AM — Between earnings madness and a key policy meeting, it’s a big day for the EGX

Is it over yet? Earnings season, we mean. The numbers just … won’t … stop.

IT’S A BIG DAY FOR- The EGX, as regulators meet to discuss some major rule changes. Proposals to reduce trading fees and introduce new caps on margin trading are on the agenda for a meeting this morning between the Financial Regulatory Authority (FRA), the EGX and Misr for Central Clearing. Also on the table: the loosening of caps on intraday share price movements in September, which has allowed shares to rise or fall 20% in a single session instead of 10%. The FRA (pdf) and the EGX were both out with statements yesterday.

Shocker: The securities industry doesn’t like regulation: Egyptian Capital Market Association VP Ayman Sabry called for drastic changes to the entire market system in an interview with Lamees El Hadidy on Kelma Akhira, saying that the EGX is missing out on the current boom in other markets, (watch, runtime: 9:57). Speaking ahead of today’s policy meeting, Sabry claimed that market regulation is costing the bourse USD 30 mn a day and called on policymakers to lift price controls and refrain from intervention.

PSA- Odds are good we’re getting rain this weekend, with our favourite weather app saying there is a 60% chance of up to 5mm of rain on Saturday. The rain looks set to usher in a spell of cooler weather, with daytime highs falling from 27°C tomorrow to 21-23°C through the end of next week.

THE BIG STORIES ABROAD- There’s no single story grabbing the attention of foreign press this morning. Retail sales in the US suggest that rising inflation isn’t yet having an impact on consumer spending (NYT | WSJ) and there are hopes that US and China could open talks to reduce tensions and prevent a proliferation of nuclear and hypersonic weapons in the region (FT | WSJ).

We’ll know in about four days’ time who the next chairman of the US Federal Reserve will be, with President Joe Biden telling reporters he’s looking to announce a nominee in “the next four days.” Biden is choosing between reappointing current Fed boss Jay Powell and Fed governor Lael Brainard. Bloomberg quotes an unnamed source as saying Biden has ruled out other possible contenders for the job. Reuters also has the story.

SIGN OF THE TIMES #1- The denizens of Wall Street are collectively licking their chops ahead of what promises to be the best year for bonus compensation since 2009, “with investment bankers and equities traders in line for the biggest bonuses,” according to a study by compensation firm Johnson Associates. Check out their press release here or hit the web — the results are all over the business press this morning.

SIGN OF THE TIMES #2- A number of Canadian MPs could be blocked from entering the House of Commons when it reconvenes next week after Conservative Party leader Erin O’Toole failed to convince all of his caucus to get jabbed against covid-19.

MEANWHILE- Netflix is finally announcing a weekly top 10, providing its first-ever official ranking of who’s watching what, where. The streamer has launched a standalone website that features a global top 10 of both TV shows and films (it also has a link to per-country rankings, but the link was broken at dispatch time).

The top three English-language TV shows globally last week: Narcos: Mexico (season 3), Arcane (season 1) and You (season 3). The story is getting plenty of ink everywhere from CNN to the Wall Street Journal.

HAPPENING TODAY + TOMORROW-

It’s the second and final day of the Africa Fintech Summit: The summit looks at innovation in the fintech ecosystem, venture capital and other forms of investing, and will also discuss the rise of healthtech.

The UK’s Prince Charles arrives in town tomorrow and will stay through Friday on his first visit to Egypt in well over a decade. Charles and his wife, the Duchess of Cornwall, are in Jordan today. Look for climate change to be on Charles’ agenda.

CIRCLE YOUR CALENDAR-

Entrepreneurs aged 18-35 have until 23 December to register for TotalEnergies’ Startupper of the Year Challenge. The competition is open for a business creation project or startup under three years old in any sector. Candidates can apply here.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: Egypt’ regional energy hub ambitions just got a boost. A Israel-UAE pipeline agreement that looked to threaten Egypt’s position as a regional energy player and neuter the Suez Canal’s importance as a vital shipping route for fuel appears under threat. And Russia’s long-planned Nordstream gas pipeline to Europe just received the cold shoulder from Berlin, potentially leaving Europe searching for new sources of gas.

