Today’s Trading Playbook
Amany Shaaban | Equity Analyst
KEY THEMES
QNB Alahli [QNBA] once again kicks off the earnings season, reporting its Q1 2022 figures. QNBA's stand-alone net earnings increased 12% y/y to EGP2.0bn, in line with our estimates (-4.8% vs. PRe). This comes despite a notable 20% y/y increase in NII that reached EGP4.2bn (-1.4% vs. PRe). Such increase did not filter through completely as higher provisions of EGP1.0bn continued to hinder bottom line growth with a significant 103% leap y/y. We note that NPLS ratio upped slightly in Q1 2022 to 3.81% (+14bps ytd). As for balance sheet growth, the bank managed to grow its total assets by 8% ytd to EGP384bn, maintaining its allocation scheme, where loan book grew 8% ytd to EGP189bn, representing 49% of total assets. On the other hand, deposits growth came a bit higher at 9.4% ytd to EP324bn, weakening NLDR a bit to 58.3% against 58.9% at the end of 2021.We remind you that we have a Neutral rating on the bank, with our 12M PT for QNBA is EGP19.5/share (ETR +18%). While QNBA’s TTM ROE is at 17.3%, the bank is currently traded at a TTM P/E and P/B of 4.6x and 0.8x, respectively.
Now, on to the top news and analysis for the day.
2. Top News & Analysis
MACRO NEWS
Egypt's state grains buyer set a limited tender on Monday to buy an unspecified amount of wheat from only European import origins included in its tender book. (Reuters)
Ministry of Housing is planning to launch 5 seawater desalination projects on the Red and Mediterranean coasts during the coming period, with capacities amounting to about 10.5mn cubic meters per month. (Economy Plus)
The Egyptian Businessmen’s Association wants Egyptian businesses to be able to open RUB bank accounts. The plan is aimed at maintaining trade between the two countries amid western sanctions imposed on Russia for its invasion of Ukraine. (Enterprise)
CORPORATE NEWS
Faisal Islamic Bank [FAIT] Q1 2022 standalone indicators showed bottom line leaping 119% y/y to EGP1.2bn. The surge in bottom line came in line with our estimates, partially in light of gains from the FX translation differences due to the EGP devaluation that took place in 21 March 2022. (Company disclosure)
Industrial Engineering Company for Construction and Development’s [ICON] BoD has agreed to allow Irish insulation manufacturer Kingspan to conduct due diligence on its sandwich panel-making business. (Enterprise)
Cement producers will allegedly must use alternative fuels (i.e. RDF) at no less than 15% of their fuel mix, according to Yasmeen Foad the minister of the environment. (Al-Mal)
Rowad Tourism [ROTO] announced their 2021 consolidated results, reporting a net profit of EGP2.8mn in 2021 compared to a net losses of EGP17.8mn last year. (Mubasher)
Elswedy Electric [SWDY] is reportedly allocating EGP3.5bn to expand in manufacturing and production within global markets. (Nabd)
GLOBAL NEWS
The Federal Reserve is expected to deliver two back-to-back half-point interest rate hikes in May and June to tackle runaway inflation, according to economists polled by Reuters who also say the probability of a recession next year is 40%. (Reuters)
OPEC told the European Union on Monday that current and future sanctions on Russia could create one of the worst ever oil supply shocks and it would be impossible to replace those volumes, and signaled it would not pump more. (Reuters)
3. Chart of the Day
Amany Shaaban | Equity Analyst
Source: CBE.
Net foreign assets of the Egyptian banking system declined sharply in December 2021. This is the lowest since 2015/16, reflecting the capital outflows due to global risk off mode towards emerging markets.
4. Markets Performance
