Kindly find attached Jazira Capital's equity research update on The Arab Ceramics Co.-Aracemco (CERA.CA).
The main topics we covered in this update are:
Wounded results by tough FY14 and to heal by FY15’s expansions
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• Aracemco achieved EGP71.5 mn net profit for 9M FY14, a 4.9% decrease compared to the EGP75.2 mn recorded in the 9M FY13, while net sales came at EGP338.5 mn in the 9M FY14, a 1.8% decrease from EGP344.6 mn in 9M FY13, EBITDA margin reached 32.5% in 9M FY14, a 54 bps lower versus the comparable period, this drop is attributed to mixing effects of higher fuel prices and weakness of sales.
• 3Q FY14 sales are better-off on Y-o-Y basis growing 7.4%, albeit it is down by 3% Q-o-Q, meanwhile profitability margins dropped, where the EBITDA margin reached 22.6% with a 827 bps decrease versus the comparable period.
• Two more Ink-Jet machines were added at the beginning of 4Q FY14, increasing the capacity of colored ceramic to reach 15,000 m/day, this increase expected to push net sales of ceramic by 17% in FY15.
• High Pressure the new sanitary production factory to come into operation on the 1Q FY15, this expansion is expected to accumulate EGP60 mn to annual sales when operating at full capacity.
• Energy usage of ceramic factory to be cut by 50% when the Dry Milling Technology-DMT come into operation by 2Q FY15.
• Updated target price at EGP9.50 using DCF model, a 6.4% over the current price, we upgrade our recommendation to “Hold”.
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| Jazira Capital's equity research update on The Arab Ceramics Co.-Aracemco (CERA.CA). |
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الجزيرة لتداول الاوراق المالية ، الجزيرة لادارة المحافظ
Jazira Securities Brokerage , Jazira Asset Management
البورصة المصرية ، شركات تداول ، شركات الوساطة ، بورصة مصر
Securities Brokerage ,Egyptian Stock Exchange
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