MARKET WATCH — Guess who’s back!
STOCK ANALYSIS: Ibnsina Pharma (ISPH)
Written end of September 2024 for Business Monthly - October 2024 Issue
MARKET WATCH
The period from Aug. 15 to Sept. 15 witnessed Egypt’s bull market resumption, which started in early July 2022. By Sept. 15, the EGX 30 was up 252% since July 5, 2022. The EGX 30 rose 2.9% to 30,498, extending its year-to-date gain to 22.5%. Meanwhile, the EGX 70 EWI continued to outperform, rising 6.6% during the period and raising its year-to-date gain to 29.6%. Both indices have managed to hold above psychological levels, 30,000 for the EGX 30 and 7,000 for the EGX 70 EWI.
The EGX 70 EWI outperforming the EGX 30 prompted Beltone Holding (BTFH, up 12.6%) to launch an index tracking the EGX 100 EWI index, a combination of both indices. That was also evidenced in the top performers list for the period, led by small caps that aren’t household names but many investors recognize. Let’s take three of them, all of which happen to have “Alexandria” in their names.
For instance, Alexandria National Financial Investment (ANFI, up 183%) jumped on a relatively higher volume than its historical average. The company even replied to Egyptian Exchange inquiries following the jump in its stock price, citing no material events that might have driven it higher. ANFI recorded a net loss of EGP 1 million in its first-half results.
Another high-flier was Alexandria Spinning & Weaving (SPIN, up 52.5%), which, like ANFI, denied any material events that may have driven its stock price higher. The company recently announced a 12.5% stock dividend after reporting a full-year net income of EGP 115 million and 28% annual growth. By the end of the period, SPIN was trading at 23 times its earnings.
The third was Alexandria Flour Mills (AFMC, up 48%), which ended its financial year on June 30 and reported a 34% higher net income of EGP 55.5 million. By the end of the period, SPIN was trading at 17 times its earnings.
Elsewhere, Sinai Cement (SCEM, up 81%) extended its rally following the sale of its 25% stake in Sinai White Cement. Also, Acrow Misr (ACRO, up 56%) reported strong first-half results, with net income jumping 133% to about EGP 550 million, driven by almost doubling revenues, higher gross margin, and higher foreign exchange gains that more than offset expected credit losses.
Meanwhile, the Central Bank of Egypt (CBE) kept interest rates unchanged, leaving three more meetings before the end of the year. And with the U.S. Fed cutting rates by 50 basis points, the door may be open for the CBE to start easing this year.
STOCK ANALYSIS
Ibnsina Pharma (ISPH)
After the bankruptcy of a pharmacy chain and difficulties of one of its largest competitors, Ibnsina Pharma (ISPH) is looking ahead with a higher market share of 29.2%. Egypt’s largest drug distributor reported first-half results showing net income growing 68% to about EGP 222 million, thanks to higher drug prices. The company, which uses credit facilities to finance working capital, has a net debt of EGP 2.8 billion. So with the CBE likely to start cutting interest rates soon, ISPH will see financing expenses reduced. The stock rose 25% during the period to EGP 3.65.
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