The market seems to be waiting for a big bang to start evolving again. In the mid of a selling spree by Arabs and foreigners in a profit taking activity, the good first half results failed to push the indices up. The flat performance of last week continued until Sunday. The value of transactions through the week ending on 17 August came at LE4.3 billion, and the CASE 30 index closed marginally low at 5,749 points. EFG-HERMES released its results for the first half of 2006, which witnessed a 2.53 fold increase in gross profits. This came on the back of an annual 200 per cent hike in operating revenues, fueled by a significant 116 per cent rise in local brokerage activity and a 189 per cent surge in its investment banking activities in Egypt. However, the results of the second quarter of 2006 came weak compared to the previous quarter, due to the decline in the trading activity in the Egyptian market -- a factor that was reflected in a 39 per cent decrease in operating revenues. Acquiring a 20 per cent stake in Audi Bank added LE103.4 million to revenues, as the bank realised an $86 million in net profits during the first half. The company also benefited from changes in the tax law, as the effective tax rate stripped off 14 per cent of income compared to around 20 per cent in the first half of 2005. Exempting offshore subsidiaries from tax rates will also realise more returns for EFG, as more of its revenues are realised offshore now that it has both brokerage and investment banking activities in UAE. It has acquired a similar license in Saudi Arabia. RAYA HOLDINGS net profits for the first half of 2006 came 95 per cent lower than in 2005. However, the company's net sales from its three core activities -- retail and distribution, IT and telecommunication -- increased by 23 per cent. Retail and distribution sales grew by 18.6 per cent during the first half thanks to the acquisition of SAMA company. This is compared to a 38 per cent increase in IT sales due to revenues from infrastructure solutions in a number of new projects. Moreover, an increase in connectivity revenues following Raya's acquisition of Super Net pushed the revenues of its telecommunication activities by 30.4 per cent. On the other hand, the effective tax rate counted for 91 per cent of Raya's consolidated income, compared to only 11.9 per cent the previous year. The increase is due to a condition in the new tax law imposing taxes on losing subsidiaries. Raya expects this cost item to be lower next year since some of its losing units will profit by the end of 2006. Misr Beni Suef Cement is currently in negotiations with the Commercial International Bank (CIB) to arrange a LE1 billion loan, to finance the company's plans to increase its market share from five to 10 per cent. The company, like its peers of cement in the market, realised better first half results than expected with an average growth rate in earnings of 95 per cent. According to a HC Securities report, the cement companies' upturn in net earnings is due to a hike in cement prices, coupled with an increase in local demand on cement. ORASCOM TELECOM HOLDING (OTH) purchased an additional 0.82 per cent in MobiNil, giving it a 17.4 per cent direct stake in MobiNil and a 14.7 per cent indirect stake. This is due to its 28.75 per cent ownership of the Egyptian Mobile Telecommunications Company, which owns 51 per cent of MobiNil. Orange Group, a subsidiary of France Telecom and France's largest telecommunication operator, owns 36.3 per cent of MobiNil and the remaining 31.6 per cent is free floated. MobiNil's CEO Alex Shalaby was quoted as saying that his company will appeal to the Egyptian courts should the National Telecommunication Regulatory Authority (NTRA) insist that the EDGE technology require a 3G license. NTRA threatened that it would take MobiNil to court after the latter began offering services that apply the 2.75 generation, known as EDGE technology, without a license. MobiNil countered that EDGE is an advanced application of the second generation of mobile services, and not a third generation application that requires a license. COMMERCIAL INTERNATIONAL BANK (CIB) entered an alliance with Blue Nile for Fund Management and Dynamic Securities for Brokerage with CIB's investment arm CI-CH, to form a new entity worth LE1.5-2 billion. Blue Nile manages a $150 million dollar fund owned by the OASIS group, that is co-owned by Egyptian mogul Naguib Sawiris, the Saudi Alian Company and Kuwaiti businessman Maged Al-Futtaim. CI-CH is a holding company with five subsidiaries: CIBC for brokerage, CIAM for asset management, a research unit CI-insearch, CI-Investment Banking and UBC brokerage, which works at the UAE. The Alliance is expected to take place through a capital increase in CI-CH and its acquisition of Blue Nile and Dynamic Securities. In his personal capacity and through Oasis, Sawiris is expected to inject new investments in CI-CH. Compiled by Sherine Abdel-Razek
