Today’s Trading Playbook
KEY THEMES
The Egyptian government’s decision to raise natural gas prices for certain industries will take effect tomorrow, 1 November. Below, we summarize our take on the effect this step will bring about on the listed companies. Meanwhile, a more detailed analysis can be found in our TAKEStock published earlier this morning.
We see certain names taking a punch to their pocketbooks, mainly manufacturers of fertilizers (e.g. Abu Qir Fertilizers [ABUK], MOPCO [MFPC], and Alexfert which is a 55.4%-owned subsidiary of Egypt Kuwait Holding Co. [EKHO/EKHOA]), as well as steel (e.g. Ezz Steel [ESRS]). Inversely, we note the price increase should not impact Sidi Kerir Petrochemicals [SKPC] as it pays for natural gas using a pricing formula. Egypt’s cement manufacturers will not be hurting either, being mostly reliant on coal, and this price hike will most likely lead them to jettison their plans to reuse natural gas. Lastly, Egypt’s ceramics manufacturers will generally be minimally impacted, with the exception of Lecico Egypt [LCSW].
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