Market Overview 

The government pledged to guarantee the capital (USD800 million) recently invested by ADQ in 3 companies, in addition to an annual rate of 8% for a period of 4 years. The companies include National Drilling (25%), Elab (35%), and Ethydco (30%).  

Egypt’s government intends to offer stakes in 5 key companies, in addition to water desalination plants, until the end of June 2024. The program aims to collect USD 5 billion during this stage, the largest part of which is due to the offering of 70% of the Siemens power station in Beni Suef.  

Supply Minister announced on Sunday the exclusion of rice from ration cards. 

BP will invest USD 3.5 bn in exploration and production operations in Egypt over the next three years. 

Middle East Glass (MEG) gave the green light to unnamed investors to conduct due diligence. 

Ministry of Electricity revealed the details of the plan to expand the participation of the private sector in electricity production to create a competitive market in the field of energy. 

Financial Regulatory Authority approved the criteria for registering verification and certification bodies for projects to reduce carbon emissions. 

The first round of GERD talks between Egypt, Ethiopia, and Sudan did not witness any tangible change in the Ethiopian position.  
The industrial sector requests the same tax exemptions and similar incentives for ongoing projects, and it would not be exclusive to new projects.  

HELI (FV: EGP12.44, OW) is to draw up a protocol agreement with the National Organization for Social Insurance regarding the National Organization for Social Insurance's offer to buy HELI's 1,695 feddan Heliopark land plot. According to local media, the final agreement could be signed in 4Q23.

According to local media, the National Organization for Social Insurance plans to invest EGP25.0 billion in the real estate sector.

EGAL (FV: EGP53.58, OW) posted its preliminary financial results for 4Q22/23 and FY22/23 recording a net loss of EGP225 million in 4Q22/23, bringing FY22/23 bottom-line to EGP3.7 billion (+48% YoY). We expect the weak bottom-line during the quarter came due to a hike in interest expense and other non-operating expenses. EGAL is trading at FY23/24 PE of 3.1x and EV/EBITDA of 3.1x.

We published our 2Q23 Cement Wrap Up. We maintain our Overweight recommendation for ARCC at a FV of EGP9.94/share. We upgraded our fair value for MCQE to EGP20.17/share, yet maintaining our Equalweight recommendation. We downgraded our fair value for MBSC to EGP25.73/share down from EGP28.12/share (adjusted for the capital decrease), maintaining our Equalweight recommendation. 

EFIC (EW, FV: EGP39.53) Issued financial results for 2Q23. Net profit after taxes amounted to EGP213 million, up 65% QoQ but down 18% YoY. 1H23 bottom line recorded EGP436 million, down by 12% YoY, due to weaker gross margins and higher non-operating expenses. EFIC is currently trading at 2023 P/E of 6.0x and EV/EBITDA of 4.36x.

According to local media, EAST's stake sale will be finalized within 1H24. The holding company for chemical industries received 3 offers from Phillip Morris, JTI, and another GCC investor.

Beltone Financial has not entered into any form of agreement to acquire the fintech platform Cashcall. It announced entry with Pickalbatros an EGP 750 mn sale-leaseback agreement.  

CIRA is studying the implementation of the second issuance of future rights securitization bonds at a value of EGP700 million.

Market overview 

El Sisi yesterday instructed cabinet to implement a package of incentives to support industrial activity and accelerate localization.

-Provide new industrial projects in specific sectors a five-year exemption from all taxes, excluding VAT, provided the projects are up and running within three years.

-Businesses that get their projects operational in half the agreed upon time frame will receive a 50% discount on the price they paid for the land.

-Expand the granting of golden licenses to all the projects working to enhance localization.

EXPA, the Agricultural Bank of Egypt, and aiBank have until 23 August 2024 to align their regulations with the 2020 Banking Act, after President Abdel Fattah El Sisi ratified the bill of establishing laws. 

Delegations from Egypt, Ethiopia, and Sudan met in Cairo on Sunday to begin a new round of talks over the Grand Ethiopian Renaissance Dam.

General Authority for Investment and Free Zones received requests from Chinese investors to inject investments into the local market in yuan to escape the dollar dominance.

Chinese textile manufacturer Zhejiang Cady Industry will invest USD 60 mn to establish a factory in Ain Sokhna.

Network International intends to invest EGP1 billion in the Egyptian market over the coming three years. 

Unnamed investors are eyeing the purchase of Gulf Capital’s entire 37% stake (23.1 mn shares) in EGX-listed Middle East Glass (MEG).

The government is planning to issue six more pellet steel production licenses to major foreign investors or local-foreign consortiums in 2024. Government is now prioritizing foreign companies to attract FX into the country.

Russia-based steel maker Novostal M plans to invest USD400-500 million to set up a steel factory in Egypt.

