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The Africa Weekly

Equity research | Pan-Africa | News & Analysis

African Alliance Securities is a leading African institutional-focused securities firm, and is able to transact for clients in 18 markets across Africa. We provide agency-only equity and bond trading, sales and in-depth, independent research to local, regional and international clients. Key to our value proposition is an on-the-ground presence with exchange membership licenses in 11 African countries which allows us to provide our clients with investment research and corporate access of the highest quality. Our award winning research includes fundamental research on most of Sub-Sahara Africas leading listed companies and sectors, as well as market data & analysis and market news & information services that span the whole continent. African Alliance Securities is part of the African Alliance Group, which provides investment banking and related services across the African continent. For more information please visit www.africanalliance.com.

The Africa Weekly


Equity research | Pan-Africa | News & Analysis

In this week's issue Regional Emerging markets boost SABMiller; Africa set to be investment capital; Seychelles starts voting; S.Africa goes to the polls Southern Africa Angola: Emirates Airline to increase Dubai-Luanda flights; Alrosa may add mining projects as diamond prices advance; Investors wooed with law changes Botswana: Govt faces spending crisis, not revenue; Power tariffs to rise by between 15% and 30% in June; Inflation eases 30bp to 8.2% in April Lesotho: Lesotho looks to Malaysia for investments and expertise; Gem and Lucara end merger talks Malawi: Government adamant on devaluation; IMF boss toughens forex policy talk; General insurance deals by June-says NICO Mauritius: Tourist arrivals rise in 1Q11; Sun Resorts 1Q11 profits down 8.9%; MCB profit rises 47% in 3Q11; New Freeport Piacenza revived Namibia: Namibia April NCPI rose; NAAMSA Vehicle sales decreased; Namibia to introduce a minerals windfall tax Swaziland: Swaziland in 'severe fiscal crisis'; Central Bank leaves rates unchanged; Swaziland Electricity Company opens Maguga Hydro Power Station Zambia: Miners to pay 30% more for electricity; Zambia to decide on oil block awards in two months; Zambia Breweries profits soar to ZMK 45bn Zimbabwe: Lafarge Cement in USD 3.3m facelift; Caledonia posts 1Q11 profit, expects to reach targeted output by 3Q11; SA banks feel heat in Zim East Africa Kenya: GDP expands 5.6% for 2010; SCB posts 13.8% y/y rise in 1Q11 PAT; Safaricom FY11 results show increased revenues Rwanda: Central Bank targets inflation at below 7.5%; Bralirwa reports strong FY10 results; Rwandair launches Libreville, Gabon route Tanzania: April inflation up to 8.6%; TRA loses bid on Barclays and CRDB Bank Uganda: Museveni says police, courts lax on protests; Nestl Foods to process milk from Kenya and Uganda locally West Africa BRVM: IBM expands further, opens Senegal subsidiary; Cargill resumes cocoa operations in Cte dIvoire; Newcrest to resume Cte dIvoire ops Ghana: Policy rate down 50bp; Ghana records improved current account balance; Revenue for Road Fund up 33.8% y/y; WACS reaches Ghana Nigeria: Consumers see compressed gas as alternative; Finance Ministry to agree budget by the end of the week; GT Bank set to float USD 500m bond issue North Africa Egypt: Ezz Steel's embattled chairman quits board; Orascom Telecom announces new CEO; Orascom Telecom 1Q11 results Morocco: Residential property prices rise by 5% y/y in 1Q11; Moroccan banks in Cote dIvoire resume operations; Vehicle sales swell 20% y/y in April Tunisia: Result of TELNET IPO; FDI fell by 24.5% in first four months of 2011; Obama to seek aid; AfDB forecasts 1.1% growth of GDP in 2011

20 May 2011
MARKET MOVES Botswana Malawi Mauritius Namibia Zambia Zimbabwe Kenya Tanzania Uganda BRVM Ghana Nigeria Egypt Morocco Tunisia MSCI EM ex SA FTSE Johannesburg Nikkei S&P 500 CURRENCY MOVES BWP MWK MUR ZMK KES TZS UGX XOF GHS NGN EGP MAD TND EUR GBP JPY ZAR (NAD, SZL, LSL) * relative to USD WEEK % -0.5 0.1 -0.4 0.0 -2.2 -1.2 -0.1 0.5 -2.6 0.2 2.3 -0.1 4.9 0.0 0.9 1.4 0.2 0.7 -1.0 -0.4 YTD % 7.6 -1.0 6.5 7.3 23.5 6.2 -10.1 2.3 -0.6 -4.1 17.9 3.8 -26.5 -5.1 -19.0 -12.4 1.0 -0.6 -5.9 6.8

LEVEL* WEEK % 6.60 150.80 28.20 4750.0 86.15 1534.5 2385.0 459.37 1.51 156.63 5.95 7.92 1.38 0.70 0.62 81.74 6.88 -0.20 -0.56 0.38 -0.31 -0.02 0.76 -0.08 -0.51 0.38 -0.08 0.30 -0.42 -0.14 -0.51 0.59 1.14 -0.41

Randolph Oosthuizen CFA Head of Research +27 11 214 8384 oosthuizenr@africanalliance.com Chris Blaine Editor +27 11 214 8324 blainec@africanalliance.com Rob Brownlee Head of Group Sales +27 11 214 8464 brownleer@africanalliance.com

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The Africa Weekly


Equity research | Pan-Africa | News & Analysis

TABLE OF CONTENT
Market Snapshot.....................................................................................................................3 Market Commentary ..............................................................................................................5 Company Results Summary ...................................................................................................7 Inflation and Interest Rate Summary ....................................................................................9 Regional ................................................................................................................................10 Nigeria...................................................................................................................................11 Kenya.....................................................................................................................................16 Egypt......................................................................................................................................20 Morocco.................................................................................................................................25 Tunisia ...................................................................................................................................28 Mauritius ...............................................................................................................................30 Zimbabwe ..............................................................................................................................32 Botswana ..............................................................................................................................35 BRVM .....................................................................................................................................38 Ghana ....................................................................................................................................40 Zambia...................................................................................................................................43 Tanzania ................................................................................................................................46 Namibia .................................................................................................................................48 Malawi ...................................................................................................................................50 Uganda ..................................................................................................................................52 Rwanda..................................................................................................................................54 Swaziland ..............................................................................................................................56 Angola ...................................................................................................................................58 Lesotho..................................................................................................................................59 Recently Published Research ..............................................................................................60 Regular Publications ............................................................................................................60

2 | African Alliance Pan-African Securities Research

20 May 2011

The Africa Weekly


Equity research | Pan-Africa | News & Analysis

MARKET SNAPSHOT
MARKET Botswana Mauritius Malawi Namibia Swaziland Zambia Zimbabwe Kenya Tanzania Uganda BRVM Egypt Ghana Morocco Nigeria Tunisia South Africa INDEX NAME Domestic Companies Semdex (All Share) All Share Local All Share All Share Industrial Top 20 All Share All Share Composite EGX 30 All Share All Share All Share All Share All Share
2.30% Ghana Uganda: -2.55% Kenya -0.14% Tanzania 0.52% Nigeria -0.07% BRVM 0.22% Morocco 0.01% Egypt 4.88%

Weekly market moves (%chg local)


Tunisia 0.95%

Zambia -2.22% Namibia Namibia Zimbabwe Botswana -1.20% -0.49%

Malawi 0.12%

Mauritius -0.43%

South Africa 0.75%

Swaziland

Source: African Alliance database

3 | African Alliance Pan-African Securities Research

20 May 2011

The Africa Weekly


Equity research | Pan-Africa | News & Analysis

AFRICAN AND GLOBAL MARKETS HEAT MAP (%CHG LOCAL)

Daily price changes (%) Date Botswana BRVM Egypt Ghana Kenya Malawi Mauritius Morocco Namibia Nigeria Swaziland Tanzania Tunisia Uganda Zambia Zimbabwe South Africa FTSE 100 Nikkei 225 S&P 500 Shanghai Composite MSCI World MSCI EFM Africa ex ZA MSCI EM Index 0.0 -2.8 -1.2 0.6 -0.2 0.5 -1.3 0.1 0.0 1.1

(08-May - 19-May 2011) 0.1 -0.2 -0.1 0.3 0.7 0.7 0.1 0.4 1.2 1.5 -0.3

Weekly chg (%) 12-May -0.2 -4.0 1.4 0.9 -1.0 0.9 2.6 -0.5 2.0 0.1 -1.7 -2.5 4.5 -0.2 0.3 0.4 -2.9 1.0 -1.0 -0.3 -0.7 -1.2 19-May -0.5 0.2 4.9 2.3 -0.1 0.1 -0.4 0.0 -0.1 0.5 0.9 -2.6 -2.2 -1.2 0.7 0.2 -1.0 -0.4 0.5 -0.4 1.4 -0.6

