Eastern Co's further share sale to boost liquidity – Analysis

By: Heba El-Kordy

Cairo – Mubasher: The Egyptian finance minister on Thursday announced the launch of the state-run initial public offerings (IPOs) programme by floating a further 4.5% stake in Eastern Co on the Egyptian Exchange (EGX) next October.

Offering an additional stake in Egypt's monopoly cigarette maker on the Egyptian bourse has two key benefits for the company, financial analyst at Pharos Research Mohamed Hamza said.

The IPO is expected to boost liquidity of the Egyptian tobacco firm’s stock as a result of the increase in its share, in addition to the company's recent decision to split the nominal value, Hamza highlighted.

In August, the extraordinary general meeting (EGM) of Eastern Co approved to split the nominal value of the stock at EGP 1, instead of EGP 5.

As for the second benefit, liquidity resulted from the additional share sale will help the company maintain idled projects and support its future investments, the analyst added.

Finance minister Mohamed Maait projected the 4.5% stake of Eastern Co to be sold for nearly EGP 2 billion.

Hamza highlighted that the fair value (FV) of the stock is estimated at nearly EGP 134 in the meantime.

He shrugged off the stock’s performance today, which slipped 0.16% to EGP 101 at 12:20 pm Cairo time.

It is worth noting that Eastern Co’s capital amounts to EGP 2.25 billion, distributed over 450 million shares at a par value of EGP 5 per share.

Earlier this morning, Maait said that NI Capital, the consultant of the state-run IPOs, has picked up the leading investment bank EFG Hermes to manage Eastern Co’s additional offering.


Translated by: Mai Ezz El-Din

MUBASHER Contribution Time: 06-Sep-2018 11:44 (GMT)
MUBASHER Last Update Time: 07-Sep-2018 14:43 (GMT)