Today’s Trading Playbook
KEY THEMES
While market participants are grappling with geopolitical risk in the MENA region, elsewhere pharma-related names are making history. Two names we refer to specifically today are ISPH and MPCI.
POSITIVE
ISPH: This is one of our top picks (please check the 19 stocks we listed last Thursday). The company seems to be considering some sort of vertical integration by investing in pharmaceutical companies. Another potential growth venue for the company could be its pharma logistics centers, which has recently become the focus of the Egyptian government. If ISPH partners with The Sovereign Fund of Egypt to develop this line of business further, this would add yet another catalyst for the stock.
MPCI: Memphis Pharmaceutical & Chemical Industries [MPCI] looks to have successfully turned around its operations after starting to reap the fruit of its recent upgrades. MPCI has long been a neglected stock amongst its pharmaceutical peers. It was probably the only company to still eke out losses after NIPH (which is incidentally one of the stock picks we mentioned yesterday within the pharma sector) has turned around. MPCI just reported its full-year results in 2019/20 ended 30 June 2020, posting a net income of EGP12.4mn vs. a net loss of EGP25.4mn in 2018/19. Even better, this implies a net income of EGP6.6mn in the month of June alone! As a scaler, MPCI’s shareholders (60% of which is the Egyptian government; free float is c.25%) approved back in April the 2020/21 budget with target net income of EGP29.4mn on revenues of EGP575mn (+57% y/y). At its budgeted net income, MPCI would be trading at a forward P/E (2020/21) of 2.8x. If the EGP6.6mn were to be annualized, MPCI would be trading at an absurd 1x!
Now, on to the top news and analysis for the day.