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El Sewedy Electric 3Q19 profits dropped by 7% QOQ to EGP 924m, falling in line with Beltone estimate - Daily News Egypt

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El Sewedy Electric 3Q19 profits dropped by 7% QOQ to EGP 924m, falling in line with Beltone estimate

The company recorded EGP 96m in FX losses during the quarter

El Sewedy Electric company stated in its third quarter of 2019’s (3Q) press release that profits dropped by 18% year over year (YoY) and 7% quarter over quarter (QoQ) to EGP 924m, coming in broadly in line with Beltone Financial holding’s estimate.

The decline in earnings came with lower interest income by 71% YoY, lower investment income by 15% YoY, and weaker gross margin by 4.0ppts YoY.

This brings the first nine months of 2019 ( 9M19) core earnings to EGP 2.9bn lower by 19% YoY, and net attribute earnings came in EGP 829m lower by 27% YoY, and 11% QoQ in 3Q19 as the company recorded EGP 96m in foreign exchange (FX) losses during the quarter, bringing the 9M19 earnings to EGP 2.7bn lower by 22% YoY.

Revenues in 3Q10 jumped by 27% YoY to EGP 13bn, achieving growth of 26% QoQ, beating Beltone’s estimate by 12%, backed mainly by sizable turnkey sales by 50% of total sales, which stood at EGP 6.6bn growing by 108% YoY and 85% QoQ.

Meanwhile cable sales which are 28% of total sales dropped by 7% and 11% QoQ to EGP 3.6bn due to lower average cable prices by 17% YoY. While revenues from the meter segment grew by 13% YoY and dropped by 4% QoQ to EGP 836m in 3Q19.

Transformers followed suit, with segment revenue growing by 13% YoY to EGP 500m. This brings 9M19 top line grew by 14% YoY to EGP 34.5bn.

Despite the notable top line growth, 3Q19 gross profit inched down by 2% YoY and 1% QoQ to EGP 1.7bn, in line with Beltone’s estimate, implying a gross profit margin (GPM) of 13.4% came as a result of lower turnkey margins given the end of Egypt’s high margin, and fast-track project era. In 9M19, gross profit grew by 2% YoY to EGP 5.3bn, implying GPM of 15.3%.

Finally, Beltone set El Sewedy’s fair value at EGP 18.8 and recommended buying.

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