Motor Sich to produce military helicopter engines in Russia

Motor Sich (MSICH: BUY) plans to start manufacturing engines for military helicopters in the Russia cities of Bykovo and Dubna, company CEO Vyacheslav Bohuslayev said yesterday. According to him, Motor Sich is ready to invest USD ~80 mln into just one of these production facilities. Earlier, Russian Chernyshov Machinery Plant said that the government asked it to start producing VK-2500 and TV3-117 engines production (the same helicopter engines as manufactured by Motor Sich) brginning in 2010. Inna Perepelytsya: According to Motor Sich, the plant in Russia will be launched in one-two years and use up to 80% of its assembly parts from Motor Sich’s Ukrainian plant. The company said it will jointly produce military helicopter engines with state owned Russian Rosoboronexport, which was in talks to acquire Motor Sich. We believe that Motor Sich will retain ownership of at least a blocking stake in the new factory and head off Russian initiatives to begin helicopter engine production. We welcome Motor Sich’s diplomatic solution to this issue and confirm our BUY recommendation on the stock.