EGYPT – INVESTORS GUIDE

8/7/2019 EGYPT INVESTORS GUIDE

1/37

Page 1

7 April 2011 | CICR Strategy

EGYPT INVESTORS GUIDEDefensives back in vogue as downgrades take rootKey themes

If a week is a long time in politics, try 3 months! Indeed, in the 12 weeks since our last Investors Guidepublication, Egypt and much of the region has been transformed politically, socially and, for the moment,economically. Having seen a year-end rally lift Egypt to one of the regions strongest performing markets in2010, widespread social unrest, mass protest, sporadic violence and the ousting of the Mubarak regime havetransformed the immediate outlook . The EGX 30 is down 23.41% year to date, well-behind other regionaland global benchmarks Saudi Arabias Tadawul is 1.09% weaker, Qatars DSM Index is off 2.14% whilethe leading bourses of theUS, Europe andAsia (ex Japan) have actually gained since January 1st.

So, despite the best efforts of the Middle East (political unrest) and Japan (earthquake/tsunami), thereremains a cautiously bullish tone to the global economy: the MSCI EM is up 15.1% for the year while theMSCI world is 10.5% to the good. Seen in this context, Egypts journey south really has been a lonely one.Still, a glass half-empty to one is half-full to another and, though the immediate economic outlook remainsuncertain (and is likely to do so until the political waters clear) Egypts fundamental growth story remainsintact. Opportunities are certainly there for those bold enough to grasp them.

Cement is the best sector year-to-date, up 6.7% mainly on the back ofSCEM andMCQEs dividend-drivenrebound on the resumption of trading on March 23rd. The defensive Mills, Telecom Services andPharmaceuticals sectors have also proved themselves robust. Overall though, it has been a challenging few

months. Growth forecasts, earnings estimates and stock recommendations have all seen downward revisions.Indeed, since our last publication, downgrades for the latter outnumber upgrades by 3:1.

In terms of our monthly stock calls MOIL,SUGR andOCIC have been added to our basket of favoured stocksfor April, joining the still-hot ORTE andOLGR. TMGH and CIEB meanwhile have been removed from our listwhile the stunning change in Egypts political landscape, and the ousting of the Mubarak regime, hastransformed the outlook for ESRS, which now faces a host of corruption allegations and lower estimates.ESRS is not the only problem-child though both PHDC andEGTS are embroiled in Mubarak-era land-disputes and, like ESRS, face reductions in their top/bottom line estimates.

For more information please contact: [email protected]

Head Office:

3rd Floor 8 Nadi El Seid St.,

Dokki,

Giza, Egypt

Telephone:

(+202) 333 856 93 (+202) 333 862 59

Fax: (+202) 333 856 90

This report has been prepared by CI Capital Research, a 100%-owned subsidiary of CIB.

Disclosures and details pertaining to stock ratings on last page.

CICR | EGYPT | STRATEGY

Mona Mansour

[email protected]

James Kostoris

[email protected]

Mark Rorison

[email protected]

Ayman Amer

[email protected]

Recent recommendation changes

Upgrade Date

SMFR Sell to Strong Buy 16-Jan-11 MOIL Buy to Strong Buy 23-Feb-11 EMOB Sell to Underweight 21-Mar-11

Downgrade Date

EGTS Hold to Sell 22-Feb-11 NSGB Hold to Underweight 2-Mar-11 HELI Hold to Sell 6-Mar-11 UASG Buy to Sell 7-Mar-11 CSAG Hold to Sell 10-Mar-11 IRAX Strong Buy to Hold 15-Mar-11 CIEB Strong Buy to Underweight 16-Mar-11 SMFR Strong Buy to Sell 23-Mar-11 ESRS Strong Buy to Sell 24-Mar-11


2/37

CI Capital | Egypt | Strategy

April 7, 2011| Egypt | Investors Guide

Table of Contents

Round-Up | January 2011 3

Stock Calls | April 2011 | In Favour 4

Stock Calls | April 2011 | Out of Favour 5

Top Down 6

Bottom Up 9

Market Investors 15

Automotive 16

Banking 17

Cement 18

Ceramics, Paints & Chemicals 19

Consumer Goods 20

Contracting & Fertilisers 21

Engineering & Cables 22

Food & Beverages 23

Housing & Real Estate 24

Hydrocarbons & Related Services 25

Media & IT 26

Mills 27

Pharmaceuticals 28

Steel 29

Telecom Services 30Transport & Logistics 31

CICR Macro Figures & Coverage Universe 32

CI Capital Coverage Universe 33

CICR Publications | Jan-Mar 2011* 35


3/37

CI Capital | Egypt | Strategy Page 3

April 7, 2011 | Egypt | Investors Guide

Round-Up | January-March 2011

Market volatile, volumes down: The market resumed trading on March 23rd, 2011 following a closure of 37 working days.Upon reopening, all EGX indices fell c. 9% before cutting their losses on the second day. The EGX 30 is currently down 23.41%

year to date (YTD), well behind other regional and global benchmarks. Cement is the best performing sector of the last twoweeks, mainly due to SCEM and MCQEs stunning dividend-driven rebound on March 23rds reopening. Mills, Telecom Servicesand Pharmaceuticals have also proved themselves robust. Compared with our key benchmark, MSCI EM is up 15.1% for theyear, while the MSCI world is up 10.5%. Seen in this context, Egypts journey south truly has been a lonely one. As marketinvestors go, retail and local investors were net buyers, while foreigners and institutions were net sellers over the last twoweeks. In addition, the value of trading made by institutions witnessed a significant increase to 62%.

Welcome Back EGX!

Stocks with i nternational presence dominate our monthly picks: Maridive & Oil Services [MOIL] joined our top picks listfor April, given rising oil prices and the companys heavy international operations, with 90% of revenue generated ininternational markets. The company recently signed a 5-year MoU with theAmerican Canyon Offshore LTD owned by Helix to provide services in deep water exploration, namely in the Mediterranean. Moreover, MOIL is a USD-denominated stock

with 97% of its earning collected in USD, which helps to hedge against local currency fluctuations. Orascom Telecom Holding[ORTE] is another top pick, with a diversified portfolio through its operation in multiple international markets. April 14 th marks akey day for the stock, as CICR anticipates the approval of Wind Telecoms plan to merge with VimpleCom; majorityacceptance of the proposed refinance plan; and approval of increasing ORTEs authorized capital to EGP14bn up fromEGP7.5bn. This should reflect positively on the stocks performance. Moreover, Orascom Construction Industries [OCIC]streasury shares buy-back through April 21st should support it. The company also stands to benefit from rising fertilizers pricesand the M&A opportunity afforded to it by a strong cash position.

SUGR and OLGR are also i n-favor this month: The approved DPS of EGP1.25 should bode well forDelta Sugar [SUGR].Adding to this is the companys higher sugar selling prices of EGP4,400/ton, up from EGP3,549/ton a year ago. With talks ofElectrolux ABs acquisition by Olympic Group [OLGR], the latters shares have been revitalized after being put on hold,reflecting positively on the stock. The deal is expected to take shape in 2Q11.

The Mubarak Effect puts ESRS, PHDC and EGTS out-of-favor: The recent cancellation ofPalm Hills Developments

Co. [PHDC]s 190-feddan contract, on top of cases raised for annulling other land contracts, should pressure down the stock.Adding to this is the accusation against the companys Chairman and CEO of wasting public funds, which should also weigh onthe stocks performance. Egyptian Resorts Company [EGTS] is another out-of-favor stock given the links of its founder andkey owner to the ousted regime, while the risk of probable land withdrawal given its deeply discounted price puts the stocksperformance at risk. The allegations facing Ezz Steel [ESRS] regarding its IRAX acquisition, corruption cases, and monopolisticpractices should all reflect negatively on the stock.

Egypt/MENA Price MoM YT D Global Pr ice MoM YT D

EGX 30 5,470.3 -3.12% -23.41% US (S&P 500) 1,335.3 1.07% 6.17%

EGX 70 613.1 14.13% -15.03% UK (FTSE 100) 6,004.8 0.23% 1.76%

EGX 100 963.5 8.90% -17.38% Japan (Nikkei 225) 9,615.6 -10.08% -6.00%

EFG Hermes 536.3 -0.80% -19.18% Germany (Dax) 7,179.1 -0.01% 3.82%

CIBC 100 311.9 n/a 14.90% China (Shang Comp.) 2,967.4 0.85% 5.67%

KSA (Tadawul) 6,548.4 14.69% -1.09% MSCI Arabia n/a n/a 0.00%Abu Dhabi (ADSMI) 2,590.1 2.38% -4.77% MSCI EM 1,193.1 4.80% 3.63%

Kuwait (KSE) 6,303.6 2.54% -9.37% MSCI BRIC 375.2 5.08% 5.28%

Qatar (DSM) 8,496.3 13.45% -2.14% MSCI World 1,345.6 -0.21% 5.12%

Currencies

EGP vs. USD 6.0 0.97% 2.59% EGP vs. EUR 8.5 2.69% 9.07%

T-Bi l ls Issued Yield MoM Commodities Price MoM YT D

91-day 5-Apr 11.10 n/a Oil (WTI, p/b) 108.0 3.44% 18.20%

182-day 5-Apr 11.95 n/a Gold ($/oz) 1,447.8 1.36% 2.05%

266-day 5-Apr 12.17 n/a C opper ($/mt) 9,311.3 -5.82% -3.51%

371-day 5-Apr 12.48 n/a Natural Gas (pence/Btu) 1,579.6 -2.70% -3.42%

*Relative to previous auction. Wheat ($/bushel) n/a n/a n /a

OE MM Funds NAV* MoM YT D O E Equi ty Funds NAV* MoM YT D

CIB (Osoul) 163.4 1.4% 2.0% ABC Bank Fund 77.6 2.0% -17.5%

Blom Bank Fund 111.8 1.4% 2.0% Pioneers Fund I 88.6 1.0% -12.2%

Piaeus Bank Fund 11.4 1.3% 2.0% Banque Misr 2 43.3 -0.7% -8.5%

Arab Inveestment Bank 10.6 1.3% 1.9% Piraeus Bank Fund 90.8 -0.9% -12.1%

Misr Money Market 17.1 1.3% 1.9% AAIB (Shield) 103.6 -1.0% -10.6%

OE = Open ended. *At 31-Mar-11 Sources: Bloomberg Professional, CBE & EIMA

Egypt | Sector Breakdown

-40% -30% -20% -10% 0% 10% 20% 30%

Automotive (1)

Steel (3)

Housing & Real Estate (13)

Chemicals & Paints (2)

Consumer Goods (5)

Banking (10)

Fertilizers (3)

Contracting (6)

Engineering & Cables (3)Media & IT (3)

Ceramics (4)

Transport & Logistics (4)

Food & Beverages (5)

Hydrocarbons & Related Services (1)

Pharmaceuticals (3)

Telecom Services (3)

Mills (7)

Cement (5)

Ytd % MoM %

*Source: Bloomberg Sectors classified in line with CI Capital100 . Number of securities iin sector in brackets.


