June 11th, 2008
Summary
▪Major Expansion Plans Underway
EFIC acquired 256,000 square meters of land in Al Ain Al Sokhna through its 99.9% owned subsidiary Suez Company for Fertilizers Production (SCFP) to increase its phosphate fertilizers production capacity to reach 1.7 million tons by the end of 2008, up from its current level of 1.2 million tons, making EFIC one of the biggest phosphate fertilizer producers in the world.   
 
▪1Q08 : EFIC’s Performance
EFIC’s consolidated results showed an impressive growth in bottom line by 235.9% YoY from EGP28.7 million in 1Q07 to reach EGP96.5 million in 1Q08, primarily due to SCFP’s full operations in 1Q08 and high selling prices across the line. It is noteworthy that SCFP is expected to contribute highly in EFIC’s consolidation results onwards. 
 
▪We Expect a 2.8x Increase in FY08e Bottom Line 
EFIC is expected to record a bottom line of EGP323.1 million in FY08e, up by 177.7% YoY from EGP116.4 million in FY07, predominantly due to (i) increasing sales & volume from SCFP, and (ii) a substantial increase in selling prices and volume in both local and export markets.
 
▪We recommend “Hold” on EFIC
We are updating our coverage for EFIC with a “Hold” recommendation, based on a target price of EGP388.0, which offers a 8.1% upside potential to the current market price of EGP358.9/share. The stock trades at a P/BV of 5.2 and a P/E of 14.4 FY08e.

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