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Macro
CPI growth slows to 0.8% mom, PPI up 4.2% mom in June. Consumer inflation was 0.8% mom in June, down from 1.3% mom in May, the State Statistics Committee announced today. In yoy terms, CPI decreased for the first time this year, totaling 29.3% yoy in June, vs. 31.1% yoy in May. YTD growth in June was 15.5%. The main contributors to June’s CPI growth were food (0.6% mom) and utilities (2.0% mom). The producer price index surged 4.2% mom or 43.7% yoy. Andrii Parkhomenko: Food prices grew at the slowest mom rate since March 2007, finally signaling the results of the good harvest and abundant supply of food products. We believe that food prices will induce a further slowdown in CPI growth and pull it down to 21.0% yoy by the end of 2008.
Oil & Gas
Cabinet of Ministers proposes to raise compensation for Naftogaz's losses to USD 1.6 bln. In its draft amendments to the 2008 state budget submitted to parliament yesterday, the Cabinet of Ministers made a provision to increase compensation for Naftogaz of Ukraine's losses by 85% to USD 1.6 bln. This would be directed at covering the sale of gas below the purchase price to households and state-financed organizations in 2006, and to municipal heating enterprises over 2006-2008. In other news, RosUkrEnergo said yesterday that Naftogaz's debt to it exceeds USD 2 bln.
Cabinet of Ministers pushes Ukrnafta and Ukrgaz-Energo to distribute 2006-2007 profits. The Cabinet of Ministers of Ukraine's draft bill on amendments to the 2008 state budget includes an item, binding Ukrnafta (UNAF: U/R) and Ukrgaz-Energo to pay dividends for 2006-2007. If the draft bill is passed, both companies will have to approve 2006-2007 dividends by September 1, 2008. Otherwise, according to the ruling, they will have to distribute their entire profit in the two year span proportional to Naftogaz's stake in these companies. Naftogaz owns 50%+1 of Ukrnafta and 50% of Ukrgaz-Energo.
Machine Building
Sumy Frunze to supply equipment to Uzbekistan. Sumy Frunze (SMASH: BUY) announced yesterday it signed four contracts for USD 90 mln (33% of the company’s 2007 sales) to supply oil & gas equipment to Uzbekistan. Under the agreements, Sumy Frunze is to deliver equipment to customers beginning in 1Q09. Inna Perepelytsya: Sumy Frunze is starting to fill its 2009 order book with stable clients: in its press release, the company said it has been cooperating with Uzbekistani oil & gas enterprises for thirty years.
Motor Sich interested in joining Russian Engine-Building Corporation. Motor Sich (MSICH: BUY) General Director Vyacheslav Boguslayev reiterated the company’s willingness to join the Consolidated Engine-Building Corporation currently being created by the Russian government. Inna Perepelytsya: We assign a high probability to Motor Sich joining the Consolidated Engine-Building Corporation by the end of 2009, ahead of the corporation’s planned IPO in 2010 (announced last week). Inclusion of Motor Sich would increase the company’s opportunities to participate in new Russian projects (like Sukhoi’s Super Jet 100, Consolidated Engine-Building Corporation’s MS-21).
Insurance
Insurer Alkona bought by HDI-Gerling International Holding. Yesterday German HDI-Gerling International Holding said that it acquired a 94.5% stake in Ukrainian P&C insurance company Alkona for UAH ~17 mln (USD 3.5 mln). Alkona ranks #47 out of Ukraine’s 370 P&C companies, with gross premiums written in 2H07 of UAH 20.9 mln (USD 4.3 mln) and gross payments of UAH 9.4 mln (USD 1.9 mln), according to Insurance Top. HDI-Gerling International Holding is part of the Talanx Group.
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