Stakhanov Wagon FY11 Bottom Line Slips 21% YoY to USD 26mn

January 26, 2012

Railcar manufacturer Stakhanov Wagon announced its production anв financial results in FY11 this morning (Jan 26). The company produced 6,810 freight railcars in 2011, a 5% YoY decrease. Stakhanov‘s revenue increased by 21% YoY to UAH 3.50bn (USD 437mn) and the company’s net profi t for the year was UAH 206mn (USD 26mn).

COMMENTARY

Stakhanov Wagon fell short of its freight car production guidance of freight of 8,000 units in 2011 by 15%, and our forecast of 7,900 units by 14%. The company explained that it had a shortage of large–scale casting supply during 2H11. The financial results also were lower than our forecasts by 13% in revenue and 15% in net profi t. We modeled Stakhanov Wagon’s FY11 top and bottom lines at USD 502mn and USD 30mn respectively, implying an EBITDA margin of 9% and a net margin of 6.1%. Despite these results we maintain our BUY recommendation for the SVGZ stock with a target price of USD 1.69.

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