Today’s Trading Playbook
KEY THEMES
A total of 720.8mn shares responded to Banque Misr offer to acquire up to 90% of CI Capital Holding [CICH] at a price of EGP4.7/share, implying a 96.9% stake. However, Banque Misr’s vice chairman reportedly announced that the bank would only own 90% of CICH. Given that the deal would be fulfilled at a price that was below the IFA’s fair value and general market consensus could be a bit of a setback to the sector. Going forward, we expect trading liquidity on CICH to be even more subdued. Meanwhile, one could argue that the depressed multiples implied by the CICH transaction is a bad omen EFG Hermes Holding [HRHO], CICH’s closest peer. However, from another perspective, we could argue that trading liquidity previously earmarked for CICH could be redirected towards HRHO.
Elsewhere, a rebounding global commodity market will catalyze a bounce back in the top line of certain names. On the other hand, this could pressure the margins of others. We find Skimmed Milk Powder (SMP) prices reverting to their pre-COVID-19 peak, which would pressure cheese manufacturers’ margins down the road. Yet, the effect on margins should be delayed until their inventory levels of cheaper SMP are depleted.
POSITIVE
OCDI: A potential non-binding offer by Aldar Properties [ADX: ALDAR] is positive for OCDI, offering a 11-17% upside to Thursday’s closing price, albeit 11-16% below Bloomberg consensus of EGP21.4/share.
NEUTRAL
HRHO: Low implied valuation from CICH’s offer to be offset by trading liquidity going through to HRHO.
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