The market maintained its two-month-long buoyant performance during the week ending 3 May. The CASE30 index, tracking the performance of the 30 most actively traded companies, gained 0.8 per cent during the week to close at 7,506. The positive sentiment was driven both by encouraging macro- economic news and good financial results posted by the market's heavyweights. The inflation rate recorded its first decline in two years in April, to 11.7 per cent and The Economist ranked Egypt eighth in terms of industrial development among emerging markets with an industrial production growth rate of 10.5 per cent in 2006. Another piece of news that was warmly welcomed by market observers was the announcement that a consortium of four financial institutions led by JP Morgan will manage the underwriting and offering of Egypt's $500 million 10-year term bond issues. MOBINIL CEO Alex Shalabi said that it plans to acquire a 3G licence. This came after months of statements by senior officials stressing the company's refusal to apply for the licence as it would cost it LE3.4 billion, and that expected revenues won't cover that sum, since 3G services target a limited group of customers. MobiNil is Egypt's first mobile network operator whose subscribers reached 10.6 million, by the end of March 2007, a 53 per cent increase over last year. The company has released its financial results for the first quarter of the year, showing a 27 per cent growth in turnover. The subscriber base of the company showed changes, with the number of postpaid subscribers declining by 14.1 per cent and prepaid subscribers increasing by 61.3 per cent. Commenting on this development, HC Securities said that the sharp increase in the number of subscribers is a result of MobiNil's new strategy of adding new subscribers, regardless of their profitability in the short run. The company believes that a strong subscriber base will pay dividends in the long run, in the face of fierce competition expected from the third operator who entered the field in May. In a related development the National Telecommunications Regulatory Authority announced that Etisalat will sign a roaming agreement with MobiNil and Vodafone Egypt by the end of this week. AL-SEWEDY CABLES' new subsidiary, United Company for Wires (UCW), which is specialised in the production of galvanised steel, started operations in March 2007 in the 10th of Ramadan city. UCW has an annual production capacity of 10,000 tonnes. It will cover a part of Al-Sewedy group's raw material needs and will enjoy a 10-year tax holiday. The group announced that it is establishing an iron production facility in Saudi Arabia with an annual production capacity of 20,000- 30,000 tonnes, part of which is to be exported to Gulf countries. AL-WATANY BANK OF EGYPT (WBE) released the results of the first quarter of 2007 posting a 78 per cent increase in net income to reach LE44.1 million. The improvement stemmed from an increase in interest income due to a 16.6 per cent increase in loans and a 0.3 per cent decrease in deposits. Added to this is the revival in non- interest income due to revaluation gains of non-trading investments. A positive feature of the bank's finances is the 75 per cent increase in its provisioning charges to LE77 million as it plans to fully cover its non-performing loans by 2007. WBE's loans-to-deposits ratio increased slightly from 70.6 per cent in December 2006 to 71.1 per cent in March 2007 compared to 60.8 per cent in March 2006. This reflects good utilisation of the bank's resources compared to the local banking sector average of 57.5 per cent as of February 2007. ORASCOM CONSTRUCTION INDUSTRIES (OCI) has established a new company --Syrian Cement Company -- to construct a cement plant in northwest Syria with a production capacity of two million tonnes per year. This will bring the overall cement production capacity of OCI to 39 million tonnes per year by 2009. OCI owns 75 per cent of the new company, with the remaining shares held by the Syrian Mas Economic Group. According to an OCI press release, the investment cost for the new plan is expected to reach $440 million. The production capacity of the plant, which will be sold in the Syrian market, may eventually be increased to three million tonnes. Syria consumed 6.2 million tonnes of cement in 2006, two million of which it imported from neighbouring countries. OCI has 18 million tonnes of new capacity under construction and expects to commission 10 million tonnes of capacity in northern Iraq, Algeria and the United Arab Emirates in the next six months. THE EXPORT DEVELOPMENT BANK OF EGYPT (EDBE) net profits for the nine months ending in March increased by three and a half times over last year to LE184 million. The increase was fed by a 98 per cent decline in non- performing loans provisions to LE3.1 million from LE143.8 million in the first nine months of the 2005/ 2006 fiscal year. This positive decline came after the bank achieved a full coverage in its non-performing loans during 2005/2006. Net interest income grew by 21.3 per cent to LE152.4 million in the same period. This was due to an impressive 23.7 increase in interest from loans as gross loans grew by 16 per cent through the nine-month period. EDBE was established in 1983 under Investment Law 95 to promote exports by providing financing to exporters at preferential rates. The bank's lenders are private and public banks, including the state-owned National Investment Bank, which owns 41 per cent of EDBE. Compiled by Sherine Abdel-Razek
