Al Ahly Pharos

The World Bank approved a new USD7 billion partnership agreement with Egypt.The Federal Reserve announced another 25 basis point interest rate hike.IFC, the Sovereign Fund of Egypt, and the European Bank for Reconstruction and Development have partnered to boost the supply of safe drinking water in Egypt through a public-private partnership.New and renewable energy budget for FY23/24 is set to be EGP8.4 billion.GAFI signed an MoU with an alliance of firms to establish Cairo International Financial Center (CIFC) in the New Administrative Capital.Egyptian expat car imports initiative has brought in USD307 million.ORAS reported 4Q22 net profit of USD55.8 million, bringing FY22 net profit to USD113.5 million.SWDY targets a 50% increase in exports in the coming period and intends to establish an industrial area beside the dry port in 6th of October City to facilitate importing and exporting.HRHO 4Q22 net profit reached EGP813 million (+141% q/q, +63% y/y), bringing FY22 net profit to EGP1,840 million (+18% y/y).BINV plans to invest EGP500 million in the pharmaceutical distribution and trade industry.DSCW 4Q22 net profit reached EGP77.2 million compared to EGP14 million in 4Q21 and EGP39 million in 3Q22. SKPC general assembly approved cash dividend distribution of EGP0.90/share to be distributed over two installments.EFIC general assembly approved cash dividend distribution of EGP5.00/share to be distributed over three installments.According to local newspapers, National Paints Holding (NPH) intends to increase its bid offer to acquire PACH.Brent crude futures rose 1.8% to reach USD76.69/bbl.Chinese Chen Feng plans to establish an industrial complex specialized in steel and complementary industries with investments of USD300 million in Sukhna.  Ministry of Electricity and Renewable Energy plans to increase the number of installed smart meters to 1.4 million by the end of FY26/27.The government banned sugar exports for the next three months, except for the surplus with an approval from the Trade and Industry Ministry.Hilton plans to open two new hotels in Cairo in the summer of 2023.

Market Overview Prepared by: Mayada Amin- CETA, CFTe

Net foreign direct investment (FDI) inflows to Egypt registered USD8.90 billion in 2022, the highest level since 2011. That’s 74% higher than 2021.The SFE will wait until the end of Ramadan to start taking companies in its pre-IPO fund to market.The SFE has added Salhia Investment and Development Company to the pre-IPO fund.Restaurants, malls, and other commercial spaces will now be open until 2 AM until the end of Ramadan.CCAP is studying increasing the production capacity of ERC by 800k tons within three years. Italian energy group Edison expects to make its final investment decision this year on whether to go ahead with a proposed pipeline that will carry natural gas from Israel and Cyprus to Europe. The pipeline would ship 10 billion cubic meters of gas a year from the Mediterranean straight to Greece and could be operational by 2027.Eagle chemicals yesterday increased its offer for Paint and Chemical Industries (Pachin) on the same day that National Paints Holding’s (NPH) rival mandatory offer (MTO) opened to shareholders. The Egyptian chemicals company offered to purchase at least 75% of the company for EGP 35.00 per share, EGP 1.00 higher than the earlier bid TMGH (FV: EGP19.67, OW) AGM approved the distribution of EGP0.193/share cash dividends (DY of 2.2%), to be distributed over two EGP0.096/share installments, the first on 31 May 2023 at the latest and the second on 31 July 2023 at the latest.IHG Hotels & Resorts and Arabella for Tourist and Urban Development will establish three new hotels in Cairo and on the North Coast, together offering more than 500 rooms to be opened between 2023 and 2026.The General Assembly of COMI authorized the BoD to issue financial instruments up to a maximum of one billion pounds, in the form of nominal bonds or subordinated loans. The process is scheduled to be completed through one or several tranches through a public or private offering, whether locally or through global markets, in order to support the bank's capital base to finance future expansion or investment activities, and to support risk-weighted assets. They also approved increasing the bank's capital by EGP 204.45 million, rising to EGP 30.195 billion.EFG Hermes has completed the fourth issuance of securitization bonds for its subsidiary ValU, with a value of EGP 856.5 million, as part of a securitization bond issuance program of EGP 4 billion.The qualified consortia for the tender of the construction of water desalination plants will be announced by the end of next week. 28 international and local consortia submitted their documents to qualify for the tender. The result of the tender of the construction of a dry port and a logistics center at the 10th of Ramadan will be announced in two-month period after submitting the technical and financial bids on April 30.Abu Dhabi Ports (ADP) made an initial offer to the Holding Company for Maritime and Land Transport to acquire a major stake in Port Said and Damietta companies for handling containers, competing with Maha Capital's deal, the investment arm of Qatar Authority

