Tuesday 14 Jan
Ezz Steel Company has set a delisting price of 120 Egyptian pounds per share, the highest in the company's history.
In a statement to investors, the company clarified that this price represents a 156% increase over the 2023 average share price; a 35% increase over the 2024 average share price; a significant premium compared to historical US dollar prices, ranging from 75% to 426% higher than the average annual share price from 2015 to 2023; and a 33% premium over the 2024 US dollar average share price.
Independent valuations from major
Egyptian investment banks, conducted from September 2023 to January 2024,
consistently estimated the fair value per share between 115.00 and 120.21
Egyptian pounds, aligning with the proposed delisting price despite varying
economic and industry assumptions.
Ezz Steel has no plans to sell shares to Arab or foreign investors and has not received any such offers. The company maintains a significant market share of approximately 40% in the Egyptian rebar market, despite increased competition from other domestic producers investing in vertical integration.
Local production capacity
significantly exceeds market demand, with a surplus exceeding double the
current market absorption. This overcapacity ensures intense competition will
persist for the foreseeable future. Further increases in steel production
capacity will negatively impact the industry, as consumption growth will take
at least a decade to catch up.
Ezz Steel remains a major
Egyptian exporter, having shipped approximately 1.07 million tons of rebar in
2024. While flat steel exports reached 1.4 million tons in 2024, the EU export
quota imposed last year will negatively impact future export volumes.
Furthermore, potential anti-dumping duties from Europe pose a significant risk.
The primary threat to Ezz Steel's
exports stems from escalating trade wars and global restrictions on steel
imports, including protective duties, increased customs duties, export quotas,
and anti-dumping lawsuits.
Most countries have implemented
measures to protect their domestic steel industries, while Egypt has yet to
effectively do so. This has allowed imported flat steel products and steel
billets to penetrate the local market, subjecting Egyptian iron and steel
companies, led by Ezz Steel, to unfair price competition.
Another significant threat to the
company's exports is the potential imposition of anti-dumping duties by the
European Union. If these duties are implemented, Ezz Steel may be forced to
reduce production or even shut down a factory, mirroring the 24-month halt in
flat steel production in Suez during the 2017-2020 trade wars.
Despite these challenges, Ezz
Steel recorded a net profit of 2.275 billion Egyptian pounds in the first half
of this year, a significant turnaround from the 809.7 million Egyptian pound
loss in the same period last year. Sales revenues during this period surged to
approximately 100.684 billion Egyptian pounds, up from 62.262 billion Egyptian
pounds in the first half of 2023.
Ezz Steel Company has scheduled an extraordinary general assembly meeting on Tuesday, January 28th. The primary purpose of this meeting is to approve the voluntary delisting of the company's shares from the Egyptian stock exchange. Shareholders affected by this delisting will have their shares purchased at the highest closing price during the month preceding the board of directors' decision to call the general assembly, or the average closing price over the previous three months, or the fair value of the share determined by an independent financial advisor.
