reports
- Dalia Bonna
HRHO: 2Q22 – Weaker than expected quarterly profits on high opex and l...
A SURGE IN OPEX WIPES OUT SEQUENTIAL GROWTH AND DRAGS DOWN ANNUAL PROFITS ALONG WITH LOWER HOLDING AND TREASURY REVENUES HRHO 2Q22 net profit after tax and minority interest came in at EGP 344 million (0% q/q, -15% y/y, and 11% lower than our estimates of EGP 386 million) so that 1H22 reaches EGP689 million (-1% y/y). Sequential growth of revenues (+16% q/q) mainly from aibank (+28% q/q) and IB platform (+10% q/q), driven by revenues from IB activity (+25% q/q). Such growth however was comple...
- Dalia Bonna
HRHO: 1Q22| Quarterly profits mainly supported by aiBank profits
Annual growth witnessed in most business lines despite higher OPEX and taxes; Sequential decline driven by lower IB operating revenue and higher taxes coupled with a surge in NBFI OPEX 1Q22 group attributable net profit recorded a healthy EGP345 million (-14% q/q, +18% y/y, and +7% higher than our estimates of EGP322 million). IB represented 51% of attributable bottom line, NBFI represented 28% and aiBank represented 21% (as both IB and NBFI platform profits declined). Annualincrease in profi...
- Monsef Morsy
HRHO EY | Up valuation to EGP22.5/share; Maintain OW
Remains among Egypt top picks. We raise our 12M valuation by 12.3% to EGP22.5/share (+50% upside), on incorporating valU (5.7% of TP) and aiBank (12.8% of TP) in our numbers. Higher policy rates in Egypt – up 3% since March – benefit the firm’s credit business, while the EGP weakness is net positive for its capital market operations – >50% FCY-denominated income. M&A transaction on the consumer finance level and/or faster-than-expected RoE expansion for commercial bank are potential upside risks...
- Dalia Bonna
HRHO: 4Q21 – Strong operational year despite higher opex and unfavorab...
ANNUAL AND SEQUENTIAL EXPANSION WITNESSED ACROSS MOST LINES OF BUSINESS DESPITE HIGHER OPEX 4Q21 group attributable net profit came in strong recording EGP402 million (+13% q/q, -14% y/y, and +8% higher than our estimates) bringing FY21 bottom line to EGP1,456 million (+12% y/y) where the IB represented 74% of the bottom line, NBFI represented 24% and aiBank represented 3%. 4Q21 strong sequential performance came, despite a surge in OPEX, on the back of strong sequential growth across all bus...
EFG-HERMES HOLDINGS reduced its risk exposure resulting in an upgrade ...
EFG-HERMES HOLDINGS (EG), a company active in the Investment Services industry, reduced its market risk and raised its general evaluation. The independent financial analyst theScreener awarded an improved star rating to the company, which now shows 3 out of 4 possible stars; its market behaviour has improved and can be considered as defensive. theScreener believes that this new assessment merits an overall rating upgrade to Slightly Positive. As of the analysis date March 8, 2022, the closing pr...
- Dalia Bonna
EFG Hermes: Management webinar key takeaways
STRATEGY AND STOCK PERFORMANCE * EFG Hermes strategy that was put 4-5 years ago and still ongoing is building businesses that are ROE accretive and that could also cross-sell within the group, and hence the whole idea of the NBFI platform and AIB which utilized a large chunk of the cash that would yield multiples of it. * They’ve been shifting away from a pure cash position, which obviously has done well in terms of RoE and operational flexibility. * The long-term goal is to see EF...
- Dalia Bonna
HRHO: 3Q21| Relatively weak quarter on unfavorable base-effect despite...
Profits fall annually and sequentially despite controlled OPEX Group attributable net profit for 3Q21 recorded EGP383 million (-34% q/q, -24% y/y), coming 13% below our estimates for the quarter and bringing 9M21 profits to EGP1,053 million (+25% y/y). Decline in earnings was exacerbated by the lack of significant catalysts this quarter versus strong comparable quarters annually and sequentially. 3Q20 was driven by private equity incentive fees related to Vortex III exit (c.EGP349 million), a...
