Pre-Trading Thoughts

Al Ahly Pharos

Pitch: HELI (FV: EGP12.44, OW) Board approved setting up a general assembly to look into the offer submitted by the National Organization for Social Insurance to buy HELI's 7.1 million sqm Heliopark land plot for EGP15.0 billion (implying EGP2,107/sqm) to be paid as a lump sum at contract signing, out of which costs will be deducted. The market is almost fully overlooking the value of HELI's residual land area in New Heliopolis. Valuing the 13.9 million sqm residual land area in New Heliopolis using a price of EGP843/sqm (60.0% discount to the EGP2,107/sqm Heliopark price tag to adjust for the residual land area in New Heliopolis being almost twice the size of Heliopark) results in a valuation of EGP11.8 billion (EGP8.81/share) for that specific land plot.

The Ministry of Finance is studying selling an additional stake (10-15%) in ETEL (FV: EGP34.00, OW). Sources added that QIA’s acquisition of ETEL’s stake in Vodafone will take place within the next two months, pending the agreement on the size of the stake.

EFID is studying to expand further in the region by opening a factory in Saudi Arabia within a few years. The company will be launching its first 3 products under its frozen bakery brand this month.

Sudan is moving to exclude Egyptian companies from drug registration procedures.

We initiate coverage on FWRY with a FV of EGP6.90 and an Overweight recommendation. FWRY is trading at 2024f P/E of 19.2x and EV/EBITDA of 10.5x, compared to the peer group average P/E of 23.7x and EV/EBITDA of 16.5x.

SWDY (FV: EGP22.87, OW) and ORAS (FV: EGP181.70, OW) refute circulated news regarding acquiring a loan from Afrexambank to finance developmental projects in Barbados.

The National Authority for Tunnels (NAT) allocated EGP4.5 billion in FY2023/24 for the works of converting Alexandria’s Abu Qir railway into an underground metro. ORAS - Colas Rail consortium inked an EPC contract last week for the first phase of the project at a total contract value of EUR1.3 billion.

BINV is planning to complete the share swap with OFH within two to three weeks. OFH stock should rerate accordingly.

Some 10-15 Chinese companies have shown interest in establishing a specialized industrial zone for chemicals with investments worth USD 7.5-12.0 bn in CNY over the next 3-4 years.

The government plans to hold an investment forum in 1H2024 aimed at attracting fresh investment into the economy.

The Central Bank is studying linking the “InstaPay” application to Saudi Arabia, the UAE, and Jordan.

The Financial Regulatory Authority is considering the launch of a reference index for pricing financing products in consumer finance industry.