We initiate the coverage of METKA SA a BUY recommendation since our estimated fairvalue is €14,50 per share. Our two-stage DCF model yields a target market value of €753,2Mand implies an upside potential of 34% from current price levels. METKA is a leading regionalplayer in turn-key energy and electro-mechanical projects and a world-class manufacturer ofcomplex fabrications with high value-added capability.AT A GLANCE:METKA was established in 1962 in Nea Ionia, Volos.METKA’s manufacturing plant for metal constructions has been in operation since 1964while since 1973 the company has been listed in Athens Stock Exchange.METKA belongs to Mytilineos group, one of the biggest industrial groups in Greece.METKA is active in three markets: Energy, Defense and Infrastructure. The main focus isplaced on the Energy sector: EPC projects (Power plants –engineering, procurement andconstruction). In Defense market METKA specializes in manufacturing co-production withdefense majors and in land defense systems. Finally, the company is able to take overtechnically demanding infrastructure applications although these projects are not currentlyof particular interest for METKA.Current backlog at €2,3B, the highest in METKA’s history from €1,8B in the end of 2009.The company’s sales used to depend mainly on PPC (Greek Public Power Company) whichused to monopolize the Greek Energy market till recently. However, nowadays the companyhas expanded abroad in order to decrease the dependence on the Greek market.In the Greek market, METKA has taken over the plants of Protergia, an energy companythat belongs to the same group (Mytilineos).List of foreign customers of METKA includes among others OMV, Petrom, RWE, PEEGT,Raytheon etc.9M:10 RESULTS: IMPRESSIVE INCREASE IN SALES AND PROFITABILITYSales of €487,21Μ increased by 140% in comparison to 9M:09. The impressive increase insales is attributed to the new contracts for big projects and to the sale of a subsidiary inJanuary 2010.Specifically, the sale of the subsidiary company ETADE to GEK Terna is responsible for anincrease in Sales by €32,4M and for higher EATAM by €27,09M.Domestic sales at €159,81M, sales in European Union (mainly Romania) at €119,09M, salesin Turkey at €196,39M and finally sales in other countries at €11,9M (mainly Syria).Q3:10 was impressive, as far as sales are concerned. Revenue reached €230,7M which arethe highest on a quarterly basis in the history of METKA. The increase can be attributed tosales from Turkey which did not exist in 9M:09.The expansion of METKA’s activities abroad is obvious since domestic sales constituted the87,2% of group’s sales in 2009 whereas they constitute now only the 32,8% (9M:10).Gross margin at 25,29% , much increased than Q3:09 (23,41%). The increase is attributed tothe first quarter during which Gross Margin reached 40,4% due to the sale of ETADE. GrossMargin of the Q3:10 was rather low at 14,8%. Gross Margin of Domestic activities at 35% affected by the sale of the subsidiary while thisof foreign activities at 20,5%.EBITDA at €107,84M increased by 199%. EBITDA margin at 22,13%, increased than the17,76% of 9M:09. The one-off profits are mainly responsible for this result. On the otherhand, adjusted domestic EBITDA margin decreased due to delays in the PPC’s project atAliveri.EBIT at €104,41M increased by 222% while EBT stand at €102,57M , increased by 223%.EATAM at €71,65M increased by 233% despite the social responsibility tax of €5,6M thatburdened the results of 2010.Operational Cash Flows at €98,39M from €50,15Μ in 9M:09 % (+96,2%).Net cash at €91,6M .CapEx needs have been at rather low levels in the past few years and will continue to be atlow levels.

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METKASA

METTK GA /MTKr.AT

Current Price (14/2):10,80

Target Price: 14,50

Upside potential:34,2%

MERIT Securities S.A., Research & Analysis Department 38 Vasileos Konstantinou str., 11635, Tel: 210.36 71 800, Fax: 210.36 71 830, e-mail: analysisdept@merit.gr

Chris A. Samothrakis cas@merit.gr, Nikolaos V. Christodoulou nvc@merit.gr,

Y-o-Y changes 2010 E 2011 F 2012F 2013F

Total Τurnover 81,03% 24,84% 6,91% -24,39%

EBITDA 112,80% 0,65% 7,71% -24,78%

EBT 111,69% 0,74% 8,05% -25,97%

EAT & Minorities 143,73% -2,03% 23,70% -26,95%

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PRICE & VOLUME vs ATHEX INDEX

Volume METKA SA ATHEX INDEX

Price: € 10.80

Target: € 14.50

METTK GA Potential 34%

Metal Constructions

Investment Opinion: BUY (5/5)

METKA S.A. Market Cap: 561,1M

Market Cap: 753,2M

February 14, 2011

% Price change since 31/12/2010: 14.86%

Effective Tax Rate 09: 32.22%

€ M 2009A 2010E 2011F 2012F

SALES 339 614 767 820

EBITDA 60.6 129.0 129.8 139.8

EATAM 35.2 85.9 84.1 104.1

FINANCIAL DATA

Market Cap: 561,1M€

200d Mov.Avrg.Price(€): 8.98

200d Mov.Avrg. Volume (#): 34,996

Major Shareholders: 53.63%

Free Float: 41.37%

Metka S.A. is an EPC Constructor focusing on thermal power

plants construction. The Company is also an industrial

manufacturer of heavy and complex mechanical structures and

assemblies used in infrastructure,energy,mining and defense

projects.

SHARE DATA

# Shares: 51,950,600 (Common Registered)

52 wk high: 11.35 (04/03/2010)

52 wk low: 7.75 (05/10/2010)

VALUATION (Working Hypotheses)

5-year CAGR of EBT: 14.51%

Institutional: 5.00%

Perpetuity after 2014: 0.50%

Risk Free Interest Rate (Rf): 5.50%

WACC: 10.98%

5-year CAGR of Turnover: 13.48%

SWOT ANALYSIS

FUTURE TARGETSStrengthsoStrong international presence.oPresence in fast growing markets.oHigh net cash position.oBacklog at historical high.oVertical integrationoCo-operation with largest internationaltechnological providersoLeader in the local market and importantregional player.

