Egypt 28 December 2015

Transcription

1 Egypt NAEEM NewsStand What's Inside Qalaa Holdings signs agreements to exit Misr Glass Manufacturing and United Glass Company Egyptian pound steady at official currency sale and on black market Egypt expects lower petroleum subsidy bill in FY16 on falling global prices Yields on Egypt's 91-day and 273-day t-bills rise Alex Containers negotiates with Ministry of Transportation to establish a platform in the Alexandria port with investments worth USD700m El Sewedy Electric to conduct an AGM on 12/1/2016 to discuss 9M15 results, dividends Pachin announces 1QFY16 net profit of EGP17.6m; up 54% YoY Egytrans board endorses budget estimates for 2016; targets net profit of EGP9.3m Top 5 Gainers Stock Name Previous close Last Price Chg National Co For Maize Production Arabia Investments & Develop Rowad Tourism Co Samad Misr -Egyfert Egyptian Iron & Steel Co EGX Market Indices Close Chg EGX 30 6, EGX NISE DJ EGX Egypt Titans 20 Index 1, Advances Declines No Change Regional Stock Market Indices Close Chg Saudi Arabia TASI 6, Dubai DFM 3, Abu Dhabi ADX 4, Kuwait KWSE 5, Qatar DSM20 10, Prior Session Market Wraps The EGX30 index decreased by 0.93% to close at 6,749.1 The EGX70 index decreased by 0.02% to close at Market turnover was EGP407m (vs. EGP550m on Thursday). Egyptian investors were net buyers, whereas Foreign and Arab investors were net sellers. Foreign investors accounted for 2.22% of the total market. Top 5 Decliners Stock Name Previous close Last Price Chg Delta Insurance Paints & Chemical Industries Prime Holding Egyptian For Developing El Kahera El Watania Invest Most Active Stocks by Value Stock Name Turnover Last Price Chg OTMT Citadel Capital Arab Cotton Ginning Commercial International Bank Arabia Investments & Develop Most Active Sectors Sector Turnover % of total Non-Banking Financial Services Telecommunications Housing & Real Estate Personal and Household Products Banking * Daily market statistics for 27 December 2015 Daily EGX30 and Turnover Points 800 7, , , , , , Dec 21-Dec 22-Dec 24-Dec 27-Dec Turnover EGX 30 Index Source: EGX Investors by Type 100% 90% 80% 80% 70% 60% 60% 50% 40% 40% 30% 20% 20% 10% 0% 0% 20-Dec 21-Dec 22-Dec 24-Dec 27-Dec Non-Arab Arab Local Institutions Source: EGX 1

2 Impact KEY STORY Qalaa Holdings signs agreements to exit Misr Glass Manufacturing and United Glass Company Recommendation: Under Review Current Price: EGP1.59 Qalaa Holdings (CCAP), announced that its subsidiary MENA Glass Ltd. has signed agreements for the sale of the entirety of its stake in Misr Glass Manufacturing Company (MGM), a producer and exporter of glass containers across the Middle East and North Africa, to Middle East Glass Manufacturing Company (MEGM), and the entirety of its stake in United Glass Company (UGC) to MGM Holding, at a combined equity value for 100% of both MGM and UGC of c. EGP828m The agreeing parties expect to finalize the closing in 1Q16 as soon as the purchasers complete their funding of the transactions. Qalaa Holdings currently has an effective ownership of 15.2% in MGM and UGC About MEGM listed on the EGX, the company produces glass containers with manufacturing operations located in Nasr City, Cairo, on a site of 105,000sqm. It produces a range of returnable and non-returnable glass containers in both green and flint colors; in 2009, doubled its production capacity to over 100,000 tons of molten glass. In 2014, it acquired Wadi Glass Manufacturing Co. for EGP202m; adding 100,000 tons of glass capacity Our take: The agreement to sell the two assets comes in line with CCAP s already set out strategy to exit non-core assets. Assuming the transaction to be carried out in cash, the final sale should raise about EGP126m for CCAP; in addition, assuming that the debt (at the asset level) would be carried forward by MEGM However, we await details from CCAP with regards to information on the initial investment cost, in order to draw a conclusion on the possibility of gains to be booked on account of the transaction closing Based on our conversation with CCAP, we note that both the assets are profitable From MEGM s perspective - the company has recently raised EGP205m of cash through a capital increase which was fully subscribed. While its available cash balance amounted to EGP241m as of 1H15 (post the capital increase), the MGM deal size of EGP828m is well beyond its internally available liquidity bandwidth. Hence, with the company left with the option of making the remaining payments in installments and/or through a combination of debt ECONOMIC & POLITICAL NEWS Egyptian pound steady at official currency sale and on black market Egypt's central bank kept the pound steady at EGP7.7301/USD at its official foreign currency auction on Sunday three days after it raised benchmark interest rates by 50 basis points. The rate was steady on the black market as well. The central bank sold USD39.4m at a cut-off price of EGP7.7301/USD, unchanged from Thursday. The official rate is still far stronger than the black market rate, which was around EGP8.575m on Sunday, almost unchanged from Thursday's EGP8.57/USD, traders said. (Source: Reuters) Egypt expects lower petroleum subsidy bill in FY16 on falling global prices Egypt spent around EGP14bn (USD1.8bn) on petroleum subsidies during 1QFY16, the state owned daily newspaper Al-Ahram reported on Sunday, citing Petroleum Minister Tarek El-Molla. As the government spent some EGP18bn (USD2.3bn) from July to September last fiscal year, El-Molla attributed the lower subsidy to the sharp decrease in global oil prices, expecting the bill to keep falling especially in the next two quarters, which would save around EGP7bn (USD890m) to the public treasury. (Source: Ahram Online) 2

