ABUK Model Update Re-initiation of Coverage - October 2016 (2)

We Re-Initiate our coverage for Abu Qir Fertilizers Company (ABUK.CA) with a “HOLD”

rating; with an upside potential of 6.8% driven from a Fair Value of EGP 107.85/share. We

applied the Discounted Cash Flow (DCF) valuation methodology to value Abu Qir’s opera-

tions, reflecting our assumptions for the company during the forecast .

In our model we utilized an after tax risk free rate of 13.2%, risk premium of 8% and a per-

petual growth rate of 2.0%. In addition we applied a liquidity risk premium of 2% and a sta-

tistical beta of 0.5 leading to a WACC of 19.0% .

At current price levels, ABUK stock is being traded at FY-17 P/E of 11.0x, however it is ex-

pected to drop in FY-18 to reach 9.7x on the back of expected higher earnings.

Market leader in the nitrogenous fertilizers industry in Egypt controlling 70% of total mar-

ket supply: The company is 85% owned by the government as it was established by the gov-

ernment in 1976 to supply the Egyptian agriculture sector with the required fertilizers. Abu

Qir 1 was the first plant and was established in 1976 to produce prilled urea Abu Qir Fertil-

izers remains the largest producer of nitrogenous fertilizers in Egypt supplying various prod-

ucts, including granulated urea, prilled urea, ammonium nitrate, NPK and liquid UAN (the

last two are exported). The company has lacked control over its profit margins due to the

pricing scheme set by the government as well as its dependence on the government for

natural gas supply.

Unfavourable FX exposure: The expected devaluation/floatation is set to have a negative

effect on the company due to its effect on natural gas prices. Natural gas , which represents

50-60% of the company’s total COGS is supplied by the government at USD 4.5/mmbtu. The

devaluation/floatation would result into increase in COGS while the company maintains its

inability to pass this increase on. Export revenues would ease the devaluation effect, how-

ever, it will not offset the full effect of the natural gas cost increase as it only accounts for 20

-30% of the total revenues.

Government pricing limits Abu Qir’s profitability: Due to its importance to the agricultural

sector in Egypt the fertilizer industry has been controlled by the government through a pric-

ing control system. Abu Qir is obligated to supply a certain quota of its production to the

Principle Bank for Development and Agriculture Credit (PBDAC) at lower prices which are set

by the government. This disables the company’s ability to pass on any cost increase to its

selling price which is almost completely out of the company’s control. A plan for a pricing

formula linking fertilizer prices to natural gas prices was approved in 2014 but was later

abandoned. Implementing such a decision would have enabled the company to maintain its

margins and pass on the cost increase to the selling price.

Removing subsidy and export ban would create a great opportunity for Abu Qir: The gov-

ernment’s set prices for Abu Qir’s products has limited the company’s potential margins due

to the significant difference between global prices and the local selling prices. Amid recent

talk of implementing cash subsidies, removing subsidies would allow the company to

achieve much higher margins. Furthermore, lifting the export ban would also allow the com-

pany to export its products at the global prices, which would increase the company’s gross

margin significantly.

PRIME INVESTMENT RESEARCH

ABU QIR FERTILIZERS - RE-INITATION OF COVERAGE

OCTOBER 27TH , 2016

ABU QIR FERTILIZERS … Unexploited potential under government pricing system

“HOLD” MARKET PRICE EGP 101.01 FAIR VALUE EGP 107.85 POTENTIAL 6.8% UPSIDE

INVESTMENT GRADE “VALUE”

1

Stock Data Outstanding Shares [in mn] 81.1 Mkt. Cap [in mn] (EGP) 8,497 Bloomberg – Reuters ABUK.EY / ABUK.CA 52-WEEKS EGP 99.5/EGP150.0 DAILY AVERAGE TURNOVER (2016) EGP 0.07MN

Ownership National Investment Bank 25% Egyptian General Petroleum 19% Industries Development Authority 13% Al Ahly Capital Holding 8% Chemical Industries Holding 6% Nasser Social Bank 6% Misr Insurance Co. 5% Free Float & Others 18%

Source: ABUK

Source: ABUK, Prime Research All prices are as of 26th October 2016

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2

Valuation We applied the Discounted Cash Flow (DCF) valuation methodology to value ABUK’s operations, reflecting our assumptions for the company during the forecast period. Utilizing an after tax risk free rate of 13.2%, a market risk premium of 8%, a beta of 0.5 and liquidity risk premium of 2.0% which translated to a WACC of 18.9%, and a perpetual growth rate of 2.0%. We arrive at a Fair Value of 107.85.

We applied 2.0% liquidity risk premium on the back of the low average trading volume of 738. Furthermore, we applied a growth rate of 2.0% with the fertilizer industry being correlated with the population growth.

It is worthy to mention that, the current hike in risk free rate witnessed in Egypt has caused a depression in our fair value. We applied 5.0% annual growth rate for the company’s local selling prices on the back of the expected devalua-tion and inflation pressure. Holding prices constant throughout our forecast period would result in our fair value changing to EGP 79.43/share. Moreover, Abu Qir Fertilizers’ valuation is strongly dependant on natural gas prices, as they represent 50-60% of the company’s cash COGS. The increase in natural gas prices would weigh aggressively on our fair value. The fol-lowing table shows sensitivity of our fair value to change in prices of natural gas.

Upside & Downside Risk



OCTOBER , 2016

Upside Risk Downside Risk

Removing fertilizers subsidy by the government to allow producers to sell at global prices.

Increase in natural gas prices beyond USD 4.5/mmbtu.

Removing export ban on urea and ammonium nitrate products.

Continuity of fluctuation in natural gas supply.

More than expected recovery in Urea prices to in-crease the company’s export prices for UAN & Am-monia.

Further drop in international Urea & Ammonia prices, which would affect ABUK’s export sales prices.

