Hermes Starts OCV N.V. Fair Value with $ 38/Share, Maintains Neutral

EFG-Hermes stated, in a recent study, that it dropped coverage on Orascom Construciton Indusries (OCI S.A.E.) (OCIC) and shift coverage to OCI NV following the tender offer completion.

It added that, it sets company’s fair value at USD38/share (EUR28.4/share) implies 8% downside to current market price; hence we initiate with a Neutral rating.

Hermes pointed out that, it thought that company’s risk outlook has improved after the conclusion of the tax settlement with Egyptian Tax Authority; amended shareholders agreement between OCI and Sonatrach in Algeria, which facilitated the start of commercial operations on August 2013; and new gas price agreements for the Egyptian fertilisers assets (EFC and EBIC), which was a key valuation overhang, in our view.