3 Yields on Egypt's 91-day and 273-day t-bills rise Yields on Egypt's three and nine-month treasury bills rose at Sunday's auction, data from the central bank showed. The average yield on Egypt's 91-day bill rose to % from % on Dec. 20 and the yield on the 273-day bill rose to % from % in a similar auction on Dec. 20. (Source: Reuters) Egypt s gas import agreement with Israel conditional upon dropping of arbitration claims and in-kind share assignment official sources at the Ministry of Petroleum. (Source: Al Mal Newspaper) Egypt said to offer Saudi Arabia projects in Housing, Tourism The Egyptian government offered tourism and housing projects to Saudi Arabian funds, a government official said, as part of planned investments by the kingdom to help Egypt s economy. The government offered tourism projects in the Red Sea resort of Sharm El-Sheikh, as well as a mixed-use real-estate project west of Cairo on a partnership basis, said the official, who asked not to be named because the details aren t public. The Saudi funds are studying the proposed projects, the official said. (Source: Bloomberg) Egypt prepares for international economic conference in 2016 Egypt is preparing for an international economic conference to attract foreign investments, a government source stated on Sunday. The Investment Ministry and the International Cooperation Ministry are planning to provide a platform for all Egyptian sectors to present investment opportunities at the conference. A date for the conference has not been determined, but meetings are ongoing to discuss means to organize it like the March Egypt Economic Development Conference (EEDC) in Sharm el-sheikh. (Source: Cairo Post) Blue Nile reverts to normal course after Ethiopian dam diversion Irrigation Minister Egyptian Minister of Water Resources and Irrigation Hossam Moghazy stated on Saturday that the Nile river stream returned to its normal course after being diverted at the tributary of the Blue Nile for the construction of the Ethiopian Renaissance Dam. The tributary was temporarily diverted in May 2013 for the construction of the controversial Ethiopian dam, Hossam added in a statement, noting that water flow has returned to its normal course to flow through four underground tunnels of the dam. However, that does not mean technically any quantity of water has been stored in front of the dam, Moghazy continued. (Source: Cairo Post) Six-fold Renaissance dam meeting in Khartoum aims for consensus with diplomatic representation A two-day meeting starting in Khartoum on Sunday between Egypt, Ethiopia, and Sudan s irrigation and foreign ministers, and the Renaissance Dam s tripartite meeting aims to overcome discords over the dam. Ethiopian foreign minister said on Sunday that holding the six-fold meeting for the second time after weeks shows willingness to abide by March s declaration of principles. The people of Egypt, Ethiopia, and Sudan are tied by the Nile which represents our common destiny, the foreign minister said. The foreign minister said a common agreement must be reached between the three countries in order to achieve mutual interests. (Source: Ahram Online) Egypt s daily gas production drops to 4.1bn cubic feet per day. (Source: Al-Borsa Newspaper) Minister of Petroleum to allocate EGP3.5bn for gas lines to grant access to the new Siemens power stations. (Source: Al-Ahram Newspaper) Minister of Supplies - government to propose 709 plots of land, 366 outlets to investors to launch commercial chains. (Source: Daily News Egypt) Egypt raises export duty on scrap fabrics by 40% Egypt has raised duties on exports of scrap fabrics used in the manufacturing of furniture fabrics by 40%, in an attempt to boost local industry. The decision aims to boost the domestic textiles industry as the rise in the clothes fragments showed that exporters were not deterred by the current levy, Kabil said in the statement. Levy on scrap fabrics will become EGP3,500 (USD447) per ton starting January 2016, up from EGP2,500 (USD319.5) per ton imposed currently, according to a ministerial statement released Sunday. (Source: Ahram Online) 3

