The Egyptian government is in the final stage of talks with the IMF on new funding.

FDI outflows from Egypt last year recorded about USD367 million. The volume of FDI inflows to Egypt last year were about USD5.122 billion.

Ministry of Supply signed agreements to establish commercial and logistical zones in Kafr El-Sheikh, Suez, and Dakahlia, with investments exceeding EGP4.5 billion.

Volume of local wheat supply for the harvest season has so far reached 4.397 million tons, which may bring the government’s purchases of local wheat to record levels; the country’s stockpile of wheat covers seven-month needs.

Leaders of Egypt, the UAE, Jordan, Bahrain, and Iraq will meet today in New Alamein for a second and final day, discussing regional cooperation.

Eni and TotalEnergies have made a “significant” gas discovery in a shared exploration block off the coast of Cyprus which the companies estimate to contain at least 2.5 tn cubic feet of gas.

SWDY 2Q22 net profit reached EGP1.1 billion (+27% YoY, +48% QoQ), bringing 1H22 net profit to EGP1.9 billion, 19% higher YoY.

HRHO’s consumer finance arm valU has acquired 100% of digital HR and payroll platform Paynas.

BINV has until next Monday, 29 August, to decide whether or not it wants to preempt Adnoc Distribution’s bid to acquire 50% of TotalEnergies Egypt.

According to local media, MHOT is studying establishing two 5-star hotels in Hurghada and Alexandria and that the company has liquidity of EGP350.0 million, part of which will be distributed to shareholders and the other part of which will be used for investments.

RACC signed a partnership agreement with Zain Saudi Arabia to manage its customers' experience in Saudi Arabia. 

Weekly Commodities Update

 | Last Price | WoW Change, %
Brent, USD/bbl | 95.7 | 0.7%
Diesel-HSFO Spread, USD/ton | 619.8 | 10.4%
Egypt Urea, USD/ton | 765.0 | 0.0%
Polyethylene, USD/ton | 1,140.0 | -5.2%
Polypropylene, USD/ton | 990.0 | 0.0%
Steel/Iron Ore Spreads, USD/ton | 439.5 | 3.0%
LME Aluminum Cash Price, USD/ton | 2,393.8 | 0.1%
Egyptian Retail Cement, EGP/ton | 1,375.0 | 2.8%
Steam Coal FOB Newcastle Australia, USD/ton | 416.3 | 2.1%

- Market Overview
- COMI
- ABUK
- AUTO
- CCAP
- FWRY
- HELI
- ISPH
 -ORHD
- EGCH
- EXPA
- ETEL


Prepared by: Mayada Amin- CETA, CFTe

The government is considering the return of import with documentary collection for some raw materials and production requirements.

UAE investments in Egypt increased during 1HFY2021-22 by 169.1% to reach USD1.9 billion.

The Ministry of Electricity decided to postpone the implementation of some number of electricity production projects to reduce expenses and financial burdens.

During a meeting with the Prime Minister and Minister of Finance, the President directed the government to continue the approach of fiscal discipline while formulating a medium-term strategy to target the largest possible reduction in debt-to-GDP ratio.

CLHO recorded net profit of EGP68 million in 2Q22 (-24.4% YoY, -28.7% QoQ), bringing 1H22 net profit to EGP164 million, down 14.3% YoY.

RMDA announced the inauguration of its new water treatment station, which is expected reduce RMDA’s annual water consumption by approximately 50% of its current level.

Telecom Egypt and Orange Jordan will launch a terrestrial network that connects Iraq to Europe in 3Q22.

According to local media, electric appliances’ prices in the local market increased by around 25% during the past six months on the back of inflationary costs and currency devaluation.

In response to the news that Saudi Arabia's Public Investment Fund (PIF) is looking to take a position in EGAL's capital increase, the company did not confirm nor deny the news, reiterating in an EGX disclosure that it is still studying plans for a capital increase and will offer shares to a “strategic investor” to help finance its development. EGAL is looking to raise as much as USD300 million in equity and finance to upgrade its operations. It has tapped Bechtel to conduct a feasibility study for the upgrades.

ARAB hired an independent financial advisor to conduct a valuation study on one of its subsidiaries in preparation for potentially listing it on the EGX. According to local media, the subsidiary referred to is Porto October.

MPRC stated that it does not have information regarding media reports that the Saudi Public Investment Fund intends to invest in it.

JMC's local agent, TVD, is planning to assemble some JMC models locally by the beginning of 2023, which will take place at GB Auto's production facilities.

Consumer Protection is requiring that the barcode system be applied to tobacco manufacturers after receiving complaints of unjustified price increases. The system will be applied starting the beginning of September. 

