Company Profile: Monbat

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Company Profile: Monbat

Monbat's core activity is the production and maintenance of lead-acid and starter batteries. Its main factory is situated in Montana (a city in northern Bulgaria).

The company's range of products includes starter batteries, stationery batteries, photovoltaic systems batteries, locomotive batteries and batteries with special military application (designed to meet both Russian army and NATO standards).

History

The first company factory was established in 1959. Six years later, as a unit of DSO Metalhim-Sopot, Monbat started production of batteries for military application. In 1998 the factory, which was then called Akumicar, was privatized. Main shareholder was Prista Oil.

Main Shareholders

Prista Oil controls 68.3% of the capital. Monbat Trading has 7.06%. Together both companies hold 75.36% and the rest of the shares are traded on the Bulgarian Stock Exchange.

Group

Monbat is a part of the structure of Prsita Oil B. V., registered in Holland. Monbat itself has three subsidiaries – the Serbian Monbat Oil DOO, Dobrich-based Start Jsc and the Romanian SC Monbat Recycling SRL.

Markets

The company exports most of its products. The main markets are the EU countries. Other destinations are Russia, Ukraine, The countries in the Middle East and Northern Africa.

Monbat's market share in Bulgaria is 55% and its distribution network covers 20 cities.

According to the 2008 – 2009 investment strategy, the company aims at achieving a production capacity of 3.1 mln batteries per year by mid-2009, compared with 2.1 mln batteries in 2006.

The production capacity of telecommunications and stationery batteries is set to reach 200,000 units by the end of this year.

Competition

We can divide Monbat's competitors in two groups - regional and international. The main rivals in the region are the Turkish MUTLU (4 mln battreis a year), INCI (2 mln units), and IGIT (2 mln), as well as the Serbian Black Horse (1 mln), the Slovenian TAB (1.5 mln batteries) and the Romanian ROMBAT (2 mln ).

On a global scale the biggest rivals are the American Alcad Stanby Batteries, MVR International Inc., BatteryCorp Inc., CSB Battery Technologies Inc., the Canadian Avestor, German BAE Natterien Gmbh, East Penn Manufacturing Co, GS Battery Inc etc.

Results
Monbat's consolidated profit rose 100% y/y in 2007 to 16.89 mln leva (8.63 mln euros). Net sales amounted to 141.23 mln leva (72.2 mln euros), against 85.31 mln (43.6 mln euros) in 2006. This hike is mainly attributed to rising product sales, which came to 133.63 mln leva (68.32 mln euros), versus 82.16 mln leva (42 mln euros) in the preceding year.

Costs on economic elements last year came to 120.93 mln leva (61.8 mln euros) which is 64% up y/y. Costs on materials soared from 50.11 mln leva to 104.86 mln leva (53.6 mln euros). 78% of this sum was spent on lead, lead allies and polypropylene, which prove to be the most expensive materials.

Monbat's development between 2003 and 2007 is presented in the following chart.

Mln BGN 2007 2006 2005 2004 2003 1 Jan'08
Profit 16,89 8,43 3,44 4,29 2,27 3,89
Sales Revenue 141,23 85,31 47,84 35,14 21,75 19,38
Total revenue 141,55 85,74 48,14 36,09 25,54
Total Costs 122,6 75,86 44,05 30,89 22,65
Assets 124,18 85,82 55,82 41,43 25,58
Liabilities 37,1 11,76



Equity Capital 86,76 73,81




Source: Monbat

According to the company's investment strategy, this year Monbat will make 60% of the raw materials needed for production itself, as opposed to 38% last year.

In December, the balanced value of assets stood at 124.18 mln leva (63.8 mln euros), which is 45% up from a year ago.

Corporate liabilities last year totaled 37.1 ml leva (18.9 mln euros), versus 11.76 mln leva (6.01 mln euros) in 2006. Long-term liabilities are up 549% to 21.48 mln leva (10.9 mln euros) due to loans taken from banks and non-financial institutions. Current liabilities grew 85% to 15.62 mln leva (7.98 mln euros), as a result of taken credits.

Monbat's core capital stands at 19.5 mln leva, and equity capital amounts to 86.76 mln leva (against 73.81 mln leva in 2006).

Last year the company revised its prognoses twice, outperforming expectations.

The prognoses for 2008 and 2009 are based on the current prices of lead – 2,500 USD/ton and 2,000 USD/ton for 2009.

The table below contains some of the most important financial coefficients, calculated on the basis of 2007 results and 2008 profit expectations.

Prognoses (mln BGN) 2008 2009 Change %
Profit 31,5 46 46,03
EBITDA 39,76 56,53 42,16
Sales Revenue 131,99 223,06 69

Source: Monbat

Secondary trade with the shares started on 3 January 2007. The stock has since then soared 186.45%, from 9.08 to 26.01 leva/share.

As a result, the market capitalization of the company soared from 170.06 mln leva (86.9 mln euros) to 508.95 mln leva (260.22 mln euros). The lowest price per share has been 8.36 leva (on 15 January 2007) and the highest 32.99 leva (4 October).

Ratio *
P/E 29,32
Forward P/E 16,06
P/S 3,54
P/B 5,85
RoE% 19,94
RoA% 13,57
Debt – Equity Ratio 0,43
COL 4,73
Assets Turnover 1,14
Profit per share 0,87
Profit margin % 11

Source: Monbat

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