By: Heba El-Kordy

Cairo – Mubasher: Sidi Kerir Petrochemicals’ (Sidpec) stock has remarkably soared 105% since the flotation of the Egyptian pound.

This came in line with Italy's Eni’s announcement on Wednesday that it began first gas output from Egypt’s supergiant Zohr gas field, which in return has pushed Sidpec’s stock to its highest level since January 2008. Sidpec's stock hit EGP 25.4 on early Wednesday.

Last Saturday, Egypt’s petroleum minister said that the offshore natural gas field located in the Egyptian sector of the Mediterranean Sea started pumping natural gas output into Port Said treatment plant with an initial production capacity of 350 million cubic feet per day (mcfd).

Zohr gas field

Sidpec has touched high levels on Wednesday, bucking the general trend of the Egyptian Exchange’s (EGX) indices as Zohr field was put on the production line on Wednesday, petrochemical sector analyst at Prime Research Omnia El-Hamamy said.

The Mediterranean’s largest offshore field will help Sidpec to use natural gas as a raw material in production that would save large fuel quantities for the company, El-Hamamy highlighted, pointing out that this will boost the company’s fair value (FV).

El-Hamamy ruled out that Sidpec would be able to implement the Propene project at its scheduled timetable set to be completed by 2020, citing the large liquidity required for the project poses a challenge for the petyrochemicals company over this period.

She forecast the Propene project will be operational by 2022.

On the other hand, the company has notably benefited from the currency float, she said, explaining that Sidpec sells its products in the US dollar and then transfers sale revenues into the Egyptian pound, which achieves a greater benefit.

Sidpec will benefit from higher global oil prices, El-Hamamy said, noting that the prices of its Ethylene and the Polyethylene products will also rise.

The Propene project

Pharos Research has raised the fair value (FV) of Sidpec at EGP 42.80 on the back of the Propene project, which will be set up with a capacity of up to 450 tonnes per year with an estimated cost of $1.2 billion.

The Propene project accounts for EGP 14 of the value of Sidpec’s stock or 35% of the target price, analyst at Pharos Karim Adel said.

Sidpec is supposed to own a 50% stake in the new project once the project’s value is set from the stock’s FV, Ezz alluded.

The stock is expected to surge 89%, which will make it top purchase recommendations in 2018, Ezz noted.

Sales are likely to increase in accordance with an annual growth rate of 8% on the back of higher prices of essential commodities and the devaluation of the Egyptian pound starting from 2019, he said.

The Egyptian Ethylene and Derivatives Company’s (ETHYDCO) stake in Sidpec’s profit amounted to EGP 76 million, beating expectations, the analyst added.

Translated by: Mai Ezz El-Din