Homegrown mass transport startup Swvl will enter Latin America for the first time with the acquisition of a controlling stake in transit company Viapool, which operates in Argentina and Chile, according to a company statement yesterday. The transaction values Viapool at around USD 10 mn, a source familiar with the matter told Bloomberg. Neither party disclosed details of the agreement.

This is the first time Swvl will run its own marketplace on the continent, having had a soft entry earlier this year with its acquisition of Spanish firm Shotl, which operates its on-demand SaaS platform in Brazil. “It’s very significant for us because it’s our first entry into LatAm with our own marketplace,” Swvl CFO Youssef Salem told us yesterday. “Viapool is the market leader in these two countries … and these are very attractive markets.”

Viapool has an impressive client list: The company has more than 80 corporate clients, including Unilever, Nestle and Siemens.

The acquisition is expected to close in 1Q2022, the statement said.

Nasdaq debut upcoming: Swvl announced in July it would go public on the Nasdaq in 4Q2021 through a merger with blank-check firm Queen’s Gambit Growth Capital. The agreement values the company at around USD 1.5 bn and the listing will raise the company’s capital to USD 550 mn from USD 100+ mn.

Listing to fund big investment plans: The company plans to invest USD 250-300 mn over the next three years to expand its global footprint after it goes public. “We will continue to rapidly pursue strategic initiatives to further enhance shareholder value and capitalize on the synergies of our global platform,” Salem said in the statement.

Egypt’s unemployment rate rose to 7.5% in 3Q2021, up 0.2 percentage points from the April-June quarter, according to official figures (pdf) released by Capmas yesterday.

The reason? The job market doesn’t seem to be absorbing fresh grads: The state statistics bureau chalked up the increase to the entry of fresh graduates into the job market in August and September. This added another 265k people to the labor force during the quarter, leading to the rise in unemployment, it said.

The jobless rate has remained fairly steady over the past year since spiking to a near-two-year high in 2Q2020 due to the effects of the pandemic and the government’s lockdown measures on the economy. Since falling back to pre-pandemic levels of 7.3% in the following quarter, unemployment has remained virtually unchanged, with mild fluctuations quarter-to-quarter.

Youth unemployment was higher than any other age group, with 15-29 year-olds accounting for almost 60% of all jobless people. The unemployment rate among women ticked up 0.3 percentage points to 15.3% while the rate for men was virtually unchanged at 5.8% from 5.7% in 2Q.

But the private sector is still creating jobs: Recent PMIs have seen private sector firms report an uptick in job creation over the past four months, fuelled by better market conditions and improving business confidence.

Carbon capture could make its Egyptian debut at COP27: Joint initiatives between the Oil Ministry and Italian energy firm Eni on carbon capture, utilization and storage (CCUS) are set to be announced at the COP27 global climate summit in Sharm El Sheikh next year, according to a ministry statement. Oil Minister Tarek El Molla met with Eni CEO Claudio Descalzi to discuss the carbon capture plans on the sidelines of the ADIPEC oil conference in Abu Dhabi this week, the statement read.

Eni is building a carbon capture portfolio: The initiative may look a lot like Eni’s HyNet North West project. The British project, which is the first of its kind in the UK, could capture and store 10 mn tons of industrial CO2 annually by 2030. Eni is set to provide support on technical and economic feasibility studies in the next step for the Egypt-based scheme. The company is also looking to partner with the government on projects to reduce methane emissions, according to the statement.

The project could be the first carbon-capture initiative in Egypt. We’re not aware of CCUS technology having landed in Egypt yet — hit us on editorial@enterprise.press if you think we’re wrong. One reason for that is that carbon capture is very expensive relative to other decarbonization strategies, like renewable energy development, as we’ve noted before. The talks with Eni follow an MoU signed in September between EGAS, the Egyptian Petrochemicals Holding Company and Japan’s Toyota Tshusho on joint blue hydrogen projects using Japanese carbon capture technology.

