Eastern Co. reported headline KPIs for 1Q16/17, with earnings of EGP427.3mn, up 16% Y-o-Y, coming in 16% above our estimate. Revenue for the quarter grew 10% Y-o-Y to EGP1.92bn and was broadly in line with our forecast (+4%). The impact of the tax increase implemented in September 2016 likely bolstered the results set to some extent (ex-factory prices for EC's best-selling brands that account for 90% of volumes increased 25%). While the tax/price increase gives the company more flexibility (especially if there are further hikes), margins gains are restricted by FX pressures.   We remain Buyers of EC, as we expect solid earnings growth in the near term (two-year CAGR of 12%) and improving returns (RoAE of 28% up from 22% two years ago) on price hikes and continued deleveraging. The stock remains one of the cheapest listed cigarette producers, trading at c6x FY16/17e P/E (vs. global peers’ c17x). (Earnings release, Hatem Alaa, Nada Amin)   Eastern Company: EGP209.27 as of 27 October 2016, Rating: Buy, FV: EGP334.00 per share, MCap: USD1,178mn, EAST EY / EAST.CA