Egypt’s trade deficit increased by 10.3% to reach USD3.24 billion in September compared to USD2.84 billion in the same month last year.

The government is looking to wrap up the Wataniya stake sale within a month or two maximum, Planning Minister Hala El Said said.

The government raised the estimated subsidies for petroleum products in FY 2023/2024 by about 9% to EGP130 billion, due to new higher oil price assumptions.

The head of the General Authority for the Suez Canal Economic Zone said that the authority has attracted investments amounting to about USD4.6 billion, adding that there are new investment incentives expected to be announced.

HRHO completes exit from Jordan, in line with the bank’s effort to simplify operations, re-direct resources and improve return on equity. 

MTIE denied what was circulated by local press on the existence of GCC interest to acquire a stake in the company at a price between EGP8-9 per share.

EGAL (FV: EGP77.75, OW) denied any relation to Ain Sokhna aluminum plant. 

Steel scrap prices surged by EGP1,500/ton this week to range between EGP24k-25k/ton on higher demand due to difficulties in importing iron ore, according to local media.

According to a provisional ownership structure published yesterday by PHAR, ACDIMA will own a 60% stake in arab API company, its subsidiary PHAR will own 30%, and the Suez Canal Economic Zone (SCZone) will own 10%. The final shareholder structure could change after the completion of ongoing feasibility studies.

Two unnamed US based companies are negotiating with the government to establish pharmaceuticals factories in Egypt and expected to begin operations by next year.

HELI (FV: EGP18.84, OW) rejected the offers submitted by investors to rent HELI's 11k sqm Ghernata land plot.

Oil prices fell for the fifth day running yesterday, as bearish market sentiment continued despite some OPEC+ members agreeing to voluntarily reduce output last week. Brent futures tumbled almost 4% to USD74.24/bbl, its lowest level since June on concerns about global demand.

SKPC called for a BoD meeting yesterday to discuss 2024 investment budget, participating in the capital of the Egyptian Bioethanol Company (EBIOL), and the participation in establishing the combined heat and power (CHP) project with EBIOL.

Market Overview 

CAPMAS is expected to release inflation figures for November on Sunday, 10 December. We expect annual urban inflation to cool further to c.34% YoY benefiting from the accommodative base effect.

Egypt's PMI rose to 48.4 in November from 47.9 in October indicating a modest decline in the health of the non-oil private sector. Besides, business confidence fell to lowest level in series history.

The Suez Canal Authority achieved revenues of USD9.492 billion during 11M2023, an increase of 31% YoY compared to revenues for the same period in 2022, which amounted to USD7.201 billion.

The Sovereign Fund of Egypt (SFE) has appointed Belgium-headquartered engineering and consultancy firm Tractebel to act as a consultant for the sale of stakes in the state-owned 580-MW Gabal El Zeit and 545-MW Zafarana wind farms.

The gap between diesel production and consumption widened by about 46% during 9M2023, to reach 3.4 million tons, compared to 2.3 million tons during the same period in 2022.

UAE-based energy company K&K Group has signed an MoU on the sidelines of COP28 with Italian energy and engineering consultancy firm CESI for the development of a subsea electricity link connecting Egypt to Italy, the companies said. The proposed 3 GW link would ship power generated by renewable energy in Egypt to across the Med, accounting for 5% of Italy’s peak electricity demand.

Benchmark Power International is negotiating with the African Export-Import Bank and its Chinese counterpart to arrange financing of about USD600 million in several tranches to establish a green ammonia production project in Suez, Egypt.

We updated our FV for EGCH to EGP8.25/share, with an Underweight recommendation. Our value does not include the company’s future project in Aswan. EGCH is currently trading at a FY23/24e P/E of 11.3x.

ABUK sent a release announcing that the company’s share in North Abu Qir for Agricultural Nutrients Company is 45% and that the studies are underway to transform it into a green project through a contract to supply green hydrogen to produce green ammonia and ammonium nitrate. 

ETEL (FV: EGP45.00, OW) released its guidance for 2024: Mid-double-digit revenue growth, compared to our estimates of 26.5% in 2024f. ETEL is currently trading at 2024f P/E of 5.0x.

Engazaat joined forces with EFIH’s subsidiary eAswaaq and NBE to sign an agreement to offer small farmers financing for solar energy and smart irrigation systems. 

GB Corp’s subsidiary Drive has completed its fourth securitized bond offering with an amount of EGP 1.4 billion. Proceeds from the transaction will be used to deleverage Drive’s balance sheet to improve its liquidity position, create new borrowing limits with lender banks and support the company’s future growth plans.

BTFH has signed a letter of intent to acquire real estate developer SODIC’s licensed securitization subsidiary.

In other news, the company’s leasing and factoring arm has inked a EGP200 mn factoring agreement with local medical equipment and services provider, EGMED. This marks the first factoring agreement for the company. 

British multinational lender Standard Chartered Egypt will begin operations early 2024, according to Finance Minister Mohamed Maait.

