Beltone initiated coverage on Lecico with a target price of LE 20.95 and a 'Buy' recommendation, the Cairo-based investment firm said in a statement. Lecico is one of the world's largest sanitary ware producers with a capacity of 6.75 million pieces, of which 60 percent is exported to Europe, Beltone said. Lecico is also a large tiles producer with a capacity of 22.5 million square meters, of which two-third is sold in the local Egyptian market. “The company's sanitary ware business boasts a significant cost advantage versus European and other low-cost producers in its landing cost price in Europe, benefiting from Egypt's low labor, energy, shipping and investment costs, as well as large economies of scale,” the statement read. Some concerns include the risk of a slowdown in sanitary ware demand in Europe, overcapacity in the Egyptian tiles market, an appreciation in the Egyptian pound and higher energy prices. “We believe the market has not realized the long term value of the stock,” Beltone added, which they believe “is more likely to be realized as the expansion plans, and earnings growth, draw nearer, in 2012 and 2013”
