Metals and Mining
June 07, 2012
Avdyivka Coke’s share price has plunged by 61% year-to-date compared to a 41% YtD drop in the UX index. One of the key reason for the stock’s underperformance is, in our view, rumors in recent weeks that Avdyivka has transferred its 99.9% stake in Krasnodon Coal to the books of its parent group Metinvest. We note that such a transfer, whether or not it actually took place, would have no impact on our target price for Avdyivka, as our valuation is derived from a DCF model which is unaffected by the company’s ownership of Krasnodon. We reiterate our TP for the AVDK stock of USD 1.02, which implies a strong BUY recommendation at the current trading level.
