METKA. An exceptional quarter. GREECE EQUITY RESEARCH INDUSTRIALS March 28, 2014 Q REVIEW

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1 GREECE EQUITY RESEARCH INDUSTRIALS Q REVIEW METKA An exceptional quarter Q review The EPC contractor reported an impressive 45% increase in revenues in the fourth quarter to EUR201.1mn, reflecting solid contract execution across different geographies. EBITDA was also higher than our estimates, standing at EUR37.7mn, up 61% yoy on particularly strong margins (+183 bps yoy), owing mainly to a strong performance in Syria and Algeria. Earnings before tax stood 51% higher yoy to EUR31.6mn. Finally, net cash improved considerably both on a reported as well as an adjusted basis. Reported net cash amounted to EUR124.9mn, up EUR76mn yoy. Adjusting for the group s investment in corporate bonds as well as restricted cash (we treat both as cash equivalents), net cash amounted to EUR232.6m, exceeding our forecast of EUR200.4mn. As far as dividends are concerned, the BoD will propose to the EGM the distribution of a EUR0.30 gross dividend per share. This is lower than our forecast for EUR0.70 (DPS/Capital return) and we stand by our investment case that with over EUR200mn cash at hand and a significant cash flow generation capacity in the coming years, Metka has room for higher returns to shareholders. Update on new projects The company informed that its Turkish subsidiary Power Projects in a consortium with General Electric has signed a new contract in Algeria. This new project relates to the engineering, procurement, installation and commissioning of 8 mobile gas turbine power generation units with a total output of 180MW. It is budgeted at USD66mn and will be carried out on a fast-track schedule, with commercial operation in the first half of Estimates revision We include in 2014 the new fast-track project in Algeria, which is due to be completed within the first half of the year while we also remove the USD1.0bn Iraqi project from our backlog following the recent developments (Metka has agreed with SEPCO III to act as a supporting partner rather than a developer). As a result, we lower our sales and EBITDA forecasts by c.3% on average. We highlight that 2014e net profit includes an extraordinary transactional gain relating to the aforementioned contract in Iraq. Valuation - All in all, we leave our target price unchanged at EUR15.0per share since the impact from our minor downgrade in sales and profitability is offset by an assumed transactional gain relating to the Iraqi contract. Although our valuation implies a small c.10% upside from current levels, we highlight that the stock trades at a much more attractive target multiple than the rest of our universe (the non-financials in our focuslist trade at a 7.1x 2015e EV/EBITDA multiple). For this reason, we retain our Buy recommendation and also maintain METKA in our Top picks portfolio, taking into account the potential for significant cash flow generation and dividend capacity. Estimates EUR mn 2012a 2013a 2014e 2015e 2016e Revenues EBITDA Net Profit EPS DPS Valuation 2012a 2013a 2014e 2015e 2016e P/E EV/EBITDA EBIT/Interest expense Yield 1.8% 2.2% 4.3% 4.9% 3.8% ROE 19.0% 20.4% 17.3% 13.1% 9.4% * DPS / Capital return Recommendation BUY Target Price Closing Price (28/03) Market Cap (mn) Expected Return 10.3% Expected Dividend 4.3% Expected Total Return 14.6% METKA Share Price Mar-13 Jun-13 Aug-13 Oct-13 Jan-14 Mar-14 Stock Data Reuters RIC Bloomberg Code MTKr.AT METTK GA 52 Week High (adj.) Week Low (adj.) 9.40 Abs. performance (1m) 4.7% Abs. performance (YTD) 18.8% Number of shares 52.0mn Avg Trading Volume (qrt) 110.9k Est. 3yr EPS CAGR -16.5% Free Float 45% Analysts Katerina Zaharopoulou Equity Analyst Tel: kzaharopoulou@eurobankequities.gr John Kalantzis Head of Research Tel: jkalantzis@eurobankequities.gr Head of Research Tel: Sales Tel: Trading Tel: /110 See Appendix for Analyst Certification and important disclosures

