KEY THEMES
We have long been talking about M&A as one of the catalysts that the Egyptian market is entertaining for nothing more than its cheap valuation. Indeed, stepping into 2022, we think M&A will continue to play an even bigger role in setting the scene for the performance of target companies.
Yesterday, we learned of an interest (albeit a stake of only 26%) in Cleopatra Hospitals Group [CLHO] at EGP5/share or an 11% premium to Tuesday's close. This pushed the stock 4.7% higher yesterday, but it is still 22% below a market consensus of EGP6/share. Every now and then, we hear of M&A news that involves different sectors. Just earlier this month, SODIC [OCDI] was subject to a tender offer that was accepted by 85.5% of its shareholders.
Generally speaking, we think current low valuation levels will attract more strategic and financial investors to grab up large companies with strong business models. We do not think that this is a sector-specific trend but rather an overall market phenomenon.
Last but not least, November inflation reading came more or less in line with our estimates, so no surprises here.