Beltone Research
MENA Region > MENA Morning Bell > July 2011 > Mon the 11th
Egypt
Headline inflation stablises at 11.8% y-o-y in June 2011; core inflation inches up to 8.9% y-o-y, but decelerates on a monthly basis
Suez Canal revenues reach USD445.2 million in June 2011, up 16% y-o-y and 2% m-o-m
Military breaks up sit-in at road leading to Suez; Suez Canal Authority official says traffic un-interrupted despite sit-ins
Political groups issue statements highlighting Tahrir Square sit-in demands
Six presidential candidates reject PM statement
Sharaf assures of cabinet re-shuffle
SCAF studying demands of protesters
General Prosecution issues statement confirming date of Mubarak trial
IDA to announce changes to company licences this week
EU delegation to discuss seeds-import ban in Cairo this week
Egypt-Israel gas pipeline repair work expected to be completed this week
Ministry of housing reiterates its commitment to the one-million housing unit project
Electrolux to Acquire OG at EGP40.60/share; all other deal details unchanged
South Valley Cement finishes trial runs at its first clinker production line, expects to begin commercial operations within a few days
Pioneers Holding expects FY2011 profit could be up to EGP80 million
Centamin Egypt and Sheba Exploration agree to terms of Centamin’s recommended offer
Saudi Arabia
Saudi Government demands that dairy producers cancel their price increases implemented July 1st, 2011; Almarai to comply with decision effective immediately
YANSAB doubles 2Q2011 bottom line, y-o-y; 1H2011 earnings surpass FY2010’s
UAE
TDIC bonds not guaranteed by Abu Dhabi government
Uttarakhand government decides to cancel its MoU with Emaar MGF
Qatar
Whistleblower retracts Qatar corruption and bribery allegations
CBQ receives approval for USD5bn Euro Medium Term Note Programme
Kuwait
Minister of information and transportation resigns citing health reasons
Oman
Bank Sohar announces 2Q2011 results, posts earnings of OMR6.9 million, up 16% y-o-y
Full Stories
Egypt
Headline inflation stablises at 11.8% y-o-y in June 2011; core inflation inches up to 8.9% y-o-y, but decelerates on a monthly basis
Egypt’s urban headline inflation stabilised at 11.8% y-o-y in June 2011, same as in May 2011, new data released by CAPMAS showed. On a monthly basis, food price inflation continued to drive the acceleration in overall monthly inflation level, which increased to 0.4% in June 2011 from 0.2% in May 2011. Meanwhile, annual core inflation (which excludes volatile food items and regulated items), also released yesterday, increased, slightly, to 8.9% in June 2011 from 8.8% in May 2011. On a monthly basis, core inflation has actually decelerated from 0.5% in May 2011 to 0.45% in June 2011, indicating that volatile food items have led the monthly headline inflation in June 2011. Comment: We had undermined the impact of the political instability on Egypt’s consumption patterns and, consequently, on inflation. We had expected that with the weakening of the Egyptian currency, and in tandem with global food price increases, inflationary pressures would intensify in Egypt in May and June. However, as the political situation remained fluid, domestic consumption and investments took a big hit, leading to a lower level of imports. Moreover, the currency has not weakened significantly (as explained in Beltone’s Currency View published on June 30th and Beltone’s NIR Watch, published on July 7th), alleviating some inflationary pressures on the CPI in May and June 2011. Annual inflation had peaked in February 2011 at 12.1%, as supply disruptions outweighed subdued consumption patterns. It is evident from the data that these supply disruptions are either no longer present, or are outweighed by the increasingly slowing consumption patterns. During the next six months, we expect annual inflation to ease or at least stabilise at the current levels, as we expect more protests, demonstrations and strikes, as we approach this critical political phase in Egypt of Parliamentary and Presidential elections, which will, in turn, affect consumption and investment negatively. Having said that, we believe August to be an exception, on the back of the month of Ramadan, which usually witnesses higher consumption patterns. We believe annual inflation rate will slow down to reach 11.7% in July 2011, to increase to 11.9% in August 2011, and then slow down, again, starting September until the end of 2011. We anticipate annual inflation to accelerate to 14%, on average in FY2011/2012, with food price inflation being the driver, mainly. Provided that Egypt witnesses more political stability and clarity in 1H2012, we expect inflation to pick up, in tandem with the increasing global food prices and the depreciated currency, coupled with the already existing structural problems and bottlenecks. In addition, it is likely that the Ministry of Finance would restructure energy subsidies, which would have an inflationary impact across the board. We anticipate annual inflation to accelerate to 14%, on average in FY2011/2012, with food price inflation being the driver, mainly. That noted, it is unlikely to see the Central Bank of Egypt (CBE) tightening its monetary policy in its upcoming Monetary Policy Committee (MPC) meeting on July 21st. Egypt’s fragile recovery and weak growth prospects and, in turn, subdued inflation during the next six months provide no justification for raising policy rates at the moment. In addition, we have not seen significant non-food inflationary pressures emerging in May and June 2011.
