Market report
A handful of blue chips registered new records through the transactions of the week ending on 13 March, due to increased local and foreign demand which pushed the CASE30 index to exceed the 11,500 points threshold for the first time. However, heavy profit-taking activity at the end of the week deprived the market of some of its gains, and was reflected in a 0.5 per cent decline in the CASE30 compared to the end of the previous week.
Overall transactions through the week came at LE14.3 billion, with foreigners being net sellers with their selling orders exceeding their buying activities by LE351 million.
On the macroeconomic level, Suez Canal revenues rose to $407.7 million in February, up from $326.4 million in February 2007.
ORASCOM TELECOM HOLDING (OTH) announced that it is interested in bidding for Egypt's second fixed-line licence which will be awarded through a tender on 19 June. If OTH applied for the licence it will compete with a number of local and regional players, including Alcan Egypt, the Saudi-based Atheeb and the UAE-based Etisalat.
On another front, OTH's CEO Naguib Sawiris said the company may start its North Korean operations by May, and is targeting a couple of million subscribers in up to four years. OTH posted a 180 per cent increase in its net profits through 2007 by realising profits worth $2.02 billion. The increase was fed by a 22 per cent increase in sales from $3.88 billion in 2006 to $4.72 billion in 2007. OTH also benefited from investment income resulting from the sale of its stake in HTIL and its Iraqi operation.
TELECOM EGYPT (TE) posted a net profit of LE2.54 billion, marking a 4.5 per cent growth during fiscal year 2007 compared to the previous year. Moreover, the company's subscriber base grew by 3.9 per cent to reach 11.23 million, thanks to a recent campaign to encourage the installation of new fixed lines. The rate of fixed line penetration in Egypt increased to 15.1 per cent from 14.7 per cent in 2006.
TE's increase in income was partly fed by increases in revenues of leasing the company's infrastructure to mobile operators, in addition to growth in mobile to fixed interconnection fees. An HC Securities report on TE's results pinpointed other developments in the company, stating that TE's CEO Aqil Beshir is currently in talks to acquire a telecom operator in the region with the aim of finalising the deal by the end of 2009. TE is also planning to buy another operator which combines fixed line and mobile services in the Middle East and North Africa (MENA) region, Africa and Eastern Europe.
Moreover, Telecom Egypt plans to rebalance its fixed line tariffs by increasing the price of local calls and decreasing the fixed line to mobile rates, in an attempt to curb the fixed to mobile substitution trend. The rebalanced tariffs are expected to take effect by mid-July, as the company is still in talks with mobile operators over these issues.
AL-ARAFA FOR INVESTMENTS AND CONSULTANCIES finalised two acquisition deals last week by totally acquiring Specialty Retail Group (SRG) -- one of Britain's leading menswear retail chains. SRG has annual sales of around 63 million Sterling pounds, and manages a total of 71 stores located in both high streets and malls. Arafa Holding is currently in the due diligence process and the transaction is expected by the end of March. After the acquisition, SRG will act as Arafa's retail arm in the UK.
On another front, Arafa Holding acquired the wholesale business of the European Piscador, Pierre Sangan, and Haynes & Bonner. This is in addition to acquiring Pierre Cardin licences for producing men's formal shirts. This agreement was finalised through the company's wholesale affiliate Melka, and would generate net profits of a million Sterling pounds. Some 75 per cent of the deal will be financed through previously agreed upon loans of $200 million.
PAINTS AND CHEMICAL INDUSTRIES (PACHIN) is considering regional expansion as a priority in the coming period, with production in its Libyan subsidiary expected to start next year. PACHIN is investing $826.4 million in the plant which has an annual capacity of 5,000 tonnes per year. Moreover, it might expand in Sudan to meet increased construction demands.
Compiled by Sherine Abdel-Razek
Al-Ahram Weekly Online : Located at: http://weekly.ahram.org.eg/2008/889/ec3.htm