Pre-Trading Thoughts

Al Ahly Pharos

Oil prices plunged more than 10% as reports of a new coronavirus variant sparked fears of more lockdowns and another blow to fuel demand; Brent futures are trading at USD72.72/bbl

ESRS has finalized acquiring an c.18% stake in Egyptian Steel, for a value of EGP1.5 billion, to be fully paid in cash without including a share swap; Equity value per ton is EGP6,940/ton (assuming 1.2mn tons sales volume per annum for Egyptian Steel), which translates into a valuation for ESRS of EGP32.6 billion (on capacity of 4.7mn tons) or EGP60/share; Not justified, unless there is a massive difference in leverage profile

Twelve companies withdrew the terms of reference for the new iron and steel licenses put forward by the Industrial Development Authority

The government intends to announce the framework governing investment in the field of water desalination in Egypt before the end of the year

Aldar consortium is not planning to up its bid price for OCDI if shareholders reject the MTO

New Administrative Capital (NAC) Company is warning developers that have started marketing their NAC projects before completing 30.0% of construction, given this violates contract terms. This could be indication that regulation would start with projects in the NAC before being implemented across the whole sector.

Two new schools will be set up in the Sixth of October’s Cosmic Village under a private-public partnership agreement with Cairo Egypt for Education (CEE, a joint venture of CIRA and Elsewedy Capital) and the Sovereign Fund of Egypt (SFE)

Saudi Arabia has opened direct entry into the Kingdom from Egypt, following the decision of the Kingdom to open direct flights to and from Egypt, starting December 1, 2021. This is in preparation to open up Umrah for Egyptians. We remind you that SPMD (FV: EGP2.50, OW) is a key beneficiary of Umrah resumption, with expected revenues of EGP1.2 bn and net income of EGP265 million in 2022. Umrah contract contributes EGP0.17/share to our SPMD FV