WeaknessesoInstability in revenue.o Large dependence on energy sector (EPC projects).

Opportunitieso Fast growth in energy markets in Balkan peninsula and in the MENA region and especially in Turkey.oMassive need for energy infrastructure projects.oReplacement of old capacity with highly efficient lignite fired plants by PPC.oEntry to new markets, such as Africa.

Threatso Delays in licenses of domestic projects.

oGlobal competition can hurt EBITDA.

INVESTMENT RISKS

-LIQUIDITY RISK: The risk is low due to the high net cash position of the company and the fact that its customers arefinancially strong.-INTEREST RATE RISK: This risk is trivial due to very low debt.-CREDIT RISK: Low risk because of a high dispersion of its customers.-CURRENCY RISK: High risk in the last few years due to the expansion abroad.

SHAREHOLDER’S STRUCTURE

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MYTILINEOS GROUP

INSTITUTIONAL INVESTORS (+5%)

FREE FLOAT

GROUP’S PROFILE-HISTORY

METKA, from its establishment in 1962 in Nea Ionia, Volos in Central Greece, has followed a steady path of growth, withparticularly dynamic development in recent years. METKA’s manufacturing plant for metal constructions commencedoperation in 1964 and in 1973 the company was listed on the Athens Stock Exchange.

In 1980 METKA absorbed the technical contracting firm TECHNOM S.A., further developing its capability to undertake andimplement major projects. In 1989 the acquisition of Servisteel SA. took place, adding an advanced production plant for thefirst phase of fabrication to the company’s existing manufacturing infrastructure.

During the period of July 1998 through to January 1999, Mytilineos Holdings S.A. gradually acquired a controlling interest inthe company. Following this acquisition the company’s subsequent share capital increase in December 1999 enabledMETKA to further build its capability through the acquisition of stakes in established firms with complementary activities tothose of METKA. During the period through to 2002 the acquisitions were completed, significantly enhancing METKA’sability to provide a broader range of services and complete solutions in the Energy sector.

In almost 50 years of operation, METKA has specialized in constructing very demanding and high-value added projects in allthree areas of activity, projects that demand the use of edge cutting technology. By continuously growing its technicalknow how and organization, METKA is internationally renowned as a company in position to deliver major projects to thehighest quality standards.

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Source: The Company

METKA’S FACILITIES

METKA’s major industrial facility in Nea Ionia, Volos in central Greece, is close to the Volos deep water port facilities and it is serviced by a dedicated railroad connection. It consists of a covered area of 25.000m2 with a total plot area of approximately 80.000m2. Due to the flexibility and large size/heavy weight range which can be handled, the plant represents one of the leading manufacturing facilities of its kind anywhere in the world. Works which are carried out at this site include machining, welding/fabrication, assembly, sand blasting and painting.

The facility consists of the following main working areas and lifting equipment:♦ 24x240m room, designed for construction of items of up to 100 tons, equipped with four bridge cranes of a lifting capacity of 60, 30, 15 and 10 tons respectively and an 8-meter-high hook.♦ 20x240m room, equipped with five bridge cranes with a lifting capacity of 20, 20, 10, 6 and 5 tons respectively and a 6 meter-high hook.♦ 20x240m room, equipped with five bridge cranes with a lifting capacity of 50, 20, 16, 6, and 5 tons respectively, featuring a 7-and an 11- meter-high hooks.♦ Fifteen (15) portal cranes with a lifting capacity of 2-16 tons.♦ Seven (7) 5-ton pillar-mounted slewing cranes.♦ The plant has a 2,000m2 open-air assembly area, serviced by a 70-ton portal crane.

SERVISTEEL’s industrial facility in the Volos Industrial Area, has a total area of approximately 110.000m2, of which 9.500m2 are sheltered and 35,000m2 is an outdoor storehouse of raw material (metal sheets-sections). SERVISTEEL is particularly focused on the cutting, formation (bending and rolling) and tracing of plates and sections. The storehouse area is covered by bridge cranes for immediate and easy transfer of raw material.

EKME’s industrial facilities in Thessaloniki (40% owned by METKA), consist of a total area of 22.500m2 of which 11.000m2 are sheltered, and a secondary facility in Kavala, of a total area of 6.000m2 of which 1.500m2 are sheltered. These facilities specialize in steel structure engineering and fabrication and in the production of steel equipment such as tanks, pressure vessels, and heat exchangers.

CONSTRUCTION SECTOR

METKA is the undoubted leader in the Greek EPC projects market and one of the most important regional players of the sector.Greek construction companies focus generally on infrastructure projects and secondarily on energy and general metalconstructions projects. GEK Terna S.A., J&P Avax S.A. and Michaniki S.A. are among the companies that have carried out energyprojects. Other international competitors in the regions of interest for METKA are: Ansaldo Energia (Italy) that often co-operateswith METKA, Alstom (France), Siemens (Germany), Mitsubishi Heavy Industries (Japan), Gama Endustri (Turkey), ENKA (Turkey)etc. Other companies active in this sector are: MAN Ferrostaal (Germany), Doosan Heavy Industries (South Korea), Huyndai HeavyProductions (South Korea), Eser Holding (Turkey), SNC Lavalin (Canada), Grupo Cobra (Spain) etc.

