Al-Ahram Weekly Online   30 March - 5 April 2006
Issue No. 788
Published in Cairo by AL-AHRAM established in 1875

Market report

The market gained ground after the dramatic losses of recent weeks as local funds, as well as individual investors, began once again to buy. The CASE30 closed five per cent up, ending the week at 6,708 points.

The value of transactions came in at LE4.3 billion which, while low compared to the heady days of December and January when transactions often came in at the LE8 billion mark, suggests that investors are regaining their balance with many holding onto stocks in a wait and see mood.

The Cairo and Alexandria Stock Exchange (CASE) is also pursuing greater interregional linkage. CASE, Abu Dhabi Securities Market and Misr Clearing, Settlement and Central Depository have signed an agreement allowing for dual listings and trading on both markets. CASE's supervisory body, the Capital Market Authority, has also signed a Memorandum of Understanding with the Securities and Commodities Authority in UAE in an attempt to upgrade investor protection and market efficiency.

Eastern Tobacco: The government is considering transferring ownership of the company's real estate to a specialised real estate entity in which the government's 53 per cent stake would then be offered for sale.

Minister of Investment Mahmoud Mohieddin announced last week that five international and local institutions had been short-listed as possible advisors for the offering. First, though, a scheme will have to be devised to deal with the company's monopoly over cigarette manufacturing and to guarantee workers' rights. EFG-Hermes upgraded EC's fair value to LE451, 28 per cent higher than the traded value.

According to an HC report on the company issued last June the book value of EC land had reached LE219.7 million, of which LE172 million was accounted for by its 6th of October City complex with the balance of LE47.7 million being made up by EC land holdings in Giza, Alexandria, Talbia and Menouf. The market value of the real estate was estimated at LE1.57 billion.

MISR ALUMINUM: Misr Aluminum's general assembly approved a fiscal year 2006/2007 budget which projected net profits at LE420 million, up from LE405.5 million. The meeting also shed light on the impact of the 5.1 per cent increase in electricity prices, to 10.3 piastres per kilowatt hour, on MA's results. The increase has seen the Cost of Goods Sold item on its income statement grow by LE21 million. The company also decided to double its capital to LE1 billion and modify company by laws accordingly.

The Holding Company for Metallurgical Industries also announced that Misr Aluminum's right's issue will be postponed as the slow down in the market during the last two months has negatively affected demand.

SIDI KRIR PETROCHEMICALS (SIDPEC): The company -- Egypt's monopoly producer of ethylene and polyethylene -- posted an 8.2 per cent increase in net income during 2005 compared to the previous year, with net profits coming in at LE794.7 million. Revenues were up by 2.2 per cent increase to LE1.7 billion. Production of ethylene fell slightly during 2005, while sales dropped 317,000 tonnes in 2004 to 311,000 tonnes in 2005. The company plans to increase its ethylene production capacity by 460,000 tonnes over the next three years.

SIDPEC exports more than 30 per cent of its polyethylene production though, as highlighted in an HC Securities news bulletin, the increase in international prices of polyethylene has not been reflected in the company's profits given that it sells through forward contracts at pre-fixed prices. With shares trading at LE103 on the day it posted results, SIDPEC's Price/Earning ratio is 12.97 times compared to a global average of 11.24 times, suggesting it is slightly overvalued. Even so, the company ended the week up at LE116.2.

ORASCOM CONSTRUCTION INDUSTRIES (OCI): One of the most actively traded stocks of the week, OCI was also one of the heaviest gainers, ending the week with a 6.49 per cent increase to close at LE228.58. Interest in the company is being fed by its ambitious regional expansion plans. OCI is the largest regional manufacturer of construction and building materials. It ranks ninth internationally in terms of cement production capacity and is among the world's top 150 construction companies.

OCI, which operates in more than 20 countries, is currently expanding its natural gas based fertiliser operation. Since Egyptian law stipulates that company loans cannot exceed half of capital OCI launched a rights issue of LE2.3 billion to finance its expansion.

Commercial international bank (CIB): Last week's CIB general assembly approved a LE410 million increase in legal reserves, and an increase in the bank's authorised capital to LE5 billion compared to its current LE1.5 billion. It was also decided to issue LE2 billion worth of callable convertible bonds with a five- 10 year tenor. CIB shares rose LE2 to close the week at LE69.

ARAB COTTON GINNING (ACG): ACG was this week's top performer, making up for at least some of the losses sustained earlier in the month. It gained a massive 60.82 per cent to close at LE13.75. ACG, set up in 1963 as a state-owned entity, was fully privatised in the early 1990s. It has followed an aggressive expansionary plan, acquiring majority stakes in some other textiles companies and merging with others. The company's former chairman Amin Abaza stepped down three months ago following his appointment as minister of agriculture and land reclamation. ACG was one of the best performing shares of 2005, surging by 653 per cent during the year to end at LE25.9.

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