Arabian Cement (ARCC EY): The company's 4Q25 consolidated net income surged 2.17x y-o-y to EGP1.07bn, its audited financials showed. Additionally, its board proposed an FY25 DPS of EGP2.94, it said in a release to the EGX. (EGX)
Our comment: ARCC delivered another solid quarter, with revenue growth driven by higher y-o-y volumes and improved pricing. Disciplined cost management led to a y-o-y doubling of gross profit and robust margin expansion. Although the company recorded FX losses and provisions, which we did not account for in our numbers, these were largely offset by a higher-than-expected surge in net finance income, reversing a net finance cost a year earlier. Consequently, net income more than doubled y-o-y and came broadly in line with our estimate, only 0.9% higher. Total cement and clinker sales volumes increased c26% y-o-y to 1.38m tons, coming c4.6% above our estimate. Export volumes surged c2.0x y-o-y to 0.60m tons, representing 43.6% of total sales, and c16 pp higher y-o-y. Consolidated revenue increased c56% y-o-y to EGP3.65bn, c5.4% above our estimate. Revenue per ton rose 24.1% y-o-y to EGP2,611, in line with our estimate, only c0.8% higher, reflecting improved pricing dynamics compared to a year earlier. Cash cost per ton increased c6.4% y-o-y to EGP1,455, broadly in line with our estimate, only c1.4% higher, reflecting effective cost controls, energy mix cost optimization, and efficiency improvements. As a result, consolidated gross profit doubled y-o-y to EGP1.49bn, and came c2.7% above our estimate, resulting in a gross profit margin expansion of 10.0 pp y-o-y to 40.8%, c1.0 pp below our estimate. EBITDA surged 2.06x y-o-y to EGP1.49bn, beating our estimate by c4.9%. EBITDA margin expanded 10.0 pp y-o-y to 41.0%, missing our estimate by c0.2 pp. SG&A (ex-depreciation) rose c52% y-o-y to EGP105m, and came c6.3% below our estimate. ARCC recorded net financing income of EGP93m, beating our estimate by c70% and reversing the net financing cost of EGP4.71m in 4Q24. The company booked FX losses of EGP37m and provisions of EGP64m, which we did not account for in our numbers. NPBT increased 2.17x y-o-y to EGP1.41bn, in line with our estimate. Taxes rose 2.16x y-o-y to EGP332m, and came c5.5% above our estimate, translating into net profit of EGP1.07bn, broadly in line with our estimate, c0.9% higher. The company's board proposed a FY25 DPS of EGP2.94, implying a payout ratio of c39% and an after-tax dividend yield of c5.5% based on Thursday's closing price of EGP50.6/share. The DPS is c61% below our EGP7.5/share estimate. Nonetheless, we believe management may retain flexibility to declare an additional FY25 dividend in 2026, contingent upon sustained earnings visibility, stable operating conditions, capex discipline, and the absence of material adverse developments.
Our comment: This price revision is more aggressive than the previous one in late July, which entailed a gasoline price increase of c10–11% and a diesel price increase of c15%. We expect the October price revision to lead to higher-than-expected inflation over the coming few months, and hence the Monetary Policy Committee's (MPC) decision to maintain rates at its Thursday meeting is well justified, in our view. Also, Egypt's prime minister had said during the second week of October that Egypt's inflation rate may not ease as quickly as hoped. The diesel price increase would lead to higher food transportation costs and hence higher food and beverage prices, and the price revision of heavy fuel oil (mazut) would increase the production cost for the industrial sector, especially after the recent increase in electricity prices to the industrial sector in August of c21-31%. The budgeted petroleum products' subsidy bill for FY24/25 is EGP155bn, and hence, the total savings as a result of the July and October price revisions of EGP36.4bn suggests that the FY24/25 petroleum products' subsidy bill will decrease by c23% to EGP119bn.