In Greece, big construction companies do not focus on energy projects but they view them as secondary activities. Specifically:GEK Terna’s energy portfolio includes the Heron II CCGT plant on behalf of its subsidiary Heron II, the gas-fired power plant ofPPC at Lavrio, hydroelectric plants for its subsidiary Terna Energy etc. J& P Avax energy projects’ portfolio include the 220 MWplants in Cyprus (Vasilika V, VI) , the 485 MW CCGT plant in Komotini for PPC, the plant in the facilities of Hellenic Petroleum inSalonica, the diesel power plant in Crete, the steam cycle power plant in Crete, Megalopoli IV power plant, the Linoperamatadiesel power plant (PPC), a small co-generation plant at Revythousa etc. Finally, Michaniki’s projects include some hydro-electrical projects for PPC.

The following table proves that almost all Greek construction companies were hit by the current recession, except for METKA.Greek construction companies were affected by the lack of public infrastructure projects and the decreased revenue fromconcessions. Only companies that have diversified their activities or have expanded their activities abroad managed to moderatetheir results. 2011 is expected a difficult year for the sector, too.

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SALES 9M:2010 SALES 9M:09 EATAM 9M:10 EATAM 9M:09

METKA 487,21 202,99 70,14 19,94

ELLAKTOR 1302,25 1665,01 8,46 72,44

GEK TERNA 439,15 564,43 1,25 80,51

J&P AVAX 568,56 704,73 9,7 23,11

MICHANIKI 63,62 114,51 -22,04 10,63

VIOTER 33,09 43,21 -10,58 -3

ATTIKAT 8,43 93,76 2,48 -3,91

ATHINA 123,53 178,94 0,07 2,19

DOMIKI KRITIS 6,46 13,17 -1,01 -0,58

MOCHLOS 26,76 52,66 1,42 0,47

TECHNIKI OLYMPIAKI 20,81 14,66 -1,78 2,29

INTRAKAT 142,79 154,63 2,94 2,73

PROODEYTIKI 17,71 3,33 0,08 1,58

EDRASIS 27,39 37,62 -12,21 -25,41

Source: Merit Research

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SMETKA’S GROUP

METKA’S Group consists of the following companies:

Servisteel (99,8%): SERVISTEEL S.A. has its headquarters in the Industrial Area of Volos and is the first steel service center in Greece and deals exclusively with the first phase of a metal construction, namely the marking-cutting-treatment of metal sheets or sections. The company was founded in 1982 and was at that time the only steel treatment company in Greece. In 1989, METKA bought a 99.98% of its share capital. Its share capital today is €2,367,560.

EKME (40%): ΕΚΜΕ is based in Thessaloniki. The company was founded in 1973; the main goal of its establishment was to execute works within the petrochemical industry. In December 1999, METKA proceeded to a 40% share acquisition valued at €9.51 million which was funded by METKA's share capital increase. EKME has facilities in Thessaloniki and Kavala; the

company also disposes site facilities in many industrial sites of his clients.

Rodax (100%): RODAX is operating in the area of electromechanical projects and specializes in electrical design. Thecompany is capable of fully undertaking the execution of integrated electrical projects (design, supply, installation andcommissioning of electrical, instrumentation and control systems) as well as the relevant civil works (desing & construction).In the context of such projects, the company cooperates with all major companies of the sector, in Greece and abroad. It wasacquired in 2000 so as to complete METKA’s capabilities in delivery of full turnkey power plants.

ELEMKA (83,5%): Its goal according to article 3 of its statute is:• Study and construction of technical works, buildings of any kind, public or private, in any relationship, fee or subcontract• Buying, selling, and exploiting real estate• Hotel and tourist business activity, construction, leasing, exploitation of tourist facilities and any relevant activity, and• Trade, import, export, and representation of items relevant to the above goals, as well as agricultural, stockbreeding and piscatory, industrial or small industry products.ELEMKA’s field of activities is mainly focused on importing and distributing bridge and road construction materials as well as their application. The company also provides engineering support, design and supervision.

The main subsidiaries of METKA abroad are the following:METKA BRAZI SRL, in Romania. RODAX Romania SRL POWER PROJECTS in Turkey (100%)DROSCO Holdings Ltd, in Cyprus. (83,5%).BRIDGE Accessories & Construction Systems S.A.

PEER GROUP ANALYSIS

As peers of Metka we consider a few foreign companies that specialise in metal constructions, or have subsidiaries thatspecialise in metal constructions (e.g. the Spanish ACS whose subsidiaries specialise in metal constructions). Some of thecompanies are competitors or potential competitors of METKA. Greek companies were not included since they focus moreon infrastructure projects rather than metal constructions such as energy projects.

METKA currently trades at a discount of 59,3% relative to most international peers since the company’s estimated P/E for2010 is 6,53 and the weighted average of the 8 peer companies below is 16,04 according to the closing price of06/02/2011. METKA’s adjusted P/E (we adjust EATAM due to the fact that there is a non-recurring profit of €27,09Μ in the2010’s earnings) is 9,52 which means that it is traded at a discount of 40,6% relative to the peers. Moreover, the median ofthe peer group is 15,25, which is also much higher than METKA’s expected P/Es (adjusted and unadjusted) for 2010.

Source: Bloomberg, Merit Research,

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COMPANY COUNTRY MARK.CAP in M € EST.P/E 2010

ALSTOM FRANCE 12484 14,2

MAN FERROSTAAL GERMANY 12246 19,36

ACS SPAIN 10969 10,37

SNC LAVALIN CANADA 6700 23,58

ENKA TURKEY 6072 16,3

DOOSAN S.KOREA 5507 13,98

TECNICAS REUNIDAS SPAIN 2540 18,43

ANSALDO ITALY 1303 14,2

ENERGY

METKA specializes in delivering complete power plants involving the complete range of Engineering, Procurement andConstruction (“EPC”) activities. METKA specializes in providing complete turn-key projects including full EPC scope ofsupply. METKA undertakes EPC contracts either on a stand-alone basis or in consortium with leading technology suppliers.

