SWVL eyes EGX IPO; targets $15 billion valuation🚀

Last Week’s Market Summary

EGX 30: 10,885 (+1.5%) weekly change, YTD (+0.36%) 

Traded Value 1W Avg: EGP 462M, (+2.7%) 90D Avg. 

EGP:USD: 15.70 (0.0%) weekly change

Local Pick-up

SWVL eyes EGX IPO; targets $15 billion valuation💪

After making history two weeks ago by becoming the highest valued African unicorn to list on any U.S. exchange at debut, Egypt-born ride-sharing app SWVL is considering an IPO on the EGX in 2022-2023. Company CEO Mostafa Kandil said the company aims to reach a $15 billion valuation next year. That’s 10x its U.S.-listing valuation!

SWVL considers the Egyptian market to play a key role in its expansion plans. Currently operating in 10 cities in 6 countries, SWVL said it will use its listing funds to expand to 30 cities across 20 countries by 2025, including southern and western Europe, Brazil, Mexico, Malaysia, and Indonesia.

By 2025, the company expects to operate 2 mn trips a day compared to over 3 mn trips a month at present. “SWVL will turn profitable in 2024 after investments and operating costs of about $13 million. We then aim to earn more than $170 million in 2025,” SWVL CFO Youssef Salem told Reuters. Salem said SWVL is considering an IPO on the EGX after it finalizes its U.S listing but did not give further details.

Is a record-breaking IPO on the horizon?🙏

During the inauguration of several projects in Badr City on Saturday, August 14, 2021, President Abdel Fattah El Sisi revealed that plans for a record-breaking IPO are in the making. Shares of the Administrative Capital for Urban Development (ACUD), the company responsible for the management of the New Administrative Capital, are to be listed on the EGX at the earliest possible date through the ACUD fund, according to El Sisi.

President El Sisi insisted that ACUD has financed its projects completely through its own funds, and not a pound will be paid by the government. According to El Sisi, ACUD could report EGP 100 billion in liquid assets, and around EGP 3-4 trillion in total assets within the next couple of years!

A listing of this size has the potential to more than double the market value of the EGX. Financial analysts said that the listing of ACUD will attract foreign investors we have not seen for three years in the market. The Egyptian market has not seen such a large offering for a long time, something the market has been in dire need of to greatly refresh the EGX, which will reflect positively on the economy.

Fawry seeks to expand its digital lending services📲

Fawry CEO Ashraf Sabry revealed plans to expand the company’s digital lending services based on the successes it achieved during the last period, with the goal to save time and effort for small business owners.

Sabry stressed that the recent decisions of the Central Bank regarding the availability of digital savings and borrowing services would activate the borrowing system. This decision is even more significant since Central Bank statistics show there are about 2 million people who use credit cards as a borrowing method in Egypt.

Sabry also pointed out that the market faces a problem of reaching customers and providing an easy mechanism for borrowing or saving. Since current saving mechanisms require routine branch visits, customers tend to borrow from relatives in order to save effort, which explains the high percentage of borrowing from outside the formal sector in Egypt.

More Headlines📰

  • ADIB Egypt approves Tycoon’s offer to acquire Alexandria National Investment
  • GB Auto completes sale of a stake in Dutch firm
  • Egypt’s unemployment rate decreases to 7.3% in Q2
  • Egyptian billionaire Naguib Sawiris advises investing a quarter of a portfolio in gold
  • US stocks rise Tuesday after passing the infrastructure package to support the economy

Global Pick-up

Disney records blowout earnings🏰

The multinational conglomerate crushed analysts’ earnings per share (EPS) expectations, reporting EPS of 80 cents versus expected 55 cents. Although Disney’s theme parks turned profitable for the first quarter since the pandemic began, Disney+ was the company’s main profitability driver this time around.

Disney has a total of 174 million subscribers across multiple streaming services as of Q3-2021. Hulu, ESPN+, & of course Disney+ are some (not all) of the streaming services in which Disney distributes its movies, a HUGE competitive advantage over competitors like Netflix, who only distribute its movies on, well, Netflix.

Disney continues to experiment with viewership analytics and film release methods following the pandemic. The company will release “Shang-Chi” in theaters exclusively for 45 days before adding it to its streaming service. During Thursday’s earnings call, CEO Bob Chapek said that “the prospect of being able to take a Marvel title to the service after going theatrical with 45 days will be yet another data point to inform our actions going forward on our titles.”

Stock of the Week – Cairo for Investment & Real Estate Development (CIRA)

Cairo for Investment and Real Estate Development (CIRA) is the largest integrated provider of educational services in the Egyptian private sector. CIRA operates 21 schools with 26.5k students and owns Badr University in Cairo (BUC) with a total student body of 10.3k in 13 different faculties. CIRA scored 3.90/5.00 in our August 2021 Factor Investing Picks, giving it the second-highest score after last week’s “stock of the week”, the Export Development Bank (EXPA).

Word of the week – Earnings Per Share (EPS)

EPS is a financial ratio, calculated by dividing net earnings available to common shareholders by the average outstanding shares over a certain period of time. The EPS ratio indicates a company’s ability to produce net profits for common shareholders. One should compare EPS with the EPS of other companies in the industry. Given an equal amount of shares outstanding, higher EPS indicates better profitability.

Earnings Call:

  • Export Development Bank of Egypt (EXPA) posted Q4-2021 net profits of EGP 157.9 million, a 28.26% YoY increase
  • Ibn Sina Pharmaceuticals (ISPH) records H1-2021 net profit EGP 104.75 million, a 17.72% YoY increase
  • Abu Dhabi Islamic Bank Egypt (ADIB) posted EGP 680.15 million net profits for the first half of 2021, a 28% YoY increase
  • GlaxoSmithKline (BIOC) posted consolidated net profits of EGP 20.65 million in H1-2021, an 82.19% YoY decrease