Zaporizhie Abrasives

Zaporizhie Abrasives is the largest in the CIS countries and one of the leading abrasive tools producers in Europe. The company
manufactures abrasive materials and tools, the need in which is
satisfied by only several companies across the world. By the end of
2008, the company plans to increase its disks production capacities to
10 mn pieces, which will amount to almost 80% of the Ukrainian
market.

Stirol

Stirol (STIR) is Ukraine’s major private nitrogen fertilizer producer, processing 60% of its ammonium into derivatives, such as urea and
ammonium nitrate. The company strategy consists of strengthening
its existing positions on nitrogen fertilizer market, as well as moving
into other business segments. One area is construction materials,
with Stirol aiming for a target output of 75,000 tons of polystyrene per
annum. Another niche under development is biodiesel.

Among competitive advantages of Stirol are favorable global prices
for ammonia and urea, high efficiency in ammonia production, strong
diversification in output and improved transparency in the process of
preparation to IPO.

Chemicals

Ukrainian chemical sector is largely disputed as reliant on gas consumption where import prices are constantly revised upwards. It
concerns most of all the nitrogen fertilizers producers, where the
global price increase has outpaced domestic inputs prices markedly in
2008. As a result, export revenues of domestic fertilizers’ producers
have been up by impressive 72% y-o-y in 7M08.

Ukrainian nitrogen fertilizer manufacturers are divided into three
categories – efficient (Stirol, Odessa Port Plant, Cherkasy Azot,
Rivneazot), in transition (Severodonetsk Azot), and inefficient
(Dniproazot).

Centerenergo

Centerenergo is Ukraine’s second-largest generating company after
Dniproenergo. It has 7.6 GW of installed capacity, or 28% of Ukraine’s
thermal generating capacity and 15% of total generating capacity
nationwide. The company operates three thermal power plants. The
company’s generating assets have a convenient geographical
location: Tripilska TPP is the main energy supplier for Kyiv and
region, while Vuglegirska TPP and Zmiivska TPP are located in the
industrially developed regions of Donetsk and Kharkiv, respectively.

Utilities

The majority of utilities’ stocks, after surging by more than 200% on
average in 2007 have plummeted by a similar percentage. However,
the sector remains rather attractive in view of the expected
implementation of Regulatory Asset Based pricing methodology in
distribution and the implementation of full-fledged market of bilateral
agreements in generation. High intensity of energy consumption
creates the preconditions for wide-scale reforms in the sector. The
shares of 27 issuers are listed on PFTS which represent the energy
industry. The majority of them are energy-distribution companies
(oblenergos), comprising 23 positions. More than half of them trade
actively, while another portion can be considered as conventionally
liquid securities. All traded gencos are blue chips and are part of the
PFTS index basket.

Mariupol Heavy Machinery Plant

Transportation machinery showed the fastest output growth in 2007
(42.3%) and its dynamics is not expected to slow down markedly in
2008. Mariupol Heavy Machinery Plant, a part of Azovmash Group, has successfully launched the mass production of automobile
transportation railcars in 2008. It is expected to bring almost $200 mn
in sales in 2008.

MZVM successfully supplies converters and other steel plant equipment to a large market. As Ukrainian steel plants modernizing
their facilities to replace their outdated open-hearth furnaces with
converters, MZVM is expected to benefit as one of the largest producer in CIS. It is capable of supplying up to 30% of the converters
required by the CIS market.

Enakievo Steel Plant

Enakievo Steel Plant is by far the most technologically advanced steelmaker in Ukraine, producing all of its steel with progressive
converters and casting 80% of it with continuous casting machines.
This is significantly higher than the industry averages of 55% and
40%, respectively, which drastically reduces gas consumption, as well
as raises steel quality and rolled product yield. The technologies used
by Enakievo Steel Group are more advanced than those used by the
majority of Ukrainian companies. They do not use the open-hearth
method for steel production – the company has three 160-ton
converters.

The company is conducting the modernization program costing
$700 mln, which began in 2001 and is expected to be completed by
2012. At least $300 mln must still be invested. The company will
modernize two blast furnaces, construct two more continuous casting
machines, eliminate its outdated blooming stage and add a new
rolling mill.