The IMF wants Egypt to make more progress on privatizing state-owned companies and moving to a flexible exchange rate before it goes ahead with the first review of the country’s USD3 bn assistance package. 

CBE Governor: Relaxing the supply issues and increased competition will result also in a healthier and faster inflation reduction…Interest rates are not the optimum solution.

The market is expecting announcements of state stake sales after Eid El Fitr, along with a fourth EGP devaluation. 

Twelve-month non-deliverable forwards hit EGP 42.80 to the USD on Thursday, according to Bloomberg.  

Trade between Egypt and Sudan stopped after conflict flared up in Khartoum. El Sisi reiterated Egypt’s principle of “non-interference” in the affairs of other countries.

Egypt released USD15 bn worth of goods from ports during 1Q 2023 despite the ongoing foreign currency shortage. 

El Sisi has issued a presidential decree to set up the Supreme Investment Council, which is part of the state’s efforts to boost investment and stimulate economic growth.  

The departments of the Financial Supervisory Authority and the Egyptian Stock Exchange are currently discussing a procedural amendment regarding the closing price auction session in the stock exchange.

Local media reported that Cabinet intends to choose one of the shortlisted offers for a stake in the state-owned United Bank immediately after Eid. Some news wires reported the offer will be for USD660 mn (EGP21.0 bn at an exchange rate of EGP30.89/USD). The United Bank achieved a net profit of EGP1.3 bn in 2022, therefore, the transaction implies P/E22 of 16.2x, lower than the recent banking transaction multiples of ABC Bank acquiring BLOM Bank Egypt of P/E21 at 19.7x, and P/B22 of 2.1x which is higher than BLOM Bank transaction multiples P/B21 of 1.3x. If we assume a 20% growth in 2023, then transaction multiples imply 13x 2023 P/E and 1.9x P/B, which confirms our view that banks traded on EGX are extremely cheap. Please check our pitch on banks from last Monday. 

EXPA should be expecting around EGP700 mn in proceeds from selling a building located in New Cairo.

CIRA released their 1H22/23 results showing a YoY decline in attributable net profit by 22.3% to record EGP220 mn compared to EGP283 mn in 1H21/22. CIRA is currently trading at a FY22/23 P/E multiple of 13.7x and an EV/EBITDA of 6.3x. 

Sudan is considered one of the largest markets importing building materials from Egypt, but the current period of vacations for Egyptian companies makes it difficult to know the impact of recent political events taking place in Sudan on exports. Libya could be the alternative destination for Egypt's building materials exports. Sudan ranked ninth among the largest importers of building materials from Egypt in 2022, with about USD138 million (+18% YoY).

EGTS Board approved a notification from the Tourism Development Authority requiring EGTS to pay USD21.9 million (translating into EGP0.64/share) to extend the development timeline for undeveloped land. 

TMGH launched East Hub, its latest commercial offering in Madinaty, for rent to companies and brands.

Eni will start the exploration of a new natural gas well in the Mediterranean's deep water with USD 130 million of investments.

Egyptian Chemical Industries (Kima) Plans to build a new project for green ammonia production using the high dam electricity.

Self-employed professionals including lawyers, pharmacists, and doctors who directly serve end-customers are no longer obligated to register with the Egyptian Tax Authority's e-invoicing system.

Market Overview 

AMOC

SKPC

ADIB

ETEL

EGCH

Prepared by: Mayada Amin - CETA, CFTe

The government raised the local wheat purchase price to EGP1,500 per ardeb.

US inflation reached 5% YoY in March 2023.

Turkey is offering to trade with Egypt using local currencies.

An alliance consisting of Smart Engineering Solutions and Frenell GmbH will establish two electricity generation stations using concentrated collectors system with a total power of 70MW and an investment cost of EGP11 billion. 

We initiated coverage on SUGR with a FV of EGP27.6/share and an Equalweight recommendation. In our forecast, we estimate global sugar prices to enter their cooling phase after a sharp peak in commodities. However, the negative effect is expected to be counterbalanced by the devaluation in the EGP. Rising inflation is expected to catch up with COGS by 2023, pushing it higher and bringing GPM down from 2022’s peak.

The Libyan General Electricity Company awarded SWDY, in alliance with Qatar’s Urbacon Trading, a EUR800 million contract for the engineering, procurement, and construction activities of a 1,044 MW power plant in Zliten City.

Parliament approved a JPY41 billion loan from the Japanese International Corporation Agency to finance the first phase of Cairo’s fourth metro line.

The General Authority for Land and Dry Ports will close receiving the technical and financial bids for the tender of the construction of a dry port and a logistics center at the 10th of Ramadan next Thursday. The list of competing alliances includes “SWDY-CMA”, the French “Bolluret-Miriam”, “ORAS - Abu Dhabi Ports” and an alliance led by the Italian MSC.

