The local stock market has been receiving good news for the last couple of weeks. A meeting involving the market regulator, the Egyptian Financial Regulatory Authority (EFRA), representatives of the Egyptian Stock Exchange, and traders gave the market a pat on the back, concluding with decisions aiming at lowering the cost of stock market transactions by reducing trading and clearance fees as well as postponing restrictions on margin trading.
This was followed by a cabinet statement saying that the government is considering withdrawing from certain sectors to give the private sector more elbow room. The cabinet also said it would be doing a review every two years to decide which state-owned enterprises need to stay under its management and which to put on the bloc in the form of initial public offerings (IPOs).
Parliament has also passed legislation encouraging more private-sector involvement in the economy. The lawmakers approved changes to the public-private partnership law allowing public entities to partner with private companies on transport, energy, communications, and healthcare projects.
Abu Kir Fertilisers (ABUK): The company will benefit more than other fertiliser producers from the government’s recent decision to increase local nitrogen fertiliser prices by 37 to 50 per cent to reach LE4,500 per ton. The decision came on the back of a recent surge in natural gas prices by 28 per cent to $5.75 per million British thermal units (mBtu).
Moreover, the new subsidies system will also give the company the right to sell 10 per cent of its production in the free market where prices are not subsidised. Since it fulfils most of its local commitment of subsidised sales in ammonium nitrate, the additional 10 per cent local quota at free-market prices will be fulfilled in granular urea. 10 per cent of ABUK annual output, or 206,000 tons, will be sold at free-market local urea prices, which are “close to export urea prices”, noted a research note on the fertiliser sector by Prime Holdings.
The note said there were expectations that the company would witness an exceptional year in 2021-22, capitalising on the robust global nitrogen fertiliser market and the historic improvement in local urea prices. In 2021-22, Prime Holdings expects ABUK to generate LE15 billion in revenues, 78 per cent higher than in 2020-21.
Sixth of ClOctober for Development and Investment (SODIC): The upmarket real-estate developer will soon be witnessing a major change in its ownership structure. The EFRA has given the green light to a bid offered by a consortium including the UAE’s Al-Dar Properties and the state-backed holding company ADQ to acquire 90 per cent of SODIC.
The consortium, led by Al-Dar with a 70 per cent stake, is offering LE20 per share, putting SODIC’s total value at LE7.1 billion. When the consortium first expressed its interest in the company in March it offered LE18 per share. Shareholders will have 10 to 30 days to respond to the offer, after which Al-Dar and ADQ would have to complete the purchase within five days. Shareholders of at least 51 per cent of SODIC’s equity should approve the selling of their shares for the deal to be finalised.
SODIC has recorded a 26.2 per cent decline in its third-quarter sales compared to the same quarter of last year to reach LE 1.6 billion. This is attributed to the suspension of sales on the 500-feddan plot that houses the VYE and Karmell compounds due to the location adjustment of the plot.
Cleopatra Hospitals Group: Egypt’s largest private hospital group by number of beds and operating hospitals reported a 38 per cent increase in its revenues for the nine months ending in September compared to the same period last year.
The performance was supported by a solid third quarter that saw the group report a 16 per cent year-on-year increase in revenue. This was despite the fact that last year’s third quarter included a strong rebound effect following the lifting of Covid-19-related restrictions in place during the second quarter of 2020.
The company’s press release on its results praised the performance despite the above-average number of bank holidays during July 2021, “with many Cairenes opting to ‘bridge’ the holiday week with the summer holidays resulting in a shortened working month,” it said.
It noted that in July 2021 there were an estimated 10 working days fewer than in the same month of last year.
The group, which owns and operates seven hospitals nationwide including the Cleopatra and Nile Badrawi Hospitals, signed agreements in October to add a 400-bed brownfield hospital to its network, with the project now pending regulatory approval.
*A version of this article appears in print in the 25 November, 2021 edition of Al-Ahram Weekly.