Today’s Top News & Analysis
Egypt to issue new steel licenses
New incentives package for industrial projects
Chinese requests to inject investments in yuan
EGX 30 hits a new record high
MICH 2022/23: Strong y/y growth driven by volume and price; stock and cash dividends proposed
MACRO
Egypt to issue new steel licenses
Egypt is reportedly considering issuing new licenses for the production of reinforcing and flat steel to investors next year. Meanwhile, Russia-based Novostal-M plans to build a steel plant in Egypt with investments of USD400-500mn. Last time Egypt issued new licenses for steel production was in November 2021, which contributed to an increase in the country's production of reinforcing steel by 13% y/y to 8.4mn tonnes in 2022. (Asharq Business)
New incentives package for industrial projects
The Egyptian President directed the government to provide a new incentives package for industrial projects. The package includes exempting projects in strategic industries from all types of taxes except for Value Added Tax (VAT) for five years, provided that the project is implemented and operational within a maximum period of three years. The package also included a possibility of recovering a percentage of the land cost, up to 50%, provided the project is executed within half of the agreed upon time frame. (Al-Mal)
Chinese requests to inject investments in yuan
The CEO of the General Authority for Investment & Free Zones (GAFI) revealed that the government received requests from Chinese investors to inject investments into the local market in yuan as a way to circumvent the USD shortage. He also pointed out that foreign entities are demanding the export of 30% of their production to protect themselves from currency fluctuations and facilitate the distribution of their profits. (Al-Mal)
EGX 30 hits a new record high
Yesterday, the EGX30 closed at an all-time high of 18,517 points, exceeding its previous record in 2018. The rally is thought to be backed by local investors trying to hedge against currency devaluation and the soaring inflation. The EGX 30 is now up 114% in EGP terms since the market’s most recent low in July 2022. (Enterprise)
CORPORATE
MICH 2022/23: Strong y/y growth driven by volume and price; stock and cash dividends proposed
Misr Chemical Industries [MICH] reported its financial statements for 2022/23, recording net profits of EGP546mn (+159% y/y) on higher revenues of EGP868mn (+58% y/y) with a 69% GPM (+13pp y/y), driven by:
· The EGP devaluation which resulted in higher local selling prices and stronger export revenues as well as a 464% y/y increase in FX gains, which was reflected in other income of EGP75mn.
· A higher production utilization rate.
· A 230% y/y increase in investment income to EGP76mn.
Meanwhile, MICH’s Q4 2022/23 net profits declined 29% q/q to EGP110mn on lower revenues of EGP191mn (-13% q/q) with a 67% GPM (-2pp q/q), driven in part by an 83% q/q decrease in other income to EGP6mn.
Lastly, MICH’s BoD approved distributing both cash and stock dividends. The proposed cash dividend is EGP183mn or EGP2.5/share, implying a payout ratio of 33% and a dividend yield of 9% based on yesterday’s closing price. Furthermore, MICH will issue a 50% stock dividend to increase its paid-in capital by EGP146mn to EGP439mn. MICH is currently trading at an LTM P/E ratio of 3.6x based on yesterday’s closing price. (Company disclosure: 1, 2)
Key Dates
28-Aug-23
ZMID: Cash dividend / Deadline for eligibility for a dividend of EGP0.150/Share.
30-Aug-23
ORAS: Financial results Announcement / Q2 2023 financial results' announcement.
31-Aug-23
ZMID: Cash dividend / Payment date for a dividend of EGP0.05/share (1st installment).
PHAR: Cash dividend / Payment date for a dividend of EGP1.00/share (2nd installment).
1-Sep-23
MSCI / MSCI's August 2023 Quarterly Index Review Effective Date.
5-Sep-23
Egypt PMI / August 2023 reading.
6-Sep-23
ELSH: OGM / Approving the decisions of the company’s board of directors in its meeting held on 15/6/2023.
ELSH: EGM / Amending some articles of the Company's bylaws.