Egypt's Sidpec stock closes near year high

Egypt-based Sidi Kerir Petrochemicals rises in anticipation of dividend payments, and strong earnings from higher oil prices.

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Sidi Kerir Petrochemicals of Egypt rose to its highest in almost a year, buoyed by a rally in petrochemical prices, expected increased dividends and depreciation in the country's currency, an analyst says.

Also known as Sidpec, it is the sole producer of ethylene and polythene in Egypt. Its main export market is Europe and Turkey.

Sidpec closed up 2.4 per cent to 14.85 Egyptian pounds in Cairo yesterday, the highest closing price since April 18. Shares have rallied by 28.3 per cent since the bourse reopened after the turmoil in Egypt.

Rallying petrochemical prices are supported by higher oil, said Lovetesh Singh, an analyst at Alembic HC Securities.

Over the first quarter of this year, product prices have rallied at a more rapid rate than feedstock costs. Propylene is up 26 per cent, while ethylene and polypropylene are both up 16 per cent compared with the final quarter of last year.

Sidpec's production process begins with feedstock in the form of an ethane-propane mixture bought from the Egyptian Natural Gas Company through a favourable arrangement for Sidpec, which then converts it into ethylene.

The output is processed to make high and low-density polyethelene, naphtha, butane and liquefied natural gas.

Sidpec announced an increased of its dividend to 1.40 pounds a share yesterday, up from 1.25 pounds last year. The dividends are expected between the second and third week of this month.

The depreciation in the Egyptian currency should enhance earnings for Sidpec, Mr Singh said, as product prices are set in US dollars.

The pound has declined by 2.6 per cent to 0.1678 against the greenback since the start of the year.

Last week, Sidpec announced it entered into a 7 billion pound joint venture with two Egyptian government-owned companies to build an ethylene plant designed with a capacity to produce 460,000 tonnes of ethylene a year. Sidpec will own 20 per cent of the company.