We updated our target price on Ezz Steel to EGP 10.27 with a HOLD recommendation after accounting for the additional specific risk associated with the lawsuits that the company’s ex-chairman is experiencing. Ezz Steel reported a 4.8% rise in revenues to EGP 14,844 million during the first nine months of 2012, attributed to a 4% rise in long product sales to 2.8 million tons. This has offset the drop in flat steel sales that declined 15% to 697 thousand tons following weaker global demand, which incited Ezz to suspend flat steel production at its EFS facility and focus on long products. Ezz Steel has endured a challenging quarter but we expect it to report a profit during the fourth quarter and considerably better results in 2013. The company reported a heavy quarterly loss of EGP 128 million in Q3 2012 compared to a net profit of EGP 128 million registered in Q3 2011.
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