Pre-Trading Thoughts

Al Ahly Pharos

ADQ will invest USD 10 bn in industrial projects in Egypt, the UAE, and Jordan as part of a partnership signed in Abu Dhabi yesterday, within different sectors including agriculture, pharmaceuticals, minerals, petrochemicals, and textiles.

The state plans to sell a 20-25% stake in Egypt Aluminum (EGAL) to a strategic investor. The transaction will take place through a capital increase.

The ministry is studying partnerships with strategic investors for four factories: Pipes and Steel, Glass and Crystal, Porcelain, and the Rakta paper factory (RAKT).

A 25.0% stake of the entity that is to merge seven state-owned hotels is planned to be offered to a strategic investor.

The government approved a 50% increase in the export subsidy bill, within the new export support program scheduled to be implemented starting FY2022/23.

The size of Egypt's first issue of sovereign Sukuk could be at USD2 billion, a Ministry of Finance official said, without clarifying a timeframe for the issue.

Minister of Supply said that scrapping bread subsidies for cash transfers is not going to happen anytime soon.

Egypt and Israel want to more than double the value of annual bilateral trade to USD700 million by 2025.

CLHO’s 1Q22 net attributable profit of EGP96 million in 1Q22 (-5.3% YoY, -16.8% QoQ), driven by: Flat revenues, and margin contraction. CLHO is currently trading at 2022f P/E of 19.6x and EV/EBITDA of 9.0x.

MCRO reported 1Q22 net profit of EGP30.7 million in 1Q22, +1.8x YoY due to the weak base effect from provisions and IPO expenses. Revenues of EGP135 million (+14.4% YoY). The company is in the process of acquiring a nutraceutical company, Zimmer for EGP3.0 million (EGP0.005 per MCRO share). MCRO is currently trading at an annualized 2022f P/E of 16.4x and EV/EBITDA of 10.3x.

The government is in talks with an unnamed Indian investor to manufacture 10-15 pharma-related raw materials, aiming to reduce imports and localize the pharma industry.

EMFD reported solid 1Q22 net profit grew 198.9% y/y to EGP1.6 billion, supported by finance income of EGP772.2 million, up 240.7% y/y. Net cash increased to EGP12.2 billion at the end of 1Q22. EMFD’s net cash position is currently 1.7% higher than its market cap

EMFD Board preliminarily approved entering into a partnership on a residential/touristic/commercial project on the North Coast with a 25.0% stake.

HELI started formulating the masterplan for 107 feddans in New Heliopolis, the first phase of which costs EGP450.0 million.

HELI’s capital increase is expected to take place at the beginning of 4Q22 depending on market conditions.

ORWE reported 1Q22 attributable net profit of EGP236 mn, a YoY drop of 21.2%. Revenue growth was healthy, but margin contraction reflected on bottom line, despite rise in export rebates. ORWE is currently trading at a FY22 P/E of 4.4x and an EV/EBITDA of 6.0x.

AMIC showed a deep slump in PC sales during April by 20% YoY reaching 12.9k cars only compared to 16k cars in April 2021.

EAST's general assembly approved the EGP 100 mn purchase of a 24% stake in Philip Morris’ United Tobacco.

We downgraded our FV of MTIE to EGP5.00 per share, down from EGP9.18 per share, mainly on the back of market challenges and Ibtikar’s multiples.

ALCN released 10M21/22 financial indicators where the bottom-line came in at EGP1.5 billion (+33% YoY).

El-Sisi signed a law that grants the Damietta alliance for container terminals; a direct competitor for Damietta Containers Handling, which is 20% owned by CSAG.

Reefy (CICH) is negotiating with 6 banks to obtain new credit facilities worth EGP1.1 billion, to expand its financing portfolio to EGP2.3 billion by the end of 2022 and is assessing obtaining a micro-leasing license.