Today’s Top News & Analysis
USD700mn worth of Chinese investments coming to SCZone
Some pharma raw materials to be exempted from VAT
GASC deferred payments for wheat due to FX shortage
EGCH 9M FY2022/23: Net income leap on higher exports revenue
AUTO Q1 2023 results: Investment income saves AUTO’s bottom line.
HRHO's EGM approves rebranding and capital increase
EFG Finance plans to launch a new SMEs financing subsidiary
HELI Q1 2023: Revenues going up
ALCN 10M 2022/23: More triple-digit growth
MACRO
USD700mn worth of Chinese investments coming to SCZone
The Suez Canal Economic Zone (SCZone) signed agreements worth USD700mn with a number of Chinese companies to invest in projects in China’s TEDA industrial zone in Ain Sokhna. The projects include:
· USD265mn power plant and USD100mn petcoke products factory by Hidier Power Group.
· USD110mn bromine factory and another USD200mn sodium hydroxide project by Shandong Tianyi.
· USD20mn clothing factory and another USD12mn textiles factory. (Enterprise)
Some pharma raw materials to be exempted from VAT
The Egyptian Customs Authority decided to temporarily exempt some raw materials used in the pharmaceutical industry from VAT to prevent shortages of drugs. The decision is made to ease access for pharma producers despite the blockage of imports due to FX shortage. (Enterprise)
GASC deferred payments for wheat due to FX shortage
The General Authority for Supply Commodities (GASC) defaulted on payments for wheat imports driven by deferred opening letters of credit amid an FX shortage. (Reuters)
Corporate
EGCH 9M FY2022/23: Net income leap on higher exports revenue
Egyptian Chemical Industries (Kima) [EGCH] reported its financial results for 9M FY2022/23:
· Net income increased by 129% y/y to EGP1.1bn on the back of a 65% y/y leap in revenues to EGP5.1bn. This was mainly due to an increase in exports revenue that represented 71% of total revenues (vs. 66% last year), reflecting the premium in global prices even after the latest plunge. However, due to an increase in cost, GPM remained flat y/y at 48%.
· The reason why the increase in revenues did not filter through to the bottom line was an 83% y/y increase in net financing cost to EGP568mn on the back of interest rate hikes seen during the fiscal year. The third quarter alone represented 42% of the period’s financing cost.
· On a quarterly basis, Q3 FY2022/23 recorded a whopping 276% q/q increase in net income to EGP501mn (45% of the period’s profits) on the back of an 87% q/q increase in revenues to EGP2.3bn.
· Kima’s ROE now stands at 15.5% against 9.8% last year. (Company disclosure)
AUTO Q1 2023 results: Investment income saves AUTO’s bottom line.
· GB Corp [AUTO] reported Q1 2023 net profits of EGP108mn (-53% y/y) on lower revenues of EGP4.7bn (-40% y/y). Meanwhile, the GPM decreased by 1pp y/y to 22%.
· Net profits were mainly driven by GB Capital's net profits of EGP189mn (+55% y/y) on higher revenues of EGP1bn (+21% y/y). Despite GB Capital’s operating loss of EGP20mn, the increase in income from associates to EGP222mn (+92% y/y) more than offset the operating loss.
· Meanwhile, GB Auto & Auto-Related generated net losses of EGP81mn compared to net profits of EGP108mn in Q1 2022 due to:
o Lower revenues of EGP3.9bn (-37%y/y).
o Higher SG&A-to-revenues ratio of 13% (+6pp y/y).
o Higher FX loss of EGP264mn (+33% y/y).
o Higher finance cost of EGP199mn (+33% y/y). (Company disclosure)
HRHO's EGM approves rebranding and capital increase
EFG Holding's [HRHO] EGM approved the rebranding from EFG Hermes Holding to EFG Holding to ensure the brand is in line with the company's expansion through its main three subsidiaries: (1) EFG Hermes as the investment bank, (2) EFG Finance as the NBFS arm, and (3) aiBank as the commercial bank. The EGM also approved increasing HRHO's paid-in capital by EGP1.4bn through 25% bonus shares. (Company disclosure)
EFG Finance plans to launch a new SMEs financing subsidiary
The CEO of EFG Finance, the NBFS arm of EFG Holding [HRHO], announced the company's plans to establish a new company for small- and medium-sized enterprise (SME) financing as part of the expansion strategy in the non-banking financial platform. He also stated that the financing limits for new companies will range from EGP0.2-5mn and that the company has an initial customer base through its sister entities, namely Tanmeyah for Microfinance and EFG Hermes Corp Solutions. (Al-Mal)
HELI Q1 2023: Revenues going up
Heliopolis for Housing & Development’s [HELI] Q1 2023 net income came in at EGP19.4mn compared to EGP3.2mn in Q1 2022. Net revenues came in at EGP91mn compared to EGP51.9mn in the comparable period (+77% y/y), while GPM widened by 3.9pp y/y to 76.4%. Investment income more than doubled to EGP31.7mn in Q1 2023. (Company disclosure)
ALCN 10M 2022/23: More triple-digit growth
Alexandria Container Handling Co.’s [ALCN] 10M 2022/23 net profits came in at a strong EGP3.5bn (+139% y/y), in line with Prime Research's expectations (PRe). Revenues came in at EGP3.8bn (+80% y/y, -4% vs. PRe). This came from handling 676,214 containers (-3% y/y, +6% vs. PRe), with an average revenue/container of EGP5,650/TEU (+86% y/y, -9% vs. PRe). The strong growth in profits is attributable to a higher USD/EGP FX rate paired with a higher margin despite lower volumes. (Company disclosure)
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