Minister of Petroleum approves USD3/mmbtu gas price for KIMA’s operations
Egyptian Minister of Petroleum Tarek El Molla approved a USD3/mmbtu gas price for KIMA’s operations, according to a company release. Although management denied gas prices would be USD3/mmbtu just two weeks ago, stating that it would pay USD4.5/mmbtu like the rest of the sector, it seems that, since then, it has reached a formal agreement with the Egyptian government to apply the lower gas price. We also note that our forecasts already account for a USD3/mmbtu gas cost in the medium term and a long-term price of USD4.5/mmbtu; thus, this has no impact on our forecasts and valuation. (Company release, Omar Gharabawi, Yousef Husseini)
Egyptian Chemical Industries (KIMA): EGP4.87 as of 21 Oct. 2018, Rating: Buy, TP: EGP6.50/share, MCap: USD239mn, EGCH EY/EGCH.CA
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