MARKET WATCH: All-Time Highs
MARKET WATCH: All-Time Highs
STOCK ANALYSIS: TMG Holding (TMGH)
Written for Business Monthly - October 2023 Issue
MARKET WATCH
The period from Aug. 15 through Sep. 15 was momentous with both the EGX 30 and the EGX 70 EWI hitting new all-time highs. During the period, the former rose 8.8%, while the latter added 5.5%. Let’s take each index one by one.
The EGX 30, the market’s main index, finally broke through its previous all-time high of 18,414.11 recorded back on Apr. 29, 2018. During the 27 Aug. trading session, the index hit a new all-time high of 18,516.59 which was the highest level reached during that day. Since then, the index rose in 11 of the following 14 trading sessions. The index continued to extend its gains beyond the 20,000 mark. For two consecutive days (Sep. 19 and 20), the index tried to close above the 20,000 mark without success. Its first-ever close above 20,000 was recorded on Sep. 21.
That said, the EGX 30 index was lagging behind the EGX 70 EWI, its small-cap counterpart, which hit all-time highs long before. Indeed, this year the EGX 70 EWI broke above its 2021 all-time high on Jan. 30, hitting an intraday high of 3,073.05. It continued to register new all-time highs throughout 2023. It last all-time high was registered on Sep. 19 at 3,919.34.
But at the end of the day, for investors, it is their stock holdings that matter the most, not the index. For many stocks, the index performance reflected positively on their performance. For instance, TMG Holding (TMGH, up 36%) broke through the EGP10 psychological threshold, ending the period at EGP13.21. It later continued its journey north to trade above EGP14. Such a performance may have been driven in part by an overall positive sentiment on tourism-related stocks. Also, Egyptian Resorts (EGTS, up 46%) extended its year-to-date gain to 117%. Similarly, Sharm Dreams for Tourism Investment (SDTI, up 26%) extended its year-to-date gain to 55%.
Other top performers during the period included large caps, such as Eastern Co. (EAST, up 36%) of which earnings hit an all-time high of EGP7.7 billion. Even at market price, the stock is traded at an attractive 7-times earnings. EIPICO (PHAR, up 30%) continued its ascent after its capital increase shares were made available for trading. The drugmaker, which denied rumors that it is an acquisition target, has plans to take part in Egypt’s first active pharmaceutical ingredient factory in the Suez Canal Economic Zone under the umbrella of ACDIMA, its majority shareholder.
Elsewhere, Export Development Bank of Egypt (EXPA, up 33%) also denied rumors of being an acquisition target from GCC investors. Such rumors circulated after the Egyptian President canceled special laws related to some banks, including EXPA, which some thought would open the door for foreign investment in this state-owned bank.
Going forward, investors will continue to monitor the market’s two main indices performance for cues. For now, it looks like the bull market has legs.
STOCK ANALYSIS
TMG Holding (TMGH)
With interest in tourism-related names rising, TMG Holding (TMGH) came to the forefront with an outstanding performance. The stock pierced through its prior highs and closed the period up 36% at EGP13.21 before advancing further beyond EGP14. This values Egypt’s leading real estate developer and hotel operator close to EGP30 billion, which is still less than USD1 billion. The company recently agreed to acquire seven Egyptian historic hotels for USD700 million. More recently, the company signed with Saudi Arabia-based National Housing Co. to construct a smart residential city east of Riyadh, a 10-million square meter project with an investment cost of SAR40 billion. TMGH stock traded some 99 million shares worth more than EGP1 billion.
