The board of South Valley Cement Co. (SVCC) authorized the chairman and managing director to carry out procedures needed for and sign a contract for a EGP 1.221 billion long-term syndicated loan from Commercial International Bank (CIB) – Egypt and Arab African International Bank (AAIB).
According to the company, the facility will go for financing expansions in the milling segment and boosting production capacity in addition to investing in energy alternatives. In a report issued earlier, Naeem Research raised the stock’s target price to EGP 7.11 from EGP 4.90, and placing an Accumulate recommendation. Naeem expects the company’s 4Q13 performance to reflect significant QoQ improvement. “SVCE 's current capacity stands at 1.5mt p.a. We expect top- and bottom-line performance to improve substantially on higher volumes, which should get reflected in the 4Q13 results,” the report issuer stated. It added that, taking indications from latest cement dispatches in Egypt, SVCE's underlying plant utilization rates have jumped to 96% in 4Q13; a large QoQ surge compared to 58% in 3Q13. SVCE’s expected 4Q13 sales trends reflect outperformance, compared to indications inferred from the Egyptian cement industry in general; Industry volumes during 4Q13 increased QoQ by c. 10% - 15% “Amidst an expected turnaround in QoQ volumes, we expect prices to remain more or less flat during 4Q13. 9M13 prices averaged c. EGP500/ton,” Naeem said “The anticipated price trend reflects overall industry indications wherein cement prices in Egypt remained stable during the quarter.”