EGX on a roll as investors build new positions in blue-chips stocks

Daily News Egypt
12 Min Read

The Egyptian Exchange (EGX) is likely to move upwards in the second week of April as investors are likely to extend building new positions in blue-chips stocks amid a strong earning season.

The benchmark EGX30 index has a short-term resistance at 15,320 points, while it has support at 15,000 and 14,903 points, head of the capital market committee at the African Economic Council, Ayman Fouda, highlighted.

Moreover, the small- and mid-cap EGX70 index has short-term resistance at 688 and 695 points, while it has support at 669 and 660 points, he indicated.

Osama Naguib, head of Technical Analysis at Arab Finance Securities, said that the EGX30 index is still moving sideways above the main support level of 14,600 points, and below main resistance at 15,300 points.

The benchmark may retest 15,300 points if the heavyweight Commercial International Bank (CIB) settled above EGP 71.5, he noted.

The EGX’s indices ended the first week in April in mixed notes, the benchmark EGX30 index going up 582 points, or 3.96%, to close at 15,247 points.

Market capitalisation gained EGP 15bn and closed at EGP 830.25bn.

Meanwhile, the small- and mid-cap EGX70 index declined 1.13% to 678.09 points, and the broader EGX100 index shed 0.4% to 1,730 points.

The CIB grew 8.58% at EGP 74, with a turnover of EGP 613m.

Most of the stocks listed on the EGX rose in the first quarter (Q1) of 2019, pushing up the benchmark EGX30 index by 13%.

During the January-March period, six blue-chip stocks, namely, Egypt Kuwait Holding (EKH), the Heliopolis Company for Housing and Development, the Sixth of October for Development and Investment (SODIC), Palm Hills Development Company, Global Telecom, and Juhayna Food Industries jumped by over 20%.

The EKH’s stock topped the rising blue chips with around a 46.2% increase, and a turnover of EGP 1.9bn.

Meanwhile, the leading real estate stocks Heliopolis Housing, SODIC, and Palm Hills rose by 36.43%, 22.3%, and 24.7%, respectively.

The EGX30 index went up 13% during Q1 of 2019, finishing the quarter at 14,737 points.

The CIB gained 15.8% in the first three months of 2019.

Moreover, trading volume amounted to around 15.55m shares exchanged at a turnover of EGP 82.6bn in Q1 of 2019.

Market capitalisation rose during the three-month period to EGP 816.5bn, compared to EGP 749.7bn at the end of December 2018.

In company news, Egyptian Resorts Company’s board of directors has approved an EGP 106.28m debt settlement with one of the investors.

Accordingly, the investor will be exempted from paying any dues for acquiring a stake in the company’s subsidiary Sahl Hasheesh for Touristic Investment, according to a statement to the EGX.

It is worth noting that Egyptian Resorts Co posted it had turned to loss of EGP 75.23m in 2018, against a profit of EGP 69.46m in 2017.

The company logged EGP 126.3m in revenues for the full-year ended 31 December 2018, versus EGP 281.06m in 2017.

Meanwhile, Pharos Research has set the fair value (FV) for Egyptian Transport and Commercial Services Company (Egytrans) at EGP 12.58 per share, with an ‘Equalweight’ recommendation.

Egytrans is likely to report a stable performance this year with an expected growth rate averaging between 5% to 10% year-over-year (Y-o-Y), Pharos said in a research.

The Cairo-based research firm projected new developments in the Hamrawein plant to take place, in addition to petrochemicals projects’ bids to be launched, by Q2 of 2019.

The company’s 2019 operating performance is expected to be similar to 2018, according to the research note.

In February, Egytrans reported a net consolidated profit of EGP 41.8m for the full-year ended 31 December 2018, versus EGP 77.25m in 2017.

In another note, Palm Hills Development Co’s extraordinary general assembly meeting (EGM) has agreed to raise the company’s issued capital by EGP 78m to finance the reward and motivation system for employees.

The issued capital will be raised to EGP 6.23bn from EGP 6.15bn and will be financed by retained profits of the financial statements of the period ended March 2018, Palm Hills said in a statement to the Egyptian Exchange.

The capital increase will be dedicated to the reward and motivation system for the company’s employees and the board of directors, according to the statement.

The EGM has also approved the amendment of articles 6 and 7 of the company’s articles of association.

Meanwhile, the ordinary general assembly meeting (OGM) has endorsed allocating EGP 78m of the retained profits for the company’s reward and motivation system, the company added.

The OGM also approved 2018 financial statements, as well as the board’s report on the company’s business.

Moreover, the OGM endorsed the restructuring of the board and renewing the membership of the members headed by the chairperson Yaseen Mansour.

