Today’s Trading Playbook
KEY THEMES
Yesterday, B Investments [BINV] announced that that Vodafone Egypt [VODE] has subscribed in a capital increase at par value in Ebtikar’s subsidiaries (i.e. Bee and Masary). Hence VODE’s ownership stake in each company reached 9.99%. As a result, Ebtikar’s ownership stake reached 90.01% in Bee and 63.64% in Masary, whereas BINV’s stake in Ebtikar is 16.5%. We note that, VODE is still planning to acquire up to 20% in both fintech vehicles, pending some regulatory approvals.
Such deal will bring us closer to the long awaited IPO of Ebtikar, which will represent an important catalyst for both BINV and MM Group [MTIE]. We continue to think that BINV will be catalyzed by further divestment opportunities, with the most recent one being the exiting of Giza Systems. Furthermore, we note that VODE’s exposure to Egypt’s fintech’s universe will allow Telecom Egypt’s [ETEL] to attain an indirect exposure to the ever growing sector.
Both BINV and ETEL were both included in our 15 stocks that we had picked in our STANDPoint 2022 strategy outlook published on 30 January 2022. We have an Overweight rating for both names with our 12MPT for BINV at EGP16.7/share (ETR +76%), and our 12MPT for ETEL at EGP28.1/share (ETR +72%).
Now, on to the top news and analysis for the day.
2. Top News & Analysis
MACRO NEWS
The government has formed a committee to study the file of foreign borrowing and restrict it to very narrow limits, after MPs voiced concern over the rise in the external debt during a House plenary session. (Ahram Online)
The IMF now expects the Egyptian economy to expand at a 5.9% clip in FY22, up 0.3% from its previous forecast in January. This is the second time the IMF has upgraded Egypt’s growth forecast this year. The Fund also sees the economy growing by 5.0% in FY23, down from its previous 5.6% prediction. (IMF)
CORPORATE NEWS
Alpha Oryx, a subsidiary of ADQ, and the new shareholder of a 17.5% stake in CIB [COMI], has no intention of doing anything that would negatively impact the bank’s management or the interests of its stake holders. (Enterprise)
Raya Contact Center’s [RACC] OGM decided not to distribute dividends for 2021. RACC’s OGM also approved to provide its subsidiary, Gulf Customer Experience (GCX), a loan amounts to USD0.5mn. (Company disclosure)
Due to significant price increases in construction materials, Orascom Development Egypt [ORHD] is reportedly looking to raise O West’s prices by 10% and El Gouna’s by 6%.(Arab Fianace)
Export and Development Bank of Egypt’s [EXPA] first round of capital increase has been subscribed by 78.29%. (Mubasher)
GLOBAL NEWS
A hawkish turn by the Federal Reserve is eroding a key support for U.S. stocks, as real yields climb into positive territory for the first time in two years. (Reuters)
China surprisingly kept its benchmark lending rates steady on Wednesday, with markets seeing the move as Beijing's cautious approach to rolling out more easing measures as the economy slows due to COVID-19 lockdowns. (Reuters)
The International Monetary Fund on Tuesday slashed its forecast for global economic growth by nearly a full percentage point, citing Russia's war in Ukraine, and warning that inflation was now a "clear and present danger" for many countries. (Reuters)
3. Chart of the Day
Youssef Ghazy | Equity Analyst
Source: FRA.
Egypt's consumer finance market reached EGP1.16bn by end of January 2022. Contact Consumer Finance, a Contact Financial Holding [CNFN] subsidiary, still leads with the highest market share of 38.5%, followed by ValU, an EFG Hermes Holding's [HRHO] subsidiary, with a market share of 24.3%. Combined with Contact, the two names add up to 62.9% of the overall market share.
4. Markets Performance
