Motor Sich further improves P&L in 9M20

Ukraine’s leading aeronautics firm Motor Sich (MSICH
UK) reported a 20% yoy increase in net revenue to UAH 7.70 bln in 9M20. Its
EBITDA surged 14.5x yoy to UAH 2.41 bln and its bottom line was UAH 0.93 bln
(up from negative UAH 0.53 bln a year before) in 9M20. The company’s net debt
decreased 13% yoy to UAH 1.49 bln as of end-September. The company’s cash flow
from sales of finished goods dropped 22% yoy to UAH 2.44 bln, while cash
prepayments for goods gained 32% yoy to 5.59 bln in 9M20.

In 3Q20 alone, the company reported net revenue of UAH
2.96 bln (up 27% yoy and up 10% qoq) and EBITDA of UAH 0.89 bln (up 14.9x yoy,
down 13% qoq). Meanwhile, its cash received for goods sold reached UAH 1.05 bln
in the quarter (up 12% yoy and up 96% qoq) and prepayments for goods reached
UAH 2.26 bln (up 64% yoy and up 15% qoq).

In its comments to its financial report, the company
said the bottom line improvement was the result of cost-cutting measures and
focusing on projects that have a short payback period. Meanwhile, management
highlighted that improvements in P&L and liquidity do not look sustainable.

Alexander Paraschiy: Motor
Sich’s gradually improving P&L results look especially encouraging amid the
huge uncertainty related to the company’s governance and ownership structure.
And especially encouraging is the increasing amount of prepayments that the
company has received for future goods, which indicates its order book is
growing despite all the apparent troubles. 

With such results and prospects, the company would have
looked like a bright spot in Ukraine’s local equity universe, if not the fact
that its shares remain banned from trading, with unclear prospects of resolving
the issue.