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Sunday, 21 February 2021

Medical diagnostics in the spotlight

The EGX30 rose 0.4% at today’s close on turnover of EGP 1.25 bn (13.5% below the 90-day average). Foreign investors were net sellers. The index is up 5.4% YTD.

In the green: Pioneers (+4.7%), Ezz Steel (+3.5%) and Ibn Sina Pharma (+3.1%).

In the red: Orascom Financial Holding (-5.3%), Cleopatra Hospital (-2.9%) and Orascom Investment Holding (-2.3%).

Medical diagnostics in the analysts’ spotlight: Buy- and sell-side folk alike have had strong interest in Speed Medical over the past year, and it’s hard not to wonder whether it’s in part because shares in market leader IDH are just so illiquid. That fact, after all, is what’s pushing the LSE-listed company to look at bringing some of its shares home to trade on the Egyptian Exchange later this year.

As we noted this morning, IDH said it would beat its FY2020 guidance as it looks to report a top line of about EGP 2.6 bn with an EBITDA margin of 40%. It had previously said it would deliver revenues in the EGP 2.3-2.4 bn range.

Speed has played a solid game creating appetite for its shares and became the first company to make the leap from the Nilex to the EGX in the process. But as Prime’s Amr El Alfy wrote in a note to clients this morning, the upstart is looking expensive, currently trading at trailing 12-month P/E of 41x. Prime estimates that “for the stock to trade at 15x 2025 P/E, earnings will have to grow at a 5-year CAGR or 23%, perhaps questionable once COVID-19-induced boon subsides.” The bottom line, El Alfy writes: “We believe the earnings boost SPMD is witnessing is only transitory and linked directly to COVID-19.”

EARNINGS WATCH- Al Tawfeek for Financial Lease (AT Lease) saw a 10.1% y-o-y hike in net profit in 2020 to EGP 74.1 mn, the company reported to the EGX (pdf). AT Lease’s revenues also rose, reaching EGP 97.9 mn in 2020 from EGP 91.8 mn in 2019.

Egyptian Media Production Company’s (EMPC) net profit fell 1.72% y-o-y in 2020 to around EGP 103 mn from EGP 105 mn in 2019, according to the company’s financials (pdf). Meanwhile, EMPC’s revenues rose 8.6% y-o-y in 2020 to EGP 468 mn from EGP 430 mn the year before.

Abu Dhabi Islamic Bank Egypt (ADIB) saw net profits in FY2020 fall to EGP 1.19 bn from EGP 1.23 bn in FY2019, the bank announced in a bourse filing.

Egyptian Transport and Commercial Services (Egytrans) saw its net profits decline 50% y-o-y in FY2020 to EGP 13.1 mn, the company said in a bourse filing (pdf). Revenues declined 13.4% y-o-y in FY2020 to EGP 316.1 mn.

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