Today’s Trading Playbook
KEY THEMES
U.S. equities slipped again yesterday, as CPI readings for April showed a stubborn inflation pattern, suggesting that the U.S. economy could live with persistently higher inflation for longer. As a result, the market is pricing in more hawkish than expected Fed actions, hence dragging risk assets lower. As the U.S. dollar is getting stronger, global commodities retreated in early Thursday trading, with Brent oil prices approaching the USD105/bbl level.
Elsewhere, Export Development Bank of Egypt’s [EXPA] second round of capital increase was finalized, where investors subscribed for the remaining shares amounting to 43.4mn shares. As a result, the bank’s paid-in capital will be EGP5.3bn distributed over 527mn shares. We note that such a capital increase was considered an overhang on EXPA’s stock performance lately, especially after suboptimal 2021 results. However, the bank has long suffered from undercapitalization, and hence such a capital increase will alleviate the pressure on EXPA’s CAR, supporting future expansion. While EXPA is not our favorite pick within the banking sector, the stock still offers a decent upside. We have an Overweight rating on the name, with a 12MPT of EGP11.0/share (ETR +37%).
Finally, today will see the announcement of the MSCI EM Semi-Annual Index Review (SAIR) at night, where the effective date is going to be 1 June 2022.
Now, on to the top news and analysis for the day.
Top News & Analysis
MACRO NEWS
Egypt inked an MoU with an alliance that includes Total Energies and Ennara Capital to build a green ammonia plant in the Suez Canal Economic Zone. (Enterprise)
Today will see the announcement of the MSCI EM Semi-Annual Index Review (SAIR) at night, where the effective date is going to be 1 June 2022. (MSCI)
The Minister of Trade & Industry has approved the immediate release of passenger cars which were kept for violating shipments and located within customs. (Hapi)
CORPORATE NEWS
German Homann Holzwerkstoffe will acquire a 27% stake in Egypt Kuwait Holding’s [EKHO] subsidiary Global MDF Industries through a two-step arrangement. (Company disclosure)
In a funding round which featured Fawry [FWRY], Mylers – a logistics start-up – managed to secure USD9.6mn in equity funding. (Arab Finance)
Arab Cotton Ginning [ACGC] BoD approved the capital increase of its subsidiary, the Egyptian Spinning & Weaving Co. by EGP10mn. (Company disclosure)
Egyptian Media Production City’s [MPRC] Q1 2022 KPIs showed a net income of EGP50mn (+97% y/y) during Q1 2022 on higher revenues of EGP147mn (+18% y/y) and higher GPM of 50% (+478bps y/y). (Company disclosure)
Egyptian Satellite’s [EGSA] quarterly earnings dropped 52% y/y to USD7.3mn on lower top line of USD25mn (-19% y/y). (Mubasher)
Lafarge Egypt inked an agreement worth USD93mn with Lomica Egypt to supply electricity using solar power to partially fulfill their electricity needs. (Al-Mal)
Al Nasr Housing & Construction bought 8mn shares of Zahraa El-Maadi Investment [ZMID] at an average price of EGP9.71/share, raising its stake in ZMID to 9.52% from 6.29%. (Mubasher)