EZDK’s stock has come under heavy selling pressure over the past weeks due to the fact no decision has been taken in regard with reducing gas price and conflicting statements made by both the government and Egyptian Natural Gas Holding Company (EGAS). Despite the expected growth rate of the stock, short-term investments are still advised not to buy the stock currently.
The Prime Bank predicted that EZDK would deliver weak results during the third quarter of the year 2016, which could lead to a huge wave of stock selling. Based on the current prices, Prime Bank advises short-and long-term investors to start buying the stock.
The bank stated that amount of natural gas supplied to reduced iron production plants would increase by the fourth quarter of the year 2016. Due to low household power consumption, this would improve operational performance of the company. Egypt is expected to resolve the foreign exchange crisis through granting external loans and to resolve the natural gas shortage crisis by 2017.
The bank explained that the fact that natural gas price has not been reduced in conjunction with increase in EGP to USD expected exchange rate would negative impact on the value of the stock. Especially after E-gas has announced in early September its rejection of the government’s decision made in March 2016 to reduce the price of natural gas supplied to steel and iron factories from $ 7 to $ 4.5.
