Download EGYPT QUARTERLY MARKET REVIEW April –June 2010

Volume I—Issue 3
April –June 2010
EGYPT QUARTERLY MARKET REVIEW
Table of Contents
Egypt’s Economic Highlights….…………………………………….……….1
Macroeconomic & Corporate News……………………………………….…2
Stock Fundamentals………………………………………………………….3
Feature Story: Egypt’s Juhayna IPO 6.8 times Oversubscribed………..............4
Egypt’s Economic Highlights
A. Real GDP Growth
Real GDP growth (market prices) during July-March 2009 /2010 was driven by the resilience of
both private and public consumption growth, recording 3.8 percent and 4.4 percent respectively. Total investment spending also increased by 1.4 percent. On the other hand both exports and imports of goods and services have declined by 3.9 percent and 7.7 percent respectively.
From a sectoral perspective, Growth was led by manufacturing (5.0 percent growth, 15.7 percent of GDP), wholesale and retail trade (6.2 percent growth, 10.8 percent of GDP), construction (13.7 percent growth, 5.1 percent of GDP), and tourism (12.0 percent growth, 4.4 percent of
GDP).
B. Fiscal Performance
The notable decline in spending on “subsidies, grants and social benefits“ during July– June
2009 /2010 is mainly due to the drop in subsidy payments to GASC and EGPC by 28 percent
and 39.2 percent, recording LE 14.9 billion and LE 33.7 billion respectively (resulting from the
decline in international food and energy prices).
C. Domestic Debt Profile
Gross domestic debt of the general government amounts to LE 726 billion (60.6 percent of
GDP) at end of March 2010, compared to some LE 596.6 billion (57.4 percent of GDP) at end
of March last year. Also, net domestic debt of the general government reached some LE
572.2 billion (47.8 percent of GDP). The increase in general government debt at end of March
2010 was driven by the increase in consolidated budget sector debt, in addition to the increase in consolidated debt of the National Investment Bank by nearly LE 16.4 billion
amounting to LE 156.8 billion at end of March 2010.
D. Monetary Developments
Total liquidity has increased slightly by 0.2 percent during April 2010, registering LE 890.4
billion, compared to LE 888.2 billion in March 2010. Moreover, year-on-year growth in M2 at
end of April 2010 increased to 9.6 percent, compared to 6.8 percent at end of April 2009.
E .Prices
CBE decided to keep its overnight deposit and lending rates unchanged- for the sixth month
in a row- during the Monetary Policy Committee meeting on June 17th, 2010. The overnight
deposit and lending rates currently stand at 8.25 and 9.75 percent respectively. The MPC explained
that current policy rates are appropriate and supportive with recent recovery in domestic economic
activity while maintaining core inflation rates within its comfort zone.
F. External Sector
With respect to the External Sector, Balance of Payment statistics for July-March 2009 /2010 depict notable improvement in the overall balance that has accumulated a surplus of US$ 3.1 billion, compared to a deficit of US$ 2.3 billion during July-March 2008 /2009.
G. Stock Exchange
As for the performance of Domestic Capital Market, the EGX-30 index decreased by 903
points during May 2010, reaching 6549 compared to 7452 last month; however it has increased
by 623 points compared to May 2009. Market capitalization decreased over the previous year by
9.6 percent, reaching LE 426 billion (35.6 percent of GDP).
