Jul
12
We continue our series of reports on the results of IRCs for the previous year by IAS. The next company is Uralsvyazinform. The sales of Uralsvyazinform for 2008 totaled 40.7 bn RUR, operating profit – 6.5 bn RUR, and net profit – 2.5 bn RUR.
Totally the results of the company make a dual impression. Uralsvyazinform, obtaining a developed cellular business, still keeps its leading positions on the sales value. Along with that, by the sales growth rates the company falls behind the other subsidiaries of Svyazinvest. Besides, OIBDA margin of Uralsvyazinform is the lowest in the branch.
The usual question for IRCs – the matter of debt load – still is up-to-date. Among IRCs Uralsvyazinform is the biggest borrower. Besides, the debt load coefficients are relatively high. By the Debt/OIBDA estimate (1.85) only STC is ahead of Uralsvyazinform. Debt/SE estimate is also one of the highest within the branch and forms 1.17. Despite such significant figures, we assume the company might rather easily go through the hard times and payoff the debts. However, in order for that to happen it requires strong control over the expenses, and also the adequate volume of the investment program. Concluding from the results of 1Q 2009 by RAS, Uralsvyazinform is moving in the right direction.
We introduced changes to our model of the company. Considering the crisis, we conclude from the conservative estimations. Particularly, we suppose that the growth of income from local communication will be minimal and will not exceed 2%. In the cellular communication the income decrease is possible. The main sales driver will likely be the broad band access services, but growth will be of the residual character.
Considering the changed we introduced to our model of the company, we estimate the fair value of 1 common share of Uralsvyazinform equal to 0.0323 USD, the preferred one – 0.0242 USD (former estimations – 0.0295 USD and 0.0221 USD respectively). Both shares obtain significant growth potential considering the fundamental estimates, which correlates with the recommendation BUY. However, we make a reservation that the given estimation does not consider any possible changes in the structure of Svyazinvest due to its restructuring, which might affect the rates of the holding companies at the market rather seriously.