Natural Gas Price, USD/mmbtu 4.50 5.50 6.50 7.50

Fair Value, EGP/share 107.85 87.17 66.00 50.96

Potential 5.4% -14.8% -35.5% -50.2%

3

Fertilizer Industry Overview The fertilizer industry is governed by three main nutrients characterized as primary nutrients; nitrogen, phos-phorous, and potassium. Fertile soil is generally rich in nutrients which play an important role in plant growth and development. Geographically, soils are rich in different minerals; meaning that different soils require different fertilizers. Plants typically take the nutrients they need from the soil to grow; with the result that soils can be-come impoverished if there is no process to replace these nutrients. Impoverished soils reduce crop yields, and ultimately the economic viability of the land itself. Traditionally, rotation of crops and regular fallow periods, to-gether with spreading of animal manure, allowed the land to recover some of its fertility, but today the main method used to restore nutrients to soil and to increase crop yields is the application of mineral fertilizers. Apply-ing an excess of nutrients can pose a threat for both the environment and the soil itself.

Nitrogen (N) Fertilizers: Nitrogen is considered the main source of protein and is essential for plant growth and development, while also contributing to the plants vigor, color, and yield. All nitrogen fertilizers are made from ammonia (NH3), which is produced by the Haber-Bosch process. In this energy-intensive process, natural gas (CH4) supplies the hydrogen and the nitrogen (N2) is derived from the air. Generally ammonia is used as a feedstock for all other nitrogen fertilizers.

Phosphate (P) Fertilizers: Phosphate is vital for root development and aids the plant in resisting drought, it is also important for growth and development for the ripening of seeds and fruits. All phosphates are obtained by extraction from minerals con-taining the anion mixing with sulfuric acid (produced from sulfur). In rare cases, fields are treated with the crushed mineral, but most often more soluble salts are produced by chemical treatment of phosphate minerals. The most popular phosphate-containing minerals are referred to collectively as phosphate rock.

Potassium (K) Fertilizers: Potassium helps with the photosynthesis process for high yielding crops; it also improves crop resistance to dis-ease and drought. Potash is a mixture of potassium minerals used to make potassium fertilizers. The main effort in producing this nutrient from theore involves some purification steps to remove sodium chloride (common salt).The other types of fertilizers include; Compound Fertilizers, Organic Fertilizers, Calcium Fertilizers and Mag-nesium Fertilizers.



OCTOBER , 2016

4

Global Industry The global nitrogen fertilizer market has been suffering from low pricing since 2015 mainly due to oversupply and

fall in energy and commodity prices:

Oversupply: The increase in capacities since 2012 especially in China and North America has put significant

pressure. It is reported that nitrogen inventory has been filling warehouses (especially in UK & Europe)

and needs to be cleared first.

Drop in natural gas prices: Natural gas prices dropped severely in 2015 flattening the global nitrogen cost

curve and shifting the nitrogen industry floor price down. The drop in oil prices to its lowest levels di-

rectly affected feedstock items like natural gas whose prices tend to track oil prices.

The demand weakness in addition to the oversupply has pushed prices downwards with energy prices standing at

very low prices. Moreover, Urea oversupply following the decline in prices has also impacted pricing applying

downward pressure.

In Africa, fertilizer demand is also expected to witness slow growth as the expected little change in low farmer

incomes, which are the main trigger for fertilizers demand. The dependence on government policies and subsidies

hinder any significant growth in farmer incomes. However, increased grain prices could be a key to increase

farmer incomes, which would in turn create increased demand for fertilizer.



OCTOBER , 2016

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-15%

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-5%

0%

5%

0

50

100

150

200

250

300

350

400

450

Urea Growth %

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

0

100

200

300

400

500

600

Ammonia Growth %

GLOBAL UREA PRICE & FORECAST, USD/MT GLOBAL AMMONIA PRICE & FORECAST, USD/MT

SOURCE: BLOOMBERG & PRIME RESEARCH

5

Local Industry Egypt's fertilizer sector, which utilizes the country's considerable gas reserves and imported LNG, is growing in

importance, both within the petrochemicals industry and the wider economy. The value of exports in Egyptian

pounds is also growing due to EGP depreciation, but volumes are also rising due to rising capacity.

In Egypt, the two most widely used fertilizers are nitrogen and phosphate fertilizers. While nitrogen is more

essential for plant growth and development ,phosphate fertilizers aids the plant and helps with resisting drought.

As we mentioned before, phosphate fertilizers are also essential for development for the ripening of seeds and

fruits. Although fertilizers are known to be subsidized, currently, only nitrogen fertilizers are under state subsidy.

Due to the fact that a) the use of nitrogen fertilizers is imperative in Egyptian soil, while phosphate is optional. b)

Producing nitrogen fertilizers requires natural gas as a raw material and natural gas is subsidized by the Egyptian

government, hence, the subsidy is passed on to the consumer in turn. Unlike nitrogen that requires natural gas as

a raw material, phosphate fertilizers use phosphate rock and Sulfur as main raw materials. Currently nitrogen

fertilizer producing companies face difficulties in obtaining natural gas. However, that is not the case for phos-

phate fertilizer producing companies.

The agriculture sector, which is considered the main driver for fertilizer demand, represented 11.2% of Egypt’s

total GDP in FY2014/15 dropping from 14.5% a year earlier. The sector witnessed a 3% y-o-y growth with invest-

ments in agriculture and irrigation sector growing by 10.8% to reach USD 1.8bn in FY2014/15. The sector remains

a priority for the Egyptian government as it contains a high percentage of the employment force and is consid-

ered the fourth largest contributor to the GDP.



OCTOBER , 2016

Company Name Products Capacity

EFIC PSSP, GSSP, Ammonium Sulfate, Sulfuric Acid,

2.3mn tons Dicalcium Phosphate, NPK

Abu Zaabal Fertilizers Ammonium Sulfate, NPK, Sulfuric Acid, PSSP,

3.5mn tons GSSP, TSP, Concentrated Sulfuric Acid

EFC Ammonia, Urea 1.3mn tons

Abu Qir Fertilizers Ammonia, Urea, Ammonium Nitrate, NPK, UAN liquid 2.2mn tons

Helwan Fertilizers Urea 0.7mn tons

Alexandria Fertilizers Urea 0.7mn tons

Suez Ammonium Sulfate 0.3mn tons

SEMADCO - Al Nasr Company Ammonia, Ammonium Sulfate, Ammonium Nitrate 0.4mn tons

KIMA Ammonia, Urea, Ammonium Nitrate, Methanol 0.3mn tons

Al Delta Fertilizers Ammonia, Urea, Ammonium Nitrate, Methanol 0.8mn tons

MOPCO Ammonia, Urea 3.1mn tons

KEY MARKET PLAYERS

SOURCE: CBE, CAPMAS, PRIME RESEARCH

6

The main obstacle for nitrogen fertilizer producers over the past years was the natural gas supply, which is con-

sidered feedstock. Following electricity cuts the government channelled all required natural gas to power plants

for household consumption, which caused supply cuts for industries like fertilizers, cement, steel and ceramics,

which are all dependent on natural gas. This affected production for nitrogen fertilizers, which unlike the cement

companies could not substitute natural gas as it is feedstock. By the end of 2Q2016 Egyptian Natural Gas Holding