Egypt’s Key Economic Indicators
Key Indicators
Population
GDP
Real GDP growth (%)
Consumer price inflation (%)
Budget balance (% of GDP)
Current-account balance (% of GDP)
Inward Direct Investment (% of GDP)
Total External Debt (% of GDP)
Exchange rate EGP vs. US$
2008a
81.5
159.7
7.2
18.3
-7.0
-0.8
26.3
87.8
5.43
2009b
83.1
189.1
4.7
11.8
-6.6
-2.0
-17.7
80.1
5.55
a: Actual, b: Economist Intelligence Unit Estimate, c: Economist Intelligence Unit Forecast
2010c
84.7
227.9
5.2
12.2
-8.7
0.4
5.6
80.1
5.50
2011c
86.3
260.1
5.4
9.9
-7.6
1.7
10.4
77.1
5.58
Volume I—Issue 3
April - June 2010
EGYPT QUARTERLY MARKET REVIEW
Money Market Statistics
Rate
Overnight Int. bank Rate
91 T-Bill Rate
182 T-Bill Rate
365 T-Bill Rate
CBE Discount Rate
Deposit Rate
Lending Rate
EGX30 Three-Month Chart
GDR Trading
8.270
10.791
10.542
9.932
8.500
6.800
11.200
Date
30/06/10
30/06/10
30/06/10
30/06/10
02/08/09
30/06/10
30/06/10
30/06/2010
Local
L.E
GDR
(USD)
P/D%
CIB (1:1)
EFG (1:2)
Palm Hills (1:5)
OCI (1:1)
OT (1:5)
Telecom Egypt (1:5)
Suez Cement (1:1)
33.77
29.20
4.89
227.44
4.98
15.74
35.73
6.10
11.11
4.7
38.70
4.40
14.00
5.80
-0.61
4.69
5.78
-6.36
-2.76
-2.11
-10.67
EGX 30 Index
8200
7700
7200
6700
6200
5700
5200
Value Traded (L.E mn)
68,152 Close
Prev. Close
%Chg
High
Low
YTD%
6,033.09
6,806.11
-11.36
7,693.46
5,936.49
-4.60
Yr. H
7,279.91
Yr. L
3,380.33
Volume Traded (L.E mn)
8,848
Macro News
Corporate News
Egypt jumped 11 places to rank 70th in the Global Competitiveness Index (GCI), up from
81 in 2009. However, the overall improvement was largely based on deteriorating conditions in other countries, according to the seventh annual Egyptian Competitiveness Report
(ECR) titled “Green Egypt: A Vision for Tomorrow.”
A joint venture of Egypt's Orascom Construction Industries (OCI) has won a contract
worth $750 million to expand Qatar's international airport. Contracting via BESIX
Group's fully-owned unit Six Construct Qatar to provide all structural, mechanical and
electrical works and design coordination for the airport's lounge and retail area.
Egyptian customs revenue rose to 15.03 billion Egyptian pounds ($2.6 billion) in the fiscal year that ended on June 30. That would equate to a rise of 6.6 percent, as an economist
with an Egyptian investment bank said the government collected duties of 14.10 billion pounds
for 2008-09.
The World Bank's investment arm said it will invest $120 million to fund a refinery project near Cairo through Egyptian private equity firm Citadel Capital. The $3.7 billion refinery will be used to convert fuel oil into lighter products such as diesel.
Following a three year absence from global financial markets, Egypt is now having a comeback with two Eurobonds for a nominal value of US $ 1.5 billion issued in two tranches.
A 10 year tranche for US $ 1 billion carrying 5.75 % coupon and a 30year tranche for US $ 0.5
billion with a 6. 875 % coupon. It is the first time Egypt to issue a 30 year Eurobond.
Egypt's core annual inflation rose to 6.70 percent in the year to June from 6.69 percent in
May.
Egypt's producer price index rose 9.92 percent in May from a year earlier, based on index
figures released by Egypt's Central Agency for Public Mobilization and Statistics (CAPMAS).
Egypt aims to attract about $8 billion in foreign direct investment (FDI) and boost economic growth to 5.8 percent in the fiscal year that begins July 2010.
Egyptian investment bank EFG-Hermes had agreed to buy Jordanian brokerage firm
Tadawol for Securities and Financial Services for 3.85 million Jordanian dinars ($5.4
million).
Egypt's state-owned Food Industries Holding Company (FIHC) received offers from
German and Japanese company's to build a 1.2 billion Egyptian pound ($211 million)
sugar refinery.
