Pre-Trading Thoughts

According to the local press, electricity prices will not move until June 2022, but there may be an amendment to the price plan to be applied in July 2022 due to higher natural gas cost; EGAL and MICH are the two stocks whose production cost is mostly reliant on electricity prices to the industrial sectorRemittances grew by 11.6% YoY in August 2021, recording USD2.7 billionNitrogen fertilizer producers are now required to supply 55% of their production to the Ministry of Agriculture; Local prices have been raised from EGP3,000 per ton to EGP4,500 per ton for Urea; Companies to pump 10% of their production for sale at international prices MFPC 3Q21 profit hit EGP1,344 million (-3%QoQ, +171%YoY), implying an NPM of 46.3%; 9M21 net profit hit EGP3,520 million (+110%YoY), implying an NPM of 46.3%; We upgrade our FV on MFPC to EGP120.80/share, with an Overweight recommendation; MOPCO is trading at 2022 P/E of 5.8x and EV/EBITDA of 3.6xWe upgrade our FV for ABUK to EGP29.00/share, with an Overweight recommendation; ABUK is trading at FY21/22 P/E of 4.5x and EV/EBITDA of 2.1xMinister Hesham Tawfiq has disclosed that Egypt plans to sell additional shares in ABUK on the EGX within one monthA subsidiary of SWDY is negotiating with NUCA to develop 5 million sqm of industrial land in New OctoberHRHO finalized on Thursday the acquisition of a 51% stake in the Arab Investment Bank, for EGP3.8 billionCBE directed banks to increase working capital financing for companies and factories in order to help them face the increase in international commodity and raw material prices CBE notified banks to stop the initiative of financing cooperative societies at an interest rate of 5%, due to potential effect on non-performing loansCICH’s leasing arm, Corplease, will go ahead with a securitized bond issuance worth more than EGP3 billion before the end of 2021IDHC 3Q21 Results Conference Call: 1) Strong financial performance would enable the group to sustain its attractive payout ratio of above 90%. We project a DPS of EGP2.32 in 2021e, implying a payout ratio of 100% and a DY of 12.8%; 2) IDHC is looking to add another two branches of Al Borg Scan over the coming twelve months; 3) Capex increased to c. 8% of sales in 9M21, which is above IDHC’s guidance of 5.5% - 6%; 4) Covid testing is expected to remain on the surface in 2022 but with relatively lower volumes compared to 2021; 5) IDHC revised downward its PCR pricing for walk-ins from EGP2,000 to EGP1,500; 6) IDHC will start rolling over an expansion plan in Nigeria next year to increase the number of lab branches; IDHC is trading at 2022f P/E of 11.7x and EV/EBITDA of 5.9xSPMD reported 9M21 net profit came in at EGP167 million (+240% YoY) in 9M21, out of which EGP42 million were contributed by Prime Speed, with a NPM of 56.3% (+12.8pps YoY). On a quarterly basis, net profit registered EGP59 million in 3Q21 (-12.6% QoQ, +111% YoY)SPMD’s BoD approved exit from Prime Speed Medical Services and Misr Labs company and to establish new lab chain “Al-Watan”We upgrade our FV for SPMD to EGP2.50/share; Excluding Al Watan Labs, our FV would stand at EGP2.00/share; SPMD is trading at 2022f P/E of 3.0x and EV/EBITDA of 2.2xPHDC plans to spend EGP3.8 billion in investments in FY22, expects selling prices to increase by 10.0-12.0% in FY22, expects net debt to reach zero by the end of FY21, and plans to take out a EGP2.5-3.0 billion loan for Badya in 1Q22EGTS’ lawsuit regarding the 20.0 million sqm third phase Sahl Hasheesh land plot has been turned to the Commissioners’ Authority to put together a comprehensive report on the case