Today’s Trading Playbook
Abdelkhalek Mohamed | Equity Analyst
aabdelkhalek@egy.primegroup.org
KEY THEMES
Yesterday, we published our TAKEStock note regarding the state of the cement sector in the wake of radical changes in price and cost regimes. The Central Bank of Egypt hiked interest rates twice so far this year, 100bps on 21 March and 200bps on 19 May, while the EGP weakened by c.15%. Recently, Egypt’s Prime Minister directed the Egyptian Competition Authority (ECA) to reach a fair price for cement after the latest price surges. This will all put pressure on cement producers’ margins. From the surface, a weaker EGP may look promising for cement exporters, but not all exporters are created equal. In this TAKEStock, we gauged the potential impact of a weaker EGP, a high interest rate environment, and higher fuel prices. In sum, we would prefer companies that are operationally efficient with strong balance sheets. For more details please check out our TAKEStock note from yesterday.
Now, on to the top news and analysis for the day.
Top News & Analysis
MACRO NEWS
Egypt’s economy grew at a 5.4% clip in Q3 2021/22 vs. 2.9% a year earlier. (Cabinet)
Construction of the pipeline connecting Cyprus’ Aphrodite NG field to Egypt will begin by the end of the year. (Enterprise)
The government is looking to attract foreign investors with major new projects. (Enterprise)
CORPORATE NEWS
EFG Hermes Holdings’ [HRHO] net earnings rose 18% y/y to EGP345mn in Q1 2022, driven by 55% higher group net operating revenues to EGP1.9bn. However, it was driven mostly by the consolidation of aiBank for the full quarter. (Company disclosure)
Misr Chemical Industries [MICH] reported its Q3 2021/22 earnings that came at EGP52mn, where 45% of the quarter earnings were taking place in March 2022. MICH was able in March 2022 to achieve earnings of EGP23.4mn, bringing 9M 2021/22 bottom line of EGP148mn (+38% y/y) due to significantly higher caustic soda prices, coupled with improved y/y utilization rate.
TMG Holding [TMHG] announced its Q1 2022 financials, achieving consolidated net profit after tax of EGP553.9mn (+27.5% y/y) vs. EGP434.6mn a year earlier
Egypt Aluminum [EGAL] reported its 9M 2021/22 results. EGAL registered a net profit for the period of EGP1.7bn vs. net losses of EGP348mn a year earlier. Meanwhile topline recorded EGP10.8bn (+32% y/y).
Housing and Development Bank [HDBK] announced its preliminary standalone results for Q1 2022.
EIPICO [PHAR] announced its Q1 2022 results, reporting an increase in net profit reaching EGP186mn (+11% y/y).
Qatari Baladna, bought 1.4mn shares of Juhayna Food Industries [JUFO], worth EGP12.4mn, increasing its stake in from 9.99% to 10.13%. (Company disclosure)
Lafarge Cement Egypt is planning to initiate talks with ECA to renew the production quota for cement producers.