Suez Canal revenues reach USD445.2 million in June 2011, up 16% y-o-y and 2% m-o-m
Suez Canal revenues reached USD445.2 million in June 2011, increasing by 16% y-o-y, data released yesterday by Egypt’s Information Portal (EIP) and Suez Canal Authority showed. Annual growth of Suez Canal revenues of 16% in June 2011 comes in higher than the 10% recorded in June 2010. Suez Canal revenues grew m-o-m by 2% in June 2011, improving from the 0.5% monthly growth seen in May 2011, but has still not reached the high monthly growth rates recorded in April 2011 and March 2011 of 5% and 6.4%, respectively. The annual increase in revenues in June 2011 is on the back of an annual increase in the total tonnage of passing vessels of 12%. The number of vessels increased by 1% y-o-y in June 2011, and increased by 3.8% on a monthly basis. Oil tankers represented 25% of total vessels that passed through Suez Canal in June 2011, compared to 22% in May 2011. The number of oil tankers increased by 2% y-o-y in June 2011, compared to a contraction of 11% y-o-y in May 2011. Comment: Suez Canal revenue and traffic data since January 2011 indicate that the monthly activity in the Suez Canal has not been affected by the political events in Egypt, in line with our expectations. We believe that the impact of the current political events in Egypt on the Suez Canal is marginal, if any, with the military and government continuing to ensure its smooth operation (which is, anyhow, within a military zone), and in view of the continued flow of traffic activity, Suez Canal monthly revenues have been increasing since the beginning of the current fiscal year, and have reached USD5 billion during FY10/11 (ending June 2011), which is exactly in line with our expectations. We expect Suez Canal revenues to remain unaffected by the political events in Egypt, providing Egypt with a secure source of foreign currency. We expect Suez Canal revenues to reach USD5.3 billion by end - FY11/12 (ending July 2012).
Military breaks up sit-in at road leading to Suez; Suez Canal Authority official says traffic un-interrupted despite sit-ins
The military has arrested 25 people yesterday, and dispersed a sit-in blocking the Ain Sokhna ring road that leads to the Suez Port after warning protesters that force would be used if the road was not opened, al-Ahram online portal reported. The sit-in has prevented workers from more than 150 companies and factories and the Sokhna Port workers from reaching work. When the news reached another sit-in outside the Suez Canal headquarters, angry protesters tried to approach the canal, “an escalation aimed at relieving the pressure of their fellow protesters”, a member of the National Association for Change was quoted as saying. According to al-Ahram, protesters continue to grow in number as more people join-in, in response to news that the army is trying to break the sit-in, and demanding the release of those arrested in the Sokhna sit-in. In a related note, a Suez Canal Authority official said that despite the sit-ins and protests, traffic is flowing un-interrupted in the canal, which continues to operate smoothly, with the army securing all of its entrances and ensuring safety of navigation, al-Shorouk newspaper reported.
Political groups issue statements highlighting Tahrir Square sit-in demands
Two statements were issued on Sunday by more than ten political groups participating in the ongoing Tahrir Square sit-in, al-Ahram online portal reported. Though separate, the statements agreed upon a number of key demands, namely: The trial of police officers responsible for the killing of the martyrs of the revolution; the trial of corrupt ex-regime figures and their expulsion from all governmental posts; the trial of the Mubaraks; ending military trials of civilians; drawing up a new state budget that is more aligned with the poor and that includes a minimum and maximum wage, and revoking the anti-strike law. The first statement indicated that concessions made by Prime Minister Essam Sharaf came only after pressure was exerted by the sit-in and, therefore, said the sit-in would continue to accomplish the demands, calling for a million-man march on Tuesday.
Six presidential candidates reject PM statement
Six potential presidential candidates have announced their rejection of the statement made by PM Sharaf in response to the Friday 8th sit-ins, requesting the Supreme Council of Armed Forces (SCAF) to respond to the demands of the revolution, al-Masry al-Youm reported. Mohamed al-Baradei; Abdul Moneim abul Futouh; Hamdein Sabahy; Amr Moussa, and Ayman Nour were amongst those who rejected the statement.
Sharaf assures of cabinet re-shuffle
Prime Minister Essam Sharaf met with a delegation of Tahrir Square demonstrators on Sunday, and assured them of a cabinet re-shuffle soon, al-Masry al-Youm reported. Protesters requested, amongst other thigns, the removal of ministers who have not met the demands of the revolution, including the ministers of international cooperation, local development and foreign affairs.
