Cairo - Mubasher: MubasherTrade Research (MTRe) maintained its Buy/Moderate risk rating of Elsewedy Electric Company, at a price target (PT) of EGP 55 per share, implying an upside potential of 9.98%, the research firm said in a report issued Tuesday.
This comes after the company’s profits doubled in Q2-16, reaching EGP 873.4 million, beating MTRe’s expectations of EGP 411.9 million and consensus of EGP 409.5 million by 112% and 113%, respectively.
Revenues retreated 12% year-on-year to EGP 5.86 billion due to lower than anticipated turnkey revenues, while the wires and cables segment delivered an 18% growth in revenues to EGP 3.26 billion on higher volumes, mainly from Egypt with a 14% rise, and a 4% higher price per tonne.
The turnkey segment, the second largest contributor to revenues after wires and cables, witnessed a 40% decline in revenues to EGP 2.13 billion, where the company recognised a large part of Egypt's emergency power plan during Q2-15, the report highlighted.
“The perceived slowdown in turnkey segment's revenues doesn't alter our positive view on this segment. The backlog of turnkey stood at EGP 20.4 billion by the end of June 2016 versus EGP 13.3 billion last year,” said the research firm.
“With more revenue recognition expected over the next two quarters, driven by Angola and Siemens projects, MubasherTrade believes the slowdown is temporary,” the report indicated.
