Sharelink lifts Logicom profit target, Egnatia price target

Sharelink Securities & Financial Services have revised higher the profit target for Logicom Plc (LOG) to EUR 7.8 mln from EUR 7.4 mln previously following the release of the first half results when Logicom reported net profit of EUR 3.9 mln, up 6.9% YoY. Egnatia Marfin meanwhile, which has a lower profit target of EUR 6.7 mln for 2007 has revised its recommendation on the stock to accumulate with a price target of EUR 1.70 whereas Sharelink has a price target of EUR 1.50 on Logicom.

Operations abroad are currently estimated to contribute €292 mln (previously: EUR310m), partly aided by the commencement of operations of the Distribution division in Hungary, Romania, Bulgaria, and Saudi Arabia in July, according to Sharelink. Estimates on revenue contribution from the Group’s operations in Cyprus are maintained at EUR53m. The gross margin estimate is maintained at 7.3%. Despite Management’s continuous efforts to improve the profitability of the lower-margin Distribution business, the estimated drop in gross margins from the level of 7.6% reported in 2006 to 7.3% in 2007 reflects the higher contribution of the Group’s lower-margin operations abroad. The profit forecast by Sharelink implies a 2007F RoE of 21.4% or 19.2% when adjusted for the estimated non-recurring ForEx-related profits (2006A: 17.1%). Management also announced that LOG’s profitability for 9M 2007 will be improved as compared to the PAT of EUR4.5m reported in 9M 2006.

Sharelink says its projections for 2007 are in line with Management’s targets. These are:

revenue increase of 35% in 2007 (2006A revenue: EUR252.1m). EBIT increase of 65% in 2007 (2006A EBIT: EUR6.5m). Medium to long-term strategic target to achieve a

consistent operational RoE of more than 20% (2006A RoE: 17.1%).

It should be noted that currently the profit estimates, as well as the valuations of LOG do not incorporate the funds that might arise from the proposed Rights issue as no specific information regarding the utilization of those funds is available yet.

On 8 August 2007 the BoD of LOG announced that LOG will proceed with a rights issue of EUR7.7m. According to the announcement the new funds that might arise will be used

for the expansion plans of the Group and for the improvement of its capital structure as well. No other information regarding the proposed Rights issue is available yet.