4/37


Stock Calls | April 2011 | In Favour

What's Hot 06-Apr-11

Company Key Numbers Key Themes

Maridive & Oil Services Analyst/s: Noran Ali

Ticker MOIL TP (USD) 4 Strengthening oil prices.

Mkt. Cap (EGPmn) 6,183 +/- to TP (%) 18.34% Generates 90% of its revenues internationally - minimal country exposure.

EGX 30 Yes Technical Target 3.8 A USD-denominated company - with 97% of earnings collected in USD.

Recommendation Strong Buy Stop Loss 3.3 Expanding backlog reaching USD450mn till 2012 - up from USD408mn.

Recent signature of a 5-year MoU with the American Canyon Offshore LTD owned by

Helix to provide services in deep water exploration - namely in the Mediterranean.

Orascom Telecom Analyst/s: Amr Hussein Elalfy, CFA/Yehia El Sherbiny

Ticker ORTE TP (USD) 5.5 An anticipated approval of Wind Telecom's announced plan to merge with VimpleCom and

Mkt. Cap (EGPmn) 23,764 +/- to TP (%) 44.58% the expected majority acceptance on the proposed refinance plan at the AGM on April 14th.

EGX 30 Yes Technical Target 5.9 An anticipated acceptance of increasing ORTE's authorized capital to EGP14bn at the

Recommendation Strong Buy Stop Loss 4.15 EGM on April 14th.

Exposure to international markets - ensuring a diversified portfolio.

Olympic Group Analyst/s: Ingy El-Diwany

Ticker OLGR TP (EGP) 45.3 Talks are back regarding Electrolux acqusition of OLGR.

Mkt. Cap (EGPmn) 2,142 +/- to TP (%) 27.07% The acquisition is expected to be materialized in 2Q11.

EGX 30 No Technical Target 42.5 Demand for consumer goods started to pick-up by end of March.

Recommendation Hold Stop Loss 33


5/37


Stock Calls | April 2011 | Out of Favour

And what's Not 06-Apr-11

Company Key Numbers Key Themes

Palm Hills Dev. Analyst/s: Hany Mohamed Samy

Ticker PHDC TP (EGP) 7.6

Mkt. Cap (EGPmn) 2,705 +/- to TP (%) 194.57%

EGX 30 Yes

Recommendation Strong Buy

Reduction in top line and bottom line estimates for 2011.

Ezz Steel Analyst/s: Hany Mohamed Samy

Ticker ESRS TP (EGP) 12

Mkt. Cap (EGPmn) 5,666 +/- to TP (%) 15.05%

EGX 30 Yes

Recommendation Sell

Egyptian for T ourism Resorts Analyst/s: Hany Mohamed Samy

Ticker EGTS TP (EGP) 1.2

The recent cancellation of a tract of land of 190 feddan representing 1.7% of PHDC's

land bank.

Allegations regarding other tracts of land that represent 3% of PHDC land bank.

PHDC chairman and CEO accusation of wasting public funds.

An expectation of nil land sales in 2011

The allegations facing ESRS relating to corruption cases and monopolistic practices.

The accusation that ESRS' acquisition of IRAX is void.

Expected lower demand for steel - flat and rebars.

Reduction in 2011 revenues and bottom line.

PHDC will reduce its construction budget in 2011 from EGP2bn to EGP1bn.


6/37



Page 6

Top Down

I. Performance

EGX 30 vs. MSCI Emerging Markets | PER (T12M)

MSC I I nd ices L ast Pr ice M oM % 3M% Yo Y% YTD %

Middl e East

MSCI UAE 209.0 17.12 -6.71 -5.46 -14.48

MSCI Qatar 755.1 12.82 -4.15 -1.27 15.72

MSCI Israel 279.3 5.05 -1.27 -0.88 -7.64

MSCI Jordan 255.6 0.92 -8.92 -7.71 -15.54

MSCI Bahrain 250.5 -0.19 -1.89 -4.05 -20.73

MSCI Oman 847.5 -1.03 -13.00 -11.13 -7.32

MSCI Egypt 1,149.2 -1.50 -22.15 -21.52 -18.76

MSCI Saudi Arabia 570.8 -6.34 -7.19 -15.75 26.61

MSCI Morocco 419.4 -6.36 -6.70 -2.82 2.79

Asia (Ex Japan)

MSCI Philippines 726.4 9.46 -2.01 -1.61 18.79MSCI India 777.7 6.86 -3.33 -4.14 6.26

MSCI South Korea 606.9 5.14 1.55 3.38 22.38

MSCI Indonesia 4,612.3 5.13 -0.76 1.45 14.39

MSCI China 70.4 4.84 3.00 5.74 7.96

MSCI Malaysia 574.7 2.92 -0.75 2.51 17.04

MSCI Pakistan 325.5 -1.12 -0.90 -0.09 10.04

MSCI Taiwan 309.1 -1.71 -3.29 -3.17 7.93

Eastern Europ e

MSCI Turkey 945,991.9 10.36 -3.79 0.14 11.40

MSCI Russia 705.8 6.90 17.74 17.74 22.96

MSCI Czech Republic 365.2 5.99 5.57 8.19 -1.84

South Amer ica

MSCI Chile 2,760.6 5.15 -1.97 -5.12 30.70

MSCI Mexico 6,614.2 3.96 0.69 2.17 17.29

MSCI Brazil 3,898.2 3.51 1.68 3.64 5.23

MSCI Argentina 3,321.0 2.03 -7.75 -7.05 47.26

Each section sorted in descending order on a MoM basis.

Sources (for all) : MSCI Barra & Bloomberg

MSC I I nd ic es L as t Pr ice Mo M % 3M% Yo Y% YTD %

Selected Other

MSCI France 1,677.0 2.37 10.08 12.41 7.44

MSCI South Africa 832.2 2.16 0.66 0.21 12.79

MSCI Germany 1,874.7 1.89 9.31 9.60 17.93

MSCI US 1,273.8 0.99 4.54 6.06 12.63

MSCI UK 1,199.1 -0.40 3.75 5.39 10.55

MSCI Japan 2,299.1 -11.94 -8.17 -7.88 -3.28

By Region

MSCI Arabia n/a n/a n/a n/a n/a

MSCI EM LatAm 4,710.3 3.45 0.83 2.09 10.07

MSCI EM Asia 482.38 4.96791 1.87755 3.03082 15.8009

MSCI EM EMEA 519.3 6.94 14.91 15.40 21.72

MSCI EM 1,193.1 4.80 2.77 3.63 15.10

MSCI EMF 422.0 4.56 2.43 4.14 17.42

MSCI World 1,345.6 -0.21 4.71 5.12 10.54

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

WoW MoM 3M YoY Ytd

MSCI Egypt MSCI Emerging Markets MSCI World

0%

20%

40%

60%

80%

100%

120%

140%

0x

2x

4x

6x

8x

10x12x

14x

16x

18x

20x

Apr-10 Jun-10 Aug-10 Nov-10 Jan-11 Mar-11

EGX 30/MXEF MSCI Emerging Markets EGX 30

EGX 30 vs. Benchmarks | index Returns

4,5005,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

Apr-10 Jun-10 Aug-10 Nov-10 Jan-11 Mar-11

MSCI Emerging Markets EGX 30

EGX 30 vs. MSCI Emerging Markets | 52 Weeks


7/37


II. Top Down | Valuation

Indonesia

US

India

Qatar

Russia

UK

Mexico

China

Malaysia

Oman

Brazil

TaiwanSaudi Arabia

Egypt

Australia

Hong KongTunisia

Germany

Poland

Canada

BahrainFrance

UAE

Japan

0 0

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

Price to B oo k (PBV)

Egypt vs. emerging market & global peers | Return on equity (ROE) vs. Price to Book (PBV)

PE 09 PE 10 PE 11e PE12e PBV 09 PBV 10 PBV 11e PBV 12e EV/EBITDA 10 EV/EBITDA 11eCICR Cover age Un iverse 12.7x 11.5x 10.8x 9.2x 2.0x 1.7x 1.6x 1.5x 7.0x 6.9x

EGX 30 Index 12.1x 13.9x 8.5x n/a 1.6x 1.5x 1.2x n/a 5.5x 5.6x

MSCI Egypt 9.9x 14.1x 8.4x n/a 2.0x 1.6x 1.2x n/a 5.1x 5.4x

MSCI Emerging Markets 17.2x 13.6x 11.8x n/a 1.7x 2.0x 1.8x n/a 7.5x 8.0x


8/37



Page 8

III. Top Down | Technical

4500

5000

5500

6000

6500

7000

7500

8000

Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

Resistance: 5650-5800Support: 5250-5000-4800

While the rebound in the EGX30 is impressive, it is still too early to declare that strong buyers havereturned. A period of consolidation is more likely next month, with a range between 5250- 5000 and5650- 5800. On the downside, support below 5250 will flip intraday bias back to the downside for 5000

level support, while only a break below 4800 will confirm that a downward trend has resumed.

EGX 30 Index

400

450

500

550

600

650

700

750800

850


Resistance: 630-640-662Support: 600-585-550

The indexs strong rebound from 463 to reach 621 returns our outlook to neutral. Nevertheless, itremains below 630, where the 50% of 794/463 moves down; keeping the sideways case likely. The firstsign of support is at 600-585, which could hold signs of a resumed upward rebound. Conversely, if it fails

to hold, the next support sign lies in the area just above 550.

EGX 70 Index

700

800

900

1000

1100

1200

1300


Resistance: 980-1000-1040

Support: 943-929-910-885

The index continued recovery from 760, its 2-year low, clearing through the 885 level. While there is noconfirmation yet, at the least, an intraday top should be formed, and further retreat to 920-910 is likely forthe next few sessions. On the upside, the next resistance is at 1000, where is the 50% of 1250/760move down followed by 1040.