Year-to-date change 01-Jan-11 19-May-11 6,412.9 159.1 7,142.1 1,000.0 4,432.6 4,953.1 1,967.5 12,655.2 172.7 24,770.5 224.3 1,163.9 5,112.5 1,188.1 3,303.9 151.3 32,118.9 5,899.9 10,228.9 1,257.6 2,808.1 1,280.1 647.1 1,151.4 6,898.3 152.5 5,249.1 1,178.5 3,986.8 4,903.6 2,095.3 12,009.0 185.4 25,717.7 224.3 1,190.2 4,143.1 1,181.0 4,079.8 160.6 31,918.9 5,956.0 9,620.8 1,343.6 2,859.6 1,345.7 566.7 1,140.4 %ch 7.6 -4.1 -26.5 17.9 -10.1 -1.0 6.5 -5.1 7.3 3.8 2.3 -19.0 -0.6 23.5 6.2 -0.6 1.0 -5.9 6.8 1.8 5.1 -12.4 -1.0

08M 09M 10M 11M 12M 15M 16M 17M 18M 19M 0.0 -0.1 -0.2 -0.2 -0.1 1.3 1.1 0.5 0.9 0.0 0.1 0.4 0.5 1.0 1.1 0.3 0.1 0.2 0.3 0.0 0.4 0.4 0.9 - -0.4 -0.3 -0.6 -0.5 1.1 -0.8 -0.1 0.1 0.3 0.3 0.9 0.7 0.0 0.6

1.2 -0.9 0.0

0.1 -0.0 -0.7

0.1 -0.5 -0.1 -0.3 0.9 -0.1 0.2 -

0.4 -0.1 -0.0

0.2 -0.1 -0.5 -0.3 0.1 -0.4 0.2 0.8 0.6 0.0 0.2 0.5 0.2 0.3 0.3 0.2

0.1 -0.1

0.5 -0.8

0.3 -0.2

0.0 -0.0 -0.1 -0.3

0.3 -0.8 -0.4 -0.1 -0.7 0.9 -0.1 -1.2 -2.1 1.8 -0.2 -0.7 -0.4 -0.4 0.9 -0.8 1.0 -0.6 -1.4 -0.7 0.4 -0.3 0.5 0.3 0.1 0.8 2.8

1.0 -0.3 -0.6 0.4 -0.5 -0.4 0.2 -1.2 -0.6 0.6 -1.0 0.1 0.1 1.1 0.9 1.0

- -2.5

- -2.0 -0.2 -0.4

0.7 -0.1

1.5 -0.1 -1.2 0.2

1.3 -0.7 -0.5 -0.3 -0.0 -1.1 0.5 -1.5 -0.7 -0.9 0.9 -0.8 0.4 0.7 0.8 -1.1 0.5 -0.8 -0.6 -0.0

1.0 -0.4 0.7 -0.5

0.6 -0.2 -1.4 0.5 0.0 -0.2

0.3 -0.4 -0.5 -0.4 0.1 -0.1

0.9 -0.7 -0.5 -0.6 -0.5 -0.5 0.4 -0.1 -1.6 -0.3 -0.7 -0.3

0.7 -0.7

0.8 -0.2

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The Africa Weekly


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MARKET COMMENTARY
In Nigeria the market drifted marginally lower (-0.1%) despite a good start, as the Nigeria, banking sector (-1.3%) saw some profit taking. Zenith Bank (-1.%), UBA (-3.6%), FCMB ( 4.8%) and Access Bank (-4.1%) were particularly affected, with only FBN (+0.7%) and Diamond Bank (+1.3%) being the only notable gainers. The financials pull back was largely offset, however, by renewed interest in Guinness Nigeria which surged by 10.3% after releasing its 3Q11 results last week; while Lafarge WAPCO climbed 3.6% at the expense of its rivals (Ashaka down by 6% and Dangote Cement ending flat). The consumer sector was mixed: PZ Cussons was up by 4.5% and Nestle Nigeria gained 1.3%, but Dangote Flour Mills (-3.7%) and Dangote Sugar (-5.8%) were in the red. In Kenya, The NSE20 index continues to remain stagnant, and closed the week at 3,986.78, down only 0.14%. Highly traded counters for the week included Equity Bank (flat), KPLC ( 3.4%), and EABL (+2.0%). Safaricom was not highly traded as it usually is, despite releasing its FY11 results during the week, which showed a 12.9% increase in revenue. It however gained 1.3% to KES 3.90. Standard Chartered released its 1Q11 results reflecting a 13.8% y/y increase in EPS. The share moved up slightly to KES 251.00 (+0.8%). Barclays Bank also released its 1Q11 showing an 11.6% y/y increase in earnings. The counter however remained flat at KES 66.00. NIC Bank's 1Q11 results showed a commendable 54.1% y/y increase in EPS. The share remained flat however at KES 46.00. The gainers for the week included ARM, which closed at KES 179.00 (+8.5%), DTB also rose 6.8% to KES 158.00. The top decliners included Pan Africa Insurance Holdings which closed at KES 53.50 (-46.5%) after going ex-dividend and ex-bonus. The bonus was a 1 for 1 share issue. CFC Insurance closed at KES 16.65 (-8.0%). EAPC was also among the week's top decliners, closing at KES 85.00 (-7.6%). The Egyptian market was strong throughout the week, with an exception of Wednesday, and the EGX index gained 4.9% for the week, with positive support coming from all sectors, but specifically from building materials (+4.4%), property (+17.0%) and telecom (+3.9%) sectors. Ezz Steel surged 18.3%, Orascom Construction was up by 3.2%, TMG spiked 25.8% while Orascom Telecom gained 7.7% for the week. The banking sector was mixed, with NSGB down by 1.3% while CIB managed to gain 2.3%. Morocco was flat for the week, with gains in the agricultural (+2.3%) and construction (+1%) sectors negated by losses in banks (-1%) and breweries (-9.3%). Both Consumar and Centrale Laitiere were up around 2.5%, and CGI was the star performed in the construction sector. Most banks ended the week lower, with Attijariwafa (-1.5%) and BMCE (02.4%) leading the pack. Brasseries du Maroc (-13.1%) fell heavily in very thin trading. Marco Telecom dominated trading (38% of weekly turnover), but it gained only marginally, up by 16bp. Tunisia ended on a positive note, up by 1%, as Poulina gained 4.5% and Carthage Cement surged by 9.4% for the week, the latter in very active trading 42% of the weekly turnover. Banks were up by 0.5% with good contributions from BT (+1.1%) and Tunisie Leasing (+11.5%). In Mauritius despite the strong performance from MCB which gained 0.5% and was Mauritius, the top trader at 37% of the total turnover, the market was dragged lower by SBM ( 0.5%) as well as the hotels sector (-2.5%, Naiade down 3.6%, NMH 2.8% lower and Sun Resorts giving up 1.5%). The ALSI was down 0.4% as a result.

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The Zimbabwean market was pulled down 1.2% this week due to selling pressure in the large cap stocks: Delta gave up 2.4%, CBZ was down 10.6% and Econet fell by almost 5%. Only Barclays Bank Zimbabwe was a notable gainer, surging by 15.9%, but this happened on very low volumes. In Botswana, the Botswana DCI lost 0.5% on the back of price declines in Barclays Botswana, Botswana (2.5%), Letshego (-1.6%) and BIHL (-0.4%). Letshego was again the most actively traded stock, accounting for around 69% of total turnover, which declined 21% on the local board this week. Cresta (+55.2%), Primetime (+10.1%), and RDCP (4.9%) were the gainers for the week. The BRVM composite index edged up 0.2% this week, as a result of gains in CIE (+7.5%), SAPH (+3.6%), BOA CI (+3.6%) and ETI (+2.2%). SAPH was the most actively traded stock in a week which saw turnover dip around 10% from the previous week. Bollore Africa Logistics CI (-14.2%) and PALM CI (-4.2%) were the most notable decliners for the week. Ghanas GSE-CI gained 2.3% as nine equities recorded gains while three lost value. FML (+15.4%) led the gainers to close at a record high of GHS 3.00 and also recorded the highest value of trades, pushing market turnover to a 10-week high of GHS 8.28m. GCB reached an all-time high of GHS 3.03 during the week, but subsequently dropped to GHS 3.00, representing a w/w gain of 9.5%. The other gainers were UTB (+6.7%), SIC (+3.9%), BOPP (+3.7), UNIL (+3.4%), GGBL (+1.6%), TOTAL (+1.1%), and EBG (+0.3%). On the losing side were GOIL (-3.2%), CAL (-3.3%), and Cocoa Processing Company (-33.3%). In Zambia, The index shed 2.2% to close at 4,079.77. StanChart Zambia (-12.0%), Zambeef (-11.8%), and Investrust Bank (-5.9%) were behind the decline. Zambeef was also the most active stock, in a week in which turnover fell over 60% from the previous week. A number of stocks however managed to post gains, including Cavmont Capital Zambia (+20.0%), BAT (Zambia) (+18.5%), Bata Zambia (+9.7%), ZANACO (+8.9%), and Farmers House (+8.0%). The Tanzanian DSE gained 0.5% as a result of a 6.7% gain in the price of NMB and 1.1% gain in TWIGA. There were no price declines for the week. CRDB Bank was the most actively traded stock, followed by NMB; however turnover slumped compared to last weeks unusually heavy trading week. The Namibian local index was flat this week as no stocks registered price changes. FNB and TrustCo were the most active traders, as turnover improved marginally from last week. The Malawi all share index gained 0.1% due to a price gain in NITL (+8.9%). NITL was also the most actively traded stock, followed by NBM. Turnover more than doubled from the previous week, and no stocks recorded price declines.

