Today’s Trading Playbook
KEY THEMES
A few trading days left before Eid Al-Adha with many market participants on holidays already ahead. Absent major market moving news, we expect a subdued trading activity.
POSITIVE
Misr Hotels [MHOT]: Yesterday, we introduced a contrarian play on the Egyptian tourism industry with a quick valuation exercise for Misr Hotels [MHOT]. Please read it here if you missed it. Yesterday, National Housing for Professional Syndicates [NHPS]—another hotel operator that is often overlooked, probably because its name does not reveal what the company does—has reminded us with yet another hotel valuation, which underpins our valuation for MHOT. NHPS owns Le Meridien Heliopolis hotel, a 283-room hotel in East Cairo, that it is selling for EGP604mn, implying a market cap value for the hotel alone at EGP2.1mn/room vs. only EGP0.8mn for MHOT (as a two-hotel company).
NEGATIVE
Fawry [FWRY]: The high-flying e-payment firm’s stock (up 118% ytd, even after its drop over the last three days), has just revealed plans to double up its capital. Please read the news below. We had mentioned here before that the stock is optimistically valued on a P/E ratio basis, surpassing the valuation of PayPal Holdings [NASDAQ: PYPL] for example. FWRY has risen to as high as EGP19.47 intraday on 19 July before giving up all its gain since 5 July. As the market values the stock based on potential growth, the question is now whether the market will appreciate that growth more than the company’s need for cash—usually a negative catalyst for EGX-listed stocks—as investors prefer to avoid doling out cash in the form of capital increases.
Now, on to the top news and analysis for the day.