Pre-Trading Thoughts

New tax hikes and development fees got the green light from the House Planning and Budgeting CommitteeThe government made a number of amendments to the VAT, pending Parliament approvalThe US Federal Reserve’s Open Market Committee meets today and tomorrow, widely expected to announce it will taper its bond-buying programEAST inked an agreement to jointly manufacture Davidoff Evolve cigarettes; Will be sold within the mid-price segment, at EGP 32 a pack; Initial production is 100 mn sticksNew entrants into cigarettes manufacturing cannot produce brands within EAST’s lowest tax bracket locally; Reducing toll-manufacturing revenues by 70% in FY25/26 brings down our FV to EGP13.50; EAST is trading at FY21/22 P/E of 5.8x and EV/EBITDA of 3.0xCompanies interested in bidding for a new steel manufacturing license from the Industrial Development Authority will get responses to their inquiries on the terms of the license today; Authority will open the door for bidding in FebruaryHRHO closed  EGP550 mn securitized bond issuanceState-owned Cargas and Gastec inked two contracts worth EGP200 mn to finance the national program to convert cars to run on natural gas over the next three years Key Commodity Changes Brent futures are trading at USD74.40/bbl, Brent has averaged USD70.78/bbl YTDDiesel-HSFO spreads were up 15% w/w and are at USD257/tonCaustic soda prices dropped by 3% w/w so reach USD702/ton, above 3Q21 average of USD410/ton by 77.4%