Mubasher: The research team of MubasherTrade maintained its price target estimate for Commercial International Bank Egypt (CIB) at EGP52.3/share, implying a total expected return of 48%. It also maintained the recommendation for the bank at BUY/LOW RISK.
The evaluation came after CIB announced that it has received a non-binding offer from Orascom Telecom & Media Technology Holding (OTMT) to acquire 100% of CI Capital Holding, CIB's wholly owned investment bank, in the range of EGP1 billion.
“We see the deal to have a positive effect on the bank's profitability in 2016,” said MubasherTrade.
CIB had acquired 49.89% of CI Capital back in 2008 for EGP768.2 million (implying a total value of EGP1.5 billion), raising the bank's ownership stake to 99.98%. Back then, CI Capital's book value was EGP1.1 billion, which currently stands at EGP428 million.
" If CIB sells CI Capital for EGP1 billion, it will book a net after-tax capital gain of EGP443 million, most likely in 2016 financials and we expect CIB's net profit (excluding CI Capital's contribution), including the one-off capital gain, to increase 7% to EGP6.7 billion in 2016," said MubasherTrade.
