AMOC THE SKYSCRAPER CHAPTER
BY: Karim M. Riad Amr El Sayed Alexandria Mineral Oil Company is one of the most efficient public companies in the petrochemicals sector. AMOC Share Price has experienced a significant increase by more than 100% since the currency flotation, on the 3rd of November 2016. Today the stock is at the EGP 94-96 level. Contemplating the fact that the 6 months financial report highlighted an increase in H1 profit by around 245% to reach a bottom line of EGP 545.7 million. A main contributor to such startling increase is the FX gain, which accounted for EGP 230 million. As tempting as all this sounds, this chapter starts on the 25th of February 2017,when the general assembly meeting will be held. The meeting agenda includes many topics, but the stock split of 1:10 ratio has to be on top of the list. AMOC has 86.1 million listed shares. However, after the stock split AMOC will have 861 million shares, which will increase the stock’s liquidity and reduce the price volatility during the trading sessions. Issuing GDR stocks in the LSE is on top of the GAM’s to-do list. Amr Mostafa, AMOC chairman, stated that they would expand the firm’s activities to include refining processes, during the upcoming GAM. He also went on to confirm that AMOC has finalized the primary agreement with EGPC company to start the refining activities. The agreement allows the company to start the refining activities beginning March 2017 at Medor facilities with a target margin of USD 2/barrel. “We see that the stock split is very positive for the liquidity. It’s not reasonable to witness such tremendous price hikes with such low volumes. The GDR listing will be 33% of the listed shares without any EFSA regulation violations, which states that only 50% of the free float could be transfered to GDR (in this case, it is 10% which represents 50% of the 20% free float, the remaining share is an institutional stakes which isn’t considered free float). Bank of America, New York is foreseen to be managing this deal after the GAM approval but it’s not yet confirmed . Buying stakes at listed petrochemicals or oil companies will be an ideal option, knowing that these stakes will be considered as a long-term investment. Primarily, the management is searching for which company or business models will work better with AMOC knowledge and experience.” Concurred a reliable source at Al Ahly capital, the private equity arm for the national bank of Egypt, which also owns 25.3% of AMOC and controls 4 directly and indirectly 4 seats now on the board of directors. Moving on to the numbers, our source stated that although the stock price jumped to EGP 120 and now trading at EGP95, the expansion model that the management is providing will be the main determinant in the coming time period. He added that the current management is very competent, and will pave the way for AMOC expansion plans. Regarding the government announcement that a share of the company will be sold during the first half of 2017; he clarified that they don’t have a framed plan on how it will go, or which entity will sell its share. However, he concluded by saying that the GDR will help the government in its economic reform plan. AMOC will be a very interesting story to read in the coming few months.