- Dalia Bonna
HRHO: 2Q21 – Robust set of results mainly driven by IB platform revenu...
EARNINGS SURGE ANNUALLY AND SEQUENTIALLY ON STRONG IB PLATFORM REVENUES AND HEALTHY GROWTH OF NBFIS, DESPITE HIGH OPEX AND SEQUENTIALLY HIGHER PROVISIONS Group attributable net profit for 2Q21 recorded EGP406 million (+39% q/q, +24% y/y), beating our estimates for the quarter and bringing 1H21 profits to EGP698 million (+67% y/y). Sequential improvement came as a result of: 1) higher IB platform revenues driven by Investment banking, Brokerage, capital markets and treasury operations, and ass...
- Dalia Bonna
HRHO: 1Q21 – Strong annually and weak sequentially; NBFI continues to ...
EARNINGS SURGE ANNUALLY ON EXCEPTIONALLY WEAK COMPARABLE QUARTER AND DECLINE SEQUENTIALLY ON LOWER IB PLATFORM REVENUES COUPLED WITH ROBUST PREVIOUS QUARTER AND DESPITE LOWER OPEX Group attributable net profit for 1Q21 recorded EGP292 million (-37% q/q, +223% y/y), higher than our estimate of EGP215 million by 36%. Sequential decline came after the strongest quarter of 2020; despite 1) lower OPEX and 2) higher NBFIs revenues, net profit continued to decline on 1) the high base effect and 2) l...
- Dalia Bonna
HRHO: FY 20 wraps up with the strongest quarter and exceeds expectatio...
STRONG QUARTER ON ANNUAL AND SEQUENTIAL BASIS ACROSS THE BOARD WITH THE EXCEPTION OF PE Group attributable net profit for 4Q20 came in as the strongest quarter of the year, recording EGP466 million (+10% q/q, +35% y/y) bringing FY20 bottom line to EGP1,305 million limiting the decline to only -5% y/y from -16% in 9M20 and versus our estimates of 23% decline in 2020. 4Q20 STRONG SEQUENTIAL PERFORMANCE CAME ON THE BACK OF: * Robust performance of the IB platform business lines, with the except...
- Dalia Bonna
EFG Hermes: Management webinar key takeaways
GENERAL HIGHLIGHTS * Part of the large cash base will be utilized in the AIB acquisition, while the remaining part will be used in merchant banking activities (like bridge loans and ST financing), treasury management and operational needs. However, the company will always maintain large cash base because some transactions require the company to be in a solid financial position to be a participant (for example during ARAMCO IPO). * AIB acquisition is expected to improve margins, group RO...
- Monsef Morsy
- Omar El Menawy
HRHO EY | High beta with catalysts ahead; Maintain OW
Strong exposure to pick up in capital markets. We cut our TP for EFG by 20% to EGP20.0/share, to reflect primarily: i) a roll-over to our valuation to 2021e, ii) lower-than-expected IB deals pipeline in 2020-to-date, iii) writing off Crédit Libanais investment (EGP0.80/share), and iv) assuming higher cost of risk and lower margins for the NBFS business. After a challenging 2020, we flag EFG as a key beneficiary of the potential pick-up in ECM transactions (mainly in Egypt), starting 2021e. A pos...
- Dalia Bonna
HRHO: 3Q20 – Solid bottom line mainly boosted by private equity gains
Private equity compensates for IB weakness; NBFI platform expands with the exception of leasing Group attributable net profit for 3Q20 came in strong recording EGP422 million (+29% q/q, +18% y/y) bringing 9M20 bottom line to EGP839 million (-16% y/y). 3Q20 strong sequential performance came on the back of: * A spike in private equity revenues on realised incentive fees of EGP349 million following Vortex Solar’s exit. Other IB platform business lines failed to provide support (Details below)....