The Egyptian unit of global mobile network operator Vodafone approved a 12.50 Egyptian
pound ($2.26) per share dividend. Egypt's landline monopoly has a 45 percent stake in the
Vodafone unit, allowing it to receive 1.35 billion pounds from the dividend.
Stock Fundamentals
Powered by:
Price
Stock
Telecommunications
Orascom Telecom Holding
MobiNil
Telecom Egypt
Construction and Materials
Orascom Construction Industries
Banking
Commercial International Bank
Credit Agricole Egypt
Housing & Development Bank
Financials
EFG-Hermes Holding
Pioneers Holding
Real Estate
TMG Holding
6th Oct. Development
Heliopolis Housing
Medinet Nasr Housing
Palm Hills Development
Oil and Gas
Maridive & Oil Services*
Sidi Kerir Petrochemicals
Egyptian Financial & Industrial
Tourism, Travel & Leisure
Egyptian for Tourism Resorts
Orascom Development Holding (EDR)**
Industrial Goods
El Swedy Cables
El Ezz Steel Rebars
Consumer Goods
Delta Sugar
GB AUTO
Oriental Weavers
Reuters
Code
Close
Yr. H
P/E
Yr. L
Market
Cap (mn)
Target
Price
Recommendation
ROA
ROE
EV (m)
10
11
12
10
11
12
10
11
12
23.87
ORTE.CA
4.98
8.03
4.57
26,125
7.34
Hold
52,667
5.28
3.88
2.76
23.97
28.30
35.59
21.13
20.90
EMOB.CA
168.63
242.50
159.56
16,863
195.00
Hold
21,992
8.91
9.00
8.53
11.34
9.13
10.24
50.06
48.75
52.40
ETEL.CA
15.74
20.59
14.88
26,869
20.08
Accumulate
26,150
9.93
9.93
9.36
NA
NA
NA
11.87
11.23
11.51
OCIC.CA
227.40
287.90
194.31
47,053
290.00
Accumulate
57,299
15.61
10.81
8,97
5.25
7.42
8.07
17.89
23.07
25.65
COMI.CA
33.07
39.75
24.00
19,515
39.60
Accumulate
8,495
11.17
9.70
8.26
2.80
3.10
3.10
25.34
25.50
24.47
CIEB.CA
11.50
14.08
10.00
3,300
15.11
Buy
(2,590)
8.04
7.22
6.17
1.64
1.65
1.62
20.25
21.50
23.60
HDBK.CA
18.73
28.30
18.0
1,584
29.76
Buy
2,580
NA
NA
NA
1.65
2.20
3.10
22.80
25.55
29.30
HRHO.CA
29.20
37.29
23.40
9,598
36.55
Accumulate
5,155
12.74
15.11
12.37
NA
NA
NA
11.01
6.57
8.67
PIOH.CA
3.51
8.27
3.20
1,755
11.00
Buy
1,050
NA
NA
NA
NA
NA
NA
NA
NA
NA
TMGH.CA
7.34
8.63
5.36
14,900
10.60
Accumulate
17,719
8.19
5.04
5.63
2.15
5.39
10.94
8.31
10.68
9.50
OCDI.CA
83.42
103.00
64.17
3,025
137.50
Buy
1,769
20.15
6.06
4.15
3.80
5.50
10.20
7.14
18.53
19.69
HELI.CA
25.76
45.58
24.10
1,910
64.40
Accumulate
2,107
24.74
20.67
17.35
7.44
8.30
9.26
31.02
31.08
24.04
MNHD.CA
30.70
38.43
23.60
3,070
50.00
Accumulate
2,944
34.06
22.37
17.98
8.70
11.70
12.60
35.10
38.20
31.50
PHDC.CA
4.89
7.10
4.25
5,125
7.80
Accumulate
7,590
6.60
5.34
3.96
4.93
10.04
10.71
20.00
26.00
23.00
43.42
MOIL.CA
3.16
4.80
2.98
808
5.40
Hold
966
8.96
6.63
5.58
14.80
18.50
18.50
26.60
45.70
SKPC.CA
12.04
15.80
9.60
6,321
16.25
Buy
4,764
6.90
7.69
6.98
28.00
22.00
22.00
43.35
38.55
40.10
EFIC.CA
16.61
26.98
15.70
1,151
26.40
Accumulate
2,073
9.83
7.14
6.40
4.56
6.70
6.26
10.91
14.42
11.31
EGTS.CA
1.89
3.13
1.62
1,984
4.10
Buy
1,672
190
22.35
17.27
0.67
3.56
7.23
0.82
7.33
10.33
ODHR.CA
15.43
23.00
13.01
7,165
29.50
Buy
1,264
0.81
0.69
0.83
6.60
7.00
NA
12.10
12.67
12.89
SWDY.CA
67.04
94.96
43.80
8,862
84.40
Accumulate
12,995
10.65