SCAF studying demands of protesters
The Supreme Council of Armed Forced (SCAF) is studying all the demands of the protesters in order to develop mechanisms for implementing them legally, and will issue statements confirming its support to the revolution’s demands, al-Masry al-Youm reported, citing an unnamed military source. According to the source, SCAF believes that expediting the trials of Mubarak regime remnants lies in the hands of the judiciary, explaining that rushing these trials could have an adverse impact on Egypt, especially regarding the repatriation of money as some of the countries to which such money was sent would not re-imburse it until a fair trial takes place. The source explained further that SCAF is reconsidering altering the maximum and minimum wages, and plans to meet more frequently with all political groups in order to lead the country safely during this critical period.
General Prosecution issues statement confirming date of Mubarak trial
The General Prosecution has issued a seven-page statement summarising the progress of trials concerning the shooting of protesters during the revolution, and confirming that the trial of former president Mubarak would take place on August 3rd, 2011, al-Ahram online portal reported, citing the statement which was posted on the GP’s facebook page. The statement, which includes both names and dates of those accused, comes in response to criticism against the Prosecutor General for the slow pace of the trials and last week’s release of policemen accused of shooting protesters in Suez, on bail. In addition to Mubarak’s trial, the statement also confirmed that the trial of former minister of interior, Habib al-Adly, would take place on September 12th.
IDA to announce changes to company licences this week
The Industrial Development Authority (IDA) will announce changes to company registration procedures by the end of the week to boost investment in industry and generate employment opportunities, al-Ahram online portal reported, citing Egypt’s Minister of Industry and International Trade Samir el-Sayyad. Possible changes will involve simplifying the procedure for granting new companies licences and reducing registration costs for five years.
EU delegation to discuss seeds-import ban in Cairo this week
A delegation of the European Union will visit Cairo this week to discuss the ban on exports of Egyptian seeds set to last until end-October, al-Masry al-Youm reported, citing Sherif al-Builtagui Chairman of the Agricultural Export Council. “The ban includes many agricultural products,” Biltagy said, adding that: “This threatens our reputation.”
Egypt-Israel gas pipeline repair work expected to be completed this week
Repairs on the pipeline supplying gas to Israel and Jordan are expected to be completed by the end of the week, al-Masry al-Youm reported, citing MENA news agency. This follows the latest, July 4th, explosion at the pipeline which took place around 60 kms east to the Suez Canal in the northern Sinai Peninsula. An oil ministry official said that GASCO, a subsidiary of EGAS, was repairing the pipeline at a section which intersects with rail tracks. Separately, al-Masry al-Youm cited Chairman of EGAS as saying the Company has not received any official notification of an international legal action taken against Egypt for the gas supply interruption from either the Israeli or Jordanian counterparts.
Ministry of housing reiterates its commitment to the one-million housing unit project
Egypt’s minister of housing, Fathy al-Baradei, has reiterated the ministry’s commitment toward executing the planned project that aims to build one-million units over the next five years, al-Masry al-Youm reported. Grants received by the housing ministry from donor countries over the past few months, through the ministry of international cooperation, exceed people’s expectations, and will support the full and complete execution of the project. Housing units will be constructed in new urban communities, as well as in governorates and around areas currently hosting informal houses. Rolling out the project in governorates, however, will depend on the availability of land in the governorate, and in case of shortage in the latter, the units will be executed in nearby new urban communities.
Electrolux to Acquire OG at EGP40.60/share; all other deal details unchanged
Electrolux announced that it signed an agreement with Paradise Capital, to buy its 52% share in Olympic Group (OG) (OLGR EY, Current Price: EGP36.01, Target Price: EGP33.00, Sell, P/E FY11e: 15.7x) for a price per share of EGP40.60 +12.75% from the current market price, and -10.28% from the deal struck pre-revolution. Electrolux will launch a mandatory tender offer to purchase all OG shares outstanding, in line with the capital market’s regulations. As part of the deal, Electrolux will sell OG’s ownership in Namaa and B-Tech to Paradise Capital. The prices at which Namaa and B-Tech will be sold back to OG are EGP13.88 and EGP3.44 per share, respectively. Those are the same prices agreed upon at the pre-revolution deal, which were the closing prices as of the October 10th trading session. As of yesterday, July 10th, 2011, Namaa closed at EGP11.26 (23.3% discount from the deal price), while B-Tech closed at EGP2.77 (24.2% discount from the deal price). Once the deal is finalised, OG will launch a mandatory tender offer to buy 100% of Delta for Engineering Industries (IDEAL), at a price per share of EGP21.40. According to OG management, OG owns c.99% of IDEAL’s shares; hence, the company will be tendering for the remaining 1%. The deal is expected to be finalised by end of July / early August, 2011. Comment: We believe the deal is positive for OG, its shareholders, and the market, in general. The deal price (EGP40.60 per share) is understandably below that of the pre-revolution deal price, pricing in the increased political risk currently embedded in the Egyptian market. The deal price is 23.0% above our fair value per share for OG, of EGP33.00, which we believe is a large mark-up, highlighting the attractiveness of the local market and its strong future prospects.
