A source has revealed that MM Group for Industry and International Trade (MTIE) is on track to achieve its 2021 auto volumes target of 1,100 cars. He added that Management is expecting a 15-20% revenue growth in its subsidiary, Kanawat Distribution, during 2021. The recently added TV and AC brands are expected to show higher contribution to revenues. MTIE reported revenues in the first quarter (Q1) of 2020 of EGP 2.51bn, compared with EGP 2.23bn in Q1 of 2020, and compared to EGP 2.13bn in Q4 of 2020. This meant an increase of 12.7% year-on-year (y-o-y), and 18.1% quarter-on-quarter (q-o-q). During Q1 of 2021, the company's sales performance was driven by consumer electronics sales, which rose 14.7% y-o-y and 7.8% q-o-q, as well as auto segment sales, which rose 33.5% y-o-y and 101.4% q-o-q. This offset weak telecom sales, which decreased by 25.2% y-o-y, and 15.7% q-o-q. Kanawat Distribution continued to show strong performance in Q1 of 2021, after a pressured performance during the first nine months (9M) of 2020. This was driven by the delayed introduction of new mobile models and preparation for expanding in shops to replicate MTIE's business model to form an organised chain of retail outlets. This aimed to secure higher margins that reflect positively on bottom line performance. Kanawat Distribution recorded revenues of EGP 655m in Q1 of 2021, an increase of 62% y-o-y, and 13% q-o-q. Kanawat's performance is expected to gradually recover throughout 2021, given the completion of shop expansion, and the introduction of new Samsung and Nokia models. Collectively, these are expected to increase sales and support recovery. Automotive sales recorded an impressive EGP 607m in Q1 of 2021, reflecting an increase of 33.5% y-o-y, and 101.4% q-o-q. MTIE sold around 315 cars in Q1 of 2021, slightly up from 296 cars in Q1 of 2020 and significantly up from around 167 cars in Q4 of 2020. Auto sales contributed 24.1% of total revenues, an increase of 3.8pps y-o-y, and 10.0pps q-o-q. Pharos Research sees signs of recovery in the consumer electronics segment, the introduction of new models, adding new home appliances to the company's distribution network, and replicating MTIE's model in Kanawat. This is in addition to the positive developments in Ebtikar (with Vitas to breakeven towards the end of Q2 of 2021), along with a rebound in auto sales could lead to a better operational and financial performance in 2021.
