Orascom Investment Holding (OIH) has reported revenues of EGP 730.5m in 2020, compared to EGP 811.4m in 2019, reflecting a decline of 10% y-o-y.
The cables business, notably Pakistani submarine fibre optic cable operator, Pakistan Cables, was the largest contributor to revenues, with 91% as of 2020, or -1.3pps y-o-y), recording EGP 664.2m (-11.1% y-o-y).
The company’s Investment Property (Victore Investment Holding, RE investment in Sao Paulo, Brazil) contributed 8.4% to total revenues in 2020, accounting for +11.7% y-o-y, and recording EGP 61.6m (+0.53% y-o-y).
Meanwhile, OIH’s Gross Profit dropped to EGP 355.4m in 2020, down from EGP 418.3m in 2019, implying a decline of 15% y-o-y, mainly on lower revenues, given a decline of 5% y-o-y COGS. Accordingly, GPM dropped to 49% in 2020 (-6pps y-o-y).
OIH reported net losses from continued operations of EGP 60.8m in 2020, compared to net losses of EGP 402.5m in 2019. This was backed up by lower booked provisions, irregular interest income gain of EGP 61.7m realised in the first quarter (Q1) of 2020 related to the Brazilian Investment and lower FX losses.
The bottom-line was supported by the lower booked provisions in 2020 amounting to EGP 22.5m compared to EGP 89.87m in 2019 (-75% y-o-y), as a result of the split.
OIH recorded a net finance income in 2020 of EGP 20.2m, compared to net finance costs of EGP 170.4m in 2019. This came in on an interest income of EGP 74.1m compared to EGP 14.0m in 2019, as a result of the early settlement, at a discount, of a loan from an international bank.
This was related to the Brazilian Investment contributing EGP 61.7m to 83% of the reported interest income gain. Moreover, interest costs simultaneously declined from EGP 149.8m in 2019 to EGP 45.7m in 2020 (-69% y-o-y).
Pharos Research sees some potential catalysts that could improve the company’s operational performance.
The first of these is a clear resolution on Koryolink’s profit repatriation or sustainable dividend pay-out in Euros, which could potentially add EGP 0.54 per share to OIH FV.
Other catalysts include: making good use of the receivables from the termination of OIH’s Lebanese contract; and a clear investment strategy/value-accretive acquisitions over the next few years.