MENA-2 SUNDAY MORNING ROUND-UP

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Egypt

OCI amongst shortlisted consortiums for Mall of Egypt, according to Al Mal Abu el Kheir investigatins continue under house arrest Abraaj may hire Morgan Stanley to advise on Citadel stake purchase Amer reports 1Q2011 net income of EGP134 million

Saudi Arabia

REDF to allow individuals to apply for loans without land ownership requirement Jeddah Municipality to allow land owners three months to fence and plant before facing penalties Maaden starts initial production at DAP plant SABIC proposes USD100/tonne increase to MEG prices for July Batelco to manage Zain Saudi Arabia if deal goes through

EFG Hermes Research

Suez Cement Group of Companies (SCGC) - 1Q2011 Net Income Beats Estimates on One-Off Item, Share Price Rallies; Downgrade to Sell - Flash Note 16 June 2011

Agenda
Egypt Tue 21 June >> Housing and Development Bank ex-div date EGP 1 per share Thu 23 June >> Talaat Moustafa Group (TMG) ex-div date for 50.3 million bonus shares Saudi Arabia Sat 25 June >> Zain Saudi Arabia AGM Wed 29 June >> Dar Al Arkan AGM and EGM Sat 2 July >> Advanced Petrochemicals ex-div date for SAR1/share dividend

Egypt News
OCI amongst shortlisted consortiums for Mall of Egypt, according to Al Mal MAF, a subsidiary of Majid al Futtaim Group, is starting negotiations with three consortiums shortlisted for the construction of the EGP3.5 billion Mall of Egypt. An Orascom Construction Industries (OCI) [OCIC.CA]BESIX joint venture (JV) is amongst the shortlisted consortiums, according to Al Mal. The mall is projected to be completed by October 2013. (Al Mal) OCI: EGP275.45, Rating: Neutral, FV: EGP265, MCap: USD9578 million, OCIC EY / OCIC.CA Abu el Kheir investigatins continue under house arrest Alaa Abu el Kheir, former managing director of Al Ezz Dekheila (EZDK) [IRAX.CA], has been released following allegations that he used fraudulent practices while working at the company. Abou el Kheir will be under house arrest for 30 days as the investigations continue. (Argaam, AL Masry al Youm) EZDK: EGP678.6, Rating: Neutral, FV: EGP693, MCap: USD1524 million, IRAX EY / IRAX.CA

Abraaj may hire Morgan Stanley to advise on Citadel stake purchase Abraaj Capital, a Dubai-based private equity firm managing about USD6.2 billion, may hire Morgan Stanley as an advisor on the planned acquisition of a stake in Egyptian private equity firm, Citadel Capital (CCAP.CA), Bloomberg quoted two unnamed sources familiar with the situation as saying. Citadel Capital Partners, the main shareholder in Citadel Capital, may hire Citigroup Inc. as an advisor on the possible sale, the two sources added. Citadel Capital Partners faces certain hurdles before the sale can be executed, including needing to provide legal representation and warranties, one of the sources explained. Abraaj Capital is always looking for opportunities to invest in Egypt and expand our reach in the region, Abraaj Capital said in a statement. We strongly believe that the region continues to have strong economic fundamentals and opportunities to invest. However, Abraaj does not comment on potential transactions that have not been signed, the statement added. Citadel Capital has not received a direct offer of acquisition from any party, nor has it received information from its shareholders suggesting that a formal offer has been presented to any of them, Citadel said in a statement on 8 June 2011. We further note in this context that as is the nature of private equity firms, Citadel Capital SAE is frequently in negotiations to divest or acquire investments, the statement explained. (Bloomberg) Amer reports 1Q2011 net income of EGP134 million Amer Group (Amer) [AMER.CA] has reported 1Q2011 net income of EGP134 million, while revenues came in at EGP330 million, Reuters reported. No comparable figures have been provided by the company. (Reuters)

Saudi Arabia News

REDF to allow individuals to apply for loans without land ownership requirement Real Estate Development Fund (REDF) will allow loan seekers to apply for real estate loans without the requirement that they own the land, and has thus suspended the application for loans this week, Al Iqtisadiyah reported. The ceiling of the real estate loan amount will also be increased to SAR500,000, up from SAR300,000 currently. (Al Iqtisadiyah) Jeddah Municipality to allow land owners three months to fence and plant before facing penalties Jeddah Municipality has granted a three month grace period to allow owners of lands located in the main city axes for fencing and plantation before imposing penalties, Al Iqtisadiyah reported. Jeddah Municipality aims to support the aesthetics of Jeddah and eliminate any opportunities for land squatting by non-owners, Al Iqtisadiyah reported. (Al Iqtisadiyah) Maaden starts initial production at DAP plant The Saudi Arabian Mining Company (Maaden) [1211.SE] has announced the start of production at its first production lines for its sulphuric acid, phosphoric acid and diammonium phosphate (DAP) plants. According to the announcement, production rates at the complex will increase as other production lines begin operations. The project, a 70:30 joint venture (JV) between Maaden and SABIC (2010.SE), will produce c3 million tonnes per annum of DAP once fully operational. (Tadawul)

