As part of our Ezz Steel coverage, please find attached an update following its FY 2012 financial results. We maintain our target price at EGP 10.27 per share, using a WACC of 20% after taking into account the local and regional economic and political conditions. The company’s share price continues to face short-term pressures from the specific risk in relation to the lawsuits filed against the ex-chairman, Ahmed Ezz, and the company’s ability to hold on to its largest and most profitable subsidiary, EZDK. Ezz Steel 2012 revenues came in line with our expectations, increasing by 6% to EGP 19,799 million versus our estimates of EGP 19,631 million. This rise was led by an 8% increase in long steel sales to 3.9 million tons despite low steel prices. Earnings at Ezz Steel plummeted to EGP 8 million in 2012 as opposed to EGP 202 million reported in 2011. This came near our estimates of EGP 15 million, as losses mounted at its EFS facility which reported an EBITDA of EGP -142 million.
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