MENA-2 MONDAY MORNING ROUND-UP

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Egypt

Central Bank sells T-bills worth EGP5.5 billion; yields rise Government to supply 890,000 tonnes of fertiliser to stop price hikes TE announces 5 qualifying consultants for salary restructuring Al Futtaim Group plans mall building in Egypt

Saudi Arabia

Advanced Petrochemicals to distribute SAR1/share for 1H2011 SABIC to buy underlying assets of SAR3 billion riyal sukuk Mobily to launch 4G network in the next few months, Al-Ahmadi says Saudi CMA approves Etihad Atheeb capital decrease

Jordan

King Abdullah promises an elected cabinet in the future

EFG Hermes Research

GB Auto - Downgrade to Neutral on Decreased Upside Potential - Flash Note 12 June 2011

Agenda
Egypt 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
Central Bank sells T-bills worth EGP5.5 billion; yields rise The Central Bank of Egypt (CBE) has said that it sold EGP5.5 billion (USD925.35 million) in domestic treasury bills (T-bills) on 12 June 2011. The CBE sold EGP2.5 billion worth of 91-day T-bills at an average yield of 11.602%, up from 11.598% during last weeks auction. Additionally, the bank asked for EGP3.5 billion in 259-day T-bills, but accepted only EGP3 billion at an average yield of 12.903%, up from 12.856% on the 17 May 2011 issuance. (Reuters) Government to supply 890,000 tonnes of fertiliser to stop price hikes Egypts Ministry of Agriculture and government-owned fertiliser companies, Abu Qir Fertilisers Company [[Link]] and Delta Fertilisers Company, will supply the local market with 890,000 tonnes of fertilizer during June-August 2011, al-Masry al-Youm quoted the Minister of Agriculture Ayman Farid Abouhadid as saying. This measure is mainly to stop the retail price of nitrogen-based fertilisers from spiking in light of traders manipulation; the retail price of nitrogen-based fertilisers has recently jumped 100% to EGP3,000/tonne. (Al-Masry al-Youm)

TE announces 5 qualifying consultants for salary restructuring Telecom Egypt (TE) [[Link]] has announced that five consultancy firms have qualified in the companys technical bid for the salary restructuring of all TE employees, including managerial positions and board members, through a performance evaluation, Al Borsa reported. TE will choose the winning bid by midnext week, and the restructuring process should take anywhere from 3-6 months depending on the winning bidder. (Al Borsa) TE: EGP15.49, Rating: Buy, FV: EGP19.5, MCap: USD4,452 million, TELE EY / [Link] Al Futtaim Group plans mall building in Egypt Majid Al Futtaim Group, the shopping-mall developer that built Dubais indoor ski slope, has said that the violent change of government in Egypt will not stop the company from proceeding with its expansion plans. Egypts fundamentals from a consumer perspective havent really changed because of the revolution, CEO Iyad Malas has said. Sales at the companys Cairo mall are back to pre-revolution levels, Malas added. Majid Al Futtaim, based in Dubai, asked for permission to construct a mall in Cairo on 160,800 square metres (sqm) of leasable space at a cost of USD760 million last week. Majid Al Futtaim, a privately held builder and owner of malls, is in talks with a consortium of Egyptian banks to arrange EGP2 billion (USD337 million) in financing for the new mall, which is due to open in 2014, Malas noted. The new government is trying to do everything it can to support investors and I think that will continue, he added. Majid Al Futtaim has built shopping centres in Cairo and Alexandria, and owns four plots of land in and around the capital where it aims to build more centres, Malas stated. (Bloomberg)

