Sokrat: LTPL intends to supply Mongolia with 13-15 locomotives
Luhanskteplovoz [LTPL UZ, BUY], the leading Ukrainian locomotives producer, intends to sign a contract with the help of Transmashholding (LTPL’s owner) with Mongolian Railways for the delivery of 13-15 locomotives between now and 2011, said LTPL’s CEO, Mr. Bykadorov. He also added that the company is in negotiations with Syria regarding the modernization of locomotives and the delivery of new equipment.
Our view: We see this news as NEUTRAL for the company. LTPL reported possible contracts with Mongolia at the end of 2009. We expect that the company would get this order: the Russian Railway owns 50% of the shares of the Mongolian Railway, and Transmashholding is the strategic partner of Russian Railways. According to our estimates, Mongolian Railways will most likely order the 2TE116U model locomotives. Such an order would bring LTPL UAH 320-370 mln (USD 40-46 mln), which is equal to 26-30% of LTPL’s 2010E revenues and 14-16% of LTPL’s 2011F revenues.
Our view: We see this news as NEUTRAL for the company. LTPL reported possible contracts with Mongolia at the end of 2009. We expect that the company would get this order: the Russian Railway owns 50% of the shares of the Mongolian Railway, and Transmashholding is the strategic partner of Russian Railways. According to our estimates, Mongolian Railways will most likely order the 2TE116U model locomotives. Such an order would bring LTPL UAH 320-370 mln (USD 40-46 mln), which is equal to 26-30% of LTPL’s 2010E revenues and 14-16% of LTPL’s 2011F revenues.
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