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In Uganda, there was a slight decline in the weekly turnover by 2% to UGX 342.6m with Stanbic generating the highest turnover, 36% of total turnover, followed by DFCU which generated 31%. Demand for Stanbic has increased this week to average 2m shares per session, while its price also rose mid-week from below UGX 265 to around UGX 270. In terms of news around Stanbic, it is expected to announce a bonus share issue soon. DFCU is still experiencing appetite from investors despite having hit a 12 month high of UGX 1,000 recently. The top gainer this week was NVL closing at UGX 810 which values it at a rolling PE of 28x. However, retail investors are still willing to buy into NVL which is expected to announce higher FY11 profits in September. BATU this week hit the UGX 1,000 mark from UGX 960 previously, though this was on low volumes. The market is bullish on Stanbic, DFCU and NVL while its bearish following announcement of a UGX 3.8bn loss for FY10. The market closed 2.6% lower for the week. In Rwanda Bralirwa gained a total of 8.8% to close at RWF 223, on the back of Rwanda, RWF 77.1m in turnover. There was no trading in Swaziland this week.

COMPANY RESULTS SUMMARY


COMPANY COUNTRY SECTOR DATE PERIOD EPS CHANGE(%)

Turnstar Ezz Dekheila Steel* Orascom Telecom* South Valley* Talaat Moustafa* GGBL PBC BBK DTB NIC Bank Safaricom SCB* Total Kenya* Illovo* Nico* Gamma Civic Harel Mallac Ireland Blyth MCB MUA NMH Phoenix Beverages Rogers Sun Resorts Maroc Telecom*

Botswana Egypt Egypt Egypt Egypt Ghana Ghana Kenya Kenya Kenya Kenya Kenya Kenya Malawi Malawi Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Morocco

Property Construction Telco Construction Real Estate Breweries Cocoa Financial Financial Financial Telco Financial Energy Agriculture Financial Construction Investments Investments Financial Financial Tourism Breweries Investments Tourism Telco

May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11

FY11 FY10 1Q11 FY10 1Q11 3Q11 1H11 1Q11 1Q11 1Q11 FY11 1Q11 1Q11 FY11 FY10 1Q11 1Q11 3Q11 3Q11 1Q11 1H11 3Q11 2Q11 1Q11 1Q11

-23 Flat +1,313 -66 -38 +500 +86 +12 +60 +54 -13 +14 Flat -10 +22 Negative -91 +21 +26 -66 +15 -4 -70 -7 -7

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COMPANY

COUNTRY

SECTOR

DATE

PERIOD EPS CHANGE(%)

Dangote Cement ETI* Ecobank Nigeria * Guinness Nigeria* Bralirwa African Barrick* Uganda Clays* Zambia Breweries*

Nigeria Construction Nigeria Nigeria Nigeria Rwanda Tanzania Uganda Zambia Financial Financial Breweries Breweries Mining Construction Breweries

May-11 May-11 May-11 May-11 May-11 May-11 May-11 May-11

1Q11 1Q11 1Q11 1Q11 FY10 1Q11 FY10 FY10

+11 +11 -60 +32 +63 -5 Negative Positive

Source: Company filings; *PAT not EPS

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INFLATION AND INTEREST RATE SUMMARY


COUNTRY BOND RATE (%) MAT. DATE COMMENT PRIME (%) 17.00 7.95 9.00 8.23 8.01 8.35 8.00 15.40 Oct-18 Oct-15 Jul-20 Apr-15 Jan-20 Aug-13 Feb 21 BW005; 7.5yrs LS000A1A1T16; 4.5yrs 10 year; 9.3yrs GC15; 4.0yrs R207; 8.8yrs SG009; 2.3yrs 10 year; 9.8yrs 11.00 11.83 17.75 7.78 9.75 9.00 9.00 21.30 CPI (%) 14.76 8.20 3.30 7.20 6.96 4.80 4.20 5.53 8.80 2.70 11.10 11.12 11.00 Oct-20 Nov-15 Aug-20 FXD2/2010/10Yr; 9.5yrs FXD4/2010/5yr; 4.6yrs FXD 6/2010/10;7.3yrs 6.00 6.00 14.59 19.00 12.05 4.98 8.60 14.00 4.10 13.30 12.61 12.75 3.85 5.61 Oct-13 Oct-19 Feb-17 Mar-16 Mar-19 1191; 2.5yrs 6th FGN Series 4; 8.5yrs EGBGR00541F5; 6.8yrs 5 year; 4.9yrs 10 year; 9.9yrs 13.00 12.80 9.75 3.25 4.62 9.02 12.80 12.10 2.00 2.91 MONTH Mar Apr Feb Mar Apr Apr Apr Mar Apr Mar Apr Apr Apr Apr Jan Apr Mar Apr Feb Feb

Southern Africa Angola Botswana Lesotho Malawi Mauritius Namibia South Africa Swaziland Zambia Zimbabwe East Africa Kenya Rwanda Tanzania Uganda West Africa BRVM average Ghana Nigeria North Africa Egypt Morocco Tunisia

Source: Central banks, statistical agencies

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REGIONAL
Pan-Africa
Emerging markets boost SABMiller
Strong growth in the emerging markets of Africa, Asia and Latin America helped brewing giant SABMiller beat forecasts with a 19% rise in annual earnings while Europe and North America proved tougher. The world's second-largest brewer and maker of Miller Lite, Peroni and Grolsch explained that as its emerging markets, which provide over 80% of its earnings, recovered strongly while tough economies in mature markets held back any upturn in beer sales. (Source: Fin24) Resource-rich Africa is set to be the world's next investment destination thanks to an array of reforms sweeping across many previously troubled countries, a former Nigerian leader noted. Olusegun Obasanjo, in office in Nigeria for eight years until 2007, noted that after many years of stagnation the continent's economies saw a sharp growth in the past decade. Real GDP increased by 5.2% annually, compared with 2.3% in the 1990s. "Thus with political and social issues properly settled and put behind us, Africa is all set to become the next big investment destination," Obasanjo explained. (Source: AFP)

Africa set to be investment capital

Southern Africa
Seychelles starts voting
Voters in the Seychelles have begun casting their ballots in a presidential election in which President James Michel is competing for a second full term at the helm of the Indian Ocean islands. Michel has overseen a raft of economic reforms to liberalise the economy after the palm-fringed archipelago faced an acute balance of payments crisis, boosting his popularity as he emerged from the shadow of his predecessor's 27-year rule. Observers expect his re-election would mean continuity for those reforms, which include the floating of the Seychelles rupee against major currencies, and pave the way for an overhaul of the tax system. (Source: Reuters) South Africas main opposition party consolidated its role as the only serious challenger to the ruling African National Congress 17-year dominance, taking support away from all its rivals in 18 May municipal elections. With 12.6m ballots counted, the ANC had 62.8% of the vote, while the Democratic Alliance won 24.3% support, the Independent Electoral Commission revealed. That compares with 65.9% and 16.6% respectively in the national election in 2009. None of the other 119 parties that contested the poll received more than 4% of the vote. The Congress of the People, formed in 2008 by a group of ANC dissidents, saw its share of the vote plummet to 2.3% from 7.4% in 2009, while that of the Inkatha Freedom Party slid to 3.6% from 4.6%. The DA, backed mainly by white and mixed-race voters, also took away support from the ANC in the countrys two biggest cities, Johannesburg and Cape Town. (Source: Bloomberg)

S.Africa goes to the polls

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NIGERIA
Macroeconomic data
Nigeria Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 15.4 11.6 -3.2 207.1 6.0 1,401.2 2009 13.0 15.2 15.1 168.8 7.0 1,111.7 2010 6.4 16.4 18.3 216.8 8.4 1,389.3 2011E 14.6 16.2 10.9 267.8 6.9 1,670.0 2012F 13.3 18.5 5.5 288.8 6.6 1,753.1 2013F 11.4 21.1 1.8 309.7 6.3 1,829.3