2 Q Review The EPC contractor reported an impressive 45% increase in revenues in the fourth quarter to EUR201.1mn, reflecting solid contract execution across different geographies such as Syria, Algeria, Jordan and Iraq. In more detail, the group booked revenues of EUR34.4mn from its projects in Algeria and another EUR48.3mn from the 1,250MW upgrade in Iraq. Jordanrelated revenue reached EUR41.0mn in the quarter. At the same time, the mgt s special measures in Syria continue to deliver positive results and contract execution continued in this quarter as well, despite the social unrest in the area. The group had recorded Syria-related revenues of EUR20.5mn in Q1, EUR12.3mn in Q2 and EUR26.0mn in Q3 while it has recorded revenues ofeur53.0mn in the fourth quarter. Recall that following a 6-month freeze in operations for safety reasons last year, the mgt took special measures and resumed activities at the Deir Ali plant during Q1. It has established an office in Lebanon (2 ½ hour drive from Damascus) and mgt now has remote control in many operations and is proceeding in a very specific way and with a lot of extra measures. Regarding the second project, news is positive since the project is going ahead, albeit with difficulties, despite the unrest. Metka has done most of the engineering work and has started shipping the main equipment, although there are still some issues so they cannot initiate any construction activities at the moment. EBITDA was also higher than our estimates, standing at EUR37.7mn, up 61% yoy on particularly strong margins (+183 bps yoy), owing mainly to a strong performance in Syria and Algeria. Earnings before tax stood 51% higher yoy to EUR31.6mn. Bottom line profitability was also strong, at EUR34.5mn (+85% yoy), owing to tax adjustments (deferred taxation reversal and adjustments due to changes in the corporate tax rate) and despite increased financial expenses (mainly LoCs cost). Working capital improved considerably compared to the end of 2012, standing at EUR195mn from EUR236mn in December 2012 (at 32% of sales vs. 43% last year), owing to a reduction in receivables (down EUR19mn yoy) as well as an increase in payables (by EUR24mn). In terms of cash flow generation, the group reported free cash flows of EUR19.8mn in the quarter, up from EUR10.5mn during the same period last year. Finally, net cash improved considerably both on a reported as well as an adjusted basis. Reported net cash amounted to EUR124.9mn, up EUR76mn yoy. Adjusting for the group s investment in corporate bonds as well as restricted cash (we treat both as cash equivalents), net cash amounted to EUR232.6m, exceeding our forecast of EUR200.4mn. As far as dividends are concerned, the BoD will propose to the EGM the distribution of a EUR0.30 gross dividend per share. This is lower than our forecast for EUR0.70 (DPS/Capital return) and we stand by our investment case that with over EUR200mn cash at hand and a significant cash flow generation capacity in the coming years, Metka has room for higher returns to shareholders. 2

3 METKA Quarterly Highlights EUR mn Q Q yoy% Q (Eurobank est.) Actual vs. Eurobank Sales % % EBITDA % % EBITDA margin 18.7% 16.9% 183 bps 19.7% -95 bps EBT % % Net profits % % OCF % % FCF % % Net Debt / (Cash) - adjusted * % % Net Debt / (Cash) - reported % Source: Eurobank Equities Research * Since 2012, METKA, through Mytilineos subsidiary Mytilineos Financial Partners participates in the group s cash pooling and in this respect, has proceeded with an investment corporate bonds. This investment amounted to EUR34.7mn in December 2013 (vs. EUR41.3mn at the end of 2012). Although classified under IFRS as a receivable from connected parties, we treat this as a cash equivalent. In addition, the group reports under Other Receivables ( Sundry Debtors ) pledged deposits amounting to EUR31.6mn in 2013 (EUR9.5mn in 2012) as a security for letters of guarantee. We also treat this as a cash equivalent. 3