Arab Sovereign Funds are negotiating with ACDIMA to acquire 20% of the Arab API company, which is scheduled to be established in the coming days. Arab API shareholder structure will be as follows:ACDIMA 50%,PHAR 20%, Pharco Pharmaceuticals 10%, and the remaining 20% will be for Arab entities.

The government is currently studying implying a sugar export ban for free zone companies. Free zone companies used to import sugar at global prices, yet after the disruption caused by covid they started using local sugar. This move comes as an attempt to bring sugar prices down and make it available in the local market. 

Market overview 
COMI
ACGC
ARAB 
EDBM
EFIH
OIH
GBCO

The Finance Ministry is looking to raise USD500 million in a bond issuance in India in 2024, Minister said. The bond would be denominated in INR. 

The tax revenue on the Suez Canal Authority’s income during 1Q23/24 increased by 151.6% to EGP21.4 billion.

The CBE is currently negotiating with the UAE to roll over a USD3 billion deposit, due current December.

The African Finance Corporation aims to pump investments worth more than USD1 billion into mega projects in the Egyptian market during the coming period.

From COP28: Six major oil players, including BP, Eni, and Total Energies, each pledged USD25 million for a new fund that will help oil companies across developing countries bring down their methane emissions.

 We published our 3Q23 Cement Wrap Up and Valuation Updates report today, where:

•We upgraded our FV for ARCC to EGP13.01/share up from EGP9.94/share and maintain our Overweight recommendation for the stock.

•We upgraded our FV for MCQE to EGP22.36/share up from EGP15.18/share and maintain our Equalweight recommendation for the stock.

•We upgraded our FV for MBSC to EGP44.17/share up from EGP25.73/share and maintain our Equalweight recommendation for the stock.

SWDY (FV: EGP34.96, OW) signed a MoU with Indonesian state electricity distributor PT PLN (Persero) to help the Indonesian government link its new renewable energy generators with the national electricity grid.

SWDY's subsidiary, Elsewedy Industrial Development, and Futurefert inked the land allocation agreement to set up a USD50 million fertilizer complex in Elsewedy’s Sokhna 360 industrial zone.

Also, Elsewedy Industrial Development awarded the Chinese fiberglass manufacturer Jushi a 60k-sqm plot in its Industrial Sokhna project located in the TEDA zone to expand its factory in China’s TEDA trade zone with investments of USD8 million.

We upgraded our FV for MFPC to EGP387/share. Our FV takes into account the following:

•Updated macro assumptions (FX rates, interest rates, and inflation).

•Global Urea prices outlook.

•Those yielded a FV/share of EGP261.50/share.

•We also included some of the company’s future plans like the revamp and melamine project.

MFPC is currently trading at 2024f P/E of 15.2x and EV/EBITDA of 10.4x.

A consortium, which includes Helwan Fertilizers, ABUK, and Al Ahly Capital Holding, now have their eyes on a green ammonia project. The proposed project would require USD1.2 billion of investment, 70% of which would be financed by bank loans and the remainder from the companies’ cash reserves.

The Sovereign Fund of Egypt will announce new partnerships on the green ammonia front during COP28, be it through already existing green plants or greening existing ammonia plants, CEO Ayman Soliman said.

PHDC (FV: EGP5.59, OW) signed an agreement with Marriott International to develop a new hotel, the Ritz-Carlton Palm Hills, in PHDC’s Palmet project in West Cairo. The hotel’s investment cost is estimated at EGP4.0 billion.

MHOT declared 1:1 stock dividends. Record date is 20 Dec 2023. Distribution date is 21 Dec 2023.

BTFH has applied to the FRA for initial approval to set up an SME-focused lender. The firm would be set up with a EGP250 million in capital. 

The International Finance Corporation (IFC) has agreed to lend USD50 million in sharia-compliant financing to SAUD to finance MSMEs. 

ValU will provide financing plans allowing people to purchase vaccines from GlaxoSmithKline (GSK) under an agreement signed by the two firms.

The Supply Ministry has poured 50k tons of sugar into the local market to be sold at EGP27/kg in an effort to stabilize the market

According to local media, GB Capital's subsidiaries will be issuing securtitization bonds of EGP8.5 billion by the end of 2023.

Market Overview 
COMI
ADIB
HDBK
CCAP
SWDY
FWRY
TMGH
HELI


Prepared by: Mayada Amin, CETA,  CFTe

Budget deficit widened to 3.9% of GDP in 1Q FY 2023-24 from 2.1% a year earlier, largely due to the government’s spiraling interest bill.

The government has downgraded its growth forecast for the current fiscal year to 3.5% down from the previous 4.2% forecast made last month.

The IMF will move forward with Egypt’s USD3 billion loan program “soon". The Fund’s Managing Director Kristalina added on another note that that the IMF will very likely scale up Egypt’s current loan program due to the additional burden posed by the war in Gaza.

Norwegian renewables developer Scatec has inked a USD1.1 billion green methanol MoU with the Suez Canal Economic Zone (SCZone). 

The government is looking to offload a stake in the military’s Chill Out fuel retailer. The process will begin after the government concludes the sale of Wataniya which, according to the Minister, will take several more weeks to close.

