We are initiating coverage of Rusal with a Buy recommendation, as our DCF-based fair value of HKD 10.0 per share points to a 18% upside. We apply conservative metal price assumptions for aluminum and alumina, anticipating a 2010 price of USD 2,225 per ton for aluminum and USD 356 per ton for alumina. Long term, from 2015 we expect aluminum to be USD 2,300 per ton and alumina to be USD 368 per ton.
Mostotrest, the leading bridge builder in Russia, acquired a 24% stake in Mostostroy-11 common equity. While Mostotrest did not disclose the deal’s value or the seller, we estimate that Mostotrest paid USD 25-35mn for the stake, or USD 1,200-1,935 per share. We believe the shares were sold by either company management or the E4 Group, which bought a stake of approximately 30% in Mostostroy-11 in early 2008. If Mostotrest bought the shares from management, it would decrease management ownership of the company to 29%. We estimate Mostostroy-11 free float remains approximately 20%.
Both common and prefs rated as Buys, although we think prefs look more attractive
We resume coverage of Nizhnekamskneftekhim (NKNC) common stock with a new DCF-based fair value of USD 0.59 per share and a 12% upside. We note the recovery of the petrochemical market in short-term, but we think this is limited with an unfavorable outlook for the operating environment in the medium-term as well as the possibility of an additional equity placement. However, our fair value for preferred shares is USD 0.32, providing an upside of 58%, and we upgrade to a Buy.
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