KEY THEMES
U.S. equities slipped notably yesterday, after yields on U.S. Treasuries surged to their highest levels in about two years. Just this morning, the yield on U.S. 10-year Treasury was around 1.875%. In addition, Q4 2021 earnings results saw a number of banking stocks missing estimates. Moreover, Asian equities were also down this morning, in anticipation to the outlook for the U.S. monetary policy. On the other hand, oil prices rose for a fourth consecutive day, as an outage in a pipeline from Iraq to Turkey increased concerns about the notion of tight global supply.
Elsewhere, General Co. for Ceramic & Porcelain Products [PRCL] has rallied 37% since we published our sector note on Egyptians ceramics producers back on 30 December 2021. We remind you that we have an Underweight rating for PRCL, with a 12MPT of EGP2.7/share (ETR of -34%). The company’s net losses widened in 2020/21 to EGP62mn from EGP54mn a year before, swinging from a gross profit to a gross loss. The EGP39mn one-off related to other revenues was not enough to save the company’s bottom line. We expect PRCL to turn to profitability in 2025, to record a net income of EGP14mn and EGP38mn in 2025 and 2026, respectively.
As for the whole sector, we prefer Al-Ezz for Ceramics & Porcelain [ECAP] (OW, 12MPT EGP14.8/share, ETR +43%) and Arab Ceramic Co. “Ceramica Remas” [CERA] (OW, 12MPT EGP0.88/share, +25%). Meanwhile, we have an Underweight rating on Lecico Egypt [LCSW], with a 12MPT of EGP3.8 (ETR +6%)