Vedomosti, July 26, 2005

Aton Capital, a Russian brokerage, has revised its target price for RBC shares to $5.02 from $4.5, reiterating its buy recommendations on the stock. In the near future, RBC plans to conclude the takeover of two companies: a system integrator and mobile content provider and an IT company, Aton Capital said. According to RBC's data, overall revenue of the two companies is USD50m and their net income is estimated at USD6m-USD7m. Aton Capital says the acquisition could boost RBC's revenue by 31% in 2005. Analysts with the brokerage upgraded their forecasts for the company's revenue to USD159m from USD50m for 2005. They expect RBC to report a net income of USD25m compared to USD7m forecasted earlier. However, EBITDA margin is forecast to lower to 30% from 31 percent, since the assets to be acquired show lower return, and this is especially true about the mobile content provider. Meanwhile the consolidation of the acquired assets will increase the share of IT and media businesses in the overall revenue. Another positive factor for RBC is the recent announcement by Comcon, claiming that RBC TV's weekly audience rose to 3.7m, or by 21 percent, from October 2004 to June 2005.

Alfa Bank forecasts that RBC's revenue (not taking into account new acquisitions and possible expansion into the Ukrainian market) will reach USD98m with EBITDA margin of 30% (USD29.4m) and net income of USD22m. RBC has been in talks on the two transactions in the media and IT sectors for a long time, experts with the bank point out. However, the deals have not been concluded as yet and no announcement on them has been made. According to analysts with the bank, the market seems to be worried about RBC's corporate management practices, since the first rumors of the deals were heard last year (after the secondary stock issue by the company). Alfa Bank has reiterated its hold recommendations on RBC, with the target price of $4.47. Yesterday RBC traded at $4.5-$5 on the RTS exchange.