Today’s Top News & Analysis
EGP value declines in NDF contracts
AFC may invest up to USD1.0bn in Egypt's infrastructure
Abu Dhabi Ports to cooperate with SCZone
Egypt’s intention to sell an additional stake in Telecom Egypt is under initial study
PACHIN’s bidding war continues
RMDA 2022: Strong year despite a weak Q4
FWRY 2022: Banking Services is bears fruit across topline
Macro
EGP value declines in NDF contracts
EGP value has decreased again in non-deliverable forward contracts (NDF), recording EGP38 against the USD. Reportedly, the decrease comes amid the slowdown in releasing goods from ports and financing imports through banks. (Economy Plus)
AFC may invest up to USD1.0bn in Egypt's infrastructure
African Finance Corporation (AFC) plans to invest up to USD1.0bn into Egypt's infrastructure projects, including the following:
· Renewable energy
· Natural gas
· Heavy industries. (Enterprise)
Abu Dhabi Ports to cooperate with SCZone
Abu Dhabi Ports is studying the options of building a logistics center in SCZone. (Mubasher)
Corporate
Egypt’s intention to sell an additional stake in Telecom Egypt is under initial study
After contacting the Egyptian government, its 80% shareholder, Telecom Egypt [ETEL] confirmed that the former's intention to sell an additional stake in the latter is under initial study and may not necessarily result in a transaction. (Company disclosure)
PACHIN’s bidding war continues
National Paints Holding (NPH) raised its mandatory offer to buy up to 100% of Paints & Chemical Industries (PACHIN) [PACH] by 17% to EGP34/share. This makes NPH the highest bidder on the table, surpassing Compass Capital and Eagles Chemicals offers. (Company disclosure)
RMDA 2022: Strong year despite a weak Q4
Rameda [RMDA] posted consolidated net profits of EGP246mn (+35% y/y), on higher revenues of EGP1.5bn (+19% y/y). Gross profit margin came in at 49% (+2.2pp y/y).
However, Q4 2022 came in weak, reporting net profits declined to EGP51mn (-31% y/y, -28% q/q) due to:
· Lower revenues of EGP391mn (-1% y/y, +2% q/q),
· Lower volumes to 8.6mn units (-18% y/y)
· Lower gross profit margin to 46% (-1.5pp y/y, -4.7pp q/q).
On a separate note, RMDA's BoD approved to distribute a 50.7% stock dividend worth EGP128mn, raising RMDA's paid-in capital to EGP380mn. (Company disclosures: 1, 2, 3)
FWRY 2022: Banking Services is bears fruit across topline
Fawry's [FWRY] 2022 net earnings showed a double-digit growth of 38% y/y to EGP240mn in 2022, on higher revenues of EGP2.3bn (+37 y/y). The sharp rise across FWRY's topline was in light of:
· Higher Banking Services revenues of EGP761mn (+85% y/y), as it was responsible for FWRY's revenue growth of 56% in FY 2022.
· The ADP segment still obtains the biggest contribution to total FWRY's revenue (48% in 2022 vs. 59% the year before). We believe the prosperity of the Banking Services segment is the primary cause of the drop in ADP contribution. Meanwhile, the ADP segment recorded revenues of EGP1.1bn (+10% y/y) in 2022.
· Microfinance revenues nearly doubled to EGP251mn (+83% y/y) due to the significant rise in FWRY's outstanding portfolio of EGP731mn.
· Supply Chain revenues climbed by 31% y/y to EGP129mn in 2022.
Operationally, FWRY's throughput value (TPV) was EGP205bn (+57 y/y) due to a higher TPV across FWRY's segments. Yet, we noted the Banking Services segment solely contributed 49% of FWRY's TPV in 2022, up from 40% in 2021.
Meanwhile, the considerable growth in TPV was the result of:
· Higher acceptance enabled POSs of 235,000 (+26% y/y) in 2022.
· A higher number of wallet transactions 85.4mn (+64% y/y), resulting in a higher total wallet processed value of EGP89bn (+123% y/y) in 2022.
· More transactions of 1.3bn in 2022 vs. 1.2bn the year before.
FWRY's gross profit margin came in at 60% (+4 pp y/y), whereas the net profit margin was maintained at 11% as last year. With an ROE of 12%, FWRY is currently trading at a P/E and P/BV of 74x and 7x, respectively. (Company disclosure: 1, 2)
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