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Wed 14 Oct 2009 09:07 PM

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Beltone cuts price target on Egypt's El Sewedy Cables

Broker cites lower-than-expected outlook for firm's electrical products, margins.

Beltone cut its price target on shares of El Sewedy Cables Co, citing the cable maker's lower-than-expected outlook for its electrical products and wind divisions and shrinking margins in the cables business.The increasing competition in the cables business segment will mean that El Sewedy Cables will witness a drop in its gross profit margin as copper and aluminum prices rise, the investment bank wrote in a note to clients.

"Although El Sewedy Cables is expanding into more attractive businesses, the wire and cables segment still accounts for around 80 percent of the group's revenues, while contributing only 68 percent of the gross profits," it said.

Beltone lowered its price target on El Sewedy Cables' shares to 72.22 Egyptian pounds from 78.71 Egyptian pounds.

The investment bank said its outlook for the company's turnkey segment remains positive due to an increase in infrastructure spending on power projects and the potential diversification of El Sewedy Cables.

Shares of El Sewedy closed at 75.60 Egyptian pounds Wednesday in Cairo. (Reuters)

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