Kryukiv Railcar raises profit 20% yoy in 2012, DPS may reach UAH 1.34

Kryukiv Railcar (KVBZ UK) boosted its net income 20% yoy to UAH 771 mln, according to preliminary results reported in the company’s AGM announcement released on March 15. The company’s AGM wil take place April 18 with its agenda containing items for profit distribution and approval of significant deals.

Roman Dmytrenko: Kryukiv’s annual financial result fell in line with our expectations. We believe the company will maintain its usual 20% distribution ratio this year and pay out about UAH 1.34/share in dividends, yielding 5.9%. Though recall that one of the large shareholders exited the company in 2012 and that might change the company’s dividend policy.

Shareholders should consider their option to sell their shares to the issuer after voting against significant deals at the AGM (refer to our Feb. 19 note for more details). We estimate the selling price in this scenario would be at least UAH 22.35/share. Kryukiv’s financials look to be a lot worse in 2013 as we expect it will cut significantly its freight car production. In the worst case scenario, the company may suspend production temporarily owing to a severe shortage in bogie castings provided by its supplier, Kremenchuk Steel Casting.