Upgrade to Neutral following EGP floatation
Margin windfall from EGP float largely offsets feedstock price increase. Sidpec is a beneficiary of a weaker EGP as all of its top line is in USD (or its equivalent), while c20-30% of costs are in EGP. We raise our 2017 EPS and EBITDA estimates by 21% and 18% (despite 20% labour cost inflation), respectively. This rise is due to higher USD:EGP rate estimates, which raises our 12-month TP by 26% to EGP14.5/share. The revised TP implies 9% upside; therefore we upgrade our rating to Neutral from Underweight. The recent 300bps rate hike bodes well for Sidpec given its liquid balance sheet (net cash of EGP537mn in Sep 2016). But our 2016 DPS estimate of EGP1.35 implies a yield of 10% vs. a one-year after-tax t-bill rate of c16%.
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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