Market report

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With blue chips returning back to take the lead and an increased interest from Gulf investors, mid-week transactions were able to offset early trading losses. The overall market turnover during the week ending 8 March came at LE5.2 billion.

Good news at the macro-economic level included Minister of Economic Development Othman Mohamed Othman's expectations that inflation will decline to nine per cent by June, 2007. Other positive news came from Governor of the Central Bank of Egypt (CBE) Farouk El-Okda who announced that the non- performing loans settlements of the public sector companies, small and medium enterprises and individuals are to be entirely completed this year.

El-Okda also highlighted a scheme to increase the paid-in capital of public sector banks by around LE6 billion, to be primarily financed by a $1 billion loan from the World Bank.

ORASCOM TELECOM HOLDING (OTH)'s fixed period for buying 11 million treasury stocks back from its shareholders ended on 6 March, with only 254,700 shares bought at a maximum price of LE436 per share. Meanwhile, the extraordinary General Assembly of the Hutchinson Telecommunications International Limited (HTIL) approved the sale of 67 per cent of its subsidiary Hutch Isaar to Vodafone group for $11.1 billion.

OTH CEO and main shareholder Naguib Sawiris resigned as the director of HTIL after the sale.

PAINTS AND CHEMICAL INDUSTRIES (PACHIN)'s mother company the Holding Company for Chemical Industries said it is not selling its 32 per cent stake in Pachin to Middle East Chemicals at the offered price of LE53 per share. The latter submitted an offer to buy 100 per cent of Pachin two weeks ago, after the government unveiled a plan to sell its stake in the company.

Pachin is considered a good catch due to its sound financial results over the past few years, in light of a rejuvenated local and regional construction market. It is also the largest paint producer in Egypt. Moreover, Pachin for Inks, a wholly owned subsidiary of Pachin, was incorporated before the introduction of the new tax law. This means that when it relocates its facilities to Obour City later this year, it will enjoy a 10-year tax holiday.

The company plans to sell the land on which its current facilities in Ameriya are located, with an expected capital gain of LE60 million.

MISR CEMENT QENA (MCQ) is at the centre of a bidding war between Citadel Capital and Cimpor to buy majority shares in the company. Citadel Capital succeeded in acquiring a 10 per cent stake in MCQ in the open market at an average price of LE80. The total value of the deal stands at LE250 million. Moreover, Citadel informed MCQ management that it wants to increase its holdings in the company to exceed the 10 per cent stake over the coming two weeks.

Meanwhile, Portuguese Cimpor is also competing over MCQ share through submitting tender offers in the open market. It started the race a month ago by offering to buy 100 per cent of MCQ at LE67 per share. Citadel Capital joined the race with a LE75 per share offer.

NATIONAL SOCIÉTÉ GÉNÉRALE BANQUE (NSGB) results for 2006 reflected the burden of the bank's merger with Misr International Bank (MIB). The bottom line retreated from LE493.5 million in fiscal year 2005 to LE147.9 million in 2006.

NSGB's General and Administrative Expenses skyrocketed by 233.7 per cent to LE899.6 million in 2006, pushing its cost to income ratio to 29 per cent compared to 16.5 per cent for its main competitor Commercial International Bank (CIB). This was fed by LE361 million cornered as the cost of goodwill amortisation, including unifying the name of all the bank's branches under the NSGB name.

SINAI CEMENT posted a 57.7 per cent increase in its net profits to LE286.8 million in 2006, compared to the previous year. The increase was fuelled by a sales growth and a null interest expense since the company is currently debt free, compared to an interest expense of LE18.1 million in 2005. A 28.3 per cent increase in sales was fuelled by a 14 per cent increase in average local sale price.

COMMERCIAL INTERNATIONAL BANK (CIB) unveiled a plan to set up a joint venture bank in Algeria with a number of local and UAE investors under the name of CIB-Algeria. While the exact value of the new entity's paid-in capital and names of the other shareholders are yet to be announced, CIB said it already signed a memorandum of understanding with the partners, in addition to applying to the Algerian Central Bank to acquire a licence.

Compiled by Sherine Abdel-Razek