MENA-2 WEDNESDAY MORNING ROUND-UP

Egypt

Army head sued over female's military trial EU bans import of Egyptian seeds linked to E. coli Court sentences former minister to prison, acquits three others Court finds PHD Chairman, former Housing Minister innocent in land deal case Cabinet approves steel licences; gives producers one month to make required payment Ministry of Housing to withdraw 210 feddans from PHD Pioneers Holding looking to acquire firms

Saudi Arabia

Government to stop issuing export licences to cement companies Jarir 2Q2011 earnings up 30%, ahead of estimate on top line beat

Jordan

Sinai explosion latest disruption in gas supply Jordan GCC membership talks to start next month Industries allowed to import fuel

Tunisia UAE

1H2011 tourism down 51% Y-o-Y du recalls faulty recharge cards

Agenda
Egypt Thu 7 July >> Lecico ex-dividend date for bonus shares Saudi Arabia Sat 6 August >> Etihad Atheeb AGM and EGM

Egypt News
Army head sued over female's military trial Three human rights groups are suing the head of Egypt's armed forces for trying a female in a military court, claiming that she was tortured and forced to undergo a virginity test. The female, whose age was not specified, is one of 17 female protesters that was rounded up on 9 March 2011 when the army cleared demonstrators from Cairos Tahrir Square, the epicentre of the popular protests that ousted former President Hosni Mubarak in February. The rights groups said that the female was tried before the military court without knowing what charges she was facing. All of the female protesters were sentenced within four days of their detention, the groups added. (Reuters) EU bans import of Egyptian seeds linked to E. coli The European Union (EU) has voted to ban imports of some seeds and beans from Egypt until 31 October 2011 following allegations that a batch of fenugreek seeds from the country is most likely source of recent E. coli outbreaks across the EU. A report by EU investigators on 5 July 2011 linked the imported seeds to two E. coli outbreaks that have infected more than 4,100 people. "The report published today leads us to withdrawing some Egyptian seeds from the EU market and to a temporary ban on imports of some seeds and beans originating from that country," EU health commissioner, John Dalli, said in a statement. The

ban covers imports of Egyptian seeds and beans for sprouting, including legumes, fenugreek and soya beans. (Reuters) Court sentences former minister to prison, acquits three others An Egyptian court sentenced in absentia former Trade and Industry Minister Rachid Mohamed Rachid to five years in prison, the state-run Middle East News Agency (MENA) reported. Three other former ministers and two businessmen were acquitted on corruption-related charges, MENA added. Anas el- Fikki and Youssef Boutros-Ghali, the former ministers of information and technology (IT), and finance, respectively, had been charged with squandering public funds on parliamentary and presidential election campaigns, the news agency said. Former Housing Minister Ahmed el-Maghraby, businessman Waheed Metwally, and Yasseen Mansour, Chairman of Palm Hills Developments (PHD) [PHDC.CA], were also acquitted on charges that include profiteering, MENA reported. The two businessmen were tried in absentia. El-Maghraby has already been given a five-year jail sentence in a separate case. Egypts public prosecutor contested the acquittal of the three former ministers, Al Arabiya television reported today, without elaborating. (Bloomberg) PHD: EGP2.54, Rating: Sell, FV: EGP2.1, MCap: USD443 million, PHDC EY / PHDC.CA Court finds PHD Chairman, former Housing Minister innocent in land deal case A court has found both Yasseen Mansour, Chairman of Palm Hills Developments (PHD) [PHDC.CA], and Ahmed El Maghraby, former Minister of Housing, Utilities and Urban Planning (Minister of Housing) 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 plot 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. The courts verdict could facilitate the companys debt financing in the future as it should make local banks more comfortable with lending to PHD given the latters diminishing legal embroilments. We expect PHDs shares to perform well over the coming sessions on the back of this news, which we view positively. (Reuters, Jan Pawel Hasman, Shaza El Kady) PHD: EGP2.54, Rating: Sell, FV: EGP2.1, MCap: USD443 million, PHDC EY / PHDC.CA Cabinet approves steel licences; gives producers one month to make required payment The Cabinet has given final approval for four new steel production licences awarded in December 2010, giving the companies one months time to make the required payments. The production licences are for the production of 1 mtpa of billets and 2 mtpa of rebar. The cEGP95 million steel licences were awarded to Port Said National Company for Steel, IIC for Steel Plants Management, Al-Marakbi and Al-Wataniya. The introduction of the new plants, which we expect will not start before 2014-2015, should not have any significant impact on currently-operating companies, in our view. The market was in a c3 mtpa deficit in 2009, and we expect that by the time the new plants become operational, they will be filling a supply gap. (Reuters, Al Masry-al-Youm, Rita Guindy)

