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Pharos Research reiterates ‘Overweight’ on ADIB Egypt

Pharos Research reiterates ‘Overweight’ on ADIB Egypt
Pharos Research reiterates ‘Overweight’ on ADIB Egypt on FV of EGP15.10/shr
Abu Dhabi Islamic Bank
ADIB
-5.43% 41.60 -2.39

Cairo – Mubasher: Pharos Research has maintained their ‘Overweight’ recommendation on Abu Dhabi Islamic Bank Egypt (ADIB) on a fair value (FV) of EGP15.10 per share.

This FV reflects the bank’s valuation and the impact of rights issue projected to take place in 2020 in accordance with the management guidance, Pharos said in a research note.

In 2012, the UAE-based lender had invested EGP 1.8 billion as prepayments for a potential capital increase, the research firm indicated.

The minority shareholders in the Egyptian unit has to subscribe to a rights issue of an amount equivalent to ADIB UAE’s subordinated loan to transfer the EGP 1.8 billion while maintaining the same shareholding structure as ADIB UAE holds a 50% stake in ADIB Egypt, Pharos highlighted.

Accordingly, the total transferred sum to the paid-in capital amounts to EGP 3.6 billion, including EGP 1.8 billion fresh capital injected by minority shareholders and EGP 1.8 billion transfer of ADIB UAE prepayments, according to the research note.

Last Tuesday, ADIB Egypt reported a 35% year-on-year increase in consolidated profits for 2018.

ADIB achieved a profit of EGP 850.23 million from January to December 2018, compared to a net profit of EGP 631.5 million in 2017, according to a statement to the Egyptian Exchange (EGX).

The lender’s revenues rose by 18% or EGP 474 million last year, registering EGP 3.1 billion, the bank added.

Return on Murabaha and speculations amounted to EGP 5.7 billion in 2018, up from EGP 4.12 billion in 2017.

At the level of ADIB – Egypt’s standalone business, the bank logged EGP 608.4 million in profits for the 12-month period ended last December, versus EGP 434.8 million in the corresponding period a year earlier.