Market report

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The market took observers by surprise during the week ending 24 August with CASE 30 breaking the 6000 points threshold, and ending the week at 6061 points, its highest level in three months. The value of transactions came at LE6.2 billion, 50 per cent higher than the previous week.

While positive sentiment caused by first half results is believed to be the main contributor to the rise, increased demand on a number of heavyweights -- mainly Orascom Telecom, Orascom Construction Industries, EFG-Hermes and Commercial International Bank (CIB) -- fed the market's revival. The four companies have been delivering good news for their shareholders for some time.

Also, an increase in foreign transactions, mounting to around 38 per cent of the market's turnover, has helped in sustaining the upward trend. The week also witnessed ownership transfer worth LE1.6 billion in shares of Delta International Bank to the National United Bank of Bahrain.

ORASCOM TELECOM HOLDING (OTH): The regional GSM operator released its first half results, where it realised an 11 per cent increase in net income, on the back of increased revenues due to an obvious increase in subscribers. The number of subscribers in the eight networks OTH operates increased by 93 per cent, up from 21.2 million in June 2005, to 41.0 million in June 2006.

Nonetheless, the increase in the company's subscriber base was offset by a meagre increase in interest expenses by 1509 per cent. Interest expense growth was propelled by rising total debt from LE10.36 billion in June 2005 to LE21.17 billion one year later. This was worsened by hikes in the dollar LIBOR rate. More than 60 per cent of OTH's debt is in foreign currency.

RAYA HOLDING: Egypt's fast expanding IT company had one of its best ever weeks with shares gaining 17.14 per cent. This was an unexpected performance in light of weak results in the first half. Following disappointing results and a decline in growth in the line, the company is considering decreasing its participation in its telecom unit. Raya said it had received several offers in the past few weeks from companies wanting to buy the telecom unit.

Raya would then increase its investments in its Information Technology and Retail and Distribution units, which are both profitable. The company expects to complete a study on internal restructuring in a few weeks.

EGYPTIAN AMERICAN BANK (EAB): The bank's shares together with that of Calyon Bank were suspended from trading by the listing committee, as a step to officially merge together under the name of Crédit Agricole. The 286.5 million shares of the new entity will be traded starting 3 September, 2006. The opening price for shares of Crédit Agricole was calculated according to the market capitalisation for the two banks at the end of 24 August, 2006 (the last day shares of both banks changed hands), divided by the total number of shares of the new entity. This means that the share will be traded at EL16.93.

MOBINIL: the company's dispute with the National Telecommunication Regulatory Authority (NTRA) has escalated, with the latter giving MobiNil a two-week period to stop using the EDGE Technology. This technology is considered a G3 Technology by the International Telecommunication Union, and thus needs to be licensed. But MobiNil insists that the technology it is using on an experimental basis in six per cent of its stations is only an advanced version of the GPRS services that the NTRA permits, such as 2G technologies.

A senior official at MobiNil noted that GSMA, which includes all GSM network operators worldwide, has sent a letter to the NTRA on behalf of MobiNil. The letter stated that EDGE technology is used by 150 GSM operators in 88 countries as a part of the 2G technology, and that none of these operators applied for a license to use it. So far, only the soon-to- be-launched third mobile network, operated by the Etisalat consortium, has the right to operate a 3G network in Egypt.

AMOUN PHARMACEUTICALS: the private pharmaceuticals company announced that the international consortium of Citigroup Venture, Capital International Private Equity Fund and Concord International Investments has completed the necessary due diligence, and is expected to submit a final offer to purchase the company next month. The deal is expected to be concluded at a price range of LE47-LE52.5. Amoun Pharmaceuticals has a paid-in capital of LE300 million, distributed over 60 million shares at value of LE5.0 per share.

TELECOM EGYPT selected the Chinese Huawei Technologies, a leader in providing next generation telecommunications network solutions, to provide Dense Wavelength Division Multiplexing (DWDM) technology. This technology enables multiple video, audio and data channels to be transmitted over one fibre and increases the efficiency and bandwidth of networks. The three-year contract will increase the capacity of Telecom Egypt's Cairo work and reduce operating costs.

OLYMPIC GROUP FINANCIAL INVESTMENTS: the white good manufacturer released its first half results which witnessed a whopping 109.3 per cent increase in net profits, to reach LE100.28 million. A 30 per cent decline in interest expenses was the main reason behind the good performance, together with a retreat in other costs due to a 12-15 per cent decline in flat steel prices and more dependence on locally produced components.

Compiled by Sherine Abdel-Razek