Late last week, Egyptian Prime Minister Mostafa Madbouly announced the first list of companies that will be offered for sale during the period from the date of the announcement until the end of the first quarter of next year, according to the agreement with the International Monetary Fund contained in the Egyptian letter of intent to the fund manager.

The list of companies nominated to sell shares of their shares on the stock exchange or to a strategic investor or a mixture of the two methods included 32 companies in 18 economic activities, and given that the majority of these companies are unknown even to specialists in the economic field, we expected that the announcement would be accompanied by financial and economic data about these companies, as a kind From promoting it among the prospective buyers of its shares, but what happened is just a statement of the names of those companies and the sectors in which they operate.

And because there are only 4 of these companies listed on the Stock Exchange, and the Stock Exchange does not provide data except for the companies listed therein, we tried to identify the data of the four companies, which are:

  • Paints and Chemical Industries Company Pachin.

  • and Cairo Bank.

  • and Damietta for container handling.

  • And Port Said for container handling.

We only found financial data for the Paints Company, and for the Bank of Cairo and the two container companies, there is only data for the nominal share value, the number of shares, and the date of listing on the stock exchange only.

And because 8 of the 32 companies fall under the umbrella of the Ministry of Business Sector, including 3 companies listed on the stock exchange, which are the paints and the two container companies, the way was to resort to the data of the Public Business Sector Information Center, so that we can get acquainted with the data of the companies:

  • Victory for Housing and Development.

  • Maadi for Development and Reconstruction.

  • Egypt for Armed Cement Works.

  • Sinai manganese.

  • Egyptian Ferro Alloys.

20 companies out of 32 without financial statements

It is noteworthy that the latest data for the public business sector companies for the last fiscal year 2021-2022 does not exist, although those companies - especially those listed on the stock exchange - issue quarterly financial statements, in compliance with the disclosure rules for periodic listing, but the data of the Public Business Sector Information Center that stopped at 2020-2021 annual only.

Returning to the data published by Banque du Caire and the Arab African International Bank, we have data for 10 companies.

Although Misr Insurance and Misr Life Insurance do not publish their financial statements on their websites, the annual report of the Financial Supervisory Authority that supervises insurance companies includes some scattered data about them in its presentation of the financial statements of insurance companies, albeit only annual data and dating back to the fiscal year 2020-2021. .

So we have data on only 12 of the companies whose shares are offered for sale, meaning that there are 20 companies for which there are no financial data, after looking at the websites available for most of them, as some of them do not have a website yet, because they have not turned into a company yet, Such as the historical hotels that were deducted from the Egoth Hotels Company and have not yet been transformed into an independent company, and the same applies to the wind power plant in Zaafarana, the wind power plant in Jabal al-Zeit, and the power plant in Beni Suef.

Despite the availability of some data on the date of incorporation, activities and volume of production on the websites of the companies: The Egyptian Company for Propylene Production, The Egyptian Company for Ethylene Production, The Egyptian Company for Linear Alkyl Benzene Production, the Egyptian Excavations, and the Canal for the Ribat and the Lights of Ships whose name was wrongly mentioned in the statement of the Council of Ministers when it called it the Rabat for the Lights of Ships, and this was repeated. With the Egyptian Drilling Company, which the statement called the Petroleum Drilling Company;

There is no financial data on the performance of these companies in order to assess their past performance and predict their future performance according to which a decision is made to buy the company's shares or not.

Analyzing and comparing financial statements are the most important

The same thing happened with companies: Misr Technology Trade, The Future for Urban Development, Helwan Fertilizers, Al-Amal Al-Sharif for Plastic, and Al-Salihiya for Investment and Development;

However, these data did not explain to us some historical details, for example, with regard to the Salhia Company. Is it an extension of the Salhia project established by President Sadat, or a part of it, or a separate project?

The same applies to Al-Amal Al-Sharif Plastic Company. Is it an extension of Al-Sharif Plastic Company?

And when we find the head of the Salhia Company operating in agricultural, poultry and animal activity, Major General of War Staff, what is his experience in the company's fields of work?!

It is strange that we find The United Bank offered for sale, which was established in 2006, has not published any financial statements about its activity since its inception until now, and sufficed with scattered statements by its president over those years, including the value of the capital, the number of branches, the value of deposits, loans, or profit in some years, Despite the announcement by the governor of the Central Bank since February 2016 of offering a share of his shares for sale, and then announcing the sale of a majority stake in it to an American investment fund in May 2019.

