Egypt's AMOC to gain as crude edges higher

Alexandria Mineral Oils Company expects a rally in the price of crude lift shares and boost its profit for the year ahead.

A rally in the price of crude is expected to lift shares in Alexandria Mineral Oils Company (AMOC) and boost its profit for the year ahead.

"The increase in crude oil prices boosted the allure of AMOC, particularly after the sell-off during December," said George Beshara, an industrials analyst at Pharos Holding in Cairo.

Shares in the company, which produces refined petroleum products, have fallen 6.3 per cent in the past month. But analysts expect an upturn in fortunes in line with rising crude prices.

AMOC rose 2.3 per cent to 44.9 pounds on the Egyptian Exchange yesterday.

Oil has reached its highest point in 26 months, pushing to US$91.38 a barrel on Friday. It was the highest year-end price since 2007 as the dollar declined against the euro and boosted commodities appeal as an alternative investment.

Mr Beshara added that if oil prices remained stable at current levels, the stock would "likely surprise" investors.

The company's main business is refining heavier crude into lighter products with higher commercial value. Production takes place at two facilities, one producing fuels and the other mineral oils, which are less commercially popular.

Total output at the facilities reached 1.86 million tonnes in the company's last fiscal year, 90 per cent of which was produced by the fuels unit.

Mr Beshara has increased his position in AMOC but has not disclosed a target price.

Despite it being a relative small-cap on the Egyptian Exchange, the fundamentals of the company are already looking strong for the year, as oil is widely forecast to reach US$100 a barrel.

Mr Beshara said he expected the company's results for this year to repeat the success of the last peak in oil prices in 2007 and 2008.

Three years ago, AMOC posted record net profit of 917.9 million Egyptian pounds for the full year 2007-2008 and paid record cash dividends of 8.5 pounds per share.

AMOC buys its raw materials from the Egyptian General Petroleum Corporation (EGPC) for the production of higher grades of oil and sells the refined product back to EGPC at international prices.