CAIRO: A recovery in Egypt’s passenger car market will benefit GB Auto Group, the nation’s biggest listed automobile assembler, Alembic HC said and upgraded the stock to "neutral" from "underweight."
"However, social unrest, rising inflation, and Egyptian pound depreciation could hold consumers back from discretionary spending for some time," HC said in a note.
The brokerage, which cut the target price on the stock by 3 percent to LE 33.5 per share, expects continued weakness in the company’s commercial vehicles business.
Commercial vehicles, which was on the cusp of recovery, has been affected by the unrest that culminated in President Hosni Mubarak’s resignation on February 11, and will be the slowest to recover due to weak tourism and corporate demand.
HC said GB’s Iraqi joint venture GK Auto, which generated 37 percent of its first-quarter revenue, would offset weakness in the Egyptian market.