Appendix e – ftse value stock screening criteria

Screening criteria

Criteria description

Met/Not met

Explanation

Valuation & Dividend Yield

Is the stock underpriced?

Is the payout ratio high?

Is dividend yield strong?

+

Underpriced: 10.5x P/E vs. 12.8x industry avg./ 4.1x EV/EBITDA vs. 5.4x avg./ PEG of 0.7 and confirmative DCF;

POR: High at 54%;

Dividend yield: Strong at 3.8% vs. 2% industry average.

Quality

Isn’t the stock a value trap? i.e.

-Is profitability healthy?

-Isn’t company too indebted?

+

MSTT is not a value trap as it:

- is reasonably profitable with ROE at 20% vs 15% industry avg. and EBIT margin at 5.6% broadly in line with the industry avg. of 5.8%

- has low leverage of only 30% Debt/ Total Capital

Other

The stock has consensus analyst “buy” calls which have notoriously lagged behind market movements?

+

MSTT is covered by over ten analysts from prominent global and Russian investment banks, whose reputation does not raise any concerns over the fairness of recommendation

2011A

2012E

2013E

2014E

2015E

2016E

2017E

CPI, yoy

1.048

1.062

1.052

1.049

1.042

1.038

EUR/RUB

40.33

USD/RUB

30.19

VAT

18%

Federal Target Programm "Development of Transport System in Russia" 2010-2015, RUB mn

Bridges and highways

577,483

673,894

777,277

873,865

944,293

Railway infrastructure facilities

925,642

1,057,048

1,154,460

1,197,458

1,221,036

Aerofields and aeroports

165,084

195,742

224,503

253,199

275,516

Sea hydrotechnical facilities

83,991

90,033

103,135

140,080

148,998

Inland hydrotechnical facilities

27,765

32,239

37,708

43,578

46,971

Export of transport services

89,537

135,237

150,506

155,320

164,853

FTP "Economic and social development of the Far East and Trans-Baikal region for the period to 2013", RUB mn

Far East-rail

100

1,812

1,850

Far East-air

775

768

823

Far East-water

1,074

3,143

3,407

Far East-auto

22,246

25,608

27,791

Federal Programm 2010-2019, RUB mn

Olimpic games and Universiada

4,237

4,441

2,081

750

Subcontractors

Date of creation

Activities

Mosengstroy

1968

Construction of roads, highways, underground utilities

Design of roads to Skolkovo

Stroymost

1993

Construction of bridges, roads and overpasses

Combined bridge over the river. Oka River in Nizhny Novgorod

Transstroy

1954

Construction of highways,bridges, railways, hydrotechnical facilities, airports and airfields

Fourth Ring Road from Enthusiasts road to Izmailovsky highway

Mosinzhspecstroj

1973

Preparation: clean-up, construction of temporary roads, utilities and structures; Geodesic breakdown and executive survey; Construction and repair of electrical networks up to 35 kV; Installation and adjusting electrical equipment, switchgear and substations; Installation of the process equipment, power equipment and lighting of buildings and structures; Installation and adjustment of telemetry, automated monitoring and metering;

Plot line of the 4th ring road from the highway to the Izmailovo Enthusiasts highway, 2nd launch complex "

Mostostroy-11

1975

Construction and overhaul of road, railway and urban bridges, overpasses and other objects of industrial and civil use

Reconstruction of the road M-11 "Narva" at the site entrance to the port Ust-Luga (km16 - km40)

Transstroymekhanisatsiya

2005

Highways (both concrete and asphalt) and airport infrastructure construction. Also it carries out excavation and demolition of buildings and airport infrastructure construction

Construction of the (km 15 - km 58) toll road from Moscow to St. Petersburg

Subcontractors

Activities

Geography of projects

ARKS

Excavation work

Transport services

Construction and reconstruction of utilities Underground development

Investments in the construction sector.

Moscow

SK "Most"

Construction and reconstruction of railways and roads, large and small bridges, tunnels, ports and docks, hydraulic structures, runways, residential and office buildings.

Moscow

Mosmetrostroy

Construction of the tunnels, subway, rail and road tunnels, subways Laying tracks and third rail Carrying out finishing work of any complexity, including the use of marble, mosaics, modern decorative designs

Manufacturing equipment for tunneling and other technology for the construction of underground facilities and transport tunnels

Nizhny Novgorod

Peterburgtransstroy

The construction and renovation of administrative and public buildings, of industrial and civil use and transport infrastructure.

St.Petersburg

Sochimorstroy

The construction of hydrotechnical facilitites

Sochi and Krasnodar