MENA-2 SUNDAY MORNING ROUND-UP Egypt MBSC 2Q2011 net income 12% below estimates on higher costs Mobinil

slashes prepaid tariff to EGP0.14/minute IDA to issue 5 steel expansion licences Saudi Arabia Bemco says is frontrunner for Riyadh power plant Sipchem delays VAM shutdown Maaden starts construction on aluminium rolling mill, alumina refinery EFG Hermes Research Juhayna Food Industries - Strong Growth in 2Q2011, but Margins Pressured; Neutral with Potential Entry Opportunity - Flash Note 11 August 2011 Agenda Egypt Mon 15 August >> Telecom Egypt (TE) 2Q2011 results (EAS) Mon 15 August >> Lecico 2Q2011 results (expected) Tue 16 August >> Telecom Egypt (TE) AGM and EGM Sat 27 August >> Al Ezz Dekheila (EZDK) AGM Egypt News MBSC 2Q2011 net income 12% below estimates on higher costs Misr Beni Suef Cement Company (MBSC) [MBSC.CA] has reported 2Q2011 results showing a net income of EGP87 million, almost flat Y-o-Y, but up 30% Q-o-Q, and 12% below our EGP98 million estimate. This was mainly driven by higher-than-estimated costs, which we believe were related to: i) trial operations at the new cement mills; and ii) a lower contribution from low-cost clinker sales. This led to an EBITDA margin of 48% in 2Q2011 versus 59% in 1Q2011 and our estimated 58%. Revenue reached EGP245 million, beating our estimate of EGP227 million by 8% on higher-thanexpected prices, in our view. Prices were up 43% Q-o-Q (after fixing the broken grinder ), but down 6% Y-o-Y (on local demand slowdown). We continue to believe that MBSC will be the only company in our cement coverage to witness volume growth in 2011 post-repair of the broken grinder and following the start of commercial operations at the new cement mill (expected in 3Q2011). We believe that this will

more than offset the decline in prices (on increasing supply and higher competition from new entrants). We reiterate our Neutral rating for the company as our fair value (FV) of EGP64/share implies 4% upside potential. (Company Disclosure, Malak Youssef) MBSC: EGP61.42, Rating: Neutral, FV: EGP64, MCap: USD412 million, MBSC. EY / MBSC.CA Mobinil slashes prepaid tariff to EGP0.14/minute Mobinil (EMOB.CA) and Vodafone Egypt (VFE) have both matched Etisalat Misrs new tariff of EGP0.14/minute through a new plan known as El Kol 14 and Vodafone 14 pt whereby prepaid subscribers can make calls to any mobile or fixed-line at a tariff of EGP0.14/minute, a 7-26% decline from the previous tariff (depending on the plan), with a daily fee of EGP0.25 that is deducted upon making the first call. Mobinil subscribers also receive 25 free on-net minutes per day to be used during 1-8 a.m. We view this move as one that will set a new low for headline tariffs in the Egyptian mobile market, although it is not as aggressive as the wave of cuts that was seen in 2010, which were initiated by Etisalat Misr in an attempt to expand market share. (Al Masry Al Youm, Omar Maher) Mobinil: EGP89.17, Rating: Buy, FV: EGP138.92, MCap: USD1,496 million, EMPN EY / EMOB.CA IDA to issue 5 steel expansion licences The Industrial Development Authority (IDA) is preparing to issue five steel expansion licences within the next three months, reported Al Mal. These licences will be awarded to already existing and operational companies who wish to expand their production capacity. Beshay Steel is said to have requested one of these expansion licences. The energy necessary to operate the new capacities is available and not subject to negotiation, according to Ismail al Nagdy, head of the IDA. No further details have been disclosed regarding the total capacities to be awarded through the licences or the potential beneficiaries. (Al Mal) Saudi Arabia News Bemco says is frontrunner for Riyadh power plant Bemco Contracting Company announced that its bid of USD1.43 billion is the lowest for the expansion of a 3,400 megawatt (MW) power plant inRiyadh, Reuters Reported. The new project would add 1,300 MW to the existing facility, owned by Saudi Electricity Company (SEC) [5110.SE]. (Reuters) SEC: SAR13.15, Rating: Neutral, FV: SAR13.20, MCap: USD14,611 million, SECO AB / 5110.SE Sipchem delays VAM shutdown

