Market overview 

PITCH| BINV to acquire OFH; Good deal for all. BINV's Board approved the acquisition of a minimum of 51% and up to 90% of the share capital of OFH through a MTO via a share swap ratio of 1 share of BINV for 56.76 shares of OFH (based on a number of 4,721,121,620 shares). OFH holds EGP700 million in cash and cash equivalents, and 29.7% of CNFN. If BINV Share is valued at EGP23.50, then OFH share is valued at EGP0.41 and implied acquisition price for CNFN is EGP3.56. As BINV assumed valuation rises, all other implied values rise as well.

The Central Bank of Egypt’s monetary policy committee will meet on Thursday, June 22, and we expect rates to remain unchanged, in light of inflation peaking this quarter and the halt to monetary tightening witnessed in the US.  

International Finance Corporation managing director Makhtar Diop is in Egypt today. Diop will sign an agreement to mobilize private-sector investment and meet with Key government officials. 

Egypt could start bartering goods such as fertilizers and natural gas with India under a wider set of trade arrangements. The proposal is part of a wider deal that could see India extend a credit line in USD to help Egypt pay for imports. 

The Supreme Investment Council is studying the inclusion of new investment incentives for investors wishing to localize the production of industrial raw materials and other feeding industries.  

Egypt’s FDI in 1H-FY22/23 recorded USD5.7 billion, +75% YoY.  

The total value of goods stuck in Egyptian ports does not exceed USD5.5 billion, after USD31.8 billion worth of goods was released YTD.  

The Masdar – Infinity – Hassan Allam consortium is selecting an advisor for the wind power project to be implemented in Egypt with a capacity of 10 gigawatts and investments of USD10 billion.

PACH bottom line in 3Q22/23 came in as a net profit of EGP6.41 million, down by 47% YoY, due to opex surpassing operating income. 9M22/23 net profit after taxes came in at EGP25.91 million. PACH is trading at FY22/23e EV/EBITDA of 17.8x and P/E of 25.4x.

A consortium led by Italy’s Mediterranean Shipping Company (MSC) won the bid to establish and operate the 250-feddan Tenth of Ramadan dry port at EGP3.5 billion.

Al Gioshy Steel plans to offer a 30% stake of its shares on EGX in 2024. 

OCDI (FV: EGP23.30, OW) is studying acquiring land or other companies, is considering acquiring land of above 300 feddans on the North Coast, and is currently not looking to expand its portfolio beyond Egypt.

ElSisi inaugurated the Tahya Misr multi-purpose terminal at the Alexandria Port to transform the Alexandria Port into a global trade and logistics hub with an annual capacity of 12-15 mn tons of goods.

Tui, Britain's largest tour operator, is nearly doubling its holidays to Egypt's Red Sea Coast next winter.

- Market Overview 

- COMI

- CIEB

- ADIB

- HELI

Prepared by: Mayada Amin - CETA, CFTe

El Sisi has suggested there will be no further devaluation of the EGP if the effect of the exchange rate is taking a toll on the lives of Egyptians. He added that we need to boost exports and lower imports. Turning to international debt markets to support reserves and help meet USD needs is no longer an option, El Sisi said. 

US Federal Reserve decided to leave interest rates unchanged for the first time in 15 months. 

Egypt has submitted its application to join the BRICS group because of pursuing to shift trade to alternative currencies. 

The Civil Aviation Authority decided to stop the “SOTO” ticket system, which are tickets whose route begins and ends outside Egypt and does not include any points inside Egypt.  

The Central Bank of Egypt decided to extend the amendment to the treatment of irregular loans for small and medium enterprises, until the end of June 2024. 

The Capital Markets Authority in Kuwait approved EKHO’s request to trade on treasury shares on the Kuwait Stock Exchange for six months, at a maximum of 10% of the company’s capital. There will be minimal effect on the stock in Egypt.

The Ministry of Petroleum plans to offer two oil and gas exploration bids in at least 16 areas in south Egypt and Red Sea before the end of 2023.

The Qatari sovereign wealth fund is in negotiations with the Sovereign Fund of Egypt (SFE) to acquire up to 30% of the 7-hotel holding company at USD 750 million. 

EGTS’s (FV: EGP1.68, EW) court date for its appeal against the court’s ruling in December 2021 requiring EGTS to pay USD5.7 million (EGP0.17/share) to Trans Mediterranean for Tourism Investments in relation with a canceled land sale contract is scheduled for 31 August 2023.

EFID finalized the acquisition of frozen bakery manufacturer Fancy Foods with a transaction value of EGP380 mn (EGP0.53/EFID share), as a part of their expansion plan.

