Today’s Trading Playbook
Amr Hussein Elalfy CFA | Head of Research
KEY THEMES
It’s a new week, and we think you should make it a habit to start it with a quick glance at the market’s updated multiples. You can do so by simply scanning our EGX Valuation Multiples report which we update daily and is always found under section #5 below. A quick look at the latest multiples can reveal some undervalued names across different sectors by way of comparison. Here is a list of ten stocks, split by sector, which we think are worth looking into based on relative valuation:
- Banks: (1) Abu Dhabi Islamic Bank Egypt [ADIB] and (2) Export Development Bank of Egypt [EXPA] are both trading below book value despite registering ROEs above 20%.
- Consumer Discretionary: (3) GB Auto [AUTO] is cheap when considering that it is now trading at only 5x LTM earnings, and so is (4) Oriental Weavers Carpet [ORWE] which is trading at 6.1x.
- Consumer Staples: (5) Eastern Co. [EAST] and (6) Obour Land Food Industries [OLFI] trade at 10.8x and 8.4x LTM earnings, when their ROEs stand at 30.9% and 32.9%, respectively.
- Industrials: (7) Orascom Construction [ORAS] and (8) Elsewedy Electric [SWDY] stand out as two names trading at mid-single-digit P/E (6.7x and 6.6x, respectively) while yielding 4%+.
- Materials: (9) Misr Chemical Industries [MICH] is still trading at only 8x LTM earnings despite its 84% ytd gain.
- Telecom Services & IT: (10) Telecom Egypt [ETEL], the country’s only fully-integrated operator, is trading at 5.3x LTM earnings and 40% below its book value. Its 45% stake in Vodafone Egypt [VODE] alone can fetch a price higher than ETEL’s market price, suggesting the market is attaching a negative value to the company’s core operations