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Al-Ahram Weekly On-line 16 - 22 November 2000 Issue No.508 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly On-line 16 - 22 November 2000 Issue No.508
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Secrecy feeds speculation
By Sherine Abdel-Razek
Increased profits, fresh investments and a free zone status: the Media Production City seems to have it all. Shareholders are their happiest since last April, when shares plummeted from its highest ever level of LE75 to the LE15-20 range. The company has since doubled its profits, though it will not actually start operating until the second half of year 2001, when the inauguration of Mubarak's international studio complex will provide it with an operations base.
During the nine months to September, the company's net profit was LE37.8 million, compared to approximately LE17.2 million for the whole of last year. While the company did not reveal the sources of its revenues so far, it is believed that it has mostly come from the interest on its bank deposits.
The General Authority for Investment has meanwhile approved three new projects for the company with total investment cost of $36 million. This came just a week after the company's extraordinary general assembly announced its unanimous approval to allow the company to work under the umbrella of free zones regulations. This means that it will be tax- and custom-exempt, an advantage, according to its head Abdel-Rahaman Abdel-Hafez, that will attract more investors.
The surprise is that market analysts were unimpressed by all this news. It is not a matter of profits that is important, said Khaled El-Mahdi, head of research in Hong Kong and Shanghai banking corp in Egypt. He pointed out that MPRC has still to meet with analysts to discuss its future projects and prospects. The company issues a No Opinion recommendation to all brokerage houses, which means they cannot assess its performance. In an attempt aiming to put an end to this situation, the company itself has contracted an investor-relations company, Finlink, to help improve both its public and private image.
The uncertainty surrounding the company's future prospects has not stripped it of its position at the top of the most popular stocks in the stock market. It alone accounted for 21 per cent of the overall market turnover during September.
El-Mahdi has a different take on things. He says that the floated shares of the company represent 10 per cent of its equity and are held by small investors usually seeking shares easy to sell - so even if they are with a company with no apparent long-term future, it would not matter. The high price of the shares, he continued, and the company's huge financial resources, were the main reason it was included in the Morgan Stanley Emerging Market Index in May 2001.
The company has several strengths. It owns 1.85 million square miles in the Media City complex in 6th October City, which enjoys a free zone status. It's Mubarak complex includes 29 studios, of which 11 are rented.
History of Media Production City shares since its debut at the end of 1999
Source:El Eman Brokerage
Recently, there has been much talk about investment in the company's studios in the media city. However, the willingness of such investors to deal with the tricky issue of censorship by the ministry of information remains a question. In fact, such tension is already around with the Qatari-based El-Jazira satellite channel, which signed last April an agreement to use the company's facilities but has since received a threat from the minister of information that its offices here will be closed if the channels continues to adopt what it considers an anti-Egyptian bias.
The company's internal affairs are increasingly coming under scrutiny too. Its extraordinary general assembly witnessed furious small investors asking the company to take steps to compensate them for the huge capital losses they have incurred. Small investors accuse the company of acting illegally when it gave the institutional shareholders -- ie, those considered to be its founders -- the right to sell their shares within two years of the company's establishment. This resulted in an over-issuing of shares, and thus the price of each to spiral downward - a trend still having a knock-on effect.
The recent intervention by the National Bank of Egypt on behalf of other investors to repurchase four million of the company's shares in a move aimed at limiting this decline in its share price has not achieved much. However, the news was leaked to investors, who rushed to submit selling orders for the shares the NBE had offered to buy at LE25 each, because at the time they were trading at just LE15.
Additional reporting Hanan Sabra
Related stories:
Private media push and pull 24 Feb. - 1 March 2000
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