EGX 100 Index

800

850

900

950

1000

1050

1100

1150

1200


Resistance: 1169-1190-1200

Support: 1136-1130-1125-1110-1104

The indexs recovery from 1072 extended as high as 1168 before starting a brief profit taking. Correctivedips have left a succession of higher lows, hinting that the uptrend remains intact. A firm break of 1168-1169 will elicit a stronger rise towards 1200. For the short term, we are abandoning our higher targets; incase of a clear downward break of 1130. This would put us in the process of a wider sidewaysconsolidation formation, with ranges between 1130-1160 and 1130-1093.

MSCI EM Index


9/37



Page 9

Bottom Up

I. Performance

B y Pr i ce MoM 3M Ytd Yo Y By Turn over

1 Month Av.

(000' USD)

6 Month Av.

(000' USD )Top 5 Stocks Top 5 Stocks

Ceramics & Porcelain 43.4% -14.4% 2.7% -3.9% Commercial International Bank* 12,357.2 10,214.6

Sinai Cement* 33.3% 15.7% 26.1% 6.4% Orascom Construction Industries* 7,570.5 7,206.3

GlaxoSmithKl ine Egypt 29.6% -12.9% -10.3% 6.0% Talaat Mostafa Group* 5,644.7 4,073.7

Central Egypt Mills * 28.2% -8.5% -5.4% -20.1% EFG-Hermes Holding 4,747.8 3,840.0

Egyptian Saudi Finance Bank 27.9% -21.2% -9.9% 43.0% Orascom Telecom Holding* 4,149.0 10,295.0

Bottom 5 Stocks Top 5 Sectors

Palm Hills Developments * -44.8% -56.8% -57.6% -59.5% Telecom Services (3) 2,300.8 4,436.4

Ezz Steel* -32.8% -47.2% -45.4% -51.1% Banking (10) 1,446.8 1,466.6

Talaat Mostafa Group* -31.5% -47.5% -48.2% -42.6% Contracting (6) 1,340.5 1,836.0

GB Auto* -27.3% -35.8% -34.6% -21.0% Hydrocarbons & Related Services (1) 1,219.2 949.3

Misr Duty Free Shop -20.3% -32.9% -28.1% -17.5% Automotiv e (1) 846.2 645.6

B y Pr i ce MoM 3M Ytd Yo Y By Vo lu m e

1M Daily Av.

(000' shrs)

6M Av. Tnvr

(000' USD )

Top 5 Sectors Top 5 Stocks

Cement (5) 20.3% 3.6% 6.7% -11.9% Talaat Mostafa Group* 6,981.2 4,073.7

Mills (7) 15.6% -5.1% -3.2% -12.4% Orascom Telecom Holding* 5,836.8 10,295.0

Telecom Services (3) 15.5% -5.6% -2.7% -16.2% Egyptian Resorts Company* 3,869.9 2,280.4

Pharmaceuticals (3) 14.1% -6.9% -4.6% 1.9% Commercial International Bank* 2,280.4 10,214.6

Hydrocarbons & Related Services (1) 10.5% -6.1% -5.1% -12.6% Palm Hills Developments * 1,884.0 1,012.0

Bottom 5 Sectors Top 5 Sectors Engineering & Cables (3) 7.3% -16.3% -12.6% -23.1% Telecom Services (3) 2,175.5 4,436.4

Ceramics (4) 9.2% -14.9% -8.1% -0.7% Housing & Real Estate (13) 1,080.4 1,064.4

Food & Beverages (5) 10.3% -10.3% -6.8% -7.3% Engineering & Cables (3) 599.7 746.6

Pharmaceuticals (3) 14.1% -6.9% -4.6% 1.9% Hydrocarbons & Related Services (1) 389.4 949.3

Mills (7) 15.6% -5.1% -3.2% -12.4% Steel (3) 311.6 936.6

Turnover & Volume calculated on a daily average basis. Source: Bloomberg (all)

* Actively covered by CI Capital EGX suspended between 27th Jan - 23rd March 2011.

Number of securities in sector in brackets.

GDR's (London-l i s ted) Cur r. Las t P /D MoM 52W H 52W L

Top 5 Stocks

Orascom Telecom* USD 3.83 3.4% 24.4% 7.25 2.92

Orascom Construction* USD 42.35 3.1% 21.2% 55.00 31.27

Suez Cement USD 7.20 11.0% 10.8% 8.25 5.60

CIB* USD 5.57 2.4% 4.9% 8.40 3.14

Telecom Egypt* USD 13.60 -6.7% 4.7% 18.22 10.04

Palm Hills Development* USD 5.30 134.7% 0.0% 6.00 4.00

Lecico Egypt* USD 4.10 39.7% 0.0% 4.10 2.00

EFG-Hermes USD 7.05 -1.86% -11.76% 15.00 6.72

GDR trading at a Premium (P) or Discount (D) to local stock.

* Calculated using an exchange rate of EGP5.955 to USD1.0.

3,500

4,500

5,500

6,500

7,500

8,500

9,500

10,500

11,500

12,500

13,500

COMI LCSW PHDC OCIC

ETEL EGX 30 ORTE


10/37



Page 10

II. Bottom Up | Key Sectors (Last 6 months)

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

EGX 30 Real Estate (W) Real Estate (UW)

Housing & Real Estate

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,5009,000

9,500


EGX 30 Banking (W) Banking (UW)

Banking

4,500

5,000

5,500

6,000

6,500

7,000

7,500


EGX 30 Steel (W) Steel (UW)

Steel

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500


EGX 30 Cement (W) Cement (UW)

Cement

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500


EGX 30 Telecoms (W) Telecoms (UW)

TelecomServices

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000


EGX 30 Fertilisers (W) Fertilisers (UW)

Fertilisers

(W) Weighted; (UW) Unweighted. Sector's classified according to CI Capital 100 Index, except Housing & Real Estate which also includes Touristic Real Estate.

Each sector's performance is calculated on a weekly basis in accordance with Bloomberg weekly-interval figures. Sector constituents weighted by market-cap and re-based to EGX 30.


11/37


III. Bottom Up | Valuation

B y PE Ticker EGX 30 2010 2011 2012 B y PB V Ticker EGX 30 2010 2011 2012

Top 5 Top 5

Al-Ezz Ceramics ECAP No n/a 45.46x 17.67x Heliopolis Hous. & Dev . HELI No 6.83x 8.92x 7.87x

Ezz Steel ESRS Yes 17.82x 42.68x 21.24x Nasr City H&D MNHD No 9.62x 8.68x 7.79x

Nasr City H&D MNHD No 31.73x 35.59x 30.74x United Arab Stev edoring UASG No 4.87x 6.11x 8.13x

Canal Shipping Agencies CSAG No 23.29x 32.69x 29.94x Misr Cement (Qena) MCQE No 3.33x 5.39x 5.36x

EFIC EFIC No 33.13x 27.19x 13.02x Maridive & Oil Services MOIL Yes 3.84x 3.37x 3.13x

Bottom 5 Bottom 5

Palm Hills Dev . PHDC Yes 5.67x 2.33x 1.50x TMG Holding TMGH Yes 0.60x 0.26x 0.41x

Housing & Dev elopment Bank HDBK No 7.08x 4.67x 3.67x Al-Ezz Ceramics ECAP No 0.87x 0.49x 0.74x

Misr Beni Suef Cement MBSC No 8.66x 5.19x 5.49x Raya Holding RAYA No 1.63x 0.51x 1.26x

TMG Holding TMGH Yes 6.30x 5.68x 5.07x Egytrans ETRS No 0.27x 0.52x 0.24x

Al-Arafa For Inv estment AIVC No 5.55x 5.94x 5.41x Palm Hills Dev . PHDC Yes 0.70x 0.57x 0.60x

B y EB ITDA m arg i n Ticker EGX 30 2010 2011 2012 EV/EB ITDA Ticker EGX 30 2010 2011 2012

Top 5 Top 5 Alex andria Containers Handling ALCN No 63.7% 59.2% 59.9% Semad Misr SMFR No n/m 50.63x 40.04x

Misr Beni Suef Cement MBSC No 63.7% 58.3% 56.8% Heliopolis Hous. & Dev. HELI No 12.90x 24.93x 21.22x

Heliopolis Hous. & Dev . HELI No 59.4% 52.6% 50.9% Nasr City H&D MNHD No 21.46x 24.73x 24.08x

Sinai Cement SCEM No 48.9% 48.8% 46.6% Egytrans ETRS No 52.98x 13.65x 5.16x

Misr Cement (Qena) MCQE No 52.6% 47.8% 45.7% EFIC EFIC No 14.53x 11.90x 9.44x

Bottom 5 Bottom 5

Egyptian for Tourism Resorts EGTS Yes -135.0% -262.7% 11.8% Telecom Egypt ETEL Yes 1.79x 1.56x 1.11x

United Arab Stevedoring UASG No -284.1% -262.1% -208.7% Palm Hills Dev . PHDC Yes 4.70x 2.24x 1.33x

C l Shi i A i CSAG N 5 6% 13 8% 12 2% Al d i Mill AFMC N 4 41 2 32 1 59

CICR Coverage Universe


12/37


PHDC

HDBKMBSC

TMGH

AIVC

SUGRSCEM SWDY

UEFM

RAYAAFMC

EDFM

MILSEAST PHAR

MOIL

AUTO

ORWECIEBETRS

LCSW

WCDFORTE

ETEL OLGR

NSGBMCQE COMIALCN

OCICEMOB

IRAX

CEFM

HELI

EFIC

CSAG

0x

5x

10x

15x

20x

25x

30x

35x

-20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80%

PE Ratio 2011

3 -year CAGR EPS (2009-12)

CICR coverage universe | 2011 PER vs. 3-year EPS CAGR (2009-12)


13/37



Page 13

IV. Bottom Up | Technical Analyst: Mohamed Elzayat

12

14

16

18

20

22

24

26


EGP

Resistance: 22-23.24-25-27

Support:20.50-19.50-18

The stocks fall from 25 was contained at 18, and a subsequent rebound pushed the price through the20.50 level, indicating the rebounds ongoing nature. On the other hand, due to the volume decrease inthe last few sessions, some pullback is likely before breaking above the previous high of 21.80 towards

our next basic targets at 25 and 27. The first sign of support is at 20.50, followed by 19.50.

