Cairo - Mubasher: Pharos Research has maintained their Equalweight recommendation on Oriental Weavers Carpet with a fair value (FV) evaluation of EGP 19.80, according to a recent report.
Oriental Weavers expects substantial business from export markets, with new expor orders set to start this June to IKEA under a program that would last till June next year, the report indicated.
The company expects growth in sales to IKEA to remain flat compared to the figures of last year in foreign currency terms at EUR 45 million. It also expects growth in orders in US markets in the third quarter of 2017, as export market volumes expected to grow by 10% to 15% this year.
“Oriental Weavers has experienced some price competition from Turkish producers in the US market. However, Turkish producers’ relative weakness in reliability and consistency of orders played in Oriental Weavers’ advantage,” the report noted.
Pharos explained that the company’s treasury department expects Q2-17 to be affected the latest by the 200 basis points rate hike, however, the situation is expected to reverse in Q3-17 and Q4-17.
“Oriental Weavers plans to invest as much excess cash in treasuries in an attempt to contain the situation and expects flat net interest expense growth in 2017,” the report indicated.
