Pre-Trading Thoughts

Annual urban inflation jumped to 37.4% in August from 36.5% in July. Core inflation — which strips out volatile items such as food and fuel — recorded 40.4% y-o-y in August, down marginally from 40.7% in July.   We believe the CBE will press the pause button on its upcoming meeting on 21st September, especially to assess the impact of the 100bps hike decided in its last meeting on August 3rd. The decision might be supported by a probable slowdown in the Fed tightening.  Minister of Planning said that the government aims to collect USD 4-5 billion from the government privatization program by the end of the current fiscal year 2023/24, and half of these proceeds have been collected so far.  Minister of Planning indicated that 4 new companies are being qualified to join the pre-offering fund of the SFE.  Minister of Planning said that the Egyptian economy will grow by less than 4% in the fiscal year 2022/2023.  The General Investment Authority discussed with the China Development Bank (CDB) the opportunities for a Chinese bank to be present in Egypt.  Emirati business leader Khalaf Al Habtoor is interested in investing in projects offered by the Sovereign Fund of Egypt.  Several local and international investors are eyeing a stake in state-owned manganese producer Sinai Manganese.   The Export Council for Engineering Industries is launching a trade mission to Iraq, that includes 22 Egyptian companies from various sectors to Iraq. The mission intends to boost exports.   Egypt’s gas imports from Israel rose 21.5% y-o-y to 903 mn cubic feet per day (cf/d) on average in 1H 2023.  Ethiopia has completed the fourth and final phase of filling the reservoir of the Grand Ethiopian Renaissance Dam (GERD).  The Financial Regulatory Authority (FRA) launched a pricing index for MSME financing products designed to give small business owners clearer information about the loan market.   TMGH (FV: EGP22.55, OW) is partnering with Saudi National Housing Company to develop a development project in Riyadh called Banan on a land area of 10.0 million sqm, with investments estimated at SAR40.0 billion.  HELI (FV: EGP12.44, OW) is extending the deadline for investors to submit offers to rent HELI's 11k sqm Ghernata land plot to 19 October 2023. POUL (FV: EGP5.90, EW) released 2Q23 net profit at EGP207 mn (+13% YoY). Squeezed margins down the income statement and heightened net interest expenses, despite the annual jump in revenues due to higher prices, 1H23 net profit recorded EGP763 mn (2.3x YoY). POUL is currently trading at a FY23 P/E of 1.8x and an EV/EBITDA of 1.6x. Afrexambank granted USD200 million loan equally distributed between SWDY (FV: EGP22.87, OW) and ORAS (FV: EGP181.70, OW) to finance developmental projects in Barbados in the Caribbean, according to local media.  Gioshy Steel proposed to acquire a government-owned billets production facility, according to local media. We downgraded our FV for IDHC to EGP22.32/share, down from EGP23.03/share, maintaining our Equalweight recommendation, to factor in: Updated macro assumptions and higher RRR, Rolling over the model for one additional year, Joint venture in Saudi Arabia, Pressured GPM on the back of launching Saudi Arabia's new joint venture. Despite higher top-line growth in 2024 and 2025 given further high price increases due to devaluation, in addition to conventional test recovery and margins normalizing to pre-Covid norms by 2027-2028. Etisalat intends to launch an electronic payments company in Egypt in 4Q2024.  Weekly Commodity Update |  Last Price        WoW Change, % Brent, USD/bbl            90.7     2.4% Diesel-HSFO Spread, USD/ton  &nbs