reports
- Ahmed Soliman
Headwinds priced-in, dividend yield attractive
Overweight after recent weakness, export upside and yield. We trim our 12-month TP by a marginal 5% to EGP20/share to reflect fees imposed on sales from free zone facilities (c26% of top line) and as we turn more cautious on the pace of export rebate collection given 9M17 progress (2018e rebate proceeds-to-export sales of 2.5% vs. the historical run-rate of 5%). Our 2018 EPS estimate (-6% y-o-y) is 15% below guidance on lower margins as we assume EGP appreciation (USD:EGP rate of 16 in 2018e) wi...
- Khaled Sadek
Shielded from consumption shocks, reiterate OW
Appealing valuation warrants further rerating. We raise our 12-month TP to EGP21.0/share from EGP10.5/share on higher EBITDA (+61% over 2017-21e) on i) EGP floatation gains (FCY CoGS are fully hedged), ii) better export competitiveness and iii) the export rebate programme extension. We see 2017e revenue as price driven (+36% y-o-y) on flat volume (0.7%). We assume stable FCY export prices. OWC trades on 2017 P/E of 8x (13x implied on TP ex. rebate) vs. peers’ 15x.
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