4Q16 trading update - positive for the stock on better prices, volumes and coal output forecast
MMK announced its 4Q16 trading update this morning. Volumes and prices were better than our forecasts, resulting in implied revenue from steel sales at the main Magnitogorsk site of 9% above our estimates. In addition, management plans to grow output at the Chertinskaya-Koksovaya mine by 600kt in 2017E vs. our expectations for flat coal output in 2017E. The news should be considered positive for the stock. MMK exceeded our price target (PT) yesterday. While there is no upside to our current PT, ‎our assumptions for steel and iron ore prices are significantly below the current spot so in this price environment, MMK remains cheap. The stock is catalyst-light in the near term, however, as we do not see the sale of its Turkish plant as imminent, and an increase in the dividend is unlikely until 2H17E at the earliest.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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