Pre-Trading Thoughts

The overall budget deficit rose during the first two months of FY2023/24 to 3.2% of GDP, compared to 1.4% for the same period of the last fiscal year, under pressure from increased expenditures, especially interest on government debt.

Afreximbank has agreed to extend USD3 billion of credit facilities to Egyptian companies.

Emirati state-owned port operator DP World will break ground on its USD80 million logistics zone at Ain Sokhna Port this month. 

CBE raised USD1.61 billion in a t-bill auction yesterday to refinance existing debt. 

ETEL (FV: EGP45.00, OW) bottom line recorded EGP2.45 billion in 3Q23 (+2.7% YoY, -14.9% QoQ). 9M23 bottom line came in at EGP9.15 billion (+48.3% YoY). We updated our FV for ETEL to EGP45.00/share. Telecom Egypt is currently trading at 2024e P/E of 4.1x and EV/Adjusted EBITDA of 2.6x. 

EAST released 1Q23/24 initial financial indicators. Net profit recorded EGP1,124 million (-20% YoY, -52.5% QoQ). EAST is currently trading at a FY23/24 P/E of 5.7x and an EV/EBITDA of 4.7x.

Philip Morris has hiked the price of smokes by up to 20% in the wake of the cigarette tax hike signed into law last week.

Sugar prices witnessed a sharp increase in selling prices up to EGP42-48/kg, which industry experts attributed to misbehavior from market factors like merchants and end consumers.

EXPA (FV: EGP20.00, OW) 3Q23 consolidated bottom line recorded a strong EGP1,034 million (+49% q/q, +178% y/y), bringing 9M23 bottom line to EGP2,291 million (+131% y/y). EXPA is currently trading at 0.8x P/B24 and 4.7x P/E24.

EGBE (FV: USD0.55, OW) 3Q23 standalone net profit recorded EGP389 million (+81% y/y, +14% q/q). 9M23 Net income recorded EGP1,047 million (+68% y/y). EGBE is currently trading at P/E24 of 4.9x and P/B24 of 0.9x.

SAUD (FV: EGP15.00, OW) 3Q23 net profit recorded EGP587 million (+24% y/y, +2% q/q). 9M23 net profit recorded EGP1.6 billion (+28% y/y). The stock is currently trading at P/B24 of 0.8x and P/E24 of 3.6x.

Fitch Ratings has downgraded the credit ratings of National Bank of Egypt, COMI, and Banque du Caire to B- from B.

Banque Du Caire’s digital payments subsidiary Taly plans to launch two e-payment platforms next month, one targeting individuals and another targeting businesses.

QNBA has submitted an application for a digital banking license to the CBE. 

MPs yesterday gave final approval to amendments to the 2020 SMEs law that grants financing handed out by the SMEs Development Agency the same exemptions and benefits afforded under the Banking Act.

HELI (FV: EGP18.84, OW) reported 3Q23 net loss of EGP16.5 million, compared to 3Q22 net profit of EGP11.7 million and 2Q23 net profit of EGP5.2 million, bringing 9M23 net profit down 98.8% y/y to EGP8.1 million.

ESRS raised rebar prices by EGP3,865/ton to EGP36,000 as of 13 November 2023, 12.0% higher than the EGP32,135/ton announced on 20 March 2023.  

EGAL extended the deadline for submitting technical and financial offers for the rehabilitation of the company’s facilities till 15 January 2024.

MICH released 1Q23/24 financial results posting a 32% YoY increase in net profit to EGP137 million. MICH is currently trading at an annualized FY23/24 PE of 5.0x.

Israeli gas exports to Egypt increased to 350-400 million cubic feet per day, up from 250 million earlier this month as Chevron restarts production at the Tamar field.

The government wants to increase its imports of Kuwaiti crude oil by 33% to 3 million barrels per month starting the new year.

Subsidized natural gas installation fees increased currently to reach EGP3,360 per household, from EGP2,160 previously, according to local press.