Officials are mulling the sale of EGP8 billion worth of real estate assets to investors in 1Q 2024. HELI is among the state-run companies investors are looking at.

The government reportedly intends to offer a 31% stake in the Upper Egypt Tourism and Real Estate Development Company to the private sector, and that international investors have expressed interest in acquiring the stake.

Kima is planning to arrange for the advance payment to establish the nitric acid and ammonium nitrate project before the end of December. The project will cost EGP1 billion as well as USD280 million. The down payment amounts to 20% of the EGP sum in addition to 25% of the USD amount, according to local press.

Benchmark Power International (BPI) will set up a USD1 billion green ammonia plant in Suez, which will produce 183 tons of green hydrogen a day to produce 1k tons of green ammonia.

Weekly Commodities Update

 |   | Last Price | WoW Change, %
| Brent, USD/bbl | 78.9 | -2.1%
| Diesel-HSFO Spread, USD/ton | 387 | -8.9%
| Egypt Urea, USD/ton | 355 | -11.3%
| Polyethylene, USD/ton | 990 | 0.0%
| Polypropylene, USD/ton | 925 | -1.1%
| Steel/Iron Ore Spreads, USD/ton | 357 | 3.0%
| LME Aluminum Cash Price, USD/ton | 2,172 | -0.2%
| Egyptian Retail Cement, EGP/ton | 1,990 | -1.2%
| Steam Coal FOB Newcastle Australia, USD/ton | 134 | 9.4%
| SMP, USD/MT | 2,622 | -3.7%
| Last price may vary week over week in some indices due to time difference

Market Overview 
COMI
HRHO
CCAP
EGIH

Egypt has USD42.3 billion in foreign debt repayments in 2024, including interest payments.

According to CBE data, Kuwait has rolled over a total of USD4 billion deposits. Also, the data shows a rollover of a USD1 billion UAE deposit.

China-based chemicals manufacturer Befar Group could build a USD2 billion industrial complex for producing specialty chemicals in East Port Said under a letter of intent inked with the SCZone last week.

Norwegian renewables developer Scatec will establish a 1-GW solar and 200-MWh battery storage project in Egypt, under an agreement signed with the Egyptian Electricity Holding Company (EEHC).

Egypt will ink some USD270 million worth of projects aimed at slashing the industrial sector’s carbon emissions, Environment Minister Yasmine Fouad said.

The Ministry of Finance will request the expansion of the use of green sovereign financing in financing projects that reduce carbon emissions. 

Cabinet approved an MoU that will allow China Electric Power Equipment and Technology — a subsidiary of Chinese state-owned electric utility corporation State Grid — to begin its feasibility studies on a proposed 10-GW solar energy project.

Five countries and the EU committed financing a combined USD420 million to the loss and damage fund, helping developing nations in their fight against climate change. Funds could start rolling out as soon as 1Q24.

We upgraded our fair value for ORAS to EGP233.65/share up from EGP192.45/share, and maintain our Overweight recommendation for the stock.  ORAS is currently trading at FY24e P/E of 11.4x and EV/EBITDA of 3.2x. 

Net foreign banking system assets deficit amounted to USD27.12 billion in October, recording an increase of 1.2% on a monthly basis. 

FAIT (FV: EGP33.00, EW) 3Q23 consolidated bottom line recorded EGP863 million (+61% y/y, +12% q/q), bringing 9M23 bottom line to EGP3.9 billion (+48% y/y). We issued an Equalweight recommendation on FAIT on an updated FV of EGP33.00/share. The stock is currently trading at P/B24 of 0.8x and P/E23 of 8.1x.

The African Development Bank (AfDB) has approved a USD148 million financial package for COMI, which will be used to on-lend its clients and strengthen its capital position. 

Naguib Sawiris is planning to invest at least USD120 million in a project that aims to replace motorcycles’ and tuk-tuks’ traditional combustion engines with electric motors. The plan will be carried out through the e-mobility startup BlueEV, under an investment agreement signed with OIH earlier this year.

CCAP’s TAQA is set to submit a binding offer to purchase an unspecified number of fuel stations from military-owned fuel retailer Wataniya after Taqa’s board approved the decision on Wednesday. 

Several OPEC+ countries agreed on Thursday to make deeper voluntary supply cuts in a bid to stabilize the markets. 

Real estate developers are in discussion with the government over incentives for Egyptian expats and foreigners who opt to pay in foreign currency to purchase properties in Egypt from private-sector developers.

AMIC released its report for October showing personal cars sales of 6,970 units (+14.7% YoY, -11.6% MoM).

The head of Pharmaceutical Industry Chamber of the Federation of Egyptian Industries stated that Egypt released only 30% of raw materials needs for pharmaceutical companies this year and the remaining quantity accumulated in the ports was not entered due to the shortage of foreign currency. This led to a decline of 40% in production capacities of pharmaceutical factories and a shortage of medicines in the market by 30-40% in 2023, according to local media.

Market Overview 
COMI
EHDR
HRHO
FWRY
MASR
ORHD
JUFO



prepared by: Mayada Amin - CERA, CFTe