reports
- Taher Seif
TELECOM EGYPT – VALUATION UPDATE
​We downgrade our TE fair value to EGP 13.94/share with a “Buy†recommendation, entailing 35% upside potential. This represents almost 12% down from previous fair value of EGP 15.15/share in our last Risk free rate cuts report. We used an average WAAC of 19.02%, as we account for a 2% uncertainty risk discount surrounding the company’s prospects in the medium term, specifically related to mobile operation segment performance, the segment that should be driving growth in the company’s t...
- Mohamed Marei
MADINET NASR – VALUATION UPDATE
​We updated our valuation for MNHD, as the company`s dynamics have changed significantly. We currently value MNHD based on a SoTP-DCF methodology with only 20% of both residual land plots in Sarai and Taj City being valued on a NAV basis, as such land plots will be dedicated to the establishment of commercial properties, hence turning MNHD towards becoming a cities` developer, fully equipped with all modern amenities.
- Ali Afifi
Spotlight - Misr Chemical Industries Company
​We assign a “STRONG BUY†rating; with an upside potential of 48.9% driven from a Fair Value of EGP 12.21/share to Misr Chemical Industries Company (MICH). We applied the Discounted Cash Flow (DCF) valuation methodology to value the company’s operations, reflecting our assumptions for the company during the forecast period. Utilizing a market risk premium of 8.0% an adjusted beta of 0.44 a liquidity risk premium of 2.0%, which translates to a WACC of 16.9% and a perpetual growth rate of ...
- Omneya El Hammamy
DELTA SUGAR CO. - VALUATION UPDATE
​We update our Fair Value for Delta Sugar Co. - with a “Hold†rating driven from a upside potential of 6.57%; driven from our estimated Fair Value of EGP 17.52 /share. Using the DCF valuation methodology for Delta Sugar Co., we utilized an average WACC over our forecasted horizon of 16.23%, an average risk free rate of 11.40%, and a market risk premium of 8%. We used the company’s 5 years adjusted beta which is equivalent to 0.65.
- Mohammed Magdy
Egypt's Cement Sector Note
​Prosperity in demand boosted selling prices during 2016. Cement demand jumped by 7% y-o-y during 2016, a 3Y high, to stand at 57mn ton leaving the market with an idle capacity of 13mn ton. Massive infrastructure and energy investments coupled with stable demand over residential units, on the back of growing population and marriage rate, in addition to accumulating a stock pile of building materials by many real estate developers and contractors, all supported the robust demand growth recorded...
- Mohamed Marei
PALM HILLS – VALUATION UPDATE
​We raise our valuation for PHDC by 14% over our previous update, to stand at EGP 4.49/share vs. EGP 3.94/share updated post our assumptions concerning risk free rates expected cuts. The upgrade comes loaded by 4Q2016/1Q2017 massive prices rerating for the company`s inventory and expected new launches, as the market information we gathered indicates that the average market pricing for standalone units is currently being marketed at c. EGP 17-19K/sqm (cumulative value of BUA & Land divided by B...
- Ali Afifi
ABU QIR FERTILIZERS - VALUATION UPDATE
​We upgraded our fair value for Abu Qir Fertilizers (ABUK) by 29.5% from EGP 114.94/share to EGP 148.90/share following the latest changes in the industry which had a significant effect on the company’s valuation. We assign an “BUY†rating for the stock; with an upside potential of 15.9%. Following the floatation, which took place back in November, significant changes took place affecting the industry significantly making fertilizers an attractive sector with huge room for growth.
- Mai Abdelaziz
MACRO - 1HFY17 BOP FIGURES… ENHANCEMENTS THAT ARE REFLECTED IN THE S...
​Trade deficit has narrowed down, however, the balance of Current Account has slightly widened, mainly due to the decline in Tourism and Suez Canal Revenues and the increase in interest payments. In 1HFY17 Egypt’s current account deficit has widened by 2.9% when compared to the same period a year before, recording a net outflow of USD 9.7bn compared to a net outflow of USD 9.4bn in 1HFY16.
- Mai Abdelaziz
PRIME FEBRUARY INFLATION NOTE - EGYPT
​Urban headline CPI for February 2017 has recorded another historical high level reaching 30.2% y-o-y (31.7% for the whole government) compared to 28.1% in January 2017. Monthly inflation rate, from the other side, has relaxed to 2.6% compared to 4.1% a month before.
- Mai Abdelaziz
FEBRUARY NIR - A SLOWDOWN IN NIR INCRAESE
​Egypt's Net International Reserves has been increasing since the flotation of the EGP in November 2017, however, the increase in the NIR in February came to be the lowest since the flotation, with an increase of only USD 178mn (+0.68%), as it has increased from USD 26.363bn in January 2017 to USD 26.542bn. Both gold reserves and foreign currency have increased by USD 170mn and USD 14mn respectively, however, SDRs have decreased by USD 7mn.
Macro assumptions entail upcoming cuts in risk free rate – Impact on...