Timely delivery of complex power generation projects requires a blend of well qualified Engineering, Procurement andConstruction (EPC) functions, coordinated by specialist project management resources.

►The scope of Engineering ranges from the conceptual design of the plant through to full detailed design of all aspects ofthe plant.

►The scope of Procurement includes all aspects of procuring and expediting the delivery of all equipment, bulk materialsand services required for the successful execution of complex projects in the energy industry.

►The scope of Construction covers the activities of on-site erection, testing and commissioning of the Unit, extending up to completion of the warranty period. Construction is managed by a dedicated site team from METKA, with specialist supervisors being assigned for each discipline.

METKA’s turn-key capability extends across the full range of thermal power generation technologies (combined cycle,conventional steam plants) as well as hydro power generation. Capabilities also include the rehabilitation andupgrading/repowering of existing power plants.

Combined Cycle Plants

METKA has significant experience in combined cycle power plants, and is able to respond to customer requirements for awide range of configurations and generating capacities. METKA provides complete combined cycle power plants based onmain equipment supplied by the leading OEM’s (GE, Siemens, Alstom, Ansaldo). Fuel is normally natural gas, and dual fuelcapability can be provided for back-up purposes. A flexible approach is followed which enables the most appropriatesolution to be defined in each case for the plant’s intended operating mode. This may include for example phased deliveryof the plant, with open cycle operation of the gas turbines followed by completion of the combined cycle.

Conventional Thermal Plants

Building on its long standing activity in construction of conventional steam units, METKA has the capability to carry outturn-key EPC contracts for state-of-the-art solid fuel and oil fired power generation plants either on a stand-alone basis orin consortium with other leading suppliers. For solid fuel fired plants, METKA is able to provide plants utilizing eitherimported coal or local lignite, based on either Pulverized Coal (PC) or Fluidized Bed (FB) boiler technology.

Hydro Power Plants

METKA is flexible in meeting customer requirements for hydro power plants, with the capability to undertake projects fromsmall hydro up to large utility scale plants, selecting the most appropriate turbine technology for the particular application.For large hydro projects METKA’s scope of supply normally includes the complete electromechanical works on full turn-keybasis, whilst for small hydro projects METKA is able to deliver the complete power plant on turn-key basis including civilworks.

METKA also takes over EPC contracts for environmental upgrades of existing units, such as the installation of new fly-ashelectrostatic precipitators and the upgrade of existing precipitators at Kardia and Agios Dimitrios, plus the replacement ofthe electrostatic lignite precipitators at the Megalopolis power plant for PPC.

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Building on its long standing industrial manufacturing and site construction activities in the power generation field, METKAhas successfully developed its capabilities to become the leading EPC contractor in Greece, with a growing profile in theregion and beyond. Metka’s major customer is still PPC (Public Power Company of Greece) but the company’s expansionabroad has lead to smaller and smaller dependence on it. Some of the projects that the company completed in the pastinclude:

The Protergia natural gas fired combined cycle plant (CCGT) in Agios Nikolaos, Viotia (430 MW).The Protergia CHP plant (Co-generation) plant at the facilities of Alouminio Elladas, in Viotia prefecture (321 MW).The Lavrio V natural gas fired combined cycle plant (PPC-377 MW). The open cycle gas turbine power plants in Crete and Rhodes (PPC).The lignite fired power plants I, II,III,IV at Agios Dimitrios in Kozani prefecture (PPC).The repair of the fire-damaged unit II at Agios Dimitrios in Kozani prefecture (PPC). The lignite fired power plant at Achlada-Meliti in Florina prefecture (330 MW-PPC).The Thissavros hydro power plant in Drama prefecture (384 MW-PPC).The Piges Aoos hydro power plant in Ioannina prefecture (210MW).The Ghiona hydro power plant in Fokida prefecture (8,5MW-PPC).The Stratos hydropower plant in Aitolia-Akarnania prefecture (7MW).The Ilarion hydropower plant in Kozani prefecture.The temporary and back up power generation for Athens 2004 Olympic Games. The Korangi 220 MW combined cycle power plant in Pakistan (KESC).Environmental projects in the energy sector such as the replacement of the existing lignite Vapour ESP of lignite unit III atMegalopolis and the design, fabrication, erection and commissioning of new Electrostatic Precipitators and upgrading of theexisting ones at Units III & IV of Kardia Power Plant, 300MW each. Both projects were carried out for PPC.

Projects under construction include:oThe new Aliveri CCGT plant (417MW) for PPC. The project is expected to be delivered in the current year after delays due toarcheological findings that did not let METKA finish the project within 2010. Total value of €219M while remaining value isless than €20M which may increase due to compensation fees for the delays.oThe OMV Petrom CCGT plant at Brazi, Romania (860 MW). The project is completed under a 50/50 consortium with GE.Contract value for METKA at €210M while the remaining sum is less than €100M. The project is expected to be completedwithin 2011.oKorinthos Power 437 MW CCGT plant at the facilities of Motor Oil, at Agioi Theodoroi, Korinthos. Korinthos Power is a jointventure between Mytilineos Group and Motor Oil. The project whose total value is estimated at €285M will be deliveredwithin 2011.oA RWE-Turcas 775 MW gas-fired combined cycle plant at Denizli, Turkey. METKA is the main contractor of the project whichis expected to bring €500M to METKA.oThe PEEGT –Deir Ali- 700 MW CCGT plant near Damascus, Syria. The project is executed by a METKA-Ansaldo Energiaconsortium in which METKA is the leader. Ansaldo Energia is a subsidiary of the Italian group Finmeccanica. PEEGT (PublicEstablishment for Electricity Transmission and Generation) is the monopolistic energy company of Syria.oThe PEEGT 724 MW CCGT power plant in a consortium with Ansaldo Energia. METKA is the leader of the project and willinvoice an amount of €680M.oOMV Turkey new power plant of 870MW in Samsun. This project’s cost is estimated at €475M.The project is expected tobe delivered in 2013. METKA will soon commence operations .oMetka also holds a 10% share in the new PPC CCGT project at Megalopolis (V-811MW), in the prefecture of Arcadia. Themain contractor of the project is ETADE, a former subsidiary of METKA, purchased by GEK Terna in January 2010.

