The market reversed its direction during the week ending 17 May with the CASE30 Index ending in the red at 7,424. The revival witnessed on the last trading day of the week failed to offset the 2.8 per cent decline in the index resulting from profit-gaining transactions. The average daily transactions through the week were LE1.4 billion. The unexpected demand and high selling prices of state-owned land lots in several new communities pushed the shares in the construction sector to all time highs. However, the sector's bellwether, Orascom Telecom Holding (OTH), alone shouldered a 10 per cent loss through the week. TELECOM EGYPT (TE): Subscribers to the company's fixed line network increased 3.9 per cent from 10.5 million in March 2006 to 10.9 million in March 2007. This increases the penetration rate to 14.8 per cent. According to HC securities, Telecom Egypt has not been focussing on increasing its penetration rate but instead has focussed on adding subscribers for its high-end product offerings and installing lines in newly established cities. Boosted by the investment income of Vodafone Egypt, Telecom Egypt's net income increased by 21.9 per cent from LE480 million in the first quarter of 2006 to LE585 million in the first quarter of 2007. A 25 per cent increase in operating expenses, including a 58 per cent increase in salaries, has eaten away the savings in costs. However the 102 per cent increase in investment income from Vodafone Egypt, in which TE increased its stake from 26.6 per cent to 45 per cent through last year, made up for the increase in costs. ALEXANDRIA SPINNING AND WEAVING (Spinalex): The former chairman of the company is accused of misconduct and using insider information to make illegal profits from shares transactions. The Capital Market Authority (CMA) stated that investigations proved that the chairman has used his relatives and acquaintances to trade in the stock. Prior to the CMA announcement, the former chairman resigned in early May for undisclosed reasons. The company's net profits for the first quarter of 2007 were 9.3 per cent higher than last year at LE5.78 million. ORASCOM HOTELS AND DEVELOPMENT (OHD): The company witnessed a 53 per cent increase in revenues for the first quarter of 2007 fed by a 78 per cent surge in its real estate sales and the inclusion of OHD's sale of its stake in the Egyptian resorts company. Meanwhile the company's hotel operations counted for the lion's share in revenues generating around 45 per cent of overall sales. This was fed by an increase in the average room rates together with the appreciation of the euro. OHD's real estate line of business continued to gain momentum with sales recording a 78 per cent increase to LE85.5 million. There was a sharp increase in the average selling prices in El-Gouna to $2,800 per metre compared to $1,750 in the same period last year. OHD's overall landholdings for both real estate and hotel development activities are 115 million square metres on three continents. ORASCOM CONSTRUCTION INDUSTRIES (OCI) announced that it has acquired a 60 per cent stake in Samba, the largest aggregates producer in Algeria, for $8 million. Samba controls 60 million tonnes of crushed stone reserves and has a quarrying capacity of approximately a million tonnes of aggregates per year. OCI intends to increase the production capacity of its existing plant and equipment to 5,000 tonnes per day, which will double its annual output to two million tonnes of aggregates per year through additional investments. ORASCOM TELECOM HOLDING (OTH): The shares lost ground through the week due to bomb attacks in Pakistan. Subscribers to OT's network in Pakistan represent almost 25 per cent of overall OT subscribers. However, the company revealed new deals which if they materialise would support the shares in the coming weeks. In an interview with Reuters, OTH's Chairman Naguib Sawiris said his company submitted an offer to Telecom Italia to acquire its Brazilian subsidiary, Tim Brazil. Also, OT submitted a bid for Qatar's second mobile licence. Moreover, Sawiris hinted that OTH is planning to acquire Hutchison operations in Vietnam and Indonesia. OTH posted its first quarter profits realising a net income of LE970 million compared to LE930 in the first quarter of 2006. This growth came on the back of a 21.6 increase in sales to LE6.85 billion with a 60.8 per cent increase in the number of subscribers from 35.2 million to 56.6 million. The company operates networks in six countries: Egypt, Iraq, Tunisia, Algeria, Pakistan and Bangladesh. EFG-HERMES: The leading investment bank said that Abu Dhabi Investment Authority (ADIA) has acquired eight per cent of the company over the past months, granting it one seat on the EFG-Hermes board. ADIA is the second largest shareholder in EFG after the UAE-based Abraaj Capital which owns two per cent of the investment bank. The bank's first quarter results showed a 20.3 per cent increase in net profits to LE251 million including the LE71 million gain from selling 500,000 shares in SODIC. AL-WATANY BANK OF EGYPT: The bank is attracting a lot of interest from potential buyers, with five local and regional institutions asking to perform due diligence in preparation for potential bids to acquire the bank. A senior official in the bank was quoted as saying that most Al-Watany Bank of Egypt shareholders are willing to sell if the price is right. Compiled by Sherine Abdel-Razek
