MMKI Shuts Down Facilities For Reconstruction

Mauripol Mettalurgical Plant (MMKI: HOLD) closed its converter and blast furnace shops due to a global slowdown in demand for steel products and a permanent transportation tariff in April. Concorde Capital: MMKI’s chairman is known as one of the most furious critics of a recent hike in transportation tariffs. However, we do not believe the higher tariffs to be a major threat. Transportation accounts for about 7% of total costs, a 50% tariff increment in April will downsize net margins by 3-4%. The company posted a net margin of 14% after 1Q05, which was on par with its 2004 levels. We forecast a margin of 10% by the end of 2005.