Ukrainian Coal Machinery

Table of Contents

TABLE OF CONTENTS

1. Investment thesis
2. Industry summary
3. SHORT-TERM RISKS
4. SHORT-TERM government action
5. LONG-TERM OPPORTUNITIES
6. Valuation summary
7. Market overview
8. Short-term industry concerns
9. Growth constrained by economic weakness
10. Metallurgy: Large customer faces problems
11. Political turmoil adds more risks
12. Government offers assistance to coal industry
13. Long-term outlook: sector will recover
14. Government upgraded coal extraction targets
15. ENERGY coal: Key to ukraine' s energy independence
16. COKING COAL: DEMAND OUTPACEs SUPPLY
17. Expenditures on mining equipment must double to support at least current extraction
18. SCM started consolidation of MB
19. Needed steps for SCM to complete UMBH
20. UMBH: A holding with both vertical and horizontal integration

21. Company profiles
22. Druzhkivka Machinery
23. Monopoly producer of roof supports in Ukraine, SCM' s preferred coal machinery asset
24. Modernization program
25. Key forecasts
27. Svitlo Shakhtarya
28. Ukrainian scraping conveyors monopoly
29. Domestic operations: outlook
30. Highest profitability among Ukrainian coal machinery producers
31. Key forecasts

33. Yasynuvatsky Machinery
34. Largest Ukrainian coal machinery exporter
35. Acquisition target
36. Forecast revisions
37. Dongirmash
38. Most diversified producer in the sector
39. Appendices
39.1 Appendix A: Comparative valuation
39.2 Appendix B: Key peer financials
39.3 Appendix C: Our view on sector development: two phases
39.4 Appendix D: Private vs. state owned mines: A historical comparison
39.5 Appendix E: P&L quality is low
39.6 Appendix F: Stock market monitor
39.7 Analyst certification
40. Investment ratings

CHARTS

Druzhkivka Machinery
Svitlo Shakhtarya
Yasynuvatsky Machinery
Dongirmash
Real GDP growth, %
Equipment expenditures by Ukr. mines, breakdown by driver, USD mn
Planned coal extraction in Ukraine, mln mt
Yearly average gas price at Ukrainian-Russian border, USD/mcm
Steam coal demand from Ukrainian generation companies, mln mt
Coking coal demand in Ukraine, mln mt
Ukrainian coal extraction in 1985-2007, mln mt
Coal mines' average equipment expenditures, USD/mt of coal extracted
SCM coal machinery asset structure
Coal machinery assets sit atop SCM' s energy & steel business chain
Sales structure, 2007
Revenues, USD mln
Profitability
Sales structure, 2007
Revenues, USD mln
Profitability
Sales structure
by country
Production output, USD mln
CapEx of Ukrainian coal mines, USD mln
Ukrainian producers' market share, %
Ukrainian state vs. private mines' equipment expenditures, USD/mt of coal extracted
Coal machinery sector EBITDA margins, 1H08

TABLES

Production, units
Druzhkivka Machinery DCF output, UAH mln, as of November
Income Statement Summary, USD mln
Balance Sheet Summary, USD mln
Production output, units
Svitlo Shakhtarya DCF output, UAH mln, as of November
Income Statement Summary, USD mln
Balance Sheet Summary, USD mln
Roadheader production
Forecast revisions. Sales
Forecast revisions. Profitability
Yasynuvatsky Machinery DCF output, UAH mln, as of November
Income Statement Summary, USD mln
Balance Sheet Summary, USD mln
Income Statement Summary, USD mln
Balance Sheet Summary, USD mln
Summary of two phases before and after mine privatizations
Ukrainian mines' profile
Ukrainian coal machinery financials
Ukrainian coal machinery expenses, common size