Metals and Mining
February 15, 2012
Khartsysk Pipe is one of only a few Ukrainian stocks with a track record of paying meaningful dividends over the last five years. We expect the company to announce at its spring AGM that it will distribute nearly 100% of its 2011 net profit to shareholders. Taking into account our forecast for Khartsysk’s FY11 bottom line of USD 96mn, we calculate the likely dividend at USD 0.036 per share, implying a dividend yield of 24%. Making the assumption that the company will continue to pay high dividends over the next five years, we use a dividend discount valuation model to obtain a target price for the HRTR stock of USD 0.19 per share, suggesting a potential upside of 25% and a BUY rating.
