35.5% – to 20.167 bn RUR, sales of polymer products and insulation tape – by 78.3%, to 0.551 bn RUR.
Company’s EBITDA increased by 61.8% – to 10.862 bn RUR, EBIT rose by 73.3%, to 9.869 bn RUR. Looking through the financial results of 1Q 2008, it should be mentioned that NOVATEK managed to capitalize its value, increased free cash flow and also kept the leading position of operations efficiency. Thus, EBITDA margin formed 47.3% over the 1Q 2008 (+10 p.p.), net income margin formed 35.9% (+7.4 p.p.).
We update NOVATEK’s model and put some changes in it. Our changes touched upon oil and gas prices of the company, we increased them by +22.6%. We also reviewed gas sales and raised them by +20.6%, due to government’s amendments concerning continuation of domestic gas rates regulation until 2014 and growth of oil prices.
S It should be mentioned that due to delay of oil companies transfer to equal profitability from 2011 to 2014, the consideration of MET change for NOVOTEK can be shifted by 2-3 years, which will have a positive influence on company’s securities.
We also reviewed the capital investments value and increased it by +20%, due to 1Q data, which appeared to be higher our expectations and total inflation value of oil and gas sector.
We reviewed NOVATEK’s model and changed it according to the results of 1Q 2008 report and reflected new fair price of the company, which formed 12.05 USD per share and it is by +31,4% higher than forecasted earlier 9.17 USD. The potential growth of company’s shares forms 31.7%. We confirm our “BUY” recommendation of company’s securities.
NOVATEK: Rates regulations continues - June 26, 2008 (PDF)