Eastern Co. released some additional details of its 2018/19 budget after its BoD meeting was held on 25 February 2018. EC expects revenue growth of 20% Y-o-Y to EGP15,797mn (+5% vs. EFGe), with total volumes expected to be almost flat (+1% vs. 2017/18e budget), mainly based on: i) local revenues (86% of total) of EGP13,662mn (+15% Y-o-Y) with volume expected to inch up 2% to 61.0bn sticks; and ii) a 6% softening in under-licence revenues to EGP2,659bn, with volumes expected to contract c6%. On the costs front, raw materials, spare parts and others (based on EGP-USD rate of 18.0) are expected to inch down c3% Y-o-Y to EGP7,700, while total salaries are expected to increase c17% Y-o-Y in 2018/19. The company had announced earlier that it is expecting a net income of EGP3.25bn for 2018/19 vs. a budgeted EGP1.4bn for 2017/18 (already booked EGP2.3bn in 1H17/18 alone) and EGP2.98bn in 2016/17 (had targeted EGP1.3bn) - typically, Eastern has set fairly conservative earnings targets, in our view.  
 
Eastern Company: EGP526.84 as of 26 Feb. 2018, Rating: Buy, TP: EGP630.00/share, MCap: USD2,988mn, EAST EY/EAST.CA
 

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