Ezz Steel: EGP11.09, Rating: Buy, FV: EGP12.1, MCap: USD1,011 million, ESRS EY / ESRS.CA Ministry of Housing to withdraw 210 feddans from PHD The Ministry of Housing, Housing, Utilities and Urban Planning (MOH) intends to withdraw 210 feddans out of 310 feddans total in Sixth of October city from Palm Hills Developments (PHD) (PHDC.CA) that the company acquired in a closed envelope auction in 7 May 2007 for EGP812/square metre (sqm), Al Mal reported. According to Al Mals sources, the company has developed only 100 feddans to date, which is the reason for the withdrawal.

The specifications of the land provided by the report suggests that the project in question is PHDs Golf Extension. According to the most recent data provided by PHD, 68% of units offered in the project have been sold, while only 7% of total estimated construction outflows have been incurred to date. While the news has not yet been confirmed by the company, we believe that it may signal further legal difficulties to PHDs land bank, despite the positive verdict issued on 5 July 2011 relating to the Palm Parks land deal case. (Al Mal, Jan Pawel Hasman, Shaza El Kady)

PHD: EGP2.54, Rating: Sell, FV: EGP2.1, MCap: USD443 million, PHDC EY / PHDC.CA

Pioneers Holding looking to acquire firms Egypt's Pioneers Holding (PIOH.CA) said on 5 July 2011 that it is studying the purchase of controlling stakes in housing and industrial companies listed on the Egyptian stock exchange. Pioneerss Senior Vice President and Managing Director, Khaled El Tayeb, told reporters that he expects to complete the acquisition of three companies by year-end, with one during the current quarter. (Reuters)

Saudi Arabia News

Government to stop issuing export licences to cement companies Saudi Arabia announced on 5 July 2011 that it will stop issuing export licences for cement companies in order to meet growing domestic cement demand. Local cement sales volume rose 10% Y-o-Y to 4.45 million tonnes in May. Increasing local demand has seen local volumes (96% of total sales) jump 14% Y-o-Y at the expense of exports, which dropped 40% Y-o-Y. For 5M2011, local volumes rose 12% Y-o-Y to 20.6 million tonnes.

Significant spending plans have been announced this year, including USD66.7 billion to be allocated for the construction of 500,000 housing units across the country. According to MEED, over USD650 million worth of projects are currently planned and under construction in the Kingdom. The suspension of exports mainly impacts companies in the northern region (Al Jouf Cement Company and Northern Cement Company) of the Kingdom, which suffers from weak cement demand and high costs associated with transporting cement to other regions in Saudi Arabia. (Argaam, MEED) Jarir 2Q2011 earnings up 30%, ahead of estimate on top line beat Jarir Marketing Company (JMC) [4190.SE] has reported preliminary headline figures for 2Q2011 showing a net profit of SAR98.5 million (up 30% Y-o-Y, but down 28% Q-o-Q) driven by stronger-than-expected top line growth of 44% Y-o-Y. Net profit came 11% ahead of our estimate. Total revenue stood at SAR968 million, up 44% Y-o-Y and 2% Q-o-Q, overcoming seasonality effects, and came in 22% ahead of our SAR790 million estimate. The company commented that the top line growth is attributable to a marked increase in smart phone and lap top sales as a result of Saudi Arabias country-wide salary increases and bonuses. Jarir reported net operating profit of SAR97.2 million, up 30% Y-o-Y, but down 28% Q-o-Q, and 10% ahead of our forecast. The margin contracted c110 bps to 10.0% from 11.1% in 1Q2011 likely due to a shift in the sales mix to the lower margin smart phones and laptops. We had forecasted a more resilient margin of 11.1%. (Tadawul, Nada Amin, Wafaa Baddour) Jarir: SAR174.3, Rating: Neutral, FV: SAR160.0, MCap: USD1,858 million, JARIR AB / 4190.SE

