Egypt’s shares are expected by analysts to move sideways this week awaiting fresh stimulus ahead of the imminent earnings season.
The Egyptian Exchange (EGX) is expected to carry on the sideways trend on Tuesday amid the absence of catalysts, said head of the capital market committee at the African Economic Council, Ayman Fouda.
The benchmark EGX30 index has resistance at 13,580 and 13,622 points, and has support to 13,444 and 13,335 points, Fouda highlighted.
Meanwhile, the small- and mid-cap EGX70 index has a short-term resistance at 677 and 682 points, and has support to 669 and 664 points, he added.
For his part, head of Technical Analysis at Arab Finance Securities, Osama Naguib, said that the EGX30 index has been moving sideways for the twelfth session in a row last week between 13,600 and 13,300 points.
The heavyweight Commercial International Bank (CIB) is expected to jump in this week’s session, which will pave the way for the EGX30 to consequently resume the upward trend, Naguib indicated.
New market-boosting catalysts are expected to emerge in the medium-term, pushing the EGX30 to hover around 13,750 and 14,100 points, he noted.
The EGX ended the four-session last week in mixed notes, as the benchmark EGX30 index grew 23.6 points, or 0.17%, to 13,506.65 points.
The market was off on Thursday on the occasion of Police Day and the 25th January Revolution.
The CIB’s stock surged 5.53% to EGP 83.99, its highest level in four months.
The EGX70 index declined 0.15% to 627.5 points and the EGX100 lost 0.13% to 1,695.1 points.
Over the week, market capitalisation gained EGP 3.6bn, recording EGP 765.29bn.
In company news, Eastern Company has closed a supply agreement with Cairo Airport Duty-Free after a five-year suspension.
This suspension stemmed from a dispute over the rent value for product display, Eastern Company’s managing director said in a release.
A top official added that his company has resumed exports with an “ambitious” plan to increase these exports to $20m (EGP 358.18m) within a year.
Eastern Company is targeting $4m in returns from contracts with Duty-Free EgyptAir in the current fiscal year (FY), while focusing on countries with the highest number of Egyptian expats such as Saudi Arabia and Jordan, the top official revealed.
Eastern Company posted a 5% year-over-year (y-o-y) decline in its net profits during the Q1 of FY 2018/19.
From June to September, the Egyptian tobacco company registered a net profit of EGP 991.18m, down from EGP 1.04bn in the same period last year.
Meanwhile, Cairo Investment and Real Estate Development on Monday announced it is seeking to get a loan facility worth around EGP 250m to EGP 300m to complete the construction of Badr University.
The company’s board of directors has assigned their managing director to finalise the loan agreement with one of the banks, according to a statement to the EGX.
Furthermore, the company is currently constructing four new buildings in Badr University, Cairo Investment added in a separate statement.
These buildings are set to include the faculties of medicine, applied medicine, biotechnology, veterinary medicine, and nutrition, the company highlighted.
The number of students at Badr University has increased by 24% during the first half (H1) of 2019, reaching 7,885 students, the company indicated.
In the same vein, the company said that the number of students in affiliated schools grew by 13% y-o-y to 24,290 during H1of 2019.
Noteworthy, Cairo Investment had reported a net profit of EGP 148.43m for the six-month period ended February, versus EGP 113.95m in the same period a year earlier.
In other company news, Elsewedy Electric Company has announced that it was considering a number of infrastructure projects in the New Administrative Capital (NAC) with total investments of EGP 2bn.
The company further noted that the total value of its planned projects in the NAC amount to EGP 3bn, according to an EGX statement.
Likewise, Elsewedy stated that it had completed a project to build a 500kV converter plant ahead of schedule.
Elsewedy Electric last reported a 20.9% y-o-y decline in its consolidated results during the H1 of 2018, recording a net profit of EGP 2.41bn from EGP 3.05bn.
In other market news, the EGX has suspended trading on the stocks of Madinet Nasr Housing and Development (MNHD) and Sixth of October for Development and Investment (SODIC) starting from Wednesday, 23 January.
Trading on MNHD’s stock stopped as of today’s session, as well as orders, the EGX said in a statement.