Market Overview Prepared by:Mayada  Amin - CETA, CFTe

The House yesterday voted through legislative amendments allowing the government to borrow an extra EGP 165 bn for the final quarter of the current fiscal year. Around EGP 70 bn will be used to increase funding to social protection programs while EGP 85 bn of the new borrowing will be spent on servicing government debt in the April-June quarter.Foreign investments in Treasury bills reached USD10.4 bn in January 2023, up from USD8.04 in December 2022. We upgrade our FV for OLFI to reach EGP11.60/share from a previous EGP8.72/share while changing our recommendation to Equalweight, on market price rally. The FV upgrade is mainly backed by:Resilience in volumes, amidst turbulent market dynamics, despite the scheduled price increases in FY22Improving market share as the whole market shrank by the phasing out of small playersRevenues are expected to grow with a 5yr CAGR of 12%, recording EGP5,701 mn during 2023 to end our forecast horizon with EGP8,040 mn in 2027.Gross profitability is expected to grow at a CAGR of 12.1% during the same period with GPM hitting 23.1% in 2023 and 24.4% by 2027We expect NPM to record 12.6% during 2023 up to 13.6% backed by rising prices and revenues.OLFI is currently trading at a 2023 P/E of 5.6x and an EV/EBITDA of 3.9x. EKHO increased its total stake (direct and indirect) in AlexFert from 61.57% to 69.42%. This was done through increasing EKHO’s stake in Bawabet Al Kuwait Holding Company (BKH) by 13.12%, USD66.4 million, to reach 84.79%. CCAP’s Dina Farms is negotiating with the government to buy two land plots and targets injecting EGP380 million to expand its production capacity during 2023. Goldman Sachs lowered its crude price forecast for this year and 2024. It is now expecting Brent to average USD94/bbl in the next 12 months and USD97/bbl in the second half of 2024, down from USD100/bbl previously. Hisham Ezz Al Arab has been reappointed as COMI’s non-executive chairman for a new three-year term, along with the rest of the board which will remain in place until March 2026. In response to yesterday's news regarding Emirates Global Aluminum's (EGA) interest in financing EGAL's (FV: EGP39.53, EW) plant rehabilitation, EGAL commented in a release that all options are currently being studied to improve the efficiency and quality of production. The development plan also includes adding a new production line with a capacity of 100k tons per annum in addition to establishing aluminum foil plant.   FRA approved SPMD's rights issue to increase capital by EGP110.9 million distributed on 554.6 million shares at par value of EGP0.20 per share, bringing total capital to EGP332.7 million 

Market Overview Prepared by:Mayada Amin- CETA, CFTe

-UBS will acquire Credit Suisse USD 3.25 bn in return for receiving up to CHF 100 bn in liquidity from the Swiss central bank.  - Minister of Finance revealed draft state budget for FY23/24. It factors in 5% real GDP growth, a primary surplus of 2.5% of GDP, and an overall deficit of 6.37% of GDP. -El Sisi has directed the government to raise the personal income tax exemption threshold to EGP 36k from EGP 24k currently. -State-owned real estate companies El Nasr Housing and Development and Maadi for Development and Construction will attract investments from strategic investors through capital increases rather than selling stakes.  -CLHO recorded net attributable profit of EGP78.8 million in 4Q22 (-31.7% YoY, -4.5% QoQ). For FY22, net attributable profit came in at EGP326 million (-15.9% YoY). CLHO reported revenues of EGP620 million in the first 9 weeks of 2023, an increase of 24% YoY.  CLHO is currently trading at 2023f P/E of 12.6x and EV/EBITDA of 6.8x.-MNOs should receive NTRA’s approval for price increases within days, unless NTRA decided to keep prices unchanged.-ESRS raised rebar prices by 9.7% or EGP2,850/ton to EGP32,135 (including VAT) as of March 20, 2023. Rebars price went up c.37% YTD. -Cement Chamber of Union addressed the Ministry of Industry to facilitate challenges facing cement producers and help expand producing different cement types like those in Europe and the US. -Government has received Emirati interest to participate in the development of EGAL led by Emirates Global Aluminium (EGA) in return for a stake in the company's capital increase.-ADIB Egypt intends to focus on more aggressive growth over the next three years and will launch a digital consumer finance company and a microfinance company in 2H23. ADIB is trading at 2023 P/E of 2.87x and P/B of 0.6x.-FAIT's 4Q22 net profit recorded an impressive EGP2,225 million (+89% y/y,+316% q/q) bringing FY22 net profit to EGP4,826 million (+60% y/y), supported by a one-off gain of EGP1,458 million booked in 4Q22 along with impairments reversals of EGP200 million. The stock is currently trading at P/B23 of 0.7x and P/E23 of 5.3x, with ROAE of 13%. -HRHO and GB Capital's Kaf Life Insurance has obtained a commercial life insurance license from FRA. -Pachin has 10 working days to respond to National Paints Holding’s (NPH) takeover bid after FRA yesterday approved the offer, which was for 75-100% at EGP34/share. -The winning consortia’s contribution to Containers handling in Ain Sokhna Port is: 50% for Hutchison Ports, 25% for CMI terminals, and 25% for COSCO.-Weekly Commodities UpdateBrent, USD/bbl            73.0     -11.9%Diesel-HSFO Spread, USD/ton          412.0   -3.1%Egypt Urea, USD/ton  377.5   -6.3%Polyethylene, USD/ton           1,160.0            -0.9%Polypropylene, USD/ton         1,040.0            -1.4%Steel/Iron Ore Spreads, USD/ton       498.2   -2.0%LME Aluminum Cash Price, USD/ton 2,226.5            -1.6%Egyptian Retail Cement, EGP/ton      1,915.0            1.9%Steam Coal, USD/ton 173.0   -6.6%Crude Palm Oil, USD/MT       890.7   -3.3%SMP, USD/MT            2,739.0            -1.1% 