4 Egypt's Sisi appoints committee to investigate corruption claims Egypt's President Abdel-Fattah El-Sisi ordered a taskforce to be formed late Saturday in order to investigate corruption allegations in the media, following last week s claims by Central Auditing Organization head Hisham Genena that corruption from 2012 to 2015 cost the country EGP600bn. The committee will be headed by the chief of the Administrative Control Authority and will consist of representatives from the ministries of justice, interior, planning, and finance, in addition to Central Auditing Organization deputy chief Hisham Badawi. (Source: Ahram Online) Ministry of Finance to discuss investor complaints filed against the unified investment law tomorrow. (Source: Al-Borsa Newspaper) Saudi funds in talks to invest USD1.5bn in Egyptian developmental projects. (Source: Amwalalghad)) Sisi s Long Live Egypt Fund receives USD6bn of commitments. (Source: Amwalalghad)) Abraaj Group - in negotiations to acquire Al-Shorouk hospital through health care investment arm. (Source: Almal Newspaper) LG mulls establishing a plastic production plant in the Suez Canal axis area during the coming period; the feasibility study of the project to be completed within a year. (Source: Almal Newspaper) EgyptAir reports net loss of EGP718m in FY15, compared to a loss of EGP3bn in FY14. (Source: Al-Borsa Newspaper) CORPORATE NEWS Alex Containers negotiates with Ministry of Transportation to establish a platform in the Alexandria port with investments worth USD700m. (Source: Al Shorouk) El Sewedy Electric to conduct an AGM on 12/1/2016 to discuss 9M15 results, dividends. (Source: EGX) Pachin announces 1QFY16 net profit of EGP17.6m; up 54% YoY. (Source: EGX) Egytrans board endorses budget estimates for 2016; targets net profit of EGP9.3m. (Source: EGX) Beyti Managing Director - company s share in the milk and juice market reached 40% in the current year due to expansion plans executed; company managed to raise production capacity by 200%, resulting in sales growth of 150%. (Source: Al Shorouk) North African Company for Real Estate - currently in negotiations to develop a land plot in Sadat area; to borrow EGP200m from a bank. (Source: EGX) Orascom Construction Industries SAE board approves delisting of shares from the EGX. (Source: EGX) Egypt Gas approves budget estimates for 2016, targeting a net profit of EGP10.5m. (Source: EGX) Nile for Pharmaceuticals and Chemical Industries reports net profit of EGP4.2m for the five month period ending 30/11/2015; down 7% YoY. (Source: EGX) GB Auto is working on placing the company's financing operations under the umbrella of "GB Capital"; 100% owned by GB Auto. (Source: Almal Newspaper) Arabia Investments approves sale of a land plot owned by subsidiary Misr for Mechanical & Electrical Projects ( Karhomika). The board also approved the EGX listing proposal for the subsidiary. (Source: EGX) The Egyptian Company for Construction and Development (Lift Slab Misr) announces an AGM date of 5/1/2016 to discuss potential capital increase from EGP43m to EGP86m through a rights issue. (Source: EGX) Sabaa International Company for Pharmaceutical and Chemical Industry to add three new production lines involving investments of EGP15m in (Source: Al-Borsa Newspaper) Al-Ahli Bank of Kuwait announces a mandatory purchase offer to buy 1.51% of Piraeus Egypt to complete the 100% ownership. (Source: Al-Ahram Newspaper) 4