4 Update on new projects Metka wins EUR226mn railway project in Greece, as expected As was expected, the company recently informed that it has been appointed as the provisional contractor for the new railway line Kiato-Rododafni. The project is commissioned by ERGA OSE (a.k.a. Ergose), a subsidiary of the Greek railway organization OSE responsible for planning, development and management of all ongoing railway projects in the country. It is budgeted at EUR273mn and is co-funded by the European Regional Development Fund (ERDF). It is scheduled for implementation over a period of 24 months following the award of the contract. METKA will collaborate with THALES, a global leader in the field of signaling and telecommanding, as well as with XANTHAKIS S.A., a Greek company specialized in railway superstructure works. We remind that although it had not been officially confirmed by the company, we have already included this project in our backlog since we expected Metka to win the tender given the significantly higher discount in relation to its competitors (reportedly at 17.24% vs. 8.5%-9.5% offered by its competitors). Due to the complexity of the project, we expect it to bear quite decent EBITDA margins (close to those of motorway projects), albeit lower than the group s average. All in all, we think it is a positive development for METKA which strengthens and further diversifies its backlog. We remind that we had already included it in our backlog (for more details see METKA Eyecatching discount vs. peers issued in January 2013). New fast-track project in Algeria, budgeted at USD66mn Update on USD1.0bn project in Iraq In addition, the company informed in February that its Turkish subsidiary Power Projects in a consortium with General Electric has signed a new contract with Société Algérienne de Production de l'electricité (SPE Spa). This new project relates to the engineering, procurement, installation and commissioning of 8 mobile gas turbine power generation units with a total output of 180MW. It is budgeted at USD66mn and will be carried out on a fasttrack schedule, with commercial operation in the first half of Although the project is small (c. 3% of backlog including USD1bn Iraqi contract), this development is positive for Metka which wins its 5th project in Algeria, further strengthening its presence in the region. Finally, recall that on July 1 st, 2013, a consortium consisting of METKA S.A. and its subsidiary METKA Overseas signed an agreement with the Ministry of Electricity in Iraq in relation to the engineering, procurement and construction of a EUR1.0bn turnkey CCGT project in the area. The project relates to the construction of a reported 1,642MW CCGT plant in al-anbar and will be carried out during a period of 32 months. According to press reports, apart from METKA, Italian Saipem, South Korean Hyundai Engineering, Turkish Gama and a consortium consisting of Italian Techint Engineering and Turkish Calik were in the shortlist to win the project. The company has also given notice that the project will be carried out in collaboration with Chinese state-controlled construction company SEPCO III, which has acquired METKA Overseas. The final details of the project execution agreement are still under negotiation. During the full-year 2013 results conference call, the mgt commented that due to the increasing risk in the Al-Anbar area, it has agreed with SEPCO that Metka Overseas will lead the consortium and will execute the project and Metka will remain a supporting partner in engineering and project management, thus limiting its exposure in these activities only. We remind that we had included the USD1bn Iraqi project in our backlog so as to properly reflect it in our valuation despite the special circumstances. Following the aforementioned development, we removed it from our backlog and replace it with an extraordinary transactional gain. As a result, our valuation remains unaffected. 4

5 Estimates revision We have re-visited our model for METKA following the release of full-year 2013 results. We include the new fast-track project in Algeria, which is due to be completed within the first half of the year while we also remove the USD1.0bn Iraqi project from our backlog following the recent developments. As a result, we lower our sales and EBITDA forecasts by c.3% on average. Below the EBITDA line, we have made minor adjustments reflecting mainly increased interest expenses (LoCs cost), in line with the 2013 trends. We highlight that 2014e net profit includes an extraordinary transactional gain stemming from Metka s agreement with SEPCO III relating to the aforementioned contract in Iraq. METKA Estimates Revision EUR mn 2014e 2015e 2016e old est. new est. Revision old est. new est. Revision old est. new est. Revision Sales % % % EBITDA % % % EBITDA Margin 16.3% 16.0% -23 bps 16.3% 16.2% -4 bps 17.0% 17.0% 0 bps Net Profit % % % DPS % % % Group Free Cash Flow % % % Net Debt / (Cash) * % % % Source: Eurobank Equities Research 5

6 Valuation All in all, we leave our target price unchanged at EUR15.0per share since the impact from our minor downgrade in sales and profitability is offset by an assumed transactional gain relating to the Iraqi contract. Although our valuation implies a small c.10% upside from current levels, we highlight that the stock trades at a much more attractive target multiple than the rest of our universe (the nonfinancials in our focuslist trade at a 7.1x 2015e EV/EBITDA multiple). For this reason, we retain our Buy recommendation and also maintain METKA in our Top picks portfolio, taking into account the potential for significant cash flow generation and dividend capacity. We remind that we have reached to our target price using a blended valuation methodology applying a 50% weight to our DCF and a 50% weight to an assumed exit multiple of 2015e EV/EBITDA of 5.3x, which is in line with 2015e EV/EBITDA multiple of its global peers. On our target price, the group trades at a 10.9x 2015e PE and a 4.6x EV/EBITDA. METKA Blended Valuation Weight Target Equity Value Target Value Per Share (EUR) Prior Value Per Share (EUR) DCF Valuation 50% Multiples Valuation 50% Target Valuation Upside / Downside 10.3% Source: Eurobank Equities Research Relative Valuation Our selected universe of EPC contractors 1 currently trades at 6.4x 2014e and 5.3x 2015e EBITDA multiples. On our numbers, METKA trades at a heavy 30%-40% discount relative to its global peers on 2014e-2015e EV/EBITDA multiples. METKA Relative Valuation EV/EBITDA 2014e 2015e 2016ε EPC Contractors (BBG Consensus) 2 6.4x 5.3x 4.3x METKA (Eurobank Est.) 3.9x 4.0x 5.4x Premium / (Discount) -39.6% -24.9% 25.3% Source: Eurobank Equities Research, Bloomberg 6 1 Average of JGC, Petrofac, Samsung Engineering, Hyundai Engineering & Construction, AMEC, Jacobs Engineering, AKER Solutions, KBR, GS Engineering & Construction, Daelim Industrial, McDermott, Tecnicas Reunidas, Foster Wheeler, Duro Felguera, Kvaener and Kentz.

