Download EGYPT QUARTERLY MARKET REVIEW October–December 2010

Volume II—Issue 1
October–December 2010
EGYPT QUARTERLY MARKET REVIEW
Table of Contents
Egypt’s Economic Highlights….…………………………………….……….1
Corporate News…………………..……………………………………….…2
Stock Fundamentals………………………………………………………….3
Feature Story: Egypt’s Amer IPO oversubscribed 5.58 times…………….…..4
Egypt’s Economic Highlights
A. Real GDP Growth
Real GDP growth for FY 2009/2010 has gained momentum and increased to 5.2 percent, an
improved rate by all means in comparison to last year’s 4.7 percent realized growth, given the
turbulent global economic and financial environment. Growth was driven mainly by strong local
consumption and investment spending, the revival of export-oriented sectors, and the diversity
of the sources of growth. Recently issued GDP statistics indicate an improvement
in economic performance during the fourth quarter of FY 2009/2010. Real GDP grew at 5.4 percent in the fourth quarter of FY 2009/2010,compared to 5.6 percent during the preceding
quarter, and 4.6 percent in the fourth quarter of 2008/2009.
B. Fiscal Performance
The Egyptian government successfully outperformed its deficit target of 8.4 percent of GDP,
with the preliminary deficit standing at 8.1 percent of GDP. Figures for FY 2009/2010 show that
the overall deficit to GDP increased by 1.2 percentage points to 8.1 percent. The primary deficit to GDP has increases by 0.3 percentage points, registering 2.1 percent of GDP.
C. Domestic Debt Profile
Gross domestic debt of the general government amounts to LE 780.6 billion (56.6 percent of
GDP) at end of September 2010, compared to some LE 665.8 billion (55.2 percent of GDP) at
end of September last year. Also, net domestic debt of the general government reached some
LE 621.6 billion (45.1 percent of GDP) compared to LE 514.2 billion (42.6 percent of GDP) at
end of September 2009. The increase in general government debt at end of September 2010 was
driven by the increase in consolidated budget sector debt.
D. Monetary Developments
Total liquidity has stabilized during October 2010, for the third month in a row, at 1.4 percent,
registering LE 961.4 billion, compared to LE 948.2 billion at end of the previous month. Year-on–
year growth in M2 at end of October 2010 picked up recording 13.4 percent.
E .Prices
Domestic consumer prices, annual CPI inflation for urban areas decreased, unexpectedly during
November 2010 recording 10.2 percent compared to 11 percent during last month, and compared
to 12.9 percent during November 2009. Moreover according to CBE inflation report, annual
core inflation increased during November 2010 recording 8.6 percent compared to 7.8 percent
during last month.
F. External Sector
With respect to the External Sector, the Balance of Payment statistics for the fiscal year 2010/2011
steadied at a slight surplus of US$ 14.7 million in the overall balance. This comes as a result of
the capital and financial account accruing an inflow of almost US$1 billion.
G. Stock Exchange
As for the performance of Domestic Capital Market, the EGX-30 index increased by 508
points during the period October-December 2010, reaching 7142 in December 2010, and with an
increase of 933 points when compared to December 2009. Market capitalization increased over
the previous year by 2.3 percent, to LE 488 billion (35.4 percent of GDP).
Egypt’s Key Economic Indicators
Key Indicators
Population (mn)
Nominal GDP (US$ bn)
Real GDP growth (%)
Consumer price inflation (%)
Government Balance (% of GDP)
Current-account balance (% of GDP)
Gross Fixed Investment (% real change)
Total External Debt (year-end; US$ bn)
a: Actual, b: Economist Intelligence Unit Estimate
2008a
81.50
159.70
7.20
18.30
-7.00
-0.80
14.80
32.60
2009a
83.10
189.20
4.70
11.80
-6.60
-1.50
-10.20
29.50
2010b
84.6
217.2
5.10
11.10
-8.00
0.40
3.90
30.20
2011c
86.2
220.9
4.10
14.60
-12.00
0.72
7.50
31.40
Volume II—Issue 1
October - December 2010
EGYPT QUARTERLY MARKET REVIEW
Money Market Statistics
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
Rate
Date
31/12/2010
Local
L.E
GDR
(USD)
8.26%
9.27%
10.1%
10.6%
8.50%
8.25%
9.75%
30/12/10
30/12/10
CIB (1:1)
EFG (1:2)
Palm Hills (1:5)
OCI (1:1)
OT (1:5)
Telecom Egypt (1:5)
Suez Cement (1:1)
47.40
33.92
6.34
287.11
4.32
18.08
38.00
8.35
12.01
5.30
48.99
3.65
15.99
5.85
30/12/10
30/12/10
02/08/10
30/12/10
30/12/10
P/D%
-3.64
-2.58
-7.99
-4.26
-3.21
-2.66
-15.2
EGX 30 Index
7200
7000
6800
6600
6400
6200
Value Traded (L.E mn)
48,420
Close
Prev. Close
%Chg
High
Low
YTD%
7,142.14
6,634.27
7.65
7,148.77
6,423.45
13.87
Yr. H
7,247.95
Yr. L
5,628.33
Volume Traded (L.E mn)
6,809
Corporate News
Corporate News
Citadel Capital Corp.’s Taqa Arabia unit entered into a US$1 billion partnership with a Ugandan company to build small and medium-sized power plants in the East African country. The projects will be built by Taqa Power Africa, a company that is 70% owned by Taqa Arabia and 30% by
Chui Investments Ltd., it said.