South Valley Cement finishes trial runs at its first clinker production line, expects to begin commercial operations within a few days
South Valley Cement (SVCE EY, Current Price: EGP4.30, Not Rated, Consensus P/E FY11e: N/A) has finished the trial run for its first clinker production line, with an annual capacity of 1.65 million tonnes, Al Mal reported. The project stood at a cost of USD200 million (USD121 per tonne), of which USD120 million was self-financed, and the remaining USD80 million to be financed through a loan from HSBC. The company’s chairman indicated that the 50% utilisation should be reached over the coming few days, whilst full operating rates could be achieved within a few weeks. An improvement in margins, which have historically averaged c.10 - 15%, is definitely in sight, upon ridding the company from the burden of buying clinker from other cement players. Other Egyptian cement producers operate at gross profit margins of c.30 - 40%.
Pioneers Holding expects FY2011 profit could be up to EGP80 million
Pioneers Holding (PIOH EY, Current Price: EGP4.54, Not Rated, Consensus P/E FY11e: N/A) said in a regulatory filing that it expected FY11 profits to be up to EGP80 million, and that it had bought back 10 million shares in June 2011.
Centamin Egypt and Sheba Exploration agree to terms of Centamin’s recommended offer
Centamin Egypt Limited and Sheba Exploration have reached an agreement with regard to the terms of the Centamin Egypt’s recommended offer to purchase all of Sheba Exploration’s share capital (both issued share capital and the share capital expected be issued). The agreement stipulates that Centamin Egypt purchase each Sheba share at a price of three pence per share. Moreover, Centamin Egypt’s number of ordinary shares is to equal the number of shares a Sheba shareholder owns divided by forty.
Saudi Arabia
Saudi Government demands that dairy producers cancel their price increases implemented July 1st, 2011; Almarai to comply with decision effective immediately
Saudi Arabian Minister of Trade and Industry issued a decision to revalue the two litre milk bottle at SAR7.00, after some producers, including Almarai (ALMARAI AB, Current Price: SAR94.50, Not Rated, P/E FY11e: 15.94x), increased their price to SAR8.00 (+14.3%) at July 1st, 2011. Almarai announced that it would comply with the government’s decision; nevertheless, it sees that the justification for the price increase is valid, and it will continue to work with the relevant government authorities to address this issue. Comment: Almarai’s margins have been hit during 1H2011 by higher raw materials costs, including those of milk. Hence, we believe it was justifiable that the company increase its prices, in a move to pass on part of the costs to the end consumer. However, we still believe Almarai’s margins are very attractive on an absolute basis, with a GPM of 38.11% and a NPM of 17.35%, both as of 2Q2011. Margins have fallen, in general, by 200 basis points during 2011.
YANSAB doubles 2Q2011 bottom line, y-o-y; 1H2011 earnings surpass FY2010’s
Yanbu National Petrochemicals (YANSAB AB, Current Price: SAR49.00, Not Rated, Consensus P/E FY11e: 9.4x) reported 2Q2011 preliminary results, with earnings of SAR964 million, almost double the SAR502 million achieved during 1Q2010, and 34% higher than the SAR718 million achieved during 1Q2011. The company’s 1H2011 bottom line of SAR1,682 has already surpassed the SAR1,673 bottom line of the whole FY2010.
UAE
TDIC bonds not guaranteed by Abu Dhabi government
The Abu Dhabi government will not guarantee the planned Abu Dhabi Tourism and Development and Investment Company (TDIC) USD3 billion bond programme, Gulf News reported, citing the bond prospectus. TDIC has "no assurance that the government would assist the group in repaying or refinancing any of its commercial debt," the prospectus explained. Proceeds of the seven-to-ten year bond will be geared toward financing development projects.
Uttarakhand government decides to cancel its MoU with Emaar MGF
Uttarakhand government has decided to cancel its MoU with Emaar MGF, a joint venture between Emaar Properties (EMAAR UH, Current Price: AED3.09, Not Rated, Consensus FY11e P/E: 9.6x), and MGF Development of India. The decision was taken after the state government had rejected a request by Emaar MGF to construct a mall at the site of proposed five-star hotel.
Qatar
Whistleblower retracts Qatar corruption and bribery allegations
The whistleblower who alleged Qatar had paid bribes to FIFA executives to host 2022 World Cup has retracted the story, the Guardian reported. The whistleblower, who identified herself as Phaedra al-Majid, was Head of Media Relations at Qatar’s 2022 World Cup bid between May 2009 and March 2010. Bribery and corruption charges have been entirely fabricated by al-Majid as she wanted to “hurt” the bid after they decided to move her from her job by showing them she “could control the international media”, the Guardian reported.
