Pre-Trading Thoughts

CBE allowed the EGP to fall 16% against the USD to EGP 18.27 to the USDCBE raised interest rates by 100 bps at a special monetary policy meetingNational Bank of Egypt and Bank Misr offer one-year certificates of deposit at 18% yieldThe government is re-introducing the monthly customs exchange rate, setting it at EGP 16 for imports of basic commodities and materials used for manufacturingWhich companies will benefit from a weaker EGP versus the USD? Mainly exporters and the industrial sector have a direct benefit; ABUK, MFPC, EGCH, EKHO, ESRS, IRAX, EGAL, SKPC, AMOC, ORWE, ALCN, SWDY, RACC, ECAP, LCSW; Indirect benefit to real estate developers and banks through inflation (nominal impact on their size)Which companies will benefit from interest rate rise? Banks whose treasury exposure out of total assets is the highest: FAIT, EGBE, SAUD, COMI; Banks whose funding base is of low cost: HDBK, COMI, CIEB, ADIB; COMI is a winner on both points above, and at current multiples, it is a top pick (P/E of 5.9x and P/B of 1.0x); Cash-rich companies: EMFD, MBSC, HRHO and ABUKMinistry of Finance approved a package of social protection procedures, worth EGP130 billionThe capital gains tax on IPOs is being slashed by 50% for a two-year periodADQ wealth fund will purchase up to 18% of COMI, unspecified stake in FWRY alongside three other companiesSovereign Fund of Egypt has lined up investments for Egypt worth more than USD 2 bnSKPC approved in its OGM the issuance of 1:5 bonus shares; SKPC trades at 2022 multiples of P/E 5.7x and EV/EBITDA 4.5x.   HELI Board approved the sale of a receivables portfolio for EGP320.0 million (EGP0.24/share) to EXPAWeekly direct flights between Baku and Sharm El Sheikh resumed on 18 March 2022Weekly Commodities UpdateBrent futures are trading at USD112.90/bbl and averaged USD95.34/bbl YTDEgypt Urea Index increased by 3% WoW and prices are currently at USD1,130/ton (ABUK)Polyethylene (HDPE) prices were up 9% WoW and prices are currently at USD1,510/ton (SKPC)Diesel-HSFO spreads were up 26% WoW and are at USD528/ton (AMOC)Polypropylene prices climbed to reach USD1,350/MT, higher WoW by 5.5%Steel/Iron Ore spreads rose by 2% to USD621/ton compared to last week (ESRS)Aluminum prices retreated this week by 3% to stand at USD3,381/ton (EGAL)Retail cement prices in Egypt remained stable at the range of EGP1,450 -1,550 per tonSteam Coal came down 9% WoW to record USD336/tonCrude palm oil prices dropped to reach USD1,4230/MT, -9.8% WoWSMP prices rose by 1.4% to reach USD4,545/MT