Cairo-based investment bank Beltone Financial upgraded Thursday the target price on Orascom Construction Industries OCI to LE 284.62, an increase of 11 percent, with an “add” recommendation.
In a note, Beltone said, “We view OCI’s outlook as positive, with a slightly cautious approach in the short term until the first half of 2011.”
The valuation is based on what Beltone sees as an undervalued Sorfert,
OCI’s Algerian fertilizer operations, which has “an overall impact on the market’s valuation of the company’s fertilizer division.”
While acknowledging that the risks in Algeria, Beltone says, “we feel the current discount on valuations is overdone.”
The stock has lost close to 1 percent over the last two months compared to the overall EGX30 Index gaining 9 percent and in spite of fertilizer prices increasing 20 percent over the previous month.
The ongoing consolidation in fertilizers is a positive sign for OCI’s shareholders and while remaining cautious on construction until the first half of 2011, the firm has a positive medium to long term view.