Market Overview 


Prepared by: Mayada Amin - CETA, CFTe

Egyptian Banks| You are Hedged by Nominal Growth 

• The current macroeconomic environment is creating a perfect opportunity for banks' profitability. Balance sheets will expand with the weakness in local currency and high inflation. Treasury investments will present a good opportunity to park excess liquidity, and the high-interest rate environment will serve NIMs and push them higher.
• Banks have a high percentage of CASA deposits that will counterbalance the recently offered high-rate CDs and alleviate some pressure off of NIM. In addition, treasury rates are on the rise to cover for the higher cost of funds. 
• We believe that Egyptian banks are offering a good upside opportunity, especially after most stocks rallied over the last three months.
• Egyptian banks are delivering ROEs north of 20%, and most of them are trading below book values.
• Most banks that got acquired in Egypt recently witnessed transaction multiples that are double those seen amongst listed banks.
• It is notable that management who will be able to strike the perfect balance between margin gains and tax expense spikes will be able to achieve the highest gains from the current macro environment.
• Banks have been building excess provisions over the last 7 years, which limits downside risk from any asset quality issues.
• Based on current profitability trends, we believe those banks present the highest opportunity: ADIB, QNBA, CIEB, CANA, and SAUD, along with COMI of course which continues to be cheap on a P/E basis and much lower than its historical average.
•  Please check the table published today for detailed fair values and trading multiples.

• The IMF trimmed its 2023 global economic growth forecast by just 0.1 ppt to 2.8% and cautioned that sticky inflation and rapid policy tightening are presenting serious risks to the global economy. 
• The IMF now expects Egypt’s economic growth to slow to 3.7% this year, a 0.3 percentage point trim. 
• Suez Canal revenues rose 35% y-o-y in 1Q 2023 to USD 2.3 bn.
• The Madbouly government is working to incentivize Greek investments in Egypt through joint energy projects, as well as cooperation on renewables and green hydrogen. 
• The Japanese company Sumitomo, one of the world's largest manufacturers of automotive electrical harnesses, is investing USD100 million in Egypt.
• Jiangsu Guotai International Group aims to pump investments of USD50 million in Egypt in the field of ready-made garments, with aim to export 100% of its production to the European Union and the United States.
• The Ministry of Transport signed a cooperation protocol with the Spanish company Talgo, to establish a factory in Egypt, to manufacture railway passenger cars in Beni Suef Governorate.
• The Ministry of Finance rejected demands to reduce the real estate tax for hospitals, similar to the decision approved for industrial establishments.
• EGAL reduced selling prices in the local market by a range of EGP2k-14k per ton (excluding tax) during April. 
• HRHO has completed its exit from Oman, with aim to improve its return on equity. 
• HRHO has issued an EGP 250 mn senior unsecured short-term note for its brokerage arm to diversify funding sources.
• A consortium led by GB Auto acquired the initial FRA approval to launch "E'teman" for small and medium enterprises financing with an initial paid-in capital of EGP30 mn.
• AfricInvest is looking to acquire a 25% stake in the British University in Egypt with a total deal amount exceeding EGP1 bn. The deal is expected to be finalized by the upcoming June.
• FRA approved MTIE’s capital increase through 0.25 bonus shares for each original share, bringing issued and paid in capital to EGP749.3 million.
• Misr Technology Services (MTS), an associate of EFIH, plans to IPO on EGX next y

Market Overview 

SKPC

MFPC

ABUK

HELI

ACAMD 

ATLC

ZMID

ORWE

FWRY

Prepared by: Mayada Amin - CETA, CFTe

Egypt’s annual urban inflation jumped to 32.7% y-o-y in March, up from 31.9% the month before. Core inflation stood at 39.5% y-o-y in March, down slightly from February’s record high of 40.3%.

Yesterday, the spring meetings of the World Bank and the International Monetary Fund kicked off in Washington, DC, with the participation of Egypt’s Minister of International Cooperation.

Chinese hydropower developer CTG wants to invest in local renewable energy, desalination, water pumping, and green hydrogen projects.

China Energy could start working on a USD 5.1 bn green hydrogen facility in Egypt next month.

GAFI intends to launch the digital platform for establishing companies in Egypt in July, which is in addition to a comprehensive map of all investment opportunities across Egypt.

QNBA 1Q23 net profit pre-minority interest and appropriations recorded EGP4,715 billion (+56% q/q, +114% y/y). The stock is currently trading at 2023 multiples of P/B of 0.6x and P/E of 3.8x.

National Paints Holding (NPH) raised its offer to acquire 100% of PACH’s shares to EGP39.80 per share, up from its previous EGP37.75/ share.

EGAL released its adjusted budget for FY2023/24 targeting a net profit after tax of EGP3.1 billion (previously EGP3.5 billion) vs. EGP2.50 billion recorded in FY2021/22 and an estimated figure of EGP3 billion in FY2022/23. The budget is planned on average exchange rate of EGP30/USD.

