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Sunday, 14 February 2021

What’s a good target price for CI Capital? Plus: Egypt is still overweight in EFG Hermes’ MENA Top 20

The EGX30 fell 0.3% at today’s close on turnover of EGP 1.53 bn (6.3% above the 90-day average). Local investors were net buyers. The index is up 6.1% YTD.

In the green: MM Group (+7.4%), Fawry (+2.5%) and CI Capital (+1.1%).

In the red: Eastern Company (-2.8%), GB Auto (-2.8%) and Heliopolis Housing (-2.8%).


FROM THE ANALYST’S DESK- CI Capital looks set to grow — the question is whether you’ll be able to buy into the story for love or money. HC Research sees the investment bank turned NBFS house posting a consolidated net profit CAGR of about 20% through 2025 “on NBFS growth and improved stock market activity from last year’s troughs,” supported by monetary easing. HC is leaving in place its “overweight” rating, with analyst Monette Doss writing in a client note out today that the firm is bumping its 12-month target price for CI by 19% to EGP 5.47 per share. CI shares closed up 1.1% today at EGP 4.59.

Why the question? Readers will recall that Banque Misr is mounting a mandatory tender offer to raise its stake in CI Capital to a commanding 90% — or just shy of the minimum it needs to maintain an active listing on the EGX. HC thinks the tie-up with Banque Misr, which already owns nearly 25% of CI, would be good for the investment bank, citing “significant synergies between the two entities, including providing [lower cost] funding to CI Capital’s NBFS operations and benefiting investment banking operation.” Banque Misr said it will settle for a minimum of 51% of CI, but it’s an open question how liquid CI’s shares would be if the state-owned giant leaves just 10% in private hands.

CI Capital has appointed Baker-Tilly WAG to do a fair value report ahead of the MTO, the investment bank said in a regulatory filing today (pdf).

MEANWHILE- EFG Hermes is overweight Egypt in the latest incarnation of its MENA Top 20, out to clients this afternoon from Simon Kitchen. EFG Hermes sees “a reduction in high real rates as a potential catalyst for outperformance.” Egyptian constituents are unchanged: CIB, industrial play EK Holding, real estate outfit Talaat Moustafa and education group CIRA.

EFG’s MENA Top 20 has outperformed, returning 8.6% on a freefloat basis since its last update on 16 December compared to the MENA benchmark’s 3.8%. The firm’s highest-conviction overweight is the UAE, where “valuations are more attractive than peer markets” and EFG expects strong earnings growth through 2022.

IN OTHER MARKET NEWS- First Abu Dhabi Bank (FAB) has obtained a custody license in Egypt from the Financial Regulatory Authority (FRA), which would allow it to settle transactions and trades with Misr for Central Clearing, Depository and Registry, according to a statement from UAE news agency WAM. The license follows FAB’s announcement of its intention to acquire Bank Audi’s Egyptian operations.

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