MENA-2 MONDAY MORNING ROUND-UP

Egypt
EZDK shareholders approve 2010 dividend of EGP35/share OD Holding files appeal against courts verdict against Chairman and Egyptian subsidiary Prosecution appeals against judges ruling in PHD Chairman Mansour and former Housing Minister El Maghraby land deal case OCI in negotiations for USD376 million power plant contract in Iraq

Saudi Arabia

SABIC rolls over August PE and PP prices to September SEC contains fire at a power generation plant in Hail Private sector credit growth accelerates to 8.7% Y-o-Y in June

EFG Hermes Research

Elsewedy Electric - 2Q2011 Results: Solid and on Track, Stock Trades below Replacement and Book Values; Reiterate Buy - Company Note - 28 August 2011

Agenda
Egypt Tue 6 September >> Orascom Construction Industries (OCI) 2Q2011 results Sat 10 September >> Ezz Steel AGM Mon 12 September >> Maridive EGM regarding 1:6 bonus shares

Egypt News
EZDK shareholders approve 2010 dividend of EGP35/share Al Ezz Dekheila (EZDK) [IRAX.CA] has announced that the companys shareholders have approved a 2010 cash dividend of EGP35/share during the annual general meeting (AGM). The company has yet to announce the exdividend date. This represents a dividend yield of 6.1% as at the closing price on Thursday, 25 August 2011, and a 2010 payout ratio of 69%. The 2010 dividend comes in below our forecast of EGP50/share. (MIST, Ahmed Shams el Din, Yousef Husseini) EZDK: EGP592.01, Rating: Neutral, FV: EGP693.00, MCap: USD1,327 million, IRAX EY / IRAX.CA Ezz Steel: EGP8.33, Rating: Buy, FV: EGP12.10, MCap: USD759 million, ESRS EY / ESRS.CA OD Holding files appeal against courts verdict against Chairman and Egyptian subsidiary Orascom Development Holding (OD Holding) [ODHR.CA] has filed an appeal against the Cairo Economic Misdemeanours Court of First Instances judgment against Orascom Hotels and Development (OHD, the Egyptian subsidiary of OD Holding) and Samih Sawiris, OD Holdings Executive Chairman. The main allegation in the case is that OHD misrepresented the percentage of the parents ownership in it, where the financial statements of the parent overstated the ownership in the subsidiary by 2%. This difference resulted from the non-recognition by the Egyptian Financial Supervisory Authority (EFSA) of the ownership transfer through an economic interest acquisition, which took place in December 2008, the company said in a press release. The 2% economic interest in OHD has been recognized and audited and to resolve this discrepancy, EFSA required OD Holding to undertake a mandatory tender offer for the remaining 3.86% (which included the 2% in dispute) in November 2010. The company completed the transaction on 18 January 2011 and now holds 99.66% of OHDs shares, complying with EFSAs requirements. Another allegation by EFSA is that OD Holding has breached an obligation towards OHDs shareholders, as it was required to keep OHD listed on the EGX for three years from the 2008 tender offer. Nonetheless, EGX has changed its listing rules in January 2010, requiring all listed companies to maintain a free float of 5% of its shares at all times, and given that that the May 2008 tender offer resulted in OD Holding owning 96% of OHD, OHDs shares were

suspended as at 1 January 2010 to comply with the new listing rules. OD Holding attempted to resolve its noncompliance with the three-year listing requirement, which, according to the company, was resolved by EFSAs approval to launch the tender offer in December 2010. Sawiris has been sentenced to two years imprisonment and fined CHF6,780 in his capacity as Chairman of OHD. Bail of CHF2,720 has been paid and discussions for settling the charges have begun. (Company Disclosure) OD Holding: EGP7.65, Rating: Buy, FV: EGP26.20, MCap: USD721 million, ODHN EY / ODHR.CA Prosecution appeals against judges ruling in PHD Chairman Mansour and former Housing Minister El Maghraby land deal case The prosecution has appealed against the judges ruling in the land deal case, which included Palm Hills Developments (PHD) [PHDC.CA] Chairman Yasseen Mansour and former Minister of Housing, Utilities and Urban Planning (Minister of Housing) Ahmel El Maghraby, Al Masry Al Youm reported. In July 2011, a court had found that both Mansour and El Maghraby were innocent in the Palm Parks land deal case. The two had been accused of squandering public wealth over the course of the deal. The land that is the subject in this case measures 113 feddans (474,600 square metres (sqm)) and is home to PHDs Palm Parks project in Sixth of October City. (Al Masry Al Youm) Palm Hills Developments: EGP1.73, Rating: Sell, FV: EGP2.10, MCap: USD304 million, PHDC EY / PHDC.CA OCI in negotiations for USD376 million power plant contract in Iraq Orascom Construction Industries (OCI) [OCIC.CA] is currently negotiating for a USD376 million contract to build a power plant in Iraq, the company announced yesterday, clarifying that the contract is not final. Earlier this month, OCI said that it has been awarded a USD181 million contract for work on a 1,500-megawatt power plant in Giza. In addition, it is currently constructing several power plants in Egypt and Algeria, with a total power generation capacity of 5,250 megawatts. (OCI Release, Zawya Dow Jones) Orascom Construction Industries: EGP238.95, Rating: Neutral, FV: EGP265.00, MCap: USD8,377 million, OCIC EY / OCIC.CA

