Today’s Top News & Analysis
Egypt's net international reserves slightly improve in January 2023
Contraction in Egyptian non-oil private sector activity for the 26th consecutive month
Ministry of Transportation denies any negotiations with AD Ports Group
Concord Investments eyes investments in Egyptian healthcare sector
Foreign investors interested in acquiring SEMADCO
EGP devaluation saves EGBE's balance sheet growth in 2022
A 10% stake in Helwan Fertilizers sold for EGP1.3bn, neutral for Abu Qir Fertilizers
ISPH signs an agreement with Boehringer Ingelheim
AAIB negotiates selling its stake in Palm Hills Developments to Al-Ain Holding
Palm Hills Developments gets approval to reduce its capital by EGP120mn
Egyptian Satellites' 2022 preliminary results show a 27% growth in net profits
Speed Medical to raise its paid-in capital; sells Speed Hospital
Macro Group to decrease its paid-in capital
MACRO
Egypt's net international reserves slightly improve in January 2023
For the fifth month in a row, Egypt's net international reserves (NIR) increased in January 2023 to USD34.2bn from USD34bn in December 2022. (CBE)
Contraction in Egyptian non-oil private sector activity for the 26th consecutive month
Egypt's Purchasing Managers’ Index (PMI) for the non-oil private sector fell to 45.5 in January 2023 from 47.2 in December 2022, well below the 50.0 threshold that marks growth in activity, as high inflation and a continued shortage of foreign currency still weighs on business. (Reuters)
Ministry of Transportation denies any negotiations with AD Ports Group
Ministry of Transportation has denied any ongoing negotiations with AD Ports Group to sell development and management rights of Suez Port. News has falsely reported a potential takeover by the ADQ-owned company of the port under a usufruct contract, which the ministry completely dismissed. (Economy plus)
Concord Investments eyes investments in Egyptian healthcare sector
New York-based Concord International Investments Group eyes investment opportunities in the Egyptian healthcare sector that amount to USD40mn as per management's statement. (Economy plus)
Foreign investors interested in acquiring SEMADCO
Sources allege that foreign and GCC investors have shown interest in acquiring a stake in El-Nasr for Fertilizers & Chemical Industries Co. (SEMADCO), a subsidiary fully owned by The Chemical Industries Holding Company and is under the ministry of public business sector. (Economy plus)
CORPORATE
EGP devaluation saves EGBE's balance sheet growth in 2022
Egyptian Gulf Bank [EGBE] has announced the full results for 2022. The bank managed to grow its net income by 23% y/y to EGP856mn which was mainly due to:
(1) Significant decrease in the bank's effective tax rate to 47% against 55% last year
(2) A 10% y/y increase in net interest income to EGP3bn.
This growth in net income came despite:
· maintaining the same level of Cost of Risk at -1%
· other operating expenses of EGP12mn against other operating income of EGP90mn last year
· 4.4pp increase in cost-to-income ratio reaching 46%.
EGBE's main remarkable figure of 2022 would be the substantial growth in the bank's loan book by 52% ytd to EGP28.4bn which was on the back of growth in foreign currency loans due to revaluation after the EGP devaluation, which brought EGBE's GLDR up to 40% from 29%. This growth also positively affected the bank's credit quality as the NPL ratio decreased from 5.84% in 2021 to 4.55% in 2022 with a coverage ratio of 120%.
On the deposits side, the bank grew its deposits by 11% ytd to EGP71.7bn in a year of fierce competition, also attributable to foreign currency deposits. We note that EGBE's asset repricing gap turned negative in 2022 amounting to -3.9% of total assets, which makes the event of increasing interest rates harmful to the bank. While EGBE's net foreign currency increased to 1% of total equity against 0.08% last year, making the bank a beneficiary of further EGP devaluations.
The bank's NIM remained flat y/y at 4.38%, while ROAE increased by 3.6pp to 15.50%.
As for the bank's multiples, EGBE is currently traded at a P/E of 8.5x and a P/BV of 1.4x. (Bank disclosure)
A 10% stake in Helwan Fertilizers sold for EGP1.3bn, neutral for Abu Qir Fertilizers
According to the daily report of the Egyptian Exchange published on February 2, 2023, a 10% stake in Helwan Fertilizers Company (HFC) was sold for a total value of EGP1.3bn representing 15mn shares. We note that Abu Qir Fertilizers [ABUK] owns a 17% stake in HFC. Using the deal value, we calculate that HFC was valued at EGP13.1bn, which implies EGP2.2bn for ABUK's stake.
We had included the value of ABUK's stake in HFC at a value of EGP2.1bn in our price target of EGP40.6/share. Thus, the deal value is higher than ours by some 7%. If we use the implied deal value, our valuation of ABUK would increase by only EGP0.12/share, representing merely 0.3% of ABUK’s market price.
According to our estimates, the implied P/E multiple from the deal using HFC’s 2021 earnings of USD101mn is 4.3x (at yesterday’s exchange rate of EGP30/USD). We believe the effect of the deal on ABUK's share is neutral, given that the valuation resulting from the HFC deal is very close to our valuation. (EGX, Prime Research)
ISPH signs an agreement with Boehringer Ingelheim
Ibnsina Pharma [ISPH] signed an agreement with Boehringer Ingelheim to distribute its treatments across cardiovascular, cardio-renal-metabolic and respiratory therapeutic areas in Egypt. (Company disclosure)
AAIB negotiates selling its stake in Palm Hills Developments to Al-Ain Holding
Arab African International Bank (AAIB) is reportedly negotiating selling its 12.7% stake in Palm Hills Developments [PHDC] to Al-Ain Holding, a UAE-based investment company. (Asharq business)
Palm Hills Developments gets approval to reduce its capital by EGP120mn
The Financial Regulatory Authority (FRA) approved Palm Hills Developments Co [PHDC] capital reduction from EGP6bn to EGP5.9bn by writing off 60mn treasury shares with a par value of EGP2/share, totaling EGP120mn. (FRA)
Egyptian Satellites' 2022 preliminary results show a 27% growth in net profits
Egyptian Satellites' [EGSA] 2022 preliminary net profits grew to USD39mn (+26.7% y/y) despite a decline in revenues to USD99.9mn (-10.7% y/y). Meanwhile, gross profit margin expanded by 25pp y/y to 45.5%. (Company disclosure)
Speed Medical to raise its paid-in capital; sells Speed Hospital
Speed Medical [SPMD] EGM approved the BoD proposals to:
(1) Increase the paid-in capital by EGP111mn through a rights issue, offering c.555mn shares at a par value of EGP0.2/share.
(2) Sell the full stake of 80.25% in Speed Hospital located in Obour City. (Company disclosure)
Macro Group to decrease its paid-in capital
Macro Group Pharmaceuticals [MCRO] will hold an EGM to discuss decreasing its paid-in capital by 1.24% or EGP1.4mn, through terminating c.7.2mn treasury shares. The total outstanding shares after the capital decrease will be c.570mn shares. (Company disclosure)
MARKETS PERFORMANCE
KEY DATES
Latest Research
