Leading Egyptian vehicle manufacturer GB Auto has signed a partnership with China’s Higer Bus Company, formalising plans for the Chinese company’s exclusive franchise in Egypt that will include local assembly of buses at GB Polo.
Higer and GB Polo are expected to drive the localisation of electric, diesel, and compressed natural gas (CNG) bus production in Egypt, targeting the countr’s public and private transportation sectors.
The Chinese company’s electric bus is set to stand out in the Egyptian market for its environmentally friendly features, and for being equipped with water-cooled batteries, ensuring a longer battery and better performance.
Naeem Research sees that the development would bode well for GB Auto’s current portfolio, providing a much-needed boost to the country’s lagging automotive segment.
The partnership comes on the back of the Egyptian government’s strategy of moving towards cleaner fuels. At the same time, the strategy aims to reduce the dependency on hydrocarbons, particularly in Egypt’s transportation sector.
Naeem Research noted that GB Auto’s total bus sales in Egypt, including the Maxi, Midi, and Maxi City models, hit 1,200 in 2019, and 640 units in the first seven months of 2020.
GB Auto reported that commercial vehicle revenues accounted for 6% – 7% of the total. Naeem Research expects the segment’s contribution to increase exponentially over the next two years. It maintained its recommendation of BUY on GB Auto stocks, with a TP of EGP3.31/share