Chemicals
A new deal between the Ukrainian and Russian governments on a revised import gas pricing formula for Ukraine should be a strong trigger for Stirol’s share price. Top officials in the Yanukovych government have stated that the deal is likely to be finalized by the end of November. In the meantime, Stirol’s published 9M11 results fell far short of expectations. The company failed to return to profitability, posting a net loss of USD 27mn despite boosting its net revenue by 2.4x YoY to USD 452mn in the period. With this report, we cut our financial forecasts for Stirol, reducing the average expected EBITDA and net margins over 2012-17 by 5 p.p., to 9% and 5% respectively. We lower our target price for Stirol from USD 14.7 per share to USD 9.2 per share. The new TP implies an upside of 64% to the current trading level, and we therefore maintain our BUY rating on the STIR stock.
