Egyptian Exchange benchmark EGX 30 index dipped by 5.73 % this week, representing a retreat of 285.3 points, ending Thursday transactions at 4,686.42 points compared to 4,971.72 points at the end of last week. Regarding current week trading, the index hit its highest point on Sunday closing at 4,824.34 points, where its lowest point recorded on Tuesday at 4,683.87 points. EGX30 tumbled the most in two months after unofficial presidential election results showed the two most-divisive candidates are headed for a runoff next month. EGX30 dipped by 3.49 % on Sunday to close at 4,798.14. Market trade volume reached 173,234,788 shares amounted to EGP 20,508,722,136. The index extended decline for the second day after first round of presidential election and dipped by 1.79 % on Monday to close at 4,738.10. Market trade volume reached 70,120,884 shares amounted to EGP 422,474,920. EGX30 index shrunk early loss to extended decline for the third day this week and dipped by 1.14 % on Tuesday to close at 4,683.87. Market trade volume reached 53,775,664 shares amounted to EGP 329,314,825. EGX30 eroded early gains to end three consecutive sessions of decline and edged by 0.04 % higher on Wednesday to close at 4,685.79. Market trade volume reached 87,684,564 shares amounted to EGP 1,055,857,172. EGX30 reversed early loss and edged by 0.01 % higher on Thursday to close at 4,686.42. Market trade volume reached 87,875,649 shares amounted to EGP 888,877,623. Companies' Weekly Performance: Egyptian Financial Group-Hermes Holding Company - (HRHO.CA) shares closed last week at EGP 11.22, while closed on Thursday at EGP 10.97 (highest close), jumping dipping 2 % (EGP 0.25). The lowest close during that week came on Monday closing at EGP 10.48. On Wednesday, Hermes BOD approved the fair value submitted by the independent financial adviser Grant Thornton LLP for a number of its, direct or indirect, affiliates. This valuation was made in order to transfer ownership of some of these companies to be directly owned by Hermes, namely EFG Hermes Asset Management and Hermes Bond Trading, while 8 other affiliates ownership will be transferred to EFG-Hermes Qatar. According to the independent financial adviser, total valuation for the mentioned companies amounts to EGP 700.5 million ($ 116 million). Also on Wednesday, Hermes, the leading investment bank in the Arab world, confirmed that no member of the family of former President Hosni Mubarak nor the former president himself hold any shares in EFG Hermes Holding or its subsidiaries, which include nearly 50 individual companies. The sole exception is Gamal Mubarak who in 1997, prior to his entry into political life, acquired 18% of EFG Hermes Private Equity, a small subsidiary of EFG Hermes Holding. The ownership of this stake was disclosed at the time of EFG Hermes Private Equity's establishment and was public knowledge in Egypt and in international markets. In the course of his investment in EFG Hermes Private Equity, Gamal Mubarak received total dividends of c.USD 880,000 annually, in the context of which EFG Hermes notes that exchange rates were lower at that time than at present. All dividends were paid by the subsidiary. Moreover, EFG Hermes Private Equity's financials and dividend payments have been audited and monitored locally and internationally since the subsidiary's establishment. EFG Hermes confirms that neither the firm nor any of its subsidiaries has had a financial relationship of any form with any member of the former President's family with the exception of two securities trading accounts opened to trade shares on the Egyptian Exchange (EGX). On Thursday, Planet Consortium announced its initial interest to submit a $ 1.2 billion takeover offer to EFG-Hermes. Hermes announced earlier this month it had sealed an agreement first announced in March to form a region-wide investment bank with Qatar's Qinvest. Qinvest will control 60 percent of the new bank, which will be called EFG Hermes Qatar, and provide $250 million to increase its capital. It is worth noting that, founders of Planet are Ahmed El-Hussainy, founder and former Managing Director of Citadel Capital, Mahmoud Abdel-Latif, Former Chairman of Bank of Alex-San