Today’s Trading Playbook
KEY THEMES
Yesterday was one of the few days we have seen lately where institutional foreign investors ended the day net buyers (EGP16.8mn). Twenty-two stocks of the EGX 30 rose yesterday, including five of the 19 top picks we listed last Thursday advancing in excess of 2% apiece: HRHO (+4.4%), OCDI (+3.6%), AUTO (+2.4%), COMI (+2.4%), and CIRA (+2.3%). It seems the geopolitical risk concerning the situation in Libya and Ethiopia is subsiding, which a supporting to the market.
POSITIVE
MPCI: Our call two days ago is paying off; the stock is up 12.9% so far (+15.7% at last price). MPCI is now at a two-year high. Please read Talking Pharma here to learn why we picked the stock of what was once a money-losing drug manufacturer. MPCI traded yesterday 91,538 shares (the highest in 13 trading sessions) worth EGP1.5mn. With a sub-EGP100mn market cap, MPCI is the smallest of all EGX-listed pharma stocks, making it a less likely candidate for institutional investors given its low liquidity, but could The Sovereign Fund of Egypt be interested as part of its health care fund? We believe all state-owned pharma stocks will be better off if merged into one larger entity. As for MPCI, if its June profitability proves sustainable, we could see higher liquidity over the coming period. But shareholders should not expect dividends just yet until its retained losses are extinguished (i.e. book equity was a negative EGP88mn as of 31 March 2020). MPCI is one of the few companies that reports a monthly P&L, so we’ll look forward to July figures by late August.
NEUTRAL
RMDA: Another drug manufacturer was up yesterday after receiving a nod from the Egyptian Drug Authority to price two medicines used in COVID-19 protocol starting September (as detailed in the news below). Until there is visibility on the demand for the two drugs, it will be difficult to gauge the impact on RMDA’s results.
Now, on to the top news and analysis for the day.