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Securities & Investment

Category: HC News

HC expects the MPC to hold interest rates at its 20 August meeting.

Posted on by Marwa Nakhla

Egypt’s external position is still relatively resilient, in our view, despite intermittent regional geopolitical turbulence, as evidenced by the following: (1) Egyptian banks’ net foreign assets (NFA) widened significantly by USD5.04bn m-o-m to USD27.995bn in June from USD22.957bn in May, due to a major increase of USD4.81bn m-o-m in total foreign assets for banks and CBE versus a decrease of USD1.06bn in banks’ liabilities and a moderate increase in the CBE’s liabilities of USD826m m-o-m, (2) net international reserves (NIR) and the deposits not included in official reserves increased by a total of USD2.72bn m-o-m to USD56.29bn and USD12.54bn in July, respectively, and (3) Egypt 1-year CDs are fluctuating on a downward trend, recording 190 bps currently, down from its peak at 326 bps at the end of March. The flexibility of Egypt’s exchange rate acted as a shock absorber during the regional conflict, with the EGP depreciating against the USD by c13% to EGP54.7/USD in the first week of April from the year’s beginning, and then appreciating by c9% to EGP50.4/USD currently, minimizing its y-t-d depreciation to c5%. Domestically, there are some challenges caused by the war, specifically Egypt’s higher energy costs, pressuring the government’s fiscal consolidation targets. In this regard, at the beginning of the current month, the Egyptian government kept the electricity tariff for the first household consumption bracket unchanged and raised it by c12% for the remaining residential brackets, increasing inflationary pressures in 3Q26; we estimate inflation to average c16% in 3Q26 from c15% in 2Q26. Moving to the treasury yields, the 91-day T-bills yield since 19 May 2026 has become lower than the 364-day T-bills yield, reverting to a normal curve, and the negative yield curve between the shorter maturities (182-day and 273-day) and the longer maturity, the 364-day T-bills, is somehow narrowing, in preparation to revert to normal levels pending the resolution of the geopolitical conflict. As for the yields of the 182-day, 273-day, and 364-day T-bills, they increased by more than 200 bps since the first week of March, after the outbreak of the regional war. Nevertheless, the latest 12M T-bills yield of 25.07% implied a positive real interest rate of 6.47% using our updated 12M inflation estimate of c14.8% (after deducting a 15% tax rate for European and U.S. investors), suggesting that Egypt’s carry trade remains attractive. Given accelerated inflationary pressures, we expect the MPC to keep interest rates unchanged at its 20 August meeting.

 

 

HC: Juhayna Food Industries, Gradual normalization

Posted on by Marwa Nakhla

  • We forecast JUFO to deliver a c18% revenue and c26% EBITDA 2026–30e CAGR, supported by higher prices and volumes

  • A gradual margin normalization will pave the way for higher dividend distribution, despite planned expansions, in our view

In a recent report, HC Brokerage shed light on the consumer sector through an evaluation of Juhayna Food Industries’ performance. They forecast revenue growth supported by both price and volume increases.

Pakinam El-Etriby, Consumers Analyst at HC commented that: “JUFO’s operations normalized in 2025, after a strong 2024 led by concentrates, with this trend expected to continue in 2026: In 2024, JUFO delivered a strong y-o-y improvement in operational performance, with gross profit margin (GPM) expanding to c30% from c23% in 2023 as concentrate revenues grew by around threefold y-o-y to EGP3.15bn, contributing c13% of total revenues, up from c7% in 2023 and c2% in 2022. The surge was supported by JUFO capitalizing on the 2024 orange tree crisis, along with favorable factors, including the Ras El Hekma investment deal and macro reforms, that improved USD availability at the official rate. In 2025, however, GPM started normalizing to c25%, driven by the resolution of the Brazil supply disruption, which weighed on concentrate revenues, declining by c56% y-o-y to EGP1.40bn and contributing only c5% of total revenues. We forecast concentrate revenues to decline by a further c27% to EGP1.03bn in 2026, representing c3% of total revenues, broadly in line with pre-2023 levels, and forecast concentrates to average c3% of revenue over our 2026–30e forecast horizon. We see that concentrates have already normalized, accounting for  c40–45% of total exports as of 1Q26, down from c85% of exports in 2024, and representing c2% of total revenues, in line with 2021–2022 levels.”