SUGR

2.0

2.5

3.0

3.5

4.0

4.5


USD

Resistance: 3.47-3.56-3.67-3.80Support:3.30-3.20-3.12

The stock continued to move in a sideways consolidation below 3.55. Such consolidation is ongoing andlikely developing into a bullish continuation pattern, which would be confirmed by a breakthrough at thislevel, bringing a stronger rise toward 3.80 and 4, successively. On the downside, a fall below 3.30 would

invalidate our bullish view for the short term, prompting our next downside target at 3.12.

MOIL

160

180

200

220

240

260

280

300

320


EGP

Resistance: 250-256.50-260-268.50Support: 241.50-239-234-228

The stocks outlook remains mixed. Despite a strong rebound from 184, it remains held back by strongresistance at 250. However, it appears to be forming a short-term continuation pattern, which would beconfirmed by a break through the 250 level. In that case, our targets would be at 260 and then 275,successively. On the down side, stop loss should be positioned below 236 and in this case next targetand important support levels are found at 220-217 area.

OCIC

20

25

30

35

40

45


EGP

Resistance: 37.80-39.10-40.00-40.45Support: 36.00-34.70-34.00-33.50

The stock is fighting to stay above a 33.50 support level and build a new base following its last pullbackfrom 42.50. A clear upward break of 37.80 will confirm that a short term low has been reached, and afurther rise toward 42.50 should follow. On the downside, a drop below 33 would invalidate our shortterm rebound scenario, and in such a case further sideways will be in favor.

OLGR


14/37



Page 14

IV. Bottom Up | Technical (Cont.)

3

4

5

6

7

8

9


EGP

Resistance: 4.50-4.65-4.75-4.95Support:4.35-4.20-4.12

The stock remains below a 4.75 resistance and is retreating from there, while sideways consolidation isexpected in the next few sessions. Following consolidation, a strong rise is likely, and a break throughthis level will confirm consolidations completion. From there, a further rise should follow towards 5.25

and 5.90 as basic targets. On the downside, short-term traders will set their stop loss below 4.15, whilemedium-term investors should position their stop loss below 3.90.

ORTE

2

3

4

5

6

7

8


EGP

Resistance: 2.80-3.06-3.18Support:2.53-2.40

The stock's fall from 6.42 was contained at 2.40. Its subsequent rebound has turned the short term trendsideways, with a range of 2.40-3.06. A firm break of 3.06 is needed to confirm the recent upwardrebound, heading toward 3.75. Otherwise, there remains risk of another fall, and a fall below 2.40 will

bring deeper decline toward the 2 zone.

PHDC

1

1.5

2

2.5

3


EGP

Resistance: 1.38-1.53-1.63Support:1.25-1.12-1.06

After a brief recovery, EGTS has entered choppy waters trading above a 1.12 low. Further consolidationcannot be ruled out, but the upside of recovery should be limited by 23.6% retracement of 2.21 to 1.12 at1.38. In case of a clear upward break of 1.38, the next resistance will be at 1.53. On the downside, asustained break of the 1.12 support level will add credence to this case and bring about a deeper fall tothe 0.80-0.75 support level. Risk remains on the downside even in the case of a strong rebound.

EGTS

7

12

17

22

27


EGP

Resistance: 10.90-11.30-11.55Support:10.35-10.10-9.50

After the stock fell through the 18 level and the important support at 15.80 was broken, we haveswitched our view to negative, setting a target at 8.25-8. While some rebound would is likely beforebreaking below 9.50 support, such a rebound would be limited to under 11.50 before the next legdownwards begins.

ESRS


15/37



Page 15

Market Investors

0% 20% 40% 60% 80% 100%

29-Dec-10

30-Dec-10

2-Jan-11

3-Jan-11

4-Jan-11

5-Jan-116-Jan-11

10-Jan-11

11-Jan-11

12-Jan-11

13-Jan-11

16-Jan-11

17-Jan-11

18-Jan-11

19-Jan-11

20-Jan-11

23-Jan-11

24-Jan-1126-Jan-11

27-Jan-11

23-Mar-11

24-Mar-11

27-Mar-11

28-Mar-11

29-Mar-11

30-Mar-11

31-Mar-11

3-Apr-11

4-Apr-11

5-Apr-11

Foreign Non Arabs Local Foreign Arabs

Market participants (Net %) | Last 30 trading sessions to 3rdApril 2011

Tu r n o ve r E GX 3 0 % of total Net buyer/ % of total Net buyer/ % of total Net buyer/ % of total Net buyer/ % of total Net buyer/

B y Mo nth (EGPm n ) Ch ng (%) tu rn over sel ler tu rn over sel ler tu rn over sel ler tu rn over sel ler tu rn over sel ler

Mar-10 24,289 2.62% 73.87% (275) 7.19% (96) 18.94% 371 46.84% (635) 53.16% 635

Apr-10 28,811 9.49% 69.45% (750) 12.23% (215) 18.32% 964 53.37% (256) 46.63% 256

May-10 23,276 -12.11% 75.76% (413) 6.51% 50 17.72% 361 50.70% (398) 49.30% 397

Jun-10 24,511 -7.88% 77.52% (197) 5.40% 694 17.08% (497) 42.27% (109) 57.73% 109

Jul-10 18,400 4.70% 80.33% (333) 3.95% (65) 15.72% 398 41.56% (353) 58.44% 353

Aug-10 17,304 1.45% 77.87% (660) 4.66% (176) 17.47% 837 45.11% (464) 54.89% 464

Sep-10 20,571 3.53% 80.61% (595) 4.63% 102 14.76% 493 44.99% (281) 55.01% 281

Oct-10 22,851 0.54% 81.15% (783) 5.36% 182 13.49% 601 50.75% (39) 49.32% 39

Nov-10 20,917 0.52% 76.43% (1,104) 4.35% (283) 19.22% 1,387 39.49% (427) 60.51% 427

Dec-10 19,633 6.52% 76.45% (671) 5.62% 75 17.93% 597 47.32% (306) 52.68% 306

Jan-11 22,283 -20.27% 65.57% 806 7.55% (459) 26.88% (346) 44.71% (574) 55.29% 574

Feb-11 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Mar-11 6,998 6.24% 33.85% 151 9.11% (1) 57.03% (149) 27.78% 265 72.22% (265)

Tu r n o ve r E GX 3 0 % of total Net buyer/ % of total Net buyer/ % of total Net buyer/ % of total Net buyer/ % of total Net buyer/

B y Year (EGPm n ) Ch ng (%) tu rn over sel ler tu rn over sel ler tu rn over sel ler tu rn over sel ler tu rn over sel ler

2007 290,560 51.29% 69.60% (11,379) 11.91% (7,374) 18.49% 18,327 58.23% (15,882) 41.77% 15,455

2008 383,118 -56.43% 68.94% (9,872) 9.59% 3,511 21.46% 6,361 57.35% (15,880) 42.66% 15,879

2009 356,988 32.00% 82.97% (1,198) 5.43% (3,928) 11.60% 5,204 58.87% 15,635 41.13% (15,715)

2010 271,406 15.03% 76.97% (6,625) 6.45% (7) 16.57% 6,631 47.90% (5,037) 52.11% 5,036

Ytd 30,841 -23.41% 58.08% 981 7.87% (457) 34.06% (524) 41.31% (258) 58.76% 258

Net sellers in brackets; all figures in EGPmn unless stated. Ytd figure as at 3rd April 2011 All sources: CICH & EGX Website

InstitutionTotal Local Foreign Arab Foreign Non-Arab Retail

EGX 30 | Monthly & annual volumes

0.

5.

10.

15.

20.

25.

30.

35.

EGPbnEGX 30 Turnover - Last 12 months

0%

10%

20%

30%40%

50%

60%70%

80%

90%

100%Retail Institution


16/37


April 7, 2011 | Egypt | Automotive

Page 16

Automot ive Sector: Share Data As at 5th April 2011.

Mkt Cap Close a t

Stock (USDmn) 5-Apr-11 MoM (%) Ytd (%) H L

AUTO 615.9 EGP 28.43 -27.25% -34.55% 55.00 25.21

Sect or 615.9 n/m -27.25% - 34.55% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7

CI Capital Coverage Universe: Valuat ion & Recommendat ion

Ta rg et Ups i de P ER

Stock Price Potential Date* 2010 2011 2012

AUTO 58.10 104.4% Hold 21-Oct-10 13.9x 8.2x 3.5x

Share Performance | 52 Weeks (rebased to EGX 30)

* Date of last recommendation change.

CICR projected PER 2011/12

Recommendation

645.6

Based on CI Capital 100. Source: Bloomberg

TP in same currency as stock price (see above).

52 Wee ks A v . 6M Dai l y

Vol. (000' USD)

645.6

Source: CICR Database

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11Mar-11

AUTO EGX 30

Automotive

Ahmed Abdel Ghani

[email protected]

Review | March 2011

The Ministry of Trade and Industry (MoTI) has decided to postpone the Government of Egypt's (GoEs) strategy to supportlocal automotive manufacturing. While this would raise the governments production share of locally manufactured vehicles to over45%, recent political unrest has forced the government to reprioritise and, ultimately, delay this plan. Originally due to begin inFebruary 2011, the plan held total incentives expected to reach EGP1.5bn. This news is likely to have a negative impact on theauto-feeding industry. This is due to the fact that the GoE created the 1M2020 strategy as a means of gearing-up the sector andthereby partially off-setting the gradual elimination of customs duties on imported completely-built-up (CBU) vehicles. The strategywas aimed at raising Egypts production share of locally manufactured vehicles by over 45%. Indeed, under the plan, the GoEsconsumer support mechanism would reduce the market price per vehicle running from 2010-2020 across two periods 2010-2015and 2016-2020. It would support consumer purchases of two classes of vehicle production, namely passenger cars less than1600cc and Light and Medium Trucks, Pick-ups and Minibuses. The strategy was also designed to attract Original EquipmentManufacturers (OEMs) to invest in the Egyptian market and increase their models sales through the benefits of these incentives.

