Sources at Paints and Chemical Industries, also known as Pachin, told Daily News Egypt exclusively that management could soon announce plans to develop on a 60,000 sqm plot of land pertaining to the old factory in Hadayek El Qobba. Accordingly, the company is looking to invite bids from real estate companies to develop the plot of land which has already been converted and rezoned for real estate and commercial purposes. The original function of the land was purely industrial. The company will start looking over bids from real estate companies sometime in the middle of this year.
Sources said that Pachin’s growing market share, which currently controls 70-75% of the medium category market, plans to expand on its 10% share of the premium category market.
Naeem Research values Pachin with a Target Price (TP) of EGP25.7 per share and recommends to buy. The company’s financial performance is expected to improve between fiscal year (FY) 2021 and 2024, as increased demand is likely to raise utilisation rates and improve margins. In addition, oil price stability will be positive for Pachin as roughly 80% of costs of goods sold are raw materials linked to global oil prices.
Naeem said that Libya’s stability plans will be a positive trigger for Pachin, as it already owns a factory in Libya with a capacity of 2,500 terapascals (tpa).
Naeem indicated that Pachin owns a 60,000 sqm plot of land, which was recently rezoned and is expected to result in significant monetisation through the development model. About 30% of the fair value (or EGP7.5 per share) on Pachin is derived from undeveloped land owned by the company.
The company produces various types of architectural and decorative coatings, industrial paints, printing inks, and alkyd resins with production capacity of 120,000 tpa for paints and 3,000 tpa for ink. Pachin sells most of its output locally in Egypt. Moreover, the firm has strategic alliances with some global leaders within the paint industry such as AkzoNobel and Nova Colour, under which Pachin manufactures and sells various products on behalf of Akzo Nobel under the trademark Dulux, while other Akzo Nobel products are being manufactured under the trademark Pachin. The company owns three coating manufacturing plants: El Obour Paints & Chemical Industries in Qalubya, and in Alexandria, as well as Pachin Libya. The government owns 44.6% of the company through Chemical Industries Holding Co.
