Bloomberg News

RusHydro Drops in U.S. on Concern Cold Weather to Cut Output

February 03, 2012

(Adds closing price in second paragraph.)

Feb. 2 (Bloomberg) -- OAO RusHydro, Russia’s largest hydropower producer, fell in U.S. trading on concern colder weather will reduce electricity production and as Deutsche Bank AG cut its target price for the company’s stock.

RusHydro’s American depositary receipts dropped 1.5 percent to $3.91 in New York, paring their 29 percent advance this year.

“The company’s production is expected to decline as frosts have arrived,” analyst Dmitry Bulgakov at Deutsche Bank in Moscow said by phone. “You can’t cheat Mother Nature, water freezes when temperature drops that much.”

Temperatures in Moscow fell to minus 25 degrees Celsius (minus 13 Fahrenheit) yesterday and was expected to be as low as minus 50 Celsius in Russia’s Magadan region, according to Russia’s Hydrometeorological Center. The company’s stock in Moscow fell 0.2 percent to 1.1687 rubles. One depositary receipt is equal to 100 ordinary shares.

Deutsche Bank cut its 12-month target price for RusHydro’s Moscow-listed stock by 9 percent to 1.31 rubles. The bank reiterated its “buy” recommendation on the stock, adding that “the main downside risk is an escalation of investment costs,” analysts led by Bulgakov said in an e-mailed report.

The company plans to invest 103.6 billion rubles, or $3.4 billion, for technical upgrades of its existing power plants and construction of new projects throughout the country in 2012.

--Editors: Marie-France Han, Emma O’Brien

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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