Amid Mostly Red Performance, Egypt’s Benchmark Falls 1.56% In Week

In a week that witnessed mostly red performance, Egypt bourse has incurred losses of around EGP 4 billion. The capital market reached EGP 360.783 billion on Thursday, compared to EGP 364.841 billion a week earlier.

Egyptian Exchange’s benchmark EGX 30 index inched down by 1.56 % this week, representing a decline of 84.76 points, ending Thursday’s transactions at 5343.21 points compared to 5427.97 points at the end of last week.

Main index hit its highest point on Sunday closing at 5451.23 points, where its lowest point recorded on Monday at 5343.21 points.

Companies’ Weekly Performance Highlights:

Six of October Development & Investment (SODIC) – (OCDI.CA) closed last week at EGP 20.91, while closed on Thursday at EGP 20.38 (lowest close), dipping by EGP 0.53 (3 %).

Stock highest close during the week came on Monday at EGP 21.04.

On Wednesday, SODIC’s BOD approved EGP 150 million loan from Societe Arabe Internationale De Banque.

Also on Wednesday, SODIC has released its consolidated financial results for the first quarter ending 31st of March 2013.

SODIC reported a net consolidated profit of EGP 6 mln (Q1 2012 net profit of EGP 35 mln) on consolidated revenues of EGP 130 mln (Q1 2012 revenues of EGP 312 million).

The drop in revenues y-o-y is attributable to the reduced deliveries during the quarter.

In addition, by the end of May SODIC plans to launch the first phase of Eastown, its long-awaited project in New Cairo.

On Thursday, SODIC has announced an update regarding the current legal status of extending the development schedule for SODIC West:

New Urban Communities Authority’s (NUCA) Board of Directors has formally approved an extension for SODIC’s “SODIC West” development schedule to compensate for the delays in issuing necessary approvals.

In that respect SODIC has received an official letter from NUCA dated 23/5/2013 extending the development schedule for an additional ten and a half months.

SODIC has been working diligently in developing Westown’s land achieving an unparalleled success through its 7 phases of Westown Residences (WTR).

Finally, EFG-Hermes stated on Thursday that SODIC’s 1Q2013 net income before minorities was only EGP 6 million, significantly below our EGP 34 million forecast.

Hermes added that, We view the results negatively, given the weak deliveries that have driven the earnings disappointment.

The company delivered only 37 units worth EGP115.8 million in its flagship project Allegria, much lower than our expectation.

We believe that our outstanding earnings forecast was already quite conservative and much lower than consensus.

Nonetheless, significantly stronger pre-sales and stable gross margin should be considered a bright spot, in our view.

Net pre-sales reached EGP551 million and were significantly stronger than our EGP271 million forecast.

Orascom Telecom Holding – (ORTE.CA) closed last week at EGP 4.7, while closed on Thursday at EGP 4.62, dipping by EGP 0.08 (2 %).

Stock highest close during the week came on Sunday at EGP 4.73.

Two sources said on Friday that Vimpelcom wants to delist Cairo-based subsidiary Orascom Telecom from the Egyptian and London stock exchanges so it can manage it directly, Reuters reported.

The move will also allow Vimpelcom to cut costs associated with running the Egyptian office and avoid regulatory and political risks, a source familiar with Vimpelcom’s plans and a source close to Vimpelcom said.

“This is part of the strategy. There is a task to run the assets directly, which will help to improve the quality of management of the businesses such as (Djezzy) in Algeria,” a source close to Vimpelcom said.

“Vimpelcom spends around $50 million a year on its Cairo HQ, and taxes in Egypt are very high,” said another source familiar with Vimpelcom’s plans.

The source said material regulatory risks, such as extra tax claims, and political risks due to broader instability, added to the reasons for the move.

Removing this extra layer will make it possible to save at least $100 million, one of the sources said, adding the decision has been taken “at shareholder level”.

On Sunday, Sources related to the bid offered by Baskindale to buy Orascom Telecom shares confirmed that VimpelCom’s split agreement contains articles that prevent the company from delisting OT until 2016, Almal newspaper reported.

It is worth noting that, rumors spread over the past days that VimpelCom aims to delist OT from both Egyptian Stock market and London Stock Exchange.

On the other hand, the sources asserted that the two options that might be available for Altimo’s Baskindale are either to get an exception from EFSA and amend the offer price, or to wait for 6 months and offer a new price.

On Wednesday, OT announced that it didn’t informed about stoppage of negotiations between Russian VimpelCom, owner of Orascom, and the Algerian Government about OT’s unit in Algeria Djezzy.

OT added, in a release sent to EGX that, it is not party in these talks.

Egyptian Financial Group-Hermes Holding Company- (HRHO.CA) closed last week at EGP 9.76, while closed on Thursday at EGP 9.19 (lowest close), sinking by EGP 0.57 (6 %).

Stock highest close during the week came on Sunday at EGP 9.61.

On Wednesday, Hermes announced consolidated financial results for the first quarter of 2013, reporting net income after taxes and before minority interest of EGP 98 million on total consolidated operating revenues of EGP 494 million.

Group revenues rose 14% Y-o-Y in 1Q13, driven by 17% growth in Investment Bank revenues to EGP 194 million, reflecting rising contributions from all four fee-earning lines of business. The Commercial Bank’s contribution to Group revenue increased 12% Y-o-Y to EGP 300 million in the quarter.

Revenues for the quarter split as 61% contributed by the Commercial Bank and 39% by the Investment Bank.

“We expect the Firm to see more one-off expenses during the year as we continue implementing our plan to streamline operations and generate efficiencies,” Awad said, noting that “the Firm remains committed to its target of reducing its cost base to c. EGP 500 million in 2014 from an estimated EGP 780 million this year.

This will ensure the Investment Bank’s ongoing ability to perform amid unpredictable market conditions.”

Regarding Investors’ Activity:

Local investors led the market activity all through the week, followed by Foreign and Arab investors respectively.

Arab investors were the most active buyers this week earning the value of EGP 8,574,599.

Local investors chose also to buy by value of EGP 7,700,382.

Foreign investors were most active sellers this week by the value of EGP 16,274,982.

Retail & Institutions’ Activity:

Retail activity led the market all through the week as it ranged between 12.75 – 65.35 %.

While Institutions activity ranged during this week between 34.64 – 87.24 %.