KIMA has received a request from Italian Engineering and Construction firm Tecnimont to have an extension of five months for the delivery of KIMA 2 expansion project. The request also included an increase in the cost of the contract by USD76mn for the new project. Currently, the subject request is in the legal validity stage, while noting the subject would increase the total facility cost by EGP1.34bn. It is worth noting that the original project investment cost was estimated to be in the range of EGP11bn, and we were already expecting cost overruns. Despite the subject delays in the project, we were already expecting the expansion to start contributing to earnings by 2019-20, which represents a one-year delay from management’s previous guidance for a commercial startup in 2018-19. 
 
Egyptian Chemical Industries (KIMA): EGP8.16 as of 2 Apr. 2018, Rating: Sell, TP: EGP6.10/share, MCap: USD293mn, EGCH EY/EGCH.CA
Ahmed Hazem Maher