From the trading floor

Sherine Abdel-Razek , Tuesday 7 Sep 2021

From the trading floor
From the trading floor

Abu Qir Fertilisers: The leading state-owned fertiliser producer is upbeat about global nitrogen fertiliser prices. During a conference call earlier this week, the management of the company told analysts it expects prices to hover around $400 per ton at least in the short run before the hike in urea prices, the main factor that has pushed up prices for nitrogen fertilisers, loses steam.

Urea prices surged on the back of low exports from China, increases in the international prices of commodities like wheat and corn, and strong demand from importing countries. In the medium to long term, the company thinks a $300 per ton price is attainable, more profitable than pre-Covid-19 levels, according to a Prime Security note on the conference call.

Abu Qir said it will keep supplying the market with 77,000 tons of fertiliser monthly at a subsidised price, a stipulation of the government for all fertiliser producers in Egypt before they are given permission to export their products. There are negotiations between fertiliser producers and the government to change the pricing mechanism, with one option being to provide the subsidies in cash rather than a discount on the price.

“If it were not for the local quota, Abu Qir would have achieved net profits close to LE4.6 billion instead of LE3.5 billion,” according to Prime.

It put the target price of the listed company at LE26 per share, or 35 per cent higher than its trading value. Key catalysts behind the high valuation are the possibility of the liberalisation of local urea prices or the company qualifying for free-zone status. Any cut in natural gas prices by the government could also be reflected in the price. A reduction of one dollar per Metric Million British Thermal Unit (MMBTU) would be translated into a 20 per cent increase in the target price.


Orascom Construction (OC): the company reported a 143 per cent increase in its net profits in the second quarter of 2021 compared to the same quarter of 2020. The improvement is fed by good performance indicators in the Middle East and Africa region as well as in the US.

OC also signed this week a deal to participate in building the 660km high-speed electrified main and freight rail line that will connect the port cities of Ain Sokhna on the Red Sea to Alexandria and Marsa Matrouh on the Mediterranean Sea. It is part of a consortium that also includes Siemens Mobility and Arab Contractors.

OC’s role will include the track works, signalling, overhead catenary, telecommunication system, and traction power substations, while a 15-year maintenance agreement encompasses the track works and telecommunication system, according to a company press release.

There are currently discussions to finalise two other high-speed railway lines, increasing the total distance of this new rail network to 1,800km. The two additional lines will connect the Greater Cairo region from 6 October city along the River Nile with Aswan and Luxor via Hurghada to Safaga, noted the press release.


Arab Investment Bank (AIB): Seventy-six per cent of the state-owned bank is now being privatised, as both EFG Hermes and the Sovereign Fund of Egypt (SFE) have acquired the green light from the Central Bank of Egypt (CBE) to pursue the purchase deal.

The deal will take the form of a LE3.8 billion increase in AIB’s capital. EFG’s holdings in AIB will be 51 per cent and that of SFE will be 25 per cent following the deal. The remaining 24 per cent will remain held by the National Investment Bank (NIB), which used to own 91.4 per cent of AIB. Minority shareholders will also sell their 8.6 per cent share.

AIB is both a commercial and an investment bank, and it offers both traditional and Sharia-compliant services. It was established in 1974.


Integrated Diagnostics Holdings (IDH): The medical diagnostic services provider recorded an almost 400 per cent increase in its net income in the second quarter of 2021 compared to the same period of the previous year to reach LE326 million as the market continues to recover from the impact of Covid-19.

A company statement showed a six-fold increase in Covid test revenues to reach LE569 million. Conventional test revenues also recorded a 60 per cent increase.

IDH companies include the Al-Borg and Al-Mokhtabar labs in Egypt as well as subsidiaries in Jordan, Sudan, and Nigeria. The company was listed on the London Stock Exchange in 2015 and debuted its shares on the local stock exchange in May.





*A version of this article appears in print in the 9 September, 2021 edition of Al-Ahram Weekly.


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