Cairo - Mubasher: Pharos Research has maintained its "Overweight" recommendation for Arabian Cement Company (ACC) with a fair value (FV) of EGP 11.50, according to a recent report.
This comes after the company’s financial results came perfectly in line with estimates, the report indicated.
“We expect the company’s top line to grow 36% in 2017, on the back of higher selling prices in EGP terms. Average retail selling prices year-to-date (YTD) recorded EGP 744 per tonne, up 24% compared with the same period last year,” it stated.
“However, we expect the gross profit margin (GPM) to soften to 27.5% due to rising costs, namely coal and electricity,” the research firm added.
Pharos also said that its FV of EGP 11.50 takes into account further margin compression, as it expects margins to level off to 26% by the end and selling prices to grow at a compound annual growth rate (CAGR) of 1% between 2017 and 2021.
“It is critical to note that the lockup period for the major shareholders will expire post the annual general meeting in April 2017. We do not rule out the possibility of a stake being acquired by a strategic investor,” the report concluded.