Future projects :oDomestic market conditions are not positive for the moment. METKA can benefit from the market reform in the energysector since new players have entered the market such as Protergia, Iron, Elpedison and Enelco. Few new projects areexpected from PPC which will, however, replace some old plants with new ones and cease production in some old ones.METKA currently participates in two tenders: One for a lignite-fired plant in Ptolemaida (Unit V) and one for an oil-fired plantin Crete. The lignite-fired plant’s expected capacity is around 550-660 MW and the expected cost is €1,32B. METKAparticipates in the competition through a consortium with Alstom in which METKA is expected to participate with less than50%. The project has been delayed and since recently the exact date of the acceptance of the offers is not known. The oilplant in Atherinolakkos, Lasithi is a 100MW project and the budget is estimated at €135M. As for foreign projects, METKAfocuses on the growing energy markets of MENA region, in which it has already a presence (Syria, Turkey) and secondly inthe Balkan peninsula. Turkey has a rising energy market with projects of total capacity 20-30.000 MW to be expected in thefollowing years and therefore is the main focus of METKA. The company is determined to apply only for projects with ahealthy margin.

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The Defense sector became a strategic choice for METKA in 1999, following the majority acquisition of the company by«Mytilineos Holdings S.A». By taking advantage of the experience from the construction of the hull for the «LEONIDAS»armored vehicle in 1995, METKA has developed its capabilities considerably, building concrete foundations for future defenseprojects of any scope.

Nowadays, METKA is a leading partner of major defense equipment suppliers with state-of-the-art manufacturing technologyand significant fabrication experience for land defense systems and sub-marines. The Defense sector activity is largely basedon the significant industrial assets, machinery and equipment at METKA’s two plants, as well as the advanced know-how ofthe company’s workforce. Further investments in state of the art manufacturing technology, valued at more than €15 millionhave been made, together with the addition of further specialized personnel. Through its continuous investments inequipment and personnel and as a result of these strategic actions METKA is today acknowledged as a leading partner inGreece for major defense equipment manufacturers. Metka’s former projects in this sector include:

A major part of the manufacturing for the LEO 2 HEL Main Battle Tank project, through a contract with the LEO 2manufacturer, Krauss-Maffei Wegmann, Under this contract METKA has undertaken the fabrication of 170 hulls, turrets andmechanical equipment for 170 Main Battle Tanks the needs of the Hellenic Army. It also carried out the fabrication of the hullsand recovery components for 12 Armored Recovery Vehicles Leo-2 Hel and the fabrication of equipment for 170 Leo-2 HelMBT Cannons.

METKA has also successfully completed an innovative and very demanding project for the construction of the pressure hullfor three class 214 Submarines for the Hellenic Navy. Through this project, METKA has acquired cutting edge technology andknow-how, becoming one of the few qualified manufacturers of latest generation submarine pressure hulls, thus enhancingthe company’s prospects for further exports.

A fabrication and supply of mechanical parts for self propelled Howitzer PzH 2000 for Krauss Maffei.

Complete fabrication of 42 semi-trailers for the PATRIOT Missile System for Raytheon.

Supply of 36 launcher mechanics for the PATRIOT Long Range Anti-Aircraft Defense System for Lockheed Martin.

Fabrication and supply of ninety two Leonidas type armoured vehicles for ELVO.

Current Projects include: Manufacturing of the subassemblies of the Patriot Air Defense Systems for Intracom DefenseSystems/Raytheon, 47 semi-trailers and 37 sets launcher mechanics for U.A.E. and 15 semi-trailers and 11 sets launchermechanics for Taiwan. Total cost of the project is estimated at $50Μ.

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INFRASTRUCTURE

METKA has an impressive track record in the execution of large scale Infrastructure projects, utilizing its high value-addedmetal construction capability and technical know-how. From the early days of its foundation, METKA has played a significantrole in the execution of large scale Infrastructure projects, both in Greece and abroad. METKA’s operation in the Infrastructuresector dates from the company’s establishment, and covers a range of high value-added construction projects for bridges,athletics facilities, port equipment, mining equipment and industrial and petrochemical facilities.

Within this sector, METKA has successfully completed very demanding projects such as:

The fabrication and installation of the pylon head steel structures for the land-mark Rion - Antirrion Bridge, and theassembly and installation of the bridge’s steel deck.METKA also carried out the full construction of the steel roof structure of the Olympic Velodrome and the Western Marketat the main athletics complex of the Athens 2004 Olympics, as well as the Katehaki Pedestrian Bridge, all designed by therenowned Spanish architect Santiago Calatrava.METKA also has considerable background in large scale Infrastructure works for mining and industrial facilities. Experienceincludes the design, fabrication and erection of conveyor systems for bulk materials such as lignite, wet and dry ash, cementand bauxite. Some projects of this category include : the Titan’s Zlatna Panega plant in Bulgaria, the upgrade of Titan’s plant inSalonica, the Pirdop copper plant in Bulgaria.Additionally, fabrication and installation of mining equipment (excavators, bucket wheel excavators, and stackers);Construction and erection of installations in the refining and petrochemical industry.A further area of activity for METKA is the construction of large scale cranes, such as projects carried out for the ports ofPiraeus, Rotterdam as well as ship lifting/transporting platforms utilized in major shipyards (e.g. Neorion).

