OREANDA-NEWS. May 18, 2010. Kemerovo Azot released FY09 and 1Q10 RAS financials. The company’s FY09 revenue rose 12% YoY (USD389m), EBITDA increased c.50 % YoY to USD49m and EBITDA margin increased from 10% to 13%. The company posted a very sharp rise in net income (+188% to USD 20m), reported the press-centre of OTKRITIE Financial Corporation.

View: In 2009 the company changed its selling policy and its fertilizer prices are now in line with global market prices. Revenue from nitrogen fertilizers increased 115% YoY from USD 80.5m to USD 172m with 100% capacity utilization (95% in FY08).

Azot was able to show financial growth despite a decline in fertilizer prices and caprolactam. Increased revenue was also a function of high capacity utilization rates (almost 95%). The 5% drop in caprolactam production and a c.40 % drop in its price reduced the share of caprolactam sales in total 2009 revenue mix to from 50% to 30%. However we expect that in 2010 revenue from this segment will rise thanks to a gradual recovery in demand. We also forecast higher revenue for the company due to a rebound in prices and increased demand for other Azot products in FY10.

Valuation and Action: Azot’s stock trades on a 2010 EV/EBITDA of 4.4x, which is a 50% discount to international peers. We view the results as positive we reiterate our BUY rating for the stock.