Stories In Focus
Egypt’s central bank leaves rates unchanged, meeting our expectation
Egypt's central bank kept its official interest rates unchanged at its Monetary Policy Committee meeting on Thursday, according to a statement on the bank’s website. The bank kept its deposit rate at 8.25% and its lending rate at 9.25%. It also kept its discount rate and the rate it uses to price one-week repurchase and deposit operations at 8.75%.
QNBA EGM approves 15% stock dividends, no cash dividends for 2013
QNB Al-Ahli (QNBA EY, Price: EGP33.99, FV: EGP43.00, Buy, P/E FY2014e: 8.6x) shareholders approved at its EGM late last week 15% bonus shares for 2013 profits to grow issued and paid-in capital EGP732 million to EGP5.61 billion, pending required regulatory approvals. It was also decided that the bank would not distribute cash dividends for the year for the first time in the bank's recent history. We believe this could be viewed as a confirmation of the new parent's commitment to organically grow its newly acquired Egyptian subsidiary — a positive sign in our view.
Tax Authority cancels band-roll implementation on cigarettes
The Egyptian Tax Authority cancelled the band-roll implementation on box cigarette packs until further notice due to technical malfunctions, Al Mal newspaper reported. The authority explained that international bidders approached to amend Eastern Tobacco’s (EAST EY, Price: EGP167.00, FV: EGP177.67, Hold, P/E FY14e: 8.4x) machinery to be compatible with the implementation of the band roll failed to meet required specifications, leading the authority to call off the plan. It remains unclear whether the recently applied implementation of the band roll to 50% of soft-pack production will be cancelled. We believe the cancelation of the band roll is positive for Eastern Tobacco, especially since management noted earlier that the band-roll implementation program would cause the company to incur EGP120 million per annum in additional costs. We currently account in our valuation only for an additional cost of EGP40 million per annum relating to the 50% of soft pack production, which commenced in 4Q2013 and if cancelled would raise our FV by EGP4.63/share to EGP182.30/share.
Egypt's cabinet, led by Prime Minister Ibrahim Mehleb, sworn in on Saturday afternoon after a reshuffle that replaced around a third of the ministers; since Thursday, finance ministry official Hany Dimian appointed minister of finance, Field Marshal Abdel Fatah El-Sisi remains minister of defense (Ahram Online)
Interim President Adly Mansour issues presidential decree reconstituting the Supreme Council of the Armed Forces to be headed by the defense minister and not the president while still giving the president the right to include members in the council, to invite the council to meet whenever necessary, and to head meetings he calls (Ahram Online)
Egypt's interim president Adly Mansour issues presidential decree reconstituting the National Defense Council to be headed by the president and to include the prime minister, head of parliament, ministers of defense, foreign affairs, finance, and the interior along with head of intelligence, military chief of staff, heads of navy and air force (Ahram Online)
Political figure Amr Moussa says Field Marshal Abdel-Fattah El-Sisi will announce his presidential bid in a matter of days, adding that he has started putting together a presidential team of experts from various fields and beginning to prepare his presidential program (Ahram Online)
Egypt’s public transport workers resume work as the last four garages of 24 in Greater Cairo end their strike Friday after the head of the Public Transportation Authority (PTA) and the Cairo governor assured workers they would be guaranteed the same rights as others in the public sector as the PTA would now fall either under the Cairo governorate or the Ministry of Transportation; workers also promised permanent monthly bonuses of EGP200 (Ahram Online)
North Cairo Criminal Court postpones on Saturday the espionage trial of former President Mohamed Morsi to March 3 after the defense team requested new judges be brought in to try the case (Daily News Egypt Online)
A Cairo court on Saturday adjourned former President Mohamed Morsi’s trial on charges of inciting murder to today to allow evidence to be gathered (Ahram Online)
Egypt revenue rises to EGP175.4 billion y-o-y from EGP152.9 billion in 1H FY2013/14, while total expenditure rises to EGP262 billion from EGP234 billion over the same period; oil subsidies decline from EGP52.6 billion to EGP24.9 billion while food subsidies rise to EGP11 billion from EGP8.9 billion (Bloomberg, Ministry of Finance website)