“We forecast JUFO’s revenues to grow at a 2026–30e CAGR of c18%, driven by higher average selling prices and volume growth: For 2026e, we expect revenues to increase by c21% y-o-y to EGP36.2bn (c1% above our prior estimate), supported by price and volume growth. We also assume JUFO’s core segments (dairy, yogurt, and juice) to grow by c23% y-o-y. Meanwhile, we expect the concentrates segment to normalize to pre-crisis levels, reaching EGP1.03bn (down c27% y-o-y and contributing c3% of total revenues). Over 2027–30e, we estimate revenues to grow at a CAGR of c18%, also supported by higher prices and volumes. In 2026e, we expect GPM to remain broadly stable at c25% (lower than our prior estimate of c32% assuming higher concentrates), as we believe that JUFO is more likely to pass on cost increases to consumers to preserve margins, especially due to global cost pressures – particularly due to higher shipping and insurance costs– resulting from ongoing geopolitical tensions. Although skimmed milk powder (SMP)’s price increased c7% y-o-y in 1Q26 to USD2,946/ton, and further rose by c23% y-o-y to USD3,459/ton in 2Q26, likely impacted by the recent geopolitical tensions, JUFO is unlikely to be significantly impacted as it secured most of its SMP needs at favorable prices at the beginning of the year, according to management. Over 2027–30e, we estimate GPM to average c28%, gradually increasing to 29.9% by the end of our forecast period. We expect EBIT to stand at EGP4.93bn in 2026e (below our previous estimate of EGP6.94bn), implying an EBIT margin of c14% (below our prior estimate of c19%). Over 2027–30e, we forecast EBIT margin to average c16%, reaching c18% by the end of our forecast period. We also expect SG&A/sales to average c12% over 2026–30e and forecast total export rebates of EGP848m, equivalent to c4% of total exports. We expect net debt to increase to EGP6.46bn as of 4Q26e from EGP5.96bn in 4Q25 (implying a drop in net debt-to-equity to 0.62x in 4Q26e from 0.74x in 4Q25), then rise further to EGP6.76bn by 2028 in line with the company’s expansionary plans, and decline thereafter. Consequently, we expect the 2026e net profit margin (NPM) to increase by only 0.10 pp to c8% (lower than our previous estimate of c13%), primarily on lower margins, gradually increasing to c13% by 2030e.” Consumers Analyst concluded.

 About HC Brokerage

HC Brokerage is an affiliate of HC Securities & Investment– a full-fledged investment bank providing investment banking, asset management, securities brokerage, research, and custody services. HC Brokerage is an Egyptian registered company and member of Egypt’s Financial Regulatory Authority (FRA), and its registered address is 34 Gezirat Al-Arab St., Mohandessin, Giza, Egypt, Dokki 12311

For further information, please contact: Research@hc-si.com

HC expects the CBE to keep the policy rates unchanged

Posted on by Marwa Nakhla

  • In light of Egypt’s macro economy developments and the geopolitical conditions, the Research Dept. at HC Securities & Investment expects the CBE to keep the policy rates unchanged at its upcoming July 9, 2026 meeting.

Financials analyst and economist at HC, Heba Monir commented: “The regional geopolitical turbulence from the US-Israeli war against Iran, which began on 28 February, is still affecting the global economy and Egypt. Egypt’s stable external position and flexible exchange rate have managed to absorb the conflict’s implications relatively well until now, with the following; (1) Net international reserves (NIR) increased by a total of USD1.68bn y-t-d to USD53.1bn in May, while deposits not included in the official reserves increased by a total of USD647m y-t-d to USD11.0bn, after these deposits had dropped by a total of USD2.90bn from February to April and started recovering in May, (2) Egyptian banks’ net foreign assets (NFA) decreased moderately by USD6.60bn to USD22.9bn in April, from a peak of USD29.5bn in January over the past five years. The NFA figure recovered by USD1.57bn m-o-m in April, after dropping by a total of USD8.18bn in February and March, backed by narrower net foreign treasury outflows. Egypt recorded net foreign inflows of USD4.55bn in 6M26, compared to USD1.34bn only in 6M25. In parallel, the EGP appreciated against the USD by c11% to EGP49.1/USD from EGP54.7/USD in the first week of April, minimizing its y-t-d depreciation to only c3%, (3) Egypt’s USD sources showing stability and improving with worker remittances increasing c38% y-o-y to USD17bn in 4M26, and Suez Canal revenues increasing by c27% y-o-y to USD1.56bn in 4M26. Domestically, we expect headline inflation to move in a sideway direction, after it decelerated to 14.6% y-o-y and 1.6% m-o-m in May from a high of 15.2% y-o-y and 3.2% m-o-m in March, the highest in the past 14 months, affected by the war’s implications on energy prices and FX depreciation. In light of this, the latest 12M T-bills yield of 24.7% implied a positive real interest rate of 6.78% using our updated 12M inflation estimate of c14% (after deducting a 15% tax rate for European and U.S. investors). Therefore, given the geopolitical risks and their implications for Egypt’s USD resources, our downward revision of inflation estimates, the need to maintain the carry trade attractiveness, and the budget deficit targets, we expect the MPC to keep interest rates unchanged at its 9 July meeting.”

It is worth mentioning that, at its  21 May meeting, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) maintained the benchmark overnight deposit and lending rates at 19.0% and 20.0%, respectively, reversing a total of 825 bps since 2025 of a total 1,900 bps rate hikes since the CBE started its tightening policy in 2022. The MPC also reduced the required reserve ratio (RRR) for commercial banks by 200 bps to 16.0% from 18.0% in February 2026. Egypt’s annual headline inflation decelerated to 14.6% y-o-y in May from 14.9% y-o-y in April, according to the Central Agency for Public Mobilization and Statistics (CAPMAS) data. Monthly prices increased by 1.6% m-o-m in May compared to 1.1% m-o-m in April. On the global front, on 17 June, the U.S. Federal Reserve maintained the target range for the federal funds rate at 3.50-3.75% with total cuts of 175 bps since September 2024, after it hiked rates by 525 bps since it started tightening policy in 2022, while the European Central Bank (ECB) raised the key ECB interest rates for the deposit facility, the main refinancing operations and the marginal lending facility by 25 bps to 2.25%, 2.40% and 2.65%, respectively, with total net cuts of 175 bps since it started cutting rates in June 2024 after it hiked rates by 450 bps since it started its tightening policy in 2022. Given Egypt’s current economic situation, we present below our expectations for the possible outcome of the 9 July MPC meeting..

