Today’s Trading Playbook
KEY THEMES
Over the past few days we made two calls, “neutral” on Raya Holding [RAYA] and “negative” on Arabia Investments Holding [AIH]. On one hand, RAYA just finalized two acquisitions undertaken by two of its subsidiaries, namely Raya Distribution and Raya Electronics, acquiring 99.95% of Itsalat International Egypt (i2) for EGP178mn and 100% of United Retail Co. for EGP7mn. We valued RAYA at EGP12.8/share in our Trading Playbook published on 20 January 2020, yet RAYA rose some 20% since then (now at EGP15.65/share). On the other hand, AIH’s consumer finance arm, Rawaj, closed its third securitization issue worth of EGP308mn, with proceeds earmarked to finance Rawaj's expansion plan. In our Trading Playbook published yesterday, we projected that AIH could achieve a bottom line of EGP70-75mn in 2020, which means AIH is trading at rich multiples. AIH ended yesterday down some 3.5% to close at EGP0.64/share.