Machinery

Research

Machinery
August 16, 2010LUAZ — Stuck In a Market Jam

In 2010, Bogdan Motors, a member of Bogdan Corporation (the second largest Ukrainian automobile producer), will only begin its slow recovery after a major hit inflicted by the financial crisis. The company’s net sales are poised to gain a mere 2% this year over 2009, yet this will account for only 12% of its pre-crisis 2008 sales. Although the Company is claiming to turn profitable in 2010, we retain a more conservative forecast of a net loss of USD 23 mln, based on its net loss of USD 11 mln posted for the 1Q2010. During the past two years, Bogdan absorbed a huge debt of USD 353 mln, and interest payments will erode its bottom line for 2010 and 2011. Bogdan’s net margin will probably not return to a green zone until 2012. The stock’s EV/EBITDA and P/E multiples are of no relevance due to Bogdan’s oversized debt and forecasted net loss in 2010-11, while its 24% discount to emerging market peers in 2011 P/Sales is unwarranted. SELL.

Machinery
July 15, 2010Stakhaniv Railcar – full throttle to margins recovery

Stakhaniv Railcar Works, which is a member of AutoKrAZ Holding and is controlled by the Finance & Credit Group, is the largest Ukrainian producer of gondolas and hoppers, the most universal and popular freight railcars. The recovery in the railcar building sector led to the strong operational and financial performance of the Plant and forced us to review SVGZ’s target price with buying recommendation.

Machinery
June 10, 2010Luhanskteplovoz — at the wave of privatization

Luhanskteplovoz is the only Ukrainian producer of locomotives and one of the leading CIS producer of main-line diesel locomotives. Russia is the core market for the Plant – nearly 78% of output goes to Russia. After returning of the 76% stake in LTPL to State Property Fund at the end of 2009, a new privatization auction was announced. We expect Russian Transmashholding (TMH) to win the auction and re-acquire LTPL, which would open a huge market for the plant and would act as a catalyst for operational performance of the Company. According to our valuation, future sales growth has already priced-in, while expected low margins will restrict minority value and result in a HOLDing recommendation.

Machinery
April 12, 2010Sumy Frunze – century-long success story

Sumy Frunze Machine Building is one of leading machine-building complexes in Ukraine engaged in manufacturing equipment for the oil and gas, as well as chemical industries (unique types of chemical equipment, compressors and gas turbine-driven centrifugal compressor packages, pumps and gas pipeline valves). It is the only Ukrainian and the leading CIS producer of gas compressing units, with Gazprom as its main client. SMASH is an export-oriented company, with only 10% of its sales domestically-driven, which is currently showing growth in both its operational and financial performance.

Machinery
April 12, 2010Svitlo Shakhtarya – deep digging value

Kharkiv Machine Building Plant Svitlo Shakhtarya is one of the oldest and largest CIS producers of mining equipment. The Plant oriented at domestic market, with only 10% of sales export-oriented. Svitlo Shakhtarya is one of the main suppliers in the modernization of Ukainian mines, that opens high potential market for the Company. On the back of the strong operational and financial performance, high margins and no debt burden we initiate the coverage of the stock with BUYing recommendation.

View all reports

Daily monitor

Machinery
September 2, 2010SPFU offers termination of the Luganskteplovoz acquisition contract to TMH

The State Property Fund of Ukraine presented Bryansk Machine Building Plant (a member of Transmashholding, Russia) with an offer to terminate their contract on acquisition of 76% share in Luganskteplovoz [LTPL UZ] by agreement between the parties. Bryansk Machine Building Plant was supposed to pay 100% of the share price by August 31 2010, which did not happen. Now the company will have 20 days to terminate the contract or to pay the full contract price, including the competition pledge and fines, at an overall cost of USD 15.7mln.

Machinery
September 2, 2010Ukraine shortens both export and import of steel pipes

In July 2010, export of steel pipes from Ukraine decreased by 12.1% MoM to 95thsd. Ton. Revenues from exports fell by 16.5% to USD 100.4 mln. Import of steel pipes has decreased by 18.8% to 3.5 thsd. Ton, while expenses on imports increased by 16.7% to USD 7.6mln. In January-July 2010, export of steel pipes fell by 16.9% to 652 thsd ton, while overall earnings from export accounted 657 mln. During this period, import of steel pipes increased by 31.4% to 29.9thsd Ton, with a total cost of USD 54.3 mln.

Machinery
August 31, 2010Joint Russia-Ukrainian aviation concern to be created by November

According to Dmitry Kiva, the general director of Antonov State Aircraft Company, recent negotiations with Russian Joint Aircraft Corporation may result in creation of joint Russia-Ukrainian aviation concern by November. Meanwhile Antonov announced its plans to attract USD 0.5 bln of credits, backed by contract receivables during the next 3 years for expending production volume.

Machinery
August 30, 2010Kryukivka Carriage shortens production by 4%

In August 2010, Kryukivka Carriage [KVBZ UZ] will have decreased its train car production by 4% MoM to 873 units. All 3 sections of the plant were operating during the month, producing 50 cement carriers, 2 subway train carriages, and 821 gondola cars.

Machinery
August 27, 2010Bogdan Corporation plans to raise production 2.5 times by 2015

Bogdan Corporation, owner of Bogdan Motors [LUAZ UZ], has announced its plan to increase car production at the Cherkassy plant to 5,000 units per month by the year 2015. Next year, the company aims to produce 2,500 – 3,000 cars per month. From 2012 - 2015, Bogdan Motors will incrementally increase production to reach 5,000 units per month by 2015, which is the car production breakeven point for the plant.

View all reports

E-Mail Password
Register
Forgot your password?

Stock indices

			Δ, day	Δ, %
PFTS	(16:56)	806,98	0,67	0,08%
UX	(17:29)	2 008,26	0,71	0,04%

NBU Exchange Rates

		Δ, day	Δ, %
USD	789,78	1,17	0,15%
EUR	1 012,34	2,92	0,29%
RUB	2,57	0,01	0,52%