 

About HC Securities & Investment

 

HC Securities & Investment is a leading investment bank in Egypt and the MENA region. Since its inception in 1996, HC has utilized its relationship-driven insights, local and regional market knowledge, and industry-specific expertise and strong execution capabilities to provide its clients with a wide range of services in investment banking, asset management, securities brokerage, research, custody and online trading through its offices in Egypt and the UAE (DIFC). HC Investment Banking has an outstanding track record of advising leading corporates in Egypt and the MENA region on M&A, capital market, and financing transactions in excess of USD6.6bn. HC Asset Management now manages 7 mutual funds for commercial banks and portfolios for institutions and sovereign wealth funds with assets under management in excess of EGP5.6bn. HC Brokerage is ranked among the top brokers in Egypt and provides a wide array of services, including research and online trading to institutional and retail clients.

 

HC Brokerage and Avior Capital Markets hold their sixth Egypt Virtual Conference

Posted on by Marwa Nakhla

  • Over 4 days, 8-11 June, HC Brokerage and Avior Capital Markets hold their sixth Egypt Virtual Conference. “HC– Avior EGYPT VIRTUAL CONFERENCE June 2026”

1 June 2026

The HC-Avior Egypt Virtual Conference starts on 8 June and runs until 11 June, offering financial institutions from the US, UK, Europe, South Africa, and Egypt insights into compelling investment opportunities within Egypt’s leading listed companies across multiple sectors. Investors will e-meet representatives of some 28 listed companies on the Egyptian Exchange (EGX) through group and one-on-one meetings.

Hassan Choucri, Managing Director of HC Brokerage, said: “As global markets continue to adapt to economic shifts, geopolitical developments, and evolving investor priorities, we are proud to host this initiative for the sixth consecutive year in partnership with Avior. The conference provides a unique platform that connects leading companies with regional and international investors seeking growth opportunities in high-potential markets. It also reinforces Egypt’s position as a compelling investment destination and highlights the depth, resilience, and long-term opportunities offered by the Egyptian capital market.”

For Further details on Avior Capital Markets, please visit: https://avior.co.za/

For Further details on HC Brokerage, please visit: https://www.hc-si.com/

HC expects the CBE to keep the policy rates unchanged

Posted on by Marwa Nakhla

  • In light of Egypt’s macro economy developments and the geopolitical conditions, the Research Dept. at HC Securities & Investment expects the CBE to keep the policy rates unchanged at its upcoming May 21, 2026 meeting.

Financials analyst and economist at HC, Heba Monir commented: “The regional geopolitical turbulence from the US-Israeli war against Iran, which began on 28 February, is still affecting the global economy as and Egypt. Egypt’s improved external position and flexible exchange rate managed to relatively absorb the conflict’s implications until now. Despite Egypt recording net foreign outflows of USD3.2bn from its treasury secondary market from 19 February until the end of April, its net international reserves (NIR) increased by a total of USD263m in March and April to a record USD53.0bn in April, while deposits not included in the official reserves declining by a total of USD2.60bn in March and April to USD10.8bn; however, Egyptian banks’ net foreign assets (NFA) dropped significantly by USD8.18bn during February and March, to USD21.3bn by the end of March, mainly due to the net foreign outflows from Egypt’s treasury market, leading to a c10% y-t-d EGP devaluation to EGP52.9/USD, as of 15 May, showing exchange rate flexibility. Domestically, the government raised diesel, LPG cylinders and octane gasoline prices in March by an average of c19% on 10 March and the natural gas for the industrial sector (cement, iron, steel, non-nitrogen fertilisers, and others) on 3 May, due to mainly a c51% surge in oil prices to USD109/bbl, in addition to a c58% increase in natural gas prices (Dutch TTF – Front month futures) to USD17.1/MMBtu and c5% increase in wheat prices to USD244/ton, which pressure the FX liquidity and will result in inflationary pressures, in our view. To prevent dollarization and tighten money supply, public banks increased the interest rate on newly issued three-year certificates of deposit (CDs) by around 1.25% to an average of 17.25%, prompting private banks to follow suit and issue similar products with a higher minimum amount per CD; which should also help limit inflation acceleration and support pensioners who rely on high-yielding CDs. Regarding the treasury yield, the CBE slightly reversed the direction of interest rates on treasuries to keep the carry trade attractive, where the latest 12M T-bills auction of 24.4% implied a positive real interest rate of 4.57% using our 12M inflation estimate of c16% (after deducting a 15% tax rate for European and U.S. investors). Therefore, given the geopolitical risks and their implications for Egypt’s USD resources, our upward revision of inflation estimates, the need to maintain the carry trade attractiveness, and the budget deficit targets, we expect the MPC to keep interest rates unchanged at its 21 May meeting.”