The EGX has suspended trading on SODIC’s stock until the company responds to its inquiries, according to a separate statement.
This decision follows MNHD’s announcement of backtracking on an acquisition with SODIC.
In October, 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.
In April, MNHD unveiled its board was considering a possible merger or acquisition (M&A) with SODIC.
In earning news, Alexandria Mineral Oils Company (AMOC) reported a 62% y-o-y decline in profits for the H1 of FY 2018/19.
Net profits amounted to EGP 278.4m in the six-month period ended December, versus EGP 745.4m in the prior-year period, AMOC said in a filing to the EGX.
Sales increased to EGP 7.7bn in the July-December period of FY 2018/19 from EGP 6.2bn in the same quarter a year ago.
In October, AMOC posted a 37% y-o-y drop in profits for the Q1of FY 2018/19, recording EGP 253.09m, versus from EGP 402.6m in the prior-year period, AMOC said in a filing to the EGX.
Moreover, sales grew to EGP 4.1bn in the July-September period of FY 2018/19 from EGP 3.5bn in the same quarter of FY 2017/18.
Meanwhile, Agility Public Warehousing, dually-listed on Boursa Kuwait and the Dubai Financial Market (DFM), signed a memorandum of understanding (MoU) to manage logistic services for Carbon Holdings Limited’s industrial institutions in Egypt, including its Tahrir Petrochemicals Complex.
The Kuwait-based company will work with Carbon Holdings to move secondary plastics across Egypt and to the company’s customers abroad, CNBC Arabia reported.
Under the deal, Agility will manage the distribution of chemicals including low-density ammonium nitrate across Egypt and the other distribution services to related ports.
Spanning over 5m sqm, the Tahrir Petrochemicals Complex is expected to be the world’s largest naphtha cracker plant.
Agility also signed a five-year agreement worth KWD 6.5m ($21.5m) to provide warehouse management services to Kuwait National Petroleum Company (KNPC).
Meanwhile, Orascom Construction Plc, listed on the EGX and Nasdaq Dubai, announced it has added $825m contracts to its under-construction businesses during Q4 of 2018.
The new ongoing projects in Egypt and Africa accounted for 60% of the contracts’ value, the international engineering and construction contractor said in a statement.
The company’s new contracts in the United States made up the remaining percentage, the Egypt-based firm added.
In November, Orascom Construction reported a 37% y-o-y increase in consolidated profit for Q3 of 2018.
Net profits stood at $32.3m during the three-month period ended September, versus $23.5m in the year-ago period.
Revenue shrank to $728.8m in Q3of 2018 from $805.4m in the same period a year earlier.
In the first nine months of the year, the company logged $119.3m in profits, versus $82.3m for the corresponding period of 2017.
Meanwhile, the Egyptian government plans to sell a stake in Banque du Caire which is fully owned by Banque Misr, Egypt’s second largest state-run lender, the governor of the Central Bank of Egypt (CBE), Tarek Amer, said, according to Bloomberg.
“The size is around 20%; might go up to 30%,” Amer said in an interview in Washington, where he attended the International Monetary Fund and World Bank annual meetings, Bloomberg concluded.
Selling the equity in Banque du Caire, one of the biggest state-owned lenders in Egypt, would be through the EGX by the end of 2019, Amer added, according to Bloomberg.
“It’s not about money,” Amer highlighted, adding, “We have a plan to support the EGX with new issues. There is a lot of demand.”
In M&A news, CI Capital Holding announced it has signed a contract to acquire an indirect stake of 60% stake in Taleem Educational Services and Consultations (TESC).
The transaction is expected to be implemented during Q3 of 2019, CI Capital said in a statement to the EGX.
The acquisition is not eligible until all legal and contractual conditions are fulfilled, the company noted.
The company may invest around 15% to 20% of the total transaction as a sponsor since it would share the remaining stake with a number of investors, according to the statement.
TESC is an investment joint venture owned by a number of global investment institutions and international funds that operates Nahda University in Beni Suef which has over 5,200 students.
Noteworthy, CI Capital previously reported a net profit of EGP 487.25m for FY 2018, versus EGP 274.19m in 2017.
