Investment Company Finam lowered its target price of one ordinary shares of JSC MRSC of Center and Volga Region by 43% to $ 0.0064 at the end of 2010 conservation BUY recommendation. Analysts say the economic crisis has led to the suspension of the transition to RAB-tariff regulation affiliates IDC, reducing the value of investment programs, as well as the possible lack of indexation of the tariff in 2010.
In the first half of 2009 due to the negative impact of the crisis there was a decrease of production and financial performance, IDC Center and Volga Region. According to the published financial statements according to RAS, leave the network for 6 months of 2009 declined by 12% to $ 27.6 billion kWh. Useful vacation for the first half of 2009 declined by 13% to $ 27.7 billion kWh. In this case the total losses during the transport of electricity increased by 1 percentage point and amounted to 10,5%. Expenses IDC Center and Volga Region in the first half of 2009 grew by 35%. The growth rate of expenditures IDC Center and Volga Region was on 12 percentage points above the rate of revenue growth, - says the study Finam .
Analysts of investment company noted that in published reports they are particularly troubling faster growth of costs, compared with an increase in revenue caused by the increase in articles that are beyond the control of management of the company. However, the current system of regulation of tariffs of the company involves compensation forgone earnings in future periods.
Investment Program IDC Center and Volga Region was significantly reduced compared with pre-crisis values. The new investment program involves a smaller amount of power inputs and a reduction in monetary terms. We believe that in a declining power and the scarcity of financial resources, reducing the investment program is a positive factor for the company's value, - said analyst Finam Konstantin Reily .
To improve the profitability of the company management IDC Center and Volga Region implements anti-crisis program, a major step which is a shift to service power transmission through a two part tariff. According to Mr. Reilly, the implementation of the project will reduce the risk of reducing the company's revenues due to a possible further reduction of energy consumption, which will significantly improve the predictability of the company receiving revenue.
negative factor for the cost of MRSK Center and Volga Region is a slow transition of the company on RAB-regulation. Not so long ago it was assumed that the transition of most branches MRSK Center and Volga Region at the RAB-tariff regulation will occur during 2009, - said Mr. Reilly. - However, in fact, using this technique since 2009, the company operates only two branches, and the full transition IDC Center and Volga Region at the RAB-regulation in the schedule will not happen. This negatively affects the growth rate of the company and its profits.
Analysts Finam also note that the income MRSK Center and Volga region depends on the tariff, which for most of its branches established annually. We believe that the tariffs for the company in 2010 will not be significantly increased. As a result, it can get a loss in 2010, - says Mr. Reilly.
Department of Public Relations and Media Investment Holdings FINAM.
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