Company (EGAS) announced the resumption of natural gas supply to all nitrogen fertilizer plants at an average of

90% of the total contracted amount (600mn cubic feet per day). However seasonality of natural gas by power

plants has affected EGAS’ fulfilment of its supply agreement with the company. Power plants increased natural

gas consumption due to the demand for air conditioning with power plants demand being considered as the gov-

ernment’s main priority. However, we expect supply for fertilizer plants to resume following the summer espe-

cially with the fertilizer industry being highly appreciated by the government due to its exporting potential. As a

result of rising capacity, Egyptian fertiliser exports grew 131% y-o-y to EGP2.05bn (USD231mn) in the first five

months of 2016 and by end-May represented 20% of the value of Egypt's total exports, according to the Egyptian

Chemical Export Council (CEC).

Natural gas supply remains a risk factor for fertilizers: We expect growth to remain volatile due to the natural

gas supply concerns. Despite efforts by companies and the government to increase natural gas supply, which saw

a 12.6% y-o-y drop in 1Q2016. We expect the production recovery in early 2017 with the start up of the West Nile

Delta project. Natural gas price have always been set by the government in USD for all energy intensive industries

which includes the fertilizer industry. With the natural gas being the main component of fertilizer production cost

(50-60%) price hikes as well as devaluation have had a negative effect on the margins of public fertilizer produc-

ers, with prices being mostly set by the government as well limiting the companies’ ability to pass on the increase

in production costs.



OCTOBER , 2016

AGRICULTURE % OF GDP INVESTMENT IN AGRICULTURE, USD MN % TOTAL OF GDP

SOURCE: CBE, CAPMAS, PRIME RESEARCH

NATURAL GAS PRICE USD/MMBTU HISTORICAL

SOURCE: PRIME RESEARCH

Pre FY-09

NG Price: USD 1.25/mmbtu

FY-09 to FY-13

NG Price:USD 3.00/mmbtu

Since FY-14

NG Price: USD 4.50/mmbtu

7

Further reasons behind losses recorded by governmental fertilizer producers: Apart from increased natural gas

prices, there were some other factors that contributed to losses recorded by fertilizer producers. First, producers

are obliged by law to sell almost 55% of their supply to the government, which sets the selling prices, for the Prin-

ciple Bank for Development and Agriculture Credit (PBDAC). The government has valued selling prices at an USD

exchange rate of EGP 8.88, despite rate being recorded at EGP9.25 in the government budget. As a result , com-

panies sell at a huge discount to market and export prices . Furthermore, plants have to halt operations for

longer periods for maintenance with most companies operating 330 days/year at most.

Pricing set by the government: Nitrogen based fertilizers are essential to Egypt’s agriculture sector. As a result

the government has implemented a price control system, whereby producers are obliged to sell at a certain price

regardless of international prices of urea and ammonia to ensure the farmers can afford the product. The compa-

nies supply their products through a quota system. Principle Bank for Development and Agriculture Credit

(PBDAC) , which is considered the intermediary between producers and farmers and is supervised by the Minis-

try of Agriculture and the Central Audit agency, is assigned a certain quota at a subsidized price to distribute to

farmers.

Government raise fertilizer prices by 33% in 2014: In October 2014 the Ministry of Trade and Industry an-

nounced raising the prices of subsidized fertilizers by 33%. Thus, average prices of urea fertilizers increased to an

average of EGP 2000/mt from EGP 1500/mt, while Nitrate prices reached EGP 1900/mt from EGP 1400/mt. This

came as result of the huge difference between subsidized and unsubsidized and privately sold products . How-

ever, due to the FX effect as well as the increase in natural gas prices governmental fertilizer producers still suf-

fered from compressed margins.

Reasons behind the price decline: The decline in urea prices as well as the slow demand has been main reasons

behind the decline in fertilizer prices pushing producers towards the export markets. It is noteworthy that, in

2014 the government’s decision to hike locally subsidized fertilizers by 33% had benefited fertilizer producers

especially state-owned which deliver the highest quantities of subsidized fertilizers.

Devaluation/ flotation effect on fertilizer producers: Fertilizer producers would suffer from higher production

costs due to natural gas (main feedstock) being valued in USD (USD 4.5/mmbtu). However, the fertilizer exports

could help ease the negative fx exposure post the devaluation/flotation effect. Egyptian Fertilizers Company

(EFC) was the largest exporter with its exports reaching EGP 490mn with 25% of total fertiliser exports. MOPCO's

exports totalled EGP 317mn and AlexFert Company's exports hit EGP 297mn. France was the main export desti-

nation with EGP506mn of fertiliser products sold on the French market, followed by Italy (EGP 353mn) and Turkey

(EGP 318mn). It is noteworthy that state-owned companies are only allowed to export certain products as they

are obligated by the government to supply a certain quota locally.

Recent additions to the total fertilizer capacity: MOPCO is adding significantly to Egypt’s fertilizer capacity after

has adding 2mn tonnes per annum (tpa) of new fertiliser capacity on-stream in 2016. Meanwhile, E-Chem is also

targeting the addition of 2mn tpa. It is noteworthy that consistent natural gas output is essential to operate the

new capacities with MOPCO already operating at low utilization due to low natural gas volumes received.



OCTOBER , 2016

8

Abu Qir Fertilizers Abu Qir fertilizers (ABUK.CA) is the largest producers of

nitrogen based fertilizers in Egypt controlling almost 70%

of the local market supply. The company is 85% owned by

the government. It was established by the government in

1976 to supply the Egyptian agriculture sector with the

required fertilizers. Abu Qir 1 was the first plant and was

established in 1976 to produce prilled urea. The com-

pany’s main products are: Prilled Urea, Ammoium Nitrate,

Granulated Urea, NPK blend, Liquid UAN and Ammonia.

