Naeem Holding for Investment’s equity research division has maintained the target price of Egyptian Chemical Industries’ (Kima) stock at EGP 11.5 a share with ‘Buy’ recommendation.
The investment bank noted that Kima had logged weak financial results after swinging to loss in the first quarter of fiscal year 2018/2019 on the back of lower sales volume.
Kima’s revenues retreated in the third-quarter and year-on-year period due to a decline in nitrate fertiliser sales, coupled with lower exports, particularly to Turkey and Sudan, Naeem added.
In the first fiscal quarter ended September, the Cairo-listed firm recorded a loss of EGP 12.4 million, compared to EGP 17.3 million in profits during the same period a year earlier.
The firm’s sales dropped to EGP 66.07 million from July to September, versus EGP 166.04 million in the prior-year period.
Kima ascribed the fall of sales to the stoppage of exports to some countries.
Naeem said in a research note that prices of nitrate fertilisers tumbled 17% quarter-on-quarter in the three-month period ended September and 4% year-on-year, bringing Kima’s total profit margin down 16 points and 29 points, respectively.
Nevertheless, Naeem affirmed a positive outlook for Kima’s performance in the second fiscal quarter of this year, citing expectations to iron out export barriers and the firm’s quest for foraying into new markets, along with 12% price hike of nitrate fertilisers.
By 2:29 pm Cairo time, Kima stock fell 1.46% to EGP 6.09.