Metals and Mining

June 08, 2011

Pivnichny GOK reported an outstanding set of 1Q11 financials. Net revenue rose by 37% QoQ on strong iron ore pricing, while EBITDA jumped by 52% QoQ to USD 287mn, suggesting an EBITDA margin of 64.9% (+6.4p.p QoQ). Net profit surged by 3.3x QoQ to USD 178mn, with net margin improving by a whopping 23p.p to 40.3%. We leave our FY11 financial forecasts for Pivnichny GOK unchanged, and expect the company to report net profit of USD 595mn on revenues of USD 1.6bn. We reiterate our target price for the SGOK stock of USD 2.56, which implies an 88% upside and a BUY recommendation.