Research Notes

Kaluga Turbine Plant (KTP) is a company operating in one of the most dynamically growing segments of the machine engineering market – production of energy equipment. UES’s multi-billion dollar investment program and heavy import duties imposed on foreign energy machinery will not leave the company without production orders, while cooperation ties with Power Machines, the largest company in this sector, help KTP streamline marketing activities. The imminent purchase of a controlling interest in KTP by Power Machines will deepen partnership ties between the companies which should turn into an upside driver for KTP stocks.

• Kaluga Turbine Plant is engaged in producing modern small- and mid-capacity turbines which are enjoy strong demand.

• Marketing operations are carried out through Power Machines, Russia’s leader in terms of electric turbine production that commands over 50% of the market linked with UES, which allows KTP to obtain promising orders in Russia.

• Power Machines’ acquisition of a controlling block of shares in KTP will deepen cooperation ties between the companies, enabling KTP to gain access to Power Machines’ advanced technologies. In addition, the purchase of such a major stake could spark interest on the part of other investors, driving up KTP’s stock valuations.

The main driver for the company’s expansion and its stock valuations should be UES’ multi-billion dollar investment program and a shortage of generating facilities in Russia.

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Konstantin Romanov

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