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The IPO of ALCN postponed to 2020 because of weak liquidity - Daily News Egypt

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The IPO of ALCN postponed to 2020 because of weak liquidity

18% decline in the company's revenue in Q1FY20 as a result of lower number of containers dropping by 18%

An official source at the Alexandria Containers and Goods company (ALCN), told Daily News Egypt  that the expected share sale of the company, which is part of the government’s IPO programme, is to be postponed to 2020 instead of the end of 2019, due to the weak liquidity in the market, along with current share price well below the initially expected price.

ALCN revenue in the first quarter (Q1) of fiscal year (FY) 2020 came in at EGP670m, down to 18% QoQ and 3% YoY.

The net profit attributable to shareholders declined to EGP417m, compared to profits of EGP511m in Q4FY19 and EGP492m in Q1FY19.

The official source added that the launching of the El Dekheila port-quay 96 expansion plan, set to be completed by November, would allow the company to service third and fourth-generation containers, increasing the quay’s depth to 16m, instead of the current 12-14m.

For the medium term, the acquisition of quay 55 would also enable the company to service a larger number of containers

Naeem Holding for investment’s research finds that the results are neutral and that the reported numbers are broadly in-line with their estimates. QoQ, the top-line decline came as a result of a lower number of containers, dropping by 18%; the company received 229k containers versus 231k in Q4FY19.

Naeem Holding added that they view the sequential decline in container volumes as a result of seasonality factors, bearing in mind that the company receives the lowest volumes in Q1FY and the highest in Q4FY.

The fees on the other hand, remain almost unchanged QoQ at EGP2,925/container versus EGP3,002/container. ALCN’s flattish YoY top-line performance during the quarter was reflective of a slight decline in container fees which dropped by 3% YoY.

While ALCN infers a considerable decline in the company’s bottom-line for both QoQ and YoY, the same could have been driven by a drop-in financing income, including interests from treasury bills, FX impacts, and one-off expenses. However, they still await the release of the full financials.

With regards to dividends, while the management has proposed a pay-out of EGP400m for FY19 (EGP0.30/share). However, it is expected that the company will increase the proposed pay-out given its strong cash position.

Naeem Holding said that they have a positive outlook for ALCN’s underlying earnings, because of favourable seasonality factors that are expected to push up the volumes of containers in Q2FY20.

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