In February, Palm Hills posted it recorded a net consolidated profit of EGP 906.8m in 2018, compared to EGP 936.47m in 2017, including minority shareholders’ rights.

In earning news, Orascom Investment Holding on posted a 91% Y-o-Y growth in its consolidated profits for fiscal year 2018.

The company logged EGP 865.59 million in profits for the 12-month period ended 31 December 2018, versus EGP 453.12m in 2017, including minority shareholders’ rights, according to a statement to the Egyptian Exchange (EGX).

Operating revenue amounted to EGP 1.7bn last year, versus EGP 1.4bn a year earlier, the Egyptian giant owned by billionaire Naguib Sawiris added.

At the level of standalone business, the company achieved a profit of EGP 58.79m in 2018, compared to EGP 606.14m in 2017.

It is worth noting that Orascom Investment previously reported an EGP 1.07bn in consolidated profits for the nine-month period ended September 2018, versus EGP 239.9m in the corresponding period of 2017.

Meanwhile, El Sewedy Electric for Trade and Distribution, a subsidiary of Elsewedy Electric Co, has signed an EGP 1.7bn contract with state-run Egyptian Electricity Transmission Co. (EETC).

The turnkey contract includes designing, supplying, and building the Benban-Naga Hamady two lost 500-kilovolt overhead transmission lines with a total length of 195km, Elsewedy said in a statement to the Egyptian Exchange (EGX).

The project will be implemented within six months from the date of signing the contract, the company indicated.

It is worth noting that Elsewedy Electric holds a 99.8% stake of Elsewedy Electric Co for trade and distribution.

In January, Elsewedy Electric announced that it was considering a number of infrastructure projects in the New Administrative Capital with total investments of up to EGP 2bn.

In other earning news, Minapharm Pharmaceuticals disclosed its consolidated income statements for fiscal year 2018, registered a decrease of 34.2% y-o-y in consolidated profits.

Consolidated income decreased to EGP 124.24m in FY18 from EGP 189.07m in FY17, according to a bourse filing.

During 2018, revenues grew to EGP 1.9bn from EGP 1.6bn in FY17

Meanwhile, Hassan Allam Holding has completed the construction of a 50-megawatt solar power plant in Benban Solar Park in the Upper Egypt governorate of Aswan in partnership with Taqa Arabia, a subsidiary of Qalaa Holdings, at a cost of EGP 1.35bn, a source familiar with the matter said.

The plant is now connected to the Egyptian Electricity Transmission’s (EETC) substation and is subject to trial operation before linking it to the national electricity grid within the framework of the second phase of the feed-in tariff programme.

The plant will generate 154m kw/h per year when it starts commercial operation this month and it will produce only around 65,371 tonnes carbon emissions per year.

The solar power plant project is being backed by a loan facility from both the International Finance Corporation, the World Bank’s private sector arm, and the Asian Infrastructure Investment Bank (AIIB).

In August, Qalaa Holdings announced its first investment in generating solar power through photovoltaic (PV) cells at a cost of EGP 1.35bn in Aswan in collaboration with Hassan Allam Holding.

Revenues of the project are expected to stand at around EGP 10.8m per annum, Qalaa Holdings said.

In another context, Emaar Misr for Development, a subsidiary of UAE-based Emaar Properties, on denied negotiations with Madinet Nasr Housing and Development (MNHD) over an acquisition.

This came as a response to one of the newspapers that published Emaar Misr was planning to acquire MNHD, according to a statement to the EGX.

In a separate statement, MNHD also denied any talks with Emaar Misr regarding the same matter.

In January, MNHD’s board of directors suspended the merger and acquisition negotiations with Sixth of October for Development and Investment (SODIC) as both disagreed on the terms of the swap transaction.

In October 2018, SODIC announced that its mandatory tender offer to MNHD would be implemented through a stock swap deal. One share of SODIC would be exchanged for two shares of MNHD.

MNHD unveiled last April its board was considering a possible merger or acquisition with SODIC.

Meanwhile, Abu Qir Fertilizers and Chemicals Company posted a 32.4% year-on-year increase in profits for the first half of fiscal year 2018/2019.

Net profits amounted to EGP 1.65bn in the six-month period ended December, versus EGP 1.24bn in the same period of 2017, according to a filing to the EGX.

Revenues rose to EGP 4.9bn in H1-18/19, slightly up from EGP 4.15bn in the same period a year earlier.

The company attributed the increase in profits to its flexible marketing policy, in addition to the excellent management of its financial portfolio.

In November, Abu Qir Fertilizers reported a 61% year-on-year surge in profits for the first quarter of FY18/19, registering a net profit of EGP 752.8m, compared to EGP 467.11m.

Additionally, revenues jumped 54% Y-o-Y to EGP 2.15bn in the six-month period ended September 2018.

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