Orascom Construction (ORAS EY, ORAS DH) | OCI N.V. (OCI NA): OCI Global and Orascom Construction PLC announced that they are pursuing a potential merger (the combination), according to a joint release. The combination would establish a scalable infrastructure and investment platform anchored in Abu Dhabi, with global reach. OCI and Orascom Construction are exploring a structure whereby Orascom Construction would be the acquiring ADGM-incorporated and ADX-primary listed entity. Subject to ongoing negotiations on the structure of the potential Combination, OCI shareholders would receive new Orascom Construction shares at a ratio to be determined after completion of reciprocal due diligence and relative valuation. OCI would then subsequently be liquidated and delisted from Euronext Amsterdam. If a transaction can be agreed and approved by the boards of the two companies, it will be submitted to shareholders of both companies, and for regulatory approvals from the relevant authorities. Specifically, the combination would offer the following benefits: (1) complementary strengths; the combination will bring together Orascom Construction’s world-class execution capabilities, supported by a USD14bn backlog, deep industry expertise in infrastructure, and multi-decade delivery of complex projects and concessions primarily in the US, the GCC, Egypt, Europe and select emerging markets — and OCI’s institutional investment platform, transactional expertise, and proven track record of disciplined capital allocation; (2) strong balance sheet: the combination will unite and enhance the companies’ financial strength, consolidating substantial capital resources and funding capabilities. This strengthened platform will facilitate investment in large-scale infrastructure opportunities through multiple channels, including equity, credit, and operation and maintenance participation, while leveraging Orascom Construction’s established experience in the space. Together, these attributes position the combination to unlock a new phase of growth; (3) infrastructure track record: the combination will provide a globally diversified platform from which to leverage Orascom Construction’s long-standing track record and access to an infrastructure opportunities pipeline spanning multiple industries including digital, aviation, transportation, power, and water, as well as leadership credentials in delivering landmark projects such as U.S. data centers, and other notable industrial and infrastructure investments. (Company release, Bloomberg)
Our comment: Over the past two years OCI N.V. has completed a sequence of transformational disposals. In December 2023, it agreed to sell Iowa Fertilizer Company (IFCo) to Koch Ag & Energy Solutions, LLC for USD3.6bn, a transaction completed in August 2024. In the same month, OCI announced the sale of its controlling 50%+ stake in Fertiglobe plc to Abu Dhabi National Oil Company (ADNOC) for USD3.62bn, which closed in October 2024. In August 2024, OCI signed an agreement to divest its Beaumont Clean Ammonia Project in Texas to Woodside Energy for USD2.35bn, closing in September 2024. Subsequently, in September 2024, OCI announced the divestment of its global methanol business (OCI Methanol Group) to Methanex Corporation, valued at USD1.6bn (USD1.3bn cash plus 9.9 m Methanex shares, representing a 12.9% equity stake), which closed in June 2025. In aggregate, these disposals generated USD 11-12 billion in gross proceeds, of which USD7bn has been distributed to shareholders, while leverage was materially reduced. Strategically, OCI has effectively exited cyclical, asset-heavy fertilizers and chemicals to reposition itself as an investment platform, with credibility in value realization and disciplined capital allocation. What remains in OCI are its European Nitrogen operations in Netherlands, its 12.9% equity stake in Methanex, a portfolio of marketable securities. For Orascom Construction, integrating OCI’s residual assets, cash, and investment culture can be transformational. ORAS’s main challenge has been the cyclicality and thin margins of EPC contracting, despite a USD14bn backlog and strong U.S. presence in data centers and aviation. By absorbing OCI N.V.’s capital base and investment discipline, ORAS gains the funding capacity and credibility to scale into concessions, recurring O&M, and capital-backed infrastructure investments, particularly in the U.S. and GCC. This would shift ORAS’s equity story toward a global infrastructure investment platform anchored in Abu Dhabi, with a potentially more stable earnings profile and scope for re-rating closer to infrastructure peers. The key merger challenges include governance alignment, clarity on capital allocation policies, and discipline in deploying capital into infrastructure projects that deliver recurring, contracted cash flows. If these are managed successfully, the transaction could mark ORAS's transition into a capital-rich, globally credible infrastructure player, leveraging its proven execution capability and OCI’s financial track record. Management has indicated that it aims to finalize the merger swiftly, and we believe completion could come as early as 1Q26.
