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Al-Ahram Weekly 6 - 12 April 2000 Issue No. 476 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 6 - 12 April 2000 Issue No. 476
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Summit Features Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Letters A touch of Disney
By Sherine Abdel Razek
The Egyptian Media Production City Company (MPCC) has been the focus of market attention over the past few weeks.
The company's shares, introduced in September at LE10 a share, have performed consistently well over the past five months, ending last week at LE71.
Most recently, the MPCC has dominated market transactions, cornering 39 per cent of overall turnover last week and 47 per cent in the pervious week, replacing MobiNil as the market's star performer.
Media and telecommunications companies have become highly attractive in the wake of the MobiNil experience. The first high-tech company to be launched in the Egyptian market, MobiNil's price repeatedly broke records.
Demand for MPCC shares was fuelled by news that the company will participate in a free media production zone, and further boosted by rumours that Eurodisney was considering taking a stake in the company.
But there have also been reports that the Ministry of Information, along with the Radio and Television Union, which hold around 50 per cent of the company's equity, have been talking-up the company's shares.
"The company's position in the stock market is unjustified," believes Nashaat Abdel-Aziz, managing director of Egyptians Abroad for Investments and Developments.
"Eurodisney itself has never registered such leaps. Any financial analysis of the company clearly indicates that it is currently seriously over-valued."
The company's financial results for 1999 revealed profits of LE 31 million, meaning shares are currently being traded at a price-earning ratio of 350, nine times higher than the market average.
"Psychological factors are the name of the game," said Abdel-Aziz. Egyptian investors are prone to buying bullish shares even when there is no logical basis or reason for the increases in price. Such behaviour, though, can have serious repercussions as investors liquidate their holdings in other companies so as to buy more of the rising share.
While a report published by EFG Hermes failed to find any solid reasons for the public's buying frenzy, a second report issued by the United Brothers pointed out that the company is basically sound, has a professional management team and enjoys a monopoly in both the Egyptian and Arab markets.
