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Analytical review
When launching electric power industry reform, the government announced to
pursue policy to increase market price of Russian power companies to match
market price of power companies on emerging markets as initial and market price
of those companies in developed countries as final goal. So far, market prices
of most Russian power-generating companies cannot be seen as competitive prices
even against the emerging markets results. Globally, market prices of companies,
whose stock is quoted on international capital markets, are estimated in
billions of dollars.
In Russia UES (EESR) is the standout on the power
market to show turnover sufficient for the company to be seen as competitive
performer when compared with foreign counterparts, Mosenergo deliverables can
also be seen as competitive on particular markets.
In terms of financial
results, P/E (Price/Earnings) average ratio of power companies in developed
countries is 15, being 10 for emerging markets, while P/S (Price/Sales) is 1,06
and 1,87, respectively. As for Russian power market, even the strongest
performer UES is traded at 32 per cent discount against European and U.S.
counterparts, average discount against quotes of emerging markets power
companies constituting from 5 to 6 per cent.
Despite many UES
subsidiaries being both local power producers and national power stations having
recently showed significant deliverables in terms of rate growth, they remain
underestimated against foreign power companies.
After being slowed down
for a long time, Russian power industry reform has finally been on the home
straight. Earlier, investors felt risk-averse amid the unpredictability of the
actions to be taken by Russian government within the framework of the reform.
Given the market as it currently is, there’s no reason why investors should be
apprehensive as the expected key decisions have been taken and the long-term
goals have been identified as well as near-term ones, as one can make forecasts
for companies in the sector. Russia picking up sustainable growth will foster
efficiency of power-generating sector as a system.
Power-generating stock
has been investor focus over the recent a year and a half, and so in September
2002 market value of power stocks picked up gradual growth.
Given the data,
we can presume that market prices of Russian power companies are to be
significantly increased. |
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