Northern and Central Iron Ore report 2013 EPS growth of 25% and 102%

26 февраля 2014 года
Конкорд Капитал

Центральный ГОК (CGOK), Северный ГОК (SGOK)

Mining firms Northern Iron Ore (SGOK UK) and Central Iron Ore (CGOK UK), both controlled by Ukraine’s biggest steel producer Metinvest, announced AGMs for March 31, having disclosed part of their 2013 financial results on February 25. Net profit at SGOK increased 25% yoy to UAH 4,441 mln (EPS of UAH 1.93/share), while net profit at CGOK jumped 105% yoy to UAH 1,575 mln (EPS of UAH 1.35/share). Shareholders of both enterprises will consider distributing profit and approving significant deals at the AGMs.

Roman Topolyuk: The reason for the robust earnings at both companies cannot be explained by the ordinary course of business. Production of iron ore concentrate and pellets was relatively stable, while prices for products declined 15-21% on the local market, while having grown just 5% yoy on the international market. Production costs might have fallen to some extent, but such a decline would not fully explain the bottom-line advance.

Since the improvement in earnings doesn’t seem sustainable, and the outlook for the iron ore market is worsening, we don’t see any reason why the companies should reinstate its generous dividend distributions. Voting against significant deals will give SGOK and CGOK shareholders the right to sell equities back to the company, though the buyback price, based on our estimates, will be lower than current market price (UAH 8.85/share for SGOK against the Feb. 25 closing price of UAH 9.30/share; UAH 7.6/share for CGOK vs. the UAH 8.0/share market price).

Источник: Конкорд Капитал

Аналитик: Роман Тополюк


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