A consortium of several real estate finance companies intends to address the FRA to solve the problem of obliging it to deal only with brokers registered with the authority when completing the purchase of units for customers using the real estate financing system. Which led to lower financing volumes this year due to the decrease in their number.

Market Overview 

*Key news articles for today*

United States Inflation fell to 4.0% y-o-y in May — its lowest level in 27 months and down from 4.9% the month prior. Thus, the Fed is widely expected to leave rates unchanged. 

Egypt and Iraq signed 11 MoUs yesterday during Iraqi Prime Minister's visit to Cairo. El Sisi discussed boosting ties on economic cooperation, trade, investment, and the upgrading of infrastructure. 

The Minister of International Cooperation signed a development financing agreement worth USD 460 million with the State of South Korea for the second and third lines of the Greater Cairo Metro. 

The Urban Development Fund has received offers from local and foreign investors to participate in developing the capitals of the major governorates at an estimated cost of EGP600 billion. 

The Finance Ministry has invited local and international banks to pitch for an advisory role on the sale of its 20% stake in Bank of Alexandria (Alexbank). Intesa Sanpaolo purchased 80% of its shares for USD 1.6 bn in 2006. AlexBank achieved a net profit of EGP1.2 billion in 1Q23, with estimated profits of EGP4 billion in 2023. Book value stood at EGP15.5 billion in Mar-23. 

The House of Representatives yesterday approved a government-proposed bill that will revoke the establishment laws of the Arab Investment Bank (aiBank), the Export Development Bank (EBank), and the Agricultural Bank of Egypt. The newly-approved bill aims to align these lenders with the current banking regulations, ensuring parity among all banks operating in the country. EXPA’s establishment law makes no distinction between ownership and management rights and places limitations on who can own shares in the bank, which should change with the new laws. EXPA will now be open to foreign ownership. Stock is amongst the cheapest in Egypt with 2023 P/E of 3.4x and P/B of 0.6x.   

JAF Investment has obtained the approval of FRA to proceed with the transfer of shares in two subsidiaries of Arabia Investments Holding (AIH), the 30% stakes in UE Finance for EGP 147 mn and Rawaj Consumer Finance for EGP 30 mn. 

Some of the steel manufacturers in Egypt were forced to shut down their factories and trim or stop production due to the lack of foreign currency needed to import raw materials. We remind you that ESRS exports have been on the rise since 4Q22 to secure the foreign currency needed for importing raw materials, which should remain to be the case supported by the commercial launch of EFS’s new furnace. 

MBSC submitted documents to decrease its paid-in capital to EGP679.3 million distributed over 67.9 million shares, down from EGP750 million distributed over 75 million shar es through cancelling 7.07 million treasury shares.

MOPCO might witness another acquisition amid a strong market appetite from Gulf investors to increase their shares in the company. Sources clarified that the board members of MFPC are buying heavily in the stock.  

TAQA will start trading on EGX within two weeks.  

MICH reached an initial agreement with two private sector companies to form a new company with an authorized capital of EGP1 billion and issued capital of EGP600 million for producing chlorine granules (TCCA). MICH will hold a 12% stake.  

The value of pharmaceutical raw materials that are stuck at Egyptian ports is around USD150 mn and could be cleared by the end of June, according to local press. 

PHAR denied receiving Saudi offers to acquire a stake in the company, in response to news of an expected Saudi acquisition of 75% of the company's shares. 

The Ministry of Communications is negotiating with a number of international companies specialized in manufacturing mobile phones to participate in localizing the electronics industry. 

Market Overview 
ORAS
CCAP
GBCO
ISPH
MTIE


prepared by: Mayada Amin - CETA, CFTe

The government will raise USD2 billion from its asset sale program within the next 1-2 months, through ETEL exiting its entire stake in Vodafone Egypt, or from the sale of the Beni Suef power station.

The House of Representatives yesterday gave its final approval to the FY 2023-2024 fiscal budget, with an expected deficit of EGP849 billion (7% of GDP). 

Prime Minister discussed potential incentives to help boost localization across various industries with representatives of the Federation of Egyptian Industries, industrial chambers, and manufacturers. 

Egypt is set to attract foreign direct investments of USD12 billion in FY23/24, +20% YoY.

EGAL (FV: EGP53.58, OW) invited EPC companies to submit technical and financial offers for the rehabilitation of the company's facilities by October 12, 2023. We remind you that the revamp of the company’s facilities, the solar power plant, and/or better electricity pricing are considered significant triggers for higher fair value.

