MENA-2 WEDNESDAY MORNING ROUND-UP

Egypt
El Sewedy Electric reports EGP161 million net profit in 2Q2011, in line with our estimate ERC and OD Holding organise tender offer for execution of the marina in Sahl Hasheesh SCs 2Q2011 net income 12% above our estimate on non-operating income Ezz Steel denies media reports that DRI loan was frozen NUCA to offer 6,100 land plots in public draw on 25 September 2011 Ministry of Housing to organise tender offer for execution of 200,000 budget housing units

Saudi Arabia
SEC signs power contracts worth USD308 million Jarir opens new store in Mecca, bringing total to 30 Standard & Poors affirms Dar Al Arkans credit rating at BB- Petro Rabighs PO unit resumes production

UAE
Etisalat appoints new Group CEO

Agenda
Egypt Sat 27 August >> Al Ezz Dekheila (EZDK) AGM Tue 6 September >> Orascom Construction Industries (OCI) 2Q2011 results Sat 10 September >> Ezz Steel AGM

Egypt News
El Sewedy Electric reports EGP161 million net profit in 2Q2011, in line with our estimate El Sewedy Electrics [SWDY.CA] 2Q2011 net profit came in line at EGP161 million, compared to EGP171 million in 1Q2011 and EGP256 million in 2Q2010 (included a one-off gain of EGP73 million). Revenue was up 11% Q-o-Q to EGP3.9 billion. Gross profit showed a strong Q-o-Q recovery, up 16% to EGP618 million, owing primarily to the turnkey projects segment (+53%). Wire and cable, transformers and other electrical products showed moderate Q-oQ growth of 7%-10% in gross profit, while meters performance remained muted. EBITDA grew 22% Q-o-Q to EGP393 million and the margin expanded c100 bps to 10.0%. EBITDA was 18% ahead of our estimate. The strong Q-o-Q performance was offset by higher expenses below the EBITDA line: i) net interest expense increased to EGP71 million from EGP50 million in 1Q2011 on higher debt levels, ii) the company reported an FX loss of EGP43 million versus a FX gain of EGP13 million in 1Q2011, and iii) an increase of 160 bps in the effective tax rate, reflecting the retroactive application (for 1Q2011) of the increase in Egypts standard tax rate to 25% from 20%. (Company Financials, Wafaa Baddour, Khaled Sadek) El Sewedy Cables: EGP27.65, Rating: Buy, FV: EGP57.50, MCap: USD812 million, SWDY EY / SWDY.CA ERC and OD Holding organise tender offer for execution of the marina in Sahl Hasheesh Egyptian Resorts Company (ERC) [EGTS.CA] and Orascom Development Holding (OD Holding) [ODHR.CA] are planning to organise a tender offer for contractors to execute the marina in the Sawari project in Sahl Hasheesh, Al Mal reported. The execution of the marina is expected to begin in 4Q2011 and has an estimated cost of EGP2.66 billion, Al Mal reported, quoting Abu Bakr Makhlouf, ERCs Investor Relations Manager, as saying. Makhlouf added that reservations in the Sawari project have reached USD20 million, to date. The marina project is planned to host 5,000 units, according to Al Mal, and ERC plans to deliver units in the first phase in the marina project in 2014. (Al Mal)

