Cairo - Mubasher: Pharos Researchhas maintained their Equalweight recommendation on the stock of Ghabbour Auto with a valuation of EGP 3.50 per share.

The research firm said in its recent report that it takes into consideration both the expected weakness in demand in 2017 and the long-term potential of the industry.

The main catalyst in the short-term would be the “Automotive Directive” which, supposedly, should have entered a plenary session in parliament in mid-march.

On the other hand, the long-term catalyst would include both the manufacturing of two and three wheelers and passenger cars. The former is within reach for the time being as AUTO finalized technical assistance agreements with Bajaj Auto, said Pharos.

Short to medium term outlook remains bleak as consumer purchasing power was hit hard following the EGP float, and the consequent price increases and interest rate increases which presumably sucked the life out of car financing.

“We expect this weakness to extend all the way through 2017, however we are still confident of the industry’s underlying potential on the long run given the favorable demographics and the relatively underpenetrated market,” the report added.