Pre-Trading Thoughts

Al Ahly Pharos

-Egyptian Banks: Love at the time of macro challenges. Egyptian banks are delivering ROEs north of 20%, and most of them are trading below book values. Most banks that got acquired in Egypt recently witnessed transaction multiples that are double those seen amongst listed banks. Treasury investments will present a good opportunity to park excess liquidity, and the high-interest rate environment will serve NIMs and push them higher. ADIB, CIEB, CANA, SAUD, HDBK, along with COMI of course that continues to be cheap.

-Government sale of assets and the real estate sector steal the show. High focus went from the market to the stocks where the government intends to sell assets including HELI, EGAL, AMOC, SKPC, HDBK, EFIH, MNHD, ABUK, & ALCN.

-Damietta and Postsaid Containers Handling (DCH, PCH) are also ready to be sold to a strategic investor within weeks. FV of CSAG is around EGP22.00-26.60, based on P/E 22/23 transaction multiple of 10.0-12.0x.

- EGP held steady against the USD yesterday, settling at 29.63/USD.

-Yesterday’s treasury auction of three-month bills was more than 10x oversubscribed, ultimately selling EGP 87.1 bn worth of bills at a weighted average yield of 20.52%.

-Finance Ministry has issued the amended executive regulations for the VAT Act, which contain new targeted tax breaks designed to support manufacturing and boost exports.

-Federation of Chambers of Commerce estimated the volume of goods that are still in the ports at the present time at about USD5.4 billion.

PP Unit stated that the consortia qualified for the tender of the construction of the EGP3.5 billion dry port and a logistics center at the 10th of Ramadan should start submitting their technical and financial bids on April 30. The list of competing alliances includes the French “SWDY-CMA”, the French “Bolluret-Miriam”, “ORAS - Abu Dhabi Ports.”

-PPP Unit started that 28 international consortia submitted their documents to qualify for the tender of the construction of 17 water desalination plants.

-Chevron and Eni have made a significant gas discovery in the Eastern Mediterranean. Media states that the field has been estimated to hold 3.5 trn cubic feet of gas.

-EU will impose a ban on imports of Russian diesel, jet fuel, and other oil products starting February 5, while the G7 also plans to implement price caps on those products.

-Negotiations between the Holding Company for Construction and Development (HELI's major shareholder) and Gulf companies and funds include partnering on the Heliopark project.

-ETRS confirmed that the company is still studying the acquisition of the National Company for Transport and High Seas Services “NOSCO”, and the deal is planned to be completed in 1Q23.

-Price of some meds could increase by 20-25% by the end of February after around 50-60 medicine manufacturers submitted requests to the Egyptian Drug Authority to increase prices, to offset currency weakness.

-CLHO plans to spend around EGP3.0 billion over the coming six years on the development of 4 hospitals, according to local press.

-MNOs are in discussions with the National Telecom Regulatory Authority (NTRA) to increase prices of telecom services, after a hike of around 40% in costs on currency weakness.

-Egyptian Poultry Association requested from The Holding Company for Food Production to raise the poultry selling prices from the current EGP62/Kg to a new EGP82/Kg amidst the rise in market prices and production costs.

-House Economic Affairs Committee began its discussion of the Unified Insurance Act yesterday, which was approved by the Senate last April.