Political and economic news


1,000 banks branches marked for demolition
The cordial relationship between the Lagos State government and commercial banks operating in the state may soon go sour, as the government is poised to demolish over 1,000 illegal structures serving as branches of the banks. Fielding questions from newsmen in Lagos, the state commissioner for physical planning and urban development, Mr. Francisco Abosede, revealed that out of 1,653 branches of banks operating in the state, only 100 have approved building plan, while 1,325 are still undergoing evaluation. Abosede, who claimed that the banks took the state physical planning laws for granted, added that the state government would not hesitate to appropriately sanction any of the affected banks. Sanctioning the erring banks [may] be misunderstood by the public and international community, but we urged management of the bank[s] that operate branches that do not comply with the State Model City Development Law of 2009 and the State Urban and Regional Planning Law of the state. If we are to go after over a thousand bank branches that fail to comply with developmental law in the state, what message would we be sending to the international community? They will not look at it from the angle of enforcing the law, rather they would look at it from an economic perspective. Abosede explained that the primary motive of enacting the state planning laws of 2009 and 2010 was to firm up all extant regulations on building control to ensure more professionalism on the part of staff, quality of building and wilful compliance with physical planning and building control regulations throughout the state. He argued that since the introduction of these laws, the state had witnessed a better planned environment, a healthier condition of living and an increase in life expectancy, noting that more emphasis will be placed on the conduct of officials of the state Building Control Agency and strict compliance with the development permit to ensure the aim of the planning laws is not defeated. The commissioner added that 7,393 building contraventions were detected across the state in 2010 alone, while 162 illegal structures were demolished, adding that out of the 12,804 building permit applications received the previous year, 7,600 had been processed and approved while 5,204 are still undergoing processing for approval, even as 90 lay out plans submitted and 31 had been approved.. (Source: Leadershipeditors.com)

NIGERIA
11 | African Alliance Pan-African Securities Research 20 May 2011

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Equity research | Pan-Africa | News & Analysis

Consumers see compressed gas as alternative

The clamour for a safer and cheaper alternative fuel for cars and domestic appliances is attracting more consumers to compressed natural gas (CNG) as source of fuel for their vehicles. CNG is a fossil fuel comprising mostly of ethane, or natural gas under high pressure with nearly zero emissions and is one of the cleanest burning alternative fuels for vehicles and automobiles. Since the Nigerian Independent Petroleum Company (NIPCO) Plc completed the construction of its multi-billion naira CNG plant in Benin City, Edo State, over 200 vehicle owners and taxi cab operators have turned up for the free conversion kits that would enable their vehicles ply on the alternative fuel. To encourage more vehicle owners embrace the new fuel, NIPCO announced it has commenced a free conversion programme that would see about 500 vehicles more being converted to CNG before the end of September. (Source: 234next.com)

Stock exchange to introduce corporate certification for operators

The management of the Nigerian Stock Exchange (NSE) says it is considering the introduction of a certification process that would help determine the level of compliance with established corporate governance and operational rules and regulations in the countrys capital market. NSE director general, Oscar Onyeama, who did not give details about when the proposed process would take off, announced that it would be an annual exercise, as part of efforts to restore the integrity of the capital market. In order to ensure compliance and ensure that on a year-in year-out basis firms are actually complying with their corporate governance standards, we will have a certification process, so that on an annual basis companies would be certified that they have met the policies and procedures they have subscribed to, Mr Onyeama announced. Though he acknowledged the negative activities of some operators in the recent past has taken a toll on the integrity of the stock market, the NSE boss argued that the starting point towards restoration would be to look inwards and take steps to establish and enforce proper corporate governance standards and operational efficiency by the regulator. Once that is done, one would have the moral high ground to go to the listed companies and broker dealers to let them appreciate the new standards, which they must buy in within an agreed time frame. Once everybody has bought into that idea about good corporate, good governance standards, we will be on our way, because we can actually use corporate governance as a competitive tool, which is good for business, (Source: 234next.com)

Gas operators to establish gas cylinder plants

The Nigerian Liquefied Petroleum Gas Association (NLPGA) says its members will soon set up assembly plants for gas cylinders in major cities in the country. President of the association, Auwalu Ilu, announced in Lagos this week that the aim was to increase the number of gas cylinders in circulation by about 100%. As soon as the market is saturated with cylinders, operators will embark on enlightenment campaigns on the use of gas as better means of cooking. Mr. Ilu announced that the investment, which would worth about NGN 12bn, would commence in 4Q11. According to him, the association is appealing to the Federal Government to make the sector more investor-friendly by removing the Value Added Tax on LPG. (Source: 234next.com)

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Conflict over NITEL building sale lingers

The Bureau of Public Enterprises (BPE) spokesperson, Mr. Chukwuma Nwoko, announced this week that the agency has not commenced any investigation the sale of the Lagos head office building of the Nigeria Telecommunications Limited (NITEL). As far as I know, we did not issue any release stating that we are investigating anything. Mr. Nwoko, however, informed the press that the issue was in court already and that solution to the lingering crisis was in place. The liquidator of the NITEL/MTEL Pension Fund, Olusola Adekanola, had claimed that the board of NITEL approved the sale of the head office building. Mr Adekanola, in a statement by his media and communication consultant, Kazie Uko, two weeks ago, revealed that the list of NITELs non-core assets, which were transferred to NITEL/MTEL Staff Pension Fund, was prepared by a team of professionals working with NITEL management. The list of such non-core assets was prepared for the BPE by a professional team that worked in conjunction with NITEL Management, and was approved by NITELs Board before being handed over to me (liquidator), the statement added. (Source: 234next.com)

Local firm closes in on Shell Nigerian oil block

The consortium of Niger Delta E&P and Petrolin is in the final stages of talks to buy one of the Nigerian oil blocks Shell has up for sale, the CEO of one of the company's told Reuters on early this week. "We are still in talks and we are hopeful," announced Layi Fatona, chief executive of the local Nigerian firm Niger Delta Exploration and Production. The company bid in partnership with African-focused energy firm Petrolin for block OML 34 which has oil reserves of around 200m barrels, Fatona claimed. Many of the other oil companies bidding for Shell's Nigerian assets have already been informed that they were unsuccessful. (Source: Reuters) Nigeria's government is expected to agree on an amended 2011 budget with parliament by the end of this week. The minister of finance announced that the new version will have tighter spending plans than the proposal lawmakers set out last month. Once both houses of parliament are happy with the budget it will be sent to President Goodluck Jonathan for assent. "The executive and the national assembly have been engaging on the budget in the last two weeks, trying to come out with a budget that is workable and that both are happy with," Olusegun Aganga told Reuters following a weekly cabinet meeting in Abuja. "We are getting to the stage of finalising it now. If things move as we expect that by Friday it should be ready." (Source: Reuters)

Nigerian Finance Ministry expects to agree budget by the end of the week

Company news
GT Bank set to float USD 500m bond issue
As part of the efforts to consolidate its position in the Nigerian banking industry, Guaranty Trust Bank Plc has concluded plans to float a five-year USD 500m issue under its USD 2bn global medium term note program. The unsecured notes have been assigned a long term rating of B+ (Stable) by both Standard & Poors and Fitch, carry a coupon rate of 7.5% and will mature on 19 May-16. The proposed issue will mark the third time that GT Bank will be raising funds from the international capital markets.

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The bank had in Jul-07, became the first Nigerian company and first African bank to be listed on the main market of the London Stock Exchange (LSE) with the listing of its USD 750m Global Depository Receipts (GDR). This came on the heels of a USD 350m Eurobond issue in Jan-07, which made the financial institution, the first Nigerian company to issue a Eurobond and also, the first Nigerian institution to venture into the international capital markets without a sovereign guarantee or credit enhancement from any international financial institution. The securities will be listed on the LSE, and the proceeds from the placement will be used partly to refinance the Banks USD 350m Eurobond maturing in Jan-12 and partly for general corporate purposes. (Source: Thisdayonline)

Market activity
In Nigeria the market drifted marginally lower (-0.1%) despite a good start, as the Nigeria, banking sector (-1.3%) saw some profit taking. Zenith Bank (-1.%), UBA (-3.6%), FCMB ( 4.8%) and Access Bank (-4.1%) were particularly affected, with only FBN (+0.7%) and Diamond Bank (+1.3%) being the only notable gainers. The financials pull back was largely offset, however, by renewed interest in Guinness Nigeria which surged by 10.3% after releasing its 3Q11 results last week; while Lafarge WAPCO climbed 3.6% at the expense of its rivals (Ashaka down by 6% and Dangote Cement ending flat). The consumer sector was mixed: PZ Cussons was up by 4.5% and Nestle Nigeria gained 1.3%, but Dangote Flour Mills (-3.7%) and Dangote Sugar (-5.8%) were in the red. Nigerian Stock Exchange
TOP GAINER(S) Honeywell Flour Mills Guinness Nigeria GSK Consumer Nig. TOP TRADER Zenith Bank MARKET PERFORMANCE NIG ALSI (NGN) % CHG 10.7 10.2 10.0 NGN (M) 2,098.7 LEVEL 25,718 PRICE 5.07 226.01 27.18 USD (M) 13.4 NGN (%) -0.07 TOP LOSER(S) Unity Bank Ashaka Cement Dangote Sugar Refinery TOTAL TRADED NIG ALSI % CHG -8.8 -6.0 -5.8 NGN (M) 14,028.8 USD (%) NGN/USD 0.00 156.63 PRICE 1.03 25.20 13.50 USD (M) 89.5 % CHG 0.08

