Pre-Trading Thoughts

FAB’s NBO on HRHO| Due diligence will take about 60 days and may extend for an additional 60 days; EFG Hermes will hire an independent financial advisor to determine the fair value; FRA stated that the upcoming acquisition offer from First Abu Dhabi Bank will require submission to the authority’s board of directors for approval; At EGP19.00, HRHO's transaction implies 2022 c.10-11x P/E for 2022 and 1.1x P/B; Using the same transaction multiples to value stocks within the same sector, CICH’s combined value would be EGP5.50/share and AUTO at EGP8.00/share; If FWRY continues to fail the MSCI buffer rule for May 2022 rebalancing, and if HRHO gets delisted, EKHO and TMGH will be on the short-list to replace FWRY   MSCI makes no changes to Egypt constituents within its EM indices, whether standard or small cap within the February 2022 rebalancing.   Inflation readings for January will be released today. We expect urban inflation to hit 7% YoY, driven by food and beverages rise in prices.   BoD of Egyptian Central Securities (ECSD), is formed, in another step towards making local debt Euro-clearable and EGP bonds more accessible to foreign investors.  Aldar Properties will spend at least AED5 bn (c.USD1.4 bn) on acquiring retail and education assets in Egypt, the UAE and Saudi Arabia.  SWDY (FV: EGP14.28, OW) released 4Q21 financial results. Net Income after Minority Interest slightly fell by 4% YoY to EGP1.2 billion in 4Q21. SWDY’s board of directors announced not proposing dividends for 2021. SWDY is currently trading at P/E of 5.8x and EV/EBITDA of 3.6x. Afrixim Bank revealed that the bank is studying with SWDY the establishment of a hotel in Comoros, with investments of EUR50 million. The Holding Company for Drinking Water and Wastewater is negotiating the tariff for desalinated water from private sector companies; The tariff offered for selling a cubic meter of desalinated water ranges between EGP12-17.  The Planning and Budget Committee of the House of Representatives greenlit amendments to the property disposal tax for owners to pay a lumpsum tax ranging from EGP1,500 to EGP4,000 upon selling their properties, instead of the current 2.5% tax.  MCRO's shares will begin trading today on EGX. According to our estimates, at EGP4.85/share, the stock should be trading at 2022f P/E of 14.9x, EV/EBITDA of 10.0x, and P/S of 3.9x.