Saudi Arabia News

Advanced Petrochemicals to distribute SAR1/share for 1H2011 Advanced Petrochemical Company (Advanced) [[Link]] has announced the decision of its board of directors (BoD) to distribute SAR1/share in cash dividends for 1H2011. The ex-dividend date will be on 2 July 2011. We had forecasted a dividend payment of SAR2/share for all of 2011, thus 1H2011s dividend is in line with our estimate. (Tadawul, Rita Guindy) Advanced: SAR33.5, Rating: Neutral, FV: SAR36.0, MCap: USD1,263 million, APPC AB / [Link] SABIC to buy underlying assets of SAR3 billion riyal sukuk The Saudi Basic Industries Corporation (SABIC) [[Link]] has announced its intention to buy the underlying assets of its first sukuk issue, worth SAR3 billion, issued in July 2006 and listed on the Saudi Stock Exchange (Tadawul). Trading on the sukuk will be suspended starting on 15 June 2011 and will be delisted thereafter. (Reuters, Tadawul) SABIC: SAR103.00, Rating: Buy, FV: SAR133, MCap: USD82,200 million, SABIC AB / [Link] Mobily to launch 4G network in the next few months, Al-Ahmadi says Mobily ([Link]) will launch a Long Term Evolution (LTE), or 4G network in the next few months following last years successful trials. "Once implemented, the [4G] network will provide data speeds [of] up to 100 mbps instead of the 20-40 mbps [that] the 3G is providing," Arab News quoted Mobilys Chief Business Officer, Marwan Al-Ahmadi, as saying. This will enable individuals and businesses to use high-speed data services with mobility. Although Mobily is growing in all segments, a great deal of the growth is expected to come from the business segment in the next few years, he added. The business segment is rapidly expanding due to two main factors: the growing Saudi economy and the very high growth rate of data traffic in Saudi Arabia. Mobily is also teaming with real estate developers to invest in intelligent buildings and cities, another emerging trend. (Arab News, Zawya Dow Jones) Mobily: SAR50.75, Rating: Buy, FV: SAR65.9, MCap: USD9,473 million, EEC AB / [Link] Saudi CMA approves Etihad Atheeb capital decrease Saudi Arabias Capital Market Authority (CMA) has approved Etihad Atheebs ([Link]) request for a capital decrease, according to a statement posted on the Tadawuls website. The company will decrease its capital to SAR400 million from SAR1 billion currently, and accordingly will decrease the number of shares to 40 million from 100 million. The approval of the capital decrease is conditional pending approval by company shareholders in its next EGM as well as finalization of all necessary procedures. (Tadawul)

Etihad Atheeb: SAR7.75, MCap: USD207 million, EAT AB / [Link]

Jordan News

King Abdullah promises an elected cabinet in the future King Abdullah promised to allow in the future the formation of governments based on parliamentary majority and political party manifestos. In a televised address to the nation, Abdullah made the pledge, without providing a time frame or a mechanism for the move to be implemented. This latest announcement comes in response to opposition forces, whose main demand has been the formation of an elected cabinet. Abdullah reiterated calls for more constitutional reform and urged the continuation of the fight against corruption. He also added that he will instruct the government to hold new municipal elections based on a new law that guarantees greater representation. (Bloomberg)

EFG Hermes Research

GB Auto - Downgrade to Neutral on Decreased Upside Potential - Flash Note 12 June 2011 FV of EGP33.4/Share Implies Limited Upside; Downgrade to Neutral: GB Autos share price has risen since our last rating change (see Upgrade GB Auto and Eastern Company to Buy, Downgrade Cairo Poultry to Neutral," published on 13 April 2011). Our fair value (FV) of EGP33.4/share offers 5% upside potential over last weeks average share price, hence we downgrade our rating to Neutral from Buy. We maintain our forecast, which implies a slight Y-o-Y decline in 2011 net profit, followed by a strong recovery over the rest of our forecast horizon. GB Autos estimated 2011 P/E and EV/EBITDA multiples are at a premium to global auto dealerships median 10.2x and 8.0x, respectively. The companys estimated 2012 P/E and EV/EBITDA are in line/slightly lower than global dealerships 9.5x and 7.8x, respectively. Management Update: Gradual Recovery in Passenger Car Sales Volumes: In a recent meeting, GB Auto management reiterated the gradual recovery in GB Autos Egypt passenger car sales volumes, which outperformed the markets recovery during 1Q2011. Management has also indicated that three wheeler volumes continue to be strong, in line with the 1Q2011 trend. In Iraq, previous supply constraints are being resolved. The outlook for the commercial vehicle operation remains negative, however, with weak local demand and a slower-than-previously-anticipated take-off in exports. Management is now also looking to accelerate its regional diversification strategy, and is exploring opportunities. For 2011 and barring any new announcements, we expect that a resilient performance from three wheelers sales in Egypt and sustained passenger car sales in Iraq (showing the first full operational year) will mostly offset a somewhat sharp Y-o-Y deterioration in Egypt passenger car and commercial vehicle sales. (Nour Farrag)
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