Pharos starts Egypt's OCI with 'hold' rating

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HOLD RATING: Pharos, begins coverage of Egypt's Orascom Construction Industries with a 'hold' rating. (Getty Images)

Pharos Research on Monday initiated coverage of Egypt's Orascom Construction Industries (OCI) with a "hold" rating and a fair value estimate of 215.1 Egyptian pounds, citing the strength of the company's construction and fertilizers business.

"In both it is well positioned and has compelling cost advantages. The diversity of the operation offers the business a hedge and flexibility to reallocate resources," Pharos analyst George Beshara said in a note to clients.

He added that his fair value estimate of the company was highly influenced by commodity price expectations, which are significantly below their peak levels.

"Upward or downward revisions to our estimates and recommendation will be a function of a change in outlook on oil and fertilizer prices," Beshara said. The main risk factor, but also growth driver for OCI, is commodity prices, namely oil, urea and ammonia, the analyst said.

Shares of Egypt's largest listed builder and fertiliser maker closed at 220.76 Egyptian pounds on Monday in Cairo. (Reuters)

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