- Dalia Bonna
HRHO: Q2 earnings bounce back on seed capital revaluation; weak microf...
IB platform revenues provide main support amid weak microfinance revenues and continued booked provisions Group attributable net profit for 2Q20 came in strong recording EGP328 million (+263% q/q, +8% y/y) bringing 1H20 bottom line to EGP418 million (-38% y/y). 2Q20 strong sequential performance came on the back of: * Strong IB platform revenues mainly driven by 1) stellar capital markets and treasury operations which more than doubled annually and sequentially as a result of FX gains, and t...
- Radwa Elswaify
MSCI Quarterly Rebalancing: Thoughts on Egypt constituents
Our full report contains our analysis of MSCIEM Index rules and its application on constituents from Egypt, both for the Standard Index and Small Cap Index. Below are our key conclusions: SWDY Facing Risk of Exclusion; HRHO Is Replacement Candidate On the last ten business days of July, if SWDY dropped more than 50% below Market Size-Segment Cutoff, then the stock will face exclusion. If, on that same relevant date, HRHO's free-float market cap surpassed SWDY's free-float market cap, then HRH...
- Dalia Bonna
EFG Hermes (HRHO): Meet the management webinar – key takeaways
Strategy Update Management continues to have a prudent strategy when it comes to the NBFIs business segment, with a primary focus on asset quality while continuing to grow and invest over the coming period by adding new complementing business lines to have a complete NBFIs platform. As for the investment bank, management intends to take 2020 as a breather in terms of geographical expansion, and evaluate the next move, especially after 3-4 years of continuous geographical expansion and product...
- Dalia Bonna
HRHO: Q1 20 – Lowest profits in 3 years on IB operational weakness, ...
Profits decline despite NBFIs solid revenue growth, and controlled opex Group attributable profit for 1Q20 recorded EGP 90 million (-74% q/q, -76% y/y), which marks the lowest quarter profits since 4Q2016 on the back of several factors: * Operational weakness of the IB platform especially brokerage and IB divisions * Adoption of IFRS 9 which resulted in EGP 437 million unrealized losses developing from the move of seed capital/Investments from Investments at fair value through OCI (FVTOCI) ...
- Dalia Bonna
HRHO: Strong FY 19 results driven by Tanmeyah and IB platform; maintai...
Group attributable profit for Q4 19 recorded EGP344mn (-4% q/q, +16% y/y), bringing FY 19 bottom line to EGP1.4bn, 36% higher than FY 18 of EGP1.0bn, mainly onTanmeyah’s robust revenue growth and that of IB platform, and despite the decline in investment banking and asset management revenues. Q4 19 financial highlights: * Group operating revenues (+13% q/q, +5% y/y) were mainly supported by capital markets and treasury operations (+83% q/q, +3% y/y), which now represent 42% of Q4 19 group op....
- Aya Abdellah
- Monsef Morsy
IB pick-up a precursor to rerating; Maintain OW
Remains a top play on potential liquidity improvement. Our updated TP for EFG of EGP25.2/share, down 3% from our previous valuation, reflects: i) our valuation roll-over to 2020e, ii) our lower CoE assumptions, in line with the ongoing monetary easing, and iii) the higher value creation from NBFS. This is more than offset by the EGP appreciation and our lower valuation of Credit Libanais (CL). We anticipate higher transmission of monetary easing, on the release of excess liquidity parked at the ...
- Nour Kamel
Maximising shareholder value
Focus on higher returns; maintain Overweight. Our 6%-higher target price incorporates the sale of CL, though partially offset by lower IB assumptions and higher CoE. Divesting non-core operations should boost RoE to 11-13% over our forecast horizon from 5% in 2015. The current market price almost fully reflects the value of excess cash and investments, while assigning zero weight to the core business. The stock currently trades at 0.77x 2016e book, a deep discount vs.1.5x pre-2011, our implied m...
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