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Wednesday, 17 February 2021

OIH is back

The EGX30 fell -1.1% at today’s close on turnover of EGP 1.4 bn (3% below the 90-day average). Foreign investors were net buyers. The index is up 5.24% YTD.

In the green: Orascom Investment Holding (+51.5%), CI Capital (+0.9%) and Sodic (+0.6%).

In the red: Orascom Financial Holding (-15.5%), Pioneers Holding (-3.3%) and MM Group (-2.5%).

Orascom Investment Holding (OIH) rose more than 50% to EGP 0.262 on its first day back to trading after the spinoff of its non-bank financial services (NBFS) holdings into Orascom Financial Holdings (OFH). Meanwhile, Orascom Financial Holding was the worst performer of the day, with its shares falling 15.5% to EGP 0.385.

That suggests both companies have overshot: OFH is oversold and OIH over-bought. Prime suggested OIH had 8% to run and OFH would contract 3%, with Head of Research Amr El Alfy suggesting that “we believe [OFH] is where all the action will be, starting with a clean slate and zero leverage. OFH will likely go on an acquisition spree within the NBFS space, potentially raising capital through debt or equity.” OIH, on the other hand, is more of a play on how the Koryolink story will unfold, with Pharos’ Bassma Bakry saying that a resolution on the status of the North Korean mobile operator could be the “saviour” of the share.

EARNINGS WATCH- There are no surprises as FY2020 earnings season continues: Healthcare had a reasonably good year, and banks saw pressure on their bottom lines thanks to covid-19, interest rate cuts and the central bank’s debt-relief measures.

First up, Cleopatra Hospital is set to report revenue growth of around 20% y-o-y in 4Q2020 and a full-year revenue growth of 10% y-o-y in FY2020, Cleopatra said in a trading update (pdf) ahead of the release of its audited financial results. The hospitals group expects net profit to be in line with top-line growth despite higher depreciation as Cleopatra continues to invest in its infrastructure with lower interest income following the CBE’s multiple rate cuts in 2020.

Management is optimistic about 2021: Cleopatra’s management is optimistic about the Group’s growth prospects in 2021 after managing to diversify its revenue stream and digitalize many of its operations in 2020. The Group is “ideally positioned to continue building on the solid momentum witnessed in the final months of 2020 to deliver strong growth and improved margins in the coming period.” The release makes no mention of its in-progress acquisition of Alameda Healthcare, owner for Cairo’s Dar El Fouad and As-Salam International hospitals.

The National Bank of Kuwait- Egypt reported a 33.2% y-o-y dip in 2020 net profits to EGP 1.44 bn, according to the bank’s earnings release (pdf). The lender’s top line declined to EGP 3.26 bn last year, compared to EGP 3.76 bn in 2019.

Misr Fertilizers Production Company’s (MOPCO) net profits rose 37% y-o-y in 2020 to EGP 1.14 bn, compared to EGP 830.42 mn in 2019, according to a regulatory filing (pdf).

Arab Aluminum’s net profits rose 81% y-o-y in 2020 to EGP 13.67 mn, compared to EGP 7.55 mn the previous year, the company said (pdf).

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