HC Brokerage initiated El Sewedy with a "neutral" rating, and said while the company’s cable profitability remains superior compared with peers, it is not entirely immune to overcapacity in the Middle East and North Africa region.
The investment bank set a price target of LE 74.1 on shares of El Sewedy — the Arab world’s biggest maker by market value of cables used in power transmission and telecoms.
The Egyptian group’s share price performance will remain muted until its non-cable businesses realize their potential, HC said.
"El Sewedy’s non-cable businesses constitute over half of our valuation despite the company remaining largely a cable player at least in the near term," the investment bank said. However, non-cable businesses still lack momentum due to delays in Europe’s meter substitution programs, slow materialization in transformer sales, weak turnkey backlog and delays in contributions from the wind segment, HC said.
Earlier this month, El Sewedy told Reuters it is increasing output this year and the next, on the back of growing demand for its products in Europe, the Middle East and Africa. The company also said it plans to capture 2-3 percent of Europe’s market over the next three years.