Meet our analyst of the week: Beltone’s Ali Afifi
OUR ANALYST OF THE WEEK- Ali Afifi, vice president of equity research at Beltone Financial (LinkedIn).
When I graduated eight years ago, the research field was not in my sights. However, soon after getting a job in equity research, I fell in love with it and I’ve been working in the field ever since. At the beginning of my career I had the honor of working at Pharos with Hany Genena who I consider one of the greats. I then moved to Mubasher for a year, then Prime Holding, and finally to Beltone where I’ve been for over four years now. I now cover industrials in Egypt and the GCC.
The best part of my job is the exposure and the knowledge. I never would have thought that I would understand fertilizers so well or need to go to different countries for plant site visits and witnessing such huge operations. Some people think being a research analyst is just sitting at a desk, but it's so much more than that and we’re often on the ground checking things out ourselves. There’s also a lot of creativity involved, and no day is the same as the other.
The worst part of my job is that sometimes firms’ management is hesitant to talk to you. Some companies tend to be scared at first, especially if they’re a bit old fashioned and don’t understand the importance of clear communication. It’s very frustrating at times as some companies have so much untapped value but people won’t give you the information you need to show it off. However, Egyptian companies in my sector have been improving in this regard in recent years which I attribute to the state’s push for IPOs and more young people taking on management roles.
During WFH we worked crazy hours. The amount of time we would have spent at roadshows was spent fielding calls at all hours of the day or night. My wife also works in investment banking so we were a very hectic couple for a while [laughs]. Clients had more time to ask questions and picking up the phone had become a more acceptable option. We stayed well engaged with them I would say, but of course roadshows are a whole different ballpark and the ability to build connections and trust is enhanced when you’re physically together. I think that roadshows are definitely coming back, especially with all the potential IPOs that could take place in Egypt in the coming years.
It’s been an exceptional year for commodities, especially since last year they were at all time lows and now they’re at all time highs. There are several supercycles happening for commodities such as aluminum and cement, making it a very interesting time to be an industrials analyst. Things are constantly happening globally and it’s reflective in the stocks I cover. We try to quickly anticipate everything as everyone is trying to stay ahead of the curve. I see the commodities boom lasting for a long time. It could normalize for a bit but I think long-term it will still stay at levels that are higher than they were pre-covid.
My theory of investment is to look at fundamentals, especially from a long-term perspective. It’s important to read the market by understanding the psychology of the people. How are they feeling? Are they bullish or bearish? Being aware and investing dynamically will net you good returns, but it requires a lot of research and constant calls to people to assess sentiment. You always have to remember that nothing is set in stone and when something changes you should be ready to act.
The most important factor I look at is the company’s management. Poor management that doesn’t communicate openly can often weigh heavily on the stock price because people consider that the company has a bad track record. However, when I feel that there is value that is being over penalized by the management, I try to help the firm out by initiating coverage as well as clarifying and communicating the story.
I think 2021 still has potential to be the year of Egypt. We weren’t terribly affected by covid either economically or socially, and everything is currently falling into place for a revival. The stock market and especially industrials have performed well and I think this will only continue going forward.
If I had to switch and cover another industry I would choose healthcare or real estate. Healthcare is really interesting with all the acquisitions and expansions taking place. You can see the rapid evolution in the sector. Meanwhile, real estate never goes out of fashion and is always a key industry. However, industrials is always my top choice. Whenever I was offered the option to switch, I chose to stay in what I consider the most dynamic sector.
The last great thing I watched was a German show called Dark. To me, it’s the best show of all time as I like series where you really have to concentrate.
I’m currently reading Paris 1919 which looks at the last six months of WWI. I’m a history buff and I enjoy reading or watching documentaries about history.
In my downtime, which I usually don’t have [laughs], I like to play volleyball. I love playing and watching sports, so the Olympics was a blast for me. I’m also a big supporter of Man United. When I have a long vacation, I love to travel. I really want to go back to Italy or Greece because I still have a lot to explore.
The EGX30 fell 1% at today’s close on turnover of EGP 1.9 bn (29% above the 90-day average). Local investors were net sellers. The index is up 0.9% YTD.
In the green: Egyptian for Tourism Resorts (+2.7%), Ibnsina Pharma (+1.8%), and Rameda (+1.7%).
In the red: Sidi Kerir Petrochemicals (-2.7%), CIB (-2.6%), and Ezz Steel (-2.1%).