Egyptian Exchange Main Index 4.2% Down Amid Controversial Verdict

Egyptian Exchange benchmark EGX 30 index dipped by 4.2 % this week, representing a retreat of 196.87 points, ending Thursday transactions at 4,489.55 points compared to 4,686.42 points at the end of last week.

Regarding current week trading, the index hit its highest point on Sunday closing at 4,625.62 points, where its lowest point recorded on Wednesday at 4,484.71 points.

EGX30 started week on sever losses after Hosni Mubarak was sentenced to life imprisonment on Saturday for his role in killing protesters and dipped 1.3 % on Sunday to close at 4,625.62. Market trade volume reached 56,249,405 shares amounted to EGP 956,137,502.

EGX30 reversed early loss and retreated by 0.35 % on Monday to close at 4,609.48. Market trade volume reached 105,918,031 shares amounted to EGP 365,530,685.

The index extended red performance and dipped by 2.31 % on Tuesday to close at 4,502.91. Market trade volume reached 73,915,938 shares amounted to EGP 447,343,372.

EGX30 reversed early gains to extend red performance and retreated by 0.4 % on Wednesday to close at 4,484.71. Market trade volume reached 50,932,520 shares amounted to EGP 174,581,522.

EGX30 ended week in green after 4 red session and retreated by 0.11 % on Thursday to close at 4,489.55. Market trade volume reached 37,925,509 shares amounted to EGP 319,347,016.

Companies’ Weekly Performance:

Egyptian Financial Group-Hermes Holding Company/EFG-Hermes Holding – (HRHO.CA) share closed last week at EGP 10.97, while closed on Thursday at EGP 10.63 (lowest close), dipping 3 % (EGP 0.34).

The highest close during that week came on Sunday closing at EGP 11.01.

Egyptian billionaire Naguib Sawiris is helping finance a takeover bid for Egypt’s biggest investment bank EFG Hermes that would ensure the company is not broken up, the bid consortium said on Friday.

Planet IB, the group of Gulf investors and bankers behind the bid move, is led by financial industry interests including Chief Executive Ahmad al-Husseiny, who until last month was managing director of Egypt-based private equity firm Citadel Capital. 

Husseiny said Planet had lined up debt finance for its cash bid and “substantial equity commitments from leading Egyptian business figures” including Sawiris, Gulf-based investors such as Tariq bin Faisal al-Qassimi and a top Bahraini institution.

“The proposed acquisition keeps a flagship Egyptian multi-national intact and prevents its break-up,” said Hussieny in a statement.

Planet IB that has launched a bid to buy out Hermes said on Saturday it intended to offer 13.50 Egyptian pounds ($2.23) per share for the Egyptian investment bank.

“If EFG-Hermes is serious about entertaining a tender offer from Planet IB, it must immediately postpone the execution of the alternative transaction,” it said in a statement, referring to a plan to form a joint venture with Qatar’s QInvest.

Shareholders of EFG-Hermes voted in favor of creating an investment bank in which QInvest LLC, a unit of Qatar Islamic Bank (QIBK), will own 60 percent.

The vote was confirmed by Doha-based QInvest Chief Executive Officer Shahzad Shahbaz who said by phone today the agreement will still requires the Egyptian Financial Supervisory Authority (EFSA).

EFG-Hermes shareholders approved the deal at a meeting on Saturday, two people with knowledge of the vote had said earlier, asking not to be identified because the decision hasn’t been made public.

Also on Saturday, shareholders of Egyptian investment bank EFG-Hermes voted against a group of investors seeking to buy the bank, but the investors will appeal to Egypt’s regulator to suspend the decision, the group targeting the bank said.

Planet was asking the regulator to halt the process and have another vote taken after shareholders were allowed to hear Planet IB’s offer, Abdel Latif said.

He said his group had sent a letter to the regulator and planned to meet with Egyptian Prime Minister Kamal al-Ganzouri on Sunday to gain support for its buyout offer.

On Sunday, Hermes said it would distribute a dividend of 4 Egyptian pounds ($0.66) per share after it completes a joint venture it is forming with Qatar’s QInvest.

It confirmed in a statement that shareholders had approved the venture, in which EFG would have a 40 percent stake and QInvest 60 percent.

“As a result of the transaction, the proceeds will be utilized to distribute a dividend of EGP 4 per share, representing a dividend yield per share of 36 percent, in the form of actual annual profits, capital gains, retained earnings and capital reduction,” the statement said

On Monday, Hermes said it was taking “legal measures” to protect shareholders after a group of investors offered to buy the company at a premium to the market price, Reuters reported.

EFG has dismissed as not serious the offer by Planet IB, which includes Egyptian businessman Naguib Sawiris, former AlexBank Chairman Mahmoud Abdel Latif and a member of the ruling family of the Gulf emirate of Sharjah.

Also on Monday, Egypt’s Planet, which is seeking to take over EFG Hermes, said it intended to match financial and legal guarantees as well as other undertakings made by its Qatari competitor, which has a merger deal with the Egyptian investment bank.

Planet said it was ready to begin due diligence immediately in preparation for its intended offer to buy 100% of EFG’s shares.

Hermes reported consolidated financial results posting a net profit of EGP 77,016,622 in the first quarter of 2012, compared to net profits of EGP 82,661,074 for the same period of the previous year.

But the head of the buy-out group vowed to press on with the bid, saying it had the financial firepower it needs and would consider a hostile approach for Egypt’s biggest investment bank.

