STANDPoint
Egypt / Strategy Note / STANDPoint Portfolio Update
So far, the year 2023 has proven to be more than just a year of adjustment, not only locally but globally. The onset of what seems to be a re-run of the Global Financial Crisis (GFC) has taken many market participants by surprise. But depending on whom you ask, the picture is not all gloomy. For us, we like to stick to our rules, picking stocks for the long term at relatively cheap multiples with potential catalysts in sight. In this note, we are taking stock of our STANDPoint Portfolio (SPP) performance so far, updating its constituents, and recalibrating our outlook for the coming period.
Where do we stand and how are we doing so far?
As we illustrated in our 2023 annual strategy outlook, SPP has outperformed all main market indices since inception back in 2021. However, the market has been on a downward spiral as EGX 30 (-14.3%), EGX 70 EWI (-12.1%), and EGX 100 EWI (-13.6%) all fell in the period from 29 January through 20 March 2023. Similarly, SPP fell 16.2% over the same period, yet maintaining its long-term outperformance nonetheless. We are adding four new stocks to SPP within our three key themes: (1) beneficiaries of a high interest rate environment, (2) export-oriented businesses, and (3) companies with long USD (i.e. non-EGP) positions. We note that today, Mother’s Day, marks the first anniversary of the first major EGP devaluation seen in 2022.
What to do next?
We continue to retain the same 10 stocks we had in our SPP, namely ADIB, COMI, TALM, EKHO/A, SWDY, ORAS, OFH, ACAMD, TMGH, and ETEL. Today, we are adding four new stocks, so in total we now have 14 stocks in SPP. The new additions are Alexandria Containers Handling [ALCN], Al Ezz Ceramics & Porcelain (GEMMA) [ECAP], EFG Hermes Holding [HRHO], and Raya Customer Experience [RACC].
For the investment rationale for the four new additions, please read the full report in English:
And in Arabic (باللغة العربية):
Amr Hussein Elalfy
MBA, CFA
Head of Research
T +202 3300 5724