METKA has significant advantages for high value-added projects within the Infrastructure sector due to the experience andhigh level of technological competence of its personnel, proven ability to meet the highest quality standards and itsdemonstrated reliability as a partner in both the local and international context.

However, this sector is not of particular interest for METKA at the moment.

There has been an important change in METKA’s backlog composition in the past few years. METKA’s revenues used to dependheavily on PPC in the past. Nevertheless, due to a shortage of PPC’s projects METKA sought expansion abroad since energymarket in Balkan peninsula and in the MENA region is growing. At around the same time Greek energy ceased to be a monopolyand Protergia (a subsidiary of Mytilineos) entered the market. It is considered that backlog (estimated at €2,3B) consistscurrently of foreign projects in a percentage of 88%. Nevertheless, the dependence of METKA’s backlog on PPC is currentlyaround 4%.

BACKLOG COMPOSITION

Source: The Company

PROJECTS ABROAD

MYTILINEOS

PPC

OTHER

PROJECTS ABROAD 88%

MYTILINEOS 5%

PPC 4%

OTHER 3%

SALES BREAKDOWN

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The company divides its activities in 4 territories: Greece, European Union, Turkey and other countries. Sales and EATAMbreakdown per territory are depicted in the following graphs. International projects account for around 88% of the currentbacklog, for the 65% of 9M:10 sales and for the 63,5% of EATAM. For 2011, we expect an around 80% of EATAM to come fromforeign projects.

GREECE: Estimated current installed energy production capacity at 14-15GW, electricity production at 64 B kWh (end of 2008)and per capita consumption at 5800 kWh.

ROMANIA: METKA is currently constructing an 860MW plant at Brazi for OMV Petrom. The country has been hurt by recessionin the past 3 years but there are important needs in the energy sector which may create opportunities in the future. Installedcapacity in the country is 22GW (end of 2009), electricity production is 65 B kwh (end of 2008) and per capita consumption isat 2900 kWh (end of 2009).

TURKEY: Turkey is one of the foreign markets on which the main focus of the company has been placed. The country is rapidlygrowing and energy needs are increasing. Thus, METKA is already constructing two CCGT plants for two energy companies (theconsortium RWE-Turcas and OMV). METKA has established a subsidiary, Power Projects which is seeking new opportunities inthis market. In the next decade, it is estimated that new units of a capacity 20-30.000 MW are going to be constructed withinthe following years which makes Turkey one of the most attractive energy markets in the MENA region with estimatedinstalled capacity at 44,8GW (end of 2009), electricity production at 194 B kWh (end of 2009), per capita consumption at 2500kWh (end of 2009) and estimated energy demand growth at 6-7% CAGR (2009-2018).

SYRIA: Syria has recently emerged as a potential market for METKA. Two projects have been already granted to METKA and toits peer Ansaldo Energia by the state energy company of the country (PEEGT). Estimated installed capacity at 8,4 GW (end of2008), electricity production at 27,4 B kWh (end of 2008), per capita consumption at 1250 kWh (end of 2008) and estimatedenergy demand growth at 5-6% CAGR (2008-2018).

PAKISTAN: In Pakistan METKA has carried out the Korangi 220 MW combined cycle power plant in Pakistan for KESC, the stateenergy company of the country.

SALES 9M:10 in M €

GREECE

EUROPEAN UNION

TURKEY

OTHER COUNTRIES

SALES 9M:09 in M €

GREECE

EUROPEAN UNION

TURKEY

OTHER COUNTRIES

0

5

10

15

20

25

30

EATAM 9M:10 in M € EATAM 9M:09 in M €

GREECE

EUROPEAN UNION

TURKEY

OTHER COUNTRIES

in M €

VALUATION

We initiate the coverage of METKA with a BUY recommendation since our Discounted Cash Flows Model derives a target price of€14,50 per share, revealing an upside of 34,2% from the current price levels. The long term growth rate is estimated at 0,5% ,weestimate beta at 0,9, assume a long-term risk free rate of 5,5% and expect the debt portion to stabilize finally to 0% of total capitalstructure in order to derive a long-term WACC of 11%. CapEx are estimated at relatively low levels for the whole 5-year periodwhole Working Capital depends heavily on the group’s sales. The enterprise value of the group according to our estimates is€678,06M. The net value of the group after the addition of current net cash and the subtraction of minorities rights becomes€753,2M.

The following tables present the calculation of the FCFF we discount in our model, the calculation of the target price per share anda sensitivity analysis illustrating how the target price changes according to different assumptions regarding the long term growthrate and the long term WACC for the group.

VALUATION

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LT WACC

14,4982 0% 0,25% 0,50% 0,75% 1,00%

10,00% 14,85 15,09 15,35 15,62 15,90

10,50% 14,44 14,66 14,89 15,14 15,39

10,98% 14,09 14,29 14,50 14,72 14,95

11,50% 13,73 13,92 14,11 14,31 14,53

12,00% 13,42 13,59 13,77 13,96 14,15

SENSITIVITY ANALYSIS

PERPETUITY GROWTH OF FCFF

CASH FLOW STATEMENT 2011 F 2012F 2013F 2014F 2015F

Turnover 767.000 820.000 620.000 638.600 657.758

EBIT (Adjusted) 125.643 135.600 100.910 109.460 116.303

Less: Adjusted Tax 37.002 26.720 19.782 21.492 22.861

NOPAT 88.640 108.880 81.128 87.968 93.442

Plus: Depreciation 4.161 4.209 4.259 4.350 4.507

Less: Change in Working Capital 44.442 43.515 -35.584 28.466 12.865

Less: Capex 4.645 4.699 5.350 6.377 6.609

Cash Flow to the Firm (FCFF) 43.714 64.875 115.621 57.475 78.476

Present Value of Future Cash Flows 251,113

Present Value of Residual Value 426,946

Value of firm 678,059

Less: Net Debt -91,604

Minorities 16,531

Plus: Participations 66

Value of Equity 753,198

Value of share 14.50

% upside potential 34.24%

MAJOR NUMBERS AND INDICES

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0,00

0,50

1,00

1,50

2,00

2,50

2009 A

2010 E

2011 F

2012F

2013F

2014F

EPS (€)

