Cairo - Mubasher: Pharos Research has maintained their fair value (FV) of Oriental Weavers at EGP 19.80, and downgraded their recommendation to Equalweight, mainly due to share price rally after the pound flotation.
“We believe the company is well positioned, locally and globally, to improve its margins and volumes,” the research firm said in a report on Monday.
“We project local sales to spike on the implemented 40% price hike on two phases, post floatation. We conservatively assume that local sales volume will shrink 10% in 2017, with inflationary pressures and the readjustments to lower disposable income.”
“We estimate local sales to grow 23% in 2017, followed by a more reasonable 7%, and then stabilize at 6% per annum. We believe that Oriental Weavers will sustain solid market share in the local market due to import restrictions, low competitiveness of imported rugs and import rationalization initiatives by the government.”
Pharos also expects a decent 10% growth in exports during this year, and also projects that Oriental Weavers will provide price discounts in export markets in the range of 5% in foreign currency terms versus a jump in EGP terms.