The Egyptian government has banned Abu Qir from ex-

porting its products as it is considered the main supplier of

the local market. However, liquid UAN excess ammonia

has been approved to be sold at international prices. As

we mentioned earlier, the price of locally sold products

are determined by the government with the company

forced to supply a set percentage of its production to the

Principle Bank for Development and Agriculture Credit

(PBDAC).



OCTOBER , 2016

ABUK BOD & SHAREHOLDERS STRUCTURE

Capacity (mtpd)

Primary Products

Abu Qir 1

Prilled Urea 1,550

Abu Qir 2

Ammonium Nitrate 2,400

Abu Qir 3

Granulated Urea 1,750

Secondary Products NPK Blend 1,000

Export Products UAN Liquid 2,000

Rem Ammonia 1,000

Board Members

Saad Maaty Chairman & MD

Madiha El Refaei Board Member

Hassan Jalil Board Member

Mohamed Hussein Board Member

Ehab Aziz Board Member

Syad El Bahey Board Member

Mohamed Shouman Board Member

Ismail Jaber Board Member

SOURCE: ABUK

25%

19%

13%8%

6%

6%

5%

18%National Investment Bank

Egyptian General Petroleum

Industrial Development Authority

Al Ahly Capital Holding C

Chemical Industries Holding

Nasser Social Bank

Misr Insurance Co

Free Float & Other

9

Abu Qir Fertilizers dynamics...

Largest producer of nitrogenous fertilizers in the local market: Abu Qir Fertilizers remains the largest producer of

nitrogenous fertilizers in Egypt supplying various products, including granulated urea, prilled urea, ammonium

nitrate, NPK and liquid UAN (the last two are exported). Despite being a market leader, the government owned

company has suffered in the past from unstable margins due to its little control over pricing and cost compo-

nents.

Natural gas supply was a main concern for the company: Natural gas is essential for fertilizer production as it is

considered a main feedstock. In FY-14 the country was facing a n power problem causing electricity cuts. As a

result , the government has opted to re-allocate most of the natural gas supply to be used for household electric-

ity, cutting of natural gas supply for fertilizer as well as cement, steel and ceramics producers. This caused the

shutdown of operations for Abu Qir due to the lack of required feedstock making the company unable to supply

its quota to the Principle Bank for Development and Agriculture Credit (PBDAC). The natural gas supply problem

is expected to disappear following the Zohr discoveries which are expected to increase the natural gas supply in

Egypt.

Lack of control over pricing and feedstock prices remain a risk for Abu Qir: Due to its importance to the agricul-

tural sector in Egypt the fertilizer industry has been controlled by the government through a pricing control sys-

tem. Abu Qir is obligated to supply a certain quota of its production to the Principle Bank for Development and

Agriculture Credit (PBDAC) at lower prices which are set by the government. This disables the company’s ability to

pass on any cost increase to its selling price, which is almost completely out of the company’s control. The in-

crease in natural gas prices in FY-15 to USD 4.5/mmbtu, which is 60-70% of the company’s total cash COGS, has

caused an obvious margin compression for the company. The suspended plan for urea-gas pricing equation,

which was set to be implemented in FY-14 would have created a more flexible pricing scheme for Abu Qir and to

enable the company to restore its margins. Instead, the government opted to raise selling prices by 33% in late

2014 in an attempt to ease the effect of the natural gas price increase. However, the lack of natural gas supply

was also another factor which affected the company’s capacity utilization. It is noteworthy that, the government

has valued selling prices at an USD exchange rate of EGP 8.88, despite exchange rate being recorded at EGP 9.25

in the government budget.



OCTOBER , 2016

53%55%

41%39%

35%

0%

10%

20%

30%

40%

50%

60%

FY-12 FY-13 FY-14 FY-15 FY-16

ABUK GROSS MARGINS AFFECTED BY NG PRICES, % HISTORICAL NATURAL GAS PRICES (USD/MMBTU)

3.00 3.00

4.50 4.50 4.50

0.00

1.00

2.00

3.00

4.00

5.00

FY-12 FY-13 FY-14 FY-15 FY-16

SOURCE: ABU QIR FERTILIZERS, PRIME RESEARCH

10

Subsidy removal would present a great opportunity for Abu Qir: The imposed pricing as well a s quota to Princi-ple Bank for Development and Agriculture Credit (PBDAC) have limited Abu Qir’s profitability significantly. The difference between market price and subsidized price has squeezed the company’s margin. For example, Nitrate based NPK is supplied to PBDAC at EGP 1,434/mt compared to its unsubsidized price of EGP 2,402/mt. The gov-ernment is currently considering replacing the current subsidy system with a cash subsidy. This would enable the company to absorb the expected negative effect from the devaluation, which would increase its cost signifi-cantly and would help the company achieve much higher margins with higher prices pushing towards in-creased revenues. The only problem remains the low global urea prices which would affect Abu Qir pricing even after subsidy removal. Lifting the export ban would present a further opportunity to achieve higher margins: The government forces Abu Qir Fertilizers to sell almost all of its products locally due to the need for fertilizers in the agriculture sector. The company is only allowed to export liquefied UAN as well as the unused ammonia from the production proc-ess. Removing the ban imposed on urea and ammonium nitrate exports at international prices would enable to the company to achieve higher revenues. More importantly, export revenues would increase in value due to the expected devaluation/floatation and would offset a part of the negative FX exposure caused by the natural gas cost. Unfavorable FX exposure for Abu Qir Fertilizers: Natural gas , which represents 50-60% of the company’s total cash COGS, is currently valued at USD 4.5/mmbtu. It is worthy to mention that one ton of ammonia requires 32 mmbtu of natural gas whereas a ton of urea requires 5.2 mmbtu. The expected increase in FX rates would in-crease the cost of natural gas significantly as prices remain controlled by the government with the company be-ing unable to pass on the cost increase. Despite the export revenues (UAN & remaining ammonia) benefitting from the devaluation/floatation, they represented a historical average of 25% of total revenues (EGP 65.9mn in FY-16), whereas natural gas is the main cost component for Abu Qir Fertilizers.



