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RMG - Strong results from LSR Group in 1H 2012, Aug 29, 2012.

Strong results from LSR Group in 1H 2012

LSR Group (LSRG RX, LSRG LI) 1H 2012 sales were almost flat from 1H11 level, only 1% lower y-o-y. Company showed excellent EBITDA margin of 21%, up by 4pp from 1H 2011 result and 1pp higher than end-2011 level. The result outperformed consensus, which expected 18% margin.

Construction division showed strong performance in 1H 2012. In 2Q 2012 cement plant in Slantsy reached full capacity and by July LSR put into operation its brick plant in Moscow region. Positive trends on the building materials market should contribute to LSR 2H 2012 financial performance, company says.

We expect LSR to benefit from both volume and price increases on the building materials market, based on upbeat demand for residential and infrastructure construction, as well as active mortgage lending (30% of LSR mass-market sales in 1H 2012), which should trigger pre-sales. We share LSR optimism about 2H 2012 and reiterate our BUY recommendation for company stock.

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Rye, Man & Gor Securities

Copyright: Rye, Man & Gor Securities, All rights reserved.

For further Information please contact: Rye, Man & Gor Securities,

Posledniy Pereulok 17, Moscow 107045, Russia

Tel: +7 495 258 62 62, Fax: +7 495 258 62 26

Websites: http://www.rmg.ru, e-mail: research@rmg.ru
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Publication:Russian Banks and Brokers Reports
Date:Aug 29, 2012
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