Pre-Trading Thoughts

The IMF's board will meet to discuss the staff-level agreement-approved third review of Egypt's USD 8 bn loan program on 29 July, after initially being penciled in for today. An anonymous senior government official said that the delay stems from Egypt “not meeting some conditions.” However, the source clarified that these were “simple procedures by the Fund that will be clarified soon.

The Chairman of the General Investment Authority, revealed that Egypt aims to attract USD20 billion in private investments during the current fiscal year 2024-25.

Prime Minister gave directives to form two specialized ministerial groups aimed at enhancing human and industrial development. 

Prime Minister said that the government has developed a plan to schedule the remaining foreign oil companies 'arrears within a month. He added that Egypt has paid between 20 and 25% of the arrears recently.

The cabinet gave preliminary approval to five new petroleum projects to be carried out by the Egyptian Natural Gas Holding Company (EGAS), the Egyptian General Petroleum Corporation (EGPC), and a number of international and local companies with investments totaling USD 200 mn.

Two solar power projects will begin feeding the national grid with 700 MW of power by the end of August.

Prime Minister stated that the government will gradually raise electricity prices over the course of a year and a half to shrink the very large gap between cost and price, to reduce the amount of subsidies the government bears. An agreement with pharmaceutical companies in the private sector was also confirmed, moving drug prices through the Pharmaceutical Authority, due to the increase in the price of imported raw material.

UAE-based KSH and the local Safwat Kaliouby Group (SKG) will develop a 20k sqm plot in Giza’s Tanash area overlooking El Warraq Island with EGP 24 bn (c. USD 500 mn) in investments. The project will see the construction of three mixed-use towers and a five-star hotel over a four-year period.

Prime Minister has instructed that load shedding be temporarily paused as “experiments” in order to gauge daily energy needs “under normal conditions,”. The move comes ahead of the government’s plan to suspend power cuts for the summer months starting from the third week of July.

The cabinet approved an agreement to eliminate dual taxation between Egypt and Oman and crack down on tax evasion. The agreement was first inked during an Egyptian-Omani business forum in May 2023 and ratified by the Omani Sultan the following month.

ESRS reported its consolidated results for 1Q24 with net attributable income coming in at EGP910 million, 12% lower QoQ, and reversing 1Q23 loss of EGP1.7 billion. ESRS is trading at FY24e PE of 3.1x.

We downgrade our FV for EGCH to EGP7.67/ share from EGP8.25/share, and maintain our Underweight recommendation for the stock. EGCH is currently trading at a FY24/25e PE of 10.5x.

TMGH (FV: EGP75.00, OW) achieved massive YTD sales of EGP340.0 billion, up 623.4% y/y. Sales performance was driven by the newly launched SouthMed project which generated sales of EGP200.0 billion in just six working days since bookings opened. Sales performance was also supported by Banan which generated sales of around EGP40.0 billion.

Drug prices will be gradually raised until the end of the year in agreement with companies to resolve drug shortage.

CIRA will complete the third and final issuance of its securitization bond program, worth EGP500 million, by 4Q24.

The Saudi Egyptian Investment Company (SEIC) should conclude its due diligence on CIRA by the end of August.