Metals and Mining
February 14, 2011
Pivnichny GOK: Appropriately Positioned for Growth - Pivnichny GOK’s aggressive 2011-2012 capacity expansion program, coupled with strong iron ore prices, bodes well for the company’s top and bottom lines in the medium term. In 2011, we expect Pivnichny to post EBITDA of USD 1.0bn (+43% YoY), implying an EBITDA margin of 63% (+5p.p YoY) for 2011. The near-term price trigger for the SGOK stock is the expected declaration of a USD 0.11 per share dividend at the company’s March 25 AGM, which would imply a dividend yield of 5.7%. We initiate coverage of Pivnichny GOK with a target price of USD 2.56 and a BUY recommendation.