Market Overview Prepared by: Mayada Amin - CETA, CFTe

Market Overview 

As Egypt prepares to trade with Russia in local currencies, it is now looking at making similar arrangements with China and India.The Emigration Ministry will set up a new company aimed at encouraging Egyptians living abroad to invest in the local economy and bring more hard currency into the country.The Minister of Finance said that Egypt aims to achieve FDIs of USD10 billion in FY 22/23. Abu Dhabi Ports will develop and operate a container terminal at Safaga Port under a USD200 million, 30-year concession agreement signed with the government on Saturday. Elab will be the first company to go to market via the Sovereign Fund of Egypt’s pre-IPO fund.The Sovereign Fund of Egypt started promoting the sale of the Salhia Investment and Development Company, which owns 21,000 agricultural acres, to strategic investors.The government is going to offer a minority stake of ElNasr Housing and Maadi for Development on the Egyptian Stock Exchange.FRA: Egypt is working to launch a fund to invest in precious metals in the coming weeks.The General Authority for Investment and Free Zones aims to grant the golden license to a thousand investors during the next two years.Egypt could rethink its decision to exit from the UN grain treaty after receiving several letters from the Grain Trade Convention calling on the government to remain a member.ORHD achieved strong 4Q22 sales of EGP3.8 billion, up 28.6% y/y and 47.4% q/q, bringing FY22 sales to EGP11.1 billion, up 20.7% y/y. Net profit in 4Q22 reached EGP289.1 million, up 228.9% y/y and down 51.6% q/q, bringing FY22 net profit to EGP1.7 billion, up 38.3% y/y.Abu Dhabi Ports signed two 15-year agreements with the Suez Canal Authority to develop cement terminals in Al Arish Port and West Port Said Port, which will collectively require USD33 million of investment. The two terminals will feature silos with a combined storage capacity of 90k tons, and are expected to be operational by 4Q 2023. DSCW Board agreed to purchase 90 million treasury shares starting Tuesday, 21 March 2023, for 5 days at a price of EGP0.35/share. Mercedes-Benz opened a new EGP35 million logistics zone in the SCZone to serve as a warehouse and a distribution platform for cars and spare parts.e-Tax, an associate company of EFIH, signed a contract with the Egyptian Tax Authority to launch the first government system aimed at unifying the criteria for calculating taxes relating to wages and salaries. Nasser Social Bank is now offering three-year certificates of deposit at 22% and 18-month CDs at 20%.

