KEY THEMES
The EGX 30’s negative performance yesterday (-1.4%) was marred by CIB’s [COMI] continued weak showing, partially offset by Telecom Egypt [ETEL] which appeared as the phoenix out of the ashes with it stellar performance (+10.7%). In our new research series TAKEStock, we noted yesterday that ETEL should be worth EGP22.5/share, which the market just started to partially admit. How long will this rally last is up to anybody’s guess, but based on its growth profile and recently-signed modified shareholders’ agreement with Vodafone Group [LSE: VOD] concerning Vodafone Egypt (VFE), ETEL should have even better visibility going forward, a point seldom seen in the market today.
Meanwhile, M&A activities is one of the two catalysts we have noted before that we thought will drive stock performance. We still have a few M&As to consider, with year-to-date double-digit performance: (1) TAT for Medical Services’ interest in Alexandria Medical Services [AMES] (+55% ytd), (2) HA Utilities’ interest in Egytrans [ETRS] (+21% ytd), and (3) Aldar Properties’ [ADX: ALDAR] interest in SODIC [OCDI] (+15% ytd).
POSITIVE
ETEL: We see more room for further upside in the stock.