5 NAEEM FOCUS LIST Company Commercial International Bank "CIB" Sidi Kerir Petrochemicals QNB AL-Ahli Telecom Egypt "TE" Egyptian Resorts Company El Sewedy Electric Ezzsteel Egypt Kuwait Holding Global Telecom Palm Hills Developments Credit Agricole Egypt Maridive and oil services GB AUTO South Valley Cement Misr Beni-Suef Cement Suez Cement Misr Qena Cement Sinai Cement Arabian Cement Juhayna Food Industries Talaat Mostafa Group SODIC Madinet Nasr Amer Group Heliopolis Housing ADIB Egypt - UR=Under Review Code Last Price (EGP) Target Price Rec. PE (x) Price/CFPS EV/EBITDA PBV DY 15f 16f 15f 16f 15f 16f 15f 16f 15f COMI ACCUM na na na na SKPC BUY na na QNBA ACCUM na na na na ETEL BUY EGTS BUY na na na na na na SWDY BUY na na ESRS HOLD na na na na na na 0.9 na 0.0 EKHO BUY na na na na na na na na na GTHE BUY na na na PHDC BUY CIEB HOLD na na na na MOIL BUY na na na na 0.0 AUTO BUY na na SVCE BUY MBSC BUY SUCE BUY MCQE BUY SCEM HOLD ARCC 9.9 UR UR JUFO BUY TMGH BUY OCDI BUY MNHD BUY na na 0.0 AMER ACCUM HELI BUY na na 0.0 ADIB BUY na na na na

6 DAILY AGENDA Mon Tues 29 December 2015 Wed 30 December 2015 Thurs 31 December 2015 EMFD:EGM to approve amending Article of Incorporation No.55 concerning annual profit distribution (After amendment, the article will state that the company's net profits will be distributed annually after deducting general expenses and other costs) MICH: BOD to discuss financial position Sat 2 January 2016 Sun 3 January 2016 Mon 4 January 2016 Tues 5 January 2016 Wed 6 January 2016 Thurs 7 January 2016 Sat 9 January 2016 Sun 10 January 2016 GLOBAL DEPOSITORY RECEIPTS GDRs Company name London Bb Code Conversion Ratio Previous Close (USD) Last Price (USD) Change Local Price (EGP) Diff. GDR/Local Commercial International Bank "CIB" -Egypt CBKD LI EFG - Hermes Holding EFGD LI Global Telecom Holding GLTD LI Suez Cement SZCD LI Telecom Egypt "TE" TEEG LI Palm Hills PHDC LI Source: Bloomberg 6