Preview | April 2011

The Ministry of Finance (MoF) is preparing to implement the third phase of the national taxi replacement program. This programwas announced in 2009 with a contribution from the National Bank of Egypt, Banque MisrandNasser Social Bank, with twophases having been implemented so far. The first phase of the program succeeded in replacing 22k vehicles, while the second onlyreplaced 13k, largely due to difficulties with advertising companies.

Mahindra (India)

AsburyAutomotive (US)

Pendragon (UK)

Lithia Motors(US)

UNIPRES(Japan)

Peer GroupAverage

GB Auto (Egypt)

0x

1x

2x

3x

4x

5x6x

7x

8x

9x

10x

4x 6x 8x 10x 12x 14x 16x 18x

EV/EBITDA2011

PER 2011

12.4%

9.5% 8.8%

8.8%

10.3%

0%

2%

4%

6%

8%10%

12%

14%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2008 2009 2010 2011e 2012e

EBITDA MarginRevenue (EGP mn)

GB Auto vs. Global peers | PER vs. EV/EBITDA 2011 GB Auto | Revenue&EBITDA 2008-12

Source: Company Financials, Bloomberg & CICR


17/37


April 7, 2011 | Egypt | Banking

Page 17

Banking Sector: Share Data As at 5th April 2011.

Mkt Cap Close a t

Stock (USDm n) 5-Apr -11 MoM (% ) Ytd (%) H L

COMI 3,210.9 EGP 32.4 -11.21% -31.65% 47.70 29.08

CIEB 589.4 EGP 12.23 -7.00% -22.50% 16.50 9.63

EGBE 330.3 USD 1.65 15.38% 13.79% 1.90 0.92

SAUD 144.1 EGP 11.23 27.90% -9.87% 15.07 5.89

EXPA 208.7 EGP 8.63 15.68% -15.48% 11.25 6.06FAIT 228.7 EGP 21.76 23.36% 3.77% 26.00 15.31

NRPD 150.5 EGP 4.48 7.95% -24.45% 6.67 3.74

HDBK 385.3 EGP 19.95 -12.96% -16.77% 27.30 18.00

NSGB 2,404.9 EGP 39.07 -8.65% -21.83% 52.50 27.27

CANA 234.8 EGP 6.99 -1.83% -22.16% 10.20 6.41

S ec to r 7, 887. 5 n/m 4.86% -14.71% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7

CI Capital Coverage Universe: Valuation & Recommendation

Targ et Ups id e P ER

Stock Price Potenti al Date* 2010 2011 2012

COMI n/a n/a n/a 29-Mar-11 9.5x 10.1x 9.2x

CIEB 13.54 10.7% Underweight 16-Mar-11 7.9x 8.5x 7.9xHDBK 30.15 51.1% Buy 9-Dec-10 7.1x 4.7x 3.7x

NSGB 43.29 10.8% Underweight 2-Mar-11 10.7x 9.7x 8.6x

COMI not rated due to majority ownership of CICH.

TP in same currency as stock price (see above).* Date of last recommendation change.


CICR projected PER 2011/12 Source: CICR Database

Recommendation

7.6

14,666.1


1,969.2

5 2 Week s A v . 6M Dai l y

Vol. (000' USD)

10,214.6

99.2

144.6

1,031.6

65.630.3

687.2

416.1

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000


COMI CIEB HDBK NSGB EGX 30

Banking

Alia Abdoun

[email protected]

Review | March 2011

2010 showed signs of a pick-up in economic and banking activity with lending growth up 6%. Retail lending began to show somemomentum too, especially amongst our coverage universe. Moreover, banks have also started to show an improvement in non-interest income. COMI reported YoY net profit after tax (NPAT) growth of 15%, CIEB rose 13.3% while NSGBs NPAT grew by3.5% though the latter shows underlying double digit growth upon the exclusion of provisions (which were net positive fromreversals in both years, but higher in reversals in 2009).


Our bullish outlook for 2011 has changed following the January 25th Revolution. While we retain ourpositive outlook for longer-term growth, short-term instability and low visibility on the political front has led us to revise our immediate outlook. We now expectlending to slow in 2011 with banks shifting their focus to T-Bills, which have seen their yields rise with increasing governmentexpenditure and a rising budget deficit. Though the economic slowdown brings with it the risk of rising NPLs, we do not expect a

strong deterioration in asset quality.Regarding liquidity, wedo not fear a run on deposits as the Egyptian banking sector is one of the most liquid in the region andbetter positioned than most to weather a shock (c.50% system LDR). Furthermore, core local funding remains strong, with 64% ofdeposits coming from local households rather than riskier foreign sources. We do however expect a slowdown in the growth ofdeposits and lending volumes, especially in 2011. On this basis, we have trimmed our 2011 earnings estimates for COMI,NSGB and CIEB by an average of c.18% (HDBK has yet to release its 2010 earnings). This, combined with higher estimated costof equity, have driven valuations downwards.

COMI

NSGBCIEB

HDBK MARK

ATW

NBBQIIK

BBK

AUBBCP

ABKKIB BOUBYAN

SALAM

0%

5%

10%

15%

20%

25%

0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x

ROE2011

PBV (x) 2011

COMI

NSGBCIEB

HDBK

EGBE

BCPATW

SALAMOIBB

ABK

0x

5x

10x

15x

20x

25x

-30% -20% -10% 0% 10% 20% 30%

PER2011

3 Year (2009-12) EPS CAGR

Local Banks vs. Regional Peers | PBV vs. ROE (F12m) Local Banks vs. Regional Peers | PER vs. 3yr EPS CAGR

Source: Bloomberg & CICR


18/37


April 7, 2011 | Egypt | Cement

Page 18

Cement Sector: Share Data As at 5th April 2011.

Mkt Cap Close a t


MBSC 441.6 EGP 65.75 9.60% -9.16% 104.75 52.00

MCQE 616.8 EGP 122.43 20.59% 21.80% 128.89 75.05

SCEM 714.5 EGP 60.78 33.29% 26.07% 63.10 38.30

SVCE 393.0 EGP 4.75 25.33% -7.05% 8.05 3.42

SUCE 1,179.4 EGP 38.62 12.89% 1.63% 46.22 29.00

S ec to r 3, 345. 3 n/m 20.34% 6.66% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7




MBSC 75.35 14.6% Sell 1-Dec-10 8.7x 5.2x 5.5x

MCQE 126.82 3.6% Buy 28-Dec-10 8.5x 9.9x 11.4xSCEM 74.22 22.1% Strong Buy 19-Jan-11 4.7x 6.6x 9.2x




Recommendation

TP in same currency as stock price (see above). Source: CICR Database

1,790.0


52 Wee ks A v . 6 M Dai l y

Vol. (000' USD)

221.2

29.7

475.4

950.5

113.3

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000


MBSC MCQE SCEM EGX 30

Cement

Ghada Refky Basma Shebeta

[email protected] [email protected]

Review | March 2011Cement consumption in March is expected to hold at Februarys level of c.3mn tons largely due to the disruption that hit severallocal producers in March. Local ex-factory selling prices for February and March remained at nearly the same levels as January2011, at EGP491/ton. Company-wise, Misr Beni Suef Cement [MBSC]s 2010 net profits fell 22% year-on-year (YoY) toEGP304mn a decline largely attributable to MBSC's broken grinder, while Misr Cement (Qena) [MCQE]s 2010 net profits grew22% year-on-year (YoY) to EGP428mn. In its AGM, MCQE approved a DPS of EGP16, with a dividend yield of 13%. Meanwhile,Sinai Cements [SCEM's] stand-alone 2010 net profits grew 33% year-on-year (YoY) to EGP904mn. A one-time GoE refund ofEGP176mn for resource development fees added to the numbers, and SCEM's consolidated net profits reached EGP906mn, up35% from 2009. In its March 27th AGM, SCEM approved a DPS of EGP9.5, with a dividend yield of 16%. Remarkably, when thestock exchange resumed trading on March 23rd, five of the 17 stocks which managed to close in positive territory were cementstocks boosted by their defensive nature and healthy dividend yield. SCEM was the markets top performer, up 10% on the 23rdalone. On March 28 we closed our SCEM trading note based on its excellent performance, and have now returned to ourfundamental story. All considered, investors were able to generate a 25% return in only 3 trading sessions.


In April, we believe local demand for cement will see a MoM decline due to a seasonal downturn for lack of workers, and a liquidityshortage driven by the wheat harvest season, lasting from Aril through mid-June. Regarding local prices, we believe producers willsteady their selling prices in April in an attempt to fuel demand for cement and to continue competing with cheaply-priced imports.SCEM remains our top pick amongst our coverage universe with a Strong Buy rating.

400

450

500

550

600

Jan 09 Apr 09 Jul 09 Oct 09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11

EGP/ton

Cement Ex-factory (Excluding Transportation Costs)

Cement Prices to End Consumers

Cement Ex-factory (Including Transportation Costs)

MBSCMCQESCEM

IT

BZUGCEM

HOLN

HEI

FCCL TACCO

0x

5x

10x

15x

20x

25x30x

35x

40x

45x

50x

-30% -20% -10% 0% 10% 20% 30% 40%

PER2011

3 Year (2009-12) EPS CAGR

Egypt | Local Cement Prices Local Banks vs. Regional Peers | PER (F12m) vs. 3yr EPS CAGR

Source: Ministry of Trade, Bloomberg & CICR


19/37


April 7, 2011 | Egypt | Ceramics, Paints & Chemicals

Page 19

Ceramics, Paints & Ch emicals Sector: Share Data As at 5th April 2011.