0,00

0,50

1,00

1,50

2,00

2,50

2009

A

2010

E

2011

F

2012F

2013F

2014F

Op.CF PS (€)

0,000,200,400,600,801,00

2009 A

2010 E

2011 F

2012F

2013F

2014F

DPS (€)

0,0%10,0%20,0%30,0%40,0%50,0%

2009 A

2010 E

2011 F

2012F

2013F

2014F

ROE (%)

0,0%5,0%

10,0%15,0%20,0%25,0%30,0%

2009

A

2010

E

2011

F

2012F

2013F

2014F

Gross Margin (%)

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

2009

A

2010

E

2011

F

2012F

2013F

2014F

EBITDA Margin (%)

0,0%

5,0%

10,0%

15,0%

2009 A

2010 E

2011 F

2012F

2013F

2014F

EATAM Margin (%)

Current Price

10.8 2008 A 2009 A 2010 E 2011 F 2012F 2013F 2014F 2015 F

# of Shares (,000) 51,951 51,951 51,951 51,951 51,951 51,951 51,951 51,951

P/E (x) 8.30 14.39 6.53 6.67 5.39 7.38 6.80 6.39

P/Sales (x) 0.90 1.49 0.91 0.73 0.68 0.90 0.88 0.85

P/BV (x) 2.18 2.93 2.16 1.75 1.43 1.30 1.15 1.04

EPS (€) 0.80 0.68 1.65 1.62 2.00 1.46 1.59 1.69

EPS growth (% ) 12.6% -14.9% 143.7% -2.0% 23.7% -27.0% 8.6% 6.3%

PEG (x) 0.66 -0.96 0.05 -3.29 0.23 -0.27 0.79 1.02

Operating CFPS (€) 0.43 0.70 1.84 0.87 1.22 2.29 1.20 1.60

Dividend / Share (€) 0.20 0.40 0.50 0.65 0.80 0.59 0.72 0.76

Dividend Yield (% ) 3.0% 4.1% 4.6% 6.0% 7.4% 5.4% 6.6% 7.0%

ROE (% ) 27.9% 21.3% 39.7% 29.0% 29.1% 18.4% 18.0% 17.1%

EV/Sales (x) 1.06 1.49 0.88 0.68 0.58 0.64 0.58 0.51

EV/EBITDA (x) 6.04 8.33 4.17 4.00 3.38 3.78 3.28 2.76

Net Debt / Equity (x) -0.04 -0.12 -0.46 -0.40 -0.41 -0.54 -0.53 -0.55

Current Ratio (x) 2.31 1.39 1.73 1.75 1.88 2.24 2.44 2.63

INCOME STATEMENT (€ ,000) 2008 A 2009 A 2010 E 2011 F 2012F 2013F 2014F 2015 F

Total Τurnover 381,472 339,390 614,400 767,000 820,000 620,000 638,600 657,758

COGS 299,490 261,313 463,872 611,299 651,900 489,800 501,301 513,051

Gross Profit 81,983 78,077 150,528 155,701 168,100 130,200 137,299 144,707

Other Operating Income 3,024 685 2,800 1,500 1,000 1,000 1,000 1,000

SG&A Expenses 23,466 22,968 28,589 31,559 33,500 30,290 28,839 29,404

EBIT 61,540 55,794 124,739 125,643 135,600 100,910 109,460 116,303

Depreciation 5,240 4,811 4,227 4,161 4,209 4,259 4,350 4,507

EBITDA 66,780 60,605 128,966 129,803 139,809 105,169 113,810 120,810

Interest Expense (3,561) (1,216) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000)

EBT 57,980 54,578 122,739 123,643 133,600 98,910 107,460 114,303

Taxes 13,195 17,586 35,057 37,002 26,720 19,782 21,492 22,861

Minorities 3,357 1,756 1,800 2,500 2,800 3,100 3,400 3,700

EAT & Minorities 41,428 35,236 85,882 84,140 104,080 76,028 82,568 87,742

CASH FLOW (€ ,000) 2008 A 2009 A 2010 E 2011 F 2012F 2013F 2014F 2015 F

Cash flow from Operations 22,405 36,607 95,563 45,447 63,273 119,194 62,204 83,310

Cash Flow from Investment 832 -179 2,099 -8,606 3,295 -3,265 -5,227 -4,973

Net Cash Flow from Financing -32,813 -22,892 -8,222 -26,305 -35,856 -43,752 -31,651 -38,686

BALANCE SHEET (€ ,000) 2008 A 2009 A 2010 E 2011 F 2012F 2013F 2014F 2015 F

Total Non-Current Assets 77,936 78,633 72,555 78,873 72,831 71,211 73,490 75,654

Inventory 15,292 12,756 16,300 23,010 24,600 18,600 19,158 16,444

Other Current Assets for Sale

Total Cash 17,688 31,289 120,729 131,266 161,978 234,155 259,481 299,132

Total Current Assets 257,018 404,128 667,748 765,917 840,484 778,172 819,818 866,412

