Mubasher - Cairo: MubasherTrade Research said that Paint and Chemicals Industries (Pachin) is facing headwinds in the short term, as it challenged by a number of factors on the short term, according to a recent report.

“Paints are considered a discretionary spending item which people cut back on during hard economic times.”

“Moreover, the residential construction sector, which is a key demand driver, is vulnerable to the macro-economic situation. Hence, we believe the company is facing difficulties on the operational level as evidenced by its lower sales volumes due to the deteriorating purchasing power of the Egyptians, especially following the EGP floatation that took place early November 2016,” the report stated.

Also, the company’s exports to Libya were hit by the political situation there.

MubasherTrade Research believes this situation is going to continue in the short term until the Egyptian economy strengthens and the Egyptians’ purchasing power recovers.

The research firm concluded the report with a higher-than-expected total return in EGP terms, explaining that although the medium term might hold a better story for Pachin, induced by mega residential projects taking place, the realized return is satisfying.