KEY THEMES
The past few trading days, market participants have been bidding shares of energy-intensive stocks higher in anticipation of government decisions to cut energy prices, particularly a key driver for Ezz Steel [ESRS], Al Ezz Dekheila [IRAX], Sidi Kerir Petrochemicals [SKPC], and Abu Qir Fertilizers [ABUK]. Another government action which could be in the works is related to the poultry industry, with the resumption of poultry exports representing a positive omen for poultry stocks in general. Destination markets and their depth are two factors to take into account, but generally speaking any action that would lighten inventory levels in the domestic market is a positive for the industry. The only risk would be if importation intensifies as well. Meanwhile, the Prime Minister’s relaxing the construction limitations on new buildings may lend a helping hand to cement manufacturers in the short term. The cement industry is still looking forward to government support to revive the industry which has been plagued with a chronic oversupply issue.
POSITIVE
Poultry, Cement: In view of the above, we think poultry names will be in the spotlight today, led by Cairo Poultry [POUL]. Also, cement stocks may be in focus with the government suggesting new construction terms could be issued next week.
NEGATIVE
IRAX: Al Ezz Dekheila Steel’s [IRAX] huge losses in Q2 2020, while expected, is not helping the overall sentiment on the stock or the industry, leaving the government’s decision to cut natural gas prices as the only positive in the short term.