Edita announced that it increased prices of most croissant (‘Molto’ brand) SKUs by EGP0.5/pack (SKUs selling at EGP1.0 increased to EGP1.5, EGP2.0 to EGP2.5). Croissant represents 34% of 1H16 revenue and 30% of gross profit with Edita commanding a market share of c70%. This is a first-time direct price increase by the company: Edita has historically raised prices through product upsizing (retiring SKUs and replacing them with larger, higher-priced products), weight reduction and launching new products at higher price points.   We are surprised by the price increase, given its outright nature, as well as its timing, as it succeeds the Twinkies upsizing (in September 2015 doubling its price to EGP1/pack), which impaired Edita’s cake segment performance in 1H16 (volumes -25%, revenue -11%). This highlights the severity of the FX-related cost pressures in Egypt (croissant has the highest contribution of FX cost components across Edita’s products), in our view. The move is, nonetheless, positive as it showcases management’s proactivity in responding to growing cost pressures.   While we believe the price increase could impair volume momentum in the short term, we do not think that the impact will be as severe as what happened in the cake segment post Twinkies upsizing, given the current inflationary environment, and as several croissant competitors have increased their prices already (selling at EGP2.5). (Company disclosure, Hatem Alaa, Nada Amin)   Edita Food Industries: EGP9.74 as of 11 October 2016, Rating: Neutral, FV: EGP11.80 per share, MCap: USD796mn, EFID EY / EFID.CA