Equity Analysis /
Egypt

MM Group: Initiation: A successful turnaround story

    Al Ahly Pharos Securities Brokerage
    29 July 2019

    We initiate coverage on MTIE with an overweight recommendation, an equity value of EGP7,511 million and a fair value of EGP12.14/share, offering an upside of 19%.

    We valued MTI’s core operations and business lines namely: Consumer Electronics, Telecommunications, Automotive and Pipes & Tractors using the DCF, implying an equity value of EGP6,536 million, translating to a core operations FV/share of EGP10.56; contributing to 87.0% of total valuation. Additionally, we valued MTI’s NBFS arm through its investments in Ebtikar (Masary, Bee, Tamweel and Vitas) using market multiples approach, bringing a blended NBFS arm value of EGP975 million, translating to a FV/share of EGP1.58; contributing to 13.0% of our FV.

    MTI offers an attractive 2019e ROE of 37%. MTI trades at 2019e P/E of 12.0x and EV/EBITDA 2019e of 9.0x, which is at a decent discount to global peers trading at P/E and EV/EBITDA average of 16.2x and 9.5x.