KEY THEMES
Once again, the market trading failed to cross the EGP1bn mark yesterday, as the Holy month of Ramadan draws to a close. We now have four trading days left in Ramadan (including today) before we embark on another long weekend (in observance of Eid El-Fitr this time) end of next week from Wednesday through Sunday. Not only are we going to have fewer trading days in May because of the vacations, but we will also have fewer operating hours for stores, shopping malls, coffee shops, cafeterias, restaurants, and cinemas, and theaters—all running up to only 9 pm for the next two weeks, ending 21 May. Also, conferences or events are prohibited throughout that period. In effect, this is a “partial lockdown” after COVID-19 cases started to rise again and the appearance of new virus variants around the world, especially coming from India, are posing a threat to an already shaky global economic recovery.
So, how can investors play this partial lockdown story? We suggest focusing on COVID-19-proof plays, such as EFG Hermes Holding [HRHO] (please see below), Fawry [FWRY], Misr Chemical Industries [MICH] (up 7.3% yesterday on good Q3 2020/21 results), Speed Medical [SPMD], and Telecom Egypt [ETEL]—all in alphabetical order.
POSITIVE
HRHO: An Al-Mal interview with the CEO of EFG Corp-Solutions could be a reminder for investors on how HRHO is expanding its traditional investment banking business model to include non-banking financials as well as commercial banking with its acquisition of aiBank. The stock, for which we have a 12-month price target of EGP17.7, offers a 25% return off market price. HRHO is trading at TTM and 2021 P/E of 8.4x and 7.9x and P/BV of 0.8x and 0.7x, respectively.