Cairo and Riyadh to establish SAR 60 bn joint investment fund, sign three other MoUs on Sisi and MbS’ first day of meetings: Egypt’s Investment and International Cooperation Ministry and Saudi Arabia’s Public Investment Fund signed an MoU yesterday to activate a 2016 agreement to establish a SAR 60 bn (USD 16 bn) joint Egyptian-Saudi investment fund, Reuters’ Arabic service reports. A Saudi official told Reuters that Riyadh's part of the new joint investment fund will be cash to help develop the Egyptian side of NEOM (robot utopia). Long time readers of Enterprise will remember that an initial agreement for the fund was signed during King Salman’s visit to Cairo in 2016, though nothing had come of it since.

Officials from both sides also signed MoUs yesterday covering cooperation between labor and freezone authorities, and another on cooperation on environmental protection, according to Al Ahram. The Washington Post is

The agreements were inked during a summit between President Abdel Fattah El Sisi and Saudi Crown Prince Mohammed bin Salman, who is in Cairo for the first leg of his first public foreign trip since he became heir to the throne. The two leaders agreed that there is a need for additional cooperation across the board “to reflect the depth of strategic ties,” particularly on the fronts of economy and investment, and especially in tourism along the Red Sea Coast, an Ittihadiya statement says.

MbS and his delegation will be accompanying El Sisi on a number of visits to ongoing project sites during their three-day stay, according to Ittihadiya spokesperson Bassam Rady, who did not elaborate on the schedule. Sources tell Al Mal, though, that Monday’s agenda includes a trip to Ismailia and the Suez Canal, as well as the inauguration of a new hotel. Other sources tell The National that the “prince will underscore his commitment to Egyptian youth by pledging to build a new university in the Sinai.”

Both leaders also said they would continue the close coordination of efforts to resolve ongoing regional disputes and challenges, agreeing to “work together to fend off attempts at regional intervention and division.” Counterterrorism and Saudi’s efforts against Houthi rebels in Yemen were among the topics discussed.

The story is topping coverage of Egypt in the foreign press, with pickups from Reuters, The Associated Press, AFP, Asharq Al-Awsat, and Xinhua, who seem mostly focused on the trip meaning to “deepen the alliance between two of the region’s powerhouses.”

The Saudi prince will fly to London on Wednesday before he heads across the pond to the US on 19 March. “He is trying to reach out to Western investors to let them know that what happened in the past few months is nothing to be worried about—in fact this is an opportunity,” Alef Advisory founder Hani Sabra tells the Wall Street Journal (paywall). The Center for American Progress’ Brian Katulis agrees, saying that “they are coming here to tell the story about how Saudi Arabia is reforming its economy and letting women drive.”

LEGISLATION WATCH- Parliament approves private sector participation in railway sector development: The House of Representatives approved yesterday amendments to the Railway Act that would allow private sector participation in developing, managing, and operating railway projects, Ahram Gate reports. Under the law, private companies will be required to compete in public tenders for projects, in accordance with the Auctions and Tenders Act, Al Masry Al Youm reports. Companies can be contracted for a maximum of 15 years. The legislation establishes a new regulating body, the Egyptian Railways Authority, with the jurisdiction to govern private involvement in the sector. The new body will also have the authority to establish joint stock companies, and the authority’s employees will be granted priority in purchasing up to 10% of each of the state company’s shares. The amendments also criminalize any acts of vandalism and tampering with equipment in a way that hampers the safety of railway lines. Parliamentary Speaker Ali Abdel Aal had urged MPs to pass the bill to clear the path for an overhaul of the country’s rail system and avoid further accidents from occurring, Al Borsa reports.

The vote came after Transport Minister Hisham Arafat vowed that the country’s railways will see a marked improvement by mid-2019 on the back of constructing new lines, purchasing new locomotives, and installing electronic signaling systems, Al Shorouk reports. The ministry is also working to impose harsher penalties on railway employees found responsible for causing rail accidents, Arafat told Parliament in response to a summons over last week’s train collision in Beheira, which left 12 dead and 39 injured.

