Motor Sich EBITDA, profit worsens in 9M21

Ukraine’s aviation engine producer Motor Sich (MSICH
UK) generated UAH 9.70 bln of net revenue in 9M21, up 26% yoy, according to its
interim report published on Oct. 29. Meanwhile, its EBITDA decreased 22% yoy to
UAH 1.87 bln and net profit decreased 1% yoy to UAH 0.92 bln. Its operating
cash flow was negative UAH 0.03 bln in 9M21 (vs. positive UAH 0.86 bln a year
ago), which is mostly the result of a large prepayment made (UAH 7.23 bln, up
59% yoy) amid a 36% yoy decrease in prepayments received (to UAH 3.58 bln). Its
cash outflow for investments increased 54% yoy to UAH 0.18 bln. The company’s
end-September net debt amounted to UAH 1.23 bln, up 36% YTD.

Alexander Paraschiy: Large cash outflow for prepayments look worrying (this was the biggest
9M outflow), but a similar situation was observed in the year 2018, with no
large damages to the company. Most likely, the increased outflow is related to
increased commodity prices, so it might be compensated in the future by higher
prices of its finished goods. Taking into account the uncertainties with the company’s
governance, the
results look good.