*Key news articles for today*

Suez Canal Authority amends and extends passage fees reductions for chemicals, petroleum products and LNG vessels until 30 June 2024.

The Federal Reserve on Wednesday held its key interest rate steady for the third straight time and set the table for multiple cuts to come in 2024 and beyond.

We issued this morning our Egypt Consumer Sector 2024 Update, in which we discus sector outlook, intercompany analysis, upside triggers, downside risks, and individual company analysis for EFID (FV: EGP40.30/share, OW), JUFO (FV: EGP27.09, OW), DOMT (FV: EGP13.42, OW), OLFI (FV: EGP15.00, OW), POUL (FV: EGP12.68/share, OW), SUGR (FV: EGP98/share, OW), ORWE (FV: EGP23.42, OW), GBCO (FV: EGP12.86, OW), and DSCW (FV: EGP1.11, OW). Our top picks for the sector are EFID & ORWE. For further details please refer to our report published this morning. 

We upgraded our fair value for ESRS to EGP97.02/share and maintained our Overweight recommendation. ESRS is currently trading at FY24e P/E of 1.6x and EV/EBITDA of 2.0x.

BINV to acquire up to 90% of OFH (swap ratio of 1 BINV share: 56.76 OFH shares).

BINV approved to extend a convertible shareholder loan to its subsidiary, Gourmet Egypt with a total value of EGP100 mn. Moreover, the board approved to sign a loan agreement with the National Bank of Kuwait for a total amount of EGP100 mn.

ALCN expects to handle 860 thousand containers in FY23/24, compared to 831 thousand containers in FY22/23, with revenues of EGP5.3 billion and net profit of EGP4.7 billion in FY23/24, implying NPM of 88.7%, according to local press.

The government is planning to launch a pilot phase for a proposed mandatory carbon market in 1Q2024. 
 A consortium led by the Saudi Public Investment Fund (PIF)-backed ADES Holding was awarded a 10-year contract to operate and ramp up oil production at maturing fields operated by Suez Oil Company and Offshore Shukeir Oil Company.

Market Overview 
EKHO
EMFD
HELI
ESRS
ORHD
ACGC
ALCN
CCAP
DOMT
EGAS


Prepared by: Mayada Amin - CETA , CFTe

The Fed will conclude its two-day meeting today, expected to leave interest rates where they are in December in response to signs that inflation continues to slow.

The government is considering granting a golden license to investors in the healthcare sector, in an attempt to facilitate the work of private companies.

Minister of Supply revealed Egypt’s reserve stock of some strategic commodities, including oils, which cover 6 months, and sugar that covers 7.8 months.

Oil prices plummeted as much as 4% yesterday on the back of the CPI data and continued concerns about oversupply. Brent futures closed 3.7% lower at USD73.24/bbl, the lowest level in six months. 

The Egyptian Soda Ash Company is in talks with a syndicate of local and international banks for USD450 million, which would fund the construction of the planned complex in New Alamein. The complex is estimated to cost a total of USD685 million to build and have an annual capacity of 600k tons. Construction is expected to get underway sometime in 2024 and take three years to complete.

MOIL released 9M23 unaudited financial indicators posting a 73% YoY growth in consolidated revenues to USD132 million. Net profit recorded USD29 million, compared to a net loss of the same amount in 9M22.

GBCO’s auto arm, GB Auto, is on its way to assemble Hyundai Elentra AD locally. The assembly is expected to take place by 1Q24.

EBRD is reportedly considering a USD150 mn loan to the CIB for on-lending to SMEs and environment-friendly projects. The National Bank of Egypt was also in talks with the lender for a USD50 mn loan to finance SMEs’ agricultural projects.

The “Vortex 4” fund - affiliated with Vortex Energy, owned by EFG Holding Group - has opened the subscription door to raise USD300 million in the second closing of the fund. It is expected that the closing will be completed before the end of 2023, and the size of the fund will exceed USD500 million.

RAYA acquired EGBE’s stake (27.69%) in Ostool, bringing its stake in Ostool to 90%, up from 62%.

ARCC’s (FV: EGP13.01, OW) general assembly approved a cash dividend distribution of EGP0.262/share for FY22, bringing total cash dividend distributions for the year to EGP0.922/share. This implies a payout ratio of 97% and a dividend yield of 9.8%.

China’s Hainan Airlines is planning to return to Egypt after over a decade of absence with three weekly Cairo-Shenzhen flights starting 21 January 2024. 

Market Overview 
ARAB
EKHO
EKHOA
DOMT
SPMD



Prepared by: Mayada Amin- CETA, CFTe

 The Sovereign Fund of Egypt (SFE) is gearing up for new sales of state-owned companies in 1Q24. The privatization program will expand to include companies working in the infrastructure and financial services sectors.

Two of five LNG shipments destined for Europe are being prepared to leave Egypt within a week, government officials have reportedly said. The Oil Ministry plans to export all five shipments before the end of 2023.

Private-sector workers on the minimum wage will get a salary bump from the beginning of 2024. From 1 January, the minimum wage will rise 17% to EGP3.5k a month (before taxes and social insurance deductions) from EGP3k currently.

The government has turned to its strategic sugar reserves in a bid to put a lid on soaring prices, a government source said. The Supply Ministry will dump 240k tonnes into the market this month to fill the supply gap to reduce the volatility, which has continued despite a raft of measures put in place by the government to restore calm.

Canadian gold miner Aton Resources plans to start extracting gold from its Abu Marawat concession in the Eastern Desert by 2025. The Egypt-focused firm will secure a production license this month.

Brazil is showing interest in investing in logistics and green energy projects in the Suez Canal Economic Zone.

