MubasherTrade Research set its target price (TP) for Orascom Construction Ltd at $17.7/shr (EGP 134.75/shr), a 24% upside to the high-end of the IPO offer price at $14.28/shr (EGP 108.71/shr).  

OCI NV has commenced proceedings to affect a demerger of the company's engineering and construction business from its fertiliser and chemicals business.

The demerged construction business will be called Orascom Construction Ltd. (OC) and will be dually listed on Nasdaq Dubai and the Egyptian Exchange (EGX), where OCI NV shareholders will receive one OC share for every two OCI NV shares they own as of 6 March, thus reducing OCI NV's share capital by $1.4 billion.

Concurrently with the demerger execution, OC has already offered 12.98 million new ordinary shares, representing 11% of its shares to the public retail investors and through a private placement to qualified institutional investors in the EGX.

The research unit believes securing vast contracts in the MENA region (Middle East and North Africa), particularly in Egypt, which is currently adopting mega projects, could accelerate OC’s recovery and improve its profitability margins.

However, exposures to political instability in Egypt and low-margin contracts in the US are key risks.