Mkt Cap Close a t


CERA 122.1 EGP 29.09 4.34% -6.19% 35.00 17.00

ECAP 25.5 EGP 2.98 -13.62% -32.43% 6.19 2.50

LCSW 176.1 EGP 17.48 2.70% 3.31% 19.72 12.56

MICH 53.5 EGP 6.37 15.61% -17.49% 10.56 4.96

PACH 137.5 EGP 40.94 -13.08% -24.26% 58.00 39.68PRCL 41.4 EGP 4.89 43.40% 2.73% 6.80 2.99

Sector 556.1 n/m 6.56% -12.39% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7




ECAP 3.29 10.4% Sell 18-Nov -10 n/m 45.5x 17.7x

LCSW 21.40 22.4% Buy 29-Nov -10 11.1x 8.7x 6.6x




Recommendation


1,771.9



Vol. (000' USD)

419.4

116.3

87.6

383.9

59.7 705.0

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000


ECAP LCSW EGX 30

Ceramics, Paints & Chemicals

Ahmed Abdel Ghani Yasmin Ghanem


Review | March 2011Despite surviving the recent domestic unrest with all outlets, factories, and inventory intact, Al-Ezz Ceramics and Porcelain(GEMMA) [ECAP] will still decrease its production capacity by 40%. Meanwhile, GEMMA's local replacement market (which ittargets with a market share of c.7%) could be negatively impacted by customers' increased preference for cash should the politicalsituation in Egypt remain unstable. On a more positive note, given that GEMMA produces the highest-quality tiles in Egypt ofwhich around 30% is exported we believe these exports will not be affected by events in Egypt. On the company front, LecicoEgypt [LCSW] released its 4Q10 results, reporting a 60% YoY decline in net profit to EGP11.4mn. Bottom line was pressured bydeclining sales and an unexpected EGP11.2mn in exceptional provision-charges stemming from fire insurance claims. 4Q10revenues were down 10%YoY at EGP239.9mn, as sanitary ware (SW) revenues dropped 20%YoY on weak European demand anda restricted local supply. Fortunately, margins continued to expand as stronger pricing, cost control and favorable FX rates helpedcounter a rising energy bill. In Its AGM and EGM, held March 29, LCSWs shareholders approved a DPS of EGP1 in addition to a1:3 bonus share issue. Both actions should help bolster share liquidity and performance over 2011.


ECAP should release its FY10 financial results by the first week of April 2011. Consolidated revenues are expected to decline YoYby 10.7% while EBITDA margin is expected to rise 4.5% YoY. Overall, ECAP is expected to report a loss of EGP0.4mn in 4Q10(against a net loss of EGP2.7mn a year ago). Meanwhile, both LCSW and Arab Ceramics [CERA] are set to distribute cashdividends. Lecico will distribute a DPS of EGP1 for a dividend yield of 6% while Arab Ceramics (Aracemco) is set to distribute aDPS of EGP3 for a dividend yield of 10.8%.

Source: Company Financials, Bloomberg & CICR

ECAP & PACH Revenue analysis | 2008 3Q10

-

20

40

60

80

100

120

-

5

10

15

20

25

3035

40

45

1Q082Q083Q084Q081Q092Q093Q094Q091Q102Q103Q104Q10

EGP (mn)Units 000'

ECAP Revenues Additional Urban Units Supplied

Porcelain &Ceramics(Egypt)

DynastyCeramics(Thailand)

Cersanit(Poland)

Peer Group

Average

Lecico (Egypt)

Saudi Ceramics& Co. (KSA)

3x

4x

5x

6x

7x

8x

9x

8x 13x 18x 23x 28x 33x 38x 43x 48x

EV/EBITDA2011

PER 2011

Lecico Egypt vs. Peer Group | PER vs. EV/EBITDA (F12m)


20/37


April 7, 2011 | Egypt | Consumer Goods

Page 20

Consumer Goods Sector: Sh are Data As at 5th April 2011.

Mkt Cap Close a t

Stock (USDm n) 5-Apr -11 MoM (%) Ytd (%) H L

AIVC 164.6 USD 0.63 5.00% -13.70% 0.74 0.48

EAST 881.7 EGP 105.01 -4.74% -12.46% 134.80 89.30

KABO 50.0 EGP 0.88 12.82% -22.81% 1.51 0.70

OLGR 359.6 EGP 35.65 -3.18% -13.47% 42.90 23.54

ORWE 477.9 EGP 31.62 -2.80% -7.25% 37.30 25.70

S ec to r 1, 933. 9 n/m 1.42% -13.94% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7




AIVC 0.65 3.9% Hold 27-Oct-10 5.5x 5.9x 5.4x

EAST 129.00 22.8% Hold 13-Mar-11 6.2x 7.5x 6.9xOLGR 45.30 27.1% Hold 27-Oct-10 10.7x 9.6x 8.1x

ORWE 39.00 23.3% Buy 3-Apr-11 8.8x 8.4x 7.8x




Recommendation


1,492.6


52 Week s A v . 6 M Dai l y

Vol. (000' USD)

54.3

316.5

310.3

503.1

308.4

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000


AIVC EAST OLGR ORWE EGX 30

Consumer Goods

Ingy El Diwany

[email protected]

Review | March 2011Having grown more cautious in their market outlook, consumers are cutting back on non-essential spending. Consequently,demand for white consumer goods has been heavily disrupted, with volumes sold falling almost 50% Ytd compared to last year.Olympic Group [OLGR] has put capacity expansions scheduled to take place in 2011 on hold while Oriental Weavers Carpets[ORWE] is currently operating at a 70% utilization rate based on weaker local sales. That said, ORWE did report strong operationalgrowth in 2010 on 14% higher top line, while its BoD proposed a DPS of EGP1.5/share, (implying a dividend yield of 4.7%).Elsewhere, the local and foreign retail operations ofAl-Arafa [AIVC] picked-up gradually during March. With the UK accounting for40% of total sales, and USD set as the reporting currency,we believe the GBP appreciation against the USD may offset lower localsales. Given the issues facing Eastern Company, wecut our LTFV and TP 13% to EGP129/share, down from EGP148/share.


Though consumer demand started to pick-up in March, we believe market conditions for OLGR will be challenging in 2011.

Furthermore, given the recent unrest in Arab and African countries OLGRs main export markets exports (10% of sales) areexpected to come under pressure. Recently, Electrolux resumed talks with OLGR and the deal is expected to be executed in2Q11. We believe that a short-term disruption in local demand for floor coverings will follow the expected cut in consumer spendingin 2011. Pursuant to its BoD meeting, AIVC will soon distribute a 10% stock dividend. The new structure of AIVC, where segmentsare classified according to market demand instead of operations as in the old structure, may lead to a more focused management,each member with an improved understanding of different market needs. We expect growing top line for EAST in 3Q10/11, thoughthis could well be muted by higher interest and lease expenses.

Source: ECES, Bloomberg & CICR

CICH Consumer Goods stocks | Quarterly revenue growth

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11e2Q11e

EGPmn Revenue (EGP 000) QoQ

*Aggregated revenue of consumer goods companies in CI Capitalcoverage universe

Al Arafa

Olympic Group

OrientalWeavers

Arcelik (Turkey)

Electrolux(Sweden)

Whirlpool (US)

Indesit (Italy)

Mohawk (US)

Perry Ellis (US)

Phillips VanHeusen (US)

Casual Male(US)

Peer GroupAverage

3.0x

3.5x

4.0x

4.5x

5.0x

5.5x

6.0x

6.5x

7.0x

7.5x

8.0x

4x 9x 14x 19x 24x

EV/EBITDA2011

PER 2011

Consumer Goods global peer group | PER vs. EV/EBITDA (F12m)


21/37


April 7, 2011 | Egypt | Contracting & Fertilisers

Page 21

Contractin g & Fertilisers Sector: Share Data As at 5th April 2011.

Mkt Cap Close a t

Stock (USDm n) 5-Apr -11 MoM (%) Ytd (%) H L

ABUK 1,702.8 EGP 200.9 1.81% 2.00% 233.00 177.60

ECMI 125.5 EGP 62.27 0.00% 0.00% 62.27 62.27

EFIC 184.3 EGP 15.84 1.41% -16.23% 25.30 14.06

ENGC 25.8 EGP 8.62 13.87% -19.74% 14.16 6.25

GGCC 35.0 EGP 34.72 13.99% -20.46% 54.50 23.05

NCCW 35.4 EGP 42.2 3.99% -11.57% 57.76 29.00

OCIC 8,502.6 EGP 244.7 7.76% -14.77% 294.50 183.94

SMFR 14.2 EGP 8.8 15.03% -13.89% 13.24 6.89

UEGC 56.4 EGP 0.89 -1.11% -26.45% 1.57 0.77

S ec tor 10 ,68 2.1 n/m 6.31% -13.46% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7




EFIC 23.20 46.5% Hold 23-Nov-10 33.1x 27.2x 13.0x

OCIC 286.90 17.2% Buy 30-Mar-11 15.2x 12.5x 9.9xSMFR 6.37 -27.6% Sell 23-Mar-11 n/m n/m n/m




Recommendation


9,984.0


864.9

52 Week s A v . 6 M Dai l y

Vol. (000' USD)

176.3

n/a

361.8

422.7

522.5

163.4

7,206.3

266.1

4,000

5,000

6,000

7,000

8,000

9,000

10,000


EFIC OCIC SMFR EGX 30

Contracting & Fertilisers

Muhammed El Ebrashi

[email protected]

Review | March 2011M&A activities are back on track amidst the euphoria of BASFs plan to sell part of its fertiliser activity in Belgium and 50% of itsFrench operation. This deal could be a catch forBHP, the ex-bidder for Potash corp. That said, OCIC could enter into the bidprocess too with its 4Q10 results surpassing expectations (plus its possessing a cash position of USD1bn). Retail fertiliser pricesshowed little movement for the second week of March, with N (nitrogen) and K (potash) fertiliser segments edging only marginallyhigher. Locally, ongoing political unrest in Egypt could affect the import of fertiliser inputs for some time, according to the Ministryof Chemicals and Fertilisers. Overseas, China will cut import taxes, give subsidies to the poor and encourage more foodproduction, Finance Minister Xie Xuren said, referring to the governments plans to deploy its vast wealth to dampen inflation.


Fertilizer companies are set to dive into M&As in April, with some of the most aggressive activity in the nitrogen segment. We alsosee several nitrogen-related prospects and assets up for acquisition in Arica, while the continents abundant and cheap gas could

lure in new investors. This, together with additional European potential presents Orascom Construction Industries [OCIC]management with opportunities on two important continents. We expect the local market to undergo multiple restructuring activities,driven by companies which possess cost-advantage gas contracts and sell a percentage of their products at a subsidized pricelevel. We expect these companies to fall into the nitrogen-based segment, as phosphate-based companies lie outside the subsidyagreement. That said, phosphate companies might not be tempted to offer the same hefty discounts as the nitrogen companies.

