Pre-Trading Thoughts

Al Ahly Pharos

MSCI Egypt Index Changes: HRHO replaced FWRY in the Standard Index; EFIH and FWRY got included in Small Cap Index; PHDC and HELI have been excluded from the Small Cap Index. The execution date is May 31.

A press conference to announce new details of the state’s response to the economic turmoil fallout from Russia’s war in Ukraine will take place this week. Might unlock IMF funding.

The EGP continued to strengthen against the USD on Thursday, jumping to USD 18.38 from EGP 18.44 on Wednesday.

Egypt is in talks with India for exemption from the wheat exporting ban decision. Egypt is considering the purchase of wheat from Pakistan and Mexico.

More than 40 US companies arrive for three days of meetings to discuss business partnerships in energy, healthcare, agriculture, aviation, construction, and water resource management.

Amazon has agreed to purchase USD 10 mn worth of HRHO’s GDRs (c.10% stake in HRHO) with an option to convert the investment into a 4.255% equity stake in EFG’s consumer finance arm valU (valued at USD 235 mn). This translates into SoTP valuation for HRHO at EGP 21.53/share FV for HRHO, out of which EGP 4.49/share is for Valu. HRHO is currently trading at 0.9x P/B22 and 9.3xP/E22.

ATLC reported positive 1Q22 financial results where the net income recorded EGP26 million (+57% q/q, -64% y/y). The decline is attributable to the one-off securitization gain of EGP65 million that was booked in 1Q21. Outstanding lease portfolio to EGP4.3 billion as of March 2022 (+10% q/q, +39% y/y). ATLC is currently trading at P/B22 of 0.9x and P/E22 of 3.9x, on an ROE of 28%.

CBE is getting ready to hand out its first digital banking licenses during the next few weeks. Applied: NBE, Banque Misr, Emirates NBD, QNBA, and Bank ABC. Interested: EFIH, COMI, SAUD, and CANA.

Egypt will sign contracts for the second and third phases of our high-speed railway with Siemens by the end of May, at an investment cost of USD6.0 bn. The total project cost is USD23 bn.

Urea Indian Index prices dropped to reach USD800/ton. Egyptian producers are reporting that this is similar to their current average export prices.

Ministry of Transportation approved the license for ABUK to operate and manage Abu Qir marine port to export its surplus ammonia production for three years starting February 2022.

RMDA reported 1Q22 attributable net profit came in at EGP71.8 million in 1Q22 (+138% YoY, -3.0% QoQ). Results were driven by revenue growth and better margins. RMDA is currently trading at 2022f P/E of 9.7x and EV/EBITDA of 6.9x.

New Administrative Capital Company is considering allowing land payments by developers to be postponed by a year.

There is an expected upcoming meeting between real estate development companies & Egyptian Real Estate Finance Federation representatives to study real estate financing for units under construction.