In other legislative news, unauthorized after-sales service centers should have a hard time operating once the Consumer Protection Act is issued, according to Consumer Protection Authority boss Atef Yakoub, who says that the bill will even penalize television channels that broadcast these business’ ads. The act sets strict rules and harsh penalties that could result in prison sentences of up to three years, he tells Al Borsa. The move is part of a series of auto industry-related provisions in the act that allows for possible price controls.

Separately, the decision to extend the mandate of the Tax Dispute Resolution Act for two years has been published in the Official Gazette, according to a Finance Ministry statement. The law resolved around 4,500 tax disputes and contributed EGP 15.1 bn to state coffers last year, the ministry said.

Reserves record their biggest jump since July: The central bank’s FX reserves recorded USD 42.5 bn in February from USD 38.2 bn in January — reaching another highest-ever mark. The USD 4.3 bn m-o-m increase is only dwarfed in recent years by the USD 4.7 bn recorded last July. The increase in February is mostly attributable to the successful USD 4 bn eurobond issue, which was 3x oversubscribed. “Net international reserves jumping to a new safe level will enhance investor confidence and minimize the funding gap even with the USD 12 bn of repayments outstanding for this year,” Hany Farahat, senior economist at CI Capital, told Reuters. He told Bloomberg “the surge in reserves ‘definitely facilitates the reduction in policy rates this year and minimizes the risk of currency outflows as rates decline.’” CBE Sub-Governor Rami Aboul Naga told Bloomberg the eurobond sale “was only one contributor to the increase. A marked improvement across a range of economic indicators had also provided a boost,” but did not elaborate further.

INVESTMENT WATCH- Ezdehar Egypt Mid-Cap fund is planning to invest USD 80 mn this year in Egypt’s export-heavy industrial sectors, non-banking financial services, and consumer sectors, Ezdehar Managing Partner Emad Barsoum tells Al Borsa. Ezdehar is also closing in on acquiring an industrial company in a USD 50 mn transaction, Barsoum said, without providing the company’s name or further details on the agreement.

Egypt is looking to raise output from the Zohr offshore gas field to 700 mcf/d in May, Oil Minister Tarek El Molla tells Reuters’ Arabic service. The field officially went live in December 2017, with production beginning at an initial rate of 350 mcf/d. El Molla had said at the time that output would rise to about 1 bcf/d by June, while Eni CEO Claudio Descalzi said in February that the goal is to reach output of 1.8-2 bcf/d by the end of 2018 and then ramp up to 2.9 bcf/d by mid-2019.

Dana Gas received USD 10.4 mn last month from the sale of Egyptian natural gas condensate as part of a plan to recover outstanding receivables, the company disclosed to the ADX. Dana Gas sold 157,200 bbl of El Wastani condensate at an average price of USD 66.5 per bbl. “The sale marks the fourth cargo of Egyptian condensate since the start of 2017. Last year, the Company sold three shipments for a total receipt of approximately USD 21 mn. The shipments are part of the Gas Production Enhancement Agreement signed with the Egyptian government as a mechanism to help pay down the overdue receivables.”

EARNINGS WATCH- GB Auto reported a consolidated net loss of EGP 666.9 mn in 2017, narrowing from EGP 865.7 mn the previous year, according to a company statement (pdf). Top line for the year rose 15.5% y-o-y to EGP 17.56 bn. Last year saw the group taking steps to return to profitability, CEO Raouf Ghabbour said. “We are confident that the increased appetite for our automotive products, will see us steadily regain our market share to our historical rate of 33% and improve our margins.” Ghabbour stressed the importance of passing the Automotive Directive to capitalize on the “positive sentiment finding its way back to the automotive market” and “the window of opportunity to become an automotive hub in the region.” Tap or click here for the full earnings release (pdf).

Cleopatra Hospitals Group’s consolidated net profit rose 32% y-o-y to EGP 118.2 mn in 2017, up from EGP 89.4 mn in 2016, the company said in its earnings release (pdf). Revenues came in 30% higher y-o-y at EGP 1.126 bn, with the rise “supported by improved case mix and pricing.” Cleopatra Hospital was the largest contributor to group revenues for the year with 44% of the total. “2017 was a milestone year for the Group which saw us deliver on several strategic fronts,” Group CEO Ahmed Ezzeldin said, pointing to business development initiatives, platform integration, investing in infrastructure and technology upgrades, and pushing ahead with its acquisition and expansion strategy. “We are heading into 2018 have reshaped our organization and positioned the Group for further growth and value creation for all our stakeholders.”

