The market is showing signs of strength and regaining some balance hitting the 5,400 level on Sunday, its highest level in six weeks. The value of daily transactions, nevertheless, remained at the lows of the LE400-500 million level.
Egypt plans to sell $1 billion in five-year Eurobonds this year to finance the widening budget deficit. "We need to diversify because the local market is squeezed," Finance Minister Samir Radwan told Reuters.
The deficit may widen to 11 per cent of GDP in 2011-2012 according to the website of the Ministry of Finance compared to 9.2 per cent this fiscal year.
This came a few days after Egypt received a debt forgiveness of $1 billion from the US and a $4 billion aid package from Saudi Arabia which will include a $1 billion deposit at the Central Bank and $500 million in bond purchases.
The moves will help ease, to a certain extent, the pressures on foreign reserves. The direct purchases of government bonds will ease pressures on yields, and will help finance the deficit.
On another positive note, the government will form a committee for settling investment contracts and disputes, a decision many market analysts say will be useful for listed real estate companies.
AL-SEWEDY ELECTRIC: The Arab world's biggest listed cable maker posted a 32 per cent drop in first-quarter net profit to LE171.3 million. Al-Sewedy's consolidated revenue rose by 21 per cent to LE3.6 billion compared with a year earlier.
In March, the company had slashed its forecast for net profit growth in the current year to one per cent from 20 per cent due to political transformations in Egypt and Libya. A company statement released on Monday said the first three months of 2011 were "challenging".
An analyst interviewed by Reuters attributed the increase in revenues to the fact that non-cable operations like transformers, metres, and turnkey projects contributed more in 2011.
CITADEL CAPITAL (CC): The leading private equity group said it will appeal the Egyptian Financial Supervisory Authority (EFSA) decision to refuse CC's request for permission to call its board of directors to convene to approve to increase its capital via rights issue. CC had filed for preliminary approval to increase its capital to LE4.4 billion from LE3.3 billion. EFSA said the rejection is based on reasons that included the failure of the private equity firm to give adequate justification for the increase. A statement released by CC noted that its original proposal fully outlined the structure and conditions of the rights issue as well as the use of proceeds.
CC's management noted that EFSA has, in recent months, initially denied permission to a number of other applicants seeking capital increases. Appeals are then considered by EFSA as a recourse.
ORASCOM TELECOM HOLDING (OTH): The company's two-year dispute with the Algerian government over its Algerian unit Djezzy seems to be moving towards a resolution. Khaled Bichara, OTH's new CEO, told Reuters his company sees there may be an intention to arrive at a solution. "We hope we are reading the situation correctly. But do we have any formal meetings or confirmed news? The truth is no," Bichara said.
On another front, 42 local and international banks signed a contract to transfer OTH's $1.77 billion worth of debts to VimpelCom as a part of the merger deal between the two companies. The hearing of the appeal case, raised by Public Mobile (a new entrant to the Canadian mobile market), which challenges the Canadian government's decision to grant OTH's Canadian unit a licence to operate, opened last week and a decision was not expected for several weeks. Globalive spent 442 million Canadian dollars for the licence and stared operations in December 2009, after the government overturned a regulator ruling that blocked its operation. According to CI Capital, losing the appeal case would not threaten Globalive's immediate future as it could appeal to the Supreme Court or alter its structure to win approval. However, a victory could ease investors' concerns. Canada's Telecommunications Act restricts foreign ownership to 20 per cent of a telecom's voting shares, and limits direct and indirect foreign control to 46.7 per cent, while OTH holds a third of the voting shares and two- thirds of the equity in Globalive.
JUHAYNA FOOD INDUSTRIES: The company posted a 17 per cent drop in its first quarter consolidated net profit to LE50.1 million compared to LE60.2 million a year ago. Revenues grew six per cent to LE427.6 million on higher revenue in all segments: dairy, yoghurt, juice and concentrates.
Commenting on the results, Beltone Financial said that the results are positive "given a challenging political environment early in the quarter, where the company (and all businesses in general) suffered a week of lost sales due to the revolution," it said. The investment bank explained that the drop in profits in the first three months of the year is due to non-recurring capital gains recorded in the corresponding quarter of the previous year. Juhayna recorded LE19.59 million in capital gains from the sale of land back then. If the value of this land's revenues were taken off, Juhayna's profit in the first quarter of the current year would have been 23.5 per cent higher.
THE EGYPTIAN COMPANY FOR MOBILE SERVICES (MOBINIL): The company's ordinary general meeting approved interim dividends of LE3.16 per share, implying an interim dividend yield of 2.26 per cent, to be distributed on 8 June. This pushes up the total dividends per share (DPS) for 2010 to LE12.35, implying a dividend yield of 8.9 per cent.
Compiled by Sherin Abdel-Razek