Paulo and Mona Yassine, former Chairman of Cairo-Far East Bank. Also on Thursday, Hermes said it would defend its two chief executives against accusations of illegal share dealings. Yasser El Mallawany and Hassan Heikal were referred to trial on Wednesday alongside the two sons of deposed President Hosni Mubarak as part of a probe into the dealings, according to the public prosecutor. They are accused of violating stock market and central bank rules to make unlawful profits through the trading of shares in Al Watany Bank of Egypt, a listed bank. In a statement, EFG affirmed the "soundness of its legal position" in regard to the 2007 acquisition of Al-Watany Bank by National Bank of Kuwait. EFG said the accusations had not affected the bank's operations in any way and it expressed full support and confidence in the two CEOs. Egyptian Company for Mobile Services (Mobinil) - (EMOB.CA) closed last week at EGP 180.19, while closed on Thursday at EGP 165.04 (lowest close), sinking by 8 % (15.15). Stock highest level recorded on Sunday closing at EGP 185.5. EGX said on Sunday that France Telecom acquired 94 percent of Egyptian mobile phone company Mobinil in a tender offer, giving the French group control of a top sector player in a volatile but lucrative emerging market. France Telecom on Sunday executed its purchase of 93.9 million shares of the 100 million outstanding at a pre-agreed price of 202.5 pounds each, for a total transaction value of 19 billion Egyptian pounds ($3.15 billion). The deal, which was subject to a preliminary agreement struck in February, recasts the terms of its relationship with Sawiris, who had a put option to sell out completely to France Telecom starting in September 2012. Sawiris agreed to keep a 5 percent stake in Mobinil. On Thursday, MT Telecom, a fully-owned subsidiary of France Telecom-Orange, announced that it submitted a Mandatory Tender Offer (MTO) to the Egyptian Financial Supervisory Authority on 12 April 2012 to acquire up to 100 million shares, or 100%, of the Egyptian Company for Mobile Services (ECMS) at a share price of 202.5 EGP. France Telecom-Orange announced today that its subsidiary, MT Telecom, has successfully settled the MTO through the acquisition of 93,922,559 shares of ECMS, thus, increasing its indirect economic ownership in ECMS from 36.36% to 93.92%. In line with a previous shareholder agreement, announced in February 2012. Orascom Telecom Media and Technology (OTMT) have retained directly 5% of the capital of ECMS. France Telecom-Orange intends to ensure that, in the medium term and if the conditions allow it, up to 15% of ECMS's shares are held by Egyptian shareholders, whether these are private or public companies, or individual shareholders. Orascom Telecom Holding - (ORTE.CA) closed last week at EGP 3.4, while closed on Thursday at EGP 3.13, sinking by 8 % (EGP 0.27). Stock highest level recorded on Sunday closing at EGP 3.2, while the lowest came on Wednesday at EGP 3.09. On Monday, Orascom Telecom said that an Algerian court had confirmed fines against its Algerian subsidiary but had suspended a jail sentence on a member of the unit's senior executive team, Reuters reported. It said the court of appeal confirmed a judgment against Orasom Telecom Algerie (OTA) that consisted of fines of 99 billion Algerian dinars, worth about $1.3 billion. "The criminal custodial sentence previously ordered against a member of OTA's senior executive team has been suspended. However, OTA has been ordered to pay the whole amount of the fines," it said in a statement. OTA says its executive complied with the law. On Tuesday, CI Capital maintained OT Hold recommendation with target price at EGP 4.1 per share, after Algerian court confirms judgment on Djezzy but suspends sentence against its CEO. Yehia El-Sherbiny, analyst at CI Capital, stated that the rejection of the appeal comes as no surprise. Although Djezzy will file an appeal at the Algerian Supreme Court, we expect VimpelCom to take such fines into consideration during the negotiations with the Algerian government over the sale of the operator. Despite the fact that DZD93bn of the fines are imposed on Djezzy and the remaining DZD6bn imposed on the company's