*Key news articles for today*

The CBE's MPC is meeting today to decide on interest rates for the last scheduled time in 2023. We believe the MPC might prefer to keep rates unchanged, as any possible hike would be of little benefit compared to its fiscal costs. 

Egypt is approaching an agreement with the IMF to increase its loan from USD3 billion to USD6 billion.

The government has so far secured aboutUSD5.6 billionfrom selling stakes in 14 state-owned companies. 

The government is studying collecting VAT on logistics services in the Suez Canal in foreign currencies.

The Sovereign Fund of Egypt is set to finalize a contract with a consortium that will be in charge of developing the site of the former National Democratic Party (NDP) headquarters in Downtown Cairo.

The EGX is in talks with the FRA to cut the time it takes for listed companies to access the capital they raise through subscription.

The Financial Regulatory Authority aims to launch a derivatives market within the next few months.

The FRA is considering the introduction of key reforms and instruments to the bourse in a bid to boost trading performance.

Saudi Arabia renewable energy giant Acwa Power will set up a green hydrogen plant in the SCZone.

The government approved a one-year postponement to the 15% increase on usufruct fees collected from companies operating in free zones, until the beginning of 2025.

Egypt is studying the issuance of Gulf currencies denominated bonds.

Naguib Sawiris allocated USD100 million to develop the Pyramids area.

TMGH, through its hospitality arm ICON, signed definitive agreements for the acquisition of a 39% stake with management rights in a sizable portfolio of 7 unique hotels in Cairo, Alexandria, Luxor, and Aswan, the stake will reach 51% within a specified period in Legacy Hospitality company according to the schedule of the contract concluded. 

We remind you that EGTS’s (FV: EGP1.68, EW) next court date for the 20.0 million sqm third phase Sahl Hasheesh land plot lawsuit is, if not further postponed, on 23 December 2023.

HELI is studying the offers submitted by companies to develop 1,000 acres of land in Heliopolis. According to local press, HELI’s share would reach more than 30% of the returns that will be achieved by the projects to be launched while the remaining share will go to the developing partner.

The Cabinet has approved a new EGP 50bn tourism initiative that will see the government offer financial incentives to encourage hospitality players to increase their hotel room capacity through offering funding not exceeding EGP 2 bn and tax breaks. 

Elsewedy Industrial Development Company, a subsidiary of SWDY (FV: EGP34.96, OW), plans to start the construction works of its new Industrial City in Tanzania in 1Q24, according to local media.

Cement exports witnessed a 20% YoY increase to USD688 million in 10M23 up from USD571 million in 10M22.  

EFID (FV: EGP40.30, OW) is planning to spend EGP1.0 bn on capex during 2024 to expand production capacity. The company are also expecting for their export sales to exceed EGP1.0 bn by 2024 end, according to local press.

FWRY submitted a request to the CBE to obtain a license that would allow the company to offer its services through InstaPay, this makes FWRY the first e-Payments player to apply for such a license.

Corplease, CICH’s leasing subsidiary, intends to issue securitization bonds worth EGP 3.172 billion before the end of the current year.

EBRD will be granting NBE up to USD100 mn senior unsecured loan to be on-lent to micro, small, and medium enterprises (MSMEs). 

Market Overview 
COMI
ARAB
ATQA
EDBM
ETEL



prepared by: Mayada Amin- CETA, CFTe

*Key news articles for today*

Prime Minister Moustafa Madbouly is scheduled to hold a privatization press conference today. 

According to Reuters, shipping companies are rerouting their vessels away from the Red Sea, in response to repeated attacks on shipping by Houthi armed groups in Yemen. 

12-month non-deliverable forwards contracts have reportedly fallen 7% since mid-November to a record low of 50.50.

According to World Bank, remittances to Egypt declined by 15% YoY in 2023 to USD24.2 bn, largely due to the major gap between the official and unofficial exchange rate pushing Egyptians abroad to send in their remittances through unofficial channels.