It is worth mentioning that, at its 2 April meeting, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) maintained the benchmark overnight deposit and lending rates at 20.0% and 21.0%, respectively, reversing a total of 825 bps since 2025 of a total 1,900 bps rate hikes since the CBE started its tightening policy in 2022. The MPC also reduced the required reserve ratio (RRR) for commercial banks by 200 bps to 16.0% from 18.0% in February 2026. Egypt’s annual headline inflation decelerated to 14.9% y-o-y in April from 15.2% y-o-y in March, according to the Central Agency for Public Mobilization and Statistics (CAPMAS) data. Monthly prices increased by 1.1% m-o-m in April, compared to an 3.2% m-o-m increase in March. On the global front, on 26 April, the U.S. Federal Reserve maintained the target range for the federal funds rate at 3.50-3.75% with total cuts of 175 bps since September 2024, after it hiked rates by 525 bps since it started tightening policy in 2022, and on 30 April, the European Central Bank (ECB) maintained the key ECB interest rates for the deposit facility, the main refinancing operations and the marginal lending facility at 2.00%, 2.15% and 2.40%, respectively, bringing total cuts to 200 bps, since it started cutting rates in June 2024 after it hiked rates by 450 bps since it started its tightening policy in 2022.

About HC Securities & Investment

 HC Securities & Investment is a leading investment bank in Egypt and the MENA region. Since its inception in 1996, HC has utilized its relationship-driven insights, local and regional market knowledge, and industry-specific expertise and strong execution capabilities to provide its clients with a wide range of services in investment banking, asset management, securities brokerage, research, custody and online trading through its offices in Egypt and the UAE (DIFC). HC Investment Banking has an outstanding track record of advising leading corporates in Egypt and the MENA region on M&A, capital market, and financing transactions in excess of USD6.6bn. HC Asset Management now manages 7 mutual funds for commercial banks and portfolios for institutions and sovereign wealth funds with assets under management in excess of EGP5.6bn. HC Brokerage is ranked among the top brokers in Egypt and provides a wide array of services, including research and online trading to institutional and retail clients.

 

HC forecasts CIB’s net income to increase

Posted on by Marwa Nakhla

Commercial International Bank

  • Although Egypt’s external position could be affected by the regional conflict, economic reforms and mitigation efforts cushion the impact
  • We expect the regional war to delay monetary easing, which supports banking sector profitability in 2026; CIB stands out, in our view  

  • HC Brokerage research department released their evaluation of CIB stock expecting Egypt’s banking sector profitability to benefit from a delayed easing cycle and a lower RRR

 

Economist and financial analyst at HC, Heba Monir commented: “Egypt’s economy remains resilient amid geopolitical tensions; however, the easing cycle would be delayed, in our view: Egypt’s external position showed resilience at the beginning of the year prior to the outbreak of the US-Israeli war against Iran, as demonstrated by net international reserves exceeding a record USD52bn by the end of February, and the banking sector’s net foreign asset (NFA) position surpassing USD29bn by the end of January. However, the war triggered net foreign outflows of around USD7.09bn from Egypt’s T-bill secondary market since 19 February to date, leading to a c11% depreciation of the EGP against the USD to EGP53.6/USD, showing exchange rate flexibility. The war also led to a c43% surge in oil prices to USD102/bbl, which pushed the government to increase diesel, LPG cylinders, and octane gasoline domestic prices by an average of c19% to keep the budget deficit close to its target of 7.3% of GDP since the FY25/26 budgeted oil price was USD75/bbl and the budgeted exchange rate was EGP50/USD. Therefore, we upwardly revised our estimate for the annual headline inflation in March to 14.3% y-o-y and 2.4% m-o-m, and to an average of c14–15% y-o-y over 2026 from c10–11% y-o-y before the outbreak of the conflict, which could delay the easing cycle in our view. Having said that, we believe that the Egyptian economy is in a stronger position than at the beginning of the Russia-Ukraine war in February 2022, which triggered USD21bn of net foreign treasury outflows, as its external situation is now stronger with an NFA position of USD29.5bn as of January 2026 versus USD0.62bn in January 2022 and Egypt now has a flexible exchange rate with no FX parallel market, unlike the situation in 2022. However, the implications for Egypt would depend on the war’s duration, as its USD sources, including tourism, the Suez Canal, and worker remittances, could be significantly affected, especially remittances from Egyptian expats working in the GCC countries. We based our view on an assumption that the war would end before the end of 2Q26.”