Stimulus spending is expected to accelerate economic growth to an estimated 3.5% in FY2013/14, in line with our expectations, while public investment is expected to grow 14.3% in real terms and consumption 9.8%; real growth is expected to pick up to above 4%, gradually surpassing GDP potential over the medium term, budget deficit is projected to decline to below 6% of GDP, and public debt to fall to 74% of GDP by FY2017/18, according to a Ministry of Finance report (Ministry of Finance website)
NCMP targets a bottom line of EGP137 million in FY2014 on improved utilization and sales volume (Al Mal)
OCI NV extends the second period during which all eligible shareholders of Orascom Construction Industries SAE may accept an exchange offer to exchange their shares into OCI NV shares or for a cash alternative of EGP255.00/share until March 13, 2014 (Company release)
Ezzsteel reduces ex-factory steel rebar prices for March 2014 by EGP100/ton to EGP4,850/ton; other domestic steel producers follow suit with Beshay Steel and Egyptian Steel reducing their prices by EGP110/ton to EGP120/ton (Youm7, Al Mal)
Egyptian Kuwait Holding FY2013 preliminary indicators: Bottom line up a mere 2% y-o-y to USD84.9 million, while revenues grow 140% y-o-y to USD1.97 billion albeit at a significant compression in GPM, leaving gross profit only 9% higher y-o-y; board recommends not distributing dividends for FY2013 (EGX)
ODH CEO Gerhard Niesslein to leave the company end of February 2014; founder and chairman Samih Sawiris to take over his responsibilities as interim CEO (Company release)
MNHD Tag Sultan sales exceed 800 units to date worth more than EGP1.0 billion; company studies partnership offers from developers on KM45 project, in negotiations with banks to secure a EGP400 million loan (Al Mal)
Stories In Focus
IPO planned for 15% stake of NCB
Saudi Arabia's government plans to sell a 15% stake in National Commercial Bank (NCB), the country's largest lender by assets, in an IPO that would be the kingdom's first bank IPO since 2008, reported Reuters. The IPO plan would be submitted to the market regulator in 3Q2014, according to Finance Minister Ibrahim Al-Assaf, where the sovereign fund Public Investment Fund will be the seller. The fund, a majority shareholder in NCB, will also sell an additional 10% stake to the government's Public Pension Agency. As of the end of December 2013, NCB's assets stood at USD101 billion and earnings were USD2.1 billion for the year. NCB owns 90.7% of investment firm NCB Capital and has a 66.3% stake in Turkiye Finans Katilim Bankasi, an Islamic bank in Turkey.
Provisional estimates show real GDP growth in Saudi Arabia accelerates to 4.7% y-o-y in 4Q2013 from 4.0% y-o-y in 3Q2013 after growing 3.8% y-o-y in 2Q2013 and 2.7% y-o-y in 1Q2013 (CDSI)
Money supply (M3) growth rises to 12.8% y-o-y in January 2014 from 10.9% y-o-y in December 2013; bank-lending growth to the private sector slows to 12.3% y-o-y in January 2014 from 12.5% y-o-y in December 2013; net foreign assets at SAMA reach record high of SAR2.693 trillion (USD718.1 billion) in January 2014 (SAMA)
Royal Commission for Jubail and Yanbu signs three contracts worth SAR250 million for the construction and maintenance of educational and engineering projects in the two industrial cities (SPA)
Jarir opens third showroom in Qatar with total investment worth SAR20 million as part of its plan to open seven new showrooms in 2014 (Tadawul)
Stories In Focus
Dubai government to focus on commercial property, keeps rentals within limits
The government of Dubai will focus on advanced industrial sectors and commercial real estate and will also keep the rental market within permissible limits, Reuters quoted the Department of Finance as saying. In its paper titled "The Global Financial Crisis, Lessons Learned," the Department of Finance lists 11 lessons. Several of them are related to the property market, including the need to register real estate deals and prevent harmful speculation and the importance of regulating the rental market. The paper also suggested that Dubai should adjust its economic focus by emphasizing on commercial rather than residential real estate and by relying on advanced industry rather than property to drive growth. Other lessons listed in the paper include "fiscal discipline on lending operations," an apparent reference to the fact that state-linked companies borrowed too much before the last crisis and were forced to restructure billions of USD in debt. The Department of Finance also mentioned the need to monitor the economy and review development plans and to keep the size of the public sector within acceptable boundaries.
