Market report

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Following a non-stop upward trend during the last three months, the market witnessed a profit taking spree during all the trading sessions of the week ending 8 November. With shares jumping to record highs, investors opted to liquidate their holdings through the week to acquire capital gains, and even foreign investors were net sellers. This resulted in a 3.7 per cent decline in the CASE30 index to 9,177 points, compared to 9,527 the previous week.

A handful of positive economic news failed to offset the setback, which is expected to be short-lived amid positive macro- indicators, sound performance of listed companies and a retreating dollar. According to the Central Bank of Egypt, net foreign reserves reached $30.92 billion by the end of October 2007, showing a rise of 3.5 per cent from its level in September 2007, and a 26.8 per cent increase from the previous year.

Meanwhile, the number of tourists visiting Egypt reached nine million visitors in fiscal year 2006/2007, up from 7.9 million the previous year. Tourism revenues amounted to $7.6 billion in the same year and are expected to reach $14.0 billion in 2011.

TALAAT MUSTAFA GROUP (TMG) is offering 180 million shares, representing 10 per cent of its outstanding shares, through both an IPO and private placement. TMG's financial adviser Grant Thornton valued the company at LE25.3 billion equivalents or LE13.91 per share.

The first tranche, sold through the IPO, comprises 65 million shares at a price ranging between LE10 and LE13.91 per share. Subscribers in the IPO have to buy a minimum of 500 shares and a maximum of 100,000 shares, in addition to depositing 50 per cent of the value of their buying orders with their brokers. The subscription period lasts for 10 days ending 20 November.

The second tranche pertaining to a private placement will have minimum and maximum buying orders of 65 million and 115 million shares, respectively, and will be offered at a maximum price of LE12.6 per share, representing a 9.4 per cent discount to the company's share fair value. In order to maintain price stability during the offer and immediately after its end, TMG reserved 50 million shares of those allocated to the private placement to be managed by the offering book runner.

The capital proceeds are expected to fund expanding the company locally and regionally.

SIDI KREIR FOR PETROCHEMICALS COMPANY (Sidpec) posted a nine per cent increase in its bottom line figure during the first nine months of fiscal year 2007, to reach LE794.5 million. This compared to LE724 million during the corresponding period in 2006. Sidpec recently formed a joint venture with the Holding Company for Chemical Industries to expand its ethylene production lines. ABB LUMMUS Americans Company is the contractor and engineering designer of the project.

HELIOPOLIS HOUSING & DEVELOPMENT COMPANY (HHD) is expected to receive LE1 billion in proceeds from a planned public auction of its 200 feddans located in Cairo. HHD's chairman was quoted last week by the financial news website, Noozz, as saying that a number of local and Gulf-based companies have already bought the deal documents and terms, and the company has formed a technical ad hoc committee to answer their enquiries.

While he did not reveal the name of any of these companies, he insisted that the auction was drawing great interest from investors and major companies both in Egypt and abroad. Names of the winning bidders will be announced on 27 November.

On a different note, HHD will pay out a LE5 dividend to its shareholders as of 19 November on two instalments. The first instalment of LE3 will be distributed on 22 November and the second on 30 January, 2008. The company recently released its results for the first quarter of fiscal year 2007/2008, posting an 18 per cent surge in net income to reach LE45.9 million.

ORIENTAL WEAVERS CARPETS COMPANY (OWCC) and Credit Agricole Bank signed several agreements to fix interest rates on loans obtained by Oriental Weavers Investment. This comes within the framework of OWCC's strategy to reduce costs through restructuring its financing structure. Accordingly, the company will pay a fixed borrowing interest rate of 3.9 per cent during fiscal years 2007 and 2008.

OWCC estimated a preliminary loss of LE52.3 million after a fire in one of its premises two weeks ago, representing 3.6 per cent of the company's insurance policy value of LE1.44 billion. The insurance company has made an initial downpayment of LE20 million, assuring that the remaining sum will be paid as soon as OWCC files for collection.

ORASCOM TELECOM HOLDING (OTH) Chairman Naguib Sawiris announced that a deal to sell the Algerian fixed line LACOM, a 50-50 joint venture between OTH and Telecom Egypt, might not materialise. Sawiris cited the Algerian regulator's preferential attitude towards the country's state-owned operator, Algerie Telecom, as a reason for the expected failure of negotiations.

On another note, Sawiris stated that MobiNil, which is 33 per cent owned by OTH, may not apply for an international call licence according to current terms. This, he explained, is because the pricing of the licence was in favour of Telecom Egypt, which currently monopolises the international gateway. Sawiris stated that he will approach Minister of Communication and Information Technology Tareq Kamel to discuss the possibility of changing the terms of the licence.

Meanwhile, OTH expressed interest in bidding for Egypt's second fixed line licence which the government intends to offer next year.

AL-WATANY BANK OF EGYPT (AWB)'s results for the first nine months of fiscal year 2007 ending September, showed a 170 per cent increase in net income to reach LE224.9 million. This is comparable to LE83.1 million for the same period in 2006. Net interest income rose by 37.9 per cent to LE258.1 million, while non-interest income jumped by 41.8 per cent to LE184.7 million in the nine-month period.

Compiled by Sherine Abdel-Razek