The government has sought help from the World Bank to launch a mandatory market for carbon certificates, and the bank will help in establishing and transferring the necessary expertise to establish the market.

ESRS reported consolidated results for 3Q23 with revenues soaring to EGP40.1 billion (+85% YoY, +19% QoQ), bringing 9M23 top-line to EGP103.2 billion (+70% YoY). Attributable net loss came in at EGP509 million in 3Q23, reversing last quarter profits of EGP1.0 billion and 3Q22 profits of EGP1.1 billion. This led to negative earnings of EGP1.2 billion in 9M23 vs. a positive figure of EGP3.7 billion in 9M22. ESRS’s P&L was significantly hit by a forex loss of EGP10.8 billion during the quarter, bringing 9M23 forex loss to EGP23.9 billion. ESRS is currently trading at FY24e PE of 4.8x.

LCSW’s AGM agreed to distribute 3.2 million treasury shares to the company’s shareholders as free shares, implying 0.04 share for each original share held.

Market overview 
COMI
FWRY
PHDC
ORHD




Prepared by: Mayada Amin- CETA, CFTe

Annual urban inflation rate declined further in November to 34.6% from 35.8% in October, while monthly inflation accelerated to 1.3% in November from 1% the month before.

Core inflation fell to 35.9% YoY in November from 38.1% the month prior. Meanwhile, monthly core inflation fell to 1% from 1.8%.

All businesses pricing goods and services in foreign currency will now have to settle their VAT dues in FX after the Finance Ministry scrapped a rule that would have allowed them to pay in EGP.

Egypt plans to totally liberate the natural gas market within the coming 3-5 years, allowing private sector companies to import natural gas for themselves or for third parties. The tariff for natural gas imports will be set by the Gas Regulatory Authority.

Egypt's imports of Israeli gas jumped by 52% YoY during the 9M2023, to record 236.6 billion cubic feet, despite the fact that Israeli gas exports were affected by the aggression on the Gaza Strip.

HELI (FV: EGP18.84, OW) signed the co-development agreement with MG Development on 77 feddans in New Heliopolis whereby HELI, as landowner, is entitled to a 32.1% revenue share amounting to EGP3.4 billion over 14 years. This is positive given the 32.1% revenue share to the landowner is higher than the industry average of 30.0%. 

MCQE (FV: EGP22.36, EW) confirmed, in a release sent to EGX, not receiving any official notice regarding the National Investment Bank’s (NIB) reported plan to exit the company and sell its 10% stake in MCQE to a private-sector investor.

Sugar prices dropped by EGP3,000/ton to record EGP43,000/ton due to the increase in supply in the market.

Weekly Commodities Update

 |   | Last Price | WoW Change, %
| Brent, USD/bbl | 75.8 | -3.9%
| Diesel-HSFO Spread, USD/ton | 366 | -5.4%
| Egypt Urea, USD/ton | 348 | -2.1%
| Polyethylene, USD/ton | 990 | 0.0%
| Polypropylene, USD/ton | 925 | 0.0%
| Steel/Iron Ore Spreads, USD/ton | 374 | 5.0%
| LME Aluminum Cash Price, USD/ton | 2,092 | -3.7%
| Egyptian Retail Cement, EGP/ton | 1,963 | -1.4%
| Steam Coal FOB Newcastle Australia, USD/ton | 151 | 13.1%
| SMP, USD/MT | 2,671 | 1.9%
| Last price may vary week over week in some indices due to time difference

Market Overview 




Prepared by: Mayada Amin - CETA, CFTe

The international reserves at the CBE inched up by USD71 million to record USD35.17 billion in November.

The Managing Director of the IMF expects the fund to increase the value of the loan provided to Egypt due to the impact of external factors on its economy. 

The Emirati energy company Mubadala is seeking to inject new investments in Egypt. The new investments will be in energy and decarbonization projects.

The government raised the estimated subsidies for petroleum products in FY2023/2024 by about 9% to EGP130 billion, due to higher cost of petroleum products amid higher FX.

The National Investment Bank (NIB), which hold a 9.57% stake in MCQE (FV: EGP22.36, EW), plans to exit the company through an offering on the Egyptian Exchange, according to local press.

Kima is currently negotiating with a consortium of local banks to borrow EGP4 billion to restructure and develop the company's factory in Aswan. The loan will include a foreign currency tranche. 

SKPC’s BoD approved 2024 capital budget with EGP2,794 million, which include the contribution to the capital of the Egyptian BioEthanol Company (EBIOL) and contributing to the joint project to establish a Combined Heat & Power (CHP) project with EBIOL.

ABUK sent a release regarding the study of the proposal to increase ABUK’s share in Alexfert with the value of the land plot owned by ABUK and rented to Alexfert (where the company is located). The BoD decided on continuing to rent the land to Alexfert instead of converting it to an in-kind contribution in the latter’s capital.

The FRA has introduced a group of regulatory changes aiming to minimize risks in the financial system. 

BTFH’s leasing and factoring arm has a new leasing agreement worth EGP480 million with a subsidiary of TBS Holding. 

Sarwa Insurance, CNFN’s arm is planning to bring its paid in capital to EGP250 million over 2024, up from EGP100 million. The increase will support the company’s expansion plans over the next 5 years and will support the capital position as per the new insurance law.

B Healthcare Investments Company is planning to acquire medical centers specializing in reproductive health in 2024. 

Five international firms have reportedly qualified for a USD400 million tender to install the signaling and control systems for the Cairo-Alexandria freight railway bypass. 

Market Overview 
COMI
CIEB
HRHO
EKHOA
BINV
FWRY
EAST
ABUK