VTB Leasing announces purchase of Stakhaniv Wagon's production run

Yesterday, during a visit to Stakhaniv, CEO of  Russia’s VTB Leasing Andrey Konoplev announced that his company was ready to purchase  the entire production run of 8,400 railcars of Stakhaniv Wagon (UX: SVGZ UK).  Konoplev also said VTB Leasing was interested in acquiring shares in Stakhaniv Wagon. Consequently Stakhaniv Wagon CEO Vitaliy Kasionov revised the Ukrainian manufacturer’s 2010 output up 17%, from 6,000 planned at the beginning of 2010 to 7,000. Next year Stakhaniv plans to increase production by another 14%.  The fact that VTB is making such a bold announcement about its orders suggests that the current recovery in railway machinery demand in Russia has led to a new railcar deficit on the Russian market, much like in 2007. Therefore, strong demand for Stakhaniv Wagon’s products in 2010-2011E is likely to drive an increase in railcar selling prices, favoring higher margins. We recommend Stakhaniv Wagon as a BUY (for more details see our report of September 8, 2010).