Kominmet Shareholders Voted To Increase Share Capital 24.5%

Kominmet (DMZK: BUY) shareholders at their AGM yesterday voted to increase the company’s charter fund by 24.5% to USD 9.9 mln. Subscription will be held in two stages: (1) December 17 to December 20; and (2) December 21. Eugene Cherviachenko: Management is targeting a boost in pipe production of 25% in 2007 vs. our forecast of 15% yoy and has already indicated that in mid-October the company will be launching a new pipe workshop, which will increase monthly production capacity to 20 ths mt (+33%). Proceeds from the additional share issue will finance additional working capital needs of the new pipe workshop. Our dilution-adjusted target price is USD 0.59 per share (vs. non-adjusted USD 0.75 per share), suggesting a 25% upside for those who will subscribe. We maintain our BUY recommendation.