OREANDA-NEWS. August 23, 2010. The management of Sollers announced that the company intends to increase its Far East production of Ssang Yong SUVs to 25,000 vehicles in 2011. In December 2010, the company will launch production of a fifth model of the Korean brand, a compact crossover named “New Actyon”. Sales of the new model will begin in February 2011. Currently the plant in the Far East assembles 4 models - SsangYong Kyron, Rexton, Actyon and Actyon Sports, reported the press-centre of OTKRITIE Financial Corporation.

View: We consider this news as positive for Sollers because company intends to increase its Ssang Yong production by 1.9x in comparison to its 2010 production target of about 13,000 vehicles. This is a rather large increase in production given total 7M10 sales of approximately 39,000 vehicles. In our view, the company will manage to sell its production volumes if summer market optimism of 2010 continues into 2011.

Valuation: Sollers trades on a 2011 EV/EBITDA of 4.0x. This is at a discount to both EM and DM peers, which trade at 7.6x and 4.9x, respectively. We believe that Sollers is the top company in Russia’s automotive sector as it has a differentiated, modern model portfolio and is able to improve its business position on the market faster than competitors.