        Revenues: EGP4.0bn, +33% Y-o-Y, +7% Q-o-Q, +14% EFGe  
        Gross profit: EGP711mn, +105% Y-o-Y, +58% Q-o-Q, +31% EFGe
        Net income: EGP442mn, +79% Y-o-Y, +43% Q-o-Q, +6% EFGe
 
AMOC released its 4Q17/18 financial highlights, showing earnings of EGP442mn (+42% Q-o-Q, +79% Y-o-Y), which came in line with our estimate of EGP418mn. The main surprise was seen in the GP, which spiked to EGP711mn in 4Q17/18 and implied a c17.8% margin (vs EFGe of c15.4%). Full financial statements are not yet available, but we think the improvement in gross profit was likely a function of: i) higher-than-expected volumes; and ii) swings in oil prices, which were relatively volatile during the quarter. This was also witnessed in the revenues line, which reached EGP4.0bn (+14% vs EFGe). 
 
Our take on AMOC: Today, AMOC seems to have turned ex-growth, even though expansions are still under study to be implemented. As such, we think that AMOC’s P/E multiple of 10.2x already captures its marginal growth outlook. With oil prices rallying, though, to mid-70s, we think that some margin expansion could be merited and would offer upside to our 2019 estimates, albeit likely minimal, given that the company is a second-stage refinery. Accordingly, while we see some upside vs our valuation, we think the market is fully pricing in fundamentals; hence, we reiterate our Neutral rating on the stock.  
 
The game changing act is still being studied; will the expansion ever materialise? The twist to this story could emerge from the proposed plans to transform into a zero-fuel oil facility, which will likely be a game changer for growth and value. However, details are still vague until now regarding: i) the product mix that this investment will enjoy; and ii) the capital structure of the investment; and iii) the final investment cost, which has been quoted to be anywhere between USD500-700mn. Initially, we think the premise of the expansion seems accretive and will generate an IRR in the range of c20-30%, as it will eliminate the production of loss-making products (mainly heavy fuel oil blend) and add more value-accretive lighter products. We are still awaiting further details on this project, which has been taking a long while so far.
 
AMOC: EGP11.80 as of 15 Jul. 2018, Rating: Neutral, TP: EGP10.00/share, MCap: USD853mn, AMOC EY/AMOC.CA
Ahmed Hazem Maher, Alaa Saleh