Pre-Trading Thoughts

Pitch: We published this morning our earnings expectations for companies under coverage in 3Q23/FY23.CBE released balance of payments data for FY2022/23. Moody’s downgraded Egypt’s credit rating from B3 to Caa1, changing the outlook from negative to stable.Egypt needs to move forward with another currency devaluation or it will “bleed” reserves, IMF Managing Director said.CAPMAS is expected to release inflation data for September on Tuesday, 10 October. We expect urban annual inflation to approach 39% YoY as food items continue to surge in September.Egypt’s net international reserves increased by USD42 million in September, recording USD34.97 billion, on higher level of foreign currencies.Egypt's CDS rates rose only marginally during last Friday's trading, according to local press, with 5-year CDS rate recording 17.47% compared to 17.15%, despite Moody's downgrading Egypt's credit rating agency.The World Bank has revised up its estimate for Egypt’s real GDP growth in FY2022/23 to 4.2% from 4%, but downgraded the country’s growth forecast for FY2023/24 to 3.7% percent from 4%.The Minister of Petroleum expects Egypt’s imports of Israeli gas for export to rise by 30% during the coming period.The Minister of Petroleum will finalize ADQ's acquisition of 25-30% of Elab, EDC, and Ethydco with a total value of USD800 million before the end of the year.HELI (FV: EGP18.84, OW) AGM approved the National Organization for Social Insurance’s offer to buy HELI’s 7.1 million sqm Heliopark land plot for EGP15.0 billion to be paid as a lumpsum at contract signing, out of which around EGP2.0 billion will be deducted to increase building heights and convert hanging electricity cables to underground cables.PHDC (FV: EGP4.35, OW) achieved impressive 3Q23 sales of EGP15.3 billion, up 124.0% y/y and 19.0% q/q, bringing 9M23 sales to EGP35.0 billion, up 99.6% y/y. PHDC’s strong 9M23 sales performance is already higher than our FY23 sales forecast of EGP31.7 billion assumed in our EGP4.35/share valuation.PHDC (FV: EGP4.35, OW) is partnering with Hassam Allam Properties to develop 440 feddans on the North Coast in the Ras El Hekma area, with an expected combined investment cost of EGP120.0 billion, according to local media.The Administrative Capital for Urban Development intends to appoint a global financial advisor to offer a 5-10% stake on the EGX in 1H24.EGAL (FV: EGP53.58, OW) Board of Directors proposed a cash dividend distribution of EGP1.00/share for FY22/23, implying a dividend yield of 2.3%. EGAL (FV: EGP53.58, OW) reported FY22/23 and 4Q22/23 full financial results recording a net loss of EGP225.4 million during the quarter, down from positive earnings of EGP812.8 million in 4Q21/22 and EGP2.2 billion in 3Q22/23, bringing FY22/23 bottom-line to EGP3.7 billion (+48% YoY). EGAL is currently trading at FY23/24e P/E of 6.8x and EV/EBITDA of 5.2x. ISPH seeks to transfer ownership of Al-Shorouk Hospital, which it acquired last year, to its investment arm AIM before the end of this year.The founder of ISPH, the Abdel-Gawad family, is reported innocent from the complaint filed against them by the Illegal Gains Agency, and the ban on their funds has been lifted.The preliminary value of MoF’s 20% stake in Alex Bank amounts to USD150-175 million, according to local sources.BTFH will increase its Minya-based microfinance subsidiary Cash’s capital base to reach EGP500 million.Egypt signed a framework agreement on Wednesday with Maersk’s new green methanol company C2X to produce the green fuel in the Suez Canal Economic Zone. Egypt is in negotiations with three international companies to manufacture mobile phones locally.