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EGX to move sideways in mid-term as it awaits fresh catalysts - Daily News Egypt

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EGX to move sideways in mid-term as it awaits fresh catalysts

Benchmark EGX30 index may retest 15,320 points if it breaks resistance at 15,000


The Egyptian Exchange (EGX) is likely to maintain seeing profit-taking this week, analysts expected.

The EGX is expected to carry on the sideways-to-declining trend during the third week of March, and to continue seeing profit-taking in general, Head of the capital market committee at the African Economic Council, Ayman Fouda, said.

The benchmark EGX30 index may retest 15,320 points if it breaks resistance at 15,000 and 15,200 points, Fouda highlighted, pointing out that it has support at 14,810 and 14,750 points.

The small- and mid-cap EGX70 index has a short-term resistance at 705 and 715 points, while it has support at 695 and 689 points, he added.

For his part, the Head of client relations at Arabeya Online, Michael Naguib, said that the EGX would continue seeing a wave of profit-taking this week.

The benchmark has support at 14,931, 14,900, and 14,624 points, while it has resistance at 15,250 and 15,320 points, Naguib noted.

The market’s indices ended in a mixed note during the second week of March. The benchmark EGX30 index went up 0.58% to 14,991 points in a week. The Commercial International Bank (CIB) shed 1.35% to EGP 69.48, with a turnover of EGP 647.5m.

The EGX70 index lost 1.5% down to 697.98 points, while the EGX100 fell by 1% to 1,771 points. Over the week, market capitalisation gained EGP 5.98bn up to EGP 831.25bn.

In market news, Infinity Solar, a subsidiary of Egypt’s private equity firm B Investments Holdings, has completed the construction and operation of its 30MW solar power plant, MMID, at the Benban solar park in Aswan.

The Egyptian Electricity Transmission Company (EETC) has issued an operating licence for the MMID that will allow the plant to be tied up to the national electricity grid, B Investments added in a statement to the EGX.

The company is projected to generate $7m in annual revenues from this project.

In December 2018, B Investments announced that Infinity Solar had linked the MMID to the national electricity grid.

This comes within the framework of the second phase of the feed-in tariff project, the Cairo-based private equity firm previously indicated.

Meanwhile, Pharos Research has maintained their equal-weight recommendation for the CIB stock based on fair value (FV) of EGP 90 per share.

The CIB, which makes up more than 33% of the benchmark EGX30 index, is expected to stay as “the perfect proxy for the macro transformation story” in Egypt, according to a research note.

As long as Egypt is included in the MSCI Emerging Markets Index, the heavyweight stock will hold a reserve spot in the index, Pharos noted.

The EGX-listed bank is likely to remain as the top-rated private sector lender, the research firm added.

The CIB reported a 27% year-over-year (y-o-y) profit increase for the full-year 2018, registering EGP 9.58bn, up from EGP 7.53bn in 2017.

Net income surged to EGP 18.14bn last year from EGP 12.5bn a year earlier.

Standalone profits climbed to EGP 9.55bn during the period between January to December 2018, versus EGP 7.55bn in 2017.

Additionally, the CIB’s board had recommended the distribution of cash dividends worth EGP 1 per share for 2018.

Last month, the listing committee at the EGX had approved raising the CIB’s issued capital to EGP 14.5bn from EGP 11.6bn through bonus shares distribution.

In another note, Pharos Research has maintained their FV on Sidi Kerir Petrochemicals’ (Sidpec) stock at EGP 19.22 per share, with an equal-weight recommendation.

Despite posting positive profit margins for the last quarter of 2018, Sidpec is likely to face pressure from the recent decline in global polyethylene prices.

Sidpec reported a 14.7% y-o-y profit growth for the full-year 2018, logging EGP 1.2bn, versus EGP 1.13bn in 2017.

Sales increased to EGP 5.7bn last year, versus EGP 4.9bn a year earlier.

In October 2018, Sidpec posted a 31% y-o-y rise in profits for the first nine months of 2018 due to a growth in production and sales.

Net profit stood at EGP 922m in profits for the nine-month period ended September, versus EGP 703m in the prior-year period.