Palm Hills for Development has signed a Memorandum of Understanding (MoU) with Pardera
Company for Commercial Centers Management to manage PHD future commercial buildings
Sweden's Electrolux has agreed in principle to buy Egypt's Olympic Group, the biggest appliance
maker in the Middle East and North Africa, in a push to capture growth in emerging markets. Following an announcement of the mandatory tender offer for up to 100 percent of Olympic Group,
Paradise will launch a tender offer to re-acquire two Olympic non-core assets, Namaa and BTech.
Orascom Construction Industries, Egypt's biggest listed builder, had formed a joint venture with
state-owned Arab Contractors to bid on nuclear power projects in the Middle East. The joint
venture will bid on Egypt's first nuclear power plant, planned to be located in Dabaa on the country's
Mediterranean coast, in February. OCI has already formed a joint venture with U.S. bank Morgan
Stanley to invest in Middle East infrastructure projects.
Mr. Niazi Salam, Chairman of Paradise capital unveiled that the value of the deal between Paradise capital and the Swedish company Electrolux amounted to LE2.7 billion which is expected
to contribute to the government’s plan to raise exports value to LE200 billion by FY13.
Cairo Oils & Soap announced signing an agreement with Deyaar Egypt to construct residential units. The move had been approved by the former’s board on December 11, 2010.
DP World has won a concession to double the size of its container terminal at Sokhna Port on
Egypt's Red Sea coast. The concession, awarded by Egypt's Red Sea Ports Authority, involves
investments of $700 million.
The African Development Bank has lent Egypt $550 million, the biggest ever granted to Egypt
in a single operation, to build a 650-megawatt gas-fired power plant, which will use gas as a
feedstock.
Heliopolis Housing & Development announced that it has sold out in a public auction two
plots distributed over 5,480 sqm and 2,208 sqm and with a total value of LE16.3 million.
Amer Group Holding won a bid for a 2.8 million sqm plot of land south of Cairo, adding a
new project to the newly listed firm's expanding list. The firm was awarded the plot by Egypt's
Tourism Development Authority.
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
*All figures are quoted in USD
**EV & Target Price are quoted in Swiss Franc (CHF)
Reuters
Code
Close
Yr. H
P/E
Yr. L
Market
Cap (mn)
ROA
ROE
Target
Price
Recommendation
EV (m)
10
11
12
10
11
12
10
11
12
ORTE.CA
4.32
7.89
3.52
22,661.38
7.01
Outperform
60,229.85
5.48
3.25
2.46
40.22
21.53
31.45
191.70
63.84
71.96
EMOB.CA
164.92
242.50
125.00
16,492.00
191.59
Hold
18,537.23
9.29
8.91
8.65
8.55
8.45
9.25
37.36
35.17
33.65
ETEL.CA
18.08
20.59
14.88
30,863.86
20.90
Outperform
24,359.40
8.86
8.91
8.86
9.50
9.50
9.00
11.75
11.55
10.85
OCIC.CA
287.11
294.50
215.00
59,988.18
283.75
Hold
60,970.20
14.84
11.41
9.36
6.25
7.60
8.70
18.07
22.82
24.90
COMI.CA
47.40
47.70
27.45
27,972.82
44.30
Hold
9,673.22
11.89
9.63
8.11
2.80
2.85
2.97
24.35
25.65
25.75
CIEB.CA
15.78
16.50
10.00
4,528.86
16.90
Outperform
-1,617.07
9.26
8.17
6.68
1.65
1.70
1.79
20.25
22.15
24.90
HDBK.CA
23.97
28.30
18.00
2,756.55
29.20
Buy
3,664.78
8.52
6.47
4.74
1.45
1.90
2.30
13.50
17.30
21.40
HRHO.CA
33.92
37.29
25.00
12,963.34
36.50
Outperform
-13,165.20
11.74
12.58
9.64
3.45
1.80
2.15
9.80
9.16
11.42
PIOH.CA
3.20
7.20
2.36
1,600.00
11.00
Buy
983.51
NA
NA