The IFC is looking to issue its first EGP-denominated international bonds in 2024, IFC Africa chief said.

Egypt has been importing 1 bn cubic feet of Israeli natural gas per day this week — up from the 850 mn cbf/d we’ve been importing in mid-November.

Global gold mining company Centamin has raised its estimates of gold reserves in Egypt's largest producing mine by 10 percent.

The EGX will potentially be going through a comprehensive upgrade to its trading system and program, with its implementation expected sometime next year.

According to local press, a group consisting of TMGH’s subsidiary Icon Investments and unnamed foreign investors could be upping its stake in a group of historic hotels. The acquisition is expected to wrap up before the end of 2023.

Regarding ESRS (FV: EGP97.02, OW) piece yesterday, the actual flat steel price increase this week was only EGP2,500/ton to record EGP39,000/ton way below the reported price increase of EGP7,000/ton.

Ahmed Ezz purchased 4.2 million shares representing part of Gamal Al Garhy's stake in ESRS in a deal worth EGP344 million.

BTFH’s capital and investment arm NEPIT are taking a 51% stake in local seed distributor National Seeds Company (NSC) from Cairo Capital for Financial Investments in an EGP140-306 mn transaction. 

The European Bank for Reconstruction and Development has expressed interest in taking positions in Banque Du Caire and United Bank. As for Banque du Caire’s IPO, it is unlikely to happen given current market conditions.

Egypt's Pharmaceuticals exports increased by 8.5% YoY to record EGP238.8 billion in 9M23.

Nahdet Misr acquired a third of early education startup Innovvette. The proceeds will support the company's expansion plans.

Corona for chocolates is planning to spend EGP100 mn in expansions to meet the rising demand. 

Market Overview 


Prepared by: Mayada Amin - CETA, CFTe

The MPC will hold its meeting on Thursday 21 December to decide on policy rates. We expect the MPC to keep rates unchanged, as inflation outlook does not urge an immediate hike in policy rates. We believe the MPC might prefer to save a hike decision for another timing, related to a widely anticipated a downward movement on the currency front. This will most probably require a simultaneous rate hike due to upside inflation risks.

President El Sisi ratified the new Building Reconciliation Act. The amended law, which got the greenlight from the House last month, makes it easier for owners of unauthorized buildings built by October 15 of this year to legalize their properties in return for a reconciliation fee.


Nippon Steel acquisition of U.S. Steel for USD14.1 billion implies sizable upside for ESRS’s valuation. 

If we apply the same multiples to ESRS, and take into account a discount for Egypt's macro challenges then ESRS’s value will range between EGP182.40 – EGP304.46/share implying a significant upside potential for the stock compared to the current market price of EGP79.95/share and to our valuation of EGP97.02/share.

Nassef Sawiris-owned chemicals producer OCI Global has inked a binding agreement to sell its wholly-owned subsidiary Iowa Fertilizer Company (IFCo) to Koch Ag & Energy Solutions for USD3.6 billion. The sale marks the second exit by the Netherlands-based company in a few days time, OCI recently announced that it is offloading its entire 50% stake in Fertiglobe. Sale proceeds will help significantly reduce OCI’s debt, which stood at USD2.3 billion at the end of 3Q23. The transaction will also allow the company to deliver a capital return to shareholders and explore green projects. The sale is expected to close next year.

A number of oil players have paused Red Sea transits following intensified Houthi attacks on vessels passing through the waterway. Oil prices jumped on the news, with Brent Crude prices rising 1.8% to USD77.95/bbl.

Malaysian buyers are turning to Egypt for phosphate as Asia looks for new sources of fertilizer in response to China’s growing export restrictions, which the country introduced in 2021 to cool domestic prices. This should be good news for EFIC. 

Karm Solar is preparing to list its shares on EGX.