As a proxy for the potential value of the new entity, we looked at the market capitalizations of the two companies. At current market prices, OCI N.V. is valued at USD1.05bn (EGP50.8bn) and Orascom Construction at USD1.00bn (EGP48.4bn), implying a combined market capitalization of roughly USD2.05bn (EGP99.2bn). This places OCI at 1.05x the value of ORAS. On a fair value basis, we value ORAS at USD1.25bn (EGP62.2bn), while the Bloomberg consensus estimate for OCI is USD1.85bn (EGP89.3bn), implying a combined equity value of about USD3.10bn (EGP151bn) and a relative ratio of 1.48x in OCI’s favor. These figures provide an initial proxy for the scale of the combined entity, although the final swap ratio will be determined following reciprocal due diligence and relative valuation. The gap between market pricing and fundamental valuations underscores the importance of this process in defining how value will ultimately be shared between the two shareholder bases.
Egypt's annual headline inflation accelerated to 16.8% y-o-y in May from 13.9% y-o-y in the previous month, according to the Central Agency for Public Mobilization and Statistics (CAPMAS) data. Monthly prices increased 1.9% m-o-m compared to a 1.3% m-o-m increase in April, the data showed. Egypt's annual core inflation accelerated to 13.1% y-o-y in May from 10.4% y-o-y in April, with the core CPI increasing 1.60% m-o-m compared to an increase of 1.20% m-o-m in April, according to the Central Bank of Egypt's (CBE) data. Fruit and vegetable prices increased 7.00% m-o-m compared to a decrease of 5.50% m-o-m in April, and the prices of regulated items increased 1.10% m-o-m compared to an increase of 4.00% m-o-m in the previous month, the data showed. (CAPMAS, Bloomberg, CBE)
Our comment: May inflation came significantly higher than our estimate of 14.2% y-o-y and an expected 0.4% m-o-m drop in prices, and higher than Reuters' median poll estimates of 14.9% y-o-y. We partially attribute the acceleration in inflation to a delayed pass-through effect of the 11 April c12–15% increase in gasoline and diesel prices since it took place almost mid-month, which may have impacted food and beverage and transportation prices in May. Also, the CBE's total 325 bps rate cuts, including 225 bps on 17 April and 100 bps on 22 May, could have had a more pronounced impact on local demand, in our view.
Egypt’s worker remittances increased c83% y-o-y to USD2.9bn in January 2025, increasing c81% in 7M24/25 to USD20.0bn, according to Central Bank of Egypt (CBE) data. (CBE)
Our comment: Egypt’s January 2025 worker remittances dropped c9% m-o-m from USD3.2bn in December 2024, however, this is partly due to the base effect, with December seeing some seasonality and recording higher remittances than the USD2.6bn in November 2024 and January 2025’s remittances are similar to October 2024’s USD2.9bn.
Egypt's annual headline inflation accelerated to 13.6% y-o-y in March from 12.8% y-o-y the previous month, according to the Central Agency for Public Mobilization and Statistics (CAPMAS) data. Monthly prices rose 1.6% m-o-m compared to a 1.4% m-o-m increase in February, the data showed. (CAPMAS, Bloomberg)
Our comment: March inflation was higher than our estimate of 12.4% y-o-y and 0.5% m-o-m and higher than the Reuters poll median of 12.6%. We attribute the higher-than-expected inflation to higher food and beverage prices due to seasonality, with Ramadan occurring in March.
By Heba Monir/ Sunday, April 8, 2025
Egypt's banking sector net foreign asset (NFA) position widened by USD1.48bn m-o-m to USD10.2bn in February from USD8.71bn in January, reversing a net foreign liability (NFL) position of USD22.0bn a year earlier, according to CBE's data. Excluding the CBE, the banking sector narrowed its net foreign liability (NFL) position to USD1.92bn in February from USD3.30bn in January, versus an NFL position of USD17.6bn a year earlier, the data showed. (CBE)
Our comment: The m-o-m widening in the total NFA position was due to a narrowing in the banking sector's NFL position by USD1.38bn and, to a lesser extent, to a widening in the CBE's NFA by USD99m. During February, the CBE auctioned a one-year USD1.0bn T-bills and Egypt secured USD1.5bn from the International Islamic Trade Finance Corporation (ITFC) to cover petroleum products and wheat imports, while the government repaid USD1.0bn of its dues to foreign oil companies operating in Egypt.
