Sharelink lifts Muskita profit target

Sharelink Securities & Financial Services, a member of SFS Group Pcl (SFS) have revised higher their price target on Muskita Aluminium Pcl (MAI) and issued a 2007 net after tax profit target.

For 2007 SFS are projecting revenue of EUR67 mln supported by the signs of positive ongoing construction activity in Cyprus, new export contracts and higher prices. Domestic sales are currently forecasted at EUR42 mln and sales in Europe at EUR25 mln.

EBIT margins are currently estimated at 17.6%, with the slight improvement as compared with 2006 reflecting the company’s ability to pass on to its clients part of the higher raw materials and energy costs, and its continuous efforts to control its administrative and selling expenses.

Based on the current conditions and the exchange rate between the Cyprus Pound and the US dollar, Sharelink are forecasting that the profit after tax for 2007 will improve to EUR 10.5 mln from EUR 10.1 mln previously. 

Sharelink have slightly increased the price target on the stock to EUR1.40/share from EUR1.35/share before, to reflect the higher forecasted profitability. At this price the stock would be trading at a 2007F P/E of 11.0x and a 2007F EV/EBITDA multiple of 7.8x. MAI declared a dividend payment of EUR0.0345/share (ex-dividend: 7 March 2007). Sharelink estimate that the company will pay an additional dividend of at least EUR0.045/share by the end of the year.

It should be noted that the stock’s liquidity is persistently low since the company’s listing, denoting that the shares are closely held. Hence, Sharelink do not expect a material improvement on MAI’s stock liquidity in the near future despite the material improvement in the overall market liquidity since the implementation of the Common Trading Platform between the Cyprus Stock Exchange (CSE) and the Athens Stock Exchange (ASE) on 30 October 2006.