Market Overview 

Prepared by: Mayada Amin - CETA, CFTe

Egypt’s Foreign Reserves inched up to USD34.81 billion in June, adding USD130 million MoM. Unofficial foreign currency reserves increased by USD708 million, reaching the highest level since February 2022 at USD9.58 billion.  

Egypt’s oil and gas exports fell more than 50% y-o-y in the first four months of 2023 to USD3.17 billion in January-April 2023. Natural gas prices have plunged and local production has also declined in recent months, partially compensated by rising imports from Israel.  

ESRS (FV: EGP54.60, OW) reported consolidated results for 1Q23 with attributable net income recording a negative EGP1.7 billion, due to a forex loss of EGP8.9 billion during the quarter. Consolidated revenues soared to EGP27.8 billion (+49% YoY, +19% QoQ). The surge in revenues was mainly price-driven. Total sales volume dropped to 1.2 million tons. GPM was at 30.5% for the quarter. ESRS is trading at EV/EBITDA of 2.0x.  

TAQA shares will begin trading on the EGX today at the nominal price of EGP0.50 per share. The IFA valued the company at EGP8.90/share using sum of the parts valuation for Taqa Gas, Taqa Power, and Taqa Petroleum. Our multiples-based valuation valued TAQA at EGP5.75/share, assuming P/E multiple of 12x and P/B multiple of 2.8x.  

SKPC will finalize the acquisition of Ethydco during 3Q23. 

EAST (FV: EGP24.72, OW) will be continuing its early retirement program that started in FY21/22 and cost EGP1.2 billion. The cost for FY23/24 is still undisclosed. 

Drive Finance (GBCO) has entered final negotiations with four private and state-owned banks to obtain credit facilities worth EGP1 billion.

The Sovereign Fund of Egypt will offer a 25-30% stake in real estate company El Mostakbal Urban Development to a strategic investor this year after adding the company to its pre-IPO fund. 

Vodafone Egypt is waiting for CBE's approval to double its current stake of c.10% in Basata Pay to 20%. 

Egypt's Sovereign Fund aims to acquire a pharmaceutical chain in the local market. 

- Market Overview 
- ISPH
- ORWE
- AMOC
- COMI
- CIEB
- HELI


- prepared by: Mayada Amin- CETA, CFTe

Egypt's PMI rose in June to 49.1, its highest level in almost two years.

 The cabinet has denied rumors circulating about the Customs Authority banning the import of a list of goods for a three-month period.

 Cabinet approved a decision lifting current controls on foreign ownership of real estate, provided that foreigners pay for their purchases in hard currency and via bank transfer to a state-owned bank.

 Ministers approved two draft decisions allocating state owned land in New Cairo and Sixth of October to international real estate developers, to be paid for in USD.

 Foreign investors will be allowed to register as importers with 10-year licenses.

 The Parliament's Economic Affairs Committee approved amendments to the Investment Law aimed at expanding incentives, while the Budget and Planning Committee approved a draft bill reinstating taxes on state entities.

 According to the Institute of International Finance (IIF), adopting a flexible exchange rate will be key to resolving the imbalances and rebuilding reserves.

 The Finance Ministry will pay out the latest batch of export subsidies on 12-13 July.

 The cabinet approved a USD733 mn loan from the Japanese International Corporation Agency (JICA) to finance the construction of Cairo Metro Line 4.

 Cabinet approved in principle a plan put forward by French manufacturer Alstom to establish an industrial complex in Alexandria’s Burj Al Arab.

 Scatec signed a land allocation agreement with the Electricity Ministry for a planned 5-GW wind farm in Sohag governorate.

 Infinity Power acquires Lekela power for USD850 million.

 EGX announced that TAQA will start trading next Sunday, 9 July 2023. We remind you with our multiples-based valuation which valued TAQA at EGP7.8 billion, or EGP5.75/share.

 According to the IFA report of Both SKPC and Ethydco, SKPC (including 20% of Ethydco) is worth EGP23 billion (EGP30.6/share) and Ethydco is worth EGP33.5 billion. This translates into a 1.45x swap ratio. The valuation of the new combined entity will be EGP50 billion. The new entity’s total number of shares should add up to 1.6 billion with a valuation of EGP30.6 per share. Accordingly, the upside potential here is the difference between the current market price (EGP23.81) and the IFA’s FV of EGP30.6/share, i.e., 28.5% upside potential. At EGP30.6/ per share, the implied multiples for SKPC in 2023e (pre acquisition) are P/E of 9.1x and EV/EBITDA of 7.4x.

 Chevron will start digging its first oil and gas exploratory well in its red sea concession during 1H2024.

 HELI is preparing to issue a tender for the design of a residential compound in New Heliopolis.

 Real estate developer City Edge yesterday signed a partnership contract on behalf of the Housing Ministry with Hilton that will see Hilton manage two new hotels.

 Temry for frozen poultry recorded EGP500 mn in sales during 1H23 from their FY23 targeted EGP1.2 bn. The company's management are expecting fluctuations in poultry prices in the upcoming period due to disruptions in the birds' life cycle and unsteady feed and medicines prices.

