Today’s Trading Playbook
KEY THEMES
Today marks the last day of e-finance’s [EFIH] retail subscription, with a coverage ratio as high as above 20x by end of Thursday’s session. EFIH is set to debut next Wednesday, 20 October 2021, and it’s very interesting what it could bring on the table when it comes to overall market liquidity.
Elsewhere, aluminum prices soared to a 13-year high, closing Friday just a notch below USD3,200/ton. Such renewed rally for aluminum is mainly caused by power shortages in China, and expectations of subdued output raise the need for inventory accumulation. Many sources believe that the current supply shock could persist to a better part of 2022. This, of course, should be reinforcing to Egypt Aluminum’s [EGAL] 2021/22 profitability. While any upward movement in EGAL’s share price is understandable, we should pinpoint two important things: (1) Aluminum prices right now are almost USD1,000/ton above their mid-point price in the last 10 years and (2) the current electricity price for EGAL has great chances to be revised upward after the 5-year-long pricing set in April 2020 expires. With that in mind, enjoying the journey shouldn’t spoil your view of the destination.
Meanwhile, the renewed rally in aluminum prices came coupled with a strong rally in copper prices as well. Copper is currently traded above USD10,000/ton, soaring to more than a 10- year high. We note that, higher copper and aluminum prices should be somewhat of a booster to Elsewedy Electric’s [SWDY] cables segment going into Q4 2021, amid flourishing turnkey conditions. We remind you that we have an Overweight rating on SWDY, with a 12M PT of EGP12.7/share [ETR +56%]. SWDY is currently traded at TTM P/E and EV/EBITDA of 4.8x and 3.5x, respectively.
POSITIVE
EGAL, SWDY: Rising aluminum and copper prices are positive in the short term.
Now, on to the top news and analysis for the day.