​We believe the Egyptian currency will appreciate starting 2018, and accordingly the inflation rates will slow down and drop to a single digit by 2020. Hence, we believe that it might be more appropriate to consider the inflation differential mechanism. After accounting for our macro assumptions, such methodology entailed several cuts in risk free rates applied over the upcoming horizon.
- Eman Negm
Egypt Economic Outlook Update
​After the aggressive and essential reforms, 2017 proves to be a tough and challenging year for the Egyptian economy and its different sectors. Being late in applying the economic reforms enlarged the pain. So, the government does not have the luxury to let the time pass without issuing necessary laws, regulations and procedures to reap the benefits of economic reforms.
- Mohamed Marei
Talaat Moustafa Group Holding
​We valued TMGH on a DCF – SoTP basis at EGP 15.4/share, providing a massive upside potential of 85% over the previous market close; mainly supported from assuming a full monetization program for Madinaty`s massive commercial land by 2030, providing EGP 9.71/Share, equivalent to 59% of the group`s Enterprise Value of EGP 16.45/share. The residential developments in Madinaty city, are expected to add around EGP 4.55/Share equivalent to 28% of EV; hence, c. 86.6% of our estimated EV comes from...
- Mohammed Magdy
Ezz Steel - PLACING EZZ UNDER STRESS TESTING, STILL SUPPORT NEW ERA EX...
​Ezz Steel, followed by the rest of the market, reduced its selling prices by EGP 400/ton last Thursday 16th Feb on the back of three main factors; 1- Local currency appreciation against USD in the past days, reaching EGP 16/USD. 2- Imported cheaper, Turkish and Ukrainian, billets and steel, dumping local market. 3- Local demand recession post floatation. This reduction, on the one hand, led to higher losses to merchants who bought steel pre price reduction and now have to sell this inventory ...
- Aboubakr Emam
A RECOVERING ECONOMY … INSIGHTS FROM THE LESS STEEP INVERTED YIELD C...
​ The shape of the yield curve changes in accordance with the state of the economy. The normal or upsloped yield curve may persist when the economy is growing and conversely, the inverted or down-sloped yield curve is likely to press on when the economy is in a recession. In other words, using as a proxy, if the yield on 10Yrs T-Bonds is greater than the yield on 3months T-Bills (positive spread), this means that the economy is performing well. While the negative spread (yield on 10Yrs T-Bonds...
- Aboubakr Emam
CIB – 2016 RESULTS COMMENTARY
​CIB exceeded our expectations of reporting a bottom line of EGP 5.6bn during 2016, with the bank’s reported net profit reached another record of EGP 6.01bn, registers an annual increase of 27%. The difference came mainly as a result of keeping provisions far less than our estimates. As CIB recorded provisions of EGP 893mn, 47% less than EGP 1,682mn that was recorded in 2015. While we were assuming provisions to soar in 4Q2016, on the back of Floatation, to end the year with provisions of EG...
- Taher Seif
GB AUTO - SPOTLIGHT
​We update our fair value for GB Auto (AUTO.CA) to EGP 3.19/share with a “HOLD†recommendation. This represents almost 4% decrease in our fair value compared to our last report. The update mainly accounts for 1)Higher USD/EGP rates during our forecast horizon 2)Interest rate hikes post floatation 3)Price hikes and distressed volumes starting 4Q2016. In addition, the cut in our fair value also resulted from the higher 1 year risk free rate which witnessed a 300 bps increase post the floatat...
- Ali Afifi
EL SEWEDY ELECTRIC - SPOTLIGHT
​We upgrade our fair value for El Sewedy Electric (SWDY.CA) by 55.7% from EGP 62.8/share to EGP 97.8/share following the floatation of the EGP, which took place back in November 2016. We assign an “ACCUMULATE†rating for the stock; and an upside potential of 10.6%. This upgrade came on the back of the floatation with El Sewedy being in perfect position to reap its benefits. We await the company’s announcement of 4Q2016 results, which could affect our valuation of the company due to the e...
- Omneya El Hammamy
Obour Land - Initiation of Coverage
​We initiate our coverage for Obour Land for Food Industries - with a “Buy†rating driven from an upside potential of 38.1%; driven from our estimated Fair Value of EGP 12.43 /share. The company’s P/E Multiple for 2017 would stand at 7.44x.The Egyptian Food & Beverage industry witnessed a lot of changes during 2016. Two main factors shaped the industry during the year; (1) The FX shortage / volatility and (2) The high rates of inflation. In the past, the F&B producers have always been ab...
- Ali Afifi
Egypt's Fertilizers Industry Update | New chapter in the fertilizers s...
​Long awaited price increase finally implemented by the government: The Egyptian government announced the raising of the subsidized fertilizer price from EGP 2,000/ton of urea to reach EGP 2,959/ton. Meanwhile, nitrate prices have been raised from EGP 1,950/ton to reach EGP 2,860/ton. The price increase comes a as a relief for fertilizer producers who have been recording losses due to the increase in production cost. Following the floatation natural gas cost, which is valued at USD 4.5/mmbtu w...
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