Pre-Trading Thoughts

Al Ahly Pharos

Prime Minister Conference discussed five pillars: (1) fostering private sector role and industrial sector to increase local production, (2) a program to increase the share of private sector in the state-owned assets at USD10 billion annually for four years, (3) announcing a four-year plan to maintain a downward trajectory of public debt ratio to GDP and budget deficit, (4) a comprehensive vision to support the EGX which includes offering state and military-owned companies, and (5) provide for subsidized basic commodities, with social safety measures.

The government expects to reach an agreement with the IMF on a fresh support package within months.

The PPP Unit within the Ministry of Finance is working to expedite the procedures to award a set of projects worth EGP16 billion to private sector companies before the end of this year.

The Egyptian Federation of Investors Associations addressed the Cabinet to fix the dollar price for supplying natural gas to factories at EGP16, similar to the customs FX.

EKHO reported solid results for 1Q22. EKHO attributable net income amounted to USD71 million, significantly higher by 97% QoQ and 66% YoY. Performance was driven by Alex Fert and Sprea Misr. EKHO is trading at a 2022 P/E of 4.0x and EV/EBITDA of 3.5x.

MFPC issued the standalone results for 1Q22. Net profit came in at EGP2.037 billion compared to EGP289 million in 1Q21. The dramatic increase in bottom line came due to higher interest income, gains from affiliates, and FX gains, which all added up to EGP1.5 billion. MFPC is trading at 2022 multiples of P/E of 4.0x and EV/EBITDA of 2.5x.

Ministry of petroleum declared the start for the second stage of expansion projects within Midor at an investment cost of USD2.4 billion.

MCQE reported solid 1Q22 KPIs, with attributable net income for the quarter at EGP60 million (+107% YoY, +55% QoQ) mainly on surging selling prices that outpaced the rising production costs and, further, yielded better margins. Favorable margins are now questionable given the significant surges in coal prices, relatively weaker Egyptian Pound, and stagnant local cement selling prices. MCQE is currently trading at FY22e P/E of 5.4x and EV/EBITDA of 4.5x.

Prime minister announced that the long-awaited automotive strategy will be announced before the end of the current month. Might raise CKDs margins to 15-16% from the current 8%, in light of the planned incentives.

EFID released 1Q22 net profit at EGP148.1 mn (+83.5% YoY; -41.4% QoQ), out of which FX losses of EGP27.5 mn. Price hikes is currently the only tool there is to maintain healthy margins, however its toll on volumes is already showing. EFID is currently trading at a FY22 P/E of 8.8x and an EV/EBITDA of 6.7x.

CBE and Ministry of Finance have completed the payroll service through Meeza cards, through offering 30% of the payroll in advance; given that the 30% advance payment should be used only in PoS or electronic payment. (EFIH,FWRY)

The government intends to issue the citizen card that unifies electronic services offered to citizens within 3-4 months. The cards will be utilized in unified health insurance system, food subsidy program, and standard visa payment applications. (EFIH)

FWRY’s capital increase shares subscription stood at 99.92%.

CIEB 1Q22 consolidated bottom line recorded EGP492 million, pre minority interest and appropriations, (+14% q/q, +30% y/y). Shows: healthy net-interest, potentially lower OPEX and lower provisions, while effective tax rate rose slightly to 27%. The stock is currently trading at 4.3x P/E22 and 0.9x P/B22 with ROAE of 18%.

ADIB 1Q22 consolidated net profit pre minority interest recorded a robust EGP444 million (+16% q/q, +34% y/y), showing 1) strong margins, 2) higher non-interest income despite lower investment income, 3) lower booked provisions, while higher OPEX and effective tax rate limited bottom line growth. The st