Unemployment falls to 10.6% in 1Q2018, down from 11.3% in the comparable period last year, CAPMAS announced in its quarterly report. Overall, the labor force grew slightly by 0.1% y-o-y to 29.2 mn people in 1Q2018. Far more women than men remain unemployed: The unemployment rate for women was 22.0% in the quarter against 7.3% for men, stats show. Youth unemployment stood at 75.2% for the quarter. “The rate has been steadily dropping in recent months amid a program of economic reforms,” Reuters notes. The country’s unemployment levels had dropped to 11.8% at the end of 2017, down from 12.5% at the end of the previous year.

CBE to launch sweeping debt-relief program for businesses with non-performing loans? The central bank is reportedly about to launch an initiative that would see as many as 107k businesses forgiven interest payments, late charges and lawsuits over loans they are unable to repay, CBE Governor Tarek Amer tells Al Mal. Those eligible for the initiative will have to pay down the principal amount of the loan before they are eligible for interest relief and the forgiveness of charges, according to Amer. Some 5,000 factories, 27,000 clients of the Agricultural Bank of Egypt, and around 75,000 clients of other banks may be eligible for the program, according to Amer. Amer did not disclose the overall price tag of the initiative or how one becomes eligible for it. The initiative was meant to be launched this week, Amer had said previously, but several banks have expressed their interest in participating in the initiative, leading to the postponement of the launch until next week, according to CBE Sub-Governor Gamal Negm.

IPO WATCH- Government hopes to raise EGP 15-18 bn from first phase of privatization program between June 2018 and early 2019, petrochem companies first on the list: The government is hoping to raise as much as EGP 15-18 bn from the first phase of its privatization program this year, the Cabinet said in a statement yesterday. Phase one, set to run from June until early 2019, will see the government offer additional stakes and list new shares on the EGX of four to six state-owned enterprises in the petroleum and petrochemical industries. Prime Minister Sherif Ismail ordered the establishment of a new committee yesterday to oversee the program. Members include the ministers of investment, petroleum, trade and industry, finance, planning, and public enterprises. The committee will be responsible for setting the exact timeline for the listings after it reviews valuation studies conducted for the list of 23 companies the government intends to privatize.

This is the first official line on the program to be documented in writing. CBE Governor Tarek Amer said last month that Banque du Caire would IPO in late 2018 or early 2019, while Finance Minister Amr El Garhy had earlier said to expect the first companies to list shares by September or October. Oil outfit Enppi is expected to pilot the program. Expectations were also for Eastern Company to be among the first companies in the pipeline to offer additional shares for sale.

REGULATION WATCH- EGX to amend listing regs: Speaking of listings, the board of the EGX met yesterday to amend the listing regulations, sources tell Youm7. The changes, which bring the regulations in line with the latest draft of the executive regulations of the Capital Markets Act, will see amendments to procedures for delisting. It will also see tougher disclosure standards as part of a move to emphasize transparency by listed corporations. The new changes will also facilitate the listing of SMEs. The story offers no further detail on the proposed changes.

AOI, Fiat will assemble Jeeps together in Egypt for another decade: The Arab Organization for Industrialization has inked an agreement with Fiat Chrysler Automobiles that extends their partnership on the production of Jeep automobiles for another 10 years, the Trade and Industry Ministry said in a statement yesterday. The two sides are planning to produce as many as 6,000 vehicles a year, some of which will be exported to Arab and African markets as well as to the US and Portugal.

The Arab American Vehicles Company (AAV) invested USD 2.8 mn in a new Jeep service center, in collaboration with Fiat, AAV Chairman Mohamed Anis tells Al Mal. The new center, which will also include a showroom, will run entirely on solar power, the ministry said. We had reported in March that Fiat executives were in Cairo to decide on whether they would set up shop in the country, especially as the government readies to roll out the Automotive Directive. The proposed law, which is meant to incentivize assemblers to move further up the value chain into manufacturing, is expected to come out sometime this year.

There are 230 days left until 1 January 2019. That’s when customs on vehicles imported from the European Union are set to fall to zero, threatening to force domestic assemblers to turn thousands of skilled workers into the streets in the assembly and auto part industries.

