Today’s Trading Playbook
KEY THEMES
Misr Chemical Industries [MICH] rose notably yesterday, gaining 4.9%, closing the day at EGP9.25/share. MICH is on the lookout to deliver yet another triple-digit bottom line going into 2021/22. The chloralkali manufacturer announced its 4M 2021/22 indicators yesterday, showing a bottom line of EGP65mn (+9% y/y). Selling prices for MICH are expected to remain in a good shape during H1 2021/22 due to supply tightness of chlorine and caustic soda in the U.S. amid robust demand. Furthermore, the limit of industrial usage of electricity in China further kept the Chinese output subdued. We expect MICH to deliver a strong H1 2021/22, with annual earnings growth rate expected to be in the high single-digit territory. Over the long run, news about increasing Egypt’s water desalination capacity should serve as a main long-term catalyst for MICH. MICH is currently traded at 2020/21 P/E of only 5x, while our 12M PT for the name is EGP13.9 (+50%).
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