According to local media, if Expedition Investments’ offer to acquire a 34% stake of DOMT goes through, all Expedition's founders, besides Al Damaty family, will have a stake of 5-10% of DOMT. The consortium has no intention of delisting the company and will maintain the free float requirement of 10%.

PACH’s shareholder, Chemical Industries Holding Company, will appoint an independent financial advisor to value PACH amid a bidding war for the EGX-listed paint company.

- Market Overview
- COMI
- ABUK
- ORWE
- EFID
 -SWDY
- ESRS
- GDWA
- SPMD


- Prepared by : Mayada Amin - CETA, CFTe

Hassan Abdalla was appointed as Acting Governor of the Central Bank of Egypt (CBE). 

The CBE left interest rates on hold on Thursday, in line with our expectations.

Cabinet has given its approval to pay EGP10.0 billion out to exporters in the fifth phase of its program to repay overdue subsidies.

Cabinet approved a EUR250.0 million loan from the European Bank for Reconstruction and Development to finance Cairo Metro Line 2 upgrades.

MFPC 2Q22 net profit registered EGP1.6 billion, down 21% QoQ and up 33% YoY, taking 1H22 net profit to EGP3.7 billion, up 72% YoY.

PACH OGM is scheduled to convene in September for shareholders’ opinion on Sipes’ and Saybad’s acquisition offers.

The CBE approved the Saudi Public Investment Fund's offer to buy the entire shares of the United Bank.

OFH aims to establish a venture capital fund in the field of technology, with an initial size between EGP300-500 million. It is also interested in obtaining a digital bank license.

The Saudi Public Investment Fund intends to invest in MPRC. 

The Holding Company for Construction and Development acquired an 8.3% stake in ZMID. 

Mobile phone sales recorded a decline of around 25% YoY during 1H2022 to stand at 6.14 million devices. 

The Trade and Industry Ministry is launching a tender for three industrial complexes comprising 1k units in Upper Egypt next week for micro, small, and medium enterprises.

SCZone's Main Development Company and DP World have signed an agreement to build an USD80 million logistics zone at Sokhna port.

All eyes on CBE's next moves; Priority will be exchange rate followed by IMF assistance program

Since all eyes are on the CBE and what the next move will be, we assume that the exchange rate flexibility and unlocking the IMF support facility will be the number one priority.

What does this mean?

This means that the FX movement will be a key theme over the short term and we need to create positions within stocks that are key beneficiaries from a weaker local exchange rate but would not lose much from the gradual weakness in global commodity prices.

Stick with Oriental Weavers, ElSewedy Electric, Orascom  Development Egypt, and Commercial International Bank

Oriental Weavers is a key exporter whose export sales will surge with the weaker local exchange rate. We realize that volumes are suffering but the weakness in currency has been quite significant to compensate for any volume drop. The stock is a high-yielding one as well with DY at c.12%. The drop in PP prices will also bode well for margins which will gradually recover as low-cost raw materials start kicking in, and as the rise in local prices provides support to local sales value. ORWE is trading at 2022 P/E of 4.3x and EV/EBITDA of 4.4x.

ElSewedy Electric is well positioned for the weakness in local currency and the relative cooldown in the prices of copper and aluminum will alleviate some pressure on margins, albeit not a major one. The company has solid expansion plans over the next two years and the stock has been facing massive pressure over the last two years, creating room for a significant upside from current levels. SWDY is trading at 2022 P/E of 5.0x and EV/EBITDA of 4.0x.

Orascom  Development Egypt is a play on real assets and the repricing of real assets during times of high inflation. That is in addition to the fact that any weakness in local currency directly feeds into Gouna Residual Land Bank valuation. ORHD is trading at a 2022 P/E of 3.4x and EV/EBITDA of 2.5x.

Commercial International Bank is a bet on an improved investment environment. If the economy and the environment is more conducive for investments, then capex lending will revive. In the current inflationary environment, retail lending will face higher demand. If we were to choose one banking sector stock, it will have to be COMI due to management, fundamentals, and current distressed multiples. COMI is trading at 2022 P/E of 4.8x and P/B of 0.9x. The runner-up within banks is ADIB, but we are waiting for the second round of capital increase to be concluded. ADIB is trading at 2022 P/E of 1.7x and P/B of 0.3x. 

- Market Overview 
- AUTO
- COMI
- HELI
- HRHO

Prepared by; Mohamed Othman- CETA, CFTe

Tarek Amer has stepped down as governor of the Central Bank of Egypt (CBE). Prominent successor names include Hassan Abdallah, Hesham Ezz El-Arab, Hala El Said, Rania El Mashat, and Gamal Negm. 

