Today’s Trading Playbook
KEY THEMES
Al Ahly for Development & Investment [AFDI] has had an aggressive run last year. AFDI had hit a 52-week low of EGP2.95/share back on 19 March 2020, jumping 635% to end Tuesday’s trading at EGP21.68/share! The company has what we call “interesting” stakes. AFDI fully owns Nile Financial Leasing, an active leasing player, a 17% stake in Cairo Capital, as well as some JVs with B Investments [BINV]. However, we do not think the components of its portfolio justify such a gigantic run. To put things into perspective, AFDI’s annualized 9M 2020 ROE stands at c.1%, yet its current P/BV is 1.6x. Such a multiple can only make sense if (1) the underlying growth is potentially huge or (2) AFDI is set to exit one or more of its stakes at lucrative valuation. For now, none of the two cases has so far materialized.
Negative
AFDI: Its 10-month 635% stock performance is not justified … yet.