Raise to OW: 1Q17 enhances margin visibility
Sales mix finally allows for margin uplift. We expect OC’s EBITDA margin will rise to 6.8% for 2Q-4Q17e, up from 5.4% in 1Q17 and 2.5% in 2016, even with full potential charge of USD88.4mn in mechanic liens on a US project. Drivers are healthy margins for the rump of OCI N.V. backlog and IFCo handover by 3Q17e. Our new 2017 EPS estimate (12% upgrade on higher margins) implies 5.7x P/E or 3.6x, assuming OC is not liable for mechanic liens. We raise our TP for OC’s Nasdaq listing by 18% to USD10.6/share on higher margins, DCF roll-over (and for the EGX listing by c30% to EGP170/share, bolstered by a weaker EGP) and upgrade our rating to Overweight from Neutral. Earnings releases should act as catalysts, particularly with the stock’s more balanced risk profile as IFCo handover nears.
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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