Source: African Alliance database

Dividends (NGN)
COMPANY YEAR TYPE AMOUNT

Conoil Plc Lafarge Cement W Skye Bank Plc Berger Paints Custodian And Al Greif Nigeria Pl Dangote Sugar Re Guaranty Trust Continental Rein Ag Leventis & Co United Bank Afr Rt Briscoe Plc Portland Paints

2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011

Final Final Regular Final Final Final Final Final Final Final Final Final Final

2.00 0.25 0.40 0.70 0.17 0.30 0.60 0.09 0.08 0.12 0.04 0.08 0.16

06-Jun-11 09-May-11 27-Apr-11 08-Jun-11 23-May-11 03-May-11 04-May-11 04-May-11 11-Jul-11 09-May-11 27-Apr-11 27-Apr-11 31-May-11

LAST CUM DATE

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COMPANY

YEAR

TYPE

AMOUNT

LAST CUM DATE 09-May-11 09-May-11 29-Apr-11 27-Apr-11 29-Apr-11 23-May-11 N.A. 04-May-11 26-Jul-11 11-Apr-11 16-May-11 16-May-11 N.A. 03-May-11 06-Jun-11 20-Apr-11 24-Jun-11 18-Jul-11 02-May-11 18-Jul-11 24-May-11 08-Apr-11 06-Apr-11 11-Apr-11 07-Apr-11 28-Apr-11

First Bank Nig Total Nigeria Pl Mobil Nigeria Fidelity Bank Chemical And All Uac Of Nigeria Nigerian Aviatio Dangote Cement Prestige Assuran Unilever Nigeria Uacn Property De Okomu Oil Palm Tantalizers Plc Oando Plc Capital Hotel Diamond Bank Julius Berger Trans Natwde Exp First City Monum Presco Plc Boc Gases Nigeri Stanbic Ibtc Ban Zenith Bank Plc Access Bank Plc Guaranty Trust Glaxosmithkline
Source: Company filings

2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011

Final Final Regular Final Final Final Final Final Final Final Final Final Final Final Final Final Final Final Final Final Final Final Regular Final Final Final

0.60 6.00 9.60 0.14 1.00 1.10 0.40 2.25 2.00 1.10 0.55 0.50 0.02 2.40 0.08 0.15 2.00 0.05 0.35 0.20 0.36 0.39 0.85 0.30 0.60 1.20

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KENYA
Macroeconomic data
Kenya Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -6.7 46.2 41.2 30.0 1.6 801.4 2009 -5.6 49.4 44.3 29.4 2.6 761.5 2010 -7.9 50.5 45.5 32.2 5.0 809.3 2011E -9.3 52.3 47.2 35.8 5.7 874.8 2012F -7.9 50.9 45.9 40.6 6.5 964.8 2013F -7.9 49.6 44.5 45.5 6.8 1,049.7

Political and economic news


GDP expands 5.6% for 2010
Kenyas real GDP expanded by 5.6% in 2010 (2009: 2.6%). All sectors recorded positive growth. Financial intermediation led this growth at +8.8% followed by wholesale and retail trade (+7.8%) and transport and communication (+6.9%). Among the factors that influenced growth in 2010 were improved weather conditions, low inflationary pressure, low interest rates and increased credit to the private sector. The average annual inflation was 4.1% in 2010 down from a high of 10.5% recorded in 2009. The Central Bank Rate was lowered twice in 2010, with a view of lowering the cost of credit. The overall balance of payments deteriorated from a surplus of KES 75.2bn in 2009 to a surplus of KES 12.2bn in 2010. This deterioration was on account of decreased net capital inflows coupled with deterioration in the current account balance. For 2011, the domestic economy is likely to maintain a positive growth but at a decelerated rate of between 3.54.5%. Growth in 2011 is likely to be a challenge on the back of high international oil prices - which could remain high for the rest of the year (due to instability in the Middle East and North Africa), fluctuations in the exchange rate and inadequate rainfall. (Source: Kenya National Bureau of Statistics)

Company news
SCB posts 13.8% y/y rise in 1Q11 PAT
Standard Chartered Bank Kenya posted a 13.8% y/y (+52.8% q/q) rise in 1Q11 PAT, owing to increased loans and advances. The bank's PAT climbed to KES 1.64bn (USD 19.8m) from KES 1.4bn in 1Q10. EPS was also up 7.8% y/y (+46.0% q/q) to KES 5.71. Net interest income was up 7.9% y/y (-2.2% q/q) to KES 2.21bn. Loan book was up 41.5% y/y (+13.6% q/q) to KES 68.5bn, while net non-performing loans dropped 60% y/y to KES 86m. NIM was however below sector average as corporate loans dominate the bank's loan book. NIM was at 7.5% (-50bp q/q). The bank's total assets rose 17% to KES 145.2bn. There was strong q/q recovery for 1Q11. This was driven mainly by growth in NIR (+42.3% y/y; +52.1% q/q) and a dip in operating costs and provisioning. Operating costs were down to KES 1.3bn (+37.3% y/y, -7.6% q/q). The share currently trades at a PE of 11.16x, against the sector PE of 9.8x. SCB remains focused on servicing its corporate clients and middle to high income retail market. Its lean model (service provision mainly driven by IT platform) is expected to continue delivering below sector CTI. CTI declined by 1,100bp q/q, but rose 40bp y/y to 40.6%. To enhance its retail offering, SCB issued its first credit cards in the Kenyan market in February 2011. (Sources: African Alliance Research; Reuters)

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Standard Chartered Bank Kenya


3M TO MARCH (KES M ) 1Q10 1Q11 % CHG

Net interest income Operating expenses Profit before bad debt Bad debt charge Profit/(loss) after tax
Source: Company report

2,046 -505 2,151 -77 1,441

2,207 -243 2,448 -135 1,639

-4.0 -51.9 13.8 76.4 13.8

BBK records 11.6% growth in earnings

Barclays Bank of Kenya (BBK) released its 1Q11 reporting EPS growth of 11.6%y/y ( 2%q/q) to KES 1.13. EPS growth was mainly driven by growth in fee income and continued cost containment. For the first quarter since 1Q09, BBK delivered positive growth in net loans and customer deposits (+4.1% and +4.3% q/q respectively). Management targets to grow its loan book through the mortgage and SME sectors. According to management, the recent removal of ATM transaction fees will have minimal impact on fee income. Management also guide that sustained cut in costs will have no direct impact on future earnings growth. While BBK has gradually been easing its exposure to the mass retail market, it has successfully built a strong franchise in the middle income segment mainly supported by its credit card business (BBK is the largest distributor of credit cards). (Source: African Alliance Research, Company filing) Barclays Bank of Kenya
3M TO MARCH (KES M ) 1Q10 1Q11 % CHG

Net interest income Operating expenses Profit before bad debt Bad debt charge Profit/(loss) after tax
Source: Company report

4,366 -3708 2,361 -359 1,372

3,862 -3,433 2,760 -354 1,532

-11.5 -7.4 16.9 -1.4 11.6

Safaricom FY11 results show increased revenues

Safaricom FY11 results (12m to Mar-11) reflected lower than expected earnings with revenue being in line, EPS of KES 0.33 down 12.9% y/y (29.5% h/h). Overall, total revenue grew at a faster rate than subscriber market share, which was positive. The weak performance was driven by higher than expected increase in operating expenses. DPS unchanged at KES 0.20. Total revenue climbed 12.9% to KES 94.8bn. Voice revenue declined 1.7% to KES 63.5bn outperforming our estimate of a 2.2% decline. Subscriber numbers rose to 17.2m, an 8.8% y/y increase against our estimate of 8.1%. Blended ARPU declined 4.8% to KES 437. Non-voice revenue contributed 33.0% of total revenue compared to our estimate of 35.5%. Costs came in higher, pushing EBITDA margin down to 37.7% from 43.6% in 2010. Operating expenses rose 25.3% to KES 45.8bn. However, selling, general and administrative expenses grew slower at KES 13.3bn. Depreciation came in a lot higher at 16.3bn. CAPEX rose +46.1% to KES 25.5bn with a CAPEX intensity rising to 26.9% up from 20.8%. Going forward, management will be looking to maintain voice revenue and grow non voice revenue. Costs will become an important area of focus but operating costs could still increase further as the company improves quality of service. Depreciation will increase in view of the higher CAPEX but this is inevitable due to the need to grow data revenue and enhance capacity with the higher minutes of use on voice. (Source: African Alliance Research)

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Safaricom Ltd
3M TO MARCH (KES M ) 1Q10 1Q11 % CHG

Revenue Operating expenses Operating Profit Profit/(loss) before tax Profit/(loss) after tax
Source: Company report