CBQ receives approval for USD5bn Euro Medium Term Note Programme
Commercial Bank of Qatar (CBQ) (CBQK QD, Current Price: QAR73.00, Target Price: QAR87.30, Add, Consensus P/E FY11e: 11.3x) received regulatory approval for its USD5 billion Euro Medium Term Note (EMTN) Programme from the United Kingdom Listing Authority (UKLA). The trading hearing for admission to trading on the London Stock Exchange will take place today, July 11th, 2011. CBQ does not have any immediate plans to issue any bonds under the programme.
Kuwait
Minister of information and transportation resigns citing health reasons
Kuwait’s newly appointed information minister in the last cabinet re-shuffle of May 9th, Sami al-Nasef, has resigned, citing health reasons, KUNA reported. Salem al-Othaina, who currently heads the electricity and water ministry, will replace him, the news portal said.
Oman
Bank Sohar announces 2Q2011 results, posts earnings of OMR6.9 million, up 16% y-o-y
Bank Sohar (BKSB OM, Current Price: OMR0.15, Not Rated, Consensus P/E FY11e: 13.6x) announced that it had earned OMR6.93 million in 2Q2011 versus OMR6.00 million in 2Q2010, a y-o-y growth of 16%.
Calendar
Egypt
11 Jul 11 - South Valley Cement's distribution date for EGP0.10 cash dividend
12 Jul 11 - Saudi Egyptian Investment & Finance's ex-date for EGP1.00 cash dividend
14 Jul 11 - Saudi Egyptian Investment & Finance's distribution date for EGP1.00 cash dividend
26 Jul 11 - Sinai Cement's AGM
26 Jul 11 - Modern Shorouk Printing & Packaging's AGM & EGM
18 Aug 11 - El Nasr Transformers (El Maco)'s distribution date for EGP0.0875/share cash dividend (2nd tranche)
15 Sep 11 - October Pharma's AGM
26 Sep 11 - Electro Cable Egypt's distribution date for EGP0.025/share cash dividend (2nd tranche)
29 Sep 11 - Maridive & oil services' distribution date for USD0.03/share cash dividend (2nd tranche)
30 Sep 11 - Minapharm Pharmaceuticals' distribution date for EGP1.15/share cash dividend (2nd tranche)
27 Oct 11 - El Nasr Transformers (El Maco)'s distribution date for EGP0.0875/share cash dividend (3rd tranche)
31 Oct 11 - Delta for Printing & Packaging's distribution date for EGP2.0/share cash dividend (2nd tranche)
30 Nov 11 - National Company for Maize Products' distribution date for EGP0.55/share cash dividend (2nd tranche)
08 Dec 11 - El Nasr Transformers (El Maco)'s distribution date for EGP0.0875/share cash dividend (4th tranche)
Saudi Arabia
11 Jul 11 - Saudi Vitrified Clay Pipes Company's ex-date for SAR2.0/share cash dividend
14 Jul 11 - Riyad Bank's ex-date for SAR0.55/share cash dividend
14 Jul 11 - Saudi Arabia Fertilizers Company's ex-date & distribution date for SAR6.0/share cash dividend
16 Jul 11 - Yamamah Saudi Cement Company's distribution date for SAR2.0/share cash dividend
16 Jul 11 - Banque Saudi Fransi's distribution date for SAR0.75/share cash dividend
17 Jul 11 - Tabuk Cement Company's ex-date for SAR0.90/share cash dividend
20 Jul 11 - The Qassim Cement Company's distribution date for SAR2.25/share cash dividend
20 Jul 11 - Saudi Cement Company's distribution date for SAR2.0/share cash dividend
21 Jul 11 - Southern Province Cement Company's ex-date for SAR2.75/share cash dividend
23 Jul 11 - Southern Province Cement Company's distribution date for SAR2.75/share cash dividend
23 Jul 11 - Saudia Dairy & Foodstuff Company's distribution date for SAR3.0/share cash dividend
25 Jul 11 - Saudi Vitrified Clay Pipes Company's distribution date for SAR2.0/share cash dividend
25 Jul 11 - Riyad Bank's distribution date for SAR0.55/share cash dividend
27 Jul 11 - Saudi Arabia Fertilizers Company's distribution date for SAR6.0/share cash dividend
31 Jul 11 - Arabian Cement Company's distribution date for SAR1.0/share cash dividend
01 Aug 11 - Advanced Polypropylene Company's distribution date for SAR1.0/share cash dividend
01 Aug 11 - Herfy Food Services Company's EGM
