Stirol 1H07 Sales Up 21%, Net Income Down 73%

Stirol (STIR: SELL) reported 1H07 net sales of USD 284.6 mln (up 21% yoy), EBITDA of USD 14.5 mln (down 66% yoy), and net income of USD 9.9 mln (down 73% yoy). Respectively, the company’s EBITDA and net margins decreased to 5.1% and 3.5%, from last year’s 18.2% and 15.4%. Vladimir Nesterenko: In fact,Stirol’s 1H07 results slightly exceeded our full year forecasts, on the back of unexpectedly high global fertilizer prices. Our base case scenario assumed a ’07 EBITDA margin of 4.3% and sales growth of only 3.0%. The stock’s current market price implies a 23% downside to our target of USD 12.5, we maintain our SELL recommendation.