AMOC released 3Q22/23 financial results showing an 18% YoY growth in consolidated net profit, recording EGP408 million compared to EGP346 million in 3Q21/22, but lower 31% QoQ than EGP592 million recorded in 2Q22/23. CURRENCY DEVALUATION IS THE KEY FACTOR Top line grew at 36% YoY to EGP7,026 million, up from EGP5,166 million in 3Q21/22, and up by 48% QoQ compared to EGP4,760 million in 2Q22/23. This was a result of: 1. Although oil prices declined by 16% YoY and 7% QoQ in 3Q22/23, exchange r...
We upgrade our fair value for AMOC from EGP6.50 per share to EGP10.80 per share, while maintaining our Overweight recommendation. Our new fair value is factoring in the following developments: * The Egyptian currency depreciation is expected to offset the decline in petroleum products prices; hence we expect a 40.8% YoY increase in AMOC’s revenues during FY22/23. Revenues are then expected to grow at a 4-year CAGR of 8.7% until FY26/27 as oil prices are projected to normalize at USD70/bbl in...
ONGOING RALLY IN BRENT IS PUSHING PRICES UPWARDS; VOLUME GROWTH MAINTAINED AMOC was able to achieve another bright quarter on the top line level, supported by both volumes and prices. AMOC recorded revenues of EGP3,724 million, compared to a weak EGP2,001 million recorded in 1Q20/21, a YoY hike of 86.1%, and compared to EGP3,081 million recorded in 4Q20/21, a QoQ rise of 20.9%. Volumes are on a rising track to get back to the company’s historical levels. 1Q21/22 witnessed sales volumes of 0.4...
ALEXANDRIA MINERAL (EG), a company active in the Oil Equipment & Services industry, now shows a lower overall rating. The independent financial analyst theScreener just confirmed the fundamental rating of 4 stars out of 4, as well as the stock market behaviour of the title as moderately risky. However, environmental deterioration penalises the general evaluation, which is downgraded to Neutral. As of the analysis date November 2, 2021, the closing price was EGP 4.37 and its expected value was es...
VOLUMES & PRICES BOOST SALES; FUEL OIL IS THE MEGA STAR AMOC continues its rise towards outstanding performance on the top and bottom line by ending FY20/21 with a remarkably strong set of results. The company achieved sales revenues of EGP10,183 million, showing a significant rise of 13.3% YoY from the previously recorded EGP8,984 million in FY19/20 and higher than our expectations of EGP9,894 million by 2.9%. The positive change in revenues is supported by a very strong second half and espe...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
FOLLOWING THE CYCLE We initiate coverage on Alexandria Mineral Oils Co. (AMOC), Egypt’s secondary refinery, with an Overweight recommendation and a FV of EGP4.00/Share. AMOC converts low sulfur Fuel Oil sourced from first stage refineries into high margin light petroleum derivatives. On average, and as per its design capacity, AMOC processes around 1.7 million tons of low sulfur Fuel Oil annually into petroleum derivates, out of which almost 43% is in a negative spread versus their main raw m...
Global pressures pose risk to short-term outlook. Higher oil prices and global financial pressures encourage a conservative shift in fiscal and monetary policies. Our base case assumes an average 55% fuel subsidy cut in July, along with a 1% hike in policy rates in 3Q18. Based on the government’s budget for an oil price of USD67/bbl (vs. USD76 spot), and the USD:EGP rate of 17.25 for FY18/19, we calculate a combined EGP5bn increase in costs for each USD1 increase in Brent and 1% depreciation in ...
Highlighted themes and actionable charts: • Emerging markets (MSCI EM) versus Developed international (MSCI EAFE). Recent USD strength has weighed on EM's relative performance. Given (1) strength in commodity prices (sans precious metals), (2) the potential for some backing-and-filling of the USD, and (3) MSCI EM price and relative strength support levels continuing to hold, we see recent weakness as a buying opportunity... see below, left • Actionable countries. The MSCI BRIC index has re...
Global Energy shares breaking out; Technology remains attractive The MSCI ACWI and S&P 500 have both achieved a higher high relative to mid-April prices, which we see as a potential early indication of a bullish trend change. Combine this with improving market internals and we are becoming incrementally more bullish. For the MSCI ACWI, one of the more concerning breadth indicators has been the percentage of stocks above their 200-day moving average. This indicator recently hit a higher high (se...
Raise TP to 14.0/share from EGP7.10/share. The drivers: i) 22% higher oil price (USD75/bbl over 2018-23 vs. cUSD62/bbl), ii) AMOC’s plans to raise value-added products over 2018-19e to 53% of production volume from 45% by revamping its Middle Distillates Dewaxing Unit (MDDU), and iii) DCF-rollover. We base our TP on spot oil, 14.5% above the BBG consensus average, and 17.6% above oil futures, as we assume the scope for continued oil price increases, given sustained OPEC output cuts, Aramco’s pla...
Expensive; maintain Underweight. We raise our TP by c31% to reflect: i) c21% higher USD:EGP forecasts (average of 18.8 over 2018-22e), ii) c11% higher oil price estimates (average of cUSD62/bbl over 2018-22e), iii) c6% higher volume assumptions, and iv) rolling over our DCF. Against this, we raise: i) non-feedstock cash cost estimates by 2.5% and SG&A by 9.1%, and ii) WACC estimate by 45bps. AMOC’s share price rallied by c32% over 4Q17, which we find unjustified. AMOC trades on a FY18/19e EV/EBI...
Initiate at Overweight; valuation gap to peers exaggerated. The state-owned 1.5mn tpa refinery AMOC trades at a FY16/17e P/E of 5.3x, 51% below peers. This means that the 45% y-o-y FY16/17e EPS growth—a function of EGPdevaluation and an oil price recovery—is still not priced in. Our DCF implies a 2016/17e P/E of 6.9x—a more reasonable 36% discount to peers, in line with its average historical discount, given limited growth beyond FY16/17e, Egyptspecific risks, and operational dependency on the g...
Maintain Underweight; adjust TP after 1:10 stock split. We adjust our TP to reflect AMOC’s 1:10 stock split, effective 19 April. AMOC’s share price rallied 27% since the split was announced in February, even though, in our view, little has changed in the meantime. AMOC trades on a 2017/18e P/E of 9.9x, 11% below global peers, which is expensive, given its exposure to Egypt and its FY17-18e EPS growth of -14.4% vs. 22.1% for peers.
Share rally overdone, downgrade to Underweight from Overweight. AMOC’s share price surged over the past month, outperforming the market by 46%. The new developments are mainly BoD decisions on 1 February 2017 to: 1) carry out a 10:1 stock split, 2) migrate 10% of outstanding shares to GDRs, and 3) implement a USD50mn plant upgrade. Capital amendments are positive for the stock’s liquidity but should not impact valuation, while the new project adds only EGP1/share to our TP. We therefore see the ...
Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...
Overlooked in broad-market rally, unmatched dividend yield. AMOC’s sales are priced based on the global benchmarks for respective products in USD, or its EGP equivalent. A higher USD:EGP rate therefore inflates 100% of revenue in EGP-terms, but only 87% of costs (feedstock). Our new FX forecasts raise 2016/17 EBITDA by 69%. AMOC trades on a FY16/17e P/E of 4.3x, 60% below global peers, implying that the market is missing the extent to which AMOC benefits from a weaker EGP. We expect a FY16/17e d...
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