Zaporizhiaoblenergo To Pay Dividends.

Zaporizhiaoblenergo (ZAON: SELL) has announced its 2005 results. The company’s net revenue and net income reached USD 350 mln (+22% yoy), and USD 3.5 mln (compared to USD 0.35 mln in 2004) respectively. The company’s AGM directed 40% of its 2005 net income (USD 1.43 mln) for dividends (DPS USD 0.01, div. yield 0.96%). In addition, the company disclosed its plans for 2006: USD 460 mln net revenue (+32% yoy) and USD 4.1 mln net income (+15.6% yoy). Concorde Capital: ZAON significantly improved its performance in 2005 (reducing electricity losses below the permissive level and increasing collection payments to above 100%) which resulted in the stabilization of its net income. Still, because the company is over-priced by the market and faces the risk of a possible decrease in its customer base due to its increased electricity tariffs, we are sticking with our SELL recommendation.