Cash flow positive; upgrade to Neutral from UW
Prudent spending should enhance cash flow. We hike our 12M TP by 44% to AED0.72/share to reflect: i) a 20-25% expected drop in costs to USD1.7/boe over 2017-20e supported by opex reductions and currency devaluation in Egypt, ii) a cut in Egypt capex, thanks to a more conservative strategy towards exploration, and iii) clearing of Egypt receivables by 2019. These factors more than offset the downtrend of crude oil futures (USD50/bbl between 2017-19 vs. USD57/bbl previously). On EV/2P reserves (excluding KRI), our TP implies a 25% discount to peers on lengthy receivables collection cycle. A source of upside is that Dana Gas could now distribute dividends; we see double-digit FCFF yields over 2017-20.
CI Capital is a diversified financial services group and Egypt’s leading provider of leasing, microfinance, and investment banking products and services.
Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that include global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors.
CI Capital leverages its full-fledged investment banking platform to provide market leading capital raising and M&A advisory, asset management, securities brokerage, custody and research. Through its subsidiary Corplease, CI Capital offers comprehensive leasing solutions, including finance and operating leases, and sale and leaseback, serving a wide range of corporate clients and SMEs. In addition, CI Capital offers microfinance lending through Egypt’s first licensed MFI, Reefy.
The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics.
CI Capital has been recognized as the “Best Investment Bank in Egypt” by EMEA Finance for four years running from 2013-2016, and by Global Finance in 2014 and 2015.
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