Pre-Trading Thoughts

Al Ahly Pharos

A delegation from the EGX, the Central Bank of Egypt, and the Financial Regulatory Authority (FRA) wrapped up on Friday the week-long roadshow in Riyadh, Abu Dhabi, and Dubai where they met with 20 investment funds and institutions to raise interest in the government’s privatization program.

EBRD is expecting the domestic economy to grow at 4.3% in FY22/23 and 5.0% in FY23/24, on the back of higher commodity prices, lower investor sentiment, higher borrowing costs and greater pressure on external accounts.

A delegation from the Japan Overseas Infrastructure Investment Corporation (JOIN) will soon visit the SCZone to explore potential investments.

EFIH recorded net profits of EGP810 million, an increase of 55.8% YoY; driven by solid revenue growth of 34.7% YoY and margin expansion. EFIH is currently trading at 2023f P/E of 30.9x and EV/EBITDA of 20.2x.

We upgraded our fair value for EGAL to EGP39.53/share up from EGP28.70/share yet maintain an Equalweight recommendation, on the back of: 1. Better-than-expected financial results for 1H22/23 mainly on currency depreciation and decent margins, 2. A moderate, yet healthy, annual growth in global aluminum cash price, 3. Boosted revenues and margins trickle down to bottom-line, and 4. Elevated electricity tariff starting 2025/26 with an annual increase of 20%. EGAL is currently trading at attractive multiples; FY22/23e P/E of 3.2x and EV/EBITDA of 2.2x.

EFIC recorded bottom line of EGP130 million (-4% YoY, +17% QoQ). FY2022 bottom line recorded EGP756 million, up by 149% YoY. EFIC is currently trading at 2023 P/E of 7.7x and EV/EBITDA of 5.2x.

Italy’s Intesa Sanpaolo is in advanced talks with the government to acquire the remaining final 20% of the Bank of Alexandria (Alexbank) it doesn’t own. Alexbank achieved 9M22 net profit of EGP2.0 bn and book value of EGP14.2 bn, which puts the valuation of the bank at EGP22-32 bn, based on recent banking transaction multiples in Egypt.

The CBE approved the request of ABC Bank to acquire BLOM Bank Egypt, taking into consideration the rights of employees of the merged banks. August 2021 witnessed ABC Bank acquire 99.5% of Blom Bank in Egypt, in a deal worth USD425 million (EGP6.7 bn) translating to EGP22.32 per share in 2021, implying a P/E21 of 19.7x and P/B21 of 1.3x.

The Nuclear Power Plants Authority is studying, with Russia's Rosatom, approving the participation of SWDY and ORAS in Dabaa Nuclear plant.

The Cabinet has approved a two-month extension to its expat car-for-FX scheme.

The Cabinet may raise local wheat procurement prices again, in response to many senators calling for higher purchase prices to encourage increased production.