As Zilla Capital expected, the CBE kept interest rates on hold for a seventh consecutive meeting
For our top macro talks today, first, as Zilla Capital expected, the Central Bank of Egypt (CBE) kept interest rates on hold for a seventh consecutive meeting, pointing to the uptick in inflation and the pressure to maintain foreign inflows into Egyptian debt. Noting, the lending rate is at 9.25% and the deposit rate at 8.25% since November, their lowest since July 2014.
- With this in mind, it is worthy to mention that the UK's inflation rate soared by 3.2% in August, posting the highest increase since records started in 1997, following a 2% jump in July.
However, the rise is expected to be temporary as the reopening of the country pushed food and energy prices higher. Moreover, Clarkson's CISC freight cost index jumped to its highest level in nearly 13 years as demand for goods and components needed for manufacturing rebounded, and high supply chains that had collapsed due to the coronavirus pandemic disrupted and pushed freight rates to new records this year so far, with international shipping companies transporting oil to cars and even Containers are the largest daily wages since the global financial crisis in 2008. We believe that container shipping ships are the shining star in the era of Corona, as the costs of transporting the 40-foot iron box from China to a European port are currently more than 14,000 USD, an increase of more than 500% over its costs during the same period.
- On the other hand, Chinese trade has rebounded after the Beijing government managed to contain the virus since March of last year to the extent that total Chinese imports and exports grew by 23.7%
during the past eight months to reach about 3.84 trillion USD compared to the same months of 2020. During the same period, trade between China and Africa also rebounded, with a growth rate of 40.5%, to reach about 150 billion USD.
- Equally important, the French Agency for Development (AFD) is planning to allocate 200 million EUR for sanitation and drinking water projects in Egypt.
Noting that the total cumulative amount of funding allocated by the AFD in favor of Egypt recorded about 2.9 billion EUR, of which about 2.1 billion EUR were for 55 projects currently under implementation. This came on the sidelines of a tour organized by the agency in a number of its projects that provided funding for it in Alexandria, including the sewage sludge treatment unit at East Alexandria station, and the industrial wastewater treatment plant at Abu Qir Fertilizer Company. The agency is cooperating in this regard with a number of other European financial institutions such as KFW and the European Investment Bank.
- In the same fashion, the first auctions of the cotton crop for lower Egypt will begin in Sharkia Governorate,
and the opening price of the auction starts at 3100 EGP per quintal, an increase of nearly 1000 EGP over last year, which amounted to 2100. Noting that the cotton season for the 2021 crop, which started in September, witnessed a rise in cotton prices recording 2875 EGP compared to 1796 EGP in the first weeks of the 2020 crop auction which an increase of more than 2,000 EGP in quintals. We believe that 2021 cotton season is the season for the farmer, not the merchant stressing that there was a demand from the private sector for the six auctions that were carried out until last Sunday, in which 9 to 15 companies participated.
- Moving to our companies talks, first, Acrow Misr for Scaffolding and Formwork (ACRO) reported a consolidated net profit excluding minority interest of 87.32 million EGP in the first half (H1) of 2021.
This marks a 141% year-on-year (YoY) surge in net profits, as compared to a net profit of 36.20 million EGP in H1 2020. The company’s revenues jumped by 65% YoY to EGP 742.77 million in H1 2021 from 449.99 million EGP in the prior-year period. In addition, Industrial Engineering Company for Construction and Development (ICON) posted a 174% year-on-year growth in consolidated net profit excluding minority interest for the first half (H1) of 2021. Net profit amounted to 73.67 million EGP in the January-June period of 2021, compared to a profit of 26.91 million EGP in the prior-year period.
- Second, El Ezz Group announced launching its commercial administrative tower project “Destino” in New Administrative Capital (NAC).
The Destino project is a commercial administrative medical building in the NAC’s Downtown. The project is spanned over an area of 3,000 square meters with a gross sales area that reaches 13,000 square meters. The company plans to launch several other industrial and tourism projects in the coming period.
- And for our investments talks, El-Ezaby pharmacies chain intends to invest more than 100 million EGP in the Egyptian market next year.
The new investments are scheduled to be pumped to establish 45 new branches; It is expected that more than 50% of them will be implemented during the first half of 2022. Moreover, they are also looking to invest in foreign markets, by opening some branches in one of the Arab or Gulf countries during the next two years.
- By the same token, Ora Developers aims to start construction work for its new project, Silversands, North Coast, early next year;
With a total investment of 25 billion EGP to be delivered in full within 5 year. The project is planned to include 2,500 families, pointing at the same time to the high demand from Egyptians abroad, in addition to Arabs, especially from the Gulf region.
- Finally, regarding our EGX, the Egyptian Kuwait Holding Company announced that 68.4% of its shareholders agreed to change the trading currency on the EGX from the USD to the EGP.
The company's current issued capital amounted to 281.7 million USD, distributed over 1.12 billion shares, with a nominal value of 0.25 USD. Also, EKH net profits increased amounted to 109.2 million EGP during the first half that ended last June, compared to net profits of 80.2 million USD during the comparative period of 2020.
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