OCTOBER , 2016

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

EGP/USD Estimates 7.63 8.88 10.81 11.50 11.25 10.75 10.50

Natural Gas Price, USD/mmbtu 4.50 4.50 4.50 4.50 4.50 4.50 4.50

Change % 0% 0% 0% 0% 0% 0% 0%

Natural Gas Price, EGP/ mmbtu 34.34 39.96 48.64 51.75 50.63 48.38 47.25

Change % 7% 16% 22% 6% -2% -4% -2%

DEVALUATION/FLOATATION EFFECT ON NATURAL GAS PRICE PER MMBTU


11

Financial Performance in FY2015/16: Abu Qir Fertilizers recorded a net profit of EGP 1,020.1mn in FY-16, witnessing a 12.9% y-o-y increase compared to EGP 903.2mn recorded in FY-15. The increase came on the back of strong revenue increase as well FX gain recorded in FY-16. ABUK’s total revenues increased by 11.0% y-o-y backed by the increase in total urea, ammonium nitrate and exported ammonia revenues. Prilled Urea (Abu Qir 1) revenues witnessed 24.2% y-o-y increase on the back of increased sales volume (+28.0% y-o-y) with the company selling 97% of its production volume. Furthermore, granulated urea (Abu Qir 3) witnessed 24.2% y-o-y increase following a 19.9% y-o-y increase in sales volume. Moreover, ammonium nitrate has increased by 5.8% y-o-y backed mainly by sales volume increase. It is worthy to mention that prices for subsidized urea and ammonium nitrate have witnessed almost no change with the government setting the selling prices. While exported ammonia revenues in EGP increased by 86.1% backed by strong sales volume increase as well as EGP devaluation, which increased ammonia sales value in EGP, Liquefied UAN revenues in EGP dropped 26.0% y-o-y. This could be attributed to the drop in UAN selling prices, which dropped 26.4% y-o-y following the drop in global urea prices with both products being strongly correlated. In terms of COGS, ABUK witnessed 17.4% y-o-y increase mainly due to a 14.1% y-o-y increase in raw material cost. Wages also grew by 11.1% y-o-y, which however has less effect due to raw materials contributing to almost 80% of total COGS. Natural gas cost, which represents an average of 40-50% of the company’s total cash COGS, is con-sidered the main reason behind the increase in raw material cost. The government supplies Abu Qir Fertilizers with natural gas at USD 4.5/mmbtu, which meant that the devaluation of EGP directly increased the natural gas cost, which is required as feedstock for all of the company’s products. It is worthy to mention that natural gas price EGP/mmbtu increased by 16% y-o-y. Abu Qir Fertilizers’ gross profit in FY-16 grew by a mere 1.1% y-o-y on the back of the stronger increase of the company’s production costs compared to revenues. Gross margin dropped significantly to reach 35% (versus 39% in FY-15). Meanwhile, EBITDA dropped 5.4% y-o-y on the back of higher provisions and increase in SG&A, which increased on the back of higher wages (+18.0% y-o-y). Net profits witnessed 12.9% y-o-y increase backed by the decline in taxes as well as recorded FX gain in FY-16 with net margin growing slightly to reach 25.9% compared to 25.5% in FY-15.



OCTOBER , 2016

12

Valuation Assumptions: Revenues:

Abu Qir 1 Abu Qir 1 plant, which operates an average 330 days per year, has a capacity of 530,000 mtpa of prilled urea and 380,000 mtpa of ammonia. Ammonia is mainly used for the production of prilled urea with one ton of urea re-quiring 0.58 tons of ammonia. We expect total prilled urea sales to grow at a 5-year CAGR of 4.4% to reach EGP 1.1bn by FY-21. Prilled urea is divided into normal and zink prilled urea with both being sold at a price variation with the average price however maintained at EGP 2,000mt since the increase by the government in FY-14. Vol-umes are expected to drop in FY-17, according to Abu Qir’s estimates on the back of limited demand due to the farmers’ financial inability to buy large amounts of fertilizers. Volumes are expected to pick up starting FY-18 with utilization reaching 110% (historical high) by FY-21. In terms of prices we expect average prices for prilled urea (normal & zink) to grow at a 5-year CAGR of 5.0% due to inflation pressure. It is noteworthy that, any decision towards subsidy removal would increase prices significantly the prices which would in turn affect prilled urea revenues.

Abu Qir 2 Abu Qir 2 plant, which also operates 330 days per year, has a capacity of 792,000 mtpa of ammonium nitrate with ammonia capacity standing at 330,000 mtpa. Ammonia is used for the production of ammonium nitrate with one ton requiring 0.27 tons of ammonia.



OCTOBER , 2016

784

974

815 903

998 1,100

1,210

-

200

400

600

800

1,000

1,200

1,400

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

TOTAL PRILLED UREA REVENUES, EGP MN

TOTAL PRILLED UREA VOLUME, (000) TONS & UTILIZATION %

1,666 1,666 1,749 1,836 1,928 2,025 2,126

2,570 2,570 2,699 2,834 2,976

3,124 3,281

-

500

1,000

1,500

2,000

2,500

3,000

3,500

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Normal Zink

PRILLED UREA SELLING PRICES, EGP/MT

SOURCE: ABU QIR FERTILIZERS & PRIME RESEARCH

429

549

437 462

486 510 535

0%

20%

40%

60%

80%

100%

120%

-

100

200

300

400

500

600

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Prilled Urea Volume Prilled Urea utilization

13

We expect ammonium nitrate sales to grow at a 5-year CAGR of 4.3% to reach EGP 929.4mn by FY-21. The company is ex-pected to maintain an average utilization rate of 100-102% throughout our forecast period maintaining the average sales-to-production rate of 57%. In terms of prices, we expect a 5-year CAGR of 5.0% with average selling price reaching EGP 2,023/mt in FY-21. This growth is also expected as a result of inflation pressure which would lead the government to gradual increase of its set prices.

Abu Qir 3 Abu Qir 3 plant, which also operates 330 days per year, has a capacity of 578,000 mtpa of granulated urea with ammonia capacity of 438,000mtpa. Ammonia is used for the production of granulated urea with one ton requiring 0.58 tons of ammo-nia. We expect granulated urea sales to grow at a 5-year CAGR of 2.5%. According to the company forecasts, utilization rate is expected to drop in FY-17 to reach 94% due to the farmers’ financial inability to buy large amounts of fertilizers. We expect volumes to recover to reach historical average of 105% by FY-21 following the expected demand as well as consistency in natural gas supply which would ensure stable supply levels.



