Stakhaniv Wagon boosts EBITDA 1.8x in 2Q12

Stakhaniv Wagon (SVGZ UK) boosted its revenues 34% qoq in 2Q12, according to IFRS financials released yesterday. EBITDA grew 80% qoq to USD 6.3 mln, with its EBITDA margin rising 1.5 pp qoq to 5.8% in 2Q12. The company also confirmed its 2012 production plan of 8,090 freight wagons and announced a new order for two schnabel cars for 2012.

Roman Dmytrenko: The shift to production of higher value-added freight railcars (dump cars, hoppers and platforms) allowed the company to improve its profitability in 2Q12. At the same time, with only in-group bogie casting available for wagon manufacturing, Stakhaniv is currently unable to economize on scale by fully loading its production capacity. Without additional bogie casting supplies from the CIS’s largest producer, Kremenchuk Steel Casting, Stakhaniv will likely manufacture only 5,400 freight wagons in 2012 (underperforming our estimate by 23%). Though, production of schnabel cars and refocusing on higher value-added freight wagons will allow the company to reach USD 390 mln in sales in 2012 (18% below our estimate) and keep its 2012 EBITDA margin in line with our 7.7% estimate.