02 Aug 11 - Herfy Food Services Company's ex-date & distribution date for 1:9 stock dividend (subject to shareholders' approval)
06 Aug 11 - Etihad Atheeb Telecommunication Company 's EGM
17 Aug 11 - Makkah Construction & Development Company's AGM
UAE
13 Jul 11 - First Gulf Bank's BOD meeting to discuss 2Q2011 results
19 Jul 11 - SHUAA Capital's EGM
27 Jul 11 - Al Firdous Holding's AGM
04 Aug 11 - Grand Real Estate Projects Company's AGM
11 Aug 11 - Gulf Finance House's BOD meeting
Qatar
14 Jul 11 - Vodafone Qatar's 1Q FY2011-2012 results announcement
18 Jul 11 - Al Ahli Bank's 2Q2011 results announcement
18 Jul 11 - Al khalij Commercial Bank's 2Q2011 results announcement
19 Jul 11 - Qatar Gas Transport Company (Nakilat)'s 2Q2011 results announcement
19 Jul 11 - Doha Bank's 2Q2011 results announcement
20 Jul 11 - Mazaya Qatar Real Estate Development's 2Q2011 results announcement
20 Jul 11 - Qatar Islamic Bank's 2Q2011 results announcement
21 Jul 11 - Gulf Warehousing Company's 2Q2011 results announcement
24 Jul 11 - Islamic Holding Company's 2Q2011 results announcement
24 Jul 11 - Qatar General Insurance and Reinsurance Company's 2Q2011 results announcement
24 Jul 11 - Qatar International Islamic Bank's 2Q2011 results announcement
24 Jul 11 - Qatar Navigation Company's 2Q2011 results announcement
26 Jul 11 - Al khalij Commercial Bank's 2Q2011 results conference call
27 Jul 11 - Commercial Bank of Qatar's 2Q2011 results announcement
27 Jul 11 - United Development Company's 2Q2011 results announcement
27 Jul 11 - Dlala Holding Company's 2Q2011 results announcement
28 Jul 11 - Qatar National Bank's 2Q2011 results conference call
31 Jul 11 - Medicare Group's 2Q2011 results announcement
31 Jul 11 - Qatar Oman Investment Company's 2Q2011 results announcement
01 Aug 11 - National Leasing Holding's 2Q2011 results conference call
02 Aug 11 - Masraf Al Rayan's 2Q2011 results announcement
09 Aug 11 - Masraf Al Rayan's 2Q2011 results conference call
14 Aug 11 - Doha Insurance Company's 2Q2011 results announcement
14 Aug 11 - Qatar Telecom Company's 2Q2011 results announcement
|
Forex Rates |
|
|
USD/AED |
3.6731 |
|
USD/BHD |
0.3770 |
|
USD/CHF |
0.8363 |
|
USD/EGP |
5.9530 |
|
USD/EUR |
1.4268 |
|
USD/GBP |
1.6060 |
|
USD/ILS |
3.4100 |
|
USD/JOD |
0.7090 |
|
USD/JPY |
80.6400 |
|
USD/KWD |
0.2743 |
|
USD/MAD |
7.9214 |
|
USD/OMR |
0.3850 |
|
USD/QAR |
3.6415 |
|
USD/SAR |
3.7503 |
|
USD/TND |
1.3808 |
Key Shareholder Transactions - Egypt (July 7th, 2011)
|
Company |
Shareholder |
Position |
Action |
No. of Shares |
|
Advanced Pharmaceutical Packaging |
Mohamed Mohamed Adly |
Chairman & CEO |
Sold |
200,000 |
|
Advanced Pharmaceutical Packaging |
Tarek Abdel Hamid Sayed Ahmed |
Board Member |
Sold |
20,000 |
|
Arab Ceramics (Aracemco) |
Sahar Mahmoud Morsi El Gohary |
Related Parties |
Bought |
2,925 |
|
Beltone Financial Holding |
Beltone Partners Holding Ltd. |
Related Parties |
Sold |
10,500 |
|
Egyptian Financial & Industrial |
Egyptian International Fund for Investment |
Related Parties |
Sold |
36,500 |
|
Egyptian Financial & Industrial |
Misr - Alex Fund for Financial Investment |
Related Parties |
Sold |
36,533 |
|
Orascom Hotels & Development |
Orascom Development Holding (AG) |
Board Member |
Bought |
120 |
|
Universal for Paper & Packaging Materials (Unipack) |
Sar for Investment |
Board Member |
Sold |
77,000 |
|
Universal for Paper & Packaging Materials (Unipack) |
Nour El Din Abdallah Nour El Din |
Board Member |
Sold |
76,478 |
|
Upper Egypt Contracting |
Misr for Financial Investment |
Board Member |
Sold |
125,000 |
Publications Update: July 2011
|
Report |
Main Highlights |
|
Net International Reserves Watch Egypt - June 2011
NIR shed USD659 million in June 2011, on narrowing BOP deficit & declining dollarisation
(Nada Farid, July 7th)
|
· Egypt’s net international reserves (NIR) reached USD26.6 billion by end - June 2011, shedding USD659 million since end - May 2011, thereby recording its lowest level since April 2007.
