By: Heba El Kordy
Cairo – Mubasher: Qalaa Holding’s stock on the Egyptian Exchange (EGX) has seen a notable rising trend recently, and overall gains since the start of the year, as strong catalysts have bolstered the stock, analysts have said.
Four factors have been the main drivers for Qalaa Holding’s stock including the experimental launch of the Egyptian Refining Company (ERC), the upcoming subsidy cut in July, the expansion in the delivery of natural gas to homes in Egypt as well as the deal signed with Israel, among others, analysts told Mubasher.
Since the start of 2018, Qalaa Holding’s stock soared 122.83% with a total turnover of EGP 6 billion.
Two main factors have contributed to Qalaa Holding’s recent stock surge, particularly the financial restructure in its unit ERC as well as the capital hike, which paves the way for ERC’s experimental trial due to begin in 2019, commented Kareem Ezzat, financial analyst at Pharos Research.
Moreover, Qalaa will benefit from the upcoming deduction in government subsidies on fuel prices, the analyst said, forecasting further gains for the stock, which Ezzat expects will surpass EGP 3 per share.
The Egyptian government is set to cut subsidies on fuel prices by around EGP 89 billion in its coming fiscal year due to begin on 1 July.
On Monday, the investment firm’s stock jumped 4.48% to close at EGP 2.81 on the EGX, its highest level since March 2015.
Earlier in April, Pharos Research reinitiated coverage for Qalaa Holding, putting the share’s price target (PT) at EGP 3 per share, in addition to an “overweight” recommendation.
The government’s scheme to connect more homes to the natural gas grid will benefit Qalaa Holding, added to the projected increase in demand for electricity, which coincides with the rising summer temperatures, Ezzat noted.
Meanwhile, head of research at El Marwa for Securities and Brokerage Mohamed El Naggar said that among the factors that have bolstered Qalaa Holding’s stock were its results and the decline in losses incurred.
Qalaa’s stake in a gas-importing firm will support its performance and results in the coming period, particularly after Egypt began importing natural gas from Israel, the analyst said.
In terms of technical performance for the stock, El Naggar said that Qalaa’s share will see strong resistance at EGP 3, projecting profit-taking on the short term followed by retesting resistance once more.
Translated by: Nada Adel Sobhi
