Today’s Trading Playbook
Amr Hussein Elalfy CFA | Head of Research
KEY THEMES
Market activity looks to have titled towards real estate stocks trading below EGP5 a share, namely Amer Group [AMER], Porto Group [PORT], and Emaar Misr for Development [EMFD]. AMER has risen in 12 of the last 13 trading sessions, up a staggering 44% since 15 November. The stock was up 9% yesterday alone. Also, its spinoff PORT rose but only in nine of the last 13 trading sessions, up just 23% over the same period. It was up just 1.5% yesterday. Meanwhile, EMFD rose in 10 of the last 13 trading sessions, up 17.5% over the same period but 59% of that jump was in the last two days alone. However, yesterday’s top news was concerning Juhayna Food Industries [JUFO], Egypt’s EGP6bn leading dairy and juices producer, whose chairman was arrested pending investigations by the authorities (please read the news below for more details). JUFO’s stock dropped 6.3% on the news yesterday, marking the fourth negative day in a row –
down 11% overall. Trading on JUFO was initially suspended then resumed in the last hour of the trading session. Our consumer analyst Nada Wagdy reminds us of JUFO’s stock performance five and four years ago when similar news surrounding the company’s chairman arose, if history is any guidance. Nada reminds us that this is not the first time we hear news surrounding JUFO’s chairman. She points to two dates:
- On Thursday, 13 August 2015, news came out on the freezing of JUFO Chairman Safwan Thabet’s wealth to leave JUFO’s stock price dropping 7.5% the following day (16 August 2015) before paring some of its losses on 17 August 2020 when it just rose 1.3%.
- On Thursday, 25 February 2016, media reported the freezing of Thabet’s 7.2% stake in JUFO through Pharon fund. The following Sunday, the stock fell 7% in response to the news.
In the first incident mentioned above, the stock recovered all its losses in 34 days, while in the second, it only took the stock 19 days to be where it was before the incident. Please check out our Chart of the Day section today for an illustration of the stock performance in both incidents, including the worst performance following the news.
POSITIVE
JUFO: For those who like to take a contrarian approach, it might be worthwhile picking JUFO’s stock following the one-day blip, if history was to repeat itself. The stock is now trading at a not-too-demanding P/E of 14.5x. The stock is down 25% ytd, in line with the EGX 30.
ORWE: Oriental Weavers Carpet [ORWE] said it started receiving backdated export rebates after applying the recently-introduced 15% discount, which could be positive for the stock.