Motor Sich EBITDA falls 41% in 2016, surges 4.8x in 1Q17

Ukrainian aerospace engine producer Motor Sich (MSICH UK) reported a 63% yoy jump in net revenue to UAH 3.43 bln in 1Q17, according to its April 27 regulatory filing. Its EBITDA increased 2.5x yoy to UAH 1.73 bln and net profit surged 4.8x yoy to UAH 1.46 bln in 1Q17. Its net debt dropped 24% qoq to UAH 0.49 bln.

The same day, Motor Sich posted its annual financials for 2016, with net revenue of UAH 10.55 bln (-24% yoy), EBITDA of UAH 4.23 bln (-35% yoy) and net profit of UAH 1.96 bln (-41% yoy).

Alexander Paraschiy: In dollar terms, Motor Sich’s 2016 revenue dropped 35% yoy and 61% from 2013. Such a decline is related to the loss of its major clients, Russian helicopter plants, as a result of Ukrainian economic sanctions. But nonetheless, the company remains highly profitable, being able to secure enough orders for its products, invest into the modernization of its capacities and work on new product lines. According to the company’s plans revealed at its AGM, it is going to boost output by 10% in constant prices in 2017.

By our conservative estimates, we expect the company will operate at the same capacity load this year as in 2016, while it will be able to slightly improve its revenue and EBITDA. The company’s long-term future still remains unclear, given that it has a non-transparent ownership structure, but it should be considered a good short-term investment, in our view.