 

“We expect Egypt’s banking sector profitability to benefit from a delayed easing cycle and a lower RRR: The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) began its first meeting in the year with a 100 bps rate cut, bringing the total policy rate cuts to 825 bps since the beginning of 2025 to date, compared to total hikes of 1,900 bps since the CBE began its tightening policy in 2022. The CBE also reduced the required reserve ratio (RRR) by 200 bps to 16% on 12 February, to stimulate liquidity and lending activity in the banking sector. Given resilient banking parameters and the banking sector’s total assets growing by c24% y-o-y to EGP24.0trn as of June 2025, representing c132% of GDP in FY24/25, we expect this growth to continue. Following the outbreak of the war, we updated our inflation estimates and revisited our expectations for rate cuts for the rest of 2026, to 200 bps at best, pending a resolution to the regional conflict by 2Q26. Over the past twelve months, large banks lowered the interest rates on their three-year certificates of deposit (CDs) to 16–17%, from more than 20% after the March 2024 EGP devaluation, which we still see as attractive, as it translates into a positive real interest rate of 4-5%, based on our calculations. Accordingly, we forecast customer deposits to grow by c12% y-o-y to EGP17.9trn by December 2026, versus an estimated increase by c17% y-o-y for December 2025. Over the past five years, private sector loans to total market loans dropped to c43% in June 2025, from c62% in June 2020, amid successive global and domestic economic challenges. For the time being, we do not expect this ratio to improve before 2Q27, as the conflict is delaying Egypt’s monetary easing. In 2025, working capital loans showed healthy growth, which we expect to continue in 2026, also impacted by the c11% EGP devaluation y-t-d. Hence, we expect the total sector’s loans to increase by c17% y-o-y to EGP11.6trn by December 2026, versus an estimated increase of c19% y-o-y for December 2025. We forecast the loans-to-deposits ratio to increase to c65% in December 2026 from c62% in June 2025. As for the sector’s profitability, we expect the average NIM to decrease to 5.5% from 5.8% in June 2025, given relatively lower y-o-y treasury yields, despite their recent post-war increase. Similarly, we expect the sector’s ROA and ROE to decrease to an average of 2.2% and 33%, respectively, from 2.6% and 39.0% in June 2025. Regarding the banking sector’s asset quality, we believe banks are well-provisioned; however, we expect a 100–200 bps decrease in the capital adequacy ratio (CAR) due to the EGP devaluation.” Heba Monir added.

 

HC’s economist concluded: “We forecast CIB’s net income to grow at a 5-year CAGR of c12%: We forecast CIB’s net income to increase moderately at a CAGR of c12% from 2025–30e, compared to the 5-year historical CAGR of c52% from 2019–24 (inflated by the EGP devaluation), driven by the bank’s ambitious investment strategy and expansion through launching a digital bank and its commercial banking operations. In this regard, we estimate the bank’s deposit market share to increase to a 5-year average of 7.57% from 2026–30e, up from 6.58% from 2020–24, driven by more CASA accounts, which currently represent more than c60% of its deposits. Similarly, we forecast CIB to expand its loan market share to a 5-year average 6.734% from 2026–30e, from 5.19% from 2020–24. Thus, we forecast net interest income to increase at a 5-year CAGR of c14% from 2025–30e, with an increase in the 5-year average NIM to 8.45% from 2026–30e from 7.55% from 2021–25, driven by the forecasted pickup in CAPEX lending by 2H27, and translating into a 5-year average ROE of 34.1% from 2026–30e compared to an average of 33.9% from 2021–25. We expect CIB’s asset quality to remain strong with a 5-year average NPLs of 1.35% of gross loans over 2026–30e, down from the 5-year historical average of 3.70% and a 5-year average coverage ratio of 313% over 2026–30e, higher than the 5-year historical average of 289%. For 2026e, we forecast the bank to book EGP2.09bn in provisions, following the recalibration of its Expected Credit Loss (ECL) model, implying a 5-year average of 0.2% of gross loans over 2026–30e, lower than its 5-year historical average of 0.7%.”

 

About HC Brokerage

HC Brokerage is an affiliate of HC Securities & Investment– a full-fledged investment bank providing investment banking, asset management, securities brokerage, research, and custody services. HC Brokerage is an Egyptian registered company and member of Egypt’s Financial Regulatory Authority (FRA), and its registered address is 34 Gezirat Al-Arab St., Mohandessin, Giza, Egypt, Dokki 12311

 

 

HC expects the MPC to keep interest rates unchanged

Posted on by Marwa Nakhla

  • In light of Egypt’s macro economy developments and the geopolitical conditions, the Research Dept. at HC Securities & Investment expects the CBE to keep the policy rates unchanged at its upcoming April 2nd, 2026 meeting.

The regional geopolitical turbulence from the US-Israeli war against Iran, which started on 28 February, is affecting the world economy as well as Egypt. However, Egypt’s external position showed resilient parameters before the outbreak of the war, which relatively cushioned it against the external shocks, including: (1) net international reserves (NIR) increasing c11% y-o-y to a record USD52.7bn in February, and deposits not included in the official reserves hiking 1.26x y-o-y to USD13.4bn; and (2) Egyptian banks’ net foreign assets (NFA) position widening remarkably by c16% m-o-m and 3.39x y-o-y to USD29.5bn in January; Nonetheless, the war triggered net foreign outflows of around USD4bn from Egypt’s T-bill secondary market since 1 March to date, leading to a c9% depreciation of the EGP against the USD since 28 February to EGP52.6/USD, showing exchange rate flexibility, and it also led to a c48% surge in oil prices to USD107/bbl, which prompted the government to raise domestic diesel, LPG cylinders and octane gasoline prices by an average of c19% on 10 March, further increasing inflationary pressures.

