Today’s Top News & Analysis
The SMEs initiative is still on
Government to start receiving offers for its water desalination program
Industrial initiative is no more
QIA could be interested in a KIMA
Fitch revises outlook on four Egyptian banks
Dice announces Q3 2022 results
Taaleem will not pay dividends to shareholders
OFH’s Klivvr gets approval from the CBE
MACRO
The CBE’s SME initiative is still on
The 5% interest rate initiative directed to SMEs, provided by the Central Bank of Egypt (CBE), is reportedly still running without any cancellation or interruption. (Al-Mal)
Government to start receiving offers for its water desalination program
The Egyptian government's new water desalination program will reportedly start to receive bids from more than 70 local and international infrastructure operators and investors, starting this Thursday. (Enterprise)
CORPORATE
CBE’s industrial initiative is no more
Media sources said that the CBE has informed banks that the initiative directed to the industrial sector has ended. According to such initiative, companies used to obtain funding at a low and subsidized rate of only 8% p.a. (Asharq Business)
Of the many listed companies to be impacted by such decision, we name Ezz Steel [ESRS], Elsewedy Electric [SWDY], and Oriental Weavers Carpet [ORWE].
· ESRS: credit facilities account for almost half of its total debt, judging from H1 2022 financial statements.
· SWDY: almost 56% of total debt is in EGP, where 62% of which is within the aforementioned initiative (i.e. 35% of total debt falls within the initiative).
· ORWE: Local-currency (LCY) debt is around 30% of total debt, with almost all of the LCY debt obtained under the now-cancelled initiative.
We talked to several companies, but they do not know yet how this is going to be implemented. The general notion is that outstanding balances will remain as is at 8% p.a. However, future borrowing from now on will be at regular rates (e.g. an overnight lending rate + a company-specific spread). We note that most of the balances owed under the initiative are short-term credit facilities.
On the other hand, banks are not at harm, since they were getting compensated for the difference between the regular and subsidized rates anyways. One could argue that they might benefit in the sense of early collection of interest payment. Meanwhile, lending volumes might be a bit slower in response, as companies will be discouraged to draw sizable amount of short-term funding going forward at now-higher interest rates.
QIA could be interested in a KIMA
News sources point to possible interest form Qatar Investment Authority (QIA) to acquire a stake at Egyptian Chemical Industries (KIMA) [EGCH]. (Al-Mal)
Fitch revises outlook on four Egyptian banks
Fitch Ratings has revised the outlook on the Long-Term Issuer Default Ratings (IDRs) of National Bank of Egypt (NBE), Banque Misr, Banque du Caire [BQDC], and Commercial International Bank [COMI] to Negative from Stable and affirmed the IDRs at 'B+'. The revision of the outlooks on the IDRs follows the revision of the outlook on the Egyptian sovereign to Negative. (Fitch)
Dice announces Q3 2022 results
Dice Sports & Casual Wear [DSCW] reported Q3 2022 net profit of EGP39mn (+213% y/y). Bottom line improvement came due to (1) revenue growth of 25% y/y to EGP557mn, (2) a higher gross profit of EGP129mn, implying a GPM of 23% (+6pp y/y), and (3) a 31% y/y growth in other income to EGP27mn, driven by higher export rebates to EGP26mn (+69% y/y). (Company disclosure)
Taaleem will not pay dividends to shareholders
Taaleem Management Services’ [TALM] OGM held on 20 November 2022 decided not to distribute any cash dividends to shareholders for 2021/22, as proposed before by the BoD. (Company disclosure)
OFH’s Klivvr gets approval from the CBE
Orascom Financial Holding’s [OFH] fintech arm Klivvr received the green light from the CBE to launch its mobile app and payment cards. (Enterprise)
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