Mariupol Heavy Machinery Posts 22% Increase In Net Sales And Skyrocketing Net Income In 2005.

The company’s (MZVM: BUY) net revenues, USD 437.9 mln, were 6% above our projections. While EBITDA was USD 13.8 mln, 7% below our projections. Net income surged to USD 2.3 mln (we projected USD 2.5 mln), from USD 0.08 mln, reported in 2004. Mariupol Heavy Machinery is diversifying its exports deliveries, which up until 2005 had been mainly focused on Russia. It is participating in a tender for deliveries to Pakistan (~15 ths freight carriages, 5 years) and India (converters for a steel mill, 7 years). Recently it signed a contract for the delivery of railway carriages to Iran (up to 5 th carriages, 5 years). Concorde Capital: Still, we believe that the 0.5% net margin, reported by MZVM in 2005, is lower that it really is. When we compare information disclosed by its closest Ukrainian peer – Kryukivsky carriage building, w believe this figure should be ~7-11%. We expect financial transparency to increase, as MZVM plans to attract external financing for its further development.