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RMG - 1H 2012 IFRS from MRSK Volga, Sep 3, 2012.

MRSK Volga (MRKV RX) released 1H 2012 IFRS which exceeded our forecasts. Revenue and opex were flat due to the lack of tariff indexation from the beginning of the year. EBITDA edged up by 9% on the back of decreased other expenses, and the company will probably beat our EBITDA forecast for the whole year of R6.8b ($230m) as tariffs were raised by 11% from July 1. Net income was down by 14% due to increased profit tax. Net debt declined by 8% to R6.3b ($200m).

We view the results as promising as the company showed higher EBITDA and net margins than our model suggests (12% and 3.6%, respectively). MRSK Volga confirmed its strong fundamental profile compared to the majority of other companies in the Russian electricity distribution sector. Along with MRSK Center and MRSK Center&Volga, the company remains in the list of our top picks with 65% upside based on current quotes.

*****

Rye, Man & Gor Securities

Copyright: Rye, Man & Gor Securities, All rights reserved.

For further Information please contact: Rye, Man & Gor Securities,

Posledniy Pereulok 17, Moscow 107045, Russia

Tel: +7 495 258 62 62, Fax: +7 495 258 62 26

Websites: http://www.rmg.ru, e-mail: research@rmg.ru
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Publication:Russian Banks and Brokers Reports
Date:Sep 3, 2012
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