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Investment case A leading regional steel producer, with a market share of 40% in local market.

Ezz Steel Rebars. ESRS.CA/ESRS EY |Sell Recommendation | Moderate Risk | LTFV EGP18.4 | Target Price EGP12 | Analyst: Hany Samy. Investment case A leading regional steel producer, with a market share of 40% in local market.

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Investment case A leading regional steel producer, with a market share of 40% in local market.

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  1. Ezz Steel Rebars ESRS.CA/ESRS EY |Sell Recommendation | Moderate Risk | LTFV EGP18.4 | Target Price EGP12 | Analyst: HanySamy Investment case • A leading regional steel producer, with a market share of 40% in local market. • ESRS plans to expand locally to enhance margins and to meet local market needs. ESRS has long term plans to produce 1.3 mtpa of Direct Reduced Iron by late 2011. • The company is vulnerable to international steel prices, yet local resilient construction activity maintains full utilization of long products capacities. • Backlogs of construction contracts will be completed over the coming 3-4 years, and will absorb local steel production. Downside Risks • A local political and economic situation that has a negative impact on the demand for new real estate units. • Furthermore, the company may witness an increasing number of cancellations • A regional and local political issue that has a negative impact on the tourism industry • Economic crises affected negatively Ezz flat steel sales - mostly directed to export markets • ESRS plans to expand its final product capacity by mid 2012 to produce either long or flat products with a total capacity amounting to 1,200 tons per annum • Shareholder Structure • Ezz Group Holding 64.6% • Free Float 35.09% • Banks, Insurance Companies, & Others 0.31% • 52-Week Performance & Share Data (*EGX suspended 27thJan – 23rd Mar 2011) Key Performance Indicators Company Profile Ezz Steel is a joint-stock company established in April 1994 to manufacture steel rebars. ESRS' facilities in Sadat and 10th of Ramadan have a combined production capacity of 1.4mn tons per annum. Furthermore, ESRS owns 63.1% directly and indirectly of Al-Ezz Flat Steel (EFS), with a capacity is 1.3mn tons of flat steel per annum, most of which is directed to export markets. ESRS also owns a 55% stake in Al-Ezz Dekheila for Steel- Alexandria (EZDK), which is the largest integrated steel plant in Egypt, with an annual production capacity of 1.78mn tons of long products and 1mn tons of flat products.

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