Daily analyst comments
Chelyabinsk Pipe Works may hold IPO this year
22.07.10 11:15
News on the company’s potential IPO could increase interest in ChTPZ shares. However, given the company’s debt load and the current economic climate, we believe that, for the offering to finish successfully, the plant will have to place it at a huge discount to peers.
An unnamed source in the financial community told Reuters July 21 that Chelyabinsk Pipe Works (Russian acronym ChTPZ; RTS: CHEP) could hold an IPO as soon as 2010. The shares may be placed on both Russian trading floors and the LSE.
Given ChTPZ’s high leverage (total debt exceeds USD 2 bn with a USD 850 mn market cap), the company seems to have arranged for an IPO with a view to normalize the balance sheet structure. Company shareholders are to contemplate an additional share issue at the August 20 EGM; however, no detailed parameters are known so far.
News about the IPO could stir up interest in ChTPZ shares in the foreseeable future. However, given the company’s high debt load and the current market climate, we believe that, for the IPO to finish successfully, the plant will have to float the shares at a huge discount to peers.
We no not have an official target price or rating for Chelyabinsk Pipe Works at the moment.