MMK - 2Q Results Increase Likelihood of Beat on Annual EBITDA Consensus
MMK reported strong 2Q17 IFRS results yesterday. Adjusted EBITDA of $437 mln was in line with the consensus forecast and almost flat Q-o-Q. The EBITDA margin decreased to 23%, due to expensive feedstock (iron ore and coal) that had been bought in 1Q17. However, the margins should improve in 3Q17 on the back of higher steel prices and probably flattish cash costs. We thus believe that 9m17 EBITDA may well exceed $1.4 bln, so the likelihood of a beat on the annual consensus of $1.7 bln is high. We reiterate our BUY recommendation.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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