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Pre-Trading Thoughts 31/5/2002

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MSCI EM Index rebalancing execution will be today, where COMI’s FF goes down, HRHO replaces FWRY in the standard index, EFIH and FWRY get included in Small Cap Index, and PHDC and HELI get excluded.  

NBE and BM stop offering the 18% one-year CDs, after collecting EGP750 billion into the product and offer a three-year replacement for 14%. 

The Financial Supervisory Authority plans to bring the market capitalization of the Egyptian Stock Exchange to EGP1.6 trillion by 2026, supported by the listing of government and private companies during the coming period. 

The budget deficit declined to 5.17% of GDP during the first ten months of the current fiscal year, compared to 5.48% during the same period of the last fiscal year.  

Egypt aims to achieve natural gas exports of 3.5-4.0 million tons by the end of 2022, in light of the increase in natural gas production from new fields, and the full operations of the Damietta and Idku plants. Egyptian natural gas exports amounted to nearly 1.9 million tons during the first quarter of 2022.

Prime Minister will head a new ministerial committee to shore up competition policy and ensure all businesses are playing on a level field. 

EFIH reported positive 1Q22 net profit at EGP200.3 million in 1Q22 (+40.0% YoY, +43.7% QoQ), implying a margin of 35.8% (+4.9pps YoY). Bottom-line performance is attributed to revenue growth, healthy margins, and interest income. EFIH is currently trading at 2022f P/E of 37.5x and EV/ EBITDA of 26.8x. 

ETEL reported neutral 1Q22 net profit came in at EGP1.37 billion in 1Q22 (-35.7% YoY, -41.2% QoQ); noting a a decline of 67% YoY and 69% QoQ in investment income from Vodafone to stand at EGP317 million in 1Q22, compared to EGP952 million in 1Q21 and EGP1.02 billion in 4Q21, mainly on the back of Vodafone recognizing FX loss of EGP222 million,  Telecom Egypt is currently trading at 2022f P/E of 3.8x and EV/Adjusted EBITDA of 2.2x. 

Telecom Egypt and Mobily announced the signing of a strategic MoU to build the first direct bilateral submarine cable system linking the Kingdom of Saudi Arabia with Egypt. No further details are currently available.

Several merchants and distributors of mobile phones have reportedly been imposing an unofficial increase on mobile phone prices, in light of supply shortages. Brands that witnessed an increase in prices include Samsung, Oppo, Xiaomi, Realme, and OnePlus.

DOMT released strong 1Q22 net profit at EGP51 mn, compared to net losses of EGP3 mn in 1Q21 and a net profit of EGP53 mn in 4Q21. Revenues recorded EGP1,122 mn, a hike of 73.4% YoY and 3.2% YoY. We believe the phasing out of agents and the ability to pass on price increases to end consumers played a large role in such a hike in sales. GPM is 24%. DOMT is currently trading at a FY22 P/E of 6.7x and an EV/EBITDA of 6.3x.

MFPC issued positive bottom line at EGP2.090 billion compared to EGP1.272 billion in 4Q21 and EGP793 million in 1Q21 (+64% QoQ, +164% YoY). MFPC is currently trading at 2022 P/E of 3.8x and EV/EBITDA of 2.4x.

PACH issued recovering results for 3QFY21/22 with bottom line at EGP11.94 million compared to a net loss of EGP14.48 million in 2QFY20/21 and a net profit of EGP14.50 million in 3QFY20/21. Valuation continues to be driven by the land plot sale rather than operational DCF value. 

ORAS subsidiary Suez Industrial Development Company (SIDC) has signed preliminary agreements with three Indian investors to build three factories in SIDC’s industrial park in Ain Sokhna (pressure vessels used in pipes, packaging materials, and petrochemical sector).

MBSC released stable results for 1Q22 with earnings recorded EGP48 million in 1Q22 (+27% YoY, -44% QoQ). The YoY surge in bottom line was backed mainly by price rallies despite lower margins realized. MBSC is currently trading at FY22e P/E of 9.6x, EV/EBITDA of 4.8x and EV/ton of EGP384.

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