The issue is not in the announcement of the financial statements, but the most important thing is after the availability of the quarterly financial statements, by analyzing them and extracting the financial indicators through them.

It is not enough only the profit number of the company or the bank, but the most important of it is the profitability of the company or the bank, meaning how much profit the pound generates in the bank’s property rights or in its assets, and from here we will find medium-sized banks that are more profitable than large-sized banks such as government public banks, including the Bank of Cairo , although the non-professional will surely notice the large profit figure achieved by that government bank.

In 2021, the profits of Banque du Caire for sale amounted to 3 billion and 631 million pounds, bringing its return on equity to 18.7%, while the value of Abu Dhabi Islamic Bank’s profits amounted to one billion and 473 million pounds, bringing its return on equity to 21.4%. The same applies to the Arab African International Bank, whose profits in the same year amounted to two billion and 149 million pounds at the exchange rate at that time, bringing its return on equity to 6.4%, while the profit value of the Egyptian Gulf Bank amounted to 696 million pounds, bringing its return on equity to 21.4. %.

The source of profit is more important to ensure its recurrence

Also, it is important where the company's declared profit came from?

The activity of the company may be contracting, for example, but it made a profit as a result of some assets or from its investments, or from the interests of its deposits;

That is, the profit was not achieved from its basic activity.

As well as the comparison between the value of the profits of the company and companies of similar size and operating in the same activity in the market, in addition to comparing the profits of the same company during a number of consecutive years.

For example, we will find the profit of the paint company (Pachin) offered for sale, which amounted to 76 million pounds in the fiscal year 2017-2018, then decreased to 65 million pounds in the following fiscal year, to continue to decline to only 3.3 million pounds in the following fiscal year, then increased to 40 million. pounds in the fiscal year 2020-2021.

However, in the first quarter of the fiscal year 2021-2022, the profit amounted to only 650 thousand pounds, while the company’s profits were 72 million pounds in the fiscal year 2005-2006, and 84 million pounds in the following fiscal year, meaning that its profit 16 years ago from now was much higher than its profit. Currently, this is how the horizontal analysis of profit development is useful to search for the reasons for this decline, and will it be treated so that the company's shares can be bought?!

When the two companies affiliated with the army - "Safi Water Bottling" and "National Petroleum Products Distribution" - announce their financial statements, it will be necessary to complete these financial statements, in terms of determining the contribution of soldiers' labor in the Safi Company's factories to achieving that profit at a cost of low wages, and the contribution of The free lands that were obtained in this, and in the case of Safi Company, which has dozens of sales outlets within the walls of military facilities in the governorates, what will be the fate of these outlets and will a rent be calculated for them?

Acquisition of the stock means buying the future of the company

In a national case of distributing fuel through more than 250 car fueling stations, what about the wages of the soldiers at those stations after selling a share of their shares?

And what about the vast lands occupied by its stations, and will rent be paid for it?

And the categories of that rent according to the distinction of areas between those inside and outside cities to come up with natural financial lists that exclude the impact of these factors, and then compare them with the profits of competing companies with the same activity to see how distinguished the company is from its peers without special privileges.

Thus, questions arise for each company offered for sale that needs a response in order to make a rational decision to buy its shares, such as the Egyptian Company for the Production of Propylene, which suffers from harmful competition from the production of Gulf companies for the same product, which it markets in Egypt at lower prices due to the support it receives in its country, and the impact of that competition on Marketing its production, profits, and the proposed solutions to make a rational decision to acquire its shares when they are offered.

The buyer of a company’s shares is in fact buying the future of that company and not its previous history, so no matter how successful its performance was in the past, the most important thing is the future for the investor, because he is the one who will make a profit for him or make a loss for him or miss the opportunity to invest in another better performing company, and it is difficult for the circumstances to be repeated Which surrounded the company in the past and the future, in light of the changes that befall the local, regional and international economy.

Banque du Caire, as a government bank, needs the one who is willing to make a decision to buy its shares, to know the size of its bad debt portfolio, and the size of its political loans, which are loans granted by government banks under pressure from senior officials, regardless of the creditworthiness of the borrower, which is the problem he suffered from. Same bank 15 years ago.

Also, what is the impact of Moody's downgrade of the bank's rating recently from a weak level to a very weak level?

Thus, the success of privatization, which makes money its owner, and brings in general assemblies that monitor management, requires transparency in information and giving equal opportunities of data to everyone at the same time without discrimination, as well as the existence of a state of law, an independent judiciary and accountability, so that it truly becomes a means of rationalizing the management of economic resources.