Earnings Report /

CI Capital: Q4 19: Strong 2019 profits driven by Corplease; maintain Overweight

    Al Ahly Pharos Securities Brokerage
    13 February 2020

    Robust leasing operations compensate for weak operational quarter

    Group attributable net profit for 4Q19 recorded EGP207 million (+59% q/q, +92% y/y) bringing FY19 group attributable bottom line to EGP545 million (+46% y/y), in line with our estimates for 2019 and above management guidance of EGP500 million for FY2019. Financial highlights were: 

    4Q19 financial indicators:

    • Group operating revenue (+23% q/q, 28% y/y) was solely driven by leasing revenues (+39% q/q, +38% y/y) supported by securitization gains of EGP140 million, as per management guidance, amid a weak quarter across all other business lines.
    • Operating expenses inched up by 2% q/q driven by lower direct financing costs (-7% q/q) as a result of the securitization issuance of EGP2.2 billion that were used to deleverage the balance sheet and enhance the company’s equity base. 
    • However, robust growth of net operating profit (+80% q/q, +136% y/y) was mitigated by high booking of impairments loss of clients’ accounts filtering into net profit for 4Q19 of EGP207 million (+59% q/q, +92% y/y).
    • Investment banking platform failed to have any positive contribution in 4Q19 bottom line as it recorded net losses of EGP2 million. While NBFIs platform represented 100% of the group’s quarterly net profits.

     FY19 financial indicators: 

    • Group operating revenue (+43% y/y) was driven by leasing, microfinance, and investment banking operations, which together wiped out the decline witnessed in brokerage and asset management.
    • Operating expenses (+34% y/y) were mainly driven by financing costs (+48% y/y) then G&A (+13%y/y).
    • Net operating profit surged by 50% y/y filtering into net attributable profit for the year of EGP545 million (+46% y/y/) due to higher booked provisions (+508% y/y).
    • Non-banking financial services continued to represent 83% of FY19 attributable bottom line (67% leasing, and 17% microfinance) versus 75% in FY18 (52% leasing and 23% microfinance) while the investment bank contribution constituted 17% of bottom line down from 25% in FY18.