It was a good week for the local bourse, with the CASE30 hitting its highest level this year by exceeding the 7200 points. The active performance was caused by the announcement of positive results by some blue chips, in addition to news of upcoming buyouts. This was despite the Ministry of Finance's announcement that foreign debt stood at $28.9 billion, up by 17.5 per cent from $24.6 billion at the end of December, 2005. However, the week witnessed a retreat in the interest rates paid on government short term treasury bills and certificates of deposits, dropping to the lowest levels in many months. This elicited many reservations among banks which usually invest their extra liquidity in these instruments, and thus consider its pricing as a benchmark to determine the interest rate they pay on investors' deposits. Interest rates had been rising since June 2006, as the Central Bank worked to dampen inflation and banks had expected the rise to continue. Eastern TOBACCO's (EC) financial results for the first half of fiscal year 2006/2007 came better than expected, with its net profit recording a 48 per cent increase. The growth was fed by an increase in sales during the period, especially in the second quarter, despite the increase in the price of EC's best-selling brand Cleopatra King. Commenting on the results, EFG-Hermes expects the growth in sales to be lower for the full year -- predicted at 3.5 per cent compared to five per cent during the first half. The slow-down will come since retailers are probably accumulating stocks in the second quarter, ahead of an expected imposition of a 10 per cent health tax on cigarettes. Meanwhile, EFG forecasts average sales to grow by three per cent through 2012, and the company's market share of foreign brands to climb to 17 per cent in five years from 11.3 per cent in 2006. MOBINIL subscribers rose by 1.16 million in the fourth quarter of 2006, bringing its subscriber base to 9.26 million. This is a 38.4 per cent increase compared to the same period in the previous year. Meanwhile, MobiNil's market share rose from 51.1 per cent to 52.3 per cent at the end of the third quarter of 2006, as a result of tariff reductions at the beginning of the fourth quarter. The company's expenditures through the year include money spent to finance upgrading commercial activity, the network and human resources to prepare for competition. EFG Hermes increased its estimate for the company's fair value by 8.8 per cent to LE220 per share on the back of the company's decision to forgo investing in 3G. "We [EFG-Hermes] believe the cost of investing in 3G, which would include LE3.4 billion for the licence, annual revenue sharing of 2.4 per cent and other 3G-related spending, would have been value-destructive given what we believe to be relatively limited economic benefits," stated EFG's research report. Meanwhile, the report underlined possible future scenarios that might change the estimated value. This includes MobiNil reversing its decision to go without a 3G licence due to higher-than-expected market share loss, especially from high-spending customers. Another possible scenario that EFG feels might shave MobiNil's share value, is a change in the regulatory landscape to enhance competition in a way that favours the third operator, and escalating competition over pricing after the entrance of a third operator. NAEEM HOLDING FOR FINANCIAL INVESTMENTS, in pursuit of widening its financial services array, is buying Arabia Online (AOL). AOL, the first company to acquire an online trading licence in Egypt in mid-2006, is 90 per cent owned by Hani and Hesham Tawfik while the balance is owned by individual investors. The company had captured one per cent of the overall brokerages market through its first year of inception. Naeem Holding was established last year and has so far acquired two local companies -- a brokerage and fund manager. It is also setting up a mortgage finance company in addition to acquiring a Dubai-based brokerage. MISR CEMENT QENA (MCQ) is a target of what is expected to be fierce competition between international and local cement heavyweights to acquire a controlling stake. The local ASEC Cement Holding Company submitted an offer earlier this week to buy up to 100 per cent of MCQ's shares at LE75 per share. ASEC's bid came only one day before the deadline the Portuguese Cimpor Invesrsiones set to receive selling orders from investors interested in selling their holdings in MCQ at LE67. The bidding process coincided with a recent statement by the Ministry of Investment stressing that the government has no intention to sell its holdings in any cement company. MCQ is 40 per cent publicly owned . Meanwhile, MCQ revealed plans to build a second production line that will use the infrastructure of its first line, a move that aims at reducing the cost by 30 per cent. It will hold an international tender to buy the necessary equipment and machines for the new line. ORASCOM TELECOM HOLDING (OTH), owner of 19 per cent of Hutchison Telecommunication International Limited (HTIL), has reached an agreement to sell its 67 per cent stake in the Indian telecom group Hutch Essar for LE11.1 billion to Vodafone Group. OTH's share in the deal's capital gains of $9.6 billion is around $1.85 billion. The deal still needs the approval of HTIL's general assembly and a nod from the Indian regulator. HTIL's press release noted that the proceeds of the sale will be used to reduce debt, pay a special dividend, fund future investment opportunities, and finance working capital requirements. Compiled by Sherine Abdel-Razek