83,961 -36,554 22,611 20,967 15,148

94,832 -45,795 19,390 18,361 13,159

12.9 25.3 -14.2 -12.4 -13.1

Market activity
In Kenya, the NSE20 index continues to remain stagnant, and closed the week at 3,986.78, down only 0.14%. Highly traded counters for the week included Equity Bank (flat), KPLC ( 3.4%), and EABL (+2.0%). Safaricom was not highly traded as it usually is, despite releasing its FY11 results during the week, which showed a 12.9% increase in revenue. It however gained 1.3% to KES 3.90. Standard Chartered released its 1Q11 results reflecting a 13.8% y/y increase in EPS. The share moved up slightly to KES 251.00 (+0.8%). Barclays Bank also released its 1Q11 showing an 11.6% y/y increase in earnings. The counter however remained flat at KES 66.00. NIC Bank's 1Q11 results showed a commendable 54.1% y/y increase in EPS. The share remained flat however at KES 46.00. The gainers for the week included ARM, which closed at KES 179.00 (+8.5%), DTB also rose 6.8% to KES 158.00. The top decliners included Pan Africa Insurance Holdings which closed at KES 53.50 (-46.5%) after going ex-dividend and ex-bonus. The bonus was a 1 for 1 share issue. CFC Insurance closed at KES 16.65 (-8.0%). EAPC was also among the week's top decliners, closing at KES 85.00 (-7.6%). Nairobi Stock Exchange
TOP GAINER(S) Athi River Mining Diamond Trust CFC Stanbic TOP TRADER Equity Bank MARKET PERFORMANCE NSE 20 (KES) % CHG 8.5 6.8 6.2 KES (M) 402.1 LEVEL 3,987 PRICE 179.00 158.00 60.00 USD (M) 4.67 KES (%) -0.14 TOP LOSER(S) Pan Africa Insurance EA Portland Cement EA Cables TOTAL TRADED NSE 20 % CHG -46.5 -7.6 -7.6 KES (M) 2,078.5 USD (%) KES/USD -0.12 86.15 PRICE 53.50 85.00 13.40 USD (M) 24.1 % CHG 0.02

Source: African Alliance database

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Dividends (KES)
COMPANY YEAR TYPE AMOUNT

Housing Finance Diamond Trust Bank Scangroup Ltd CFC Stanbic Holdings Ltd Athi River Mining Nation Media Group Kakuzi Ltd Total Kenya Ltd Jubilee Holdings Ltd Kenya Re Ltd TPS Eastern Africa Ltd Safcom
Source: Company filings

2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011

Final Final Final Final Final Final Final Final Final Final Final Final

0.7 1.6 0.7 0.8 1.75 4 2.5 1.05 4.5 0.35 1.25 0.2

30-May-11 23-May-11 24-May-11 25-May-11 26-May-11 2-Jun-11 2-Jun-11 9-Jun-11 10-Jun-11 15-Jul-11 20-Jun-11 08-Sep-11

LAST CUM DATE

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EGYPT
Macroeconomic data
Egypt Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 0.5 74.7 60.0 162.4 7.2 2,160.0 2009 -2.3 75.6 61.4 188.6 4.7 2,455.8 2010 -2.0 73.8 60.6 218.5 5.1 2,788.8 2011E -2.7 74.9 63.1 231.1 1.0 2,892.4 2012F -2.3 73.7 63.5 251.9 4.0 3,090.4 2013F -2.0 70.9 62.0 273.3 5.0 3,287.9

Political and economic news


Obama to offer debt relief to Egypt
President Barack Obama is set to unveil an economic aid program for Egypt and Tunisia as part of a broad effort to support democratic reform in the Middle East and North Africa, U.S. officials reported. Senior advisers to Obama, previewing parts of his speech, announced the United States would offer debt relief totaling roughly USD 1bn over a few years to Egypt through a debt swap mechanism that would invest the money to boost youth employment and support entrepreneurs. Washington would also loan or guarantee loans totaling up to USD 1bn for Egypt to finance infrastructure development and boost jobs through the Overseas Private Investment Corp (OPIC), the officials told reporters. The administration would also seek to foster trade in the region and encourage private sector investment, they added. "We think these initiatives will help Egypt and Tunisia as they undertake the twin challenges of economic transformation and democratization," one official said. (Source: Reuters Africa) Egypt's anti-graft agency opened a new corruption investigation into ousted President Hosni Mubarak's former chief of staff, the day after a court ordered his release on bail, state media reported. Assem el-Gohari, the head of the Illicit Gains Authority, ordered that Zakaria Azmi return to detention after questioning him for about four hours, the state news agency MENA said. Investigators were questioning Azmi following reports by watchdog groups about additional and previously undisclosed wealth believed to have been accumulated unlawfully. Azmi, one of Mubarak's closest aides, was ordered released on bail of EGP 200,000 (USD 33,640) earlier in the week after nearly six weeks in detention. The decision came after Azmi's lawyer filed an appeal for his client's release. The anti-graft agency said it had informed the prosecutor it would appeal the ruling at the criminal court. (Source: Reuters Africa, MENA) Egypt's ruling military council dismissed speculation it would pardon former President Hosni Mubarak, who is under investigation for graft and abuse of power, and said it does not interfere in judicial affairs. Mubarak, 83, is detained in a hospital in the Red Sea resort of Sharm el-Sheikh after officials said he had heart problems. His wife, Suzanne, who also fell ill when ordered detained, was freed after giving up assets but faces a graft probe. The timing of the illnesses of Mubarak and his wife meant neither joined other officials in jail and has fuelled talk they were getting special treatment by the army. "The Supreme Council of the Armed Forces affirms that there is absolutely no truth in what was published by the media about the council moving to pardon the former president Hosni Mubarak and his family," it stated in a communiqu on its Facebook page. The council "does not intervene in any way in legal matters and particularly in holding to account

Former Mubarak aide faces new corruption probe

Egypt's army has no plans to pardon Mubarak

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symbols of the previous regime", it noted, adding that legal steps were for the judiciary to handle and such "rumours" were aimed at dividing the nation. (Source: Reuters Africa)

Iraq, Egypt near USD 1bn deal on worker compensation

Egypt and Iraq are close to a deal on compensation estimated at USD 1bn for Egyptian workers who were not paid remittances during Iraq's 1990-1991 invasion of Kuwait, officials from both sides stated. Iraq had been in financial crisis then as it could not sell oil, its only export, according to Iraqi Labour Minister Nassar Rubaie. The two countries have been trying to resolve the issue involving about 900,000 Egyptians since Saddam Hussein was toppled in 2003. The row focuses on about USD 544m in interest on an original USD 408m owed to Egyptian workers. "We are close to reaching a solution to the issue of Egyptian compensation in Iraq," said Egyptian Manpower Minister Ahmed Hassan el-Borai after Rubaie held talks in Cairo. "We have set up a technical committee which will visit Iraq soon to sign an agreement in this regard," he added. Egypt says Iraqi banks withheld hundreds of millions of dollars in remittances earned before and just after Baghdad's invasion. It says banks stopped transferring the wages on 2 August 1990, the day of the invasion. Rubaie said Iraq wanted to speed up the workers' payments and that Prime Minister Nuri al-Maliki had invited his Egyptian counterpart, Essam Sharaf, to visit Iraq to discuss the matter. "The problem relates to the interest, which requires dialogue and talks on the technical issues between the two countries. A visit will resolve many of the problems related to the interests of the Egyptian workforce in Iraq," Rubaie added. (Source: Reuters Africa) Egypt's central bank accepted EGP 8.21bn (USD 1.38bn) in seven-day repurchase agreements in the money market CBES, less than the EGP 10bn it had asked for. The central bank introduced weekly repo offerings on 5 April 2011 to keep short-term interest rates under control after the political and economic unrest earlier in the year. (Source: Reuters Africa) Egypt's general prosecutor referred former housing minister Ibrahim Soliman and four of his deputies to trial for squandering public funds, the state news agency reported. Soliman, the second housing minister to face trial, was minister from 1993 to 2005 and has come under fire for his role in several controversial deals with real estate firms. Former SODIC chairman Magdi Rasekh stepped down from SODIC's board last week, adding to a list of resignations at property firms scrambling to distance themselves from the country's deposed president. SODIC, says all its land deals have been fair and legal. No charges have been brought against the firm. MENA reported that according to the charges, Soliman gave unwarranted privileges to business executives, in violation of contracts and financial commitments, and enabled Rasekh to make EGP 907.7m (USD 153m) profit in a single land purchase. Soliman is further accused of relieving Rasekh from paying EGP 13.8m in fees that would be due to the government. Rasekh was also given the right to sell a plot of land, in violation of regulations, the agency added. (Source: Reuters Africa)

Egypt cbank accepts repos worth EGP 8.2 bn

Egypt refers former housing minister for trial

Company news
Ezz Steel's embattled chairman quits board
Ahmed Ezz quit the board of Ezz Steel and its Ezz Dekheila Steel unit as he fights graft charges from prison, and has been replaced by managing director Paul Chekaiban, the company announced. Ezz, a top official in ousted Egyptian president Hosni Mubarak's party, is charged with illegally taking control of subsidiary Ezz Dekheila Steel which then supplied parent company Ezz with steel at reduced prices. Ezz has also resigned from the board of Ezz Dekheila Steel. A judicial source stated Ezz was also charged with monopolising Egypt's steel market. Ezz stated in a letter sent to media from jail that the charges against him were unfounded and a fair trial will prove his innocence. The

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company's shares have tumbled 56% this year as a crisis in the property industry saps demand for its products and investors speculate that the charges against Ezz may damage the company's business or force him to sell his holdings.