 Basata's new e-payment platform “Basata Pay” has launched in the Egyptian market. Basata Pay will capitalize on the Bee and Masary's PoS machines.

- Market Overview 
- ORAS
- EKHOA
- ADIB
- MFPC
- ABUK
- ACAMD 


prepared by: Mayada Amin- CETA, CFTe

Egypt and Turkey officially agreed to restore diplomatic ties and reinstate ambassadors. 

EGX Head revealed that there are talks with a large number of private companies to list them on the stock exchange, in the petrochemical, energy, and tourism sectors. 

Trading treasury bills on the EGX for primary dealers should start in 3Q23, with plans to make it available for individual investors later next year. 

SKPC’s (FV: EGP22.8, OW) BoD approved the financial valuation reports submitted by the independent financial advisor, Baker Tilly for SKPC and Ethydco. The company will announce the final swap ratio once it is approved. According to Al-Mal newspaper, sources declared that the swap ratio will be around 1.5x and that SKPC’s value per share after finalizing the deal will reach USD1.5/share (EGP46.35/share). This figure is miscalculated since it simply adds the valuation of both entities and divides by SKPC's current number of shares. In reality, once the acquisition takes place, SKPC will issue new shares to be swapped for the remaining 80% ownership in Ethydco, which means that the valuation of the new entity will be recalculated. We remind you that we valued Ethydco’s Enterprise value at 1.87x SKPC’s enterprise value, but Ethydco’s equity value is 1.22x SKPC’s value, due to the difference in debt profile between both companies since Ethydco’s outstanding debt is USD250 million.

Multinational energy firms Eni, Chevron, ExxonMobil, Shell, and BP will spend a combined USD1.8 billion to drill 35 gas exploration wells in the Mediterranean and Nile Delta over the next two years.

ESRS (FV: EGP54.60, OW), Egyptian Steel and Suez Steel companies fixed their ex-factory prices of rebars during July at c. EGP32k/ton, according to local media. The fixing came as a result of the relative stability in FX rate in the recent period, in addition to the slowdown in global steel prices.

Egypt plans to offer 5G licenses soon and is currently studying the technical and financial requirements, according to local press.

The Tax Authority will start the fourth phase of its rollout of the new e-receipt system on 15th of July 2023. Newly onboarded businesses will be required to start issuing e-receipts for all business-to-consumer (B2C) transactions from this date.

Egypt could collaborate with Turkey and Iran in the fields of electronics manufacturing and BPO (Business Process Outsourcing).

Total contractual proceeds of a number of Egyptian contracting companies operating in foreign countries exceeded USD2 billion during the past two years mainly in Saudi Arabia and some African countries.

The general authority of Damietta Port intends to invest EGP1.9 billion during the current FY23/24. 

PRDC reduced its stake in UNIT from 35.06% to 17.74%.

COMI has appointed Muhammed Omar Khan as its acting chief operating officer after Mohamed Sultan stepped down after more than 8 years in the position.

Market Overview 
PHAR
ABUK
SKPC


prepared by: Mayada Amin- CETA, CFTe

Pitch: Buckle up for 2Q23 Earnings Season| Earnings will go down sequentially by 14%, which is the impact of lower commodity prices and stable exchange rate. Highest growth in earnings for full year in 2023 (>100% YoY): MBSC, LCSW, POUL, ALCN, FWRY, MCQE, EGCH, DOMT, and SKPC. Some stocks that will deliver positive surprises for 2Q23 in earnings will include ESRS, IRAX, CCAP, GBCO, MCRO, MBSC, PHAR, ECAP, CIRA, ORHD, CANA, SKPC, ORWE. Some stocks are still extremely cheap and trading below 3x P/E multiple for 2023 including EMFD, POUL, BINV, CANA, EGAL, LCSW. Some stocks are still extremely cheap and trading below 4x P/E multiple for 2023 including SAUD, ABUK, FAIT, EXPA, ADIB, QNBA, PHAR, HDBK, ETEL. Some companies will be paying lucrative dividends out of 2023 net profit, that is 10-25% including EGAL, POUL, SAUD, ATLC, BINV, MBSC, ARCC, ABUK, ETRS, EAST, ALCN, MCQE, AMOC, and CIEB. 

The Suez Canal Economic Zone (SCZone) will be marketing local investment opportunities in South Korea, Germany, the UK, Vietnam, Singapore, and Brazil before the end of the year.

The Suez Canal Economic Zone (SCZone) revealed that negotiations are underway for 18 new projects with an expected investment cost of USD 8.3 billion.

The government is in talks with 22 countries — including India, Brazil, and other South American nations — to sign wheat import agreements.

Egypt’s total outstanding dues to international oil companies more than tripled since mid-2020 to USD3 billion in April 2023.

Egypt's Petroleum exports declined by 40.3% during 1Q23 due to a 55.7% decline in crude oil exports as well as a 37.8% decline in LNG exports, mostly impacted by the decline in global prices. 

