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RMG - Quadra 2011 IFRS brings no surprise, May 24, 2012.

Quadra (TGKD RX, TGKDP RX) released 2011 IFRS which we regard as neutral. Operating financials were slightly below our estimates, but due to lower-than-expected capital expenditures free cash flow coincided with our forecasts (-R5.1b, ~$170m).

Quadra has already commissioned 312 MW from 1092 MW planned within the obligatory investment program. Till the end of 2012 extra 220 MW will be commissioned at Livensk and Novomoskovsk GRESs. Investment spending for the next two years will stay at R22.5b and most of it will be financed via debt (current net debt/EBITDA ratio stays at 0.9x). This year the company will likely fail to compensate fixed costs for 350 MW of outdated capacities (10% of Quadra's installed capacity), which failed to get status of so-called "forced generators". We expect the company to become free cash flow positive in 2015.

Quadra is the cheapest among TGKs based on EV/Capacity of 98$/kW vs. some $200/kW average for the Russian TGKs. We confirm our target price and BUY recommendation.


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

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Publication:Russian Banks and Brokers Reports
Date:May 24, 2012
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