KEY THEMES
Well, now we have it! The rally we have seen in B Investments [BINV] and MM Group [MTIE] since the start of the month looks to have been driven by the news that Hapi Journal broke with an exclusive. Ebtikar, the JV between both BINV and MTIE, has decided to let Vodafone Egypt [VODE] in with a 20% in the form of growth capital, reportedly at par. While the market might fret about the valuation being at par, the upside potential is way beyond par! We note three takeaways from this partnership: (1) Partnering with VODE opens the door for Ebtikar’s two e-payment platforms Masary and Bee to piggyback on VODE’s extensive branch network around Egypt. (2) Such a deal will be value accretive to Ebtikar which is planning to go public in H2 2021, further supporting the valuation of BINV and MTIE. (3) Should VODE open the door for Masary and Bee to penetrate other African countries where it operates would be positive for their growth profile.
positive
BINV, MTIE, ETEL: All three names were part of our 20 long ideas that we published in our STANDPoint on 1 February 2021. On one hand, both BINV (+33% since then) and MTIE (+20%) have hit and exceeded our price targets of EGP16.1/share and EGP10.8/share, respectively. However, the VODE deal could unlock further potential locally and regionally, pushing their valuation higher. On the other hand, ETEL stands to benefit directly off the deal, albeit with an indirect stake of c.9% in both Masary and Bee. Furthermore, ETEL’s Q4 2020 results published late last night are yet another testament of how cheap the stock is, leaving 32% upside to our price target of EGP15/share.
negative
FWRY: The VODE partnership could be viewed as a competitive risk to Fawry [FWRY] which has until recently been the major player in the e-payment market. FWRY (+6% since 1 February) is one of our short ideas that we published in our STANDPoint.