The government broke ground on its EGP1.5 billion strategic warehouse in Luxor yesterday which is planned to take 18-24 months to build. ORAS (FV: EGP181.70, OW), Hassan Allam Utilities, and Samcrete are executing the project. 

Misr Chemical Industries issued the net profit figure for July 2023 that amounted to EGP38 million, up 6% MoM and 71% YoY.  MICH stated in its BoD release that net profit for July 2023 increased thanks to higher production volumes and sales prices. MICH is trading at FY22/23 P/E of 3.37x.

Weekly Commodities |  Last Price           WoW Change, %

Brent, USD/bbl  84.5      -0.4%

Diesel-HSFO Spread, USD/ton     413.3    8.1%

Egypt Urea, USD/ton      467.0    0.0%

Polyethylene, USD/ton  1,070.0 0.0%

Polypropylene, USD/ton              940.0    2.2%

Steel/Iron Ore Spreads, USD/ton             377.1    0.0%

LME Aluminum Cash Price, USD/ton        2,113.7 1.2%

Egyptian Retail Cement, EGP/ton             1,917.5              12.1%

Steam Coal FOB Newcastle Australia, USD/ton    149.4              -0.1%

SMP, USD/MT   2,333.0 -4.9%

Market Overview 
ETEL
CSAG
COMI
CIEB
ORAS

Egypt intends to pay USD240 million to the IMF next September, to pay off a tranche of the USD5 billion credit agreement it concluded in 2020.

Egypt was among the six countries invited to join the Brics starting January 2024, along with Saudi Arabia, UAE, Argentina, Iran, and Ethiopia. 

Ahmed Abdelrahman El Sheikh has been named Head of EGX for a one-year term starting 26 August.

The Financial Regulatory Authority (FRA) has completed procedures to establish the first Egyptian Securities Federation.

State grains buyer GASC reportedly made no purchase after direct talks to buy wheat with international trading houses on Friday. 

Hossam Haiba, CEO of the General Authority for Investment and Free Zones, revealed that the government had received requests from Chinese investors to inject investments into the local market in yuan.

Indian “Hinduja” is seeking to invest USD500 million in the manufacture of electric buses in Egypt.

US Federal Reserve Chairman Jerome Powell hinted that the Fed could be forced to continue its aggressive monetary tightening cycle, citing persistent inflation as the US economy continues to register strong growth.

Turkey’s central bank opted for an unexpectedly large interest rate hike on Thursday, lifting its benchmark rates by 750 bps to 25%.

SWDY posted its 2Q23 consolidated financial results with net attributable income standing at EGP2.7 billion in 2Q23 (+136% YoY, -8% QoQ), bringing 1H23 earnings to EGP5.6 billion (+195% YoY). Bottom-line annual growth was accelerated by higher revenue growth and profitability across all business segments, coupled with higher FX gains that partially offset rising financing costs and SG&A expenses. Consolidated revenues surged to EGP36.3 billion (+78% YoY, +9% QoQ), bringing 1H23 revenues to EGP69.6 billion (+79% YoY). 

Medlog, the cargo subsidiary of Italy’s MSC, has inked a contract with the government to design, construct, operate, maintain, and finance the new Tenth of Ramadan dry port and logistics center under a 30-year PPP contract with investments estimated at USD100 million. A consortium led by MSC was chosen in June including SWDY and ORAS, to establish and operate the 250-feddan dry port.

SKPC will finalize the acquisition of Ethydco by the end of October, according to local press.

Chevron’s proposal to develop the Aphrodite gas field has been rejected by Cyprus, leaving both parties 30 days to reach a new agreement. Egypt is supposed to liquefy that gas to be exported to Europe. 

Neptune Energy has started exploratory drilling at the Yakoot well in its North West El Amal offshore concession in the Gulf of Suez.

ECAP's BoD approved to open a branch for the company in Saudi Arabia. 

The prices of hotels are expected to rise by at least 35% y/y in 2023, with a 30% increase forecast for 2024, according to tourism sources. 

-Market Overview 
ETEL
ELHOA
ARCC
EPCO
ETRS
EFIH


- prepared by: Mayada Amin - CETA, CFTe

Budget deficit increased to 6.26% of GDP in the first 11 months of FY22/23 to record EGP615.2 billion, compared to 5.50% of GDP in the same period last year.

GAFI has approved GV Investments’ ambitious 26k-feddan Tarboul industrial project in Giza. The project will require EGP500 billion (USD16.2 billion) of investments.

The leaders of Brazil, Russia, India, China and South Africa are reportedly close to an agreement about inviting new member countries to join the BRICS. 

Companies have until 22 November to apply to set up a credit rating agency, with the FRA set to award a license to just one of the firms.

The FRA is studying amending sukuk regulations to attract small issuances.

