Avdiyivka Coke’s EBITDA Grew 38.8% yoy in 2007

Avdiyivka Coke (AVDK: BUY), part of Metinvest Group, posted EBITDA of USD 111 mln, vs. USD 80 mln in 2006. The company’s sales totaled USD 963.9 mln, 48.8% higher than last year, while its net loss was USD 41 mln. Andriy Gerus: Avdiyivka Coke’s 2007 financial results beat our expectations: sales were 16% higher (USD 830 mln), and EBITDA margin was 11.5% vs. our previous estimate of 8.5%. Implied 4Q EBITDA and net income margins are 16.5% and 10.3% respectively, which in our view reflect the true profitability of the business. Avdiyivka’s 2007 net loss was 41.9% lower than we forecasted (loss of USD 70.6 mln) and was caused by one-off non-cash losses from transferring its 92.1% stake in Pavlohrad Coal to DTEK in 2Q07 (see our report of December 7, 2007). The news confirms our view that parent Metinvest is unlocking Avdiyivka’s value on the eve of a possible IPO in 2009. We reiterate our BUY recommendation on the stock.