Today’s Trading Playbook
Amr Hussein Elalfy CFA | Head of Research
KEY THEMES
Early yesterday, we said the market will not likely be as active as before as we count down to the few trading sessions of this eventful year. At session-end, we saw trading values fail to exceed the EGP1bn mark. We also had called for investors to look for company-specific events to drive stock performance. Indeed, we saw yesterday both Ezz Steel [ESRS] and Cleopatra Hospital [CLHO] advance some 4% apiece on higher steel selling prices and a potential acquisition, respectively. Meanwhile, we saw B Investments [BINV] advance after the company confirmed the sale of a fifth of its 7.97% stake in Total Egypt for EGP146.4mn, implying a value of EGP587mn for the remaining stake (6.38%). Even after taking into account the after-tax proceeds, the stock looks cheap at a market cap of EGP1.7bn, 9.6x earnings and 0.97x book equity. If you remember, we had made the call on BINV back on 5 August when news surrounding its investment in Total Egypt began to surface. We thought that the stock, which was trading at half its book value, was worth picking up. Still, and despite a 92% run since our stock call, we believe the stock has more value to be had when taking into account the company's stakes in Madinet Nasr Housing & Development [MNHD], Giza Systems, Gourmet Egypt, and Ebtikar—its non-banking financial services platform—in addition to cash and cash equivalents.
POSITIVE
BINV: We think the stock can be worth some EGP15/share (before calculating any capital gains tax or management fees payout) according to our back-of-the-envelope valuation, suggesting another 35% upside. This is only 1.3x book equity.