Meanwhile. Pharos has reiterated their FV on Juhayna Food Industries’ stock at EGP 12.73 per share, with an equal-weight recommendation.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins of the leading dairy producer are expected to recover as “the spike in selling, general and administrative expenses is temporary due to an increase in promotional spending,” according to a research note.

 Juhayna reported last week a 107% y-o-y hike in its consolidated profits for 2018, with EGP 408.24m in profits, versus EGP 197.7m.

Sales surged to EGP 7.12bn last year, versus EGP 6.06bn the year before.

At the level of standalone business, the company’s profits logged EGP 308.2m in profits last year from EGP 142.5m in 2017.

Moreover, Juhayna announced that its board of directors recommended the distribution of EGP 188.2m in cash dividends, or 20 piasters per share, for 2018 to shareholders.

In earning news, Egyptian Chemical Industries (Kima) announced it has turned to losses for the first half (H1) of fiscal year (FY) 2018/19 due to lower revenues.

The company suffered a net loss of EGP 3.2m during the six-month period ended last December, against a net profit of EGP 57.6m in H1 of FY 2016/17, according to a filing to the EGX.

Revenues shrank to EGP 177.7m at the end of December 2018, versus EGP 344.3m in the corresponding period of the previous FY.

Quarter-over-quarter (q-o-q), the EGX-listed firm has turned to losses during the three-month period ended September with EGP 12.4m in losses, compared to a profit of EGP 17.3m in the same quarter of FY 2017/18.

Kima previously reported a 51.9% y-o-y decline in profits for FY 2017/18, recording EGP 100.05m, versus EGP 208.04m.

Meanwhile, Hassan Allam Holding has completed the construction of a 50MW solar power plant in Benban solar park in the Upper Egypt governorate of Aswan, in partnership with Taqa Arabia, a subsidiary of Qalaa Holdings, at a cost of EGP 1.35bn, a source familiar with the matter said.

The plant is now connected to the Egyptian Electricity Transmission Company’s (EETC) substation and is subject to a trial operation before linking it to the national electricity grid within the framework of the second phase of the feed-in tariff programme.

The plant will generate 154m kW/h per year when it starts commercial operation this month and it will produce only around 65,371 tonnes of carbon emissions per year.

Furthermore, the solar power plant project is being supported by a loan facility from both the International Finance Corporation (IFC), the World Bank Group’s private sector arm, and the Asian Infrastructure Investment Bank (AIIB).

In August, Qalaa Holdings announced its first investment in generating solar power through photovoltaic (PV) cells at a cost of EGP 1.35bn in Aswan, in collaboration with Hassan Allam Holding.

Revenues of the project are expected to stand at around EGP 10.8m per annum, Qalaa Holdings said.

In another context, Emaar Misr for Development, a subsidiary of the UAE-based Emaar Properties, denied negotiations with Madinet Nasr Housing and Development (MNHD) over an acquisition.

This came in response to one of the newspapers which published that Emaar Misr was planning to acquire MNHD, according to a statement to the EGX.

In a separate statement, MNHD also denied any talks with Emaar Misr regarding the same matter.

In January, MNHD’s board of directors suspended the merger and acquisition negotiations with Sixth of October for Development and Investment (SODIC) as both disagreed on the terms of the swap transaction.

In October 2018, SODIC announced that its mandatory tender offer to MNHD would be implemented through a stock swap deal. One share of SODIC would be exchanged for two shares of MNHD.

MNHD unveiled last April that its board was considering a possible merger or acquisition with SODIC.

Meanwhile, Abu Qir Fertilizers and Chemicals Company on Sunday posted a 32.4% y-o-y increase in profits for H1 of FY 2018/19.

Net profits amounted to EGP 1.65bn in the six-month period ended December, versus EGP 1.24bn in the same period of 2017, according to a filing to the EGX.

Revenues rose to EGP 4.9bn in H1 of 2018/19, slightly up from EGP 4.15bn in the same period a year earlier.

The company attributed the increase in profits to its flexible marketing policy, in addition to the excellent management of its financial portfolio.

In November, Abu Qir Fertilizers reported a 61% y-o-y surge in profits for the first quarter of FY 2018/19, registering a net profit of EGP 752.8m, compared to EGP 467.11m.

Additionally, revenues jumped 54% y-o-y to EGP 2.15bn in the six-month period ended September 2018.

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