7 Group Financial Statements Balance Sheet EUR mn 2012a 2013a 2014e 2015e 2016e Non-current Assets Property, Plant & Equipment (net) Set-up Expenses (net) Goodwill (net) Investments Deferred Tax Asset Total Non-current Assets Inventories Trade Receivables Other receivables Cash & Equivalents * Current Assets Total Assets Share Capital & Premium Reserves Minority Interest Total Equity LT Loans Provisions Deferred Tax Liability Other Non-current liabilities Long Term Liabilities ST Loans Trade Payables Other Payables Current Liabilities Total Equity & Liabilities Source: Company, Eurobank Equities Research * * Since 2012, METKA, through Mytilineos subsidiary Mytilineos Financial Partners participates in the group s cash pooling and in this respect, has proceeded with an investment corporate bonds. This investment amounted to EUR34.7mn in December 2013 (vs. EUR41.3mn at the end of 2012). Although classified under IFRS as a receivable from connected parties, we treat this as a cash equivalent. In addition, the group reports under Other Receivables ( Sundry Debtors ) pledged deposits amounting to EUR31.6mn in 2013 (EUR9.5mn in 2012) as a security for letters of guarantee. We also treat this as a cash equivalent. 7

8 P&L EUR mn 2012a 2013a 2014e 2015e 2016e Turnover change -45.4% 10.8% 19.5% -5.9% -28.3% Gross Profit (excl. depreciation) Gross margin 21.5% 21.1% 20.0% 20.4% 22.8% Selling, Administrative & Other Expenses Fees EBITDA change -42.5% 9.8% 14.0% -4.8% -25.0% EBITDA margin 16.9% 16.8% 16.0% 16.2% 17.0% Depreciation EBIT change -43.7% 10.9% 14.4% -5.1% -26.1% EBIT margin 16.1% 16.1% 15.4% 15.6% 16.1% Net Financial Expense / Income Adjustments Earnings Before Tax change -43.2% 2.4% 36.9% -18.7% -25.1% EBT margin 15.4% 14.3% 16.3% 14.1% 14.8% Income Tax Greek levies Effective Tax Rate 16.0% -5.8% 26.0% 26.0% 26.0% Earnings After Tax Minorities Net Profit change -39.0% 30.7% -4.4% -18.7% -25.1% Net Profit margin 12.8% 15.1% 12.1% 10.5% 10.9% EPS DPS (regular & special gross) Source: Company, Eurobank Equities Research 8

9 Cash Flow Statement EUR mn 2012a 2013a 2014e 2015e 2016e Net Profit Depreciation of Fixed Assets Changes in Working Capital Other Adjustments Net Inflows (Outflows) from Operating Activities Capex Other Net Inflows (Outflows) from Investing Activities Free Cash Flow - adjusted Purchase of bonds/ Restricted cash * Free Cash Flow - reported Source: Company, Eurobank Equities Research * Since 2012, METKA, through Mytilineos subsidiary Mytilineos Financial Partners participates in the group s cash pooling and in this respect, has proceeded with an investment corporate bonds. This investment amounted to EUR34.7mn in December 2013 (vs. EUR41.3mn at the end of 2012). Although classified under IFRS as a receivable from connected parties, we treat this as a cash equivalent. In addition, the group reports under Other Receivables ( Sundry Debtors ) pledged deposits amounting to EUR31.6mn in 2013 (EUR9.5mn in 2012) as a security for letters of guarantee. We also treat this as a cash equivalent. Ratios 2012a 2013a 2014e 2015e 2016e P/E P/BV P/Sales EV/EBITDA EV/Sales EBIT/Interest expense * Net Debt/EBITDA Dividend Yield (gross) 1.8% 2.2% 4.3% 4.9% 3.8% ROE 19.0% 20.4% 17.3% 13.1% 9.4% Cash Flow Yield -3.4% 11.5% 14.0% 6.6% 3.2% Payout Ratio 18.5% 17.0% 35.0% 49.0% 50.0% Source: Company, Eurobank Equities Research * Interest expense refers to LoCs cost. 9

