Oriental Jumps on Bets Weaker Pound to Boost Sales: Cairo Mover
Oriental Weavers Co. (ORWE), which exports most of its products to the U.S., rose to the highest level in more than three months on bets the Egyptian pound’s depreciation will boost revenue.
Shares of Egypt’s largest publicly-traded machine-made carpet manufacturer and exporter rallied 3.5 percent to 24.2 pounds at the close in Cairo, the highest level since Sept. 30. The stock, which gained 4.1 percent this week, helped push the benchmark EGX 30 Index (EGX30) up 1.8 percent to 5,734.39.
The Egyptian pound weakened to a record this week after the central bank started selling dollars at daily auctions, in which the regulator caps the amount each bank can buy to conserve tumbling foreign reserves. Oriental Weavers may post a 21 percent increase in 2012 profit to 316 million pounds ($49 million) as revenue grows, according to the median estimate of three analysts on Bloomberg.
The company “is a net exporter and one of the stocks that always benefits from the pound’s depreciation,” said Mohamed Radwan, head of international sales at Pharos Holding in Cairo. “You’re going to find some appetite on names that reflect the currency’s devaluation.”
The pound weakened 0.5 percent today to 6.4207 per dollar. Orascom Construction Industries (OCIC) and Orascom Telecom Holding SAE, (ORTE) which derive most of their revenue away from their home market, advanced 2.4 percent and 1.5 percent, respectively.
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