By Mariam Elsaadany/ Sunday, 9 March, 2025
Palm Hills Developments (PHDC EY): The company’s 4Q24 consolidated net income surged c72% y-o-y to EGP914m, its earnings release showed. In other news, the company plans to set up representation offices in Saudi Arabia and the UAE as it is studying implementing projects there, according to its co-CEO and managing director. PHDC raised its selling prices in 2024 by c50% across its projects, especially in its North Coast projects, and current selling price increases range from c20–25%, in line with inflation, he added. (Company data, Al Borsa)
Our comment: The company delivered solid numbers, supported by better-than-expected deliveries and high selling prices. Revenue increased c49% y-o-y to EGP9.20bn (c7% ahead of our estimate) as the number of units delivered surged c66% y-o-y to 852 units (c55% higher than our estimates). Gross profit grew c73% y-o-y to EGP2.94bn (c1% ahead of our estimate) as GPM narrowed c4 pp y-o-y to c32% (c2 pp lower than our estimate). SG&A expenses surged c2x y-o-y to EGP1.19bn (c18% lower than our estimate). Net interest expenses surged c77% y-o-y to EGP744m, mainly on higher interest expense, which reached a very high EGP936m. The higher-than-expected financing expenses reversed the beat into a miss at the pre-tax level which reached EGP1.06bn, higher c40% y-o-y (c7% lower than our estimate). A low effective tax rate of c11% and lower-than-expected minorities reversed the miss into a c9% net income beat, c72% higher y-o-y. Sales dropped c16% y-o-y to EGP20.7bn (c33% lower than our estimate, as we had expected sales to grow y-o-y in 4Q24). Sales were dominated by West Cairo sales (c51% of sales), backed by continued Badya, P/X, the Crown and Palm Parks sales, followed by North Coast and Alexandria sales (c38% of sales) and East Cairo sales (c12% of sales). The average price in West Cairo units was the lowest at EGP19.4m/unit, c81% higher y-o-y (c36% lower than our estimate). East Cairo units were priced the highest at EGP56.6m/unit, c4x higher y-o-y (c64% higher than our estimate), while North Coast and Alexandria units were priced at EGP26.0m/unit, c31% higher y-o-y (c2% higher than our estimate). PHD’s strong sales are reflected in its backlog, which surged c2x y-o-y to 147bn, while CAPEX spending dropped c20% y-o-y to EGP2bn (in line with our estimate). PHD’s net debt-to-equity stood at 0.75x by the end of the quarter, higher than 0.58x a year earlier on increased borrowings.
Egypt's banking sector net foreign asset (NFA) position widened by USD3.48bn m-o-m to USD8.71bn in January from USD5.23bn in December, reversing a net foreign liability (NFL) position of USD29.0bn a year earlier, according to CBE's data. Excluding the CBE, the banking sector narrowed its net foreign liability (NFL) position to USD3.30bn in January from USD6.42bn in December, versus an NFL position of USD17.6bn a year earlier, the data showed. (CBE)
Our comment: The m-o-m widening in the total NFA position was due to an increase in the CBE's NFA and the narrowing in the banking sector's NFL position. We attribute this improvement to Egypt issuing USD2bn in Eurobonds in January and receiving the first tranche worth EUR1.0bn of the European Union (EU) 's EUR7.4bn (USD8bn) financing package.
