Ghabbour Auto, the largest independent car assembler and distributor in the Middle East, is hoping to increase sales by as much as 2 billion Egyptian pounds after it signed an agreement to distribute cars from China's Geely by the second quarter.
The company, which is listed in Cairo and is also known as GB Auto, plans to sell two models in Egypt, the CBU Geely Panda and Emgrand EC7, targeted at the lower income bracket.
GB Auto's main business is in cars, controlling 32 per cent of the Egyptian market. The company caters to a wide number of international brands seeking to avoid high import tariffs on fully assembled cars by having their vehicles put together in Egypt.
Ghabbour Auto's net profit is dependent on currency movement, and it carries exposure to multiple currencies, such as the dollar, the Korean won and the euro.
The company has been assembling variations of Hyundai's four-cylinder sedan, the Verna, since 1995. But the agreement is due to expire next year. GB Auto is hoping that the Geely will prove an adequate substitute for the Verna.
"GB Auto's brand equity and market leadership, backed by its reliable after-sales service network and its passenger car consumer finance arm, in addition to a new dealer distribution network dedicated to the new brand, will be key in driving Geely's success in Egypt," said Mai Nehad, an analyst at AlembicHC in Cairo. Ms Nehad increased the price target on GB Auto by 2 per cent to 30.9 pounds a share and maintained an "overweight" rating.
GB Auto is also the sole distributor of the "tuk-tuk" made by India's Bajaj group.
The three-wheeled motorised rickshaws have emerged as a durable solution to Egyptian transport woes in the aftermath of the civil-war uprising that forced Hosni Mubarak to resign as president. Rickshaw sales broke records in the first three quarters of last year, and accounted for 12 per cent of the company's total sales.
GB Auto has risen 14 per cent so far this year.
The deal with Geely should boost sales to 9bn pounds for this year and earnings to reach 807 million pounds. Shares of the company fell 1.4 per cent to 23.6 pounds yesterday.
[ halsayegh@thenational.ae ]
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