EFG-Hermes issued a new report on Orascom Telecom Media and Technology (OTMT.CA), lowering the stock's fair value to EGP 0.63 ($0.52/GDR) from EGP 1.90 ($1.56/GDR), which represents a 54% upside potential for the local share. The investment bank also recommended 'Buy'. The downgrade was attributed to the company's super dividend at EGP1.05 per share. The payment date is 19 July. The EGX adjusted the closing price of July 16th to EGP 0.40 from EGP 1.45. OTMT GDR went ex-dividend on 12 July. As of end of today, OTMT will be dropped from the MSCI Standard indices (Egypt and EM) and added to the Small Cap Indices since it no longer satisfies the size criteria. The NAV of the stock today is mainly comprised of the 75% stake in Koryolink which is valued at EGP 0.39/OTMT share or $333 million and the 5% stake in the Egyptian Company for Mobile Services (Mobinil) – (EMOB.CA) which is valued at an implied 20% discount to the floor of the put option of EGP268.5/share and which yields EGP0.15/OTMT share. The under discussion telecom law may represent a risk to exercising the option if it stipulates the presence of a local partner. There will not be much appetite for the stock, given the absence of catalyst after the dividend was paid, the report issuer added. The strategy of the company post the Mobinil sale remains ambiguous and more clarity is required before the stock is rerated.
