Kremenchuk Wheel’s Sales up 29.4% yoy in 2007

According to Ukrainian News, Kremenchuk Wheel (KKOL: N/R) posted sales growth of 29.4% in 2007 to USD 90.4 mln. Net income was USD 5.0 mln in 2007, 9.2% more than in 2006. Its net margin decreased 1 pp to 5.5%. Exports amounted to 70% of its total output. Inna Perepelytsya: We expect double digit growth in sales again this year, given the increased production of wheeled vehicles in the CIS. Kremenchuk’s main Ukrainian consumers, Kharkiv Tractor (HTZD: N/R), AvtoKrAZ (KRAZ: HOLD) and the Bohdan Automobile Plant (LUAZ: N/R) have announced plans to expand production capacity by more than 20% in 2008. The news is positive for Kremenchuk Wheel, but low free float, which we believe is due to its majority shareholder buying back shares over 2007, will make it hard for the market to factor in the sales growth.