10 Eurobank Equities Investment Firm S.A. Member of Athens Exchange, Cyprus Stock Exchange and Eurobank Ergasias S.A. Regulated by the Hellenic Capital Markets Commission Authorisation No: 6/149/ VAT No: , Reg. No Filellinon Street Athens, Greece Telephone: Facsimile: Website: IMPORTANT DISCLOSURES This report has been issued by Eurobank Equities Investment Firm S.A., a member of the Athens Exchange, a member of the Cyprus Stock Exchange and a member of EUROBANK Ergasias S.A. Eurobank Equities Investment Firm S.A.. is regulated by the Hellenic Capital Markets Commission (HCMC) with authorisation number 6/149/ This report 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. This report is not an offer to buy or sell or a solicitation of an offer to buy or sell securities mentioned herein. The investments discussed in this report may be unsuitable for investors, depending on their specific investment objectives and financial position. The investments discussed in this report are subject to risks and in respect of some investments there is risk for multiplied losses to be caused in respect to the capital invested. The information contained herein has been obtained from sources believed to be reliable but it has not been verified by Eurobank Equities Investment Firm S.A.. The opinions expressed herein may not necessarily coincide with those of any member of the Eurobank Group. No representation or warranty (express or implied) is made as to the accuracy, completeness, correctness, timeliness or fairness of the information or opinions herein, all of which are subject to change without notice. No responsibility of liability whatsoever or howsoever arising is accepted in relation to the contents hereof by Eurobank Equities Investment Firm S.A. or any of its directors, officers or employees. Eurobank Equities Investment Firm S.A. follows procedures under Eurobank Group policies that set up Chinese Walls, restricting communication between Research and other departments inside the Company or the Group so that Eurobank Equities Investment Firm S.A. complies with regulations on confidential information and market abuse. Eurobank Equities Investment Firm S.A., or any of its related legal persons, does not hold shareholdings exceeding 5% of the total issued share capital in METKA. None of the subject companies mentioned in this report holds shareholdings exceeding 5% of the total issued share capital of Eurobank Equities Investment Firm S.A., or any of its related legal persons. Eurobank Equities Investment Firm S.A., or any of its related legal persons, is not a market maker of METKA. Eurobank Equities Investment Firm S.A., or any of its related legal persons, is not a party to an agreement relating to the production of this report with METKA. EUROBANK Equities Investment Firm S.A, or any of its related investment banking services legal persons, has not received compensation for investment banking services provided within the last twelve months from METKA. Eurobank Equities Investment Firm S.A. occasionally trades for own account on investment instruments related to METKA. Analyst Certification: This report has been written by Katerina Zaharopoulou (Equity Analyst). Analyst Compensation: The remuneration of Katerina Zaharopoulou is not tied to the investment banking services performed by Eurobank Equities Investment Firm S.A. or any of its related legal persons. Katerina Zaharopoulou did not receive or purchase the shares of METKA prior to a public offering of such shares. Katerina Zaharopoulou does not have a significant financial interest in one or more of the financial instruments which are the subject of this report or a significant conflict of interest with respect to the subject companies mentioned in this report a) that are accessible or reasonably expected to be accessible to the persons involved in the preparation of this report or b) known to persons who, although not involved in the preparation of this report, had or could reasonably be expected to have access to this report prior to its dissemination to customers or the public. Planned Frequency of Updates: Eurobank Equities Investment Firm S.A. provides daily and monthly updates as well as updates on companies based on company-specific developments or quarterly financial results announcements or any other publicly available information. 12-month Rating History of METKA: Date Rating Stock price Target price 28/03/2014 Buy /01/2014 Buy /11/2013 Buy /08/2013 Buy /05/2013 Buy /03/2013 Buy Eurobank Equities Investment Firm S.A. Rating System: Stock Ratings Coverage Universe Investment Banking Clients Count Total Count Total Buy 9 31% 3 33% Hold 12 41% 2 17% Sell 3 10% 0 0% Restricted 2 7% 1 50% Under Review 3 10% 0 0% Total % Analyst Stock Ratings: Buy: Hold: Sell: Restricted: Under Review: Based on a current 12-month view of total shareholder return (percentage change in share price to projected target price plus projected dividend yield), we recommend that investors buy the stock. We adopt a neutral view on the stock 12-months out and, on this time horizon, do not recommend either Buy or Sell. Based on a current 12-month view of total shareholder return, we recommend that investors sell the stock. Under Eurobank Group policy and / or regulations which do not allow ratings Our estimates, target price and recommendation are currently under review 10