OCTOBER , 2016

713 755 752

789 843

885 929

-

100

200

300

400

500

600

700

800

900

1,000

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

450

476

451 451

459 459 459

94%

96%

98%

100%

102%

104%

106%

435

440

445

450

455

460

465

470

475

480

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

AN Volume AN Utilization

1,585 1,585 1,665 1,748 1,835 1,927 2,023

-

500

1,000

1,500

2,000

2,500

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Ammonim Nitrate

TOTAL AMMONIUM NITRATE REVENUES, EGP MN

TOTAL AMMONIUM NITRATE VOLUM, (000) TONS & UTILIZATION AMMONIUM NITRATE SELLING PRICES, EGP/MT


827

1,027

858 955

1,053 1,105

1,160

-

200

400

600

800

1,000

1,200

1,400

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

TOTAL GRANULATED UREA REVENUES, EGP MN


14

Other Products NPK is used as a fertilizer, and contains three elements that are of great importance to plants; namely, Nitrogen, Phospho-rus, and Potassium. Nitrogen helps plants grow quickly, while also increasing the production of seed and fruit, and bettering the quality of leaf and forage crops. Phosphorus supports the formation of oils, sugars, and starches. Potassium, the third essential nutrient plants demand, assists in photosynthesis, fruit quality, the building of protein, and the reduction of dis-ease. Unfortunately, the company has stopped its operations and sales of the NPK for the past years. Abu Qir has NPK ca-pacity of 330,000 mtpa, which varies between urea and nitrate NPK. While urea NPK is unsubsidized and is supplied freely to the market, nitrate NPK is divided into unsubsidized and subsi-dized volumes, which are sold to PBDAC.



OCTOBER , 2016

457

548

436 462 485 485 485

85%

90%

95%

100%

105%

110%

115%

-

100

200

300

400

500

600

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

G. Urea Volume G. Urea Utilization

1,701 1,701 1,786 1,875 1,969 2,068 2,171

2,568 2,568 2,696 2,831 2,972

3,121 3,277

-

500

1,000

1,500

2,000

2,500

3,000

3,500

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Special Magnesium

TOTAL GRANULATED UREA VOLUME, (000) TONS & UTILIZATION GRANULATED UREA SELLING PRICES, EGP/MT


520

422 390

479 532

590

652

-

100

200

300

400

500

600

700

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

TOTAL NPK, EGP MN

338

246 240

281 297

314 330

0%

20%

40%

60%

80%

100%

120%

-

50

100

150

200

250

300

350

400

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

NPK Volume NPK Utilization

TOTAL GRANULATED UREA VOLUME, (000) TONS & UTILIZATION GRANULATED UREA SELLING PRICES, EGP/MT

1434 1434 1506 1581 1660 1743 1831

2402 2402 2522 2648 27802919

30652495 2495 2619 2750

2888 3032 3184

0

500

1000

1500

2000

2500

3000

3500

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Nitrate Sub Nitrate Unsub Urea Unsub


15

We expect NPK sales to grow at a 5-year CAGR of 9.1%. Currently, subsidized NPK is sold at almost EGP 1,440/mt, whereas unsubsidized (Nitrate & Urea) is sold at an average price of 2,400/mt. We expect prices to grow at a 5-year CAGR to reach EGP 1,831/mt for subsidized and an average EGP 3,100/mt for unsubsidized NPK. In terms of utilization we expect the company to increase gradually from the expected 75% (according to company forecasts) to reach average historical utilization of 100% by FY-21.

Export Products Due to the restrictions imposed by the government on exporting urea, the company is only allowed to export liquefied UAN and the remaining ammonia from the production of urea and nitrate. Abu Qir has a UAN capacity of 660,000 mtpa. Historically, export revenues accounted for an average of 29% of total Abu Qir revenues, how-ever, this dropped to 17% in FY-16 on the back of lower produced volumes. In FY-16 total export revenues stood at USD 74.2mn ( EGP 659.1mn). Liquefied UAN revenues in USD to grow at a 5-year CAGR of 7.3% to reach USD 71.4mn by FY-21. Meanwhile, revenues in EGP are expected to grow at a 5-year CAGR of 10.9% to reach EGP 749mn on the back of the ex-pected devaluation/floatation, which would have a positive effect on the company’s export sales. According to Abu Qir expectations, UAN sales volume is expected to remain low at 300mt in FY-17. However, we expect sales volume to increase to reach 425mt by FY-18 and maintain this level until FY-21. In terms of pricing, we expect prices to increase in correlation with global urea prices by a 5-year CAGR of only 0.5% on the back of the further expected drop in prices in FY-17 before the recovery starts in FY-18. Furthermore, ammonia revenues in USD are expected to grow at a 5-year CAGR of 10.8%, with revenues trans-lated in EGP are expected to grow at a 5-year CAGR of 14.5%. Despite the expected drop in global ammonia prices on the back of the drop in crude oil prices ammonia revenues are expected to grow on the back of increased sold volume, according to company forecast. Abu Qir expects ammonia volume sold to be 100mt in FY-17, which we expect to be maintained throughout our forecast period due to its positive effect on the company’s total reve-nues following the expected devaluation/floatation.



OCTOBER , 2016

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Export Revenues, USD mn

Liquefied UAN 79.0 50.2 46.4 67.4 68.9 70.5 71.4

Change% -36.9% -36.4% -7.5% 45.1% 2.3% 2.4% 1.2%

Ammonia 15.0 24.0 37.7 38.4 39.0 39.6 40.0

Change% -52.7% 59.9% 57.4% 1.6% 1.6% 1.7% 0.9%

Total Export Revenues 94.00 74.21 84.18 105.72 107.85 110.14 111.37 Change% -40.1% -21.0% 13.4% 25.6% 2.0% 2.1% 1.1%

Export Revenues, EGP mn

Liquefied UAN 603 446 502 775 775 758 750

Change% -32.7% -26.0% 12.5% 54.3% 0.0% -2.2% -1.1%

Ammonia 114 213 408 441 438 426 420

Change% -49.6% 86.1% 91.6% 8.1% -0.6% -2.8% -1.5%

Total Export Revenues 717.22 659.02 909.92 1,215.80 1,213.29 1,184.00 1,169.36 Change% -8.1% 38.1% 33.6% -0.2% -2.4% -1.2%

EXPORT REVENUE BREAKDOWN


16

Overall, we expect Abu Qir Fertilizers revenues to grow at a 5-year CAGR of 5.5%.

