Al Ahly Pharos

Pre-Trading Thoughts

May 18, 2023 Al Ahly Pharos
Al Ahly Pharos
Pre-Trading Thoughts
Show Notes

The CBE has hired Barclays as the international financial adviser for the sale of its 99% stake in the state-owned United Bank.

We expect April’s urban inflation reading to give the CBE a chance to keep rates on hold at its meeting today.

Fitch Ratings downgraded four Egyptian banks' Long-Term Issuer Default Ratings to B from B+ and Viability Ratings to B from B+, and maintained their outlooks as Negative.

The Minister of Finance announced the negotiation with international development institutions for low-cost finance. He expects Suez Canal revenues to reach USD9 billion, tourism revenues to reach USD14.5 billion, remittances to reach USD24 billion, and the budget deficit to reach 6.6% during FY22/23, and to decline by 2027 to 5.6%. He also expects the Egyptian economy to start reviving by December 2023.

Egypt paid international bond dues worth USD3.5 billion during the first quarter of the current year.

The government targets increasing investments to EGP1.64 trillion during FY23/24, 15x higher than FY2005/2006. The government also targets increasing the private sector’s share of total investments to 60-65% during the coming three years.

Egypt will allow foreigners to own property with no limits, but according to certain rules.

Egypt has requested approval from German banks to sell shares in the three 4.8 GW Siemens-built power stations to investors.

The CBE is imposing new regulations on foreign-exchange bureaus as it looks to get on top of a resurgent parallel market. Under the regulations, FX bureaus will have to increase issued and paid-in capital to at least EGP25 million by 15 September.

The Cabinet approved a package of incentives aimed at stimulating Egypt’s green hydrogen industry and increasing FX inflows.

The newly restructured Supreme Council for Investment approved 22 decisions to encourage foreign direct investments and private investments in Egypt.

ORAS has divested its full stake in its construction chemicals subsidiary to Sika. ORAS’s share of the gross proceeds for its 28.25% effective stake amounts to EGP1.8 billion. 

Cabinet approved a golden license to fast track work on the 500-MW Gulf of Suez wind farm being built by ORAS, France’s Engie, and Japan’s Toyota Tsusho and Eurus Energy.

We upgraded our FV for LCSW to EGP10.30/share with Overweight recommendation. Given 1) LCSW is a beneficiary of the EGP devaluation, as it exports almost 75% of sanitaryware sales and around 13% of tiles sales, 2) the unprecedented hike in ASP across all segments in 1Q23, 3) revisiting our FX rates assumptions, and 4) Expecting volumes to slightly decline in 2023 and 2024 due to the slowdown in demand in the Egyptian market arising from projects’ suspension and in the European market due to high inflation.

FWRY 1Q23 net profit reached EGP123 million (+338% YoY, +6% QoQ).

EGCH 3Q22/23 net profit reached EGP501 million (+276% QoQ, +232% YoY), bringing 9M22/23 net profit to EGP1,105 million (+129% YoY). 

The Egyptian General Petroleum Corporation and EGAS extended the deadlines for the mature oilfield and exploration bid rounds to 15 July from 15 June.

MCRO 1Q23 net profit reached EGP9.4 million (-69.2% YoY, -78.7% QoQ).

Alameda Healthcare is close to acquire a 5700-meter land in New Assiut to establish a new branch of Al Salam International Hospital in Upper Egypt.

The interest rate on real estate developers' land payments is at a subsidized 10% for two years, and project execution timelines are extended by 20%.

Beyti has doubled its export volume to 10% of its business in the past year.

The agreement allowing the safe export of Ukrainian grain through the Black Sea is set to be extended for two months after Russia agreed to remain in the pact.