M&A WATCH- TE, MENA Cables reach final agreement on acquisition: Telecom Egypt and MENA Submarine Cables System have reached a final agreement on all the details of TE’s USD 90 mn acquisition of MENA Cables, sources close to the transaction tell Al Mal. Orascom Telecom Media and Technology (OTMT) is selling 100% of the cable operator, as we noted on Sunday. The transaction is now waiting on state and and regulatory approvals. TE announced last Thursday that it would finance the transaction through a shareholder loan to its cable subsidiary.

Advisors: The state-owned fixed-line monopoly had tapped Al Tamimi & Co. as its legal advisor, while Ibrachy Legal Consultancy was advisor to TE, according to the sources. We had also heard that TE was close to tapping EFG Hermes to advise on the transaction.

EARNINGS WATCH- Plenty of our friends in corporate Egypt have reported results in the past 24 hours:

Edita Food Industries reported a 50.8% y-o-y jump in its bottom line for 1Q2018 to EGP 60.9 mn, up from EGP 40.4 mn in the comparable quarter last year. Net profit climbed on the back of higher revenues, which rose by 37.9% y-o-y to EGP 886.1 mn. “The first quarter of 2018 has yielded solid results for Edita with strong volume recovery and volume-driven growth serving as evidence that difficult times are now behind us,” Chairman and CEO Hani Berzi said. “We’re seeing demand rising and consumers increasingly adapting to our new price points, especially at the croissant segment which posted the strongest growth in volumes and was the largest contributor to revenue growth during the period.” The company will continue to emphasize volume recovery in the months ahead, paying special attention to export markets. “I remain confident in our ability to continue satisfying consumer demand and in parallel creating value for our shareholders,” Berzi said. “We are also excited to be venturing further beyond our borders and look forward to increased contributions from export markets as a pillar of our long-term growth strategy.” Tap or click here to view the company’s full earnings release (pdf).

Egypt Kuwait Holding (EKH) saw bottom-line growth for 1Q2018 gain a solid 16% y-o-y to USD 32.6 mn, the company reported (pdf). EKH saw record growth in revenues for the quarter, rising 11% y-o-y to USD 118.8 mn. Revenue growth was driven by improved on-the-ground performance and strong operational results. “Our exceptional performance during the quarter was partly driven by the commencement of operations at ONS, a development that positions us today as the sole, fully-integrated energy company in Egypt,” Chairman Moataz Al Alfi said. A play on subsidy reforms and Egypt as a regional energy hub: “At a time when Egypt is carving its space as a regional natural gas hub with increased liberalization and subsidy reform, EKH stands to benefit through its upstream gas production, its midstream gas distribution, and its downstream gas-fired electricity generation and gas-fed industrials such as fertilizers and petrochemicals,” Al Alfi added.

Qalaa Holdings reports FY2017 results: Qalaa Holdings reported a net loss of EGP 4.71 bn in FY2017, “driven primarily by EGP 4.26 bn in impairments booked during the year, which management expects to be the final round of significant impairments, as well as by EGP 434.1 mn in losses from discontinued operations.” The company’s revenues rose 22% y-o-y to EGP 9.28 bn “on the back of strong growth from its energy subsidiaries TAQA Arabia and Tawazon, as well as ASCOM, its operational platform in the mining sector,” according to the company’s earnings release (pdf). “Qalaa’s full-year results reflect the ongoing transformation across our portfolio companies, with several platforms gearing-up for a new growth phase,” said Chairman and Founder Ahmed Heikal. “Energy, mining, cement, and transportation plays continued to capitalize on the prevailing economic trends and turn new market dynamics into growth opportunities and into avenues to create shareholder value.” Looking ahead: With operations at the Egyptian Refining Company set to start in 2019, Qalaa is confident that “2017 was an inflection point for Qalaa and that 2018 and beyond will witness further improvement in our financial results leading to a positive bottom-line in 2019,” Co-Founder and Managing Director Hisham El-Khazindar said.

Cleopatra Hospitals Group’s consolidated net profit after tax rose 97% y-o-y to EGP 57.2 mn in 1Q2018, up from EGP 29.1 mn, the company said in its earnings release (pdf). Revenues came in 32% higher y-o-y at EGP 347.2 mn. Cleopatra Hospital was the largest contributor to group revenues for the quarter at 45% of the total. “Our strong results in the first quarter of the year reflect the merits of our strategic initiatives and the success of our integration drive that is increasingly delivering value at our top-line and simultaneously allowing us to maximize efficiency and extract cost-savings while staying true to our commitment to patient safety and service quality,” Group CEO Ahmed Ezzeldin said. The group will continue infrastructure upgrades and press ahead with its CAPEX program over the coming period, which will see “complete renovations” in several of the group’s facilities.

