Oman Cables Industry -Equity Report -30-07-2012

Revenue declines on the back of falling Copper prices: Oman Cables managed to post revenue of RO 134.350 million for H1 2012, a decrease of 9.8% YoY. This is in line with our estimate of RO 130.3 million. The fall in revenue on an annual basis is due to fall in the copper prices which averaged USD 7,872/tonne during Q2 2012 as against USD 9,146/tonne in Q2 2011. The company has also disclosed that there has been a less off take from end customers especially in the Utility and Infrastructure segments during Q2 2012 which in turn had resulted in lower capacity utilization. While the contribution from its subsidiary continued to witness a rise during the quarter under review.

We recommend an ‘Accumulate’ rating on the stock and we revise our target price at RO 0.974 (based on 9X of FY12E EPS). At current levels, the stock trades at a PE of 7.5X, which we believe is attractive.