Pre-Trading Thoughts

ETEL| 5G License Granted without Spectrum; Triggers FV upgrade to EGP51/shareTelecom Egypt acquired a 5G license from the government yesterday at USD150 million with no spectrum fees. Accordingly, we upgraded our FV for ETEL to EGP51.00 per share up from EGP45.00 per share, given that we had accounted for USD500 million of 5G related capex (instead of USD150 million), assuming USD350 million of spectrum fees which is not the case now. At current market price, ETEL is trading at a significant discount to peers’ average with 2024f P/E of 5.3x and EV/EBITDA of 3.4x, at a discount to peers’ average of 13.5x and 6.0x.  AMOC| A Beneficiary of Political Tension in the Region and a Play on Local Currency WeaknessAMOC represents a good short-term play as one of our tier II picks for 2024 with an 15% upside potential and a FV of EGP12/share. Our FV is highly sensitive to GPM margin assumptions and local currency weakness, which are currently more on the conservative side. Thus, FV can be revised upwards to EGP14.67/share based on relative valuation and depending on local currency, oil prices, and margin performance. Our view is supported by:The expected currency devaluation bodes well for the company’s revenues, which we forecast to grow by 52% YoY over FY3/24.Net profit is expected to increase by 69% YoY to EGP2.25 billion in FY23/24.We expect to distribute a DPS of EGP0.96/share in FY23/24f, implying a dividend yield of 9%, the highest among its sector peers.AMOC is trading on a FY23/24e PE of 6.0x and EV/EBITDA of 3.4x, one of the lowest among its sector peers.Cargo flights are filling up as Red Sea disruptions continue. Traders are rushing to unwind their bets on a big depreciation of the EGP, as the country’s government is nearing a deal with the IMF to boost the size of a rescue package. The number of tourist arrivals to Egypt during 2023 increased by 27.3% to reach 14.9 million tourists.The Commodity Exchange plans to launch new products on its trading platform during the current year.Ministry of Supply, represented by the Egyptian Holding Company for Silos and Storage EHCSS, got a USD110 loan from the WB to complete the national project for field silos.ETEL secured a 5G license from the NTRA at USD150 million for 15 years.Bayut has contracted with FWRY to provide its customers with instalments services through consumer financing. Alshaya Group, one of the region's biggest retail operators will be downsizing their business in Egypt due to FX pressure and economic conditions.OPEC estimated the world's demand for oil to increase to 2.25 million bbl per day in 2024 and another 1.8 million bbl per day in 2025, on the back of a strengthening Chinese economy.EFG Finance, the non-bank financial services arm of HRHO, might look into acquiring a stake in Saudi’s PayTabs, through giving up its 50% stake in PayTabs Egypt. HRHO’s microfinance arm Tanmeyah has teamed up with the Egyptian arm of GIG to roll out new micro-ins. products. COMI has signed an agreement with the Housing Ministry’s Social Housing and Mortgage Finance Fund to provide EGP3 bn in financing to support the fund’s initiative to give out loans to low- and middle-income home buyers at 3%, 7%, and 8% interest rates.Yesterday's announced EGP4.2 billion finance agreement inked between ORAS (FV: EGP233.65, OW) and Arab Bank is not a loan, but bank guarantees to the National Tunnels Authority.Damietta port Authority reported an increase in number of ships handled by 14.2% YoY and an increase of 11.6% YoY in cargo handling in 2023.