PHOTO
Egypt Kuwait Holding (EKH) is planning to start production at its $80 million Medium Density Fibreboard (MDF) factory in Sadat City in the second quarter of 2022, the company CEO told Zawya Projects.
Sherif El Zayat said the factory, with a production capacity of 200,000 cubic metres per year, is expected to start operations by May 2022.
The new factory’s capacity represents 30 percent of the total MDF consumption in Egypt.
El Zayat said: “We have invested about $50 million in the MDF project to date and will invest remaining $30 million by next year. As part of the project, to secure raw materials for the factory, we have also invested $20 million in the development a 3,000-acre planted forest within the 6,000 acres of land allocated for the same. The trees were planted three years ago.”
Sherif El Zayat, CEO of Egypt Kuwait Holding (EKH)
2021 investment plans
EKH, which is listed on both Egyptian and Kuwait stock exchanges, had allocated $300 million for investment in Egypt during 2021, with $200 million earmarked for existing and new projects.
Apart from the MDF project, the company has invested $75 million to develop gas wells in the Offshore North Sinai (ONS) concession. ONS is owned by North Sinai Petroleum Company (NOPOSCO), where EKH is an indirect shareholder through NSCO Investments.
The EKH CEO said: “NOPOSCO is developing three natural gas wells in the North Sinai concession this year. Two wells have been drilled at a cost exceeding $50 million while the third well would be drilled at a cost of $25 million before end-2021. We are planning to develop four natural gas wells on annual basis.”
Other investments during 2021 included $15 million in subsidiary Kahraba to increase the power generation capacity of its Borg El Arab Power Plant [by 20 megawatts to 135 megawatts by the second half of 2022] and $30 million in subsidiary Sprea Misr, with $12 million to increase the production capacity of an existing formica production line and $18 million in a new sulphuric acid plant, [which is expected to begin operations in the first half of 2022].
“Out of the $300 million we had allocated to expand our activities in Egypt this year, only $50 million remains. This will be invested in the remaining months,” El Zayat said.
He said the company will also invest $100 million to increase stakes in subsidiary companies.
“We plan to increase our stake in Alexandria Fertilisers to 65 percent by end-2021. We had recently increased our stake in the company from 45 percent to 57 percent at an investment of $50 million.”
Meanwhile, EKH’s recent conversion of its listed currency on the EGX from USD to EGP is expected to improve the liquidity of its stock going forward.
El Zayat said: “EKH had announced the opening of a window from 15th of June to 14th of September to investors to exercise the option to convert the trading currency of their shares from US dollar to Egyptian pounds. The objective of this corporate action is to incentivise trading on the share and allow a larger base of investors to invest in the stock.”
For the second quarter ended 30 June 2021, EKH’s top line increased 24 per cent y-o-y to $186 million while the Group’s attributable net profit increased by 52 percent y-o-y to $45.2 million.
The company's diversified portfolio of investments spans five strategic sectors, ranging from upstream gas, fertilisers, and petrochemicals to gas distribution, electricity, and insurance.
(Reporting by Marwa Abo Almajd; Editing by Anoop Menon)
This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© ZAWYA 2021
