May
29
Strojpolimerkeramika is one of the leading manufacturer of sanitary stoneware (sinks, lavatory pans etc) of budget and middle class and also ceramic bricks. The company has strong position on the Russian market and forms 1/5 part of sanitary engineering production. It also took the 6th place among the largest brick factories. About 2/3 of company’s income formed by sanitary sales, less than 1/3 – bricks sales. The last part comes from the consumer goods: vases, pots and souvenirs.
From the financial side, the company can be characterized as a stable growing one with high efficiency level, which permanently progressing. According to the last year’s results, the company increased income almost 1.5 times and net income was doubled. However company’s EBITDA margin is on 22-30% level (from 2007 to 1Q of 2008), ROIC – formed more than 50% (complying with the results of 2007).
According to the Gosstroi’s forecasts, RF constructing sector in mid term will continue growing. Thus, the demand for SPK goods may also increase. Moreover, the real estate’s total price growth is “pulling up” the building material prices and it is also a positive factor for the company. Thus, there is a high degree of probability that the company will continue to demonstrate the stable development rates and income expansion.
After DCF and public comparables analysis, we have acquired the fair price of SPK’s common and preferred shares in 79.94 USD and 27.98 USD respectively. Taking into accounts the present quotes which are seriously below our forecasts, we save “BUY” recommendation on common and preferred shares of the company intact.
Strojpolimerkeramika : The lord of the sinks - May 29, 2008 (PDF)