Total Assets 334,954 482,761 740,304 844,790 913,316 849,383 893,309 942,066

Long Term Bank Loans

Non Current Liabilities 65,587 18,369 95,540 86,651 73,052 70,624 71,222 71,701

Short Term Banks 11,417 10,422 2,200 2,200 1,000

Current Liabilities 111,326 291,126 385,200 437,700 446,600 347,600 335,370 329,362

Equity 158,040 173,269 259,564 320,439 393,663 431,159 486,716 541,003

Total Equity & Liabilities 334,954 482,761 740,304 844,790 913,316 849,383 893,309 942,066

MARGIN ANALYSIS % 2008 A 2009 A 2010 E 2011 F 2012F 2013F 2014F 2015 F

Gross Profit 21.5% 23.0% 24.5% 20.3% 20.5% 21.0% 21.5% 22.0%

SG&A Expenses 6.2% 6.8% 4.7% 4.1% 4.1% 4.9% 4.5% 4.5%

EBITDA 17.5% 17.9% 21.0% 16.9% 17.0% 17.0% 17.8% 18.4%

EBT 15.2% 16.1% 20.0% 16.1% 16.3% 16.0% 16.8% 17.4%

EAT&Minorites 10.9% 10.4% 14.0% 11.0% 12.7% 12.3% 12.9% 13.3%

Effective Tax rate 22.8% 32.2% 28.6% 29.9% 20.0% 20.0% 20.0% 20.0%

Source: MERIT SECURITIES, Company Financial Data

METKA S.A.

Glossary

AGM: Annual General Meeting

CAGR: Compound Annual Growth Rate

CFPS: Cash Flow per Share

COGS: Costs of Goods Sold

DPS: Dividends per Share

EAT: Earnings after Taxes

EATAM: Earnings after Taxes and Minorities rights

EBIT: Earnings before Interest and Taxes

EBITDA: Earnings before Interest and Taxes, Depreciation, and Amortization

EBT: Earnings before Taxes

EPS: Earnings per Share

EV: Enterprise Value

FCFF: Free Cash Flows to the Firm

fx: Foreign Exchange

LT-WACC: Long-term Weighted Average Cost of Capital

NOPAT: Net Operating Profits After Taxes

P/BV: Price to Book Value

P/E, PE: Price to Earnings ratio

PEG: Price/Earnings to Growth ratio

ROE: Return on Equity

SG&A: Selling, General and Administrative

ttm: Trailing Twelve Months

WACC: Weighted Average Cost of Capital

ΔNWC: Change in Net Working Capital

Abbreviatons

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Investment Ratings

BUY (5/5): The difference between the stock’s estimated target price and its current price is +30%

ACCUMULATE (4/5): The difference between the stock’s estimated target price and its current price is between (+10% and +30%)

HOLD (3/5): The difference between the stock’s estimated target price and its current price is between (-10% and +10%)

AVOID (2/5): The difference between the stock’s estimated target price and its current price is between (-10% and -30%)

REDUCE (1/5): The difference between the stock’s estimated target price and its current price is -30%

Disclaimer

This report has been prepared and issued by MERIT Securities SA which is regulated by the Hellenic Capital Market

Commission and is subject to the rules of conduct applicable to investment firms (EPEYs) as established under Greek

regulations. This report has been issued by MERIT Securities SA and may not be reproduced in any manner or provided to

any other persons. Each person that receives a copy by acceptance thereof represents and agrees that it will not distribute or

provide it to any other person. The information contained herein has been obtained from sources believed to be reliable but

MERIT Securities SA has not verified it. The opinions expressed herein may not necessarily coincide with those of any

member of MERIT Securities SA. No presentation or warranty (express or implied) is made as to the accuracy,

completeness, correctness, and timeliness of fairness of the information or opinions herein, all of which are subject to

change without notice. No responsibility or liability what so ever or how so ever arising is accepted in relation other contents

herein by MERIT Securities SA or any of its directors, officers or employees. This report is not an offer to buy or to sell or a

solicitation of an offer to buy or sell securities mentioned herein. MERIT Securities SA and others associated with it may

have positions in, and may affect transactions in securities of companies mentioned herein. MERIT Securities SA and/or its

associated group companies or a person or persons connected with the company may from time to time act on their own

account in transactions covered in its research reports. MERIT Securities SA may do and may seek to do business with

companies covered in its research reports. As a result, investors should be aware that the firm might have a conflict of

interest that could affect the impartiality of this report. Investors should consider this report as only a single factor in making

their investment decision. The investment discussed in this report may be unsuitable for investors, depending on their

specific investment objectives and financial position.

At the date of the issuance of this report (mentioned in the first page of the report) MERIT Securities SA acts as a market

maker for the following securities: Viohalko S.A., Elastron S.A., Sciens S.A., Byte Computer S.A., Centric S.A., ETEM

S.A, INTRAKAT S.A.

At the date of the issuance of this report (mentioned in the first page of the report), none of the subject companies

mentioned in this report owns more than 5% of MERIT Securities SA or any of its affiliated companies.

MERIT Securities SA may have received compensation from the company for financial advisory services during the past

12 months.

MERIT Securities SA has not received compensation from the company for the preparation of the research report.

Analyst Certification

The analyst responsible for the content of this research report (in whole or in part), certifies that a) all the views about the

companies and securities contained in this report accurately reflect the personal views of the respective author and b) no part

of our compensation was or will be directly or indirectly related to the specific recommendations or view of this report. The

author of this report may have held or hold in the future shares of the company covered in its research reports. The analyst or

at least one of the analysts mentioned in this report are Certified as “Analyst of Equities and the Market” by the Hellenic

Capital Market Commission.

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