COGS Natural gas is considered the main component of the Abu Qir’s COGS as it represents 50-60% of the company’s total cash COGS. As a result, the expected devaluation/floatation is expected to increase Abu Qir’s COGS due to the higher natural gas cost, which is valued at USD 4.5/mmbtu.

Ammonia: Ammonia cost is expected to increase at a 5-year CAGR of 14.2%, on the back of increase in both ammonia cost and volume pro-duced. The expected increase in volume is backed by the increase in ammonia export sales which would enable the company to benefit from the EGP devaluation/floatation. Meanwhile, ammonia cost itself is set to witness increase as it requires 32mmbtu of natural gas per ton. Hence, the increase in natural gas cost would be transferred further to ammonia cost.



OCTOBER , 2016

-

1,000

2,000

3,000

4,000

5,000

6,000

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

P. Urea A.Nitrate G. Urea NPK UAN Ammonia

TOTAL REVENUES & BREAKDOWN, EGP MN


NG/Ammonia NG/Urea Ammonia/Urea Ammonia/AN Sulfur/NPK Phosphate Rock/NPK

mmbtu/mt mmbtu/mt mt/mt mt/mt mt/mt mt/mt

Conversion 32 5.2 0.58 0.27 0.09 0.19

IMPORTANT RATIOS FOR ABUK RAW MATERIALS COST

SOURCE: YARA FERTILIZERS HANDBOOK

TOTAL NPK, EGP MN

TOTAL NPK, EGP MN

71

90

169 190 186

178 174

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

-

50

100

150

200

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Ammonia Growth %

Prilled Urea: Despite the decline in sales volume, a 5-year CAGR of 4.3% is expected for prilled urea cost. This also comes on the back of in-creased natural gas cost with prilled urea requiring 5.2mmbtu per ton of urea. Furthermore, the increase in ammonia cost also affects prilled urea total cost as one ton of urea requires 0.58 tons of ammonia. Ammonium Nitrate: Cost for ammonium nitrate is expected to grow at a 5-year CAGR of 2.7% despite sales volume expected to drop slightly in FY-17. This also comes on the back of increased cost of ammonia which is required for ammonium nitrate production (0.27 tons of ammonia needed per ton). Granulated Urea: This is a very similar case to prilled urea cost. Despite the significant volume drop in FY-17 we expect granulated urea cost to grow at a 5-year CAGR of 2.4%. The increase in cost comes on the back of increased natural gas prices (5.2mmbtu per ton of urea) and ammonia cost (0.58 tons per ton of urea). NPK: Cost for NPK is expected to grow at a 5-year CAGR of 5.7% on the back of increased volumes and cost for its components. NPK requires ammonia, sulfur and phosphate rock. Increased global sulfur prices, which are expected recover starting FY-17 as well as the expected de-valuation/floatation are expected to increase sulfur cost for NPK produc-tion. Moreover, phosphate rock is acquired locally which hedges the company against the devaluation effect on phosphate. However, we expect its prices to grow at 5% annually due to the inflation effect as was the case historically. Ammonia cost increase also factors in the increase in total NPK cost. Liquefied UAN: Cost is expected to increase at a 5-year CAGR of 3.6% on the back of increased sales volume as well as ammonia cost.



OCTOBER , 2016

432

630

584 704 735 748 777

-20%

-10%

0%

10%

20%

30%

40%

50%

-

200

400

600

800

1,000

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Prilled Urea Growth %

TOTAL PRILLED UREA COST EGP MN

TOTAL AMMONIUM NITRATE COST, EGP MN

161

190 206 233 232

222 216

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

-

50

100

150

200

250

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Ammonium Nitrate Growth %

465

637

590

715 745 722 716

-10%

0%

10%

20%

30%

40%

-

100

200

300

400

500

600

700

800

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

G. Urea Growth %

TOTAL GRANULATED UREA COST, EGP MN

227 224 232 279 291 291 295

-10%

0%

10%

20%

30%

-

100

200

300

400

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

NPK Growth %

TOTAL NPK COST, EGP MN

189

227 250 274 278 272 271

-10%

-5%

0%

5%

10%

15%

20%

25%

-

50

100

150

200

250

300

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Liquidfied UAN Growth %

TOTAL LIQUIFIED UAN COST, EGP MN

SOURCE: PRIME RESEAERCH

17

Overall raw material cost, which represents an average 80%, is expected to grow at a 5-year CAGR of 3.9%. Total COGS is expected to grow at 3.6% after the contribution of wages, manufacturing cost and other.

Gross Profit, EBITDA & Net Profit: Abu Qir Fertilizer’s gross profit is expected to grow at a 5-year CAGR of 8.7% on the back of the expected in-crease in revenues. Gross margin is expected to witness a compression starting FY-17 on the back of the increase in natural gas price (the main COGS component) due to the expected devaluation/floatation. Gross margin drops is expected to drop in FY-17 to 32% from 35% recorded in FY-16. 2HFY-17 is expected to witness the margin com-pression with the devaluation expected to be in affect by then increasing in turn natural gas prices. We expect gross margin to recover starting FY-19 to reach the historical levels following an expected appreciation in the EGP , which is set to reduce natural gas cost in EGP. Meanwhile, EBITDA is expected to grow at a 5-year CAGR of 10.4% following the growth in gross profit. EBITDA margin is also expected to compress for the same reason as gross margin to reach 23% in FY-17. Recovery is also expected for EBITDA margin as it is expected to reach the historical margins pre FY-16, where the devaluation started to affect natural gas prices.



