KEY THEMES
President Abdel-Fattah El-Sisi’s guidance for the Egyptian government to push ahead with the establishment of 10 new higher education institutes is a reminder of one of our top picks: Cairo Investment & Real Estate Development [CIRA] (-6% ytd, mkt cap: EGP7.6bn, LTM P/E of 31.7x). CIRA has exposure to both K-12 education and higher education through its Badr University in Cairo (BUC). While its P/E multiple may look rich, CIRA is more of a growth play with further planned expansion across the educational spectrum, so investors should not expect high dividends yield in the near future. That said, the government’s plan to set up new universities should not be seen as a competitive threat as Egypt is underserved with c.40% of the country’s population within the educational age. Besides CIRA, there are two other names in this defensive sector, albeit very illiquid in terms of trading: Suez Canal for Technology Settlement [SCTS] (+17.6% ytd, mkt cap: EGP3.8bn, LTM P/E of 7.7x), the owner of 6 October University, and Cairo Educational Services [CAED] (-1% ytd, mkt cap: EGP118mn, LTM P/E of 7.5x), which is 69% owned by CIRA.
POSITIVE
CIRA, SCTS, CAED: As the education sector attracts attention, we expect these names to re-rate, but the last two will be subject to trading liquidity.