Cairo - Mubasher: Pharos Research has maintained its fair value (FV) for Oriental Weavers Carpet at EGP 19.80 per share, with an Equalweight recommendation, according to a recent report.
Oriental Weavers’ board of directors has proposed a dividend per share of EGP 1.4, “implying a dividend yield of 8.8% and an 83.7% payout ratio based on consolidated net profit”, the report noted.
The research company expected oil price to remain range-bound, as well as polypropylene prices, hence, Oriental Weavers’ 14-15% earnings before interest, taxes, depreciation, and amortization (EBITDA) margin guidance for 2018 is likely to remain the same.
The Egyptian household durable firm has almost retired all of its EGP-denominated debt, on which interest expenses shrank by 24.3% quarter-on-quarter and 27% year-on-year, the report added.
Given that Oriental Weavers has registered a foreign exchange loss of EGP 26 million on EUR-denominated liabilities, as a result of appreciating of the Euro against the US dollar and the Egyptian pound, according to the report.
The company’s gross margin for the fourth quarter of 2017 hit 10.9%, while margins have been pressured by increasing polypropylene prices, which rose by 13.1% year-on-year in 2017, in addition to the new fees imposed on free zone production facilities, Pharos said.
On Sunday, Oriental Weavers posted a 40% year-on-year surge in consolidated profits for 2017, as net profit stood at EGP 741.7 million last year from EGP 528.9 million.