CEO, the entire amount of fines, which Djezzy has been ordered to pay by the court, are factored in our target price of EGP4.1/share. Orascom Construction Industries (OCI) - (OCIC.CA) closed last week at EGP 277.78, while closed on Thursday at EGP 257.85 (lowest close), sinking by 7 % (EGP 19.93). Stock highest level recorded on Sunday closing at EGP 269.11. On Tuesday, OCI announced that its wholly-owned subsidiary OCI Fertilizer Holding has agreed to sell its 16.8% stake in the Gavilon Group, LLC (Gavilon) to Japanese trading house Marubeni Corporation (Marubeni). OCI added, in a release sent to Arab Finance, that proceeds from the transaction amount to approximately US$ 604.8 million. Marubeni valued 100% of Gavilon's equity at US$ 3.6 billion. OCI initially paid US$ 340 million for their stake in July 2008. The transaction is expected to close by September and OCI will use the cash proceeds to finance its Fertilizer Group expansion strategy in North America and potentially invest in other opportunities under review. In addition, part of the proceeds will be returned to stakeholders. The Fertilizer Group will maintain its existing relationship with Gavilon under the new ownership of Marubeni in marketing fertilizer products in North America. El Sewedy Electric- (SWDY.CA) closed last week at EGP 22.75, while closed on Thursday at EGP 22.44 (highest close), dipping by 1 % (EGP 0.31). Stock lowest level recorded on Wednesday closing at EGP 21.49. On Wednesday, El Sewedy announced that company's BOD approved to liquidate 11 of its affiliated companies which have neither activity nor tax cut. Also on Wednesday, El Sewedy reported consolidated financial results posting a net profit of EGP 102,722,461 in the first quarter of 2012, compared to net profits of EGP 182,757,200 for the same period of the previous year. Revenues in Q1 2012 decreased by 3% to reach EGP 3.45 billion versus EGP 3.55 in Q1 2011. The Wire and Cable segment achieved revenues of EGP 2.68 billion in Q1 2012, 2% lower than Q1 2011. Turnkey Revenues in Q1 2012 were 15% lower than Q1 2011 reaching EGP 445 million. Meters revenues were 7% higher YoY, whilst transformers revenues were 9% lower. Electrical Products revenues were 62% higher YoY. Net Income after Minority reached EGP 98.3 million during Q1 2012 versus EGP 171 million during Q1 2011. The decline in the Net Income during Q1 2012 versus Q1 2011 was mainly due to the decline in EBITDA of 11% in addition to Net Interest expense increasing from EGP 50.4 million in Q1 2011 to reach EGP 86 million in Q1 2012, an increase of EGP 35.6 million. The effective tax rate also increased from 14% in Q1 2011 to reach 25% in Q1 2012. The increase in effective tax rate was due to a higher contribution this quarter from the tax paying subsidiaries; however for the year 2012 the effective tax rate should be lower as the tax exempted subsidiaries contribution to profits is expected to be higher in the coming quarters. Sectors Performance: The most active sectors all through the week were Telecommunications, Financial Services, Construction & Material, Real Estate and Banks. Telecommunications sector achieved total traded value of EGP 366,219,782. Financial Services came second in terms of performance, as it achieved total traded value of EGP 308,917,664. Construction & Material sector ranked third in terms of performance, as it achieved total traded value of EGP 255,132,676. Regarding Real Estate, it achieved total traded value of EGP 191,637,390. Finally, Banks, as it achieved total traded value of EGP 157,411,365. Investors' Activity: Local investors led the market activity all through the week, followed by Foreign and Arab investors respectively. Foreign investors were the most active buyers, as they executed Mobinil deal on Sunday, and their stock this week earning the value of EGP 15,969,866,559. Local investors were most active sellers this week by the value of EGP 15,295,993,794. Arab investors chose also to sell by value of EGP 673,872,765. Retail and Institutions' Activity: Retail activity led the market all through the week as it ranged between 3.61 – 45.33 %. While Institutions activity ranged during this week between 54.66 – 96.38 %.