Steel rebars manufacturers started a new wave of price increases by a range of EGP2,000-2,500 per ton due to the fluctuations in raw materials prices this quarter. ESRS (FV: EGP97.02, OW) raised rebar prices by EGP2,500/ton to EGP38,500 as of mid-December 2023, 7% higher than the EGP36,000/ton announced a month ago. On a different note, ESRS raised its flat steel prices by EGP7k this week. 

HELI received financial and technical offers from 3 companies to participate in 4 plots of land in Heliopolis, with a total area of up to 1,000 acres. The company expects to reach a financial agreement within two weeks if these companies show sufficient flexibility to the requests of the company’s board of directors.

Local appliance manufacturers are looking to hike prices after Al Ezz Dekheila Steel, the country’s sole maker of sheet metal, raised its own prices, according to local media.

The expat cars import initiative gathered USD171 mn since its extension in October with 59 thousand requests. The extensions end by 30th January 2024.

ETRS will finalize its acquisition of 99.9% of the National Transport and Overseas Services Company (NOSCO) in early 2024 due to delayed legal procedures. The acquisition was set to wrap up in 4Q23.

Market Overview 
COMI
FWRY
EFIH
TMGH
EAST

The base wage used to calculate national ins. contributions for public and private sector workers will be raised to a minimum of EGP2k and a maximum of EGP12.6k as of 1 January 2024.

The flow of traffic in the Suez Canal remains normal, authority head said.

Egypt received USD8.8 billion in external financing for the government and private sectors during 2023, compared to USD13.7 billion in 2022, a decrease of 35.7%.

Egypt's non-petroleum exports increased in 10M2023 by 5.3% YoY, to record USD29.5 billion, up from USD28 billion during the same period a year before.

ADIB BOD has approved the mandatory tender offer to purchase the free float shares of Cairo National Co for Investment and Securities (KWIN) and up to 100% for EGP10.5/share. ADIB’s current stake in the company is 89.992%. 

OIH’s net consolidated profits jumped by 59.12% over 9M23, recording EGP422.24 million, compared to EGP265.36 million over 9M22.

AIH’s general assembly approved the agreement with JAF Investment Company, to acquire 30% of both Rawaj Consumer Finance Company and UE Finance Company, for EGP30 million and EGP147 million, respectively. Moreover, selling the company’s entire stake in its subsidiary, Arab International Contracting, in exchange for removing all the debt AIH owes to it.

EXPA postpones its EGM scheduled to be held on 11 January 2024 to 16 January 2024 to discuss increasing the paid-in capital by EGP840 million to reach EGP7,441 million from EGP6,600 million by distributing 1:7.8 bonus shares financed from retained earnings and FY22 net profit.

Three bidders are competing to buy ETEL’s towers at a transaction value of USD150-250 mn, according to local press.

EGAL (FV: EGP77.75, OW) denied knowledge of an agreement, reported yesterday, that would see Emirates Global Aluminum (EGA) invest an undisclosed amount in EGAL.  

ETRS will establish a SAR10 million (USD2.7 million) limited liability company in Saudi Arabia in partnership with the kingdom’s Link Investments in 1Q24. The new entity will have initial capital of SAR500 thousands.

Weekly Commodities Update

 |   | Last Price | WoW Change, %
| Brent, USD/bbl | 76.6 | 0.9%
| Diesel-HSFO Spread, USD/ton | 353 | -3.7%
| Egypt Urea, USD/ton | 340 | -2.2%
| Polyethylene, USD/ton | 990 | 0.0%
| Polypropylene, USD/ton | 930 | 0.5%
| Steel/Iron Ore Spreads, USD/ton | 375 | 1.0%
| LME Aluminum Cash Price, USD/ton | 2,206 | 5.5%
| Egyptian Retail Cement, EGP/ton | 2,076 | 5.8%
| Steam Coal FOB Newcastle Australia, USD/ton | 145 | -3.8%
| SMP, USD/MT | 2,671 | 1.9%
| Last price may vary week over week in some indices due to time difference