Dana Gas upgrades Egyptian plant to increase production by 25%
Dana Gas (DANA UH, Price: AED0.87, Consensus FV: AED0.77, Reduce, Consensus P/E FY2014f: 10.0x), the sixth largest gas producer in Egypt, started on Friday a major maintenance work program in the El Wastani Plant in the Nile Delta that will increase its production 25%, according to a company statement. The upgrades are expected to boost the plant’s yield 40 million cubic feet per day, which is equivalent to 6,650 barrels of oil. The plant will shut down for approximately two weeks while the company upgrades its facilities and equipment. Dana Gas operates in the Nile Delta through El Wastani Petroleum Company (Wasco) and its joint-venture company with the Egyptian Natural Gas Holding Company (EGAS). The gas producer also signed an agreement with the Egyptian government last week to develop its first offshore concession in Egypt, in north Al-Arish in the eastern Nile Delta.
TAQA-led group to buy two India power plants for USD616 million
A consortium led by Abu Dhabi National Energy Company (TAQA) (TAQA UH, Price: AED1.48, Consensus FV: AED1.82, Add, Consensus P/E FY2014f: 9.2x) has agreed to buy two hydroelectric power plants in India from Jaiprakash Power Ventures for c.USD616 million. TAQA, with a 51% stake in the consortium, will control the operations and management of both plants under the deal. One of Canada's largest institutional investors will own 39% and IDFC Alternatives' India Infrastructure Fund II will hold 10%. In addition to its USD616 million expenditure, the consortium will acquire the plants' non-recourse project debt, TAQA said without disclosing the value of the debt.
Air Arabia inaugurates flights to Cairo on Thursday from its primary hub in Sharjah, marking its fourth destination in Egypt and 90th worldwide (The Peninsula)
Deyaar plans to add hospitality projects to its portfolio; allots up to 1 million sqft for hotels and serviced apartment projects in prime locations in Dubai to be developed over the next few years (Company release)
Nakheel plans to hold a second auction on March 4 to sell off 7,750-8,700 sqft land plots at its Jumeirah Park development following the success of the first auction (Arabian Business)
Etisalat inks deal with Huawei to develop 5G network in the UAE (Zawya)
Money supply (M2) growth slows to 17.7% y-o-y in January 2014 from 19.6% y-o-y in December 2013; bank lending growth accelerates to 14.1% y-o-y in January 2014 from 11.8% y-o-y in December 2013; bank deposit growth slows to 17.1% y-o-y in January 2014 from 19.7% y-o-y in December 2013; net foreign assets at QCB reach USD41.6 billion in January 2014 (QCB)
Work on the QAR27 billion New Port Project is 35% complete, executive director says; the project is scheduled for completion in 2030 and is expected to be operational in 1H2020 (Gulf Times)
Qatar Navigation Company (Milaha) FY2013 results: Net profit reaches QAR950 million, up 13.8% from QAR835 million in FY2012; board recommends distributing QAR5.00/share in cash dividends, translating to a 5.5% dividend yield and 60.0% payout ratio (Qatar Exchange)
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