ERC: EGP1.00, Rating: Sell, FV: EGP0.90, MCap: USD176 million, EGTS EY / EGTS.CA OD Holding: EGP7.97, Rating: Buy, FV: EGP26.20, MCap: USD743 million, ODHN EY / ODHR.CA SCs 2Q2011 net income 12% above our estimate on non-operating income Sinai Cement Company (SC) [SCEM.CA] reported 2Q2011 results, showing net income of EGP153 million, 12% above our estimate of EGP137 million on higher-than-expected interest income. This was down 27% Y-o-Y due to a decline in volumes of 6% and prices of 12%, but up 31% Q-o-Q, driven mainly by a 17% Q-o-Q recovery in volumes, as well as higher non-operating income. The companys 2Q2011 revenue came in at EGP371 million (down 17% Y-oY and up 11% Q-o-Q), 4% below our estimate of EGP388 million on lower-than-expected prices, due to higher competition, especially from the earlier-than-expected commencement of the nearby armed forces plant, which sold at relatively low prices (cEGP370/tonne). EBITDA margin in 2Q2011 reached 41%, flat Q-o-Q, and versus 2Q2010s 51% and our estimate of 40%. We maintain our 2011 estimates, including revenue of EGP1.3 billion (down 18% Y-oY) and net income of EGP519 million (down 43% Y-o-Y), and our fair value (FV) of EGP35/share. (Company Disclosure, Malak Youssef) Sinai Cement: EGP38.00, Rating: Sell, FV: EGP35.00, MCap: USD445 million, SCEM EY / SCEM.CA Ezz Steel denies media reports that DRI loan was frozen Ezz Steel (ESRS.CA) sent a statement to the stock exchange on 23 August 2011 confirming that the company has fulfilled all demands of the lending banks that are financing the new DRI plant in Suez. The company denied media reports that 10 banks had frozen the loan. (Al Masry Al Yom, Company Disclosure) Ezz Steel: EGP8.46, Rating: Buy, FV: EGP12.10, MCap: USD770 million, ESRS EY / ESRS.CA NUCA to offer 6,100 land plots in public draw on 25 September 2011 The New Urban Communities Authority (NUCA) is planning to offer 6,100 land plots through a public draw on 25 September 2011, with plots measuring 200-300 square metres (sqm), Al Mal reported, citing sources close to the authority. The land plots will be distributed across 12 new cities, which include Al Shorouk City, Sadat City, Tenth of Ramadan City, New Beni Suef City, Borg El Arab, and New Sohag City. (Al Mal) Ministry of Housing to organise tender offer for execution of 200,000 budget housing units The Ministry of Housing, Utilities and Urban Planning (Ministry of Housing) is planning to organise a tender offer in November 2011 for contractors to execute 200,000 units as part of phase I of the new national budget housing project. The new national budget housing project targets the development of one million housing units over five years. (Al Borsa)

Saudi Arabia News

SEC signs power contracts worth USD308 million Saudi Electricity Company (SEC) [5110.SE] announced that it has signed two contracts worth SAR1.15 billion (USD308 million) with two local companies to develop power facilities in the Kingdom, Asharq Al-Awsat quoted the companys Chief Executive Officer (CEO), Ali Al Barrak, as saying. The contracts are for the construction of a transformer station in Qassim and two electricity lines, one linking Mecca and Taif, and another one linking Tabuk and Dhaba, the article explained. (Bloomberg) Saudi Electricity Company: SAR13.05, Rating: Neutral, FV SAR13.20, MCap: USD14,500 million, SECO AB/ 5110.SE Jarir opens new store in Mecca, bringing total to 30 Jarir Marketing Company (Jarir) [4190.SE] announced that it has opened a new store in Mecca in the Al Rifai Mall. This brings the companys total number of stores to 30, both in and out of Saudi Arabia; 26 stores are located in the Kingdom. The store covers nearly 3,700 square metres with an investment cost of SAR15 million. It offers 7,000 stationary products and 30,000 book titles, as well as an electronics segment. Since the beginning of 2011 Jarir has opened a total of two stores (including the Mecca store) and plans to add one more store in 4Q2011 in Yanbu. The company is on track with its expansion for FY2011: a total of three stores in Saudi Arabia. Our FY2011 forecasts call for revenue growth of 28% Y-o-Y to SAR3.85 billion and factor in a total of three new stores in 2011. Our operating margin of 13.4% (versus 13.9% in 2010) captures the effect of a faster sales mix shift to lower margin laptops and smart phones sales. Accordingly, we expect net profit growth of 20% to SAR482 million. (Tadawul, Nada Amin) Jarir: SAR163.25, Rating: Neutral, FV: SAR181.47, MCap: USD1,741 million, JARIR AB / 4190.SE

Standard & Poors affirms Dar Al Arkans credit rating at BB- Standard & Poors has affirmed Dar Al Arkans (4300.SE) credit rating as BB-, with a stable outlook, the company announced on Tadawul. (Tadawul) Dar Al Arkan: SAR6.10, Rating: Buy, FV: SAR16.80, MCap: USD1,756 million, ALARKAN AB / 4300.SE Petro Rabighs PO unit resumes production According to market sources, the Rabigh Refining and Petrochemical Company (Petro Rabigh) [2380.SE] has restarted its 200,000 tonnes per year (tpy) propylene oxide (PO) unit following a turnaround that lasted four months. Originally, the plant was expected to resume operations at the beginning of July 2011, but the shutdown was extended due to mechanical issues. This is the last plant to be brought online in the complex, which was entirely shutdown at the end of April 2011. (ICIS)

UAE News
Etisalat appoints new Group CEO Etisalat has announced the appointment of a new Group CEO, Ahmad Abdulkarim Julfar, by the companys board of directors. We believe this move comes as part of the group restructuring exercise that Etisalat is currently undergoing. (Company Disclosure, Omar Maher) Etisalat: AED10.15, Rating: Neutral, FV: AED12.54, MCap USD21,866 million, ETISALAT UH / ETEL.AD
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