Carbon capture could be a big theme (for energy-producing countries) at COP27: “The most important action or activity that everybody should work on diligently is CCUS. It’s very important to the oil and gas industry, very important also for [combating] climate change,” El Molla told CNBC in an interview at the oil conference. He said that Egypt would be launching several climate-related initiatives at COP27, adding that hosting the summit offers a chance to press for funding and investment to help countries achieve net-zero ambitions.

Let’s not lose sight of the big pollution picture: Oil and gas companies have been accused of using carbon capture as a fig leaf by environmental activists, who argue that investment would be better spent on increasing the use of renewable energies. It’s true that as long as we’re still extracting and burning fossil fuels, we’re still contributing to climate change. That said, amid the ongoing energy crisis that has seen oil and gas prices skyrocket globally, some — including big energy firms and oil-exporting countries — argue that it will take time to eliminate dirty energy completely. If oil and gas are sticking around for decades to come, CCUS tech can at least mitigate some of their negative impact.

ALSO AT COP27- All cars and buses in Sharm El Sheikh and Hurghada will either be converted to run on natural gas or be swapped out for EVs by the time world leaders gather in Egypt next year, according to a cabinet statement out yesterday. The statement also said that there will be 1k natural gas filling stations in operation nationwide by the end of next March.

Russia unveiled the master plan for its industrial zone to Suez Canal Economic Zone officials during an official visit to Egypt on 14-16 November, Russian news agency Tass reports. Russian Industry and Trade Ministry official Roman Chekushov told the news organization that Egyptian officials “highly appreciated” the plans revealed by the delegation, which consisted of representatives of the ministry, state development finance institution VEB.RF, and Russian companies.

Russia and Egypt agreed the main terms of the project earlier this year, paving the way for work to begin on the site at the beginning of 2022. The two sides have settled the lease period, the size of the land plot, the rent price and the deadline for site preparation.

We’re not clear on most of the terms, though we know that Egypt has to allow Russian companies to sell 100% of their locally-made products in the Egyptian market. Egypt is offering companies low-cost rents and preferential tax and energy tariffs to come over, but officials have yet to make the details public.

We’re not going to be seeing a full-sized RIZ for a long time: The project isn’t expected to be completed for another 13 years.

But companies could start appearing next year: If everything goes to plan, the first companies could start operations as soon as 2022.

Some 50 companies will set up shop in the first two or three years: Leading Russian companies in the engineering, chemicals, metallurgy, pharma industries are interested in setting up shop in the zone, Chekushov said, without naming names.

Lawmakers want the draft Unified Budget Act to come into force faster than planned, with MPs saying this week that the government should begin complying with the provisions within two years, instead of five, according to Al Mal.

Unified Budget Act? The legislation would require the government to be more transparent in how it plans public finances, forcing it to present an annual medium-term budgetary and fiscal strategy to the House and set spending limits for each ministry. It will also increase oversight of government spending and implement program and performance budgeting, though the government has disclosed little information about how this would be legislated.

Pushback from the FinMin: Finance Minister Mohamed Maait doesn’t appear to be on board with the suggestion, saying that it’s more important to focus on properly executing the plans and claiming that at least four years will be needed to put in place the necessary regulations and infrastructure.

Upmarket real estate developer SODIC saw a 75% drop in net income during 3Q2021 as revenues declined due to timing differences in deliveries compared to the same period last year, according to its quarterly earnings release (pdf). The company reported a bottom line of EGP 120 mn for the July-September quarter after revenues fell almost 40% to EGP 1.44 bn due to a 40% decline in delivered units.

SODIC looks on track to make up the gap in the final quarter of the year: The company noted that “the majority of 2021 unit handovers [are] scheduled for the fourth quarter of the year.” Revenues are down just 8% on a 9M basis while net income is off 37% in the same period.

Remember: For real estate companies, “sales” ≠ “revenues.” They book a sale when you sign a contract to buy a home. But they only record (some or all) of the value of the unit it sold you when it (a) delivers the unit to you or (b) hits a percentage completion on a total project.

