On January 21 the press-service of Saturn Research & Production Co released information on an agreement between OAO Saturn Gas Turbines and OAO TGC-6 to supply six 110 MWt GDT-110 gas turbine engines. These engines are expected to be used in the construction of three steam gas plants of Nizhny Novgorod thermal power station. The thermal capacity of these plants would be 840 Gcal/hour and electric output would be 975 MWt. The equipment is to be supplied before 2011. The amount of the deal is around RUB 3 bn (USD 122 mn).
OAO Saturn Gas Turbines is a 100% subsidiary of Saturn Research & Production Co. We are upbeat on the news about this long term power equipment supply agreement because the company is finally to enter this promising and rapidly growing market. In summer 2007 Saturn Research & Production Co signed a cooperation agreement with RAO UES to supply 12 GTD-110 plants for construction and upgrading of Russian power facilities. Presently, the company has confirmed contracts for supplying equipment to 11 power plants.
According to our estimates, the fair value of Saturn Research & Production Co is USD 0.176 per common share. This implies 48.8% upside and corresponds to BUY recommendation.
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