Today’s Top News & Analysis
The Fed raised interest rates by 25bps
A new strategic partnership between the World Bank and Egypt
New USD300mn Chinese industrial complex planned in Ain Sokhna
Egypt to suspend sugar exports for three months
Orascom Construction 2022: FX gains pushes the bottom line higher
SKPC’s OGM approves EGP0.9 DPS
EFIC’s OGM approves raising cash dividends to EGP5/share
Dice 2022: Extraordinary net profits on high revenues and low costs
EFIH's OGM approves a DPS of EGP0.23
EFG Hermes 2022: Stupendous revenue growth
B Investments signs an EGP500mn agreement with TSFE
Macro
The Fed raised interest rates by 25bps
The Federal Reserve raised interest rates by 25bps yesterday despite banking turmoil. Current benchmark interest rates are now in the 4.75-5.00% range, the highest level since 2007 before the Global Financial Crisis. (Asharq Business )
A new strategic partnership between the World Bank and Egypt
The World Bank reportedly agreed to make a new strategic partnership framework with Egypt for 2023-27, at a value of USD7bn. The new strategy is consistent with Egypt’s Sustainable Development Strategy, Egypt’s Vision 2030, and Egypt’s National Climate Change Strategy 2050. (Mubasher)
New USD300mn Chinese industrial complex planned in Ain Sokhna
China's Xin Feng intends to build a new industrial complex in Ain Sokhna specializing in steel and complementary industries. The complex will cover an area of 750,000 sqm and will focus on exporting Egyptian steel products. The project is pending final approval from the Egyptian government. (Al-Borsa)
Egypt to suspend sugar exports for three months
Effective 21 March 2023, the Egyptian government suspended exporting all types of sugar for three months unless sugar supply exceeds local demand. (Official Gazette)
Corporate
Orascom Construction 2022: FX gains pushes the bottom line higher
Orascom Construction’s [ORAS] 2022 net income came in at USD113.5mn, almost the same as the year before and +46% vs. our expectations due to USD69.3mn in FX gains. Revenues recorded USD4.18bn (+17.9% y/y, +0.4% vs. our expectations), with 62.4% of revenues coming from Egypt and the remaining 37.6% from MEA and USA. EBITDA reached USD200.3mn (-2% y/y, -4.9% vs. our expectations). GPM and EBITDA margin recorded 8.3% (-1.5pp y/y) and 4.8%
(-1pp y/y), respectively. Backlog reached USD5.27bn (-13% y/y), with 2022 new awards recording USD3.6bn (+1.8% y/y). (Company disclosure)
SKPC’s OGM approves EGP0.9 DPS
Sidi Kerir Petrochemicals Co.’s (Sidpec) [SKPC] OGM approved distributing dividends of EGP0.9/share, implying a dividend payout ratio of 55% and a dividend yield of 5.6%. The dividend will distributed in two payments: (1) EGP0.5/share within a month and (2) EGP0.4/share in October 2023. (Company disclosure)
EFIC’s OGM approves raising cash dividends to EGP5/share
Egyptian Financial & Industrial Co.’s [EFIC] OGM held on 21 March approved to raise its DPS to EGP5/share to be distributed in three installments, up from the previously-proposed EGP3/share. This raises the payout ratio to 48% and implies a dividend yield of 9.8%. (Company disclosure)
Dice 2022: Extraordinary net profits on high revenues and low costs
Dice Sport & Casual Wear [DSCW] reported consolidated 2022 net profits of EGP162mn (+409% y/y), due to:
(1) Higher revenues of EGP2.1bn (+34% y/y).
(2) Higher gross profit margin of 24% (+7pp y/y).
For Q4 2022, DSCW's net profits grew by 437% y/y and 97% q/q, due to:
(1) Higher revenues of EGP672mn (+39% y/y, +21% q/q).
(2) Higher gross profit margin to 46% (+31pp y/y, +23pp q/q).
DSCW is currently trading at a TTM P/E of 4.3x. (Company disclosure)
EFIH's OGM approves a DPS of EGP0.23
In a meeting held on 21 March 2023, E-Finance's [EFIH] OGM approved the distribution of a DPS of EGP0.23/share, implying a payout ratio of 52% and a dividend yield of 1.4%. (Company disclosure)
EFG Hermes 2022: Stupendous revenue growth
· EFG Hermes Holding’s [HRHO] Q4 2022 net income surged 141% q/q to EGP813mn on 98% q/q higher top line of EGP4.6bn. Quarterly revenues were mostly dominated by the Investment Bank Platform which grew by a staggering 192% q/q. Strong Q4 2022 display also came visible form an annual perspective, where both top and bottom lines grew by 117% and 63%, respectively.
· The Investment Bank Platform’s strong performance came against the backdrop of:
(1) Robust Assets Management operations, where revenues grew 152% q/q to EGP245mn.
(2) Holding & Treasury Activities revenues were 5x higher y/y (+484% q/q) to EGP2.1bn on the EGP devaluation during Q4 2022.
· The NBFS Platform growth in Q4 2022 came a bit tamer sequentially, yet strong annually. Revenues for the segment registered EGP781mn (+46% y/y, +18% q/q). Stronger annual performance came due to a massive leap in ValU portfolio and top line, where the consumer finance company recorded a top line of EGP283mn (+235% y/y).
· The Commercial Banking Platform (i.e. aiBank) saw a flattish bottom line q/q for Q4 2022 reaching EGP113mn, yet achieving annual growth of 55%, as the restructuring efforts appear more meaningful between 2021 and 2022. The bank’s net interest income surged by 130% y/y in Q4 2022 to EGP509mn. We note that comparable Q4 2021 figures only include November and December figures following the bank’s acquisition.
· During 2022 as a whole, HRHO achieved a net profit after minority of EGP1.8bn (+18% y/y) on stupendous revenue growth of 77% to EGP10.9bn. We note that the company saw FX gains during the year of EGP2.5bn. HRHO is currently traded at a TTM P/E of 9x and a P/BV of 1x with an ROAE of 13%. (Company disclosure)
B Investments signs an EGP500mn agreement with TSFE
In reference to B Investments' [BINV] disclosure dated 24 January 2023, BINV's BoD signed an agreement with The Sovereign Fund of Egypt (TSFE) through the latter's healthcare and pharmaceutical industries sub-fund to invest up to EGP500mn. (Company disclosure)
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