Aircraft engine producer Motor Sich (MSICH UK) reported UAH 5,918 mln in revenue in 9M13, 18% higher yoy. The company’s EBITDA plunged 26% yoy (UAH 527 mln yoy) to UAH 1,511 mln, mainly caused by a negative difference between “other operating profit” and “other operating expenses” (which declined UAH 632 mln yoy). Motor Sich’s bottom line decreased 18% yoy to UAH 992 mln.
Alexander Paraschiy: While the company remains extremely profitable by itself (EBITDA margin was 26% in 9M13), its inflated “other operating expenses” are the key area of concern for us. So far, we have no clear explanation for this phenomenon, but given that net “other operating expenses” are constantly at the level of UAH 200 mln per quarter, we still believe the company’s bottom line remains predictable. We remain neutral on the Motor Sich investment case.