Saudi Arabia News

SABIC rolls over August PE and PP prices to September Saudi Basic Industries Corporation (SABIC) [2010.SE] has rolled over its August prices for polyethylene (PE) and polypropylene (PP) to September. PP for September delivery was offered at USD1,560-1,580/tonne, low density polyethylene (LDPE) was offered at USD1,680-1,700/tonne, high density polyethylene (HDPE) was offered at USD1,420-1,450/tonne, and linear low density polyethylene (LLDPE) was offered at USD1,380-1,400/tonne. According to ICIS, the rollover to September was expected, as there was no substantial change in buying sentiment compared to August. Other GCC producers are expected to follow SABICs lead and roll over August offers, according to market sources. (ICIS, Argaam) Saudi Basic Industries Corporation: SAR92.00, Rating: Buy, FV: SAR133.00, MCap: USD73,600 million, SABIC AB / 2010.SE SEC contains fire at a power generation plant in Hail Saudi Electricity Company (SEC) [5110.SE] reported a fire at one of its power generation plants in Hail, which caused the operations at the stations eight units to be halted, Argaam reported. The fire and suspended operations resulted in a power outage to 29,700 subscribers, the company said. SEC explained that the fire was successfully contained and that services were restored within half an hour to 15,000 subscribers. Full services were restored to all subscribers within approximately two and a half hours. Work is underway to restore the damage at all affected units. (Argaam) Saudi Electricity Company: SAR13.00, Rating: Neutral, FV: SAR13.20, MCap: USD14,444 million, SECO AB / 5110.SE Private sector credit growth accelerates to 8.7% Y-o-Y in June The latest monetary data released by SAMA continues to reflect the strengthening in economy activity. Private sector credit growth saw an acceleration to 8.7% Y-o-Y in July (up from 7.8% in June) and 1.5% M-o-M (up from 1.0%). The strong rate of acceleration is notable, given the historically quieter summer period. The monthly credit growth was at the fastest pace in almost two years and despite the usual summer slowdown. We continue to see private sector credit growth being driven by both a rise in consumer and corporate loan demand, with corporate loan demand being broadly sector-based. Deposits in the banking sector fell marginally 0.1% M-o-M in July, a lower amount than the 0.6% June, again likely due to the summer effect. However, this was partly counterbalanced by increased government deposits in the banking sector in July. Net foreign assets (NFA) rose 18.3% Y-o-Y in July, largely driven

by higher oil revenue. Money supply (M2) growth remained stable at 15.4% Y-o-Y, supported by annualised build-up in both NFA and domestic assets, which increased 1.9% M-o-M in June. With inflation not being driven by monetary factors, we expect benchmark interest rates to remain on hold in 2011 and into 2012. (SAMA, Monica Malik)

EFG Hermes Research

Elsewedy Electric - 2Q2011 Results: Solid and on Track, Stock Trades below Replacement and Book Values; Reiterate Buy - Company Note - 28 August 2011 Cut FV by 15% on Higher Tax and Debt; Trades below Replacement Value: Operationally, 2Q2011s results surprised positively on a faster-than-expected Q-o-Q recovery, which was driven by higher turnkey projects and cables gross profit. Net profit came in line at EGP161 million versus EGP171 million in 1Q2011. Normalised net profit (excluding FX gain/loss) was EGP204 million, up 28% Q-o-Q. We revise our FY2011 forecasts to reflect higher EBITDA and finance costs. Our new fair value (FV) of EGP49.0/share reflects an increase in Egypts tax rate to 25% from 20%, higher leverage and adjusted forecasts. We maintain our Buy rating, noting that the stock trades below our FV, our replacement value estimate of EGP40/share, and Elsewedys book value of EGP29/share. We remain positive on Elsewedys operational performance. Exposure to metal price volatility remains a risk to free cash flow generation and leverage. Revise 2011 Forecasts, Higher Operating Profit and Finance Expenses: Elsewedy is offsetting lower demand in some of its markets, most importantly Egypt and Libya, by: i) focusing on other African markets, the GCC and Europe, and ii) leveraging its new cable (Qatar and Saudi Arabia) and transformer factories. We increase our EBITDA estimate by 2% to EGP1.5 billion (+6% Y-o-Y) to reflect resilient cable gross profit per tonne (versus our previous estimate of a 5% decline) and higher turnkey gross profit. However, we cut our reported normalised net profit estimate by 1% to EGP750 million (-11% Y-o-Y) on higher expenses, primarily finance costs. Solid 2Q2011 Operational Performance in Turnkey Projects and Cables: Revenue in 2Q2011 was up 11% Q-o-Q to EGP3.9 billion, and gross profit showed a strong Q-o-Q recovery, up 16% to EGP618 million, owing primarily to turnkey projects (+53%) and cables (+15%). Cables volume grew 13% Q-o-Q to c40,000 tonnes, despite the loss of the Libyan market, and gross profit/tonne was flat. Transformers showed solid growth, with a higher contribution from newly launched Egypt operations, while meters remained muted. EBITDA in 2Q2011 grew 22% Q-o-Q to EGP393 million and the margin expanded c100 bps to 10.0% on improved turnkey projects margin. This growth was offset by an FX loss and higher finance costs and effective tax rate. (Wafaa Baddour, Khaled Sadek)
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