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Market Comment
PFTS picked up again yesterday, rising 2.5% on USD 11.5 mln in trading volume. Centrenergo (CEEN: BUY), Dniprospetsstal (DNSS: HOLD) and Motor Sich (MSICH: BUY) led by turnover, each with a daily volume of over USD 1.0 mln. Most premiere league and tier two stocks finished the day in the green - among the day’s biggest gainers were Ukrsotsbank (USCB: BUY), up 7.6%, Raiffeisen Bank Aval (BAVL: BUY), +7.4%, and Dniprospetsstal, which put on 6.0%. As of 11:00 Kyiv time today 41% of shares were up and 26% of shares were down.
Metals & Mining
Zaporizhstal to pay USD 114.2 mln in dividends. At their EGM yesterday, Zaporizhstal (ZPST: HOLD) shareholders voted to make a UAH 553.8 mln (USD 114.2 mln) dividend payout (DPS of USD 0.04, dividend yield of 0.9%), or 100% of the company’s 2007 net income. Dividends will be paid from September 2, 2008 to September 2, 2009. Eugene Cherviachenko: In our view, such a hefty dividend looks irrational, taking into account that the company has said it plans to invest almost USD 2.4 bln in CapEx over the mid-term. The distribution of profits among existing shareholders underpins our belief that the company’s owners are preparing for a strategic sale (see yesterday’s flash note).
Banking
Ukrgazbank AGM to consider 16.7% charter fund increase. At their AGM on September 16, Ukrgazbank (UGZB: BUY) shareholders will consider increasing of the bank’s charter fund by 16.7% to UAH 700 mln (USD 144.3 mln) via an additional share issue. The bank plans to run subscription from October 14-25, 2008.
Agriculture
Cabinet of Ministers upgrades its 2008 grain harvest forecast. The Cabinet of Ministers of Ukraine has upgraded its forecast for the 2008 grain harvest from 40.4 mln mt to 43 mln mt, Minister of Agriculture Yuri Melnik said yesterday. According to him, this projection could be revised after taking it account flood damage in Western Ukraine. The government’s updated forecast is in line with the projection range of the Ministry of Agriculture and private institutions at 40-43.2 ths mt.
Ukrros says its crop yield is exceeding its plans. Ukrros (UROS: BUY) announced yesterday that its harvested area reached 10,600 ha as of July 30, 44% of the company’s planted area. Ukrros said that it completed gathering peas and winter barley. According to the company, its average crop yield is significantly ahead of what it planned: winter barley yield is 4.5 mt/ha (vs. 3.5 mt ha as planned), and winter wheat yield is 5.4 mt/ha (vs. 4.3 mt/ha). The company stressed that flooding in Western Ukraine has not affected its harvest. Olha Pankiv: Favorable weather conditions this spring/summer resulted in Ukrros’ yields being 20% (wheat) and 50% (barley) higher than we expected. We confirm our BUY recommendation on the stock.
Utilities
Inter RAO UES acquires 100% stake in Moldova’s GRES. Russian Inter RAO UES announced yesterday it has concentrated 100% of Moldavian Thermal Power Plant (Moldavskaya GRES, located in Transnistria, an unrecognized independent region, formerly part of Moldova), after purchasing a 49% stake for USD 163 mln from Hungarian Emfesz Kft, which is related to Ukrainian businessman Dmytro Firtash. Alexander Paraschiy: The deal’s P/Capacity is USD 132 per kW, a deep discount to Russian generation company acquisitions (USD 470-750 per kW). We believe the reason for the low valuation of GRES is low load (only 2-3 power units out of 12 are typically in operation): for Moldova and Transnistria, it is cheaper to buy Ukrainian electricity than to produce it at GRES. Though, the power station has good prospects in terms of increasing its load for export to Romania, Slovakia and Bulgaria – in order to realize this project, investments in transmission capacities are needed.
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