Boston, MA 10/06/2014 (wallstreetpr) – Russia’s isolation from the rest of the world continues to present some of the biggest challenges ever seen, to companies operating in the country. The impact of the proposed ‘On Mass Medial Law’ has already forced TheStreet research firm to downgrade CTC Media, Inc. (NASDAQ:CTCM)’s stock to a ‘Hold.’
CTC Media Strengths and Weaknesses
Despite the downgrade, CTC Media, Inc. (NASDAQ:CTCM) continues to enjoy a solid financial position with a low debt level. It also has an impressive return on equity ratio complimented by reasonable valuation levels. The company’s positives are on the other end offset by a slow growth in net income a problem that has been made worse by a weak operating cash flow. The stock has also underperformed for the better part of the year.
Debt to equity ratio of zero makes the stock attractive as the company can now focus on other development plans with its financial base. CTC Media, Inc. (NASDAQ:CTCM)’s gross profit margin of 46.29% is considered favorable at the current conditions although it is slightly lower compared to last year’s same period standards.
A decrease of 71.54% in net operating cash flow currently languishing at low margins of $17.58 million continues to be one of the main concerns.
Impact of New Law
The law if implemented is expected to limit direct and indirect ownership of Russian mass market. CTC Media, Inc. (NASDAQ:CTCM) is one of the biggest owners in the country with interests in a number of companies mostly in the broadcast entertainment businesses. Legislators are currently discussing the law, which is expected to affect both current and future ownership.
The mass media law if passed under the current status will make it illegal for foreign companies to own more than 20% of Russian mass media entities. CTC Media, Inc. (NASDAQ:CTCM)’s CEO, Yuliana Slashcheva, has already stated that they are carefully studying the proposed law although it is not expected to affect the company’s business operations. Slashcheva expects the law to affect corporate structures.