· The loss of USD0.66 billion in NIR during June 2011 is in line with our expectations. We had forecast the balance of payments (BoP) deficit to narrow slightly in June 2011, reducing the financing requirement from NIR.
· The loss of USD0.66 billion in June 2011 signals a continued improvement in NIR contraction from previous months. This improvement reflects a rebound in Egypt’s sources of foreign exchange, namely exports and tourism, and is an indication of easing pressure on demand for foreign exchange during May and June 2011.
· With the complete depletion in unofficial reserves, Egypt will have to depend entirely on NIR to finance the foreign currency gap, whether related to the BoP deficit or increased dollarisation in the banking system.
· During 1HFY11/12, we expect a total of USD14 billion in additional demand for foreign currency. However, we believe the CBE will only use up to USD5 billion from its NIR in 1HFY11/12 to fill in the foreign currency gap. Consequently, we anticipate Egypt’s NIR will stand at USD20 billion by end FY11/12.
· By end- FY11/12, we forecast Egypt’s NIR to stand at USD20 billion.
· Egypt’s import cover fell to five months of imports by end - June 2011 from 6.9 months by end- April 2011 and 8.5 months by end- December 2010, exactly in line with our expectations.
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Quarterly Strategy 3Q2011 Strategy Note - Egypt & GCC
Selectivity at a time of high uncertainty
(Radwa El Swaify & Samah Dissi, July 7th)
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Overweight Qatar, Saudi Arabia and Abu Dhabi, with emphasis on banks and petrochemicals
· Qatar’s real growth outlook over the medium-term will largely be fuelled by robust government-led investments.
· We assign Saudi Arabia an overweight recommendation, with a focus on banks, whose earnings will pick-up in FY2011 on improved asset quality, and on petrochemicals.
· We are positive on the energy sector and banks within Abu Dhabi, where hydrocarbon wealth and infrastructure spending fuel growth.
Neutral/Hold Dubai and Oman
· Real growth is rebounding in Dubai as it benefits from the ongoing global economic recovery, but challenges facing the property sector and the ongoing restructuring of Dubai debt will continue to weigh down investor sentiment.
· With regard to Oman, higher oil production will continue to drive economic growth. The government will focus on diversifying away from oil and gas, and public spending should increase to meet public demands and increase employment.
Underweight Egypt and Kuwait
· We recommend underweight on Egypt, since the market performance will continue to be highly correlated to the political scene, and on the back of the high volatility expected close to Parliamentary elections, by the end of September 2011.
· We recommend an Underweight on Kuwait on the back of weak earnings potential in 2011 and multiples that are amongst the highest in the region.
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Jarir Marketing Company (Jarir) 2Q2011 Results Note
Electronics continue to boost sales and net profit growth
(Ahmed Khalil & Hamed Hesham, July 7th)
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· Recommendation: Add, Target Price: SAR190.00, Upside: 10.3%
· Jarir continues to impress us and beat our estimates, delivering strong numbers, with 2Q2011 sales being the highest ever in the company’s history, despite the 2nd quarter being a seasonal low for Jarir.
· Going forward, we expect Jarir will continue to reap the benefits of its expansion plan and stronger spending patterns in Saudi Arabia (26% of Saudi Arabia’s total spending in 2011 will be dedicated to the education sector, as well as employee training), as well as in the GCC.
· Despite the minimal upside potential, we see Jarir as a low-risk play into the lucrative Saudi Arabian consumer story, with limited downside risks and further growth to be driven by new store openings and higher spending patterns in Saudi Arabia and in the GCC.
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Qatar National Bank (QNB) 2Q2011 Results Note
All star 2Q11 performance on booming balance sheet, Maintain Add
(David Mikhail & Nancy Fahmy, July 6th)
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· Recommendation: Add, Target price: QAR163.70, Upside: 14%
· QNB has delivered an exceptional quarter. Notwithstanding the higher-than-expected provisioning, profitability rose on higher efficiency and higher interest, fee and commission, and investment income.
· We retain our target price of QAR163.70 and reiterate our “Add” recommendation. The stock is currently trading at P/E FY11f of 13.7x, and P/B FY11f of 2.3x.
· Our DECF target price discounts a net profit CAGR of 17% over the next five years. We estimate a bottom line growth of 17.5% for 2011 and 16% for 2012.
