KEY THEMES
Delta Sugar [SUGR] has been on the rise since we mentioned the name back in our Trading Playbook dated 12 July 2021, as SUGR has gained c.16% under only four trading sessions. We remind you that we anticipate SUGR to achieve a bottom-line between EGP180mn to EGP200mn in 2021, where we valued SUGR at EGP14.5/share (+43%). Performance recovery in 2021 is anchored by starting the year with a thin inventory, coupled with higher global sugar prices.
Elsewhere, Alexandria Mineral Oils's [AMOC] preliminary 2020/21 standalone figures showed a turn-back to profitability, registering net earnings of EGP399.5mn vs. net losses of EGP488.3mn. This comes due to annual growth in revenues of 13% to EGP10.0bn. Also, AMOC has succeeded in recording gross profits of EGP810.0mn (i.e. GPM of 8%) vs. gross losses of EGP533.1mn (i.e. GLM -6%). We note that during H2 2020/21, AMOC’s bottom-line came at EGP483.9mn, with GPM reaching a double-digit territory of 13%. Stupendous recovery in H2 2020/21 is the product of rebounding oil prices, coupled with tamed spreads between LSFO and HSFO, which enabled AMOC to achieve profits on both gross and net levels. While we think it’s tough for AMOC to replicate H2 2020/21 going forward, we believe AMOC will enjoy relative stability in the medium to long-term future given (1) its resilient balance sheet with lush cash balance, (2) thin reinvestments required to operate, and (3) long term prospect for LSFO-HSFO spread will allow AMOC to demonstrate reasonable fundamentals compared to current market price.