ÌÌÊ intends to complete its stamped components plant in St. Petersburg by the end of 2009, a year earlier than originally planned. The plant will make stamped parts for automakers. The project is deemed strategic for St. Petersburg, given the rapid growth of machinery production in the city and the construction of automotive plants in the area by such renowned companies as Toyota, Ford, Suzuki, Nissan and Hyundai. The automotive producers will need steel for production, and their needs have to be met as soon as possible. Once completed, the plant will be set up for this task. An additional synergy effect is to be achieved by the construction of a metal service centre, which should make it possible to better meet the needs of machinery producers. Both projects are being fulfilled in Kolpino, located in the northwestern part of the Izhora Plants industrial area. The plant will have a capacity of 250,000 tons of metal a year. Total investments into the two production sites are estimated at EUR 276 million.
We are upbeat about the company’s strategy aimed at production capacity construction, which will allow it to meet demands on the rapidly growing domestic market. The share of products sold by the company on the domestic market has increased from 40% in 2004 to 69% in the first half of this year. The steelmaker will also gain on investments in raw-material assets, which will reduce its reliance on resources and boost its profit margins.
We believe that MMK is currently undervalued on the market. Investors are advised to BUY the company’s shares. Our target price for the stock is USD 1.62 per share.
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