Valuation of Novoship's assets up to $2.279 billion

Novorossiysk Shipping Co (Novoship) is becoming more expensive for a government takeover, if the Kremlin decides to buy out minority shareholders. According to a report issued on Wednesday in Moscow by Renaissance Capital, "better-than-expected FY06 annual and 1H07 financial results" have lifted asset and share valuations of the company, which is Russia's most profitable fleet operator.” Analyst Eduard Faritov concluded that Novoship shares are under-valued at present and should be revalued upward by 38% now and more in future. Revenues were up 30% [FY06] and 22% [1H07], driven by revision of the old long-term contracts and increased fleet capacity. On the back of the increased revenues, Faritov reports, "forecast free cash-flow is higher than our estimates in the previous model, which translates into… 45% upside for common shares and 114% upside for prefs versus actual prices at the report date." The latest calculations are a fresh deterrent for further moves by supporters of the Sovcomflot takeover of Novoship, whose shareholding is majority-owned by the state. A limited cashless merger, without buyout of the minority shareholders, was agreed by the Kremlin in June. Faritov reports that his valuation of Novoship's assets is $2.279 billion, rising to $3 billion in 2009.