Pre-Trading Thoughts

Prime Minister said that a subsidized bread loaf will be sold at 20 piastres, up from 5 piastres starting in June.The government is currently looking into replacing subsidies with cash support, a move which will allow citizens to use the support according to their needs.The government will hike electricity prices in July with the beginning of the new fiscal year. On average, the hikes will exceed 20%, but not yet determined.The EU and Egypt are expected to sign an EUR35 million financing agreement next month to fund renewable projects.The state has put forward some 45 potential investments within the healthcare sector in front of the private sector.The Supply Ministry will ink a number of contracts with local and foreign companies next month to set up 12 trade and logistic centers, worth a combined EGP40 billion.The government plans to exit renewable energy projects, to make a way for the private sector to implement the state’s plans to expand the production of electrical energy from its renewable sources.Egypt's exports of ready-made clothing increased to USD856 million during the 4M 2024, an increase of 23% y/y.ETEL recorded 1Q24 net profit came of EGP3.88 billion (+1.9% YoY, +68% QoQ). ETEL is trading at 2024f P/E of 3.8x.MTIE reported 1Q24 net attributable profit of EGP248 million (+62% YoY, +16% QoQ). MTIE is trading at 2024f P/E of 11.4x.HDBK1Q24 standalone net profit recorded a strong EGP2,426 million (+51% q/q, +83% y/y). HDBK is currently trading at 2024 P/E of 2.6x.BINV (FV: EGP34.16, OW) released positive 1Q24 bottom line recorded EGP892 million (+167% y/y).ValU, HRHO’s subsidiary, signed a partnership agreement with the Magdi Yacoub Heart Foundation to facilitate donations. Also, the company is targeting securitization issuances worth EGP1.25 billion by mid-July and a financing portfolio of EGP13 billion by the end of 2024 (+45% y/y).The online marketplace Jumia and CNFN’s Creditech have renewed their partnership, which started in January 2023. ECAP recorded a drop in 1Q24 net profit to EGP13.8 million (-76% YoY, -56% QoQ) on the back of operating margins erosion, increasing financing costs along with a FX loss of EGP35.4 million. ECAP is currently trading at FY24e P/E of 14.4x.We updated our FV for LSCW to EGP30.08/share (+35% upside potential), maintaining our Overweight recommendation, where the recent economic reforms, mainly EGP floatation, have been instrumental in shaping LCSW's operational performance.MBSC to reduce its capital from EGP679.3 million to EGP611.4 million by cancelling treasury shares in total of 6.8 million shares, effective June 3, 2024. Accordingly, we adjust MBSC’s FV to EGP49.08/share from EGP44.17/share.SCEM is increasing its issued and paid-in capital through a rights issue from EGP1.3 billion to EGP3.0 billion. The capital increase proceeds will be used to pay the company’s loans and credit facilities in order to reduce financing costs.ATQA released 1Q24 net profit of EGP60.9 million, -53% lower y/y, on the back of tighter operating margins as well as a negative figure of EGP123.6 million resulting from the revaluation of short-term investments in listed stocks.Ashry Steel Group aims to invest EGP8 billion into expanding its operations over the coming two years.POUL reported 1Q24 attributable net profit of EGP548 million (flat YoY, +17.2x QoQ). The substantial sequential growth in bottom line is mainly attributed to the weak base effect of 4Q23 given the high FX losses. POUL is currently trading at 2024f P/E of 1.8x.ALCN reported net profit of EGP4.08 billion in 9M23/24, increase of 28% YoY.EGAS purchased an additional 0.61% stake, representing 12.8 million shares, in MFPC, bringing its stake in the company to 9.07%.