On the sales front: SODIC sold 196 units during the quarter, recording gross contracted sales of EGP 1.63 bn. This compares to the 393 units sold in the same period last year when it reported EGP 2.21 bn in gross sales. New contracts were lower in large part due to the suspension of sales in its 500-acre West Cairo project, which was put on hold in August after the Housing Ministry made adjustments to the land plot. SODIC is looking to resume sales next year once the new adjusted master-plan of the project is approved, Managing Director Magued Sherif said.

Looking ahead: SODIC is on track to surpass forecasted sales for this year, due in part to the strong performance of the North Coast project June, which it launched last month. “The unprecedented success of June has put us in a good position to close another successful year with solid growth,” Sherif said.

Integrated Diagnostics Holdings’ (IDH) 3Q2021 net income jumped 138% y-o-y to EGP 479.7 mn, after revenues more than doubled to EGP 1.47 bn, according to its earnings release (pdf). The company’s top-line growth was underpinned by a surge in covid-19-related tests and conventional tests, along with house call services in Egypt and Jordan, the EGX and LSE-listed company said.

Egypt is still the company’s largest market, with revenues doubling y-o-y to EGP 1.19 bn. Covid-19-related revenues accounted for EGP 614 mn of that figure, mainly driven by growing demand for PCR tests from international travelers.

The company plans to launch two new branches of Al Borg Scan over the next six months after setting up three branches in 3Q2021, putting it on track to hit its target of rolling out a total of 30-35 new branches throughout all of 2021. IDH also expects to deliver its highest revenues on record in FY2021, anticipating 80% y-o-y growth to EGP 4.9 bn on the back of the “strong and sustained recovery” of its conventional business, as well as solid performance from its covid-19 test offerings in Egypt and Jordan.

“Looking ahead, our strategic priorities remain unchanged as we continue assisting local authorities in their battle against covid-19 while simultaneously pressing forward with our post-pandemic strategy,” said CEO Hend El Sherbini.

Palm Hills Developments’ net income fell 27% y-o-y to EGP 174.1 mn in 3Q2021, according to the company’s earnings release (pdf). This came despite a 22% increase in revenues, which jumped to EGP 1.88 bn in 3Q2021 on rising sales across all of its offerings.

On a nine-month basis, new sales reached EGP 12.9 bn, surpassing the sales level achieved in 2020 and nearing their FY2021 sales target of EGP 15 bn. By our math, the real estate company sold 1,054 units in 3Q2021. The growth was mostly carried by a 755% y-o-y rise in unit sales in Badya.

Looking ahead: The company recently inked a EGP 2.5 bn syndicated loan agreement with Banque Misr and NBE to help finance investment costs for Palm Hills New Cairo. The company is also “on track” to conclude several “on and off-balance sheet” financing agreements, including the securitization of around EGP 1.1 bn of gross receivables, in the short term, said Executive Chairman Yasseen Mansour.

Automotive and consumer electronics retailer MM Group’s net income dipped 1.5% y-o-y in 3Q2021 to EGP 87 mn, according to the company’s earning release (pdf). Revenues inched up nealy 2% y-o-y to EGP 2.2 bn during the quarter. For the first nine months of the year, net income rose 11% y-o-y to EGP 328 mn while revenues were up 8% to EGP 7.1 bn.

Vodafone Egypt’s adjusted EBITDA rose by a quarter to EUR 381 mn during the first half of its fiscal year, which ended in September, according to Vodafone Group’s earnings release (pdf). Revenues saw a 13% annual increase to EUR 861 mn. Vodafone’s fiscal year runs April to March.

On the airwaves last night: The nation’s talking heads discussed new emergency legislation passed yesterday that hands the prime minister wide-ranging powers during pandemics and other health crises, including the ability to lock down the country, close schools, shops, transport, and other public places, and set price caps on key goods and services. Yahduth Fi Masr (watch, runtime: 4:29) and Masaa DMC (watch, runtime: 2:58) had the story.

