Mal wieder ein paar Neuigkeiten aus der Ukraine:
Diesmal von Stirol (WKN 920562)
Gehandelt wir Stirol in Berlin, der aktuelle Kurs je ADR liegt bei 53€, in Kiev werden sie (umgerechnet) zu 60€ gehandelt, also allein ein potentieller Arbitragegewinn von über 10%.
(der Bericht ist von www.foyil.com)
Spectacular full-year results BUY
Stirol far outperformed our full-year 2004 estimates of UAH 250m for net income to post a
117% y-o-y improvement to reach UAH 411m. As a result of this and the implementation
of energy-saving technology, the Company strengthened its net income margin by almost
8 percentage points to 22% in 2004, despite a 37% gas price increase. Strong fertilizer
prices stand behind the 43% increase in sales in FY2004. We expect the Company to
continue to show strong results in 2005, as world fertilizer prices remain at record highs
and the Company continues to invest in production and cost-saving technology. Stirol will
also pay UAH 3.97 per share in 2004 dividends, a major increase from UAH 0.20 per share
in 2003. Despite this unparalleled success, Stirol still offers growth opportunity. BUY
Net income of UAH 411m far exceeds our expectations - Stirol has reported UAH 411m in net income for
FY2004, which is 117% higher than the 2003 full-year result. Moreover, the net income margin improved by
almost 8 percentage points to 22% in 2004 despite a 37% increase in natural gas prices at the same period.
Largely as a result of the seasonal growth in the demand (autumn), the sustaining high global prices for fertilizers
and Stirol's energy-saving efforts, the Company showed spectacular net income growth for a second consecutive
year. However, this net income growth is expected to be a more moderate but highly respectable 27% in 2005 as
a result of Stirol's negative exposure to the hryvnia appreciation, which we estimate at UAH 70m in 2005 alone.
• Cost of production grew by only 32% despite higher gas prices - Stirol's cost of production increased by only
32% despite a 37% gas price increase in 2004. This cost efficiency is attributed to the energy-saving programs
implemented in 2004. These programs helped the Company to moderate the negative impact of higher fuel
prices suffered in August-October 2004, resulting in 63% gross profit growth in 2004. Stirol will implement similar
energy-saving programs this year in order to further optimize production costs.
• Strong global fertilizer demand fueled Stirol's 43% sales growth - Nitrogen fertilizer prices remained at
record highs of USD 240-250 per ton during the third quarter, and for a short time during the fourth quarter
reached USD 270 per ton. This resulted in Stirol's total sales increasing by 43% to UAH1.87bn in 2004 and, thus,
substantially exceeding our full-year sales growth target of 22%.
• Stirol will pay out only UAH 97m in dividends for 2004 - At its AGM, Stirol shareholders approved to pay out
UAH 97m in dividends for 2004, resulting in a payout ratio of 24%. This leaves the Company with ample
resources to maintain operations and to continue implementing CAPEX projects. As announced in 2004, Stirol
will increase carbamide production capacity by 25% in 2005. The Company also confirmed its intention to
develop its pharmaceutical business and to implement more energy-saving programs.
FY2004 profits were fueled by the strong world demand for fertilizers
Net sales increased by 43% and reached UAH 1,869m, driven by the strong export demand
for nitrogen fertilizers. The Company experienced especially strong prices during the first and
the third quarters, as fertilizer demand corresponds to the agricultural cycle. However, Stirol's
diversification into the plastics and pharmaceutical businesses allowed it to balance fertilizer’s
seasonal fluctuations, thus helping the Company to boost sales growth. We expect these
business lines to expand further in 2005. Fertilizer prices are again strengthening at the start
of the 2005 agricultural season, and we expect them to be strong throughout the year, since
the global capacity deficit still exists and demand is expected to grow by 3% in 2005.
Cost of goods sold increased by 32% in absolute terms, but decreased from 66% to 61% as
a proportion of sales, allowing the gross profit margin to improve to 39% from the 34%
recorded for the previous year. Implementation of energy-saving technologies in 2004 helped
to moderate the impact of natural gas and fuel prices increases on gross profits, while the
higher production volume allowed the Company to take advantage of its economies of scale.
Admin and Sales expenses increased by 32% and 20% respectively, and were reported only
0.4% below our expectations, which we believe was driven by an increase in the export sales
and the reduced need to heavily promote Stirol's fertilizers on global markets. Even though
Stirol has increased its focus on the pharmaceutical business, resulting in a UAH 15m
increase in marketing spending to promote its pharmaceutical products, the sales expense
remains under our full-year targets.
As a result of the higher-than-expected net sales and the lower-than-expected production
costs and admin and sales expenses, net income exceeded our expectations, reaching UAH
411m in FY2004. Although the 2004 gas and fuel price increases, which were evenly
distributed over the year, might have put some pressure on income, high fertilizer prices and
utilization of energy-efficient programs more than offset them. Thus, net income in the second
half of the year was even higher than in the first half, resulting in a full-year net income margin
improvement by 8 percentage points of 22%.
Stirol continues to implement its CAPEX program, which for this year includes a 25%
increase in carbamide production capacity to 2,000 tons per day, scheduled to be ready by
3Q 2005. In addition, the Company intends to continue development of plastics for the
construction industry and new ammonia-based chemical products, as well as new
pharmaceutical products. The Company has sufficient capital for these purposes, as it is
retaining 76% of its net income, paying out only UAH 97m in dividends. As higher margin
products, they will contribute disproportionately to net profits in 2005 and beyond.
p.s.
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