MubasherTrade rates Buy/Low Risk on Arabian Cement

CAIRO – 14 July 2017: MubasherTrade Research assigned Arabian Cement Co (ACC) a Buy/Low Risk rating, setting its price target (PT) at LE 11.13 ($0.62) per share, with a total expected return of 27 percent, recent report said Thursday.

MubasherTrade highlighted that the Egyptian cement firm managed to retain both its 8 percent market share and operating margins, despite the unstable market conditions arose from slower demand, rising costs and energy shortages.

The research report encourages the company to allocate part of its production to the export market, especially that following the floatation of the Egyptian pound, things turned in favor of exports, with an export price of $40/ton becoming more profitable than a local price in EGP terms.

"ACC enjoys integration from mining via Andalus Mining, its JV, to delivery through its subsidiary of Wassal that enable them maintain timely delivery and avoid price manipulation and Andalus Ready Mix Concrete," the report read.

Arabian Cement has shifted their energy mix to coal at the rise of the energy crisis in 2013, while all cement producers suffered a massive increase in production cost, where they obtain natural gas at a fixed U.S. dollar price after the devaluation of the local currency, the report added.

That this move enabled the firm to beat average industry utilization rates and enjoy the global downtrend in coal prices.

MubasherTrade noted that this move enabled the firm to beat average industry utilization rates and enjoy the global downtrend in coal prices and shall shield ACC's margins from extreme deterioration post-floatation.