EUR 127.97 For Business Accounts Only

CI Capital 3rd Annual MENA Investor Conference | Macro and corporates meeting highlights

Egypt officials guide positive signals. Private sector empowerment, financial inclusion, infrastructure, and social development are key priorities. Monetary and fiscal balances will remain beyond the IMF programme, to ensure sustainable growth. Lower oil prices will help consolidation in FY18/19, while higher export growth, remittances, and tourism will minimise pressures on FX. Gradual import substitution should unlock export growth, allowed by new industrial zones in the pipeline. Restructuring of government-owned assets and the IPO programme will resume in 2019, and the delayed IMF loan disbursement is expected soon. 

Egypt banks foresee intact profitability; Trends normalising for real estate developers. Bank lending should mainly be driven by working capital in 2019. The MoF’s assertion of proactive application of the new tax treatment defers its full impact to 2020. IFRS 9 effect is likely mitigated, supported by high provisioning and the 1% of 2017 RWA buffer. Trends for real estate developers are normalising; price increases are guided at a slight premium to inflation for the most part during 2019, with payment terms stabilising. Offering commercial space for sale is on several developers’ agendas, in an attempt to capitalise on the growth seen in the residential space over the past years. Expansion into governorates is another common theme.

Bullish on urea; Transport growing at a cost; Building materials under pressure; Rising oil & gas investments. Egyptian fertiliser producers are poised to capitalise on rising global urea prices and, accordingly, margin outlook and growth prospects. Regional transport companies see volume growth, albeit with pricing and margin pressures. Egypt building materials are pressured by heavy oversupply, high interest rates, and trade barriers. Oil & gas companies benefit from the recent oil price movement and plans to boost investments in regional exploration and production.

Expanding product offering for Egypt’s consumers and telcos; GCC focused on restructuring and consolidation. Across Egypt’s consumers, sustained volume recovery, and margin expansion on scale, were a commonality. With ongoing macro challenges, Saudi players remain fixated on growing the top line, on expansions and market share gains, while trimming costs. Mezzan is not out of the woods yet, with Qatar’s water oversupply, energy drinks’ struggle in the UAE, and Saudi’s lingering turnaround. Mouwasat (our top pick in Saudi healthcare) is confident of posting 10% NP growth in 2019 and growth in Egypt’s healthcare names will remain boosted by expansions. Telecom Egypt (TE), Raya Contact Center, and Mobily highlighted expansions along with margin management as the key areas of focus in 2019.