An EFG source told Reuters earlier that Sawiris would step aside because EFG shareholders had backed an alternative tie-up with Qatar’s QInvest.

“Mr. Naguib Sawiris remains a financial backer of Planet IB’s intended bid to acquire 100 percent of EFG Hermes Holding,” said Ahmed El-Houssieny, Planet’s chief executive.

“We have in the past minutes directly confirmed with Mr. Sawiris that he remains solidly in our corner. Mr. Sawiris’ support is conditional on Planet IB being allowed to conduct due diligence (on EFG),” Houssieny said.

Orascom Construction Industries (OCI) – (OCIC.CA) closed last week at EGP 257.85, while closed on Thursday at EGP 249.07, dipping by 8% (8.78).

Stock highest level recorded on Sunday closing at EGP 253.81, while the lowest close came on Wednesday at EGP 247.25.

On Thursday, OCI announced that the International Finance Corporation (IFC), a member of the World Bank Group, will provide a US$ 100 million loan to Orascom Construction (OC), the Company’s wholly-owned construction subsidiary.

OCI added, in a press release, that the loan will be used to finance the operations of the company as well as ongoing and new projects.

Salman Butt, Chief Financial Officer of OCI, commented, “securing this loan will provide Orascom Construction with the necessary capital to expand its operations across the region. We are pleased with the IFC’s continued commitment to the company as well as the country and look forward to further developing our longstanding relationship in the future.”

Mouayed Makhlouf, IFC Director for the Middle East and North Africa, said, “by supporting a group like Orascom Construction, we want to send the signal that Egypt has long-term potential.

This investment fits with our strategy of boosting confidence in Egypt’s private sector, a major contributor to employment.”

Also on Thursday, OCI announced that company’s EGM approved facilities contract between Pandora Methanol LLC (Borrower) and OCI as (Guarantor) and banks and financial institutions (lenders) by a maximum of $ 150 million.

Oriental Weavers – (OW) (ORWE.CA) closed last week at EGP 15.82, while closed on Thursday at EGP 15.65 (highest close), retreating by 1 % (EGP 0.17).

Stock lowest level recorded on Tuesday closing at EGP 15.55.

On Monday, Oriental Weavers announced that its shareholder Sodok International Investments has purchased 66,468 shares of Oriental Weavers during the period from 27-05-2012 till 31-05-2012 to increase its stake to 5,473,468 shares (6.08 %) of total issued shares.

On Thursday, CI Capital stated that imposing anti-dumping duties of at least EGP 1,605/ton on imported polypropylene is Neutral for Oriental Weavers Carpets.
Ingy El-Diwany, analyst at CI Capital stated that, Oriental Weavers imports 60% of its needs of polypropylene which constitute 40% of its costs of goods sold.
Given that companies operating in private free zone areas are exempted from these duties and most of OW’s fibers factories are operating in private free zone areas, OW will not pay the antidumping duties.

There is only one fiber plant (King Tout) expected to be inaugurated late 2012 that is located in non-free zone area. By the time the factory starts its commercial operations, duties will have been lifted (after 200 days).

Thus, we do not see any effect of these protective measures on OW’s performance in 2012 as OW will not be subject to anti-dumping duties on imported polypropylene.

It is worth noting that, Ministry of Trade & Industry decided to impose anti-dumping duties of at least EGP1,605/ton on imports of Polypropylene (equivalent to 15% of its prices) starting June 5, 2012 for 200 days.

This will drive polypropylene prices higher to range from EGP10,000/ton to EGP11,500/ton. In reaction to this decision, workers of around 2,000 factories operating in packaging and household equipment industries threatened to protest claiming that they won’t be able to deliver their export contracts unless this duty is cancelled.

Six of October Development & Investment (SODIC) – (OCDI.CA) closed last week at EGP 15.9, while closed on Thursday at EGP 15.35, sinking by 3 % (EGP 0.55).

Stock highest level recorded on Monday closing at EGP 15.93, while the lowest close came on Tuesday closing at EGP 15.24.

On Sunday, SODIC announced that it collected EGP 156 million during the period from 01/01/2012 till 31/03/2012.

SODIC added, in a release sent to EGX that, it has executed EGP 2.9 million works during the first quarter of 2012.
It stated that, loans and credit facilities hit EGP 421 million.
SODIC pointed out that, New Urban Communities Authority (NUCA) 5 years dues hits EGP 119 million.

Sectors Performance:

The most active sectors all through the week were Financial Services, Telecommunications, Real Estate, Construction & Material and Banks.

Financial Services sector achieved total traded value of EGP 243,130,819.

Telecommunications came second in terms of performance, as it achieved total traded value of EGP 147,387,210.

Real Estate sector ranked third in terms of performance, as it achieved total traded value of EGP 105,116,519.

Regarding, Construction & Material it achieved total traded value of EGP 91,870,260.

Finally, Banks, as it achieved total traded value of EGP 87,509,232.

Investors’ Activity:

Egyptians led the market activity all through the week, followed by Foreigners and Arabs respectively.

Foreigners were the most active buyers this week earning the value of EGP 23,864,130.

Egyptians were most active sellers this week by the value of EGP 15,296,542.

Arabs chose also to sell by value of EGP 8,567,587.

Retail & Institutions’ Activity:

Retail activity led the market all through the week as it ranged between 11.08 – 57.72 %.

While Institutions activity ranged during this week between 42.27 – 88.91 %.