Between the Hammer & the Anvil

May 29, 2023

Today’s Top News & Analysis

A possible household electricity price hike in July
Banque Misr seeks an USD217mn loan from IFC
EGBE Q1 2023: Improved profitability
TMGH Q1 2023: Strong sales growth
ALCN 9M 2022/23: 153% higher bottom line
EGAL 9M 2022/23: 132% higher net profits
TALM completes acquisition of a university in New Cairo

MACRO

A possible household electricity price hike in July

The Egyptian government will reportedly effectuate the planned increase in household electricity prices this July. Unnamed sources added that the increase could be in correlation with recent FX fluctuations and that no final decision has been made yet. (Asharq Business)

Banque Misr seeks an USD217mn loan from IFC

State-owned Banque Misr is seeking a USD217mn 5-year loan from International Finance Corporation (IFC). The loan is intended for financing local SMEs and women-owned enterprises. The loan is still pending approval and will be reviewed on 30 June. (IFC)

Corporate

EGBE Q1 2023: Improved profitability

Egyptian Gulf Bank [EGBE] announced its full results for Q1 2023. The bank managed to grow its net income by 60% y/y to EGP316mn, on the back of:

· A 37% y/y increase in net interest income to EGP923mn.

· A 532% y/y increase in net trading income to EGP200mn.

· A 64% y/y in net fees and commissions to EGP106mn.

· A lower effective tax rate of 42%, down from 47% a year ago.

This comes despite an increase of 217% y/y in booked provisions of EGP122mn and a 54% y/y increase in administrative expenses to EGP538mn. Also, other operating expenses increased by 406% y/y to EGP31mn on contingent provisions.

Meanwhile, the bank’s deposits grew by 11% ytd to EGP80bn with a GLDR of 39%. On the other hand, loans grew by 9% ytd to EGP29bn with an NPL of 4.7% and a coverage ratio to 120%.

EGBE's annualized ROE is now up to 22%, and the stock is currently traded at an annualized P/E of 5x and a P/BV of 1.1x. (Bank disclosure)

TMGH Q1 2023: Strong sales growth

Talaat Moustafa Group Holding’s [TMGH] Q1 2023 net income came at EGP747.5mn (+32% y/y) compared to EGP565.7mn a year before on revenues of EGP4.4bn (+47% y/y). Revenues can be broken down into:

· Revenues from real-estate recorded EGP2.9bn (+38% y/y), with a GPM of 29% (-4.2pp y/y).

· Revenues from hotel management recorded EGP799.2mn (+106% y/y), with a GPM of 56% (+12.8pp y/y).

· Revenues from recurring income operations recorded EGP770.6mn (+39% y/y), with a GPM of 38% (-4.2pp y/y). (Company disclosure)

ALCN 9M 2022/23: 153% higher bottom line

Alexandria Containers Handling Co.’s [ALCN] 9M 2022/23 net profits came in at a strong EGP3.2bn (+153% y/y), in line with Prime Research's expectations (PRe), on higher revenues of EGP3.4bn (+85% y/y, -4.6% vs. PRe). (Company disclosure)

EGAL 9M 2022/23: 132% higher net profits

Egypt Aluminum’s [EGAL] consolidated results for 9M 2022/23 showed its bottom line rising by 132% y/y to EGP3.9bn compared to EGP1.7bn a year before. Earnings growth came on the back of 37% higher revenues of EGP14.8bn and a 9pp y/y higher GPM of 31.6% (excluding marketing expenses). (Company disclosure)

TALM completes acquisition of a university in New Cairo

Taaleem Management Services [TALM] completed the acquisition of an under-construction university in New Cairo. TALM has a 32% stake in the university through a capital increase of EGP300mn in the company that owns the targeted university. Meanwhile, it was mentioned in November 2022 that TALM may increase its stake from 32% to 51% after a year of student enrollment. (Company disclosure)