Palm Hills Development (PHD) reported a 5.3% y-o-y increase in 1Q2018 net profit after tax to EGP 224.2 mn, up from EGP 212.3 mn in the same period last year, according to an EGX filing (pdf). Revenues came in at EGP 1.47 bn for the first three months, down from EGP 1.59 bn last year.

Orascom Development Egypt (ODE) reported a net profit after tax of EGP 83 mn in 1Q2018, up from EGP 75.9 mn during the same period last year, according to an EGX filing. Revenues also rose to EGP 654.9 mn, compared to EGP 493.8 mn last year.

The National Bank of Kuwait Egypt reported 1Q2018 net profits of EGP 496.9 mn, up from EGP 329.5 mn in the same period last year, according to an EGX filing (pdf).

Egyptera still hashing out structure of July electricity price hike: The Egyptian Electricity Utility and Consumer Protection Agency (Egyptera) is reportedly still working on the final structure of the price hikes it is expected to roll out in July as the government looks to slash electricity subsidies by 47% in the next fiscal year. Sources said that the agency will be ready with the new prices next month. From what we’re reading, it looks like it has reworked the pricing scheme since they last leaked to the press in April. They new system appears to divide up home users into four categories. Those consuming 0-100 KW and 101-200 KW will see price increases of 15-32%. Then there are those who fall under the 201-600 KW and the 601-1000 KW consumption bracket. Sources tell that all those consuming anything higher than 300 KW will see increases of 25-43%. They added that these could be subject to amendments by the Ismail cabinet upon review.

LEGISLATION WATCH- House passes law granting IDA autonomy from Trade and Industry Ministry: The House of Representatives gave its final nod yesterday to legislation that gives the Industrial Development Authority (IDA) autonomy from the Trade and Industry Ministry, according to a ministry statement. MPs had signed off on the act back in January and sent it to the Council of State for a final review. The law grants the agency financial and administrative independence from the ministry and make it responsible for allocating land to investors for industrial purposes and awarding industrial permits and licenses.

The House general assembly also approved yesterday the Public Procurement Act. Products with at least 40% domestic content will now get priority in government tenders over competing products with less domestic input. The law now includes Egyptian-made tech products and software among the categories granted preferential treatment, the head of the Federation of Egyptian Industries’ ICT division, Tamer Mohamed, tells Youm7. Trade and Industry Minister Tarek Kabil also the legislation as necessary to support the growth and development of domestic industry, according to a statement. He noted that the law would impose specific quality standards for local products.

The House Local Administration Act approved on Tuesday the Shopping Centers Act, which would simplify licensing procedures for shopping malls and nightclubs, Youm7 reports. Hotels and tourism facilities have been excluded from the legislation, according to the newspaper. This is the first we’ve heard of this law and the only draft out there is not legible (thanks, Al Shorouk). We’ll be back with more details as they emerge.

The House of Representatives’ general assembly is now in recess until 3 June, Ahram Gate reports. We believe House committees will still meet during the recess to discuss pressing legislation, including the FY2018-19 state budget.

LEGISLATION WATCH- Planning Ministry wants to give civil servants bigger raises: The Planning Ministry has finalized amendments to the Civil Service Act’s executive regulations that would pave the way for public sector employees to receive bigger annual raises, government sources say. As it currently stands, the Civil Service Act stipulates that all public sector workers are eligible for an annual raise equivalent to 7% of their base salary. Public wages are comprised of a (generally low) base salary and a laundry list of bonuses, allowances, and special payouts that are added to employees’ total earnings. The new system the ministry is looking to implement would bring together all of these bonuses and added payments under one single band known as “complementary wages.” The amendments to the Civil Service Act would then grant a 7% annual raise on each of the base and the complementary wages, effectively meaning that public sector salaries will see a jump to offset rising living costs. The new system is also meant to reduce wage disparities between employees of the same seniority, Central Organization for Management and Administration head Saleh El Sheikh had said on Monday. The ministry has sent the amendments to the Ismail Cabinet for review and sign-off, according to the sources.

The death toll from clashes between Gaza protesters and Israeli forces rose to more than 60 yesterday as demonstrations against the opening of a US embassy in Jerusalem continued for a second day.