There are still plenty of images of scorpions this morning in the foreign press, which is still picking up last week’s events in Aswan which saw severe weather bring scorpions into the town’s streets, leading to hundreds of injuries. (The Guardian | Vice News | The National)

Human Rights Watch is working overtime:The rights watchdog has issued two statements, one criticizing the decision to allow Egypt to host next year’s COP27 climate conference and another calling for the release of Salah Soltan, at a time a senior leader of the Ikhwan and father of rights Egyptian-American activist Mohamed Soltan.

Also making headlines:

• Red Sea corals are threatened by warming waters due to climate change in Sharm El Sheikh, which is set to host COP27 next year. (Afrik 21)
• Sun God Ra’s temple uncovered: Archaeologists have uncovered just South of Cairo a third ancient Egyptian sun temple of the six believed to exist, in what is being called one of ​​the most important discoveries of the last half-century. (Sputnik News, BBC)
• A dive into the new capital: The urban planning and cost of building the new administrative capital are examined by France24 (watch, runtime: 2:51).

Export Development Fund needs more time to pay arrears: The Export Development Fund is extending the third phase of its subsidy program until 23 December to give it more time to pay out arrears to exporters, Al Borsa reports. Began in July, the third phase of the program was supposed to end in mid-November but the fund has had to push the end date to ensure businesses get their dues.

The program allows exporters to receive overdue subsidies in a single payment rather than in installments over four to five years, in return for a 15% haircut. Some 2.5k exporters have received a combined EGP 30 bn in overdue subsidies since the program launched in November last year.

Fatal train crash in Giza: Two people died and three were injured in a train collision with a truck at Mansha’at El Qanater crossing in Giza.

Our locally made Covi Vax will spend somewhere between six and nine months in clinical trials, head of the team in charge of supervising the clinical research studies Osama Azmi told the Middle East News Agency. After the clinical trials the vaccine will be submitted to the Egyptian Drug Authority for approval before it can be administered. The first phase of the trials will be over in two weeks, Health Ministry spokesman Hossam Abdel Ghaffar told Ala Mas’ouleety (watch, runtime: 13:24) and the second and third phases will take about six months.

Where do the trials currently stand? So far 72 volunteers received their first jab and prior to that, the vaccine was tested on 540 animal species, and it showed effectiveness against all virus variants. Earlier this week, interim health minister Khaled Abdel Ghaffar announced that the trials will begin with tens of participants before they’re expanded to include hundreds and thousands of people.

The Health Ministry reported 941 new covid-19 infections yesterday, on par with 946 the day before. Egypt has now disclosed a total of 345,848 confirmed cases of covid-19. The ministry also reported 69 new deaths, bringing the country’s total death toll to 19,636.

MEANWHILE- Lockdowns are definitely not a thing of the past up in Europe:

• Austria is taking draconian measures as it battles record high covid cases: Unvaccinated people aged 12 and up have been placed in lockdown, and are now only allowed to leave their homes for a few reasons, such as buying food or working. (BBC)
• The Netherlands is also locking down: The Netherlands re-entered a partial lockdown on Saturday, after which shops and restaurants will close early and sports events will be closed to the public. (Reuters)
• The UK could be looking at another covid lockdown: PM Boris Johnson told people to make sure to get their covid jabs and booster shots to avoid another lockdown this winter. (Bloomberg)

The Saudi foreign minister has said the kingdom has no plans to engage with Lebanon’s government until its politicians take action to “liberate Lebanon from the domination of Hezbollah,” as the diplomatic rift between the two countries deepens. Lebanon is facing its worst diplomatic crisis yet with Gulf states, after newly appointed information minister George Kordahi (the former game show host) made critical comments about the Saudi-led intervention in Yemen, prompting Riyadh to expel the Lebanese ambassador, recall its own envoy and ban imports from the country.

Are the UAE and Turkey patching things up? Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al Nahyan will soon be heading to Turkey for the first time in years to hold talks with Turkish President Recep Tayyip Erdogan in efforts to restore ties between the two countries, two Turkish officials told Reuters.

Dubai has started issuing five-year multiple-entry visas to employees of foreign companies operating in the UAE. The policy, announced by Crown Prince Hamdan Bin Mohammed on Twitter, will allow foreign employees not resident in the emirate to easily get in and out of the country for events, conferences and exhibitions.