Kindly find attached Jazira Capital's equity research update on The Arab Ceramics Co.- Aracemco (CERA.CA).
تقرير مالي مُحدث : العربية للخزف - أراسمكو
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Kindly find attached Jazira Capital's equity research update on The Arab Ceramics Co.-Aracemco (CERA.CA).
The main topics we cover in this update are:
• The Arab Ceramics Co.-Aracemco achieved EGP51.2 mn net profit for 1H FY14, with a 5% decrease compared to EGP53.7 mn in 1H FY13, the slowdown is attributed to the drop in net sales which came at EGP225.9 mn in 1H FY14, a 6% decrease from EGP239.7 mn in 1H FY13, for the EBITDA margin it reached 39.4% in 1H FY14 up by 547 bps versus the comparable period.
• 2Q FY14 Sales are better-off on quarterly basis growing 6%, albeit Y-o-Y is down by -5%, meanwhile profitability margins clearly developed, where gross profit margin achieved its highest level ever at 45%, EBITDA margin grew to 41.7%, & profit margin reached 24%.
• Natural Gas prices’ dramatically increased to US$7/mmBtu & US$5/mmBtu for the tiles & sanitary factories, respectively from US$3/mmBtu, effective July 2014, albeit Dry Milling Technology to come into operations by 4Q FY14 curbing the effect of that increase, leading to 70% increase, & 3% decrease in energy cost during FY14 & FY15, respectively.
• The increase in energy costs lured management to apply new pricing strategy, increasing ceramic tiles & sanitary prices by nearly 15% & 5% respectively, effective July 2014, this increase passed a portion of the increase in costs to consumers.
• Installation of “High Pressure” the new sanitary production factory is in progress, to reach full capacity by the beginning of FY14, this expansion is expected to accumulate EGP60 mn to annual sales when operating at full capacity.
• Updated target price at EGP34.12 using DCF model, a 3.8% 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
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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