Still pouring
Stocks mentioned: ORWE, RMDA, DOMT, ACAMD, LCSW, SKPC, EFIH, FAIT, HELI, ORHD, AIH, HRHO, TMGH, BINV, MNHD
Today’s Top News & Analysis
Egypt could acquire a stake in green hydrogen projects
Egyptian government negotiates a higher price for Gabal El Zeit
ORWE Q2 2023: Higher net profits on price-driven higher revenues and a one-off
RMDA Q2 2023: Earnings fall despite higher revenues on lower margin and higher finance cost
DOMT Q2 2023: Strong net profits on higher revenues and higher margin
ACAMD Q2 2023: Beyond the income statement
LCSW Q2 2023: A substantial turnaround across the board
SKPC Q2 2023: Selling prices drive strong y/y growth, Q2 net income not affected by FX
EFIH Q2 2023: Impressive performance, setting a new record
FAIT Q2 2023: No more FX gains
HELI H1 2023: Downhill drop in revenues absent land sales
ORHD Q2 2023: FX losses mute earnings growth despite higher revenues across the board
AIH Q2 2023: The dawn after dark
EFG Holding partakes an EGP3bn bond issuance
BINV H1 2023: 6x stronger
MACRO
Egypt could acquire a stake in green hydrogen projects
Elia Grid, the Belgian global energy consultancy firm, is reportedly concluding its study of the Egyptian electricity network's requirements for renewable energy generated from green hydrogen projects next month. (Asharq Business)
Egyptian government negotiates a higher price for Gabal El Zeit
The Egyptian government is reportedly re-negotiating its agreement with the UK-based Actis, for acquiring the state-owned 580-MW Gabal El Zeit Wind Farm. The government wants to raise the deal up to USD600-800mn from the originally submitted offer of USD400mn from Actis. (Enterprise)
CORPORATE
ORWE Q2 2023: Higher net profits on price-driven higher revenues and a one-off
Oriental Weavers Carpet [ORWE] posted H1 2023 net profits of EGP700mn (+57% y/y) due to:
· Higher revenues of EGP8.4bn (+29% y/y), despite a 18% y/y decline in sales volumes to 55.2mn sqm. Revenue growth was mainly driven by a 58% y/y increase in average selling prices.
· Higher gross profit margin of 13.8% (+2.5pp y/y).
· Treasury income growing to EGP106mn vs. EGP66mn last year.
· Reversal of an impairment charge of EGP248mn.
Meanwhile, Q2 2023 net profits grew by 37% y/y to EGP290mn due to:
· Higher revenues of EGP4.3bn (+31% y/y, +3% q/q), despite a 13% y/y decline in sales volumes to 27.8mn sqm. The revenue growth was mainly derived from a 51% y/y increase in average selling prices.
· Higher gross profit margin of 13.9% (+2.2pp y/y, +0.4pp q/q).
· Treasury income of EGP46mn vs. EGP20mn last year. (Company disclosure)
RMDA Q2 2023: Earnings fall despite higher revenues on lower margin and higher finance cost
Rameda [RMDA] reported H1 2023 consolidated net profits of EGP116mn (-7% y/y) despite an 18% y/y growth in revenues to EGP842mn. The net profits decrease was due to:
· A lower gross profit margin of 46% (-2.5pp y/y).
· An increase in net finance expense to EGP45mn vs. EGP16mn last year.
Meanwhile, Q2 2023 net profits declined by 6% y/y and 26% q/q to EGP49mn despite revenues growth y/y and q/q by 22% and 15%, respectively to EGP450mn. The net profits decrease is due to:
· A slight decrease in gross profit margin to 46% (-0.4pp y/y, +0.5pp q/q).
· A huge increase in net finance expense to EGP30mn vs. EGP8mn last year. (Company disclosure)
DOMT Q2 2023: Strong net profits on higher revenues and higher margin
Arabian Food Industries [DOMT] reported H1 2023 net profits of EGP252mn (+127% y/y) due to:
· Higher revenues of EGP3.3bn (+46% y/y).
· An improved gross profit margin of 26% (+1.6pp y/y).
· Higher other income of EGP48mn (+82% y/y).
Meanwhile, Q2 2023 net profits grew by 66% y/y while it declined by 33% q/q to EGP101mn due to:
· Higher revenues of EGP1.6bn (+37% y/y, -10% q/q).
· An improved gross profit margin of 26% (+1.4pp y/y, 0.04pp q/q).
