Eastern Company (EC) Board of Directors has approved its FY17/18, targeting post-tax net income of EGP1.4bn; however, we note that the company is typically very conservative with its budget and has consistently outperformed in the past years. 1H16/17 earnings came in at EGP890mn (+10% Y-o-Y), or EGP1.3bn, if adjusted for one-offs (+42% Y-o-Y). We forecast EGP2.5bn in net income for FY17/18. EC aims to sell 86.6bn sticks - 61.5bn sticks of its own brands (71% of total, -6% vs. EFGe) and 25.1bn sticks for foreign companies (29% of total volumes, +10% vs. EFGe). The company’s budget is prepared using an EGP18.0 exchange rate to the dollar. Also, contribution to government revenues should increase to EGP49.7bn in FY17/18 up 46% Y-o-Y (vs. budget for FY16/17).
 
Eastern Company: EGP200.05 as of 19 Mar. 2017, Rating: Buy, TP: EGP280.00/share, MCap: USD1,104mn, EAST EY/EAST.CA