The IFC expected that Egypt would lead African countries in the digital economy alongside Morocco, Nigeria, South Africa and Kenya by 2025.

PHDC net profit in 2Q23 increased 34.9% y/y and 40.7% q/q to EGP355.4 million, bringing 1H23 net profit up 8.9% y/y to EGP608.1 million. 2Q23 sales reached EGP12.9 billion (150.4% y/y and 90.3% q/q) and bringing 1H23 sales up 84.0% y/y to EGP19.7 billion, supported by sales in Badya. Revenue in 2Q23 declined 16.0% y/y and 3.9% q/q to EGP3.4 billion, reflecting fewer delivered units and bringing 1H23 revenue to EGP6.9 billion, almost flat y/y. 

According to local media, ORHD is allocating 22k sqm to the medical space in O West, and negotiations with hospitals are underway.

Israeli Energy Minister said that Israel will increase gas exports to Egypt from its offshore Tamar field. Israel will raise gas exports by an additional 38.7 billion cubic meters (bcm) over 11 years.

The Ministry of Petroleum is preparing to offer 10 new oil and gas exploration concessions in the south.

The EGX’s listing committee has approved the delisting of the shares of IRAX.

Aman Financial Services, a subsidiary of RAYA, plans to apply for a digital banking license from CBE, according to local press.

CICH’s micro-enterprise services company Reefy signed a financing agreement with the EBRD. According to it, a loan of EGP 200 million was obtained, with the aim of supporting entrepreneurs, young people in Egypt and financing their micro projects.

The Egyptian National Railway Authority, of the Ministry of Transportation, to start executing the first phase of "Matrouh-Salloum" line (280 km long) in the beginning of next year with an estimated cost of EGP8 billion, according to local media. 

Market Overview 

Unemployment inched down to 7.0% in 2Q23, down 0.1% from 1Q23, according to data released by statistics agency Capmas. Unemployment was down 0.2% compared with the same period last year.

Egypt's non-petroleum trade deficit has reached USD7.5 billion in 2Q23, showing a 10.7% dip from the same period last year. Non-oil imports value has dropped to USD15.9 billion in 2Q23 from USD17.6 billion in 2Q22, while the value of the non-oil exports fell to USD8.4 billion in 2Q23 from USD9.2 billion in the same period last year.

The National Election Authority (NEA) will soon announce the timetable for the 2024 presidential election.

Authorities have detected the first two cases of the new sub-variant of covid-19 (EG.5 / Eris).

The Sovereign Fund of Egypt is planning to offer the Ministry of Finance’s building in Downtown to investors through the usufruct system next month.

S&P Global followed Moody’s to downgrade the ratings of five US lenders amid tough operating conditions, including funding risks and weaker profitability on the back of rising interest rates.

EAST confirmed yesterday in a release that The Holding Company for Chemical Industries have received multiple offers from foreign investors to buy a stake that does not exceed 30% of its 50.95% stake in the company. According to local media, JTI and Phillip Morris are two of the main interested parties in the stake.

Valu has announced a strategic rebranding to reflect its transition from Buy Now and Pay Later Solutions Company (BNPL) as a consumer finance company, to a comprehensive financial services technology company that offers a range of diversified financial solutions and products. Valu will apply to the Financial Regulatory Authority to acquire a fintech license. It targets revenues worth EGP1.8 billion by the end of 2023, after recording EGP800 million in the first half.

The National Bank of Egypt recorded a net profit of EGP35 billion during 2022, in parallel with the growth of the bank's total loan portfolio by about 47% from 2021. Banque Misr announced a EGP25 billion net profit during 2022 and net loans jumped by 16.2%.

The petroleum ministry announced a new oil discovery in the Geisum and Tawila West Concession in the Gulf of Suez. The new discovery was made by Egypt's Cheiron through exploration well GNN-11, currently producing more than 2,500 barrels a day. Total output from the field, located in North Geisum, has reached about 23,000 barrels per day.
Misr Fertilizers Production company-Mopco appoints Ahmed Mohamed El Sayed as the new Managing director and CEO instead of Mohamed Sobhy Mansour.

Hisham Riyad Hussein Suleiman was appointed acting chairman and managing director of the Egyptian Company for Ethylene and Derivatives Production (Ethydco).

According to local press, MTIE is among three companies interested to acquire Chinese cars agencies to expand the offering of models with fuel and electric vehicles.

TALM announced that they have received the presidential decree for their Badya University and completed the licensing process. The university is expected to begin operations by September 2024. Badya University is 60% owned by TALM and 40% owned by Palm Hills Development.

Pharmaceutical companies intend to submit a request to the EDA during this August, to consider the repricing of some medicines between 15 to 20%, in light of the high cost of production requirements, which are imported in USD.

Easyjet is running three weekly flights between London Luton and Cairo’s Sphinx International Airport starting 31 October 2023.