Production results of KTO as of 1Q2017 demonstrate growth in transportation and freight turnover on a separate as well as on a consolidated basis.
In particular, separate and consolidated transportation have increased by 4% over the year and 2% respectively.
The growth of separate and consolidated freight turnover accounted for 6% and 7% respectively, which we associate with the lengthening of average transportation distance since the beginning of the year by 3%.
In quarterly terms, there is a growth of operational indicators (see Figure 1).
The volume of KTO’s transportation in the first half of the year practically coincided with our expectations of 22 728 ths tons (deviation of 0,018%). We positively view the lengthening of the average transportation distance, which led to the increasing growth of freight turnover.
The volume of transportations, included in our estimations of KTO’s stock value correlates with the Ministry’s of Energy planned oil production in Kazakhstan. According to Ministry’s of Energy forecast the oil production in 2017 will be 81mln tons. Considering that for the first half of the year the oil and gas condensate production in the country amounted for 42.6 mln tons (according to the Committee of Statistics, an increase by 9.7% over year), we still expect the KTO’s increase in freight turnover by the end of 2017, and maintain the “Buy” recommendation for KTO shares with 12М TP of Т1 634.