Pre-Trading Thoughts

Al Ahly Pharos

IMF’s Managing Director Kristalina Georgieva kicked off talks with Egyptian officials, including Prime Minister Moustafa Madbouly and CBE governor Hassan Abdalla yesterday after landing in Egypt.

The USD rose more than 0.4% against the EGP on Thursday to reach EGP48.94 to the greenback, marking its highest level since August.

Budget deficit narrowed to 2.12% of the country’s GDP in 1Q 2024-2025, recording EGP361.8 bn, compared to an EGP455.8 bn deficit during the same period last year. This was driven by an increase in revenues, mainly from the taxpayers. Government spending increased by 4.7% YoY, standing at EGP827.7 bn, while interest payments dipped 5.4% YoY, at around EGP452 bn.

Fitch Ratings upgraded Egypt's credit rating from ‘B-’ to ‘B’ with a stable outlook for the first time since 2019, citing FX inflows from the USD35 bn Ras El Hekma agreement, our expanded USD8 bn IMF program, and the EU’s EUR7.4 bn aid package, alongside greater confidence in the durability of our structural reforms.

The IMF expects constraints on Egypt’s growth to ease as regional tensions subside and structural reforms are implemented. The Fund noted that “an assumed easing of the conflict in Gaza and Israel next year and steady implementation of reforms are projected to help lift growth in Egypt to 4.1% in 2025 and above 5% over the medium term.”

Net foreign asset surplus in the Egyptian banking system rose 6% to record USD10.31 bn in September, up from USD9.7 bn in August.

The House will discuss and vote on amendments to the law regulating the tax dispute settlement on Tuesday, which will see the deadline for settlements pushed to 30 June 2025.

Egypt is aiming for 120 GW of total electrical capacity by 2040, with 60% set to come from renewable sources.

A consortium of China State Construction Engineering Corporation (CSCEC) subsidiary Umi Group and IGI Holding have signed an MoU with the New Urban Communities Authority to manage and operate the Central Business District in the New Administrative Capital.

We update our FV on ISPH to EGP9.50/share, up from EGP4.12/share maintaining our overweight recommendation; factoring in the upward revision for prices, increased market share, updating our macro assumptions, and rolling over the model for an additional year. ISPH is currently trading at 2025 multiples of P/E of 8.8x and EV/EBITDA of 1.8x.

EFIC released 3Q24 unaudited standalone results. Net profit increased by 722% YoY (+6% QoQ) to EGP265.2 million, bringing 9M24 net profit to EGP586.7 million, a 150% YoY.

SKPC sent a release announcing that the Council of Ministers has approved the establishment of a project to produce sodium cyanide as free zone project for Draschem Company, which is a partnership between the Austrian Holding Company for Petrochemicals and the Czech Company “Draslovka”. A lease agreement has been signed between them and SKPC for a plot of land to establish the project. Currently, SKPC is considering a 15% partnership in Draschem.

EKHO sent a release in reference to the news published regarding the company’s withdrawal from Al Mohandes Insurance Company, EKHO announced that this news is entirely false and there are no negotiations with any party regarding this matter.

Egypt has welcomed the first oil tanker as part of an MoU inked with the Emirate of Fujairah earlier this year.

The finance and tourism ministries have officially launched a new EGP50 bn subsidized loan program for the tourism sector. The initiative will offer financing at 12% interest, with a focus on key tourist destinations in Luxor, Aswan, Greater Cairo, the Red Sea, and South Sinai governorates.