Al Ahly Pharos

Pre-Trading Thoughts

May 16, 2023 Al Ahly Pharos
Al Ahly Pharos
Pre-Trading Thoughts
Show Notes

NI Capital is preparing to sell stakes in seven state-owned companies as part of the government’s privatization program, two of which are expected to be complete by the end of the fiscal year, or June 2023.  

The Ministry of Finance started accepting the paperwork for reimbursing exporters for the sixth phase of the export rebates program (EGP10 billion in total). Cash reimbursements will be made in July or August.   

The Minister of International Cooperation signed letters with the Italian Ambassador to Cairo to extend the agreement for the third phase of the development debt swap program until December 2024. 

Egypt signed a memorandum of understanding with the Norwegian company “Scatec” to start feasibility studies for the electricity interconnection project for the purpose of exporting 3GW of renewable energy to Europe via Italy.  

Apache wants to obtain new concessions in the Western Desert to drill more wells. 

The Egyptian Stock Exchange applied for FRA’s initial approval to establish a derivatives settlement company.

EKHO released 1Q23 net profit of USD60 million, -16% YoY. Consolidated revenues declined -23% YoY to USD225 million, pressured by Urea prices, and the lag in the rise of prices within NatEnergy, despite the rise in Sprea revenues. EKHO is currently trading at 2023f PE of 6.0x and EV/EBITDA of 3.3x.

MOIL released FY2022 top line registered USD102 million, - 12% YoY, and a net loss of USD104 million compared to USD77 million losses in 2021. 

ORWE (FV: EGP18.50, OW) released 1Q23 attributable net profit for the quarter of EGP411 mn (+73.8% YoY). The rise came backed mainly by the China divestment recording EGP277 mn. Margins are supported by the mix of rising ASP and declining commodities prices. After revisiting our FX rates assumptions and commodities expectations, we upgrade our FV to EGP18.50/share. ORWE is currently trading at a P/E of 6.0x and an EV/EBITDA of 5.3x.

Some commercial sectors launched calls to boycott securing foreign currency from the parallel market, led by car dealers, in order to control the overshooting witnessed in the rate. The proposal is to reduce importing for 1-3 months.  

There are market expectations of a rise in poultry prices in light of the continued decline in daily production and the industry losing more than 80% of production capacity. 

We raised our ORHD FV to EGP20.38/share mainly on the back of incorporating the current EGP/USD FX rate of 30.88 in our valuation of residual land in El Gouna which is based on a price of USD23/sqm, as well as the latest higher net debt position. 

OCDI (FV: EGP23.30, OW) made the down payment to acquire a 180 feddan land plot directly south of its North Coast project, Caesar, and is planning to invest over EGP10.0 billion in the development of the project over the next four years.

MNHD (FV: EGP3.16, EW) declared cash dividends of EGP0.15/share (DY of 4.6%). 

AMER is planning to issue sukuk worth EGP1.5-2.0 billion within the next two months.

SAUD 1Q23 net profit recorded EGP474 million (+29% y/y) on the back of 1) strong top-line growth, and 2) strong non-funded income growth. SAUD is currently trading at P/B23 of 0.8x and P/E23 of 3.8x, with ROAE of 21%. We upgraded FV to EGP15.00. 

HRHO called an extraordinary general meeting on May 24 to discuss proposals to change its name from EFG Hermes Holding to EFG Holding and raise its issued and paid-in capital by 25% to EGP 7.3 bn, through 1 bonus shares for every 4 shares held.

FRA raised the one-ticket funding limit for microfinance companies by 10% to EGP220,000. 

InterContinental Hotels Group is opening in Arkan Palm in West Cairo the 140-room Voco West Cairo 205 Suites in June 2026 and the 250-room InterContinental West Cairo 205 in January 2028.