Al Ahly Pharos

Pre-Trading Thoughts

May 17, 2023 Al Ahly Pharos
Al Ahly Pharos
Pre-Trading Thoughts
Show Notes

The Supreme Investment Council approved 22 measures aimed at attracting more foreign investment. The decisions include: Reducing the cost of establishing companies, Expanding the issuance of the Golden License, Facilitate land ownership, Alleviate financial and tax burdens on investors, and Incentives for transportation and housing sectors, especially in new cities. 

The EBRD has cut its Egypt growth forecast for the current fiscal year to 4.0%, down 0.7% from its last forecast. The EBRD now sees the economy growing by 4.8% in FY23/24, down from its forecast for 5.0% growth in February.

Egypt was the largest recipient of FDI in the MEA last year and the second largest recipient globally. Egypt drew around USD107 billion of FDI in 2022, which went towards 148 projects. This was supported by several mega projects being announced in renewable hydrogen.

The European Investment Bank (EIB) will invest EUR50 million every year into Egypt-focused private equity and venture capital firms.

The Internal Trade Development Authority plans to offer new land plots for investors with investments worth up to EGP2 billion during 1Q23/24 through the usufruct system.

The Ministry of Finance is planning to offer Sadat City dry port during FY23/24 with investments worth EGP3.4 billion through a public private ownership joint project. 

LCSW attributable net profit rose to EGP89.0 million in 1Q23 (+204.0% YoY, +136.1 QoQ), on the back of higher revenues by 63.2% YoY and 28.0% QoQ and lower COGS to sales ratio as the company had a stock of raw materials with pre-inflation prices.

The Egyptian Company for Silos and Storage affiliated to the Ministry of Supply entered an alliance with both SWDY (FV: EGP19.97, OW) and Samcrete Company, with the aim of establishing an investment arm that will undertake the implementation of new silos at an investment cost of USD200 million, and with a storage capacity close to one million tons. 

Saudi Arabia’s “Natural Gas Distribution Co.” has entered into a partnership agreement with CCAP's TAQA Arabia to explore ways to develop and operate gas transportation services.

New laws in the free investment zone allow companies that use natural gas as their main input, to build their projects there. Fertilizers and petrochemicals sector is now permitted to operate at the free zone.

Moody’s placed several Egyptian Banks on review for downgrade, including National Bank of Egypt, Banque Misr, Banque Du Caire, COMI and Alex Bank.

OIH’s BOD approved the plan proposed by the management to restructure some of its subsidiaries in Netherlands and Brazil through transferring assets from and to a subsidiary.

NBFS Update| The NBFS sector is witnessing strong growth with increasing interest rates. Microfinance is expected to record 40% YoY growth in 2023. Consumer Finance customers witnessed a growth of 86.6% YoY in 4Q22. Alternatively, the negative effect of higher rates (lower profit margins and higher cost of financing) is evident in some sectors such as leasing as the number of contracts decreased by 15.1% YoY in 4Q22. Mortgage financing contracts decreased by 44.1% during the same period.

Vodafone Egypt recorded revenues of EGP10.4 billion in 1Q23/24 (+c.25% YoY), attributed to data revenues growth and an increase in the number of customers.