KEY THEMES
Zahraa Maadi Investment & Development [ZMID] is now the second largest EGX-listed real estate developer in terms of market cap, only EGP1.1bn behind TMG Holding [TMGH]. ZMID is now worth a market cap of EGP13.2bn after closing near its intraday high yesterday at EGP49.99/share. Here are some interesting comparisons:
1. Market cap of ZMID is now almost 3x that of Madinet Nasr Housing & Development’s [MNHD].
2. Market cap of ZMID is very close to 2.5x the market cap of either Palm Hills [PHDC], SODIC [OCDI], or Orascom Development [ORHD].
3. Remember the failed merger attempt between MNHD and OCDI back in 2018? ZMID’s market cap is now around 1.3x the current market cap of both name altogether.
It is important to remember that ZMID is 20.3%, owned by aiBank. With a market cap of EGP13.2bn, this would imply an attributable value of EGP2.7bn for aiBank. Despite the surge in ZMID stock price, we note that the market has not priced the effect on EFG Hermes Holding [HRHO], which has announced the acquisition of 51% of aiBank. As such, ZMID’s market value implies an attributable value of EGP1.4bn for HRHO or c.EGP1.5/share, 13% of yesterday’s close. By the way, ZMID’s market cap is 24% higher that of HRHO.
POSITIVE
TMGH, EMFD, PHDC, ORHD, HRHO: Within the real estate sector, we pick four stocks that have been lagging, namely TMGH, Emaar Development Misr [EMFD], PHDC, and ORHD. Also, we think HRHO is due for a re-rating as a result of its imminent acquisition of aiBank and its recently-announced strong Q2 2021 results.