OJSC Live office (ОАО Живой офис) IPO – burning questions

It’s equity investment at a turnaround point.

Current trends looks scary:
- EBITDA declines for at least the 2nd year in a row (2011, 2012) and we have not seen reports before 2010!
- EBITDA margin achieved 0.2% in 2012

The company plans to get 129 RUB * 4m shares=516m RUB to invest in working capital and CAPEX. The company is sincere that in 2013 situation will deteriorate and EBIT will go to negative zone. But suddenly in 2014
- Revenue will almost double
- EBITDA margin increase from 0.5% to 5.9%

Can this happen on a …
- B2B market (=slow switching)
- Very competitive and price-sensitive market
- Market growing a bit faster than inflation: 10% a year

? The answer is hardly.


Tattelecom – Russian Value Trap with 80% upside

Tattelecom (JCS Tattelecom, TTLK): fixed line telecom operator in Russia. Fundamentals are appealing:

  • Regional leader with > 50% market share
  • EV/EBITDA 2012E=2.1x
  • Stable dividend yield: 6.6% for 2012, 2.5%-18.7% for 2006-2011
  • 80% upside based on DCF
  • 130-180% upside based on comparables
What is this: strong BUY, ideal LBO candidate or a value trap? Let’s take a look at its fundamental value and how it could be realized.


Abrau Durso – 48% upside

Abrau Durso (JSC Abrau Durso, MICEX:ABRD) started to trade at MICEX-RTS on 11 April 2012 to "test" investor interest. So, let's test our interest.

The intrigue of the stock is that it's very cheap comparable to multiples from other emerging markets… except Russia.

EV/2011E EBITDA = 5.9x

What about DCF valuation?

My target price is 8,167 RUB which is 48% to 08.06.2012 close price at 5,501 RUB.

Read the rest of the research at Abrau Durso – 48% upside with "Champagne"

EPAM IPO was priced at $12, my valuation was $12.2 (Wow!)

EPAM did IPO at 25% below planned IPO range – at $12. Surprisingly enough, my valuation was at $12.2!

Post with EMAP valuation

Tue Feb 7, 2012 8:46pm EST: The company, which provides IT services focused on software product development, sold 6 million shares at $12 each in its IPO. It had expected to sell $7.4 million shares at $16 to $18 apiece. (Source)

Those who may question the dates in the blog can see my message at seekingalpha.com in comments made at 7 Feb, 02:24 PM EST:


EPAM – another overpriced technology IPO?

EPAM IPO is scheduled for 7 February 2012 with the IPO price range at $16-18.

The result of my DCF model is $12.2 which is -24% of the lower IPO border.

Here is the prospectus: http://www.nasdaq.com/markets/ipos/filing.ashx?filingid=7975254

Since IPO of Yandex on 24 May 2011 on NASDAQ its shares fell ~45% while NASDAQ index grew on ~5% during the same period of time.

EPAM is another technology company from CIS which is about to be sold on an IPO. Is IPO price too high and the risk of Yandex fate is too probable? Here is a brief look at EPAM DCF valuation.

See the rest of the research at EPAM – another overpriced technology IPO?