Metals and Mining
May 05, 2011
Centralny GOK: Enriching Your Dreams - Centralny GOK is in position to ride the cresting wave of high iron ore prices over 2011-12. Following 30% YoY growth in 2011E, we see domestic iron ore prices adding a further 7% next year. According to this pricing model, Centralny’s revenue should grow at 18% CAGR in 2011-12, with its EBITDA margin at 59% (vs. 54% in FY10). In addition, CGOK is a strong dividend play, with 80-90% dividend payouts expected in 2011-13. We initiate coverage of Centralny GOK with a target price of USD 1.41, implying an upside potential of 59% and a BUY recommendation.