Orascom Telecom announces new CEO

Orascom Telecom Holding (OTH) announced the appointment of Mr. Ahmed Abou Doma to the position of Chief Executive Officer reporting to Mr. Khaled Bichara, who is nominated to the position of Executive Chairman to ensure the smooth transition of the company within the newly formed VimpelCom merged entity, while overlooking the companys continued implementation of its strategy. In his new capacity as President and Chief Operating Officer of VimpelCom Ltd., the company created through the combination of VimpelCom Ltd. and WIND TELECOM SPA., Mr. Khaled Bichara, will also be focused on executing VimpelCom synergy roadmap and achieving the targets for technology procurement and commercial development, a key benefit resulting from the merger to OTH and its minority shareholders. Naguib Sawiris, Executive Chairman of OTH commented: I am pleased to welcome Ahmed Abou Doma in this new position. Ahmed has been with the group for thirteen years and has spearheaded the transformation of our operation in Bangladesh to where it is today, and he will be a great value for OTH while embarking on a new era of growth and development under the VimpelCom umbrella. (Source: Company Press Release) In related news, Orascom Telecom reported first quarter results for 2011. Highlights included subscribers surpassing 104m, an increase of 16% over the same period last year, the sale of the shareholding in Orascom Tunisia Holding and Carthage Consortium through which OTH owned 50% of Orascom Telecom Tunisia, and Earnings per GDR reaching USD 0.78/GDR. Commenting on the results Khaled Bichara, Executive Chairman said the eventful year of 2010 had been exceeded by a solid first quarter for 2011, meeting expectations for performance despite the difficulties we encountered in some of our operating countries. He added that political circumstances in Egypt had a noticeable impact on the performance for Egyptian subsidiary Mobinil, where the forced shut-down of voice and data services for several days led to declining ARPU and usage. In addition, OTH, which is based in Cairo witnessed business interruptions during the period of unrest, and continues to remain resilient and optimistic in light of the resulting country-wide economic and political pressures. Tension in Algeria continues to hinder the growth for Djezzy; restrictions on foreign currency transfers, import bans and advertising bans on government-owned television have been countered to the extent possible by effective cost management in the Algerian business unit. Nevertheless, subscribers still witnessed an increase capturing over 58% of the market in Algeria. Revenues showed a 6% growth compared to the first quarter of 2010, while EBITDA grew by 14%. Bichara noted some of the positives as well, emphasising that other operations displayed impressive growth for the quarter. North Korean business Koryolinks strong growth in customer base translated into solid revenue growth. In keeping with the high subscriber growth trend, OTHs Bangladeshi operation increased its customers by 42% compared to the previous year, and achieved revenue growth of 27% YoY. Mobilink remains as the market leader in Pakistan, growing its base by 4% compared to 1Q10. In Canada, WIND Mobile subscribers have exceeded a quarter of a million by the end of the first quarter of 2011, proving a testament to the uptake of the operations innovative plans and offers by the Canadian customers.

Orascom Telecom 1Q11 results

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The company focuses its efforts on developing its operations to the fullest in order to fulfil its promise to maximize shareholder value. With EPS now reaching USD 0.78/GDR, a remarkable increase compared to 1Q10, OTH still upholds its aim to develop further growth through the opportunities offered by the combination of its parent company, WIND TELECOM, and VimpelCom Ltd. (Source: Company Press Release) Orascom Telecom Holdings
3M TO MARCH (USD 000) 1Q10 1Q11 % CHG

Revenue EBITDA Operating Income Profit/(loss) before tax Profit from continuing operations* Profit/(loss) after tax

901,574 392,875 203,551 59,777 15,022 58,158

949,249 436,600 239,522 128,906 67,342 821,761

5.3 11.1 17.7 115.6 348.3 1,313.0

Source: Company report, *Gains from consolidation of Mobinil (1Q10) and Orascom Tunisiana (1Q11)

Ezz Dekheila Steel unaudited 2010 net profit

Egypt's Ezz Dekheila Steel, a unit of Ezz Steel, announced its unaudited 2010 net profit was unchanged from a year earlier at EGP 724m (USD 122m). The firm reported in a brief statement to the stock exchange that its revenues rose 21% in the year to EGP 9.86bn. Talaat Moustafa Group released first quarter results for 2011. TMG posted a first quarter net profit of EGP 169.4m (USD 28.5m), a 48% slide from a year earlier. The firm made net profit of EGP 324.1m in the same period a year earlier, a statement posted on the stock exchange's website noted. Talaat Moustafa Group
3M TO MARCH (EGP 000) 1Q10 1,606,637 485,299 407,850 421,855 345,185 324,104 1Q11 1,377,279 247,804 222,727 170,976 151,474 169,437 % CHG -14.3 -48.9 -45.4 -59.5 -38.2 -47.7

Talaat Moustafa Group first quarter results

Revenue EBITDA Operating Income Profit/(loss) before tax Profit/(loss) after tax Profit/(loss) after tax and minorities
Source: Company report

Market activity
The Egyptian market was strong throughout the week, with an exception of Wednesday, and the EGX index gained 4.9% for the week, with positive support coming from all sectors, but specifically from building materials (+4.4%), property (+17.0%) and telecom (+3.9%) sectors. Ezz Steel surged 18.3%, Orascom Construction was up by 3.2%, TMG spiked 25.8% while Orascom Telecom gained 7.7% for the week. The banking sector was mixed, with NSGB down by 1.3% while CIB managed to gain 2.3%.

EGYPT
23 | African Alliance Pan-African Securities Research 20 May 2011

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Egyptian Stock Exchange


TOP GAINER(S) TMG Holding Palm Hills Development El Ezz Steel TOP TRADER CIB Egypt MARKET PERFORMANCE EGX 30 (EGP) % CHG 25.8 23.6 18.3 EGP (M) 361.2 LEVEL 5,249 PRICE 4.24 1.94 10.29 USD (M) 60.8 EGP (%) 4.9 TOP LOSER(S) Elswedy Cables Sinai Cement HandD Bank TOTAL TRADED EGX 30 % CHG -3.3 -0.8 -0.5 EGP (M) 2,318.0 USD (%) EGP/USD 4.6 5.95 PRICE 38.67 44.93 18.44 USD (M) 390.0 % CHG -0.30

Source: African Alliance database

Dividends (EGP)
COMPANY Oriental Weavers El Nasr Co For T Minapharm Pharaoh Tech For Gharbia Islamic Engineer Indust Source: Company filings YEAR 2011 2011 2011 2011 2011 2011 TYPE Cash Cash Cash Cash Cash Cash AMOUNT 2.00 0.09 0.58 0.28 0.70 0.40 LAST CUM 26-May-11 14-Jun-11 26-May-11 29-May-11 30-May-11 26-May-11

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MOROCCO
Macroeconomic data
Morocco Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -5.2 48.2 47.5 88.9 5.6 2,850.8 2009 -4.9 47.7 47.0 91.4 4.9 2,899.5 2010 -4.2 49.9 49.2 103.5 3.2 3,249.0 2011E -5.7 52.8 52.1 100.3 3.9 3,116.9 2012F -4.1 53.8 53.1 107.5 4.6 3,306.5 2013F -3.1 54.0 53.3 115.4 4.9 3,512.8

Political and economic news


Residential property prices rise by 5% y/y in 1Q11
Residential property prices increased 1.2% q/q in 1Q11 and by 5% y/y. However, the volume of transactions continued to decline given the difficult environment. (Source: Integra Bourse) Moroccan sugar beet farmers are threatening to boycott the delivery of next years crop to Consumar in a move intended to press the sole sugar refiner for better terms. If the boycott goes through the company, which has an annual refined sugar output of 1.2mt, could be forced to increase its raw sugar imports, which are mainly from Brazil. The grievances raised by three sugar beet farmers are focused on the amount Consumar pays for beet and the mechanisms by which the payment is calculated. Farmers are demanding a price increase, a minimum payment regardless of the sucrose content in their beet, more transparency about the cost of inputs supplied by Consumar, and an end to the refiners monopoly. The farmers involved in the protest are unanimous about the boycott if the refiner fails to meet their demands. Driss Ghezlaoui, a farmer from the Doukkala region and one of those leading the protests indicated that some 12,000 farmers from Doukkala and Abda regions of Morocco are participating in the protest, and that between them they produced 1mt of beet this year. Consumar, which is controlled by the National Investment Co. (SNI) an investment holding company in which Moroccos ruling family is the biggest shareholder, did not make reference any reference to any boycott in its statement. The company however acknowledged that there had been a disagreement over remuneration with farmers in the Boukkala region, which it highlighted accounted for 39% of Moroccos beet harvest in 2010. The company further indicated that this was the only region where there was problem, and that the issue had now been resolved. (Source: Reuters)