According to Platts, Sipchem has delayed the scheduled shutdown for its 330,000 tonnes per year (tpy) vinyl acetate monomer (VAM) plant due to high market demand for VAM and better-than-expected operations at the plant. The VAM plant was originally scheduled to be shut down for 15-20 days at the start of July 2011. The shutdown has been delayed to either September or October 2011, according to a source close to the company. (Argaam) Sipchem: SAR19.10, Rating: Buy, FV: SAR26.0, MCap: USD1,868 million, SIPCHEM AB / 2310.SE Maaden starts construction on aluminium rolling mill, alumina refinery The Saudi Arabian Mining Company (Maaden) [1211.SE] has announced that it has started construction of its aluminium rolling mill and aluminium refinery, which will be a part of the companys 75:25 joint venture (JV) aluminium project with Alcoa. The rolling mill will have a capacity of 380,000 tonnes per year (tpy) and is expected to start operations at the end of 2013, while the alumina refinery will have a capacity of 1.8 million tonnes per annum (mtpa) and is expected to start operations at the end of 2014. (Zawya Dow Jones) EFG Hermes Research Juhayna Food Industries - Strong Growth in 2Q2011, but Margins Pressured; Neutral with Potential Entry Opportunity - Flash Note 11 August 2011 Earnings in Line, Maintain FY2011 Forecasts; Enter on Price Weakness: Juhaynas net profit was up 54% Y-o-Y, at EGP62 million, from a depressed 2Q2010 level that included the loss of a yoghurt factory to a fire. Strong revenue growth and lower interest expense offset depressed margins. We maintain our FY2011 forecasts for now: i) 23% revenue growth, with upside risk should 2Q2011s growth carry over into 2H2011; ii) 23% net profit growth before finance expenses and one-offs; and iii) 110 bps decline in the EBTIDA margin to 22.0%, with downside risk. We expect 3Q2011s revenue and margin to notably expand Q-o-Q on higher consumption during Ramadan. We maintain our fair value (FV) of EGP5.60/share and Neutral rating. Given our positive outlook on consumer staple stocks, we believe any weakness in the share price (amidst a market-wide correction) presents a good opportunity to build positions in the stock. Revenue Grows on Yoghurt Recovery; Sound Dairy and Juice Growth: Revenue rose 38% Y-o-Y to EGP573 million, driven by the more than doubling of yoghurt revenue and a 15% rise in dairy revenue. While juice growth slowed to 17% from record 2010 levels (2010s growth was fuelled by increased capacity utilisation at new factories), the segments growth remains solid, given increased competition and slow growth in demand, in our view. Juhayna began reporting revenue from its agriculture segment (c2.5% of revenue, mostly vegetables) in 2Q2011, which partly offset lost exports to Libya. Revenue was 15% ahead of our forecast on yoghurt beat.

Margins Squeezed; Higher Revenue and Low Interest Expense Compensate: EBITDA grew 23% Y-o-Y to EGP111 million with the margin narrowing to 19.3% from 22-23% in 2Q2010 and 1Q2011. EBTIDA came in 3% below our forecast, as the margin fell short of our 22.8% expectation. The tightened EBTIDA margin mainly resulted from rising costs (milk commodities, packaging, fruits, sugar, and labour), which were not fully compensated for by dairy and juice price increases applied in 1H2011, in our view. Yoghurt margins expanded (on higher capacity utilisation and from a depressed 2Q2010 as a result of the fire), while dairy and juice margins declined. Net interest expense continued to fall Y-o-Y, propelled by the IPO proceeds in 2Q2010. (Wafaa Baddour, Nada Amin)
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