In 2013, MMK could reduce revenue and profitability that will lead to the fall in stock price

In Q4 2013, MMK increased steel production by 1.4% to 2.913 million tons. In the whole year, it reduced by 8.4% to 11.941 million tons due to cessation in steel production at MMK Metalurji at the end of 2012. A. Khalikov, the analyst of Veles Capital says that they have revised the evaluation of MMK shares with the use of DCF method, and reduced target price of the shares from $0.5 to $0.45, and the recommendation remained as ‘to buy’. The main reason for revision of the evaluation was reduction in the forecast for revenue in 2014 by 4.7%. The agency presupposes that steel demand in Russia in 2014 will remain at the level of 2014, and average price for flat sections will be $550 per ton HRC. MMK gained revenue of $8.38 billion in 2013, and EBITDA of $1 billion, and in 2014, they can be correspondently $8.68 billion, and $1.07 billion.

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