Two Chinese companies are close to being awarded construction work for renewable energy plants in Egypt, by EMEA Power, a subsidiary of the Emirati Al-Nowais Group. The project investments exceed USD1.2 billion.

Government discussions have been held over the past weeks with Power China and China Energy to implement a 500-megawatt wind power plant and a 500-megawatt solar power plant.

Egypt's trade balance deficit in May 2022 decreased by 35.8% YoY, to reach USD2.61 billion, due to the increase in exports and a restriction on imports.

Egypt’s imports of mobile phones plunged by 91% YoY during the month of May 2022, to USD12.983 million, due to obstacles facing companies in importation procedures. (MTIE)

Egypt’s imports of passenger cars declined by 72% YoY during May, to USD85.005 million. (AUTO)

HRHO 2Q22 net profit after tax and minority interest came in at EGP 344 million (0% q/q, -15% y/y, and 11% lower than our estimates of EGP 386 million) so that 1H22 reaches EGP689 million (-1% y/y). The company is currently trading at P/E22 7.8x and P/B22 0.7x.

ValU has issued EGP 532.6 mn of securitized bonds.

PHDC achieved solid 2Q22 sales of EGP5.1 billion, up 19.2% y/y bringing 1H22 sales to EGP10.7 billion, up 38.3% y/y. Net profit in 2Q22 reached EGP263.5 million, up 2.6% y/y and down 10.7% q/q, bringing 1H22 net profit to EGP558.5 million, up 21.0% y/y. The Board approved purchasing treasury shares. 

MNHD Board is open to further discussions with OCDI regarding OCDI’s offer to acquire MNHD.

DOMT shareholders have until Wednesday, 14 September to sell their shares to Expedition Investments, as part of its mandatory tender offer (MTO) for 34% of the company.

US natural gas prices have skyrocketed to levels unseen since 2008, to USD9.33/MMBtu, the highest closing price since August 1, 2008.

Crude oil inventories in the United States dropped by 21.8 million barrels to 915.8 million barrels in June, which was the lowest level since 2004.

- Market Overview
- COMI
- EMFD
- MTIE
- ORWE
- HRHO

- Prepared by: Mayada Amin - CETA, CFTe

Egypt is in talks with Chinese officials to issue CNY-denominated bonds in the world’s second-largest bond market, Finance Minister told Enterprise. The minister declined to be specific about the size of the potential offering.

The Madbouly cabinet will soon review a bill that, if passed, would allow businesses to deduct the healthcare tax from taxable income, Finance Minister said.

MPC meets tomorrow to look into rates. Despite the considerable negative real interest rate, we do not see an urgent need for the CBE to hike rates for the time being, because of inflation outlook, the decline in global commodity prices and high cost of raising rates on state budget.

The National Authority for Tunnels (NAT) yesterday inked a preliminary agreement with German railway operator Deutsche Bahn and SWDY to manage and operate the three lines of our planned high-speed rail network.

12 local firms were awarded the construction works of main and regional stations of the first phase of the high-speed rail line. ORAS was awarded the construction of only one station.

EFIC 2Q22 bottom line amounted to EGP264 million (+12% QoQ, +6.35x YoY). 1H22 bottom-line recorded EGP500 million, up by 5.62x compared to 1H21. EFIC is currently trading at 2022 P/E of 2.0x and EV/EBITDA of 0.9x.

FRA approved Expedition Investments’ bid to acquire a 34% stake in DOMT. DOMT is currently trading at a FY22 P/E of 9.2x and an EV/EBITDA of 6.6x.

Auf Group has acquired a 75.5% stake in Modern International Confectionery Co (MICC), according to local media. MICC was already a supplier to Auf Group prior to the acquisition that produces a wide range of pretzels as well as soft and hard candies. 

MNHD shareholders rejected OCDI’s request to conduct due diligence for the acquisition of MNHD.

AMER reported 2Q22 net loss of EGP4.7 million, compared to 1Q22 net profit of EGP17.0 million, bringing 1H22 net profit to EGP12.3 million, down 85.4% y/y. The Board agreed to seek FRA’s opinion on AMER’s proposed split into two companies (real estate and hospitality).

Raya Holding’s net income rose 14% y-o-y in 1H 2022 to EGP 144 mn, Revenues were up 10% during the first six months of the year, coming in at just over EGP 9.1 bn.

IDHC’s CEO Hend El Sherbini has raised her stake in the company from 25.5% to 26.71%.