Accordingly, we upwardly revised our estimate for the annual headline inflation for March to 14.3% y-o-y and 2.4% m-o-m, and to an average of c13-14% y-o-y over 2026 from c10-11% y-o-y before the outbreak of the conflict, which could delay the easing cycle in our view. Regarding the treasury yield, the CBE slightly reversed the direction of interest rates on treasuries to keep the carry trade attractive, where the latest 12M T-bills auction of 23.4% implied a positive real interest rate of 6.94% using our 12M inflation estimate of c13% (after deducting a 15% tax rate for European and U.S. investors). Therefore, given the geopolitical risks and their implications for Egypt’s USD resources, our updated inflation estimates, the need to maintain the carry trade attractiveness, and the budget deficit targets, we expect the MPC to keep interest rates unchanged at its 2 April meeting.

HC expects the MPC to cut the policy rates by 150-200 bps at its upcoming meeting

Posted on by Marwa Nakhla

  • In light of Egypt’s macro economy developments and the geopolitical conditions, the Research Dept. at HC Securities & Investment expects the CBE to cut the policy rates by 150-200 bps at its upcoming February 12, 2026 meeting.

Financials analyst and economist at HC, Heba Monir commented: “ Egypt’s external position is showing resilience with: (1) net international reserves (NIR) increasing c2% m-o-m to a record USD52.6bn in January, and deposits not included in the official reserves also hiking significantly by c33% m-o-m (USD3.40bn) in the same month to USD13.7bn; (2) Egyptian banks’ net foreign assets (NFA) position widening by c8% m-o-m to USD25.5bn in December; (3) Egypt’s USD sources showing stability and improving with worker remittances increasing c13% y-t-d while decreasing c3% m-o-m in November to USD3.6bn, which still reflecting confidence in the FX liquidity in Egypt, Suez Canal revenues increasing by c18% y-o-y to USD365m in January 2026 and the tourism sector reporting record numbers in 2025; (3) Egypt’s current account deficit narrowing by c45% y-o-y to USD3.24bn in 1Q25/26; and (4) Egypt’s 1-year CDS declining remarkably to 176 bps from 336 bps a year earlier. All these factors had helped Egypt’s exchange rate to appreciate by c8% y-o-y against the USD. Domestically, the PMI index fell to 49.8 in January from 50.2 in December, and is still considered positive even though it fell below the 50 mark, as the PMI reading reflected that cost pressures remained weak and even softened in January, with total input costs rising at the slowest pace in ten months, which enabled firms to cut their own charges for the first time in five-and-a-half years. We expect consumer prices to cool to an average of 9.50-10% throughout 2026 and estimate January inflation to decelerate to 11.4% y-o-y, driven by a favorable base-year effect, in line with the CBE’s target range of 7% (+/- 2%) by 4Q26. As for the attractiveness of Egypt’s carry trade, the latest 12M T-bills auction of 23.5% implies a positive real interest rate of 8.99% using our 12M inflation estimate of c11% (after deducting a 15% tax rate for European and U.S. investors), suggesting that Egypt’s Carry Trade remains attractive. Also, the recent drop in Egypt’s CDS would lower the required yield on treasuries by foreign investors. As for geopolitical risks, even though they remain concerning, they have relatively eased after the U.S. and Iran agreed to resume talks, the U.S. expressed a desire to end the war in Ukraine by June 2026, and the Gaza ceasefire deal went into effect on 10 October 2025, although it was breached several times. Accordingly, given Egypt’s improved external position, the EGP’s appreciation, the high real interest rate, the slowdown in input costs, the relative easing in geopoliticial risks, and the expected decline in inflation rates, we see that the MPC has a window of opportunity to cut the policy rates by by 150-200 bps at its 12 February meeting, which would stimulate private sector and economic growth and lower the government’s local debt servicing cost, in our view.”

It is worth mentioning that, at its 25 December meeting, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) cut the benchmark overnight deposit and lending rates by 100 bps to 20.0% and 21.0%, respectively, reversing a total of 725 bps of a total 1,900 bps rate hikes since the CBE started its tightening policy in 2022. Egypt’s annual headline inflation was stable at 12.3% y-o-y in December, similar to November, according to the Central Agency for Public Mobilization and Statistics (CAPMAS) data. Monthly prices inched up 0.2% m-o-m in December, compared to an 0.3% m-o-m increase in November. On the global front, on 28 January, the U.S. Federal Reserve maintained the target range for the federal funds rate at 3.50%-3.75% with total cuts of 175 bps after it hiked rates by 525 bps since it started tightening policy in 2022, and on 5 February the European Central Bank (ECB) maintained the key ECB interest rates for the deposit facility, the main refinancing operations and the marginal lending facility at 2.00%, 2.15% and 2.40%, respectively, bringing total cuts to 200 bps, since it started cutting rates in June 2024 after it hiked rates by 450 bps since it started its tightening policy in 2022. Based on Egypt’s current economic situation, we present below our expectations for the possible outcome of the 12 February MPC meeting.