Source: Bloomberg & CICR

Local stocks vs. Regional peers | PBV vs. ROE (F12m)

EFIC

OCIC

SMFR

ICL

APOT

POTMAIN

JOPHMOS ILCO

SDFYRAR

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.0x 2.0x 4.0x 6.0x 8.0x 10.0x

ROE

2011

PBV (x) 2011

-250%

-200%

-150%

-100%-50%

0%

50%

100%

150%

2009 2010 2011e 2012e

EFIC OCIC SMFR

CICR covered stocks | Actual & projected net income growth


22/37


April 7, 2011 | Egypt | Engineering & Cables

Page 22

Engineering Sector: Sh are Data As at 5th April 2011.

Mkt Cap Close a t


ELEC 69.2 EGP 0.83 12.16% -15.31% 1.29 0.67

NASR 78.9 EGP 11.79 24.24% 4.99% 15.59 7.52

SWDY 1,126.4 EGP 39.09 -14.54% -27.45% 60.85 33.81

S ec to r 1, 274. 6 n/m 7.29% -12.59% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7




SWDY 62.80 60.7% Hold 23-Nov -10 8.5x 6.7x 4.7x




Recommendation


2,239.9



Vol. (000' USD)

570.3

319.9

1,349.7

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10Dec-10 Jan-11 Feb-11Mar-11

SWDY EGX 30

Engineering & Cables

Muhammed El Ebrashi

[email protected]

Review | March 2011With European subsidies for green energy sources being phased out, energy is becoming an issue in the area. Spain, France, andthe UK are the main proponents of the green scheme, but concerns for sustainability are rising. These countries could urge theirMENA partners to implement profitable projects, which could in turn produce promising investment opportunities. The GCC ispreparing for a conference in late April to inaugurate c.USD110bn worth of projects and, while green energy subsidies fade inEurope, the US has become the 63rd member of the International Renewable Energy Agency (IRENA). In metals, thoughcopper exhibited high volatility (with China curbing metal purchases), prices ended on a downward correction due to geopoliticalconcerns and the prospect of monetary tightening in the U.S. and Europe. Shanghai copper stayed firmly in negative territory asChinese investors fretted over the same concerns that triggered selling by their counterparts.


With the escalation of Libyan political tension, we expect El Sewedy Electrics [SWDY] management to consider postponing its

Libyan investments until 2012. We also expect SWDY might lean on its significant logistical advantage and size to overcome thedwindling local demand in North Africa by targeting European markets. In addition, we see the GoE postponing its prospective bidfor a 1000MW wind farm, much as it has frozen its interconnectivity project for electric cables with Saudi Arabia. In any case, wesee copper prices falling further following an increase in oil prices and reduced MENA economic activity. Elsewhere, green energyinvestment budgets have been allocated. The US department of energy, for example, has made USD29.5bn available for the fiscalyear 2012, with c.USD8bn of that invested in solar, wind and advanced batteries.

Source: Company Financials, CICR & Bloomberg

El Sewedys earnings vs. price of copper

7,000

7,200

7,400

7,600

7,800

8,000

8,200

8,400

8,600

-

500

1,000

1,500

2,000

2,500

2010a 2011e 2012e 2013e 2014e

Prices USD/tonEGP mn SWDY Net Inc. Copper prices

Thomas & BettsCorp. (US)

Nexans SA

General CableCorp (US)

OrascomConstruction

Peer GroupAverage

El SewedyCables

2x

3x

4x

5x

6x

7x

8x

9x

10x

11x

4x 6x 8x 10x 12x 14x 16x 18x 20x

2011EV/EB

ITDA

2011 PER

Engineering & Cables global peer group* | PER vs. EV/EBITDA (F12m)


23/37


April 7, 2011 | Egypt | Food & Beverages

Page 23

Food & B everage Sector: Sh are Data As at 5th April 2011.

Mkt Cap Close a t


BISM 61.5 EGP 31.87 -8.94% -0.41% 36.87 28.01

MOSC 14.5 EGP 14.38 16.25% -2.77% 20.33 10.85

POUL 346.6 EGP 14.22 9.55% -8.55% 17.50 9.50

SUGR 426.9 EGP 20.56 11.20% -8.62% 25.00 14.00

ZEOT 30.4 EGP 1.15 23.66% -13.53% 1.73 0.84

Sector 879.9 n/m 10.34% -6.78% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7




SUGR 26.50 28.9% Strong Buy 5-Dec-10 7.2x 6.0x 7.8x




Recommendation


1,106.4



Vol. (000' USD)

3.1

120.5

335.4

283.1

364.4

3,500

4,500

5,500

6,500

7,500

8,500

9,500

10,500


SUGR EGX 30

Food & Beverages

Mirrete Ghozzi Basma Shebeta Mayan Elmenshawy

[email protected] [email protected] [email protected]

Review | March 2011International sugar prices witnessed a 5.4% MoM decline in March, reaching USD717/ton, while raw prices dipped following theIndian governments decision to allow the export of 500k tons of sugar. Moreover, India declared that it may be able to export 1mnadditional tons of sugar by September 30th if production reaches the governments estimate of 24.5mn tons. Locally, Delta Sugar[SUGR] revealed growth of 2.9x in 2010 earnings to EGP298.2mn, up from EGP102.2mn a year ago. This is the product of a 37%increase in YoY revenues, thanks to average sugar prices increasing 31% and the removal of an EGP50/ton incentive feepreviously paid to farmers. SUGRs EBITDA margin improved to 36.3% in 2010, up from 12.7% a year ago. However, during theAGM, the company amended its net income figure to EGP354.2mn based on the adding-back of tax provisions of EGP56mn,representing tax claims from 1999 and 2004 that had been paid, a portion of the EGP77mn tax provisions reported in 2010 financialstatements. SUGR approved a DPS raise to EGP1.25, implying a dividend yield of 6.3%, up from the proposed DPS of EGP1.Moreover, SUGR approved the proposed stock dividend of 15%. In poultry, March prices witnessed a 3.8% decline, with anaverage price of EGP12.75/Kg and a tighter price range than the previous months fluctuations through the unrest.


We believe international sugar prices will cool in April with the start of Indias sugar export shipments, amounting to 500k tons bythe third week of April. In addition, Brazilian sugar is expected to make its way into the market in May. On the local front, we expectSUGR to continue selling at EGP4,400/ton while receiving the beet crop from farmers. In reaction to strikes by the latter, SUGRrecently raised beet procurement prices by a maximum of EGP70/ton, from EG280/ton to EGP350/ton. In poultry, meanwhile, Aprilis expected to witness a further 4% price decline against the last week of March, with prices ranging from EGP11.5/Kg-EGP13/Kg.

Source: Company Financials, CICR, Bloomberg & Sugaronline.com

Delta Sugars revenue vs. local price of sugar

0

100

200

300

400

500

600

700

800

0

20

40

60

80

100

120

140

160

USD/tonUSD mn SUGR's Revenue International Sugar Price

0

1,000

2,000

3,000

4,000

5,000

6,000

0

200

400

600

800

1,0001,200

1,400

1,600

1,800

EGP/tonEGP mn SUGR's Revenue Local Sugar Price

Delta Sugars revenue vs. international price of sugar


24/37


April 7, 2011 | Egypt | Housing & Real Estate

Page 24

Housing & Real Estate Sector: Share Data As at 5th April 2011.

Mkt Cap Close a t


EGTS 231.0 EGP 1.31 -13.82% -34.50% 3.13 1.12

ELKA 80.6 EGP 5.12 8.94% -18.47% 7.18 3.81

DAPH 32.6 EGP 15.08 13.98% -12.98% 21.30 11.80

EHDR 55.0 EGP 3.57 10.19% -22.89% 5.60 2.92

ELSH 60.3 EGP 3.59 9.79% -31.23% 6.73 2.66HELI 402.1 EGP 21.52 17.34% -13.68% 26.61 16.07

MNHD 405.9 EGP 24.17 1.51% -24.02% 37.00 19.29

OCDI 415.9 EGP 68.28 -15.32% -36.58% 117.00 58.81

PHDC 473.5 EGP 2.69 -44.76% -57.57% 6.85 2.40

TMGH 1,511.2 EGP 4.47 -31.55% -48.20% 8.69 4.06

UNIT 63.6 EGP 4.35 -0.46% -32.35% 6.87 3.40

S ec to r 3, 731. 5 n/m -4.01% -30.23% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7




EGTS 1.20 -8.4% Hold 22/2/2011 n/m n/m n/m

HELI 15.60 -27.5% Sell 6-Mar-11 15.8x 23.8x 21.8xMNHD 38.90 60.9% Buy 2-Dec-10 31.7x 35.6x 30.7x

PHDC 7.60 182.5% Strong Buy 28-Apr-09 5.7x 2.3x 1.5x

TMGH 10.20 128.2% Strong Buy 23-Aug-10 6.3x 5.7x 5.1x


312.8

1,266.9

1,012.0

Av. 6M Daily

Vol. (000' USD)

1,084.2

607.1 534.1

2,280.4

875.0

210.0

Based on CI Capital 100. Includes Touristic Real Estate companies. Source: Bloomberg


4,073.7

999.4

13,255.7

52 Weeks



Recommendation

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000


HELI MNHD PHDC TMGH EGTS EGX 30

Housing & Real Estate

Hany Samy

[email protected]

Review | March 2011Most real-estate developers released their 2010 financial results last month. Amongst our coverage universe, Talaat MoustafaGroup Holding [TMGH] saw a drop of 15% YoY in bottom line to EGP940mn, down from EGP1,106mn in 2009. 2010 top line, incontrast, increased 10% to EGP5,339mn (vs. EGP4,822mn in 2009). Elsewhere, the non-covered Sixth of October Development& Investment Company [OCDI] reported a net profit of EGP135mn with revenues of EGP519mn and Amer Groups [AMER]2010 financial results showed a 10.7% YoY bottom line increase to EGP557mn, (vs. EGP503mn in 2009). Top line for the latterrose 3.7% to EGP1,548mn up from EGP1,494mn in 2009. In terms of six-month results to December 31 st, Nasr City Housing &Development [MNHD] saw no change in net income before minority to reach EGP43mn (vs. EGP42.9mn in Dec 2009) andHeliopolis Housing & Development [HELI] recorded earnings of EGP79.4mn 3% higher than the EGP76.8mn posted in 2009.


