Daily analyst comments

On August 18, Novoship published its key financial results for 6M 2008. In the reporting period, the company's revenue grew by 17% y-o-y to USD 371.2 million. The group's EBITDA, with account for income from fleet sales, rose by 11.6% to USD 240.8 million. The group's total asset balance has not changed much and is slightly above USD 2.3 billion.

The company continues to implement its fleet renovation program: in 6M 08, Novoship put one Aframax-class tanker into service and plans to commission three more vessels by the end of the year. At the moment, the company's orders portfolio includes 15 vessels to be delivered by late 2010. Novoship estimates the market value of its fleet at USD 3.2 billion. Fleet renovation will help Novoship reinforce its positions in the industry. However, an increase in the fleet's overall deadweight remains the main risk factor for Novoship, since it may lead to an excessive supply on the freight market and a downturn in freight rates.

We are generally upbeat about the group's financial results for 6M 2008: the company improved its key financials thanks to the favorable conditions on the freight market. However, we should wait for the complete report to be published in order to draw any final conclusions. Above all, the consolidation of 96.7% of Novoship shares by Sovcomflot will remain a powerful deterrent for the growth of the company's market cap. In line with our estimates, given the company's fleet renovation program, the owners of the company's preferred shares will not receive an acceptable dividend yield in the foreseeable future. We currently do not have any recommendations or target prices for Novoship shares.