EGX30 saw its biggest drop in three years yesterday as the fallout from the US banking crisis continued to send tremors through global financial markets.Credit Suisse will borrow as much as USD54 billion from the Swiss central bank and will buy back some of its debt in a bid to improve liquidity and curb investors’ fears. The government will start marketing state companies to investors in April, and it could add eight more companies to the list.The SFE plans to offer a 10-20% stake in Misr Insurance Holding to strategic investors.The Tourism Ministry is expecting Egypt to receive a record 15 million tourists in 2023, up 28% from 2022.The President announced that Egypt will add 3.5 million feddans to agriculture land by mid to end 2024.Mopco 4Q22 net profit reached EGP2.2 billion (+66% QoQ, +6% YoY), bringing FY22 net profit to EGP7.3 billion, up 51% YoY. The President inaugurated yesterday a new nitrogenous fertilizer complex in Ain Sokhna. The complex currently includes six fertilizer factories with an annual production capacity of 1.7 million tons.Oil prices plunged by nearly 5% on Wednesday to settle at USD73.69/bbl.The government yesterday signed two agreements worth USD1.6 billion with two international consortiums to develop new container terminals at the Ain Sokhna and Dekheila ports.Central Bank of Egypt data revealed an increase in bank assets to EGP11.4 trillion by the end of 2022, with bank capital recording EGP303.03 billion, while reserves amounted to EGP437.13 billion, and provisions recorded EGP256.09 billion. Hilton plans to expand its portfolio of properties in Egypt over the next three-five years to 27 properties from a current 14.

Market Overview 

Following several days of volatility, US stocks rose, with bank shares regaining much of the losses triggered by the collapse of several US lenders last week.  Markets were also supported by the fact that annual US inflation continued to decline in February, in the hope of a dovish rate decision next week. Moody’s has downgraded its outlook for the US banking sector to negative from stable due to the rapid deterioration in the operating environment. Egypt’s real economy grew 3.9% y-o-y in 2Q FY22/23, and 4.2% in 1H FY22/23. The Planning Ministry is now expecting growth to come in at 4.2% in the current fiscal year, down from a November estimate of 5.0%.  Egyptian exports rose 18% in 2022 to hit USD 51.6 bn. Natural gas accounted for USD 10 bn, while fertilizers brought in USD 3.3 bn. Exports of crude and petroleum products recorded USD 6 bn. On the non-oil front, Egyptian companies exported USD 2.5 bn of ready-made garments, USD 2 bn of fresh fruits, and USD 1.8 bn of plastics. State-owned Misr Insurance Holding has been transferred in its entirety to the ownership of the Sovereign Fund of Egypt (SFE), to make it ready for stake sales as part of the government’s privatization plan.  The marketing of at least 10% in Safi and Wataniya to strategic investors will start today. Finance Ministry plans to introduce financial incentives for women not to have more than two children in a bid to manage population growth. Oil prices dropped to a three-month low on Tuesday after a U.S. inflation report and the recent U.S. bank failures to USD77.45/bbl.Public Enterprises Ministry is in talks with Emirates Global Aluminum (EGA) to partner with EGAL (FV: EGP39.5, EW) and establish a new plant in Egypt. HRHO revealed that the portfolio of its financial technology company, EFG-IV, had limited funding with Silicon Valley Bank, not exceeding USD200,000. 

Market Overview 

Some global investment banks, including Goldman Sachs and Pimco, now think the Federal Reserve will pause on its tightening cycle when it meets next week to prevent the US banking crisis from intensifying.   Global investment banks are calling for further depreciation in the EGP and a major rate hike of 200-300 bps. The number of tourists visiting Egypt jumped 34% y-o-y during January and February 2023. Traffic in the Suez Canal recorded yesterday the highest daily rate with 107 vessels and a total net tonnage of 6.3 million tons. Natural gas will continue to be sold to electricity plants affiliated with the Electricity Ministry at USD3/mmBtu while relieving the Ministry of Finance from the USD0.25/mmBtu it used to bear in subsidies. AMER reported a 28.8% y/y decrease in FY22 revenue to EGP1.3 billion and FY22 net loss before minority of EGP195.2 million, compared to FY21 net profit before minority of EGP83.2 million. ADQ is reportedly in early talks with the government to acquire a 10-15% stake in the state-owned Delta Sugar Company. Egypt and Greece are in the process of selecting a consultant to conduct feasibility studies for the USD4 billion EuroAfrica Interconnector that will link their electricity grids. Italian cable manufacturer Prysmian is expected to finish manufacturing the EUR221.6 million subsea cable that will link the power grids of Egypt and Saudi Arabia and have it installed by the end of December. Emirates Global Aluminum company is open to investing in the field of electircity, renewable energy and green hydrogen in Egypt.              Mansour Auto is planning to invest USD16 mn in a program that will see manufacturing of new models across their brands portfolio. 

