EFG-Hermes sets OCI fair value at EGP 721.5

EFG-Hermes sets OCI fair value at EGP 721.5
Thu 6 Mar 2008 11:52 AM




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Orascom Construction Industries (OCI)


EFG-Hermes set Orascom Construction Industries (OCI) fair value at EGP 721.5, up 6.1% compared to market value and 6% compared to Hermes’ previous valuation of EGP 680, excluding fertilizers industry. Hermes recommended a ST "accumulate" and a LT "buy".

Hermes said fair value will reach approx. EGP 421.5, following proposed EGP 300 coupon payment.

Hermes forecasts consolidated revenues to net EGP 19.97 billion and EGP 20.526 billion in FY07 and FY08 resp. Net profit, before minority rights, is expected to reach EGP 6.91 billion in FY07 and EGP 71.374 billion in FY08, including EGP 67.678 capital gains.
Hermes outlook on OCI is denominated in billions.

OCI fertilizers production costs are projected to decline 20%, compared to global cost, thanks to the relative advantage of using low-priced natural gas in Egypt and Algeria, in addition to gas high prices in the US, Europe and Asia, increasing urea fertilizer prices globally.

This will reflect positively on profit margins for ME fertilizer producers, compared to other countries.