NBK Capital Reiterates ‘Buy’ Recommendation For Lecico’s Stock

NBK Capital MENA Research said in a report on Egyptian ceramics maker Lecico Egypt (LCSW.CA) that it has revised full year estimates slightly, due to: integrating the Q3/2012 results; revising our Q4/2012 results

Revenues had come in at EGP 298.5 million, 4.65% below our estimate of EGP 313 million. This was due to lower than expected sanitary ware revenues, which amounted to EGP 149.5 million, 9.4% short of our estimate of EGP 165 million.

This was due to the decline in sanitary ware volumes in Egypt in particular, where volumes reached 496,000 pieces, in comparison to 613,000 pieces in Q2/2012. The gross margin for this segment had stood at 19.7% in comparison to 21.1% in Q2/2012. On the other hand, tile ware revenues had come in at EGP 143.9 million, down 17.6% QoQ, but 1.3% above our estimate of EGP 142 million, due to a 31.5% QoQ decline in export volumes and a 15% decline in volumes in Egypt. Tile gross margin (post-depreciation) declined from 35.2% in 2Q2012 to 33.6% in 3Q2012, due to the overall lower volumes.

“Our fair value remains at EGP 9.39 and we reiterate our “Buy” recommendation on the stock,” NBK Capital said.