Commenting on the news that Egypt’s cigarette maker Eastern Company will sign an agreement with General Electric to build a 10-12 megawatt (MW) power plant, EFG-Hermes said the B.O.T project’s estimated investment cost is cEGP150 million and will be used to provide the company’s facility with electricity and should allow for utilities cost savings of cEGP7 million per year.
This comes as part of a move among some Egyptian companies seeking to decrease dependence on the country’s overloaded national electricity grid, EFG added.
EFG set the company’s fair value estimate at EGP225.00 per share, with a Buy recommendation.
The stock is trading on Wednesday with a rise by 2.77% to EGP 185; its highest level since debut, amid limited trading value that reached EGP 3.7 million.
Eastern Company said Tuesday, in a statement to the stock market, that it will sign a contract with U.S. General Electric for the construction of a power generation plant in its industrial complex in Six of October City. The contract will be carried out under the B.O.T system and will be signed on Monday, December 15, 2014.
According to the company’s statement, nearly EGP 7 million will be save annually from the cost of energy needs.
Eastern had posted EGP 270 million profit for the first nine months of FY14, with a jump by 179%.