Alert on Q1 2013 – Maintaining a HOLD on Ezz Steel as the cloud of political uncertainty continues to hover over Egyptian equities

We revise our target price on Ezz Steel up to EGP 12.07 per share from EGP 10.27 per share previously, using a WACC of 20% after accounting for the additional specific risk associated with the lawsuits filed against the ex-chairman, Ahmed Ezz, and the ability of the company to hold on to its largest and most profitable subsidiary, EZDK. We maintain our HOLD rating, anticipating a continuous pressure on Ezz’s share price amid greater levels of political and economic uncertainties. The company recorded a 7.4% y-o-y rise in revenues to EGP 5.6 billion during the first quarter of 2013, mainly due to higher average selling prices and a 7.5% y-o-y increase in long product sales to 1 million tons. Moreover, earnings at Ezz Steel witnessed a remarkable jump to EGP 202 million from EGP 18 million in Q1 2012 as revenues grew faster than expenses and borrowing costs, further supported by a EGP 130 million in foreign exchange gains.

Click below for the full report:

Ezz Steel – 2013 Q1 Update

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