· For 2011, we forecast 15% loan growth and 25% deposits growth. Islamic deposits, which typically make up 15% of total deposits will be phased out by year-end due to the new regulations in the sector.
· We believe that QNB’s profitability will be pared slightly in 2012, compared to the previous years, on the absence of Islamic banking business (Islamic business comprised 13% of QNB’s profits in 2010). However, we see only a mild impact from the personal lending circular on the bank, as the segment only comprises 10% of the total loan book, of which 60% is directed to VIPs or non-salaried retail lending, which is unaffected by the new regulation.
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MoneScope: Egypt
Monetary aggregates in May 2011 reflect a slight rebound in confidence levels
(Nada Farid & David Mikhail, July 6th)
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· Broad money supply (M2) annual growth picked up, slightly, in May 2011 to reach 10.98%, as growth in local currency demand, time and savings deposits increased. M2’s annual growth has been decelerating since February 2011 from 12.2% to reach 10.8% in April 2011, albeit it is still at a healthy level compared to the single digits of 2009 and early 2010.
· Monetary aggregates in May 2011 reflect a slight rebound in confidence levels, whereby growth in money in circulation outside the banking system has eased for the first time since January 2011, growing by 25.8% y-o-y, down from 26.6% y-o-y in April 2011.
· Total deposits have increased by 8.4% y-o-y and by 0.6% m-o-m in May 2011, after growing by 8.1% y-o-y and contracting by 0.3% m-o-m in April 2011.
· Growth in domestic credit continues to decelerate, reaching 16.4% y-o-y in May 2011, down from an annual growth of 17.7% in April 2011, on the back of a slowdown in claims on the government, public business and households.
· As banks in Egypt cautiously and selectively lend to their key clients, we foresee marginal balance sheet growth in the rest of 2011 (in the range of 3%), helped by the strong growth witnessed in 1Q2011.
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Telecom Egypt Valuation Update
Bundling for Survival, Target price cut to EGP19.61, Maintain Buy
(Sally Gerges, July 4th)
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· Recommendation: Buy, Target Price: EGP19.61, Upside: 31.5%
· Bundling to add flavour to a saturated market: We foresee bundling to be the key stimulus for the Egyptian market’s growth, going forward, given the saturation in the mobile market (with penetration exceeding the 100% level), the significant untapped potential in broadband and the notable opportunity that could arise from cross selling of mobile, fixed and broadband services.
· Telecom Egypt is best positioned to capitalise on the bundling opportunity.
· The MVNO proposition yields a minimal upside, of 1.8%, to our current valuation.
· Telecom Egypt should pursue the MVNO model, owing to larger risks from abandoning it: Despite the insignificant value accretion, we still believe Telecom Egypt should work towards becoming a full-fledged telecom operator, in order to be better equipped to compete in the market’s new battlefield, namely bundling, as well as to shield its strong broadband market share.
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MoneScope: Saudi Arabia
Healthy monetary indicators in May 2011 signal a sustained economic pick-up
(Nada Farid & Fawad Siddiqui, July 4th)
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· Saudi Arabia’s broad money supply (M3) continues to grow y-o-y at an accelerated pace, albeit slowing down slightly to 16% in May 2011 from 17.2% in April 2011 to reach SAR1.175 trillion, on the back of a slowdown in growth in demand deposits and other quasi monetary deposits. On a monthly basis, M3 contracted by 0.1%. We believe the slight annual slowdown in M3 growth and the monthly contraction in M3 in May 2011 to be a one-off event.
· Saudi Arabia continues to strengthen its foreign asset position, with net foreign assets (NFA) growing at a record high of 15.5% y-o-y in May 2011 through increasing SAMA’s foreign currency and deposits abroad by a record 26% y-o-y and its investments in foreign securities by 12% y-o-y in May 2011.
· Growth in bank credit to the private sector increased to 7.1% in May 2011, the highest since May 2009. Growth in bank credit to the private sector has been picking up steadily since the beginning of 2011, averaging 6.3% YTD. This signals a healthy pick-up in the economy and reflects increased confidence levels that have encouraged banks to start lending again.
· Despite the significant growth in money supply in April and May 2011, inflationary pressures remain relatively subdued. Saudi Arabia’s annual inflation slowed to 4.6% in May 2011, down from 4.8% in April 2011, way below the peak in August 2010 of 6.1%.
· We believe that Saudi banks’ NPL ratios have peaked and their aggressive provisioning cycle has come to an end, and are now ready for growth; thus, we expect improved profitability and higher dividends for 2011. Credit growth has been relatively weak for the sector as a whole YTD on slower corporate lending. Therefore, we favour more-retail focused banks, since they have higher growth prospects.
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For further questions, please call your usual sales contact, or Beltone Research, through: research@beltonefinancial.com, or +202 353 10 200.
Thank you.
Beltone Research
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