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Egypt: Transport and Logistics Sector 2010 - 2011
CI Capital Holdings, Dec 2010, Pages: 17
Water is still key to Egypt's Economic health During 2010 there was moderate growth in the sector and the start of new initiatives to increase internal trade using the river Nile. Medium and long term prospects remain positive, but growth in 2011 may be muted further. longer term prospects open up with newly signed trade agreements with Mercasur countries, and burgeoning trade with China
The expression “No Trade without Transport” is particularly apt when assessing the importance of Egypt’s Transport & Logistics sector to the country’s economy and trade. Indeed, some 90% of the country’s foreign trade passes through its ports. Egypt sits in the heart of world trade routes and astride the Suez Canal, which sees around 15% of global trade traffic. This has made it a hub for international traffic. During FY09/10, three of the sector’s four main business segments showed an improvement on the previous fiscal year. Cargo and container handling rose 11% and 10%, respectively, while passenger traffic added 3.5%. Vessel traffic, meanwhile, slid 5%. The river transport industry continues to hold untapped potential, contributing less than 1% of total goods transported internally. It recorded a CAGR of 11% between 2003-08 and 4% in 2008 alone. A fleet of 330 barges currently serves only about seven of 50 operating ports located throughout the country. Though we remain positive on both the global and Egyptian maritime industry in the medium to long-term, we feel 2011 growth may slow due to weaker-than-expected global demand and the developing currency war between the US and China. We expect a little major change in demand for the river industry during 2011, especially given the lack of news regarding new ports and barges. In terms of our universe, Egytrans [ETRS] is our top pick with a Buy recommendation, stimulated by a strong future growth, high profitability margins, and cheap P/ER compared to its int’l peers.
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