 

About HC Securities & Investment

HC Securities & Investment is a leading investment bank in Egypt and the MENA region. Since its inception in 1996, HC has utilized its relationship-driven insights, local and regional market knowledge, and industry-specific expertise and strong execution capabilities to provide its clients with a wide range of services in investment banking, asset management, securities brokerage, research, custody and online trading through its offices in Egypt and the UAE (DIFC). HC Investment Banking has an outstanding track record of advising leading corporates in Egypt and the MENA region on M&A, capital market, and financing transactions in excess of USD6.6bn. HC Asset Management now manages 7 mutual funds for commercial banks and portfolios for institutions and sovereign wealth funds with assets under management in excess of EGP4bn. HC Brokerage is ranked among the top brokers in Egypt and provides a wide array of services, including research and online trading to institutional and retail clients.

 

HC: Orascom Development Egypt is Well-positioned for tourism growth and Red Sea interest

Posted on by Marwa Nakhla

  • Red Sea investments and tourism activity fuel value creation, offsetting possible primary home sales slowdown in 2026e

  • We forecast a 4-year CAGR of c20% for revenue, c18% for EBITDA, and c31% for net income on higher residential prices and tourism revenue, and gross margin expansion

HC Brokerage issued an update on Egypt’s real estate sector, highlighting Orascom Development Egypt’s performance and noting their expectation for significant value to be unlocked for ORHD.

Mariam Elsaadany, real estate analyst at HC Brokerage commented that: “Red Sea land revaluation and strong tourism revenue unlock significant value for ORHD: We expect 2026e to be a challenging year for the residential segment of the real estate sector, triggered by 1) high price level of real estate units amid weak affordability, 2) aggressive buying over 2023–2025 leading to a higer market supply of units, 3) declining interest rates, reflecting negatively on customers’ ability to finance units through interest income from certificates of deposit (CDs), and 4) easing inflation and stable EGP make investment demand less attractive. Accordingly, we do not expect a recovery in real estate demand before 2H26, which could lead to a market correction, with developers offering limited price increases on new launches. Also by 2H26, we expect the Central Bank of Egypt (CBE) to cut interest rates by a further 300 bps on top of the 725 bps in 2025, improving the purchasing power of Egyptian real estate buyers. Based on this sector view, we opt for companies with exposure to the hospitality sector, allowing them to bypass any potential residential slowdown and capitalize on the government’s focus on growing the tourism sector, especially following the official opening of the Grand Egyptian Museum (GEM). We believe ORHD is well-positioned to benefit from Egypt’s story in the short- to long-term. The unlocking of value in the Red Sea triggered by the announcement of Emaar Misr’s (EMFD EY) Marassi Red Sea bodes very well for the company’s c15m sqm of undeveloped land in El Gouna, in our view, as our calculation for Marassi Red Sea implies an NPV/sqm of EGP3,765/sqm. We believe this will reflect positively on ORHD over the medium term, despite expected higher competition in the short term. Additionally, we like ORHD’s impressive ability to market its units internationally, with c49% and c33% of 1H25 El Gouna sales and O West sales sold abroad, respectively. Given the government’s direction to increase tourism revenue and the increased demand for hotel rooms, we expect the CBE to launch additional initiatives to expand Egypt’s hospitality inventory, which would benefit ORHD.”

 

“We increase hotel room rates to account for improved hospitality operations, and normalize growth in real estate selling prices: With Egypt’s ambitious tourism targets, we expect a 4-year hospitality revenue growth of c20% for ORHD, along with an average GPM of c36% over FY25–29e on the back of an average occupancy rate of c75% in El Gouna and c40% in Taba Heights. We increase TRevPar in El Gouna to EGP8,891 by 2028e, from EGP5,713 in 3Q25, and in Taba Heights to EGP2,683, from EGP1,687. We expect the segment to contribute to consolidated revenue an average of c22% over FY25–29e. Our estimates point to a 4-year CAGR of c26% for hospitality EBITDA. For the real estate segment, we expect revenue to grow at a 4-year CAGR of c23%, representing an average contribution of c60% to total revenue over FY25–29e. Our total real estate revenue recognition over our forecast period is EGP238bn, including EGP43.3bn from its deferred revenue balance and EGP195bn of new sales. We expect an average real estate GPM of c36% over FY25–29e. O West dominates new sales as we account for the entire project in our DCF valuation. Our estimates include collections of EGP208bn and CAPEX spending of EGP102bn for real estate operations over our forecast period. Our remaining c18% of revenue over our forecast period is from the company’s town management segment, while we account for no land sales. For the company’s debt level, we understand from management that it may increase debt to finance O West’s land liabilities. Our interest expense estimate is EGP9.73bn over FY25–29e; we expect lower interest rates to partially offset the increase in debt levels.” Mariam Elsaadany concluded

 

About HC Brokerage

HC Brokerage is an affiliate of HC Securities & Investment– a full-fledged investment bank providing investment banking, asset management, securities brokerage, research, and custody services. HC Brokerage is an Egyptian registered company and member of Egypt’s Financial Regulatory Authority (FRA), and its registered address is 34 Gezirat Al-Arab St., Mohandessin, Giza, Egypt, Dokki 12311

 

HC: Oriental Weavers, normalization is ahead, despite oil tailwind,

Posted on by Marwa Nakhla
  • Despite a favorable polypropylene price outlook, we see ORWE’s operational performance normalizing on stable FX
  • We expect total revenue to grow at a 2025 –30e CAGR of c7%, GPM to average c12%, and NPM margin to average c9%
  • In a recent report, HC Brokerage presented their evaluation of Oriental weavers forecasting the company’s performance to gradually normalize amid EGP stability. 

