Общая характеристика:

Дата подготовки исследования: Ноябрь 2008
Компания: Сократ Капитал
Стоимость обзора: 2500 грн.
Способ оплаты: безналичный расчет
Способ получения: электронной почтой
Форма получения: в электронном виде
Количество страниц: 27

Краткое описание:(English)

Motor Sich is the only Ukrainian company and one of the world’s largest companies engaged in the development, production, testing and repair of modern aviation engines. The main driver of the company’s net revenue growth is the expected significant increase in helicopter and aircraft production in Russia, as well as the growth in demand for this equipment in other developing countries with which Russia has historically maintained close relationships. Despite Russian authorities’ announcement about starting-up the serial production of helicopter and missile engines in Russian plants, we are skeptical about the timely realization of these plans. We see the most probable and advantageous way for both parties is close cooperation in engine production.
Executive summary
MSICH’s penetration in the CIS region is dramatically high – almost 90% of mid-weight to heavy helicopters and 60% of aircrafts in use in the region are equipped with Motor Sich engines. Such a market penetration and the 100-year history of the company confirm the high quality of its products. Moreover, high entry barriers to the market and the company’s strong collaboration with Russian enterprises provide MSICH with an exclusive position in such sectors as helicopter and missile engines on the Russian market.
The core company revenue generators are new engines sales – accounting for 56% of net revenue based on 2007 results. In our model we estimate the company’s output growth for helicopter engines at 6% CAGR during the period 2008-2012. Combined with price increases, we expect revenue from helicopter engine deliveries will grow 12% CAGR during this period. As for aircraft engines, we see the highest prospects with D-436 and АI-222-25, АI-25TLSH engines in the short- to mid-term.
We conservatively estimate the net revenue growth of MSICH at 14% CAGR for 2008-2012 and 5% CAGR for 2013-2017. Also, reflecting the current growth in the cost of debt, as well as the increase in the return on investment capital requested by shareholders, results in WACC of 20% for this year, which decreases slightly to 12% in 2012 due to the anticipated stabilization of the situation.
We expect weak financial results in 2008 due to the growth in prices for raw materials and an increase in administrative expenses this year. Thus, the EBITDA margin is estimated to decline to 14.4% in 2008, compared to the peak 22.8% last year. It is then expected to smoothly recover to 17%.
Recommendation. Our DCF model is based on a three-fold method that equally takes into account perpetuity growth rate, exit EBITDA and P/E multiples. The DCF method valued MSICH at USD 234.4 per share, while the Comparative method resulted in a value of USD 107.1 per share. The average of these two mentioned methods results in a USD 182.9 as a fair value per share, with a 363% upside potential. We reiterate our BUYing recommendation.

Table of Content:(English)

1. Executive summary
2. Introduction
3. Organizational structure
4. Sales structure
5. Motor Sich prospects
6. Helicopters and helicopter engines market
7. Aircrafts and aircraft engines market
8. Missiles engines market and land equipment sector
9. SWOT analysis and Risks
10. Valuation