CAIRO: Egypt’s largest steel producer Ezz Steel will benefit from the reinstatement of operating licenses for two of its plants after paying a fee, said CI Capital Research and upgraded the stock to “buy” from “hold.”
In September, an Egyptian court jailed Ezz’s former chairman Ahmed Ezz for indulging in corruption and ordered two of its operating licenses be withdrawn.
The Egyptian Ministry of Industry has reinstated the two previously-annulled direct reduced iron (DRI) licenses issued to Ezz Steel for a total fee of LE 660 million ($109.34 million), noted CI Capital.
Ezz Steel is set to increase its profit margins as the company will be able to enhance operations by adding the two DRI lines to its facilities, the brokerage wrote in a note dated March 25.
The surge in natural gas prices in Egypt will not impact the company’s profitability as only one of its plants uses natural gas for direct reduction, it said.
“The impact of the economic and political situation on Ezz was not as severe as expected,” CI Capital added.
The brokerage raised its price target on the stock by 7 percent to LE 9.4, and its long-term fair value by 16 percent to LE 18.3.
Shares of the company were trading at LE 6.83 by 1024 GMT on Monday.