Today’s Top News & Analysis
Treasury bill's weighted average return is near 25%
Two river ports to be offered for the private sector next December
ECAP Q2 2023: Pricing power supported profitability margins
MCRO Q2 2023: Lower earnings despite higher revenues on extraordinary finance expense
EGAS Q2 2023: Operationally weak, yet investments saved the day
RAYA Q2 2023: Strong revenues reflect in net profits despite a higher net finance expense
ATQA Q2 2023: Non-operational activities saved the day again
MACRO
Treasury bill's weighted average return is near 25%
The Ministry of Finance accepted bids in the last treasury auction with weighted average returns of 24.52%, 24.92%, and 24.77% for the 91 days, 182 days, and 273 days treasury bills. (Al-Mal)
Two river ports to be offered for the private sector next December
Reportedly, two river ports in Alexandria will be offered for the private sector next December. Additionally, the two ports are still under construction. (Al-Borsa)
CORPORATE
ECAP Q2 2023: Pricing power supported profitability margins
Al-Ezz for Ceramics & Porcelain’s (GEMMA) [ECAP] H1 2023 results showed a 41% higher net income of EGP117.4mn compared to EGP83.2mn the year before (within Prime Research estimates). Revenues grew by 36% y/y to EGP1.2bn compared to EGP885mn the year before (8% lower than Prime Research estimates). Revenues can be broken down into the following:
· Local sales grew by 33% y/y to EGP1.1bn.
· Export sales grew by 62% y/y to EGP146mn.
GPM came at a high 33.1% (+6.3pp y/y, +7pp vs. Prime Research estimates) on higher selling prices. We think the high margins, which still reflect ECAP’s strong pricing power, will normalize over the year. The stock currently trades at a TTM P/E of 4.6x only. We have an OW/M rating on ECAP with a 12MPT of EGP35.3/share, implying a potential upside of 98%. (Company disclosure)
MCRO Q2 2023: Lower earnings despite higher revenues on extraordinary finance expense
Macro Group Pharmaceuticals’ [MCRO] H1 2023 net profits dropped by 59% y/y to EGP29mn despite an 11% y/y increase in revenues to EGP337mn. The weak net profits can be attributable to:
· Gross profit margin falling by 6pp y/y to 71%.
· Higher SG&A-to-revenues ratio of 49% (+4pp y/y).
· Huge net finance expense of EGP31mn vs. only EGP3mn last year.
Meanwhile, Q2 2023 net profits declined by 13% y/y to EGP20mn (+5% q/q), due to:
· Gross profit margin declining to 69% (-8pp y/y, -5pp q/q).
· Higher SG&A-to-revenues ratio of 46% (+3pp y/y, -7pp q/q).
· Huge net finance expense of EGP21mn vs. only EGP2mn last year.
MCRO said that the high net finance expense is unusual as the company decided to provide cash discounts for some distributors to accelerate the cash collection. (Company disclosures: 1, 2)
EGAS Q2 2023: Operationally weak, yet investments saved the day
Egypt Gas’ [EGAS] H1 2023 results showed net profits improving by a 19% y/y to EGP122.8mn despite registering lower revenues of EGP2.1bn (-31% y/y). Earnings growth came from a jump in investment income (mainly from GASCO), recording EGP680.5mn (+36% y/y) during the year. Meanwhile, EGAS achieved a GPM of only 0.4% compared to a GLM of 10.6% (+11pp y/y), yet it is still recording operational losses with an EBIT loss margin of 27% (-14.3pp y/y). (Company disclosure)
RAYA Q2 2023: Strong revenues reflect in net profits despite a higher net finance expense
Raya Holding for Financial Investments [RAYA] posted Q2 2023 consolidated net profits of EGP144mn (+46% y/y) despite:
· A 2pp y/y decline in gross profit margin.
· A 78% y/y increase in net finance expenses.
Earnings growth is attributable to the higher revenues of EGP7.9bn (+77% y/y), the growth of which was mainly driven by a 58% in devices & goods distribution revenues to EGP3.9bn. (Company disclosure)
ATQA Q2 2023: Non-operational activities saved the day again
Misr National Steel (Ataqa) [ATQA] released its H1 2023 financial results, posting net profits of EGP411mn (+373% y/y) on lower revenues of EGP923mn (-31% y/y) with a GPM of 26% (+15pp y/y) driven by:
· Higher investment income.
· Recording an EGP237mn gain (vs. an EGP17mn loss in H1 2022) from the net change in the fair value of financial investments.
· Higher selling prices contributing to the improved GPM.
Meanwhile, Ataqa recorded net profits of EGP282mn (+118% q/q) in Q2 2023 on revenues of EGP523mn (+31% q/q) and a GPM of 32% (+13pp q/q), attributed to recording an FX gain of EGP16.6mn (vs. an FX loss of EGP87mn in Q1 2023). (Company disclosure)
Key Dates
17-Aug-23
EGTS: OGM / Approving financial statements ending 31 Dec. 2022.
20-Aug-23
BINV: Cash dividend / Deadline for eligibility for a dividend of USD0.032/Share.
21-Aug-23
BINV: Cash dividend / Ex-dividend date for USD0.032/Share.
23-Aug-23
BINV: Cash dividend / Payment date for a dividend of USD0.032/Share.
MTIE: Stock dividend / Last date for eligibility for a 0.25-for-1 stock dividend.
24-Aug-23
MTIE: Stock dividend / Date for distributing a 0.25 for-1 stock dividend.
27-Aug-23
SPMD: OGM / Approving financial statements ending 31 Dec. 2022.
28-Aug-23
ZMID: Cash dividend / Deadline for eligibility for a dividend of EGP0.150/Share.
30-Aug-23
ORAS: Financial results Announcement / Q2 2023 financial results' announcement.
31-Aug-23
ZMID: Cash dividend / Payment date for a dividend of EGP0.05/share (1st installment).
PHAR: Cash dividend / Payment date for a dividend of EGP1.00/share (2nd installment).
1-Sep-23
MSCI / MSCI's August 2023 Quarterly Index Review Effective Date.
5-Sep-23
Egypt PMI / August 2023 reading.
6-Sep-23
ELSH: OGM / Approving the decisions of the company’s board of directors in its meeting held on 15/6/2023.
ELSH: EGM / Amending some articles of the Company's bylaws.