· Higher other income of EGP34mn (+118% y/y, +153% q/q). (Company disclosure)
ACAMD Q2 2023: Beyond the income statement
Arab Co. for Asset Management & Development’s [ACAMD] preliminary H1 2023 results showed a net loss of EGP2.7mn compared to a net loss of EGP2.4mn in the comparable period. This is albeit a 78% higher revenue of EGP923K during the half. GPM recorded 77% (+18pp y/y), yet the company had an EBT loss of EGP2.5mn. (Company disclosure)
LCSW Q2 2023: A substantial turnaround across the board
Lecico Egypt’s [LCSW] consolidated statements for H1 2023 showed a net profit of EGP256.9mn compared to a net loss of EGP24.5mn during H1 2022. Revenues came in at EGP2.4bn (+63% y/y). GPM grew by 19.6pp to 39.1%. Mainly powered by sanitary ware segment higher selling prices. The revenue mix was as follows:
· Sanitary Ware segment sales contributed almost 66.5% of total sales with a total of EGP1.6bn (+73% y/y). Volumes slightly decreased by 18%, while the average price per piece for the segment increased by 111% to reach EGP748/piece, powered by a stronger USD, according to management. GPM for the segment increased by 28pp y/y to 42.2%. Exports contributed 74% of total sales volumes for the Sanitary Ware segment.
· Tiles segment sales contributed 27.4% of total sales with a total of EGP656.7mn (+44% y/y). The increase in Tiles sales is attributable to an increase in the average price per piece for the segment by 48% to reach EGP66.7/sqm, despite volumes slightly decreasing by 3%. GPM for the segment increased by 4.1pp y/y to 30.1%.
· Brassware segment contributed the remaining 6% of total sales with a total of EGP149.7mn (+67% y/y). The increase in Brassware sales is attributable to an increase in average price per piece by 34% to reach EGP1,284/piece, and volumes increasing by 25%. The GPM for the Brassware segment is still the highest among LCSW's business segments, with a GPM of 46.2% (+5 pp y/y).
On a quarterly basis, net income recorded EGP168mn compared to only EGP89mn in Q1 2023 (+89% q/q). Revenues almost did not change between Q1 and Q2 2023, recording EGP1.2bn. The substantial increase in bottom-line profits is attributable to a lower effective tax rate of 25.5% in Q2 vs. 49% in Q1. (Company disclosure: 1, 2)
SKPC Q2 2023: Selling prices drive strong y/y growth, Q2 net income not affected by FX
Sidi Kerir Petrochemicals Co. (Sidpec) [SKPC] reported its H1 2023 results, recording net profits of EGP1.2bn (+159% y/y) on higher revenues of EGP6.6bn (+69% y/y) with a GPM of 31% (+11pp y/y). The strong y/y performance is attributed to:
• Higher selling prices across SKPC’s product range.
• Greater ethylene selling volumes.
• Greater revenues from imported products for sale.
• Lower costs/ton courtesy of the Ethane/Propane (E/P mix) cost formula.
Furthermore, Sidpec’s Q2 2023 showed bottom-line growth of 32% q/q to EGP689mn despite revenues decreasing to EGP2.9bn (-18% q/q) with a GPM of 34% (+5% q/q), as a result of recording an FX gain of EGP5mn (vs. an FX loss of EGP233mn in Q1 2023). The top-line drop was caused by:
• Selling less local and exported polyethylene (PE).
• Selling fewer imported products for sale.
• Higher costs/ton because of the higher price of exported PE (linked to the E/P cost formula).
SKPC is currently trading at an LTM P/E ratio of 9x, based on yesterday’s closing price. (Company disclosure)
EFIH Q2 2023: Impressive performance, setting a new record
E-Finance [EFIH] announced Q2 2023 results, where net profit grew by 56% y/y to EGP436mn. This was on the back of:
· Strong y/y growth in top line of 38% to EGP968mn. This growth was - in order - driven by:
o Strong y/y growth of 44% in e-finance Digital Operations revenues of EGP858mn on cloud hosting and transaction-based revenues.
o Significant increase in eCards’ revenues by 260% y/y to EGP84mn.
o 63% y/y increase in eKhales revenues to EGP20mn.
o 44% y/y increase in enable revenues to EGP32mn.
Which all offset the 24% decline in eAswaaq’s revenues to EGP49mn.
· Dividends income of EGP54mn.
· Higher financing income of EGP120mn (+44% y/y).
H1 2023 marks a new record for EFIH in both top and bottom line, recording y/y growth of 38% and 50%, respectively. (Company disclosure)
FAIT Q2 2023: No more FX gains
Faisal Islamic Bank of Egypt [FAIT] announced Q2 2023 results, where net income dropped by 74% q/q to EGP556mn. This was mainly due to having no FX gains vs. EGP1.6bn last quarter.
· Also, net interest income remained almost flat (-1.7% q/q) at EGP1.4bn.
