A recent report issued by Pharos Research has downgraded their fair value (FV) for Eastern Company’s stock to EGP 19.8 per share.
The Cairo-based research firm ascribed its decision to an increase in the profit share of the Egyptian tobacco company’s employees, coupled with a decline in cash balance.
Eastern Company’s surplus cash balance dropped by EGP 3bn to EGP 1.78bn, against EGP 4.8bn in September, Pharos said in a report.
The report expected a compound annual revenue growth (CAGR) of Egypt’s monopoly cigarette maker to hit 3% in the five-year period ended 2023, with a gross profit margin of 36%.
Eastern Company last reported a 5% year-over-year (y-o-y) decline in its net profits during the first quarter (Q1) of fiscal year 2018/19.
From June to September, the Egyptian tobacco firm posted a net profit of EGP 991.18m, compared to EGP 1.04bn in the same period last year.
The company’s revenues rose to EGP 3.3bn in the three-month period ended September, compared to EGP 3.17bn in the comparable quarter of 2017.
Meanwhile, Pharos Research has reiterated their ‘Equal Weight’ recommendation on Qalaa Holdings at FV of EGP 3 per share.
The Egyptian investment firm has reported being profitable during Q3 of 2018 on the back of non-cash gains, according to a recent report.
Moreover, Qalaa Holdings reported non-cash gain associated with Africa Railways’ sale or liquidation, and are also anticipating proceeds of $50m from the sale of Arab Swiss Engineering Company’s (ASEC) share in the Zahana cement plant in Algeria, set to take place in the first half of 2019, Pharos added.
The research firm expects Qalaa Holdings to remain profitable, bolstered by buoyed by one-off gains, “up until the start-up of ERC around June 2018”.
Qalaa Holdings posted EGP 126.4m in net profits during Q3-19.
The company’s revenue soared 40% y-o-y to EGP 3.28bn in Q3 of 2018, according to a company statement.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) surged 43% to EGP 305.6m, compared to the year-ago period.
In the first nine months of the year, Qalaa’s revenue grew 46% y-o-y to EGP 9.4bn, while the company’s net profit recorded EGP 426.6m in the same period, the company revealed.
Another report issued by ArabNet said that the recent Global Entrepreneurship Week 2018 in Bahrain showed that the Middle East and North Africa’s (MENA) Startup market has registered funding valued at $650m from 270 deals in 2017.
Director of Corporate Social Responsibility, SAP MENA, Batoul Husseini, said that “Strong turnout at the ChangemakerXchange Talks and Actions shows Middle East entrepreneurs are global leaders in using technology to make a social impact.”
The main topic of discussion was ‘leveraging the power of technology’, including artificial intelligence and machine learning, blockchain, cloud, and the Internet of Things.
“While exploring the potential of harnessing technology for social change, the social entrepreneurs also took time to deepen their bond on a human level and to cultivate their wellbeing. These are important practices to sustain their motivation and become more effective in their work as changemakers,” the report noted.