Analyze This

Apr 18, 2022

1. Today’s Trading Playbook

KEY THEMES

Integrated Diagnostics Holdings [IDHC] has inked an agreement with Philips to supply the former with diagnostic scanning devices for the new Borg Scan centers. Under the Borg Scan brand, IDHC has five centers within Egyptian borders, with expectations to add three more centers in the coming period. As of 9M 2021, IDHC has had a total of 455 branches in Egypt, spanning between scanning and laboratory centers.

Furthermore, IDHC has had an exceptional year in 2021, where both volume tests and average price per test exhibited astounding growth. IDHC, we reckon, has ended the year with a top line close to EGP5bn and net earnings hovering around EGP1.5bn. This means IDHC is currently traded at a 2021e P/E of only 7.5x, which does not mirror the company’s growth potential and nature of business model. Although 2021 was extraordinary, we view ample and sufficient growth for IDHC in the future, especially with the company employing both organic and inorganic growth strategies, all supported by strong underlying growth fundamentals across its markets.

We remind you that IDHC is one of the 15 stocks we had picked in our STANDPoint 2022 strategy outlook published on 30 January 2022. We have an Overweight rating for the name, with our 12MPT of EGP28.9/share (ETR +51%). We note that at current FX rate, IDHC stock price is 6.5% below its market price on London Stock Exchange.

Now, on to the top news and analysis for the day.

2. Top News & Analysis

MACRO NEWS

The decision to temporarily suspend some international companies from exporting products to Egypt was taken due to their failure to comply with the government’s factory registration requirements, the Trade Ministry said. (Ministry of Trade)

The House of Representatives voted in plenary session yesterday to send the FY23 draft budget to the Budget & planning committee. (Enterprise)

CORPORATE NEWS

Abu Qir Fertilizers' [ABUK] OGM has approved a dividend distribution of EGP1.0/share, implying a 4% in yield. (Company disclosure)

Taaleem Management Services [TALM] intends to open the first phase of the Teaching Hospital at Al-Nahda University in Beni Suef (NUB) in September, reaching full operational capacity by November 2022. Meanwhile, TALM is working in the preparation stages for Badya International University’s land, an area of 160,000 sqm in Palm Hills Developments’ [PHDC] Badya project, west of Cairo, to start the establishment of the university. (Al-Borsa)

Cairo for Investment & Real Estate Development [CIRA], reportedly, intends to launch six new schools by 2023 with one to be added during the current year, and the remaining five to be added next year. (Al-Borsa)

United Housing & Development [UNIT] has bought 38,500 in treasury shares, amounting to 2.56% of total capital. (Mubasher)

Arabian Food Industries’ [DOMT] BoD approved considering canceling its GDR. (Company disclosure)

Development & Engineering Consultancies [DAPH] consolidated net profit in 2021 dropped to EGP9.64mn (-78%y/y) from EGP43.35mn, while revenue decreased to EGP46.50mn (-65%y/y) vs. EGP131.79mn from a year earlier. (Arab Finance)

Cleopatra Hospitals Group [CLHO] voted for four new board members to join, from CI Capital Healthcare. (Company disclosure)

GLOBAL NEWS

China's economy slowed in March as consumption, real estate and exports were hit hard,taking the shine off faster-than-expected first-quarter growth numbers and worsening an outlook already weakened by COVID-19 curbs and the Ukraine war. (Reuters)

Oil prices climbed to nearly three-week highs on Monday as fears over tight global supply grew, with the deepening crisis in Ukraine raising the prospect of heavier sanctions by the West on top exporter Russia. (Reuters)

China's crude steel output fell more than 6% in March from the same month a year earlier, data from the statistics bureau showed on Monday, as production at mills was crimped by COVID-19 outbreaks and environmental restrictions. (Reuters)