MARKET WATCH: A Fresh Start
MARKET WATCH: A Fresh Start
STOCK ANALYSIS: Ismailia National Food Industries (INFI)
Written for Business Monthly - March 2023 Issue
MARKET WATCH
The Egyptian stock market is off to a positive start. Both the EGX 30 (12.6%) and EGX 70 EWI (5.8%) rose from Jan. 15 to Feb. 15, further extending their year-to-date gains to 20% and 7.2%, respectively. Advances outnumbered declines by a ratio of 3 to 2, led by small-cap stocks Ismailia National Food Industries (INFI, up 73%) and Arab Aluminum (ALUM, up 58.5%), which recently approved a 5-for-1 stock split followed by a 50% dividend.
The period marked the start of the earnings season, with many large-cap stocks reporting solid results, thanks in part to a strong U.S. dollar. Faisal Islamic Bank of Egypt (FAIT, up 10%) reported a 67% jump in earnings to EGP 4.5 billion in 2022, despite a 19% lower net interest income. As a result, the bank's board proposed distributing a dividend of EGP 1.98 per share, implying a 7% yield. CIRA Education (CIRA, up 2%) and other companies opted to retain their annual profits. In its first-quarter ending Nov. 30, CIRA reported 8% higher year-on-year earnings of EGP 107 million on a 47% rise in revenue to EGP 633 million, thanks to higher enrollments at Badr University in Cairo and Assiut.
Obour Land Food Industries (OLFI, up 34%) reported better-than-expected earnings of EGP 462 million in 2022, an increase of 32% year-on-year on 52% higher revenues of EGP 4.6 billion. OLFI's board proposed a cash dividend of EGP 0.95 a share, implying a 9% yield. Other winners were companies that benefited from a strengthening U.S. dollar. Abu Qir Fertilizers (ABUK, down 7.5%) reported a 126% year-on-year earnings jump of EGP 7.2 billion in its first-half results on 80% higher revenues of EGP 11.2 billion. Similarly, Misr Chemical Industries (MICH, up 0.4%) reported first-half earnings of EGP 281 million, up 191% year-on-year on 68% higher revenues of EGP 456 million. Alexandria Containers Handling (ALCN, down 12%) reported 151% higher year-on-year earnings of EGP 1.8 billion in its first-half results on 78% higher revenues of EGP 2 billion.
It was not just earnings, as some M&A news made headlines. CIB (COMI, up 34%) said it would acquire the remaining 49% of Mayfair-CIB, turning the Kenyan bank into a wholly owned subsidiary. Sidi Kerir Petrochemicals (SKPC, up 26%) is considering fully acquiring its 20% owned subsidiary Ethydco.
As for the macro picture, the Central Bank of Egypt kept its key policy rates unchanged in its first meeting of the year while reiterating its commitment to price stability over the medium term. However, Moody downgraded Egypt's credit rating from B2 to B3, changing its future outlook from negative to stable.
STOCK ANALYSIS
Ismailia National Food Industries (INFI)
Ismailia National Food Industries (INFI), which rose 73% for the period, is up 92.7% on a year-to-date basis. While the company continued to report operating earnings (EGP 9.7 million in 2022 vs. EGP 9.5 million in 2021), its value has revolved around the 181 feddans it owns in Ismailia. Recently, the company disclosed it is negotiating with the Governorate of Ismailia to give up a portion of that land in return for the improvement fee (EGP 500 per square meter or a total of EGP 380 million) it owes.