Eastern Company (EAST EY): The company’s 2Q24/25 net income hiked c2x y-o-y to EGP3.56bn, according to its audited financials. (Company release)
Our comment: The company’s net income came only c4% below our estimate of EGP3.71bn, in line with our margin expectations, despite booking some FX losses, lower-than-expected net interest income, and ceasing to book leasing income from its 24%-owned subsidiary United Tobacco Company (UTC). Revenue grew c2x y-o-y to EGP10.3bn, in line with our estimate (with a minor deviation of only 0.11%), mainly on a c33% y-o-y increase in volume to 15,472m local cigarettes (only c2% above our estimate) and a c69% y-o-y increase in local cigarettes ex-factory price to EGP12.7/pack (in line with our estimate of EGP12.8/pack). The company’s gross profit increased c85% y-o-y to EGP3.30bn (only c1% below our estimate), yet implying a c5 pp y-o-y drop in gross profit margin (GPM) to 32.0% (in line with our estimate of 32.5%), mainly due to higher costs. On a quarterly basis, EAST’s volume showed signs of recovery, increasing c16% q-o-q, and the ex-factory price increased c10% q-o-q, leading to a c2 pp q-o-q improvement in GPM, offsetting the increase in costs. SG&A expenses were flat y-o-y at EGP242m and came c22% lower than our estimate, representing 2.35% of revenue, down from 4.98% a year earlier and lower from our estimate of 3.01%. EBIT also increased by c98% y-o-y to EGP3.06bn (in line with our estimate of EGP3.04bn), yet resulting in c2 pp y-o-y drop in EBIT margin to c30% (just 0.17 pp above our estimate). Despite booking some FX losses of EGP126m versus EGP3.51m a year earlier (which we had not anticipated), lower-than-expected net interest income of EGP731m versus our estimate of EGP1.06bn (yet up c36% y-o-y), and reporting no leasing income from UTC for the first time since 1Q22/23, while we had accounted for some EGP50m in leasing income, given that its leasing contract with UTC is valid until April 2025, the company's bottom-line came only c4% below our estimate on lower-than-expected effective tax rate and some net other income of EGP257m. EAST reported EGP855m in provisions for the Early retirement program (ERP) in line with our estimate of EGP850m, signaling the potential resumption of its ERP. EAST also reported EGP1.46bn in capital gains from the sale of Factory Nine to its 24%-owned subsidiary United Tobacco Company (UTC), in line with our estimate of EGP1.48bn. The company's net profit margin (NPM) dropped c2 pp y-o-y to 34.4%, only c1 pp below our estimate. EAST ended 2Q24/25 with a net cash position of EGP4.06bn, lower than EGP16.4bn in 1Q24/25.
Egypt's passenger car (PC) sales increased c7% y-o-y to 8,507 cars in November compared to a c7% y-o-y increase to 7,428 cars in the previous month, according to a report by the Automotive Marketing Information Council (AMIC). Bus sales, however, decreased by c20% y-o-y to 746 buses in November, compared to a c25% y-o-y decrease to 760 buses in the previous month, according to the report. (AMIC)
Our Comment: Local PCs sales saw a slight y-o-y increase, following a modest rise in the previous month, with the local market likely shifting focus toward CKD (completely knocked down) units. Meanwhile, bus sales dropped for the second consecutive month, after three months of growth (July–September). Initial numbers from the AMIC report suggest that total GB Corp (GBCO EY) car sales in November surged c56% y-o-y, marking its eighth consecutive month of growth and implying that GB Corp's total market share increased by 11.7 pp y-o-y to 37.4% in November, with the company starting to localize more components and import more CBU (completely built-up) units, as banks are easing USD restrictions. Hyundai sales rose c62% y-o-y and c2% m-o-m to 1,463 cars in November, marking its seventeenth consecutive y-o-y increase. Chery sales also increased by c68% y-o-y and c4% m-o-m to 1,540 cars in November. The company sold 88 cars of its Haval brand in November, slightly down from 90 cars in the previous month and 89 cars a year earlier. As for its Changan brand, it sold 87 cars in November, down from 129 cars in October and 126 cars in November 2023. Additionally, GB Corp sold only one Mazda car in November, after a prolonged period without sales, compared to three cars in October.