The World Bank estimated that the informal sector in Egypt represented 62.5% of the economy.

Imports worth USD 32 bn received customs clearance over the past five months (Maait).

Saudi Arabia and Russia deepened oil cuts on Monday. Oil prices held steady early on Tuesday as markets weighed supply cuts against weak demand. Brent crude futures are trading at USD75.08/bbl. 

Passenger car sales recorded 5.7k units for the month of May, a MoM rise of 48% and a YoY drop of 52%. This is merely a weak base effect for the month of April due to Ramadan.

Qatari "Baladna" raised their stake in JUFO (FV: EGP14.00, OW) from 10% to 15%. JUFO is currently trading at a FY23 P/E of 11.0x and an EV/EBITDA of 6.0x.

A subsidiary of SWDY (FV: EGP22.87, OW), Elsewedy Plug, and Ikarus Electric have each received a one-year license to build EV charging stations, according to local media.

EGTS (FV: EGP1.68, EW) reported 1Q23 net loss of EGP5.4 million, compared to 1Q22 net loss of EGP47.0 million.

Abu Dhabi Tourism Investment Company has earmarked USD95.0 million to build a hotel in the Giza Pyramids area. The company is also investing USD80.0 million to modernize its hotels in Sharm El Sheikh and Hurghada.

- Market Overview 
- CIEB
- ADIB
- HRHO
- EKHOA
- GBCO
- ETEL
- ISPH
- ORAS


- prepared by: Mayada Amin- CETA, CFTe

The African Export-Import Bank (Afreximbank) has begun talks with the Central Bank of Egypt and commercial Egyptian lenders to add them to its Pan-African Payment and Settlement System (PAPSS) in 2H 2023, which aims in part to cut African nation’s reliance on the USD over time in regional trade.

The Asian Infrastructure Investment Bank (AIIB) is guaranteeing more than USD 200 mn worth of our upcoming green panda bond issuance.

The Sovereign Fund of Egypt (SFR) has added Misr Technology Services (MTS) to its pre-IPO fund, in preparation to sell a stake in the company to strategic investors prior to its public offering in 2024. EFIH owns a 10% stake in MTS. 

The German Development Bank (KfW) signed a debt swap agreement worth EUR 54 million with the Ministry of International Cooperation, which exempts Egypt from paying debts worth EUR 54 million, and channel them to finance green energy transition projects. 

The value of Egypt's exports of natural gas in 1Q23 recorded USD1.8 billion, a decline of 33.44% YoY, due to the decline in LNG exporting prices.

The Egyptian Tax Authority said that starting July 1, 2023, no company will be allowed to import, export or deal with the electronic customs system “Nafeza” unless it issues electronic tax receipts.

ORAS's (FV: EGP181.7, OW) subsidiary United Holding Company has sold its 100%-owned cement subsidiary United Paints and Chemicals (Drymix) to French glass and building materials manufacturer Saint-Gobain in a transaction valued at EGP785.3 million. ORAS’s share of the gross proceeds for its 56.5% effective stake amounts to EGP443.7 million (EGP3.80/ORAS share). 

DSCW (FV: EGP0.57, EW) will be renting a 45 thousand sqm factory for 9 years for a fee of EGP774,520 per annum. The move is expected to raise the company's utilization rates by 30% which will be directed towards the export segment sales.

EGTS’s (FV: EGP1.68, EW) court date for the 20.0 million sqm third phase Sahl Hasheesh land plot lawsuit is postponed to 17 September 2023.

Egypt Education platform, owned by HRHO and the Sovereign Fund of Egypt, is in negotiations to manage two new schools in Cairo to add about 3,000 students to the current capacity of about 21,000 students. 

MICH new estimates for the chlorine granules project: Investment cost of EGP1.3 billion, Annual Revenues of EGP990 million, Annual net profit of EGP145 million, project’s execution timeline shall take from 18 to 24 months.

MICH signed an agreement with an alliance of Gulf Cryo and EMEX for supplying hydrogen and building a new unit for it. 

MOIL 1Q23 bottom line came as a net loss figure of USD0.481 million, compared to a net profit of USD0.614 million in 4Q22 and net loss of USD5 million in 1Q22. 

Contact Financial Holding has issued EGP 1.86 bn in securitized bonds for its consumer finance business. 

Weekly Commodities |  Last Price           WoW Change, %

Brent, USD/bbl  73.9      -3.6%

Diesel-HSFO Spread, USD/ton     266.5    -14.0%

Egypt Urea, USD/ton      326.0    8.7%

Polyethylene, USD/ton  980.0    -1.0%

Polypropylene, USD/ton              900.0    -1.1%

Steel/Iron Ore Spreads, USD/ton             408.6    -1.2%

LME Aluminum Cash Price, USD/ton        2,135.4 -4.3%

Egyptian Retail Cement, EGP/ton             1,717.5 -1.0%

Steam Coal FOB Newcastle Australia, USD/ton    125.5    -2.3%

SMP, USD/MT   2,667.0 -3.2%