Today’s Trading Playbook
KEY THEMES
So far, our call on banks has been profitable, with COMI rising 5% since 31 October. Also, another call that we made on Monday is looking set to materialize. We had referred to Telecom Egypt [ETEL] as very cheap, with any potential deal related to Vodafone Egypt [VODE] revving up the stock performance. Please refer to our TAKEStock dated 8 June 2021. Indeed, just over night, ETEL reported that Vodafone Group [VOD] will be transferring its stake in VODE to Vodacom, 60% owned by VOD which is yet to reveal the structure of the offer. It was reported this morning that the 55% stake will be valued at USD2.74bn, implying a USD2.24bn value for ETEL’s 45% stake or more than EGP20/ETEL share. While this transaction underlines the undervaluation of ETEL, we do not believe ETEL will be tagging along with VOD to sell its 45% stake. That said, we believe ETEL's stock will react positively to the news in the short term, but absent any monetization on ETEL’s stake in VODE, the stock may revert back to its historical levels. In other words, we could see a positive knee-jerk reaction this morning.
Now, on to the top news and analysis for the day.