Pre-Trading Thoughts

Al Ahly Pharos

*Key news articles for today*

The government is reportedly nearing an agreement with the IMF that would take the package to USD7-8 bn over three years, with USD700 mn disbursed up front after two in-process reviews are wrapped up.

The IMF has downgraded its fiscal year 2023-2024 growth forecast for Egypt to 3.0% from October’s projection of 3.6%.

12-month EGP Non-Deliverable Forward (NDFs) surged to EGP63 per USD on 30 January.

Egypt's tourism revenues increased by 8% YoY during 2023 to about USD13.2 billion, according to a government sources.

The ministry of Petroleum plans exporting three LNG shipments amounting to 220k tons by the end of February.

President El Sisi signed Law No.2/2024 regarding incentives for projects producing green hydrogen through electrolysis of desalinated water using renewable energy. The incentives include VAT exemption as well as cash incentive not less than 33% and not more than 55% of the income tax.

The Suez Canal Authority considers providing incentives and discounts in the coming period for the vessels crossing the passage from Mediterranean.

EGAL reported solid results for 2Q23/24:

• Net profit after tax for the quarter surged to EGP1.8 billion (+69% YoY, +11% QoQ) mainly on maintaining healthy pricing and margins, bringing 1H23/24 earnings to EGP3.4 billion (+101% YoY).
• Top line came in at EGP7.4 billion in 2Q23/24 (+51% YoY, +23% QoQ), bringing 1H23/24 revenues to EGP13.4 billion (+60% YoY). The annual increase in revenues was mainly backed by weaker EGP despite a 6% YoY drop in aluminum cash price. QoQ, revenue growth was mainly price driven.
• EGAL is currently trading at FY23/24e P/E of 8.4x.

KIMA’s BoD approved increasing the company’s authorized capital by EGP4 billion to reach EG128 billion. It also approved raising the issued and paid-in capital from EGP5.9 billion to EGP9.9 billion with an increase of EGP4 billion distributed over 800 million shares. The capital increase will be financed through rights issue where old shareholders with a credit balance on 31 January 2024 are invited to subscription. Capital increase proceeds will be used to finance the nitric acid and ammonium nitrate project.

Transport Ministry and the Japanese International Cooperation Agency (JICA) will start working on the feasibility studies for the second and third phases of Metro Line 4 in April, with plans to wrap them up by the end of 2024.

ADCI released 2Q23/24 financial indicators. Bottom-line increased by 31% YoY and 40% QoQ to record EGP38.3 million in 2Q23/24. Revenue came in at EGP222.7 million in 2Q23/24 (+30.2% YoY, +16.4% QoQ). ADCI is currently trading at 23/24f P/E of 5.6x .

MHOT’s 1H23/24 net profit recorded EGP430.2 million, growing by 24% YoY. Revenues recorded EGP577.9 million in 1H23/24 compared to EGP498.8 million in 1H22/23.