Pre-Trading Thoughts

Egypt’s budget deficit rose to 5.51% of GDP between July and November 2024 from 3.37% during the same period last year.

The Egyptian government has pledged to pay EGP 1.4 billion annually, covering the real estate tax for the industrial, poultry, and animal production sectors until the end of 2026.

The Suez Canal Economic Zone (SCZone) has inked five framework agreements with private industrial players to invest c. USD 235 mn.

Egypt’s non-petroleum trade deficit declined by 22.6% to USD37.1 billion in 2023. Exports declined by 1.5% to USD35.3 billion, while imports declined by 13% to USD72.5 billion. The decline was a result of foreign currency scarcity.

The government is preparing to launch a tender for the development of three projects in March, with investments that could amount to a combined USD610 mn.

Following the meeting of the EU-Egypt Association Council, EU Commissioner said that their Economic and Investment Plan will mobilize EUR 9 bn to invest in “growth and jobs in Egypt in areas that are the most critical, food, water, energy for any sustainable economy,” 

The Higher Council for Investment is preparing a new incentives package to secure foreign currency to companies.

GAFI is working on amending the regulations of the corporate law.

SKPC 4Q23 unaudited financial indicators: 

•  EGP3.5 billion in revenues (+21% YoY, +9% QoQ)  in 4Q23. Annual increase came due to a 26% YoY increase in USD to EGP exchange rate, despite a 7% YoY decline in global polyethylene prices. QoQ increase in revenues came despite a stable exchange rate and a 3% QoQ decline in global prices. 
• Net profit recorded EGP645 million in 4Q23 (+ 31% YoY, +7% QoQ), which brought 2023 net profit up by 99% YoY to EGP2.5 billion. 
• SKPC is currently trading at a 2024e PE of 8.0x. 
• During its BoD meeting, SKPC postponed discussing the payment of USD180k towards the capital increase of the Egyptian Bioethanol Company.

Egypt’s fuel imports value reached USD12.6 bln in 2023 (-11% YoY).  Local production reached 74 mln tons including 28 mln tons of crude oil and condensates, 45 mln tons of natural gas and 1 mln ton of LPG. Egypt’s petroleum products consumption declined by 2% during 2023 to 34.5 mln tons. Natural gas consumption declined by 1% to 46.4 mln tons. Total demand gap reached 6.8 mln ton. 

Urea and nitrate prices increased to EGP13,000/ton in January 2024, from EGP11,000/ton in the beginning of the month. The increase came as the local supply declined. We note that winter is the high season for fertilizers.

EGBE (FV:EGP0.45, OW) 4Q23 net profit pre-appropriations recorded EGP367 million (+59% y/y, -6% q/q), bringing FY23 bottom-line to EGP1,414 million (+65% y/y). 

• EGBE is currently trading at P/E24 of 5.4x and P/B24 of 0.9x.
• The bank will increase its issued and paid-up capital by EGP 500.5 mn through free shares, financed from its FY 2023 net income.

CANA has provided the EGX with the required documents to proceed with its EGP400 mn capital increase (from EGP4.6 bn to EGP5 bn) through bonus shares, financed from the legal reserves and 2023 profits.

MNT-Halan microfinance subsidiary, Tasaheel has issued EGP 3.8 bn worth of securitized social sustainability bonds(the first such bonds in Egypt and Africa). 

HRHO’s fintech subsidiary valU and its majority-owned aiBank are set to roll out co-branded Visa credit cards for valU customers.

The Trade Ministry has denied rumors that it is looking to cancel anti-dumping duties on reinforced steel coming from China, Turkey, and Ukraine. The anti-dumping duties in effect since 2017 were extended last June until 2027.

The Ministry of Transport will hand over the second containers terminal “Tahya Misr 1” in Damietta port to Damietta Alliance Container Terminal Company.