We expect the real estate sector to be negatively impacted by the still-uncertain political and economic climate. Over the last two

years, most real estate developers had begun to target middle income groups in a strategic bid to overcome the negative economicimplications of the 2008 global financial crisis. As such, the role of salaries which the middle classes generally use to pay thenecessary installments on properties took on a greater importance to the real estate sector. Bearing this in mind, the currenteconomic uncertainty and the associated risk of unemployment would suggest this income segment will be reluctant to take on newproperties. In the near term, this means newly-signed contracts and reservations could be adversely affected. Furthermore, weexpect real estate companies with pending land issues to witness a further drop in their stock prices with any adverse news relatedto their land cases.

Source: CICR & Bloomberg

Housing & Real Estate peer group | PER vs. EV/EBITDA (F12m)

HELI MNHD

PHDC

TMGH

ELKAOCDI

ELSH

EHDR

SDTISOLA

SRECOALARKAN

EMAAR

0x

5x

10x

15x

20x

25x

30x

35x

40x

45x

50x

0x 10x 20x 30x 40x 50x 60x 70x 80x

EV/EBITDA(F12m)

PER (F12m)

HELI

MNHD

PHDC

TMGHEMAARSRECO

SOLAALARKANSOROUH UPP-5x

0x

5x

10x

15x20x

25x

30x

35x

40x

-20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

PER(F1

2m)

3 year EPS CAGR (2009-12)

Housing & Real Estate peer group | PER vs. 3 year EPS CAGR (09-12)


25/37


April 7, 2011 | Egypt | Hydrocarbons & Related Services

Page 25

Hydrocarbons & Related Serv ices Sector: Sh are Data As at 5th April 2011.

Mkt Cap Close a t


AMOC 836.6 EGP 57.86 17.91% 31.62% 59.00 38.06

EGAS 155.4 EGP 77.12 5.56% 1.15% 86.75 60.00

MOIL 1,038.3 USD 3.38 10.46% -5.06% 4.00 2.48

SKPC 1,292.4 EGP 14.66 14.35% 1.59% 15.80 9.71

S ec to r 3, 322. 8 n/m 12.07% 7.33% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7




MOIL 4.00 18.3% Strong Buy 23-Feb-11 21.4x 8.1x 7.4x




Recommendation


2,273.8



Vol. (000' USD)

402.4

54.0

949.3

868.0

4,000

5,000

6,000

7,000

8,000

9,000

10,000


MOIL EGX 30

Hydrocarbons & Related Services

Noran Ali

[email protected]

Review | March 2011Eng. Abdullah Ghourab, Chairman of the Egyptian Petroleum Corporation (EGPC), has been named Minister of Petroleum,replacing formerEGAS chairman Mahmoud Latif. Eng. Ghourab began his term by announcing plans to establish a new price-setting mechanism for the revision of natural gas export prices to Israel and other countries, one of the most controversial issues inthe sector. Meanwhile, Egypt has resumed its natural gas supply Israel and Jordan after several delays (the gas pipelineconnecting the three countries had been damaged in an explosion and fire on Feb. 5). Company-wise, MOIL released its 2010results, reporting a 30.5% year-on-year (YoY) rise in revenue to USD322.3mn (6% below CICRe, 3% below consensus). However,EBITDA margin contracted by 10.9pp YoY to 29.8% (CICRe 37.8%, consensus 33%) while net profit slumped 32.6% YoY toUSD48.5mn ( 30% below CICRe and consensus). The companys unexpectedly weak profitability is due to a dispute betweenValentine (MOILs main profit generator) and one of its clients in India over incorrect technical information, which led to operationaldifficulties and higher costs. This resulted in Valentine reporting a net loss of USD244,574 in 4Q10 and a 12.2 pp rise in 2010COGS/sales ratio, to 62%. In its AGM held on March 23, 2011 MOIL approved shareholder dividends of USD18.4mn to bedistributed as cash dividends of USD0.06/share, implying a dividend yield of 2%, in addition to 16.6% stock dividends.


Despite disappointing results, we believe MOIL will exhibit an improved performance in 2011 given its inherent positivefundamentals. These include (1) rising international oil prices to above USD100/barrel; (2) a thriving offshore Oil & Gas industry,(demonstrated by a utilization rate which rose from 57% in Jan. to 93% in Dec. 2010, and the recent 10% rise in MOILs contractbacklog to USD450mn over 2011-2012) and (3) a diversified revenue stream, 90% of which is generated abroad.

Sources: Douglas Westwood, CICR & Bloomberg

Offshore capital expenditure vs. Oil price

-

20

40

60

80

100

120

0

50

100

150

200

250

2006 2007 2008 2009 2010 2011e2012e2013e2014e2015e

USD/barrelUSDbn Offshore Cap-Ex. (USDbn) Oil Price

e= CI Capital estimates

40

50

60

70

80

90

100

110

120

130

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11

USD/barrelEGX 30 MSCI EM rebased WTI Brent

EGX 30 vs. MSCI Emerging Markets & oil price


26/37


April 7, 2011 | Egypt | Media & IT

Page 26

Media & IT Sector: Share Data As at 5th April 2011.

Mkt Cap Close a t


EGSA 172.0 USD 4.6 11.65% 6.98% 5.10 3.50

MPRC 142.7 EGP 4.48 7.69% -18.55% 7.97 3.96

RAYA 47.3 EGP 4.53 3.42% -24.63% 6.81 3.57

Sect or 362.0 n/m 7.59% -12.06% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7




RAYA 7.61 68.1% Strong Buy 21-Nov-10 7.0x 7.2x 2.9x




Recommendation


573.8



Vol. (000' USD)

6.7

315.9

251.1

4,000

5,000

6,000

7,000

8,000

9,000

10,000


RAYA EGX 30

Media & IT

Ingy El Diwany

[email protected]

Review | March 2011Demand for mobile handsets and other IT products started to pick-up in March, driven mainly by demand for low-average pricehandsets. During the recent unrest, while only two ofRaya Holdings [RAYA] 37 retail stores were damaged the halting of internetconnectivity had a larger impact. Indeed, RAYA actually diverted its Contact Center operations (3% of revenue) through India,where 70-80% of offshore operations were handled. Elsewhere, Egyptian Media Production City [MPRC] revealed that it will cutfees for open-air shooting locations by 25% in a bid to attract more production companies while, in its 9M10 financials, MPRCshowed a 76% increase in after-tax earnings. This mainly came on the back of: (i) capital gain from the sale of land plots, (ii) rentsreceived from leasing two new studios and several administrative units, and (iii) returns from Ramadan TV series. In 2010, MPRCsold around 30,000 sqm of its unutilized land bank for a total value of EGP90mn.


We believe the demand for mobile handsets will gradually start to recover in the coming period, albeit at a lower rate than last yeargiven the prevailing uncertainties. RAYA is expected to launch one of its four smart buildings soon while the inauguration of BariQ the new plastic recycling business, is expected in late 2011. The company is due to record an EGP12mn capital gain fromtransferring the title of its Smart Village building to Palm Hills Developments [PHDC]. MPRC previously announced severalexpansion plans scheduled to take place in 2011, which we believe may be frozen given the current economic climate.Furthermore, given its widespread criticism for wasting public funds, we believe the companys plan to offer the remaining50,000sqm unutilized land for sale in 2011 will be put on hold.

Source: Company Financials, Ministry of Communications

MoM mobile subscribers | Vodafone, Mobinil & Etisalat

-

10

20

30

40

50

60

70

80

mn subs Vodafone Mobini l Et isalat

-14.01%

15.50%

-15.28%-12.95%

6.90%1.36%

9.02%

25.19%

-2.14%

3.36%

-7.71%

-15%

-10%

-5%

0%

5%

10%

15%

20%

-20%

-15%

-10%

-5%

0%

5%10%

15%

20%

25%

30%

Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410

Raya Revenue Mobile Subs

Internet Users (mn) Active Fixed Lines

MoM mobile subscriber growth rate vs. RAYAs quarterly revenue


27/37


April 7, 2011 | Egypt | Mills

Page 27

Mil ls Sector: Share Data As at 5th April 2011.

Mkt Cap Close a t


AFMC 13.3 EGP 19.87 13.41% -11.33% 29.74 15.77

CEFM 28.1 EGP 11.38 28.15% -5.40% 15.48 8.00EDFM 32.3 EGP 32.07 13.64% 0.34% 34.50 27.00

MILS 32.5 EGP 18.11 13.54% -2.74% 22.00 14.31

SCFM 15.4 EGP 30.49 9.24% -9.85% 43.48 25.12

UEFM 67.3 EGP 57.26 14.93% 4.80% 69.99 44.84WCDF 45.6 EGP 36.24 15.93% 2.11% 41.98 28.20

Sect or 234.6 n/m 15.55% -3.15% n/a nla

EGX 30 36,613.7 5,470.3 -3.12% -23.41% 7,693.5 4,743.6 84,798.7


Targ et Ups i de P ER


AFMC 18.00 -9.4% Sell 14-Dec-10 11.7x 7.3x 7.1x

CEFM 11.20 -1.6% Sell 14-Dec-10 19.8x 19.8x 21.4x

EDFM 38.70 20.7% Buy 14-Dec-10 7.5x 7.4x 7.0x

MILS 13.60 -24.9% Sell 14-Dec-10 10.7x 7.4x 7.4xSCFM 14.30 -53.1% Sell 14-Dec-10 n/m 8.4x 8.2x

UEFM 77.50 35.3% Strong Buy 14-Dec-10 4.5x 7.1x 7.0x

WCDF 39.90 10.1% Hold 14-Dec-10 5.1x 8.9x 8.7x




Recommendation


346.7


86.7

25.6

64.321.4


Vol. (000' USD)

32.8

99.316.5

3,500

4,500

5,500

6,500

7,500

8,500


AFMC CEFM EDFM MILS

SCFM UEFM WCDF EGX 30

Mills

Ahmed Abdel Ghani Mirette Ghozzi


Review | March 2011The Government of Egypt (GoE) has announced wheat procurement prices at EGP350/arddab, 30% higher YoY. Prior to themilling season, the GoE had assured that wheat prices would not fall below EGP300/arddab. However, these higher prices will notaffect wheat companies, since the General Authority for Supply Commodities (GASC) is the party responsible for buying wheatfor subsidized bread. Elsewhere, in response to strikes by beet farmers, beet producers have recently raised beet procurementprices by EGP50/ton to EGP335/ton, compared to the initial price of EGP285/ton. Indeed, the rev

Documents

EGYPT – INVESTORS GUIDE