Pakinam El-Etriby, Consumers Analyst at HC commented that: “ORWE to benefit from lower oil and polypropylene prices in 2026e, followed by gradual normalization amid EGP stability: ORWE historically benefited from times of EGP devaluation, given that exports account for more than c50% of its total sales. In 2024, total revenues rose by c38% y-o-y to EGP24.3bn, supported by a c41% y-o-y increase in export prices to EGP227/sqm following the 6 March EGP devaluation, and c28% y-o-y rise in local prices to EGP191/sqm. Consequently, its adjusted gross profit margin (GPM), excluding inventory write-downs of cEGP271m in 2Q24 and cEGP500m in 4Q24, would have reached c16%, compared to its reported GPM of c13%. In 1Q25, the company continued to benefit from the residual effects of the EGP devaluation, with export and local prices increasing by c39% y-o-y and c27% y-o-y, respectively, leading to a c27% y-o-y increase in total revenue to EGP6.40bn. Revenues for 2Q25 and 3Q25, however, increased modestly by c7% y-o-y to EGP6.17bn and EGP6.90bn, respectively, with local and export prices normalizing. As a result, we expect 2025e GPM to stand at c12%. In 2026, we expect GPM to improve to c13%, primarily due to an anticipated decline in oil prices, which should translate into lower polypropylene costs. Moreover, the massive overcapacity in the global chemicals sector and increased trade tensions have weakened near-term recovery prospects, a situation that could further deteriorate in 2026 amid expected large capacity additions from China, according to Fitch. Consequently, this outlook reflects softer petrochemical pricing amid global oversupply from these capacity additions, which, in our view, is likely to reduce polypropylene prices, as evidenced by recent price trends. Oil prices are expected to drop to USD61.3/bbl in 2026e from an average of USD68.1/bbl in 2025e and USD79.9/bbl in 2024, according to Bloomberg.”

“We forecast ORWE’s revenues to grow at a 2025–30e CAGR of c7% driven by higher average selling prices and muted volume growth: We expect 2025e revenues to increase by c7% y-o-y to EGP26.0bn (c6% below our prior estimate), supported by a c11% y-o-y rise in average selling price (ASP) to EGP238/sqm (c1% above our prior estimate), yet a c4% y-o-y decline in volumes to 110m sqm (c7% below our prior forecast). We anticipate export revenues accounting for c67% of total revenues (vs. c65% previously), reflecting a favorable base effect as 1Q25 was still impacted by the EGP devaluation. We estimate 2026e revenues to grow by c3% y-o-y to EGP26.9bn (c13% below our prior estimate), driven by a c8% y-o-y increase in ASP to EGP239/sqm (c4% lower than our prior estimate), assuming easing inflation rates and relatively stable FX rates, and a c3% y-o-y increase in volumes to 113m sqm (c9% lower than our prior estimate). We forecast a c64% export contribution to total sales (vs. c63% previously). Over 2027–30e, we forecast a c8% revenue CAGR, underpinned by a c6% increase in ASP and c2% growth in volumes. We expect 2025e GPM to stand at c12% (vs. c14% previously), down c1 pp y-o-y and further to c13% in 2026e (vs. c14% previously), assuming a decline in oil and polypropylene prices. Over 2027–30e, we forecast GPM to average c12%, gradually normalizing to c11% by the end of our forecast period. We forecast 2025e EBIT margin to narrow by 1.90 pp y-o-y to 8.99%, on GPM contraction and c29% y-o-y decline in export rebates to EGP421m, with the government’s recent reduction of export rebates/total exports to c4% from c7% previously. In 2026e, however, we expect a 2.46 pp y-o-y expansion in EBIT margin to c11%, supported by GPM improvement and a c87% y-o-y increase in rebates to EGP786m, including an EGP100m from government backlog out of a total EGP400m to be received in cash, and higher exports which now include the US market following the shutdown of its US factory, increasing its exports from Egypt. Over 2027–30e, we expect EBIT margin to average c10%, with export rebates growing at a CAGR of c3%, reaching EGP892m by the end of our forecast period. During 2026e, we expect a capital gain of cEGP482m from the sale of its US machinery and two buildings. Consequently, we expect net profit margin (NPM) to stand at c8% in 2025e, c11% in 2026e, and to average c8% over 2027–30e.” Pakinam El-Etriby concluded.

About HC Brokerage

HC Brokerage is an affiliate of HC Securities & Investment– a full-fledged investment bank providing investment banking, asset management, securities brokerage, research, and custody services. HC Brokerage is an Egyptian registered company and member of Egypt’s Financial Regulatory Authority (FRA), and its registered address is 34 Gezirat Al-Arab St., Mohandessin, Giza, Egypt, Dokki 12311

For further information, please contact:

Research@hc-si.com