Jordan News
Sinai explosion latest disruption in gas supply The explosion of Egypts natural gas pipeline, the third this year, and related damage will take two days to repair, with pumping slated to resume by the end of the week, the Jordan Times reported, citing Egypts Ministry of Petroleum. Previous attacks resulted in two separate six-week disruptions that forced the Kingdoms power plants to use heavy fuel oil reserves at a cost of about USD3 million per day. Following a similar attack on 27 April 2011, Cairo insisted on amending a favourable pricing agreement between the two countries, under which Jordan received natural gas at prices less than half the international market rate. In a statement on 3 July 2011, Toukan confirmed that both sides will finalise the amended deal, which is believed to bring an end to the favorable pricing structure, pending its approval by the Jordanian Cabinet later this month. The unreliability of gas supplies from Egypt has forced energy officials in Amman to explore the import of liquefied gas, with plans in place to construct an offshore terminal in the Port of Aqaba by 2013. Amman has received several expressions of interest in the terminal from international firms, including Royal Dutch Shell, British Petroleum, Lemont/General Electric, and Egypts Al Fijr. The drive for liquefied gas comes as Jordanian officials attempt to cover a five-year gap period ahead of the development of domestic energy sources including solar, wind and nuclear power. (Jordan Times) Jordan GCC membership talks to start next month Jordan is expected to start talks with the Gulf Cooperation Council (GCC) over its bid to join the organisation during the first half of Ramadan (August), the government announced on 5 July 2011. We realise that Jordan is not a Gulf country, but there are many commonalities between us and the GCC. The

relationship will be mutually beneficial, Minister of Foreign Affairs Nasser Judeh said, noting that the Kingdom has added value to put on the table and the Gulf has added value to offer. Judehs talks with GCC peers, he said, will cover economic cooperation, Jordanian labour in the Gulf, and freedom of movement and visas, amongst others. We already have a huge workforce in the Gulf countries, estimated at around 500,000, Judeh said. (Jordan Times) Industries allowed to import fuel The Cabinet on 5 July 2011 opted to allow industrial companies to import their heavy fuel needs, the Jordan News Agency, Petra, reported. Under the new decision, industrialists can now import heavy fuel, but must first obtain permits from the Ministry of Energy and Mineral Resources, Petra said. The decision is meant to boost the Kingdoms strategic storage of heavy fuel and enhance industries productivity, according to Petra. Sector stakeholders have been sounding the alarm that the majority of local factories are at risk of going out of business as a result of the unprecedented hikes in fuel prices, calling on the government to lay out remedy plans to save various industries. (The Jordan Times)

Tunisia News
1H2011 tourism down 51% Y-o-Y Revenue from tourism fell 51% Y-o-Y in 1H2011, official figures showed, as visitors dropped off after the countrys January revolution that toppled the former president. Tourism revenue from 1 January- 20 June 2011 of this year totaled TND614 million (USD450.5 million) versus TND1.26 billion during the same period in 2010, the Ministry of Tourism said. The number of tourists fell 40% Y-o-Y to about 1.59 million tourists, the ministry added. Tourism is a key source of income for Tunisia, accounting for 6.5% of GDP and employing about one in five people (directly or indirectly). (Reuters)

UAE News
du recalls faulty recharge cards du (DU.DU) has recalled a large number of recharge cards for prepaid lines as a result of badly printed codes that are easily erased upon scratching of the cards. The operator has promised to replace faulty cards already bought by subscribers, according to Khaleej Times. Many subscribers have sought to switch to postpaid lines to overcome the issue. (Khaleej Times) du: AED3.18, Rating: Buy, FV: AED3.66, MCap USD3,961 million, DU UH / DU.DU
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