Stirol 1H07 Results: Stronger if Consolidated

Stirol (STIR: U/R) released 1H07 consolidated financials. Contrary to non-consolidated UAS accounts (1H07 were reported recently), and consolidated under IAS, the figures provided by the company include all the entities under its control, even those in which the parent officially has less than a 50% share. Vladimir Nesterenko: The consolidated financials provided by the company look much stronger than the results of the parent company alone, which were reported earlier. On a 2007 annualized basis, the consolidated figures suggest that STIR currently trades at 50-60% discount to its fertilizer peers. However, we are cautious valuing the company on the basis of such a consolidation, as the entities included are controlled by Stirol’s main shareholder but not by the company itself. It is also unclear which additional business were included. We are looking into the details and will be issuing a note shortly. We put our target and recommendation under review.

               Non-consolidated  Chg, yoy  Consolidated  Chg, yoy
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Net revenue               284.6     20.9%         401.6     19.8%
Gross profit                55.7     -26.2%          86.9     22.9%
EBITDA                      14.5      -66.1%          45.7     20.1%
Net income                  9.9      -72.6%          36.1      3.9%

Gross margin              19.6%                   21.6%
EBITDA margin              5.1%                  11.4%
Net margin                   3.5%                     9.0%
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