The National Authority for Tunnels is preparing to assign new projects worth EGP17 billion to a number of contracting companies, in the high-speed train project “Ain Sokhna-Matrouh”, including the construction of 15 bridges.

Foreign cruise ships are getting a 50% discount on service fees and an exemption from local port authority fees at Egypt's ports. Cruise operators must pay their fees in USD.

EgyptAir is launching a new route to Bangladeshi capital, Dhaka, on 14 May 2023, with two weekly flights.

RMDA’s shareholders approved the distribution of 0.507 bonus share for each original share held, brining paid in capital to EGP380 million distributed over 1.52 billion shares at a par value of EGP0.25 per share.

RACC’s shareholders approved not distributing dividends out of 2022 profits.

Market Overview 

COMI

EKHOA

CCAP

ARAB

ORWE

ASCM

BINV

CASG

PHDC

Prepared by: Mayada Amin - CETA, CFTe

1Q23 Earnings Expectations| Currency rate and availability play a key role in shaping profits. 1) Excluding FX losses for 1Q23, aggregated profits will rise c.20% YoY, 2) Including FX losses, aggregated profits will decline 18% YoY, 3) For FY2023, aggregated profits will rise 5% YoY, due to FX losses for some large-cap companies 

Stocks that will witness a spike (>30%) in profit growth YoY in FY2023: CSAG, MCQE, ALCN, AMOC, FWRY, CNFN, ARCC, ETRS, MTIE, SWDY, ORWE, ABUK, SKPC, CLHO, EFIH, CANA, OLFI, JUFO

Stocks with P/E 2023 that is less than 5x: EMFD, CANA, ADIB, SAUD, QNBA, HDBK, ADCI, ETEL, CIEB, PHDC, ABUK, EXPA, EGBE, SWDY, ATLC, FAIT, EGAL, CPCI, AMOC, AXPH, MCQE, ARCC, ORHD

Bloomberg reported that the fixed-income carry trade in emerging markets is expected to pick up steam on the back of the US economy’s slowdown and expectations that global interest rates will cool off.

Egypt’s Urban Inflation reading for March 2023 should be released this morning, with consensus expectations pointing at c.34% YoY, up from 31.9% in February 2023.  

HELI (FV: EGP12.44, OW) plans to offer its Ghernata area in Heliopolis to investors.

EAST's BoD decided to increase the selling prices of their products Pall Mall and Viceroy to reach EGP35/pack (less than 1% of the company's sales).

HRHO’s BoD approved raising capital from EGP5.8 bn to EGP7.3 bn, through a 1:4 stock dividends.

Finance Ministry will continue to offer loans at a subsidized rate of 11% to industry and agriculture players despite the recent 2% rise in interest rates. 

Savers have so far poured some EGP 178 bn into the NBE and BM's new high-yield certificates of deposit.

SCZone announced laying the cornerstone for the Indian Flex-Egypt polyethylene USD110 million factory in Sokhna at a planned production capacity of 30,000 tons per month. 

FRA approved SPMD's rights issue to increase capital by EGP110.9 million to EGP332.7 million. Rights issue subscription will be available starting 2nd of May 2023 till 1st of June 2023.

 PRDC AGM approved the purchase of treasury shares.

Sinai Cement general assembly agreed to increase the loan amount received from Vicat-Egypt, a related party, for one additional year with a maximum amount of EGP2 billion at an 8.5% annual interest rate.

Weekly Commodities Update:

Diesel-HSFO Spread, USD/ton       335.3     -14.6%

Egypt Urea, USD/ton        332.5     -11.9%

WMP, USD/MT  3,053.0  -5.0%

LME Aluminum Cash Price, USD/ton          2,292.3  -3.6%

SMP, USD/MT   2,579.0  -3.0%

Iron Ore 65%, USD/ton    151.0     -2.7%

Wheat, USD/bu   675.5     -2.4%

LME Copper Cash Price, USD/ton 8,806.8  -2.2%

Turkish Rebar, USD/ton   690.0     -2.1%

Steel/Iron Ore Spreads, USD/ton    463.5     -2.0%

Polyethylene, USD/ton     1,130.0  -1.7%

Egyptian Retail Cement, EGP/ton   1,892.5  -1.5%

Polypropylene, USD/ton   992.5     -1.0%

Scrap, USD/ton   439.5     0.0%

Caustic Soda, USD/ton     415.0     1.2%

Crude Palm Oil, USD/MT 910.5     2.4%

Brent, USD/bbl   85.1       6.7%

Steam Coal FOB Newcastle Australia, USD/ton         193.8              9.3%

- Market Overview 

- SKPC

- SWDY

- ALUM

- EKHOA

- CCAP

- Prepared by: Mayada Amin - CETA, CFTe