Market Overview 
COMI
CIEB
ADIB
EKHO
JUFO
MCQE
HDBK
ORHD
GBCO
KABO
APSW

Prepared by: Mayada Amin- CETA, CFTe

EGAL's capital increase and revamp project trigger potential FV upgrade to EGP96.00/share

• Initial agreement on Emirates Global Aluminum (EGA) subscription to EGAL’s capital increase
• Scenario: Upside potential triggered by the transaction. There are many missing inputs and details to quantify the costs and benefits of the revamp project into our model. We are currently valuing EGAL at a FV of EGP77.75/share with an Overweight recommendation. However, we ran several assumptions to reach an estimate for the potential effect of the Revamp Project on the company’s value. After running these assumptions into our model, the new project could add another EGP18.25/share to our FV to reach EGP96.00/share.

Value of Egyptian Nitrogen Fertilizer Producers Implied by Fertiglobe Deal; EKHO stands out

ADNOC decided to acquire OCI’s 50% stake in Fertiglobe for USD3.62 billion, which values Fertiglobe at a total of USD7.24 billion in equity value. This implies an EV/ton of USD1,340 calculated using the annualized production sales volume in 2023, which is around 5.65 mn tpa. 

EKHO highest upside; MFPC still overvalued. We used the 2024f exchange rate of EGP45 to calculate the implied fair values of EGX-listed nitrogen fertilizers players. However, knowing that Fertiglobe has operations in UAE, Egypt and Algeria, we applied a 30% discount to take into consideration Egypt’s current macro challenges. In conclusion, EKHO is the only pick amongst all four stocks, based on the Fertiglobe transaction. 

Four of the world’s largest shipping firms have said that they are pausing transit through the Red Sea due to repeated attacks on shipping by Houthi groups in Yemen. 

MSME finance and consumer finance companies can now create and manage investment funds in partnership with commercial and investment banks and ins. firms.

A USD500 mn loan from the World Bank’s IBRD got the sign off from President El Sisi. The funding will be used to expand Takaful and Karama cash-based welfare programs.

Federal Reserve officials have been quick to urge caution to bullish markets that have priced in interest rate cuts as early as March. The Fed’s Atlanta President slated rate cuts for “sometime in the third quarter” of 2024 if inflation falls as expected. 

We issued this morning our Egypt Banking Sector 2024 Update, in which we discuss:

·        Sector outlook, 

·        Interbank analysis,

·        Individual bank analysis for: COMI (FV: EGP100/share, OW), CIEB (FV: EGP33.00, OW), ADIB (FV: EGP70.00, OW), SAUD (FV: EGP17.00, OW), EXPA (FV: EGP32.00/share, OW), FAIT (FV: EGP33.00/share, EW), EGBE (FV: USD0.45, OW), HDBK (FV: EGP65.00, OW), QNBA (FV: EGP55.00, OW), CANA (FV: EGP17.30, OW). Our top picks for the sector are COMI & ADIB. 

COMI has imposed further limits on the use of credit cards for FX spending, where credit card holders will only be allowed to spend EGP 7.75k worth of FX transactions a month while in Egypt, regardless of the number of credit cards they hold. The restriction went into effect on Friday.

Sarwa Insurance Company BOD, CNFN’s insurance arm, approved an increase in the company’s paid-in capital to EGP136 million (an increase of 36%). The increase, amounting to EGP36 million, was entirely financed from retained earnings. 

RAYA plans to list a stake of 30-35% of its subsidiary “Raya Information Technology” on EGX in 1H2024, according to local press.

In execution of the court ruling in December 2021, EGTS (FV: EGP1.68, EW) paid USD5.7 million (EGP0.17/share) to Trans Mediterranean for Tourism Investments in relation to a canceled land sale contract.

Market Overview