Dubai – Mubasher: MubasherTrade Research (MTR) has raised its price target (PT) of Orascom Construction Limited’s (OC) share to $7.82 per share (EGP 140.31 per share).
“This suggests an expected total return (ETR) of +12% on USD PT, and +17% on EGP PT. Hence, we assign a Hold/Moderate Risk rating for USD PT and a Buy/Moderate Risk rating for EGP PT,” the research firm said in a note.
OC recently reported $8 million in losses from its Iowa Fertilizers project in Q1-17; however, MTR said it does not expect further losses going forward.
OC forecasts that its EBITDA margin will range between 2% and 3% in 2017, “assuming that the full value of sub-contractors liens is charged. Margins growth will be supported by Natgasoline which constitutes most of the US backlog,” the note showed.
OC’s profits increased to $28 million in Q1-17, up 22% year-on-year from $23 million, on the back of higher contribution for its 50%-owned subsidiary BESIX, added to cost optimisation and improved US EBITDA margin.
“The power backlog was exceptional in 2015 on the back of Egypt's extended emergency power plan. However, [OC] is expected to leverage on its position in the MENA market to explore other opportunities in different markets,” MTR said in its note.
It added that there were other projects to be explored, such as transportation in Egypt, namely the fourth metro line to be funded by Japan, desalination plants, and other infrastructure projects in the New Administrative Capital.
