On November 16, 2007 Baltic Plant released its financial statement for 9M07. The company saw substantial deterioration in its financial performance which, as the company's press office reported, is attributable to delays in final settlements under contracts executed.
Baltic Plant's 9M07 financial indicators
| | | 9M07 | 9M06 | Chng, y-o-y |
| Sales |
Rub mln |
3,599.0 |
719.5 |
400.2% |
| COGS |
Rub mln |
4,198.4 |
562.3 |
646.6% |
| Gross profit |
Rub mln |
- 599.5 |
157.1 |
neg. |
| Gross margin |
% |
-16.66% |
21.84% |
neg. |
| S&M costs |
Rub mln |
0.96 |
12.261 |
-92.2% |
| Operating profit |
Rub mln |
- 600.4 |
144.9 |
neg. |
| Operating margin |
% |
-16.68% |
20.14% |
neg. |
| EBITDA |
Rub mln |
-537 |
159 |
neg. |
| EBITDA margin |
% |
-14.92% |
22.14% |
neg. |
| Net profit |
Rub mln |
-700.8 |
650.7 |
neg. |
| Net margin |
% |
-19.47% |
90.45% |
neg. |
Source: Company data, Finam estimates
A positive development is a sharp leap in the company's sales which is due to keener interest in products manufactured by Russian shipbuilders. United Industrial Corporation, the plant's new owner that gained control over the company in summer 2005, managed to find new clients and increased its order book, execution of which ends this year, thereby pushing up the company's revenue.
A considerable jump in COGS (above topline growth) is a negative. Be that as it may, as the plant's press service said, operating losses stem from delayed payments for contracts fulfilled.
Separately, it should be noted that nine-month net margin improved dramatically on strong earnings which are not related to the company's core activities. We expect the company will get money for the contracts executed by the end of 2007, enabling it to generate profit. Due to high growth in material prices the company's operating margin will soften.
By and large, Baltic Plant has good prospects on the strength of attractive orders won by United Industrial Corporation. Furthermore, Baltic Plant operates relatively modern equipment. In line with our estimates, the approximate fair price of Baltic Plant's shares is $240.20 on 2007 forecasts which implies 284% upside and corresponds to a Buy recommendation.
0.244
0.616
