Centrenergo Decreases Net Income 28% yoy in 2007

According to Interfax, Centrenergo (CEEN: HOLD) decreased its net income by 28% yoy to USD 12.5 mln in 2007. The company’s sales amounted to USD 678.5 mln last year, while gross profit totaled USD 60.2 mln, rising 25% yoy. The company did not disclose its EBITDA. Alexander Paraschiy: The company’s revenue is 6.8% above our forecasts, which is explained by higher than we expected production of electricity by gas-fired power units of the company in the fourth quarter of 2007. As currently, the work of gas-fired units does not look economically justified (their fuel costs are 40% larger than the costs of coal-fired power units), we do not expect they will work any time in the mid-term. Therefore, we forecast a decrease in power output by Centrenergo in 2008. We stick to our HOLD recommendation on the stock.