NA
NA
NA
NA
NA
NA
NA
TMGH.CA
8.63
8.69
6.00
17,374.18
10.00
Outperform
15,959.33
11.66
6.53
4.69
2.40
2.40
2.50
4.40
6.84
9.40
OCDI.CA
107.67
117.00
72.04
216,764.1
130.00
Buy
2,399.81
18.34
8.01
5.64
3.80
5.50
10.20
7.88
12.70
18.21
HELI.CA
24.93
26.61
16.06
2,774.64
27.33
Outperform
2,138.36
11.18
8.95
13.10
NA
9.40
9.70
NA
63.90
58.50
MNHD.CA
31.81
37.00
21.50
3,181.00
38.90
Hold
2,360.06
43.32
29.76
17.64
5.76
6.10
6.70
30.76
24.40
25.30
PHDC.CA
6.34
7.10
4.25
6,646.34
7.80
Outperform
2,546.50
9.74
5.66
4.72
4.45
5.35
6.60
11.75
20.67
20.20
MOIL.CA
3.56
3.99
2.48
1,093.63
3.92
Outperform
1,200.90
15.30
9.27
7.29
10.30
14.00
17.00
21.70
35.15
37.45
SKPC.CA
14.43
15.80
9.71
7,575.75
16.00
Outperform
5,797.31
7.96
8.55
8.01
32.20
NA
NA
32.70
26.20
28.70
EFIC.CA
18.91
25.99
14.45
1,316.04
23.20
Outperform
2,000.78
19.65
14.20
8.44
1.90
2.20
4.10
3.80
4.50
8.60
EGTS.CA
2.00
3.13
1.41
2,100.00
2.23
Outperform
1,431.32
NA
60.80
17.78
-0.60
2.60
5.10
-1.70
2.90
6.75
ODHR.CA
16.53
20.08
12.44
466.36
75.00
Outperform
1,879.04
12.58
12.05
9.19
6.60
6.90
NA
10.69
9.53
11.01
SWDY.CA
53.88
63.80
39.28
9,259.81
63.18
Outperform
12,775.75
8.99
7.72
5.76
7.45
7.95
9.90
18.30
17.30
20.20
ESRS.CA
19.60
26.00
15.00
10,647.99
24.00
Outperform
18,446.55
25.69
13.50
6.67
3.80
4.80
6.10
6.90
13.75
21.48
SUGR.CA
22.50
25.00
14.00
2,984.64
26.90
Buy
1,954.39
6.62
6.38
7.70
28.60
28.90
22.20
33.95
33.90
28.00
AUTO.CA
43.44
55.00
24.95
5,603.76
50.00
Outperform
5,431.51
16.70
10.38
7.71
5.60
7.60
11.60
16.00
22.00
25.10
ORWE.CA
34.09
37.30
25.69
3,068.10
38.00
Outperform
5,294.27
9.13
7.84
7.31
6.30
6.70
6.45
12.00
13.00
13.60
Volume II—Issue 1
October-December 2010
EGYPT QUARTERLY MARKET REVIEW
Highlight of the Quarter:
Egypt’s Amer IPO oversubscribed 5.58 times
Egyptian real estate firm Amer Group's initial public offering (IPO) was oversubscribed 5.8 times, one hour before closing of the third day of the offering, on November 25, 2010, showing good demand from retail investors
interested in attractive stock offerings.
Amer Group Shares trade as high as 2.98 Egyptian pounds
per share, compared with 2.8 pounds per share in its initial
public offering (IPO). The firm offered 82.14 million
shares in the IPO, and 328.6 million shares in the private placement. It has also received bids for 478.9 million shares compared with 82.1 million on offer as Beltone
Financial's head of investor relations Osama Rashad told Reuters.
Contacts & Disclaimer
CCFC Team
Director: Dr. Eskandar Tooma
Program Manager: Aliaa Bassiouny
Program Executive: Ghada El Eraqi
Research Associate: Aya Abou Hussein
For more Information regarding CCFC Services, contact us on: +(202)
2615-3443/3469/3680/3442 or
[email protected]
The firm sold 328.6 million shares in a private placement and 400mn shares have
been subscribed up out of the 82mn floated shares. However, with a sale of 500
million shares in an IPO and private placement, the firm values at as much as 7.7 billion Egyptian pounds ($1.3 billion).
Amer Group sells holiday homes on Egypt’s coasts and elsewhere. One of its projects
is Golf Porto, covering 2.2 million square meters in the mountainous Ain Sokhna
area by the Red.
The IPO is Egypt’s second since 2008. Egyptian dairy and juice maker Juhayna
Food Industries sold shares in an IPO in June. That offering, worth 192 million
pounds, was oversubscribed 6.8 times.
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.