Stakhaniv Wagon Directs 2006 Net Income to Retained Earnings

Stakhaniv Wagon’s (SVGZ: BUY) AGM approved the company’s 2006 financial results yesterday: sales of USD 90.5 mln (+80% yoy) and net income of USD 2.2 mln (+330% yoy). Shareholders voted to direct 2006 income to retained earnings (i.e. no dividends will be paid). The company approved the results of its recent share issue, which increased its charter fund by USD 2.38 mln, and approved a corresponding amendment of its charter. Stakhaniv Wagon’s management announced plans to increase production to more than 6000 wagons in 2007 (sales increase of more than 1.7x yoy). Inna Perepelytsya: The company’s decision not to pay dividends is positive in the current market situation. Stakhaniv Wagon needs to increase its working capital to meet booming railcar demand. The management’s production plans are 50% higher than our forecast for 2007 (refer to our report of Feb 28, 2007).