Pre-Trading Thoughts

Al Ahly Pharos

FRA decided to cut EGX trading fees by 20% and delay the introduction of new restrictions/ caps on margin trading for six months

The four government companies of which shares will be publicly offered until the end of June 2022: are Banque du Caire, ABUK, HELI, and MFPC

Local media reported that traders have reduced steel prices by EGP400/ton, but ex-factory prices have not moved yet

SWDY 3Q21 Earnings Call Key takeaways:

• Revenue growth in 2021 will be 30% YoY; FY22 revenue growth is around 20% YoY
• Group GPM in FY21 is to be 12.5-13% and net profit to grow by 12-15% in FY21.
• Cables to continue delivering strong growth both price and volume-driven
• Turnkey FY21 revenues will be above EGP24 billion and FY22 could exceed EGP25 billion
• Transformers saw the consolidation of Indonesia and Pakistan
• Capex of FY21 is around EGP1.5 billion (excluding acquisitions)
• Expect more awards in Libya after political situation stabilizes and presidential elections end
• There was an MOU signed in Malawi yesterday that includes work in IPP and EPC projects
• A factory in Tanzania will be finished in 1Q22 for meters, cables, and transformers
• Management expects to have business in the cables segment in Latin America
• Management expects a strong performance from Tanzania and KSA next year
• SWDY is currently trading at FY22 P/E of 4.4x and EV/EBITDA of 3.4x

ORAS 3Q21 Earnings Call Key takeaways:

• MEA margins were compressed due to: 1) inflation in costs, 2) higher execution in lower margin projects, 3) the weaker performance of the EURO against USD which hurt margins of some projects
• US improved margins are due to execution in higher-margin projects and are expected to continue in the next two quarters
• The USD1.2 infrastructure Act in the US would bear fruit in awards potentially after 2022
• The company is adding more awards in Libya, Iraq, and KSA but they choose to proceed after payment tools are secure (margins in those countries are typically higher than in Egypt)
• Management added that 4Q21 working capital management would improve and they aim to turn CFO to positive in FY21
• CAPEX increased during the quarter due to the increasing backlog and new awards but would normalize from the next quarter
• Management expects collection and liquidity position to improve in 4Q21, and added that they have a strong cash cushion that would suffice for about 6 months
• ORAS is currently trading at an annualized FY21 P/E of 5.1x and annualized FY21 EV/EBITDA of 2.1x, and is trading at FY22 P/E of 4.3x and FY22 EV/EBITDA of 1.8x

HRHO group attributable net profit for 3Q21 recorded EGP383 million (-34% q/q, -24% y/y), coming 13% below our estimates for the quarter and bringing 9M21 profits to EGP1,053 million (+25% y/y); Decline in earnings was exacerbated by the lack of significant catalysts this quarter versus strong comparable quarters annually and sequentially; We update our fair value of EFG Hermes to EGP 19.61; HRHO is trading at 0.7x P/B22 and 8.0x P/E22 on an ROAE 2021 of 9%

DSCW’ will increase paid-in capital from EGP106 million to EGP371 million through issuing 1.325 billion shares to the old shareholders on a pro-rata basis, with a par value of EGP0.20; Trading at 2022f P/E of 5.4x and EV/EBITDA of 7.4x

Pfizer applied to FDA for emergency approval of its antiviral covid pill; Would allow drugmakers in low and middle-income countries to produce generic versions of the drug