Pre-Trading Thoughts

Global Investment Company Limited, owned by Emirati businessmen Mohammed Alabbar and Abu Bakr Abdullah Al-Husseini, has acquired 30% of EAST (FV: EGP24.72, OW) at USD 625 million. The transaction implies a price/share of EGP28.90 and a 23/24 P/E of 10.1x. The price is above our FV by 14.5% and 34% above yesterday’s market price. USD150 mn will be made available for purchasing the needed imported raw materials to ensure the resumption of production. EAST is currently trading at FY23/24 P/E of 7.5x and an EV/EBITDA of 3.6x.

Eni and its partners will invest USD 7.7 bn in their Egypt exploration operations over the next four years.

The government has purchased hedging contracts covering 35% of its estimated oil imports for the FY23/24. The contracts lock in crude purchases at around USD 75-80 per barrel, below the USD 85 per barrel price projected in the FY 2023-2024 budget. The government expects the country to import around 100 mn barrels of crude this year.

The EGP is reportedly now trading at 38-39 per USD in the parallel market — down from highs of 41 last week — as local banks step in to meet demand among importers for the USD. (Al Arabiya)

CLHO (FV: EGP5.30, OW) reported 2Q23 net attributable profit of EGP97 million in 2Q23 (+41.2% YoY, +2.2% QoQ), impacted by margin contraction despite revenue growth. In 1H23, net attributable profit came in at EGP191 million (+16.3% YoY). We downgraded our FV to EGP5.30/share, down from EGP6.50/share. CLHO is currently trading at 2023f P/E of 13.8x and EV/EBITDA of 6.9x.

ORAS (FV: EGP181.70, OW) announced that the contract signed with the Egyptian National Railways (ENR) to modernize and upgrade the Cairo-Beni Suef railway corridor in Egypt, in consortium with Thales, is valued at EUR340 million, funded by the World Bank.

EGAL (FV: EGP53.58, OW) confirmed in a release to EGX that it is not among 14 companies being sued by the Egyptian Competition Authority (ECA) over alleged price-fixing. 

The Public Investment Fund (PIF) is on course to take over two of Saudi Arabia’s largest steel producers to create a giant national entity. 

MCQE (FV: EGP20.17, EW) to distribute a cash dividend of EGP0.75/share for FY22 over two tranches. with a dividend yield of 3.9%.

MCRO launched 20 new products in the local market during 1H23 as part of its expansion plan. The company is still studying the opening of new export markets in Saudi Arabia and the United Arab Emirates.

The Head of the Pharmaceutical Industry Chamber of the Federation of Industries expects the release of raw materials and production requirements worth USD120- USD130 million to pharma producers this month.

MNHD signed an MoU with CCAP subsidiary, ASEC Automation, to develop the infrastructure and road network for MNHD's Cavana project on the Sarai land plot, with cost estimated at EGP100.0 million and delivery expected within 12 months.

According to local media, RTVC intends to start development of its two projects on the North Coast and in New Cairo before the end of 2023.

The Egyptian Railway Authority received offers from 12 local technology companies to implement comprehensive electronic digitization for all services available to passengers and investors, according to local press.

Weekly Commodities Update |        Last Price            WoW Change, %

Brent, USD/bbl            88.6     4.8%

Diesel-HSFO Spread, USD/ton          391.8   -5.2%

Egypt Urea, USD/ton  467.0   0.0%

Polyethylene, USD/ton           1,070.0            0.0%

Polypropylene, USD/ton         940.0   0.0%

Steel/Iron Ore Spreads, USD/ton       369.1   -2.0%

LME Aluminum Cash Price