Machinery
February 08, 2012
Krukiv Wagon achieved a post-1991 production maximum and saw the average price for its railcars jump by 36% YoY in 2011. Accordingly, we raise our FY11/12 revenue forecasts for the company to USD 811mn and USD 887mn, with 2011E/2012E net profit at USD 98mn and USD 93mn respectively. It is our view that the current situation with Russia over the decertification of Ukrainian railcars is transitory in nature, and we foresee only a minor effect on Krukiv’s 2012 output and no impact on the long-term viability of its business model. Although we lower our target price for Krukiv Wagon by 4% to USD 6.18 on higher country and company-specific risks, we leave our BUY recommendation on the KVBZ stock unchanged.
