TMM to receive equipment from Keller

TMM (TR61 GR: BUY) signed a contract with Keller HCW (Germany) to supply equipment for TMM’s ceramic brick factory, which is under construction in Kirovohrad region. The company expects to produce the first batch of brick at the end of 1Q10 and to launch full production capacity of 105 mln units per annum in 2H10. Estimated project cost is EUR 40 mln. Alexander Romanov: TMM continues diversifying into building materials, in line with its previously announced strategy. In-house building material production, on one hand, will help TMM reduce production costs and improve control over the timing of its projects and, on the other hand, generate additional income streams. Development of the building materials business will put TMM closer to Russian PIK Group and LSR Group in terms of its business profile and, in our view, should command a premium for TMM’s stock valuation compared to the market average P/NAV metric. Both PIK Group and LSR Group trade higher than the average P/NAV for Russian real estate stocks.