KEY THEMES
Some news sources point to a potential reconsideration by Ministry of Trade & Industry next month to study the removal of anti-dumping fees on imported billets to counter the effect of rising steel prices. By way of background, last October, the government has lowered the fees to 13% (i.e. previously 16%) on steel billet import price with a minimum of USD60/ton. The plan back then was to gradually phase out the anti-dumping fees on steel billet imports with a subsequent cut scheduled last April 2021, bringing anti-dumping fees to 10% with a minimum of USD46/ton. Any decision about full termination of the anti-dumping fees system will not bode well for the integrated players, the likes of Ezz Steel [ESRS], as it will result in flooding the market with cheap billets.
Elsewhere, Qalaa Holdings [CCAP] slipped yesterday some 3% by market close, feeling the pain of Q1 2021 weak set of results. This confirms with our view on CCAP's fundamentals, with expectations of short-term pains to cloud the stock performance.
Furthermore, Misr Chemical Industries [MICH] posted its 11M 2020/21 indicators, showing bottom line of EGP129mn. This implies monthly net income for May of c.EGP12mn vs. EGP10mn in April 2021. With one month left in 2020/21. In the event of MICH replicating May’s performance during June, the company will exactly hit our target bottom line for the year of EGP141mn. At the current market price, MICH 2020/21 forward P/E is only 6x. We remind you that we have an Overweight rating on the name, with a 12M PT of EGP13.9/share (ETR +18%).
.