Khartsyzsk Pipe increases net income 4.6x in 2011

Khartsyzsk Pipe (HRTR UK), a Metinvest subsidiary, reported 4.6x yoy growth in 2011 net income to USD 99 mln in 2011, according to an announcement for the company’s AGM on April 11. Retained earnings at the end-2011 amounted to USD 91 mln.

Roman Topolyuk: Khartsyzsk Pipe significantly improved its financials in 2011 on the back on a favorable market environment and record high pipe production of 627 kt (up 122% yoy). Given the company’s high-dividend practice of last years, we expect it will pay nearly all retained earning in dividends (expected DPS is USD 0.04/share, expected dividend yield 23%). The company’s AGM agenda also contains a “significant deals” item, which represents an embedded put option (see our note dated March 1). The strike price for the option will be close to USD 0.15/share, by our estimate.