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Commercial International Bank (COMI EY): The bank’s 4Q23 consolidated net income hiked c83% y-o-y, yet dropped c13% q-o-q to EGP7.23bn, according to its audited financials. The bank is proposing a DPS of EGP0.55 for FY23, pending shareholder approval at an upcoming AGM. (Bank data)
Our Comment: The bank’s net income came lower than our estimate of EGP8.63bn by c16% yet higher than the Bloomberg consensus of EGP6.83bn by c6%. We attribute this deviation to charging a higher-than-forecasted loan loss provisions of EGP3.05bn, an increase of c2.4x y-o-y and c89x q-o-q, exceeding our estimate of EGP223m by c14x. Net interest income grew c65% y-o-y and c10% q-o-q to EGP15.2bn, in line with our estimates of EGP14.9bn (+1.8%), with c32% of it generated from interest income from treasuries. Non-interest income surged c2.6x y-o-y and c38x q-o-q to EGP1.55bn, exceeding our estimate by 5.06x on a hike in services fees, FX gains, dividend income, financial investments, and lower-than-forecasted losses from other operating items. Loan loss provisions hiked c2.4x y-o-y and c89x q-o-q to EGP3.05bn, coming c14x higher than our estimate of EGP223m, as the bank’s management tended to be conservative given the challenges persistent since FY22 on the macroeconomic outlook. The effective tax rate retreated by 8.7 pp y-o-y to 27.8%, given the lower allocation to treasuries. The bank’s ROE increased 13.5 pp y-o-y to 36.4%, yet came 10.4 pp lower than our estimate and 9.47 pp lower q-o-q due to the sizeable balance sheet growth and higher-than-expected loan loss provisions. Regarding the bank’s balance sheet, its net loans grew c21% y-o-y to EGP235bn, in line with our estimates (-0.9%), customer deposits increased by c27% y-o-y to EGP675bn, c5% lower than our estimate of EGP709bn, and financial investments increased c13% y-o-y to EGP270bn, beating our estimate of EGP231bn by c17%. CIB demonstrated resilient CAR of 26.2%, up from 22.7% a year earlier, and improved asset quality with NPLs dropping to 3.59% from 4.86% a year earlier and coverage ratio increasing to 309% from 229% a year earlier. The proposed DPS of EGP0.55/share for FY23 offers a net-of-tax dividend yield of 0.66%, over yesterday’s last price of EGP79.43/share.
Egypt’s Ministry of Petroleum raised gasoline and diesel prices in the local market by c14–17%, EGP3.00/liter, effective 10 March, due to the regional geopolitical events and their impact on global oil price and shipping and insurance costs, it announced. The ministry raised diesel price by c17% to EGP20.50/liter from EGP17.50/liter, the price of 80-octane gasoline by c17% to EGP20.75/liter from EGP17.75/liter, the price of 92-octane gasoline by c16% to EGP22.25/liter from EGP19.25/liter, and the price of 95-octane gasoline by c14% to EGP24.00/liter from EGP21.00/liter. The ministry also raised the price of the 12.5 kg liquified petroleum gas (LPG) cylinders by c22% to EGP275/cylinder from EGP225/cylinder, the price of the 25 kg LPG cylinder by c22% to EGP550/cylinder from EGP450/cylinder, and the price of compressed natural gas (CNG) for cars by c30% to EGP13.0/cubic meter from EGP10.0/cubic meter. (Ministry of Petroleum)
Our comment: Prior to the regional war, the Egyptian government was planning to delay any increase in diesel and Octane gasoline prices to October 2026; however, the recent regional war and its economic implications forced it to increase their prices earlier than planned to avoid a huge increase in the FY25/26 petroleum products subsidy bill, budgeted at EGP75bn, and a widening in the budget deficit, budgeted at 7.3% of GDP. The energy price revision is higher than the October 2025 revision of c11–13%, as at the time the oil price ranged USD65–67/bbl, and the exchange rate ranged EGP47.2–47.8/USD. Also, the FY25/26 budget was based on an oil price of USD75/bbl and an exchange rate of EGP50/USD, both below the current oil price of USD93.6/bbl and the exchange rate of EGP52.8/USD, which justifies the government’s decision. Moreover, according to previous officials’ estimates, every USD1.00/bbl increase in oil price over the USD75/bbl budgeted oil price for FY25/26 increases Egypt's budget expenses by EGP4.0bn–4.5bn annually, suggesting that if the government had not increased prices and the higher oil price persisted for the remainder of the fiscal year, the bill would have doubled. However, the increase in energy prices could accelerate monthly inflation in March and April, potentially disrupting Egypt’s easing cycle. Nonetheless, the favorable base effect of inflation would help keep annual inflation within a reasonable range.