Today’s Top News & Analysis
What’s next from the Egyptian government’s offerings program?
Egypt may sell 40% of Helwan Fertilizers to a strategic investor
ACWA Power to invest USD10bn by 2026
Egypt plans to drill 35 natural gas wells by FY25
BP drilling four wells in Q4 2023
Indorama offers to establish two factories
TAQA submitted a bid to acquire Wataniya
EIPICO denies selling a stake to a strategic investor
DSCW Q2 2023: Strong earnings growth on higher revenues and gross profit margin
MACRO
What’s next from the Egyptian government’s offerings program?
The Egyptian Cabinet's Information & Decision Support Center (IDSC) released a report detailing the Egyptian government’s offerings program and its targets. Some of the details are as follows:
· Increasing the private sector’s contribution of total investments to 65% over the coming few years.
· Increasing the investment rate to 25-30% to reach an economic growth rate between 7-9%.
· A total of 35 entities, across 19 sectors, are now part of the IPO program after adding Easter Co. [EAST], Ezz Al Dekheila [IRAX], and Telecom Egypt [ETEL] to the list.
· Egypt will exit from 12 companies within 3-5 years, cut or maintain investments in 16 companies, and increase or hold on to investments in 7 companies.
· The government completely exiting:
o 83% of its stake in the agricultural sector.
o 11% of its stake in the IT & communications sector.
o 14% of its stake in the water and sewage sector.
· The next phase of the offerings program will start in October and end in June 2024, targeting USD5bn from the sale of:
o Jabal Al-Zeit Wind Farm in October 2023.
o National Petroleum Co.’s (Wataniya) stations in October/November 2023.
o National Co. for Production & Bottling of Natural Water (Safi) in December 2023, where two investors are currently conducting their due diligence, namely Al-Mansour Group and Agthia Group [ADX: AGTHIA]. We note that Safi has been restructured, and its factories and 75 sales outlets were transferred to a newly-created company, which is what is being offered to investors.
o Zafarana Wind Farm in December 2023.
o Siemens Electricity Station in Beni Suef in June 2024 (a 70% stake worth USD1.4-1.9bn).
Four water desalination plants in H1 2024, from a total of 21, while the rest will be offered later (2024-2026). The government expects to collect investments of USD3.3bn for all the plants from the private sector. (IDSC, Al-Borsa)
Egypt may sell 40% of Helwan Fertilizers to a strategic investor
Egypt is reportedly considering offering at least 40% of Helwan Fertilizers Co. (HFC) to a strategic investor. The estimated value of HFC is said to exceed USD1.5bn. Furthermore, HFC achieved net profits of USD124.6mn (+22% y/y) in 2022. We note that Abu Qir Fertilizers [ABUK] has a 17% stake in HFC. (Asharq Business)
ACWA Power to invest USD10bn by 2026
ACWA Power intends to invest USD10bn in Egypt by 2026. The company is aiming to capture 50% of the Egyptian renewable energy market by 2026 through developing solar and wind power plants as well as water desalination projects. (Zawya)
Egypt plans to drill 35 natural gas wells by FY25
Egypt is planning to drill 35 new natural gas wells, during FY24 and FY25, with an investment cost exceeding USD1.5bn. Meanwhile, the government is currently drilling and completing 20 wells in the Zohr field, with plans of drilling five additional wells starting 2024. (Cabinet statement)
BP drilling four wells in Q4 2023
As part of its USD3.5bn investment plan, BP intends to drill four new natural gas exploration wells in Q4 2023. The company will drill two wells in the Raven field in the western Mediterranean and two wells in the northern region of King Mariout. (Asharq Business)
Indorama offers to establish two factories
The Egyptian government is currently studying the Singapore-based Indorama Corporation's offer to build a phosphate fertilizer plant and a mineral silicon plant with a total investment cost of c.USD700mn. Meanwhile, Indorama expressed its willingness to partner with existing projects, provided that production is earmarked for exports. (Cabinet statement)
CORPORATE
TAQA submitted a bid to acquire Wataniya
TAQA Arabia [TAQA] said it submitted a non-binding bid to acquire a stake in National Petroleum Co. (Wataniya). TAQA (and reportedly Abu Dubai National Oil (ADNOC), Emirates National Oil Co. (ENOC), and Saudi-based Petromin), went through to the second round of conducting their respective due diligence. The bids submitted for Wataniya are said to be between USD250-280mn. Meanwhile, TAQA's offer includes financing the deal using a mix of USD and EGP, unlike the others which are only USD. TAQA is reportedly seeking to borrow at least EGP3bn from a consortium of local banks led by CIB [COMI]. Meanwhile, the Egyptian government expects to complete the Wataniya deal by October/November 2023. We note that Wataniya has been restructured to improve its attractiveness, including ownership transfer of 174 stations (out of more than 300 owned by Wataniya) to a newly-created company which is now being offered to investors. (Company disclosure, IDSC, Asharq Business: 1, 2)
EIPICO denies selling a stake to a strategic investor
EIPICO [PHAR] denied rumors that its main shareholder is selling a stake to a strategic investor. (Company disclosure)
DSCW Q2 2023: Strong earnings growth on higher revenues and gross profit margin
Dice Sport & Casual Wear’s [DSCW] H1 2023 net profits grew by 380% y/y to EGP121mn due to:
· Higher revenues of EGP1.4bn (+60% y/y).
· Gross profit margin expanding by 12.5pp y/y to 31%.
Meanwhile, Q2 2023 net profits grew by 225% y/y to EGP104mn (+531% q/q) due to:
· Higher revenues of EGP759mn (+48% y/y, +10% q/q).
Gross profit margin expanded by 11pp y/y to 32% (+1.2pp q/q). (Company disclosure)
Key Dates
30-Aug-23
ORAS: Financial results Announcement / Q2 2023 financial results' announcement.
31-Aug-23
ZMID: Cash dividend / Payment date for a dividend of EGP0.05/share (1st installment).
PHAR: Cash dividend / Payment date for a dividend of EGP1.00/share (2nd installment).
1-Sep-23
MSCI / MSCI's August 2023 Quarterly Index Review Effective Date.
5-Sep-23
Egypt PMI / August 2023 reading.
6-Sep-23
ELSH: OGM / Approving the decisions of the company’s board of directors in its meeting held on 15/6/2023.
ELSH: EGM / Amending some articles of the Company's bylaws.