We expect Novatek to release 4Q 09 IFRS results on Friday, 12 March 2010, or Monday,
15 March 2010. We expect a sharp 57% increase in revenues q-o-q, and increased profitability.
We expect a sharp increase in revenues for 4Q 09, mainly on the back of a 39% q-o-q increase in gas condensate sales supported by a 19% q-o-q increase in natural gas sales. We are looking for an 18% q-o-q increase in revenues, as the increase in volume is likely to be partially offset by a slight decrease in the average sales price. However, mainly due to slower growth of transportation expenses and a decrease in net interest expenses, we expect EBITDA to increase by 26% q-o-q and net profit to increase by 17% q-o-q. According to our estimates, this should drive EBITDA margin up by 3 ppt to 48% with net profit margin staying at 33%.
We are initiating coverage of Rusal with a Buy recommendation, as our DCF-based fair value of HKD 10.0 per share points to a 18% upside. We apply conservative metal price assumptions for aluminum and alumina, anticipating a 2010 price of USD 2,225 per ton for aluminum and USD 356 per ton for alumina. Long term, from 2015 we expect aluminum to be USD 2,300 per ton and alumina to be USD 368 per ton.
Mostotrest, the leading bridge builder in Russia, acquired a 24% stake in Mostostroy-11 common equity. While Mostotrest did not disclose the deal’s value or the seller, we estimate that Mostotrest paid USD 25-35mn for the stake, or USD 1,200-1,935 per share. We believe the shares were sold by either company management or the E4 Group, which bought a stake of approximately 30% in Mostostroy-11 in early 2008. If Mostotrest bought the shares from management, it would decrease management ownership of the company to 29%. We estimate Mostostroy-11 free float remains approximately 20%.
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