Market Overview Prepared by: Mayada Amin- CETA, CFTe

US authorities announced they would guarantee all deposits in a bid to prevent a wider banking crisis. Silicon Valley Bank’s Failure May Lead to Smaller Fed Rate Hike, which will relieve the pressure off emerging markets.CBE noted that there are no negative repercussions on the Egyptian banking sector, from the failure of the American Silicon Valley Bank, since Egyptian banks do not have any deposits, investments, or financial transactions with Silicon Valley.The government will start preparing military-owned bottled drinks firm Safi and fuel retailer Wataniya for offering to strategic investors. FRA could within days create a central “lending pool” in cooperation with Citibank through which investors can engage in short selling. Egypt’s futures exchange is expected to launch in 6-8 months.The cabinet estimated the value of imported goods stuck in ports due to foreign currency shortage at about USD3.9 billion. The value of goods released YTD adds up to c. USD8 billion. Egypt and Greece are selecting a consultant to prepare the feasibility study for the USD 4 billion electricity interconnection project between the two countries.CICH (FV: EGP8.00, OW) recorded a net profit of EGP865 mn in 2022 (-43.4% y/y), despite the increase in revenues to EGP3.26 bn (+27.8% y/y). CICH is currently trading at PE23 of 6.2x and PB23 of 1.1x.RAYA Holding reported net profit of EGP419.2 million in 2022, compared EGP541.3 million in 2021 (-22.5% YoY). Revenues came in EGP20.4 billion in 2022, up from EGP16.8 billion in 2021. RAYA’s assembly approved increasing Aman’s capital by EGP450 million to reach EGP1.06 billion and increasing Raya Trade’s capital from EGP420.8 million to EGP670.8 million to finance expansion.According to Sawiris, OFH has transferred any deposits it held with any small US bank to JP Morgan and ML, after SVB failure. RACC reported 2022 net profit of EGP42.2 million in 2022 (+93.1% YoY), on strong revenue growth (+54.1%) and FX gains of EGP23.0 million. RACC is currently trading at an annualized 2023f P/E of 10.4x.The Egyptian Electricity Transmission Company (EETC) signed a contract with SWDY’s subsidiary to construct an EGP660 million turnkey transformer station in Minya. EGTS’s (FV: EGP1.68, EW) court date for the 20.0 million sqm third phase Sahl Hasheesh land plot lawsuit is postponed to 6 May 2023.Toronto-based firms Health Espresso and iCare Home Health plan to invest USD300-400 mn in the local health sector along with investors from Saudi Arabia.  Weekly Commodities Update|   Last Price           WoW Change, %Brent, USD/bbl  82.8      -3.6%Diesel-HSFO Spread, USD/ton     425.0    -6.6%LME Aluminum Cash Price, USD/ton        2,263.3 -4.1%Egypt Urea, USD/ton      403.0    0.0%Polyethylene, USD/ton  1,170.0 -0.8%Polypropylene, USD/ton              1,055.0 0.5%Steel/Iron Ore Spreads, USD/ton             514.2    0.0%Egyptian Retail Cement, EGP/ton             1,880.0 0.9%Steam Coal, USD/ton      185.3    -1.9%Crude Palm Oil, USD/MT             914.0    -4.7%SMP, USD/MT   2,769.0 -2.1%

Market Overview Prepared by: Mayada Amin- CETA ,CFTe

Silicon Valley Bank last week became the biggest casualty so far of surging US interest rates, collapsing on Friday.Annual urban inflation jumped 31.9% y-o-y in February, up from 25.8% in January. Monthly headline inflation accelerated to 6.5% from 4.7% in January.The government will unveil its largest-ever export subsidy program next week.CBE has sent investment banks a request to pitch for an advisory role in the sale of United Bank of Egypt.Egypt will withdraw from the multinational Grains Trade Convention in less than four months to stop paying the USD-denominated membership fees, especially because it was felt that no benefits have been garnered from membership.The CBE amended the maximum limits for instant payments made through its digital payment app, InstaPay.The CBE instructed banks to stop applying the previous instructions that exempted the largest 50 clients from credit concentration limits.Aman for Financial Services, a subsidiary of RAYA, plans to issue EGP1.0 billion of securitized bonds during 3Q23. According to local media, a Saudi investor is looking to buy Arab African International Bank's 12.7% stake in PHDC. According to local media, this comes after Arab African International Bank's rejection of an earlier offer from Emirati investment company, Al Ain Holding, at EGP2.5/share, with the bank aiming for EGP2.6-3/share.China International Energy Agency aims to build a new green hydrogen complex in Egypt with investment cost of USD5-8 billion.EOG Resources is considering exploring for hydrocarbons in Egypt.Energean announced that the first gas has been safely delivered at North El Amriya and North Idku.The Health Committee of the Egyptian Federation of Investors' Associations submitted a proposal to the EDA to link the drug pricing mechanism to the FX rate.EgyptAir will soon increase its flights to China to ten weekly flights.

Market Overview FWRYORWEMENAEGTSACGCPrepared by: Mayada Amin- CETA, CFTe