7.80
6.11
9.04
9.71
10.05
18.08
20.70
20.29
ESRS.CA
17.58
26.00
12.57
9,550
25.00
Accumulate
17,192
14.46
9.83
7.32
4.15
6.87
7.51
12.56
15.00
22.50
SUGR.CA
15.07
27.40
14.00
1,862
20.70
Buy
1,949
6.57
7.52
7.56
20.39
16.86
17.93
27.51
21.67
24.51
AUTO.CA
39.22
44.47
21.01
5,059
46.95
Buy
5,590
11.82
8.78
6.29
7.7
8.47
10.08
21.06
23.80
25.48
ORWE.CA
30.53
37.30
24.89
2,748
36.89
Hold
4,792
9.18
8.81
7.97
6.66
6.62
6.37
11.54
11.96
12.54
*All figures are quoted in USD
**ROA, ROE, EV, Target Price are quoted in Swiss Franc (CHF)
Volume I—Issue 3
April - June 2010
EGYPT QUARTERLY MARKET REVIEW
Highlight of the Quarter:
Contacts & Disclaimer
Egypt's Juhayna $34mln IPO 6.8 times Oversubscribed
A public share offer by Egyptian dairy and juice
maker Juhayna Food Industries, worth 192 million Egyptian pounds ($34 million), was oversubscribed 6.8 times.
Cairo-based Mideast investment bank EFG Hermes
said Juhayna's public offering lasted for four
days. The shares were priced at 4.66 Egyptian
pounds each ($0.83), 5 percent less than the company's private placement price.
EFG Hermes also received subscriptions for 279.97 million shares for the offering
of 41.19 million shares.
CCFC Team
Director: Dr. Eskandar Tooma
Editor In Chief: Shaheen Pasha
Program Manager: Aliaa Bassiouny
Program Executive: Ghada El Eraqi
Research Associate: Diana George
Research Associate: Jasmin Abu El-Dahab
For more Information regarding CCFC Services, contact us on: +(202)
2615-3443/3469/3680/3442 or
The public offering, Egypt's first since 2008, was part of a plan to raise about
1 billion pounds. The plan included a private placement that earlier closed 1.75
times oversubscribed. Juhayna was offering 206 million shares, with some 165
million offered privately at 4.90 pounds. That private placement raised about 808
million pounds.
The total offering represents 39.6 percent of the capital of the company, which
has said it will use the extra funds to expand food output, including investments in
dairy production.
The global financial crisis put a stop to IPOs in Egypt after oil services company
Maridive and real estate company Palm Hills Developments sold shares in mid2008.
Disclaimer: This newsletter has been prepared by Citadel Capital Financial Center staff and undergraduate students at the American University in Cairo. This review is based on information available
to the public. This review is not an offer to buy or sell or a solicitation of an offer to buy or sell the
securities mentioned. The information and opinions in this review were prepared by CCFC from
sources we believe to be reliable and information available to the public. CCFC makes no guarantee
or warranty to the accuracy and thoroughness of the information mentioned in this review and accepts
no responsibility or liability for losses or damages incurred as a result of opinions formed and decisions made based on information presented in this review. CCFC does not undertake to advise you of
changes in opinion or information.