· In addition to a 93% q/q decline in dividends income to EGP16mn.
· FAIT booked 88% q/q lower provisions of EGP54mn in an attempt to elevate pressure on bottom line.
· Accordingly, FAIT’s annualized ROE declined to 9% against 38% in Q1 2023.
· Deposits remained flat q/q at EGP133bn, while gross loans that grew by 9% ytd to EGP16bn with a slightly higher GLDR of 12%.
· NPL now stands at 2.6% and coverage ratio at 224%.
FAIT is traded on an annualized P/E of 7x and a P/BV of 0.6x. (Bank disclosure)
HELI H1 2023: Downhill drop in revenues absent land sales
Heliopolis Housing & Development [HELI] H1 2023 net income came at EGP31.8mn compared to EGP824.9mn in the comparable period. This is on the back of 84% lower revenue of EGP258.6mn compared to EGP1,575mn in the comparable period. GPM recorded 78% (+12.4pp y/y). The drop in revenues is attributable to a drop in land sales, as HELI sold a land plot in H1 2022 for EGP1.4bn. (Company disclosure)
ORHD Q2 2023: FX losses mute earnings growth despite higher revenues across the board
Orascom Development Egypt’s [ORHD] H1 2023 results showed net profits increasing by only 11% y/y to EGP873.5mn despite revenues growing by 62% to EGP6.2bn. Revenues can be broken down into the following:
· Hotel revenues grew 118% y/y to EGP1.4bn
· Real estate revenues grew 53% y/y to EGP4bn
· Town management revenues grew 31% y/y to EGP462mn
· Other operations revenues grew 55% y/y to EGP346mn
GPM came at 30% (-0.5pp y/y). The lower net income is attributable to an EGP289.6mn loss on the income statement, EGP335mn of which in FX losses. (Company disclosure)
AIH Q2 2023: The dawn after dark
Arabia Investments Holding [AIH] announced the results of Q2 2023, where net income registered EGP13mn against net losses of EGP2.3mn last year. This quarter’s net income is also up 37% q/q. This increase is mainly attributable to:
· 31% y/y increase in revenues to EGP326mn (+17% q/q). However, GPM decreased q/q by 2 pp to 24%.
· Capital gains of EGP2.5mn.
· Gains from OCI financial investments of EGP0.9mn.
· Reversal of expected credit provisions of EGP0.26mn against booked provisions of EGP12mn last year.
· Provisions no longer needed of EGP0.57mn. (Company disclosure)
EFG Holding partakes an EGP3bn bond issuance
EFG Holding [HRHO] could see EGP3bn in bond issuances this year. Sources added that Talaat Moustafa Group Holding [TMGH] and companies in the NBFS sector are among the prominent bond issuers. (Asharq Business)
BINV H1 2023: 6x stronger
B Investments Holding [BINV] announced the results for H1 2023. Net income skyrocketed by 6x y/y to EGP368mn. This was mainly due to a just-as-strong leap in revenues by 7x y/y to EGP412mn. The leap is attributed to the additional dividend income received from Giza Systems’ exit, in addition to FX gains of EGP68mn. Such earnings performance in H1 2023 came in spite of booking EGP46mn in performance fees and higher income taxes. In terms of portfolio companies’ performance:
· Madinet Masr’s [MNHD] net income rose 147% y/y to EGP585mn on 23% higher net revenues of EGP2.2bn.
· B Healthcare Investments saw revenues from The Egyptian IVF Center grow 36% y/y to EGP68mn, driven in part by higher number of IVF cycles.
Gourmet’s revenues rose 25% y/y to EGP666mn, driven by new store openings and higher prices. (Company disclosure)
Key Dates
16-Aug-23
DOMT: EGM / Amending Articles No. 3 & 4 of the company's bylaws.
RMDA: EGM / Approving increasing the issued capital & amending Articles No. 6 & 7 of the company's bylaws.
17-Aug-23
EGTS: OGM / Approving financial statements ending 31 Dec. 2022.
20-Aug-23
BINV: Cash dividend / Deadline for eligibility for a dividend of USD0.032/Share.
21-Aug-23
BINV: Cash dividend / Ex-dividend date for USD0.032/Share.
23-Aug-23
BINV: Cash dividend / Payment date for a dividend of USD0.032/Share.
MTIE: Stock dividend / Last date for eligibility for a 0.25-for-1 stock dividend.
24-Aug-23
MTIE: Stock dividend / Date for distributing a 0.25 for-1 stock dividend.
27-Aug-23
SPMD: OGM / Approving financial statements ending 31 Dec. 2022.
28-Aug-23
ZMID: Cash dividend / Deadline for eligibility for a dividend of EGP0.150/Share.
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.