Today’s Trading Playbook
Amr Hussein Elalfy CFA | Head of Research
KEY THEMES
The market was a bit active yesterday given that it’s the last week of the month and the year. It was not all about small caps hitting new highs, but also some large cap names flourishing. For instance, Ezz Steel [ESRS] rose 10% yesterday (now up c.17% in three days since our call on 27 December). The stock hit a 52-week high at EGP11.11. Similarly, GB Auto [AUTO] rose 7% yesterday (now up 10% since our call on 20 December). Also, Elsewedy Electric [SWDY], which rose 5% yesterday following our core coverage note that we published on 28 December. Elsewhere, Sidi Kerir Petrochemicals [SKPC] (+6% d/d), Alexandrian Mineral Oils Co. [AMOC] (+7% d/d), and Qalaa Holdings [CCAP] (+3% y/y) all rose perhaps buoyed by higher oil prices.
Meanwhile, Misr Chemical Industries [MICH] posted its 5M 2020/21 indicators, showing bottom line of EGP72mn. This implies monthly net income for November of c.EGP14mn vs. that of October's EGP16mn. While November is slightly lower than October, this is still conforming to the average monthly net income of EGP14mn since March 2020. While we anticipate a bottom line of EGP141mn this year, based on a normalization in selling prices projected for H2 2020/21, the situation with a second wave of COVID-19 could extend MICH’s astounding performance for the second half as well. We remind you that our 12M PT for the name is EGP13.9/share, implying a 28% upside potential from yesterday’s close, where MICH is currently trading at 2020/21 P/E of 5.6x.
Positive
MICH: The likelihood of continuing a strong performance throughout the entirety of 2020/21.