Large caps continued to publish their Q1 2021 results last week and over the weekend too! Of our Core Coverage universe, we have so far seen some mixed trends. On one hand, Elsewedy Electric [SWDY] and EFG Hermes Holding [HRHO] have reported strong results, whereas Crédit Agricole Egypt [CIEB] and Commercial International Bank - Egypt [COMI], which published its Q1 report late Friday night, exhibited narrower net interest margin (NIM) y/y. Meanwhile, Orascom Construction’s [ORAS] earnings came somewhat short of our estimates, and CI Capital Holding’s [CICH] earnings were dented by a one-off ESOP cost triggered by Banque Misr’s mandatory tender offer (MTO). Yet, we think it is too early to tell whether Q1 2021 trends will permeate throughout 2021. For this, we have maintained our ratings and 12-month price targets (12M PT) as is for now.
Earnings aside, we could see real estate stocks coming back in favor this week following an Al-Mal report that the Egyptian government will be limited new land sales to real estate developers, thus excluding individuals. Earlier in the year, we had made a positive call on the real estate as we thought the negative sentiment is starting to turn positive.
POSITIVE
Real Estate: We think investors will bid real estate developers’ stocks higher this week, especially those exposed to new cities.
NEGATIVE
HDBK: Housing & Development Bank [HDBK] could feel the brunt of the government’s above-mentioned decision later on in the year