Daily monitor

Brunswick Rail, a leading Russian freight wagon leasing company and number five in Russia in terms of the number of railcars owned (11.6 thsd), announced its intent to attract USD 455 mln of debt and equity capital in the near future to finance its investment program, which implies a purchase of 7–8 thsd wagons in the next two years. According to Brunswick’s representatives, the company will place the order with Ukrainian railcar producers, who produce cars of the same quality as Russian producers, but less expensively.

The program of economic reforms for 2010–2014 has been approved, and calls for a number of reforms in various sectors of the Ukrainian economy. The main indicators of success will be: 1) decrease of the public account deficit by 1% annually to the level of 2% of GDP by 2013-2014; 2) stabilization of public debt at the level of 45% of GDP by 2014; 3) slowdown of inflation to 6%; and 4) reduction of the shadow economy by 30%. The program also implies a vast transformation and liquidation of governmental monopolies in the energy sector. Thus the reforms include plans to introduce a market pricing mechanism and carry out privatization in the coal and electricity sectors.

According to Interfax, Ukraine’s steelmakers in 5M10 increased steel output by 21%, to 13.9 mln tonnes.

Astarta [AST PW, BUY], a major agroholding with an emphasis on sugar production, plans to increase its sugar mills’ processing capacity by 28.6%, to 27 thsd tonnes of sugar beets, by the start of the 2010/11 season (September 2010–August 2011). This increase in capacity will result from a reconstruction program for all mills. This program’s implementation during a new season makes the holding likely to launch its Veselopodilsky sugar plant, which sat idle during the 2009/10 season.

State property fund announced privatisation auction on 25% stake in Poltavaoblenergo [POON UK] on July 09, 2010. SPF valued 25% stake in POON at UAH 190 mln, which suggests UAH 3.44 share price.

Kyiv city raised the heating tariff by 41% and the hot water tariff by 29% since July 01, 2010. Also, the government of Ukraine allowed Kyiv city to attract a UAH 2 bln loan facility to cover its debt to Kyivenergo [KIEN UZ]. Kyiv city needs to compensate the difference in heating tariffs to KIEN from the city budget, but has accumulated over UAH 2 bln outstanding to KIEN, which in turn generates losses for KIEN.

Zaporizhtransformator [ZATR UZ, BUY], the CIS leader and one of the global leaders in transformer manufacturing, reported signing agreement with Abengoa S.A., under which ZATR will supply 2 ТМН-60000/220 transformers.

Azovmash, the leading Ukrainian machinery holding, which specializes in freight railcars and equipment for metallurgy production, reported sales of about UAH 2.2 bln as a result of 5M2010, implying growth of 90% YoY. In particular, the company produced 4457 freight railcars (3757 of which are tanks and 700 are gondolas), which is twice as many as a year ago.