Daily analyst comments

We expect the market cap of the united company to be 20% to 30% above the total market value of Uralkali and Silvinit taken separately. A doubling of business volume, liquidity growth and a higher free float will no doubt be taken at their true worth by investors.

August sales by Avtovaz have showed a downturn m-o-m, blamed on the stoppage of the production line for a week due to abnormally hot weather. On an annual basis, the monthly sales were up, with growth attributed to implementation of a clunker-for-cash program.

We are quite positive about the 17% surge in WBD revenue and the 7% y-o-y upturn in net income in 1H2010, but note the company’s profit margin came down because of a rapid growth in manufacturing, selling and other operating expenses.

The financial results have fallen short of expectations, both on EBITDA and net income. The report reveals oil production contraction, growing production costs and narrowing profit margins. On the upside, we point out the reduction in debt leverage.

Although tax benefits have so far been agreed only for one large-scale oilfield, Korchagin, it is not excluded that the Filanovsky major oilfield will also be eligible for tax breaks, but at a later date. The latter oilfield is scheduled to come on stream in 2015.

We regard the 1H2010 financial report from M Video only as moderately upbeat, despite more than a double increase in net income. We note the company’s modest profit margin of just 1.5%, an inconsiderable revenue growth, and strong influence of financial gains and losses on the final fiscal result.