Ibnsina Pharma reported an 88.9% y-o-y jump in net profit to EGP 192.1 mn, up from EGP 101.7 mn a year before, according to an EGX filing. Revenue for the year came in at EGP 9.59 bn, up from EGP 7.21 bn in FY2016. On a Q4-basis, Ibnsina’s net profit more than doubled y-o-y to EGP 49.1 mn, up from EGP 20.1 mn. The company recorded its largest contribution to revenues from its retail pharmacies segment as it reported its maiden earnings as a publicly traded company. The earnings results came just one day after the Cairo Court of Appeals agreed to hear the company’s appeal of lower court verdict imposing a fine for allegedly colluding with industry rivals. The lower court verdict is now set aside pending; the first hearing in the case is due to take place in May 2018.

Oriental Weavers saw its consolidated net profit rise 40.2% y-o-y to EGP 742 mn in 2017, up from EGP 529 mn the previous year, the company said in a regulatory filing (pdf). The rise in profits came on the back of a 50% y-o-y increase in sales revenues, which recorded EGP 10.174 bn in 2017.

The China Road and Bridge Corporation (CRBC) is planning to break ground on a USD 350 mn multipurpose terminal in Nuweiba by the end of March, Red Sea Ports Authority chief Hashem Abu Senna tells Al Borsa. The terminal is one of three projects for which the Transport Ministry signed a USD 1.35 bn agreement with CRBC in December. The company will also construct and operate new multipurpose terminals at the ports of Safaga and Sharm El Sheikh. CRBC will also be responsible for supplying the equipment for the projects, which will be carried out under a build-operate-transfer framework.

In other Chinese construction projects, the China State Construction Engineering Company (CSCEC) will design and build three stadiums for USD 90 as Egypt prepares to host the 2021 World Men’s Handball Championship, according to a Cabinet statement. The three multipurpose indoor stadiums will be built in Sharm El Sheikh, Hurghada, and Luxor’s New Thebes. The Sports Ministry and the New Urban Communities Authority will be responsible for feasibility and environment studies for the projects, while CSCEC will carry out design, engineering, and construction work.

Is Egypt really boycotting Turkish products? Efforts in Egypt to boycott Turkish products are gaining momentum, Ahval reports. Calls for a boycott against Turkey became Egyptian social media’s hottest trending topic last month, with 12,000 tweets including the hashtag “boycott Turkish products,” according to Youm7. Tweets with the hashtag included demands for the Egyptian government to take action against businessmen importing products from Turkey, and claims that buying the products would “contribute to the killing of Egyptians.” The newspaper also reported that the call for a boycott gained support from Arab countries. Saudi pan-Arab broadcaster MBC has received instructions to remove all Turkish programming from all of its channels until further notice, MBC Group spokesman Mazen Hayek tells The National.

Swvl, Egyptian Streets founders among several Egyptians on Forbes’ first Arab 30 Under 30 list: Egyptian Streets founders Mohamed Khairat and Mostafa Amin, and Swvl co-founders Mostafa Kandil, Mohmoud Nouh, and Ahmed Sabah were among several Egyptians who made it to Forbes’ first-ever Arab 30 Under 30 list. 23-year-old Ali Mohammed is also featured on the list for developing a technology that allows hearing-impaired individuals to visualize sound, while footballer Mohamed Salah was recognized for being the second-highest goal scorer in the English premier league. The list honors young innovators, many of whom “are scattered across the globe as they strive to prove their mettle in countries far from home.” Khairat and Amin, who live in Melbourne and Berlin, respectively, were also included in Forbes’ annual 30 Under 30 list in Europe.

CORRECTION- Arqaam Securities came in fourth on the brokerage league tables for February with a 5.6% market share. Pharos Securities came in fifth with 4.7%. We misstated the ranking in Sunday’s issue, but have corrected the entry on our website.