Daily monitor

On June 10, Zaporizhstal [ZPST UZ, Strong BUY] submitted an official filing with the regulators disclosing a significant shareholder structure change. Namely, on June 06, Kyiv Securities Group LLC increased its stake by 10.76% to 19.62%.

Interpipe Novomoskovsk Pipe Plant [NVTR UZ, BUY] increased its pipe output 38%YoY to 143.9 thsd metric tons in 5M2008. The plant produced 32.1 thsd metric tons of pipes in May. The mill specializes in the production of welded pipes for oil and gas, water transportation and welded pipes for wider industrial applications. The company belongs to Interpipe.

The Ukrainian government has released statistics on industrial production showing real industrial output continued growing well in May, adding 8.3% YoY and 2.2% MoM. In 5M08, real industrial growth totalled 8.0% YoY, the same figure as in 4M08. After a slowdown in industrial output growth in 2005 (+3.1% YoY), the numbers accelerated to 6.2% YoY in 2006 and 10.2% YoY in 2007. We are currently observing the normalization of industrial output growth, but the numbers are nonetheless remaining high.

Turboatom [TATM, N/R] plans to increase revenues in 2008 52% YoY to USD 105 mln, TATM CEO Viktor Subotin said. He also noted that the company’s revenues for May 2007 to May 2008 amounted to USD 95 mln, which was 28.7% more than planned. According to Subotin, Turboatom secured contracts in 2007 worth a total of USD 128 mln, or double the 2006 figure. The contracts currently in the process of being finalized amount to USD 227 mln.

Dniprovagonmash [DNVM, N/R] has increased its carriage output 48% YoY in 5M08 to 400 units. Of this number, 220 were container carriages, 150 - gondola carriages and 30 - hoppers (the production of hoppers was reinstalled in 2007). Company management is further predicting stable output growth driven by the constant demand for carriages in the CIS. As of now, the company is completely back-logged.

Interpipe Nyzhnodniprovsky Pipe Rolling Works [NITR UZ, HOLD] increased its output 4% MoM to 52.6 thsd metric tons of pipes in May 2008. The mill also produced 252.2 thsd metric tons of pipes in 5M2008, reducing its production 1.3% YoY. NITR is one of the biggest Ukrainian pipe producers and the world’s second largest producer of railway wheels. The mill makes seamless pipes for the oil, gas and power industries, as well as produces railway wheels and tires.

Electricity generation companies (except Energoatom) which belong to State owned Energy Company of Ukraine have increased their electricity production by 6.3% YoY amounting to 30.9 bln kWh. State owned thermal generation companies (Gencos) increased their output by 8.2% YoY increasing their utilization rate by 1.7p.p. to 25.8%

Gross electricity consumption (including electricity losses in the grids) increased for 5M08 by 5.3% YoY amounting to 82 bln kWh. Net electricity consumption amounted to 66 bln kWh implying a net electricity consumption increase of 5.9%. Largest consumption increase was due to household consumption which grew by 8.7% YoY compared to industrial consumption – 3.5% YoY.

The Rada’s decision to postpone the enactment of the 10% import duty law with regards to automobiles (1 to 2.2 liter engines), is going to allow Zaporizhzhya automobile plant (ZAZ) to retain its production and sales growth rates. ZAZ also plans to accumulate funds and complete the restructuring of enterprises and technical re-equipment of production, and preserve the existing jobs for its workers: such was the recent announcement of Mykola Evdokymenko, the Head of the ZAZ’s Board of Directors. Mr. Evdokymenko had also emphasized that the adoption of the law should enable the enterprise to shift its exports to new markets, be able to reorient economic ties; as well as complete the current production programs and implementation of long-term contracts.

Daniel Valk, the CEO of Dniprospetsstal [DNSS UZ, U/R], confirmed plans to implement a USD 200 mln investment program. The timeframe of the program changed from 2008–2009 to 2009–2012. Valk also projected net sales exceeding USD 800 mln for 2008. According to the CEO, EBITDA should increase at least 40% in 2008, surpassing USD 150 mln. According to Interfax-Ukraine, which reported from a June 05 investment forum, Valk noted increasing sales in Asia and North America, as well as opening an office in Chicago. Cheap Ukrainian labor, as well as favorable logistics for supplies on natural markets (Ukraine and the CIS), were mentioned as competitive advantage factors.