Taming Inflation

Apr 11, 2023

Today’s Top News & Analysis

Egypt’s inflation rose slightly in March 2023, yet lower than Prime Research estimates
QNBA Q1 2023: Higher net interest income and huge FX gains boost net income
MCRO to decrease its paid-in capital by 1.25% by canceling treasury shares
RMDA's 50.7% stock dividend approved
RACC will not distribute dividends for 2022
PACHIN bidding at a new high of EGP39.8/share

Macro

Egypt’s inflation rose slightly in March 2023, yet lower than Prime Research estimates

Egypt’s inflation figures were released yesterday, where:

· Annual headline inflation rose slightly from 31.9% in February 2023 to 32.7% in March 2023 (lower than Prime Research expectations of 35.4%). Monthly inflation slowed down from 6.5% in February 2023 to 2.7% in March 2023.

· Annual core inflation fell from 40.3% in February 2023 to 39.5% in March 2023 (slightly lower than Prime Research expectations of 41.7%). Monthly inflation slowed down from 8.1% in February 2023 to 2.5% in March 2023. (CBE)

Corporate

QNBA Q1 2023: Higher net interest income and huge FX gains boost net income

QNB Al Ahli [QNBA] announced Q1 2023 standalone results. Here are our main takeaways:

· Net income grew by 120% y/y to EGP4.5bn, mainly on the back of higher net interest income (+57% y/y to EGP6.5bn due to interest rate hikes) and other operating income (+219% y/y to EGP1.1bn due to huge FX gains).

· NIM inched higher by 0.24pp q/q to 5.9%.

· QNBA is finally lowering its guards with a 0.64pp q/q lower CoR of -1.5%, booking 22% q/q (-10% y/y) lower provisions of EGP909mn.

· Gross loans grew reasonably at 7% ytd to EGP248bn, with a lower NPL ratio of 4.6% and a coverage ratio of 127%.

· Deposits grew by 9% ytd to EGP443bn, implying a stable GLDR at 56%.

· Annualized ROAE moved up from 20% in 2022 to a solid 33.7% in Q1 2023.

· QNBA is currently traded at an annualized P/E of 2.9x and a P/BV of 0.7x. (Bank disclosure)

MCRO to decrease its paid-in capital by 1.25% by canceling treasury shares

Macro Group Pharmaceuticals’ [MCRO] EGM approved to decrease its paid-in capital by 1.25% to EGP114mn, decreasing its outstanding shares to 570,206,456 by canceling 7,152,044 treasury shares worth EGP1.4mn. (Company disclosure)

RMDA's 50.7% stock dividend approved

Rameda's [RMDA] OGM approved the BoD's proposal to distribute a 50.7% stock dividend worth EGP128mn, thus raising RMDA's paid-in capital to EGP380mn. (Company disclosure)

RACC will not distribute dividends for 2022

Raya Contact Center’s [RACC] OGM decided not to distribute any dividends to its shareholders and employees for 2022 net profits. (Company disclosure)

PACHIN bidding at a new high of EGP39.8/share

National Paints Holding (NPH) has raised its offer to buy Paints & Chemical Industries (PACHIN) [PACH] to EGP39.8/share, a 5.4% increase from its last offer. (Company disclosure)