7 EGX 100 CONSTITUENTS: 27 December 2015 M. Cap Free Last Return Turnover Volume 52 Weeks H Sector/Company Name Ticker Float Cur. Price (EGP'000) (000) (EGP) Daily YTD High Low PE Yield Construction & Building Materials Arabian Cement Company ARCC 3,765 na EGP Al Ezz Steel Rebars ESRS 4, EGP , nm na Egyptian For Developping Building EDBM EGP nm na South Valley Cement SVCE 1, EGP , na EL EZZ Ceramics and Porcelain Co ECAP EGP nm 9.1 Modern Company for water proofing WATP EGP nm na General Ceramics & Porcelain PRCL EGP Delta Construction & Rebuilding DCRC EGP na Giza General Contracting GGCC EGP , na Misr Cement (Qena) MCQE 2, EGP Egyptian Iron & Steel Co IRON 1, EGP ,274 1, nm na Orascom Construction Ltd ORAS 7,314 na EGP P 15, nm na Housing & Real Estate & Tourism TMG Holding TMGH 13, EGP ,896 2, El Wadi Co. For Touristic Investement ELWA 157 na EGP nm na Amer Holding Group AMER 2, EGP ,956 30, Palm Hills Development Co. PHDC 5, EGP ,449 6, na Heliopolis Housing and Development HELI 4, EGP , Medinet Nasr Housing MNHD 6, EGP , na Marsa Marsa Alam For Tourism Development MMAT 67 na EGP na nm na Six of October Dev. and Invest. SODIC OCDI 3, EGP , na United Housing & Development UNIT 1, EGP na Remco for Touristic Villages Construction RTVC EGP na Reacap Financial Investments REAC 250 na EGP nm na Cairo Housing ELKA 1, EGP na El Shams Housing & Urbanization ELSH EGP nm 0.7 Elsaeed Contracting& Real Estate UEGC 481 na EGP ,597 14, Egyptians Housing Dev. &Reconstruction EHDR EGP nm na North Africa Co. for Real Estate Investment NOAF 313 na EGP , na Egyptians For Investment & Urban Develop. EIUD 63 na EGP nm na Egyptian Real Estate Group AREH EGP na National Real Estate Bank for Dev. NRPD EGP na Cairo Development and Investment CIRF EGP nm na Gharbia Islamic Housing Development GIHD 23 7 EGP Arab Real Estate Investment RREI 160 na EGP ,297 5, nm na Golden Coast Company GOCO 64 na EGP nm na Gulf Canadian Real Estate Investment Co. CCRS 38 na EGP na Mena Touristic & Real Estate Investment MENA 83 na EGP na Sharm Dreams Co. for Tourism Investment SDTI 163 na EGP , nm na Orascom Hotels & Development ORHD 1,421 na EGP na Egyptian Resorts EGTS 882 na EGP ,945 20, na Banking Commercial Int'l Bank - Egypt CIB COMI 41, EGP ,

8 Sector/Company Name Ticker M. Cap Free Last Return Turnover Volume 52 Weeks H Float Cur. Price (EGP'000) (000) (EGP) Daily YTD High Low PE Abu Dhabi Islamic Bank- Egypt ADIB 948 na EGP na Credit Agricole Egypt CIEB 6, EGP Yield Non-Banking Financial Services EFG-Hermes Holding Company HRHO 5, EGP ,955 1, na Egypt Kuwait Holding EKHO 3, USD Belton Financial Holding BTFH EGP nm na Pioneers Holding PIOH 3, EGP ,508 1, na Arab Moltaka Investments Co AMIA EGP Arabia Inv., Dev., Fin. Inv. Holding Co. AIND EGP ,572 19, nm na Egyptians Abroad for Invest. & Dev ABRD EGP na Al Ahly for Dev. and Investment AFDI EGP nm na Egyptian Arabian (cmar) Securities Brokerage EASB EGP na Prime Holding PRMH EGP , na Qalaa Holding CCAP 4, EGP ,002 25, nm na Telecommunication & Technology Telecom Egypt ETEL 10, EGP , Global Telecom Holding GTHE 10, EGP ,311 5, nm na Orascom Telecom Media & Tech. Holding OTMT 3, EGP ,286 92, na Raya Holding Co RAYA EGP Fertilizers and Chemicals Egyptian Chemical Industries (Kima) EGCH 1,178 5 EGP , na Egyptian Financial and Industrial EFIC EGP Misr Chemical Industries MICH EGP Mining, Gas & Petrochemicals Sidi Kerir Petrochemicals SKPC 5, EGP , Alexandria Mineral Oils Company AMOC 2, EGP Maridive and oil services MOIL USD nm na Asek Co For Mining ASCM EGP nm na Textiles & Clothing Oriental Weavers ORWE 3, EGP Arab Cotton Ginning ACGC EGP ,447 10, na Alex. Spinning & Weaving Spinalex SPIN EGP nm na Arab Polvara Spinning & Weav APSW EGP nm na El Nasr Clothes & Textiles KABO EGP nm na Industrial Goods & services & Automobiles El Sewedy Cables SWDY Canal Shipping Agencies CSAG 8, EGP El Ahram Co. For Printing And Packing EPPK 1,124 5 EGP United Arab Shipping UASG EGP na Egyptian Transport Egytrans ETRS EGP ,232 6, nm na Electro Cable Egypt ELEC EGP Engineering Industries Icon ENGC EGP ,974 6, nm na General Silos & Storage GSSC EGP na Universal For Paper and Packaging Materials UNIP EGP , GB Auto AUTO EGP nm na 8

