Alcan, the world’s second largest aluminium processor, announced its plans to invest US$ 35m in a new aluminium extrusion plant in Slovakia to produce profiles mostly for the construction and transports sectors in Eastern Europe. According to the CEO of Alcan Engineered Products, the facility will allow Alcan to participate in Eastern Europe’s growing demand for soft alloy extruded products. The investment will include two aluminium extrusion press lines. Pending final approval from local authorities, production is expected to start in early 2007 and will employ approximately 200 people.
Our view: We believe the news could have a negative trading impact on Kety. Based on Kety’s 2006 results to date the demand for extrusion products is very solid and the aggressive entrance of competitor could diminish future growth of extruded products division, which we estimate at 5-10% in volume terms for the next 3 years. Kety also increases capacity in this segment by construction of one press in Ukraine, which should be fully operational beginning of 2007. We reiterate our Hold recommendation for Kety with a fair value estimate of PLN 139.3 per share.