SWDY (FV: EGP22.87, OW) has begun construction on a Saudi cables factory that should be up and running within two years.

SWDY's subsidiary Rowad Modern Engineering has plans to expand in Saudi and lock down a portfolio worth somewhere between SAR500 million and SAR1 billion this year.

National Investment Bank (NIB) reduced its stake in MBSC to 15.02% from 20.10% by selling 4.87 million shares at an average price of EGP31.5/share.  

Vodafone Egypt will invest more than EGP 330 mn this year to operate its network using renewable energy sources by 2025.

UAE's Aldar Properties has denied a media report claiming that it had entered negotiations to acquire Capital Group Properties (CGP).

EgyptAir will launch two new routes to Manchester, England, and New Delhi, India, in the coming months as part of the government’s efforts to stimulate tourism. 

Market Overview 
COMI
EFID
ORAS
ABUK


prepared by:Mayada Amin- CETA, CFTe

The US Federal Reserve is expected to keep its benchmark interest rate unchanged within the 5.0-5.25% range at its policy meeting this Tuesday and Wednesday. 

Egypt’s core inflation rose to 40.3% y-o-y from 38.6% in April. We expect the MPC to leave rates unchanged at the June 22 MPC meeting. 

The government is targeting oil and gas exports of USD 21 bn in 2023, up 15% YoY and another c.15% increase in 2024 to USD 24 bn. 

Short-term deposits from Arab countries with the Central Bank of Egypt reached USD 14.9 billion as of December 2022. Long-term deposits from Arab countries stabilized at USD 15 billion. 

The Egyptian Stock Exchange is considering setting up a sub-market for startup companies to help them raise capital from the public market. 

The Egyptian Stock Exchange is formulating a plan to launch a comprehensive market for futures contracts in Egypt.  

Baker Tilly, the independent financial advisor determined TAQA’s indicative fair value at EGP8.90/TAQA share, or EGP12 billion. This implies a 2022 P/E of 32.1x and P/B of 6.2x. 

We remind you of the multiples valuation for TAQA: If we assume that the company will grow by 20% in 2023, profits of EGP450 million, and a book value of EGP2.4 billion. If we utilize 10x P/E and 2x P/B (19% ROE), the average valuation for TAQA will be EGP4.6 billion. This translates into EGP3.44/share.

The share swap deal through which SKPC will acquire Ethydco will be executed at 1:1.6, i.e. every 1.00 share in Ethydco will be swapped for less than 1.6 shares in SKPC. (Al Mal) This means that the valuation has been mirroring the capacities and has slightly adjusted for the difference in debt profiles between the two entities. It also means that within the merged/combined entity, SKPC will be 38% and Ethydco will be 62%. 

ORHD's (FV: EGP20.38, OW) El Gouna will see USD100.0 million in fresh investment in the next two years allocated toward building a new hotel and expanding existing ones.

PHAR has revised upward the estimated total cost of its Biosimilar plant to EGP2.5 billion, up from an initial estimated cost of EGP1.2 billion. 

MCRO plans to add 26 new products to its portfolio during the coming two year. The company targets 2023e sales of around EGP1.0 billion.

Investors are in talks with the Public Enterprises Ministry to acquire stakes in two pharma companies including “Chemical Industries Development Company – CID” through a capital increase. 

The Egyptian government allocated EGP85 billion in FY23/24 for the works of the high-speed train. The entire project is set to cost some USD23 billion (c.EGP700 billion). Worth highlighting that Siemens Mobility, ORAS (FV: EGP181.70, OW), and Arab Contractors were contracted to build the first phase of the high-speed rail line, while Deutsche Bahn and SWDY (FV: EGP22.87, OW) are on board to manage and operate the first line. 

South Sinai governorate is studying to offer 3 water desalination plants in 2024 with a total capacity exceeding 45k cubic meters per day.

The offering of Port Said and Damietta companies for container and cargo handling will take place after deciding on the acquisition offer submitted to the two companies by a subsidiary of Qatar Sovereign Fund. 

AMNOs are waiting for NTRA’s approval on price increases within days. Market speculations point at an increase of 10-15% on telecom services provided by MNOs.

Chinese smartphone maker Vivo has begun manufacturing devices at its Tenth of Ramadan factory. 

According to local media, ARAB's (FV: EGP0.65, EW) Board preliminarily approved an IFA valuation of ARAB's subsidiary, Amer Syria, at USD13.0 million (EGP0.34/ARAB share). This compares to the USD18.0 million (EGP0.48/ARAB share) offer received by ARAB for Amer Syria in March 2023.

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