Today’s Trading Playbook
Amany Shaaban | Equity Analyst
KEY THEMES
As we approach the deadline for reporting Q1 2022 results, we highlight today two Islamic banks performance for the quarter.
First, Faisal Islamic Bank of Egypt [FAIT] announced their full standalone financials. FAIT’s bottom line leaped 120% y/y reaching EGP1.2bn. Net income was mainly boosted by the skyrocketing FX gains of EGP743mn. While net interest income (NII) increased to EGP1.3bn, on the back of a 7% increase in debt securities to EGP60bn and a 4.6% increase in loans to EGP12.4bn. The bank managed to grow its pool of deposits by 5.4% to EGP116bn, and its total assets by 4.8% to EGP137bn. FAIT is currently traded at TTM P/E and P/B of 2.4x and 0.5x respectively. We have and Overweight rating on FAIT, with our 12MPT of EGP19.7/share (ETR+48%). FAIT is one of the 15 stocks we had picked in our STANDPoint 2022 strategy outlook published on 30 January 2022.
Second, Al Baraka Bank Egypt [SAUD] has reported its Q1 2022 standalone results, achieving bottom line growth of 37.5% y/y to EGP369mn. Bottom line growth came because of (1) 14% y/y growth in net interest income of EGP719mn, (2) 26% y/y growth in net fees and commission income, (3) notably lower credit provisions of EGP69mn (-39% y/y). We note that SAUD has witnessed a notable improvement in effective tax rate, which declined to 30% as opposed to 36% a year earlier. On the balance sheet side. SAUD total assets were flat ytd, down to EGP82.2bn (-0.1% ytd). However, despite the muted asset growth, the bank made some reshuffles in its portfolio, where Treasury exposure grew by 45% ytd, while inter-bank assets slipped considerably by 42% during the same period. Net lending growth was at 11% ytd to EGP23.3bn, yet as SAUD deposits retreated in the first quarter to EGP71.2bn (-2% ytd), utilization improved. The slight drop in deposits could be hinting to the impact of the 18% p.a. high yield CDs on bank’s ability to attract affordable funds. SAUD is currently traded at TTM P/E and P/B of 2.8x and 0.5x respectively. We have and Overweight rating on SAUD, with our 12MPT of EGP25.6/share (ETR+66%).
Now, on to the top news and analysis for the day.
Top News & Analysis
MACRO NEWS
The government has so far paid EGP8.5bn for around 1.85mn tons of local wheat since the start of the harvest season, about 23% less than previously expected. (Enterprise)
The government could issue green and sustainable development bonds worth around USD500mn. (Enterprise)
The government has cut its 2022/23 GDP growth forecast to 4.5% from 5.5%. (Enterprise)
Egypt and Sweden are discussing the cooperation in the fields of healthcare and hospital management. (Mubasher)
CORPORATE NEWS
Qalaa Holdings’ [CCAP] subsidiary, TAQA Arabia, has announced the acquisition of Rosetta Energy's LNG arm to expand its business portfolio in Egypt, Africa and the Middle East. (Company disclosure)
Ezz Steel [ESRS] cut the ex-factory price for flat products by EGP4,500/ton to EGP20,500/ton, including VAT. (Al-Mal)
Elsewedy Electric [SWDY] opened a busway electricity distribution system factory which is the first of its kind in Africa. (Mubasher)
Edita Food Industries’ [EFID] BoD approved the establishment of two companies, one of which is a holding company and the other a microfinance company. (Company disclosure)
Fawry [FWRY] announced that its capital increase was fully subscribed. (Al-Mal)
Arab Drug Co.’s [ADCI] BoD approved 2022/2023 budget, expecting a net profit of EGP112mn. Meanwhile, revenues are expected to be EGP698mn. (Company disclosure)
El Nile Co. for Pharmaceuticals & Chemical Industries [NIPH] announced its 9M 2021/2022 results, reporting an increase in net profit to EGP69mn (+14.8% y/y). (Company disclosure)