SABIC: SAR102.00, Rating: Buy, FV: SAR133, MCap: USD81,600 million, SABIC AB / 2010.SE SABIC proposes USD100/tonne increase to MEG prices for July SABIC (2010.SE) has proposed increasing the price of mono ethylene glycol (MEG) to USD1350/tonne in July 2011. This would represent a USD100/tonne increase versus June 2011 prices, and would be significantly higher than the current spot price of MEG of USD1250/tonne. (Argaam) SABIC: SAR102.00, Rating: Buy, FV: SAR133, MCap: USD81,600 million, SABIC AB / 2010.SE Batelco to manage Zain Saudi Arabia if deal goes through Bahrains Batelco (BTEL.BH) will manage Zain Saudi Arabia (Zain KSA) [7030.SE] if the former acquires (with Kingdom Holdings) Zain Groups (ZAIN.KW) 25% stake in the latter. Batelco will be running the show from a management perspective, Bloomberg quoted Ahmed Halawani, executive director for private equity at Kingdom Holdings, as saying in a conference call from Riyadh on 16 june 2011. Batelco will be the technical manager, Batelcos CEO, Peter Kaliaropoulos, said in the call. Zain KSA staff will run the company under the operating direction of Batelco. The transaction will be completed by the end of September, both executives stated. If Batelco drops out of the deal, we are going to drop out of

the deal, Halawani said. And vice versa, Kaliaropoulos added. Kingdom Holdings and Batelco may jointly seek more telecommunications opportunities in the region, according to Halawani. (Bloomberg) Zain KSA: SAR7.00, Rating: Neutral, FV: SAR7.78, MCap: USD2,613 million, ZAINKSA AB / 7030.SE Zain Group: KWD1.06, Rating: Sell, FV: KWD0.92, MCap: USD14,592 million, ZAIN KK / ZAIN.KW

EFG Hermes Research

Suez Cement Group of Companies (SCGC) - 1Q2011 Net Income Beats Estimates on One-Off Item, Share Price Rallies; Downgrade to Sell - Flash Note 16 June 2011 FV of EGP32/Share Implies 20% Downside Potential; Downgrade to Sell: We downgrade our rating for Suez Cement Group of Companies (SCGC) to Sell from Neutral as the stock has rallied to EGP39.87/share. Our fair value (FV) of EGP32/share now implies 20% downside potential. We believe that the current share price does not reflect the companys cost inefficiency (lowest EBITDA margin in the local industry), nor the industrys major downside risks, including the ongoing slowdown in demand, higher competition from new market entrants, and the possibility of increasing fuel costs. 1Q2011 Net Income Beats Estimates on One-Off Gain: SCGC has reported consolidated net income of EGP277 million, down 10% Y-o-Y and 16% Q-o-Q, but 40% ahead of our EGP197 million estimate. This was mainly driven by a EGP52 million income related to clay fee amendment; the government has decided to set clay fees for May 2008-July 2010 at EGP9/tonne, instead of the EGP37/tonne originally announced in May 2008. SCGC overpaid EGP465 million during that period. The remaining EGP413 million will be deducted from future clay fees, SCGC said. Revenue was down 15% Y-o-Y to EGP1.4 billion on lower volumes, but slightly higher than our EGP1.36 billion estimate. EBITDA margin reached 28.6% versus our 28.9% estimate, 1Q2010s 35.7% and 4Q2010s 33.5%, on higher electricity costs Y-o-Y, lower operating rates and higher wages. Beyond 1Q2011: Conservative Outlook: We estimate that relatively strong demand in April, which was up 4% Y-o-Y, is not sustainable for the remainder of 2011, as we believe that it came from projects under construction and nearing completion, with no signs of new projects in the near term. We also believe that companies in the Sinai and central regions (including SCGC and Sinai Cement Company SC) will face higher competition from Al Sewedys plant in Suez, in addition to the planned start-up of the armys plant in Arish this year. We will revisit our forecasts to account for the latest developments in the sector. (Malak Youssef, Ahmed Gad)
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