Today’s Trading Playbook
KEY THEMES
Global markets ended last week lower, with US equities slipping on fears coming from weak jobs data, coupled with persistent worries that Omicron variant will dent economic activity in 2022. Meanwhile, Brent oil prices dropped below the USD70/bbl mark. Oil prices fell on Thursday after OPEC+ confirmed their commitment to their existing policy of monthly oil output increases despite fears from Omicron will hurt global demand. We stated before that volatility in global markets is here to stay at the end of 2021, helped by the overall state of confusion between investors, coupled by elevated asset prices.
Elsewhere, Qalaa Holdings [CCAP] has posted 9M 2021 figures, showing contracting net losses of EGP1.3bn vs. EGP1.6bn a year earlier. This comes in light of 17% higher revenues of EGP30.1bn. CCAP's GPM improved to 11% vs. 8% in 9M 2020.
During Q3 2021, CCAP achieved wider net losses of EGP441mn, vs. EGP402mn in Q2 2021. Furthermore, the company’s top line grew to EGP12.8bn (+26% q/q), on strong contribution from ERC in the first place, in addition to TAQA Arabia. Meanwhile, CCAP GPM improved slightly q/q to 12.6 vs. 12.4% in the previous quarter.
ERC's quarterly volumes recorded 847,954 (+18% q/q, -12% y/y). We note that Q3 2020 almost witnessed no contribution from jet fuel, vs. 16% contribution from jet fuel in Q3 2021. ERC managed to achieve annual top line growth during the quarter, despite 12% weaker revenues driven by a recovery in refined petroleum product prices coupled with an increasing gross refining margin. Management indicated that lower volumes is a reflection management’s direction of ceasing tolling crude oil at Cairo Oil Refining Company (CORC) for part of its inputs to increase ERC’s gross refining margin. Management indicated that ERC's gross daily GRM during Q4 2021 has surpassed USD2mn per day. However, management had previously stated that GRM peaked between November-December 2019 at USD3mn/day. We note that, ERC net losses contracted to EGP418mn in Q3 2021 vs. 451mn in the previous quarter.
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