Kryukiv Wagon compensates for lost Belarus orders with new Kazakh contract

Kryukiv Wagon (UX: KVBZ UK, U/R) deliveries to Belarus will be down twofold to seven passenger railcars in 2011, Interfax reported on Friday. Kryukiv already supplied three railcars to Belarus, with four units still pending. At the same time, in separate news on Friday, Kryukiv announced a new order for 12 passenger railcars from Kazakhstan, which is to be executed in November 2011. Vitaly Gorovoy: We estimate the company could have earned an additional USD 5.8 mln if Belarusian orders remained steady, but at the same time put the total for the new Kazakhstan order at around USD 8.7 mln. We believe the company could turn out 21 passenger railcars in 2011 (including the two aforementioned orders). Kryukiv Wagon’s freight railcar output has also been strong: in 8M11, it made 7,213 units, which could lead to output of more than 9,000 units in 2011E (previously, we expected only 8,500 units). We maintain our positive view on the company, but place our recommendation and target price Under Review.