OREANDA-NEWS. March 02, 2010. Kamaz has reported robust production growth for 2M 2010, estimated at about 40% y-o-y. Our estimates, however, link the growth to the production line stoppage a year earlier. We expect further growth in production volumes in 2H 2010, due to the company’s state order and gradual market recovery.

On March 1, Kamaz published manufacturing results for January-February, 2010. The report says that the company produced 3, 888 trucks and vehicle assembly kits in the reporting period, a 39.5% gain y-o-y, including 2,102 ready-made vehicles and assembly kits manufactured in February, up 30% year-on-year and a 18% gain month-on-month.

We view the posted results as moderately upbeat. We also note that the growth is in large measure due to production line stoppage in early 2009. According to our estimates, current production volumes are in line with market demand. The production target for 2010 of 27,200 vehicles shows that the company counts on growth of demand in 2H 2010. In our view, the expectations are not groundless, given that the bulk of the state order with the company typically falls to the second half of the year.

Our target price for one common share in Kamaz is USD 2.53 per share, which implies a potential downside of 1.9% and corresponds to a HOLD rating.