OCTOBER , 2016

-

500

1,000

1,500

2,000

2,500

3,000

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Ammonia Prilled Urea Ammonium Nitrate

G. Urea NPK Liquidfied UAN

-1000

0

1000

2000

3000

4000

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Raw Materials Wages Manufac.cost

Inventory change CO2&O2 sales Liquidfied UAN

TOTAL RAW MATERIALS COGS, EGP MN TOTAL COGS, EGP MN


1,380 1,395 1,182

1,460 1,663

1,900

2,116

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

-

500

1,000

1,500

2,000

2,500

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Gross Profit Gross Margin %

1,085 1,026 867

1,089 1,270

1,488

1,682

0%

5%

10%

15%

20%

25%

30%

35%

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

EBITDA EBITDA Margin %

GROSS PROFIT, EGP MN & GROSS MARGIN, % EBITDA, EGP MN & EBITDA MARGIN, %


18

Furthermore, net profit is expected to grow at a 5-year CAGR of 5.4% with gross margin also set to drop in FY-17 to reach 21% (versus 26% in FY-16). However, net margin recovery is also expected following gross and EBITDA margins to reach 25% by FY-21.

Debt The company has recently acquired two loans almost worth USD 24mn for water treatment project to be re-used “Zero liquid Discharge” divided into two loans with USD 8mn being a grant by the government . The first loan is worth USD 12mn to be repaid over 60 monthly installments, which started in May 2016. The second loan is val-ued in EGP and worth EGP 32.4mn to be repaid also over 60 monthly installments with the first installment to be paid in October 2016. The company does not require any short term debt.

Working Capital Abu Qir has followed a favorable working capital policy with the latest cash conversion cycle recording –10 days on the back of higher payables DOH. We expect Abu Qir to maintain a favorable cash conversion cycle averaging 15 days. Receivables DOH is expected to average 30 days, while payables DOH is forecasted to average 148 days. Meanwhile Inventory DOH is expected to average 130 days.



OCTOBER , 2016

903 1,020

783 886

985

1,153 1,303

0%

5%

10%

15%

20%

25%

30%

-

200

400

600

800

1,000

1,200

1,400

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Net Profit Net Margin

NET PROFIT, EGP MN & NET MARGIN, %

19


21

-1015 15 15 15 15

-20

0

20

40

60

80

100

120

140

160

FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

Payables DOH Receivables DOH Inventory DOH CCC

WORKING CAPITAL


20



OCTOBER , 2016

Financial Statements … Historical & Forecast Income Statement Brief Hist. Forecast

In EGP Mn FY-16 FY-17 FY-18 FY-19

Revenues 3,936 3,691 4,363 4,663

Change 11% -6% 18% 7%

COGS 2,540 2,509 2,903 3,000

Change 17% -1% 16% 3%

Gross Profit 1,395 1,182 1,460 1,663

EBITDA 1,026 867 1,089 1,270

EBITDA Margin 26% 23% 25% 27%

Net Income After MI 1,020 783 886 985

NPM 26% 21% 20% 21%

Balance Sheet Brief Hist. Forecast

In EGP Mn FY-16 FY-17 FY-18 FY-19

Cash 2,453 2,177 2,105 2,381 Net Receivables 287 303 359 383 Net Inventory 706 912 1,055 1,091

Total Current Assets 3,447 3,392 3,519 3,854

Net PPE 489 725 678 659 Projects Under Construction 256 0 0 0

Total Long Term Assets 1,391 1,370 1,323 1,304

Total Assets 4,837 4,763 4,842 5,158

Liabilities

CPLTD 29 32 35 34 Accounts Payable 960 1,017 1,177 1,216

Total Current Liabilities 1,442 1,087 1,212 1,250

LTD 81 93 67 32

Total Long Term Liabilities 371 354 342 321

Total Liabilities 1,813 1,441 1,553 1,571

Equity

Total Equity 3,024 3,322 3,289 3,587

Financial Ratios Hist. Forecast

FY-16 FY-17 FY-18 FY-19

GPM 35% 32% 33% 36% EBITDA Margin 26% 23% 25% 27%

NPM 26% 21% 20% 21% EPS 12.1 9.3 10.5 11.7 P/E 8.4x 11.0x 9.7x 8.7x

EV/EBITDA 6.3 7.7 6.1 5.0 ROA 21.5% 16.2% 18.6% 20.3% ROE 32.7% 24.1% 24.9% 27.8%

Total Assets Turnover 0.8 0.8 0.9 0.9

BV/Share 35.9 39.5 39.1 42.6

21



OCTOBER , 2016

22

Disclaimer Information included in this report has no regard to specific investment objectives, financial situation, advices or particular needs of the report users. The report is published for information purposes only and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Unless specifically stated otherwise, all price information is only considered as indicator.

No express or implied representation or guarantee is provided with respect to completeness, accuracy or reliability of information included in this report.

Past performance is not necessarily an indication of future results. Fluctuation of foreign currency rates of exchange may adversely affect the value, price or income of any products mentioned in this report.

Information included in this report should not be regarded by report users as a substitute for the exercise of their own due diligence and analysis based on own assessment and judgment criteria. Any opinions given are subject to change without notice and may significantly differ or be con-trary to opinions expressed by other Prime business areas as a result of using different assumptions and criteria. Prime Group is under no obliga-tion responsible to update or keep current the information contained herein.

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HEAD OFFICE

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PRIME SECURITIES

Hassan Samir Managing Director +202 3300 5611 [email protected]

RESEARCH TEAM

Aboubakr Emam, CFA Head of Research +202 3300 5724 [email protected]

Eman Negm, MSc Economist +202 3300 5716 [email protected]

Mohamed Marei Equity Analyst +202 3300 5725 [email protected]

Ali Afifi Equity Analyst +202 3300 5723 [email protected]

Omneya El Hammamy Equity Analyst +202 3300 5718 [email protected]

Ingy Fahmy Equity Analyst +202 3300 5722 [email protected]

Taher Seif Equity Analyst +202 3300 5719 [email protected]

Mohamed Magdi Junior Equity Analyst +202 3300 5720 [email protected]

SALES TEAM

Mohamed Ezzat Head of Sales & Branches +202 3300 5784 [email protected]

Shawkat Raslan Heliopolis Branch Manager +202 3300 5110 [email protected]

Amr Saber Team Head – Institutions Desk +202 3300 5659 [email protected]

Amr Alaa, CFTe Manager +202 3300 5609 [email protected]

Mohamed Elmetwaly Manager +202 3300 5610 [email protected]

Emad Elsafoury Manager +202 3300 5624 [email protected]



OCTOBER , 2016

mailto:[email protected]








ABUK Model Update Re-initiation of Coverage - October 2016 (2)

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