9 Sector/Company Name Ticker M. Cap Free Last Return Turnover Volume 52 Weeks H Float Cur. Price (EGP'000) (000) (EGP) Daily YTD High Low PE Yield Food and beverage Juhayna Food Industries JUFO 7, EGP Edita EFID 12,074 na EGP P nm na Middle Egypt Flour Mills CEFM EGP Ismailia Misr Poultry ISMA EGP nm na Int'l Co. for Agricultural Crops IFAP EGP nm na North Cairo Mills MILS EGP Extracted Oils and its Derivatives ZEOT EGP ,143 1, nm na Mansourah Poultry MPCO EGP na Egypt for Poultry EPCO EGP na Ajwa Group AJWA EGP , na Northern Upper Egypt Dev. & Agri. Product. NEDA EGP nm na Atlas For Land Recl. & Agricultural Proc. ALRA 37 na EGP nm na Egyptian Starch & Glucose ESGI EGP na El Nasr For Manufacturing Ag ELNA EGP nm na Cairo For Oils And Soaps COSG EGP , nm na Tobacco Eastern Tobacco EAST 8, EGP , Healthcare and Pharmaceuticals Medical Packing Company MEPA EGP , nm na Advanced Pharmaceutical Packaging Co. APPC EGP na nm na Miscellaneous Egyptian Media Production City MPRC EGP nm na GMC GMCI 65 7 EGP ,673 2, nm na Denotes that a stock is a member of the NISE25 index 9

10 Disclosure Appendix Disclaimer This report is based on publicly available information. It is not intended as an offer to buy or sell, nor is it a solicitation of an offer to buy or sell the securities mentioned. The information and opinions in this report were prepared by the NAEEM Research Department ( NAEEM ) from sources it believed to be reliable at the time of publication. NAEEM accepts no liability or legal responsibility for losses or damages incurred from the use of this publication or its contents. NAEEM has the right to change opinions expressed in this report without prior notice. This research report (including all appendices) contains information that is intended to be conveyed only to the intended recipients, which insofar as the United Sates is concerned, are major U.S. institutional investors (i.e., U.S. institutional investors having total assets under management in excess of USD100 million, or investment advisers that are registered with the U.S. Securities and Exchange Commission and have total assets under management in excess of USD100 million). If the reader or recipient of this research report is not the intended recipient, please notify Naeem immediately, and promptly destroy this research report without retaining any portion in any manner. The unauthorized use, dissemination, distribution or reproduction of this research report by any person other than the intended recipient is strictly prohibited. Analyst Certification The primary research analyst/analysts covering the company (or companies) mentioned in this report certify that their views about the company (or companies) and their securities are accurately expressed. Further, no part of their compensation, whether pecuniary or in-kind, was, is, or will be, directly or indirectly related to the recommendations or views expressed in this research report. Unless otherwise stated, individuals listed on the front cover/page of the report are the research analysts. Stock Ratings NAEEM believes that an investor s decision to buy or sell a stock should depend on individual circumstances (including, but not limited to the investor s existing holdings and financial standing) and other considerations. Different securities firms use a range of rating terms and rating systems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each report. In addition, since NAEEM s research reports contain complete information about the analyst s views, investors should read NAEEM reports in their entirety, and not infer the contents from the ratings alone. Ratings (and/or research) should not be relied upon as an investment advice. NAEEM assigns ratings to stocks on the following basis: Rating Upside/Downside potential Rating distribution as of 28 December 2015 BUY >20% 46% ACCUM. >10% to 20% 11% HOLD +10% to -10% 35% REDUCE <-10% to -20% 4% SELL < -20% 4% Research Contacts Allen Sandeep Director, Research allen.sandeep@naeemholding.com Harshjit Oza Assistant Director, Research harshjit.oza@naeemholding.com Sales and Trading Contacts Tarek Abaza Executive Director, Sales & Trading Local Institutions, GCC & High Net Worth tarek.abaza@naeemholding.com Mai Kishk Senior Sales Trader, Local Institutions & High may.kishk@naeemholding.com Networth Ashraf Abd-Elaziz Director, Local Institutions ashraf.abdelaziz@naeemholding.com