SODIC’s new projects to enhance company performance, boost profitability: Pharos

Daily News Egypt
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A recent report issued by Pharos Research has maintained its fair value (FV) for Sixth of October for Development and Investment (SODIC)’s stock at EGP 45.5, with an overweight recommendation.

This was mainly driven by SODIC’s projects in eastern Cairo, Pharos said in a research note last week.

There are many catalysts bolstering SODIC’s performance such as the 2.1m sqm of lands it owns, in addition to the firm’s planned launch in the North Coast this year, the research firm indicated.

SODIC is projected to generate around EGP 15bn in sales within seven years, according to the research note.

Earlier last week, SODIC posted EGP 212.11m in consolidated profits for the first quarter of 2018, slightly above EGP 211.9m in Q1 2017, including minority shareholders’ rights.

Revenues retreated to EGP 512.12m in Q1 2018, versus EGP 703.47m in the prior-year period.

Standalone profits fell to EGP 82.7m in the three-month period ended last March, from EGP 114.6m in the year-ago period.

Meanwhile, Pharos Research maintained its equal weight recommendation for Eastern Company’s stock on a FV of EGP 200 per share.

The FV was updated due to the changes in paid-in capital raised to EGP 2.25bn from EGP 1.5bn to be distributed over 450m shares, Pharos said in a research note.

The research firm forecasted Egypt’s monopoly cigarette maker will maintain its debt-free capital structure as net cash reached high levels.

In April, the board of the Egyptian tobacco firm had approved raising the company’s capital to EGP 2.25bn, instead of EGP 1.5bn through reserves.

In March, the extraordinary general meeting (EGM) had approved splitting stock by a 1:3 ratio to become EGP 5 instead of EGP 15.

The financial indicators of Eastern Co showed a 156.27% year-over-year hike in profits for the nine-month period ended March 2018.

Net profits amounted to EGP 3.4bn during the July-March period of 2018, compared to EGP 1.3bn in the prior-year period.

In another note, Pharos affirmed its overweight recommendation for Orascom Development Egypt’s stock based on a FV of EGP 13 per share.

The recommendation was mainly driven by the value of El Gouna’s residual land, as well as other positive catalysts, Pharos added in a research note on Tuesday.

These catalysts include the continuous fruitful turnaround of tourism to Egypt, new launches in El Gouna, the launch of the West Cairo project, potential expansion in the North Coast, and the further reduction of debt, the research firm highlighted.

Orascom Development reported a 9% year-over-year increase in consolidated profits for the first quarter of 2018, recording EGP 83.08m from EGP 75.9m.

Revenues surged to EGP 654.9m in the three-month period ended last March, compared to EGP 493.8m in Q1 2017.

Standalone losses grew to EGP 45.9m in Q1 2018, versus losses of EGP 42.57m in the prior-year period.

Meanwhile, Pharos Research reiterated its overweight recommendation for Ibnsina Pharma’s stock based on a FV of EGP 13.62 per share.

This was mainly driven by a deduction of EGP 2 per share of the FV due to a potential fine, Pharos said in a recent research note.

Local pharmaceuticals firms have been accused of purposefully reducing credit and cash discounts granted to pharmacies, the research firm remarked.

Therefore, Ibnsina Pharma is projected to pay a fine as its appeal was accepted by the Cairo Court of Appeals and the first hearing is set for 19 May 2018, Pharos added.

Ibnsina’s paid-in capital increased to EGP 180.5m from EGP 168m distributed over 722m shares; hence, the research firm also updated net debt to reflect end-March figures.

Accordingly, Pharos had to reduce the stock’s FV to EGP 13.62 from EGP 15, according to the research note.

Ibnsina Pharma reported a 46% year-over-year surge in profits for the first quarter of 2018, recording EGP 27.9m from EGP 19.10m.

Revenues doubled to EGP 2.9bn in Q1 2018, versus EGP 1.9bn in the prior-year period.

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