Cairo – Mubasher: MubasherTrade has maintained their Hold/Moderate Risk rating for Egypt Aluminum at a price target (PT) of EGP 72.05 per share, according to a recent report.

The Egypt-based firm has posted a 39% year-on-year decline in profits for the second quarter of fiscal year 2017/2018 to EGP 442.1 million.

The Aluminium producer has booked foreign exchange gains of EGP 654.6 million in Q2-16/17, the report added.

Excluding the impact of this one-off item, earnings would have soared by 498% year-on-year to EGP 432.8 million, yet missing MubasherTrade estimates (MTRe) of EGP 604 million by 28%, the report noted.

The research company indicated that annual decline in gross processing margins (GPM) came due to “the diminishing of low-cost inventory at pre-floatation prices”.

“The variance to our estimates could be attributed to the mismatch between the selling price and the cost during the quarter, which resulted from rapid growth in Alumina prices (raw material), as the Egypt-listed firm signs contracts at a fixed price before production," the report continued.

Bottom line was bolstered by higher investment income, as Egypt Aluminum generated EGP 146.2 million in investment income, versus EGP 58.8 million in Q2-16/17, the report said.

MubasherTrade further noted that Egypt Aluminum has EGP 2.4 billion of investments in treasury bills (T-Bills) as of 31 December 2017.