Oman Cables Industry Co.

Q3FY2010 results - Sales decline on back of increasing competition

Marginal growth in revenue as the subsidiary commences its operations: Oman Cables posted consolidated revenue of RO 51.659 million for the quarter an increase of 41.2% YoY basis and 2.8% on QoQ basis. Its subsidiary company Oman Aluminium Processing Industries (OAPIL) commenced its operations during the quarter and achieved sales revenue of RO 2.849 million for the period under review. However, the parent company’s revenue declined by 3% on QoQ basis on the back of increasing competition in the region amidst the presence of strong local demand driven by Government investment in Power and Infrastructure projects.

Valuations and Outlook: Factoring in the decline in revenue along with volatile margins during the quarter, we have revised our EPS estimates for FY 2010E to RO 0.090 from RO 0.095. We recommend a ‘Neutral’ rating on the stock with the revised target price of RO 1.345 (based on 15X of FY10E EPS). At current levels, the stock trades at a PE (FY10E EPS of 0.090) of 14.6X.