Farmers boycott delivery of beet to sugar refiner

Moroccan banks in Cote dIvoire resume operations

Moroccan banks operating in Cote dIoire have resumed their operations after a forced closure following the political turmoil that marked the country. A subsidiary of Bank of Africa, which is owned by BMCE is one of the banks that resumed operations. The bank has a healthy portfolio in relation to claims on the state, which were especially guaranteed by the Central Bank of the States of West Africa. (Source: Integra Bourse) The association of Moroccan vehicle importers, AIVAM, has published April figures pointing to an economic rally. According the association, vehicle sales shot up 20% y/y at 9.748 units. A total of 36,376 units were sold in 1Q11. Car sales rose by 24% y/y at 8,757 during April, but utility vehicle sales slid 4.6% to 991 units. (Source: Integra Bourse)

Vehicle sales swell 20% y/y in April

MOROCCO
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Company news
NYSE listed Lear Corp. opens electronics plant in Morocco
NYSE listed Lear Corporation has announced that it will officially open a new electronics facility in Rabat, Morocco. The company is a leader in developing complete electrical power management systems that support a full range of vehicle features. The company indicated that the new facility supplies world-class electronics such as battery charges and gateway modules to European carmakers including BMW, Renault and Volkswagen. The 14,340sqm plant employs 130 employees and is expected to employ over 230 employees by 2011. Its location is expected to enable easy shipment to the European market, which reduces travel time and costs, increases flexibility and allows for quicker response to customer preferences. (Source: News Bites) Credit du Maroc has lauched a private bank, which was inaugurated during the week. The bank will have 20 wealth advisers and three asset managers dedicated to working with clients to manage their portfolios. A minimum portfolio of MAD 1m (USD 125k) is required to open an account. (Source: Integra Bourse) Indian conglomerate, Gujarat Fluorochemicals, plans to invest USD 8m in a mining project in the northern region of Taourirt. According to the companys Director General, Dinesh Sardana, the company plans to build an integrated unit for extraction and transforming fluorosis acid, a key ingredient for making steel as well as optical flint, especially extra low dispersion lenses used for cameras and telescopes. The project caters for the production of 40,000t of this substance and the creation of over 150 direct jobs. The works of the project will start next September, and it falls within the framework of a recently signed memorandum of understanding. Ongoing feasibility studies amount to USD 200k. (Source: MAP)

Credit du Maroc launches a private bank

Indian firm invest USD 8m in a mining project

Market activity
Morocco was flat for the week, with gains in the agricultural (+2.3%) and construction (+1%) sectors negated by losses in banks (-1%) and breweries (-9.3%). Both Consumar and Centrale Laitiere were up around 2.5%, and CGI was the star performed in the construction sector. Most banks ended the week lower, with Attijariwafa (-1.5%) and BMCE (02.4%) leading the pack. Brasseries du Maroc (-13.1%) fell heavily in very thin trading. Marco Telecom dominated trading (38% of weekly turnover), but it gained only marginally, up by 16bp. Casablanca Stock Exchange
TOP GAINER(S) CIH CGI Afriquia Gaz TOP TRADER Maroc Telecom MARKET PERFORMANCE MORALSI (MAD) % CHG 8.6 6.8 5.6 MAD (M) 166.4 LEVEL 12,009 PRICE 288.00 1,420 1,670 USD (M) 21.0 MAD (%) 0.01 TOP LOSER(S) Brasseries Dumaroc Maroc Leasing Holcim (Maroc) TOTAL TRADED MORALSI % CHG -13.1 -10.3 -4.6 MAD (M) 432.7 USD (%) MAD/USD 0.43 7.92 PRICE 1,950 384.05 2,360 USD (M) 54.5 % CHG 0.42

Source: African Alliance database

MOROCCO
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Dividends (MAD)
COMPANY YEAR TYPE AMOUNT

Banque Marocaine Aluminium Du Mar Unimer Maghrebail Alliances Develo Eqdom Holcim Lydec Credit Immob Hot Zellidja Sa Compagnie Genera Snep Colorado Timar Stokvis N Afriq Realis Mecanique Disway Banque Marocaine Scepc Douja Prom Addoh Berliet Maroc Compagnie Minier Oulmes Etat Lesieur Cristal Auto Hall Delattre Levivie Salafin Promopharm Soc Metallurgic Credit Du Maroc Microdata Maghreb Oxygene Delta Holding Sa Agma-Lah Tazi Soc Des Brasser Ctm Acred Branoma Fenie Brossette Atlanta Managem Cnia Saada Assur Wafa Assurance Banque Centrale Centrale Laitier Ciments Du Maroc Cosumar Ib Maroc.Com Auto Nejma Sothema
Source: Company filings

2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010

Regular Regular Regular Regular Regular Special Cash Regular Regular Regular Special Cash Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Special Cash Regular Regular Special Cash Special Cash Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular Regular

25.00 120.00 3.00 50.00 8.00 50.00 131.00 22.50 6.00 20.00 18.00 13.00 4.50 3.00 2.00 15.00 21.00 3.00 15.00 2.00 8.00 100.00 60.00 5.50 3.50 18.00 13.00 45.00 100.00 30.00 57.00 18.00 3.00 200.00 100.00 22.50 23.00 80.00 15.00 3.00 12.00 22.00 70.00 8.00 59.00 30.00 86.00 18.00 55.00 23.33

23-May-11 N.A. N.A. 23-Jun-11 N.A. N.A. N.A. N.A. 23-May-11 15-Jun-11 N.A. 20-Jun-11 14-Jul-11 N.A. 16-Jun-11 N.A. 28-Jun-11 30-Jun-11 N.A. N.A. 11-Jul-11 20-May-11 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 20-Apr-11 N.A. N.A. N.A. N.A. N.A. N.A. 21-Jun-11 N.A. N.A. N.A. 02-Jun-11 N.A. N.A. 06-Jun-11 N.A. N.A. N.A. N.A.

LAST CUM DATE

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TUNISIA
Macroeconomic data
Tunisia Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -3.8 43.3 44.9 4.5 4,345.9 2009 -2.8 42.9 43.5 3.1 4,170.9 2010 -4.8 40.4 44.3 3.7 4,200.5 2011E -7.8 42.8 46.6 1.3 4,375.9 2012F -5.8 42.8 49.0 5.6 4,555.0 2013F -4.0 41.6 52.5 5.6 4,827.9

Political and economic news


AfDB forecasts 1.1% growth of GDP in 2011
The African Development Bank (AfDB) has predicted a GDP growth rate of 1.1% for Tunisia in 2011, as the country seeks to recover after the 14 January revolution. At a meeting recently held in the Tunisian capital, Tunis, by the AfDB on the theme: "Tunisia's postrevolution: What is the economic outlook?" AfDB's Vice President and Chief Economist Mthuli Ncube remarked that Tunisia had potentials in small and medium enterprises (SMEs) that will enable the country to acquire a strong background in the field of technology. (Source: African Manager) US President Barack Obama will use his speech to the Arab world to call for billions of dollars in financial assistance to Egypt and Tunisia as part of a comprehensive approach to the Arab Spring movement that he hopes will boost democratic reforms and America's reputation in the region. The aid package, which would unfold over two to three years, would include an estimated USD 1bn in debt cancellation, USD 1bn in loan guarantees and several billion more in financing from multilateral institutions such as the World Bank, according to three senior administration officials who briefed reporters on the condition of anonymity under ground rules set by the White House. (Source: The Sacramento Bee) Foreign Direct Investment (FDI) declined by 24.5% at the end of the first four months of 2011, falling to TND 448.8m compared with TND 594m in the same period of 2010, according to statistics of the Foreign Investment Promotion Agency (FIPA). Investments are shared out as follows: TND 426.8m of foreign direct investment (FDI) and TND 21.6m in portfolio, compared with TND 569.3m and TND 24.7m, respectively in 2010. (Source: babnet)

Obama to seek aid

FDI fell by 24.5% in first four months of 2011

Corporate action
Result of TELNET IPO
TELNETs IPO result shows that the Offer was subscribed 3.3 times and asked by approximately 3,950 applicants. (Source: Tustex)

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Market activity
Tunisia ended on a positive note, up by 1%, as Poulina gained 4.5% and Carthage Cement surged by 9.4% for the week, the latter in very active trading 42% of the weekly turnover. Banks were up by 0.5% with good contributions from BT (+1.1%) and Tunisie Leasing (+11.5%). Tunis Stock Exchange
TOP GAINER(S) Tunisie Leasing Tunisie Lait Carthage Cement TOP TRADER Carthage Cement MARKET PERFORMANCE TUNIS Index (TND) % CHG 11.5 10.4 9.4 TND (M) 7.40 LEVEL 4,143 PRICE 27.20 4.45 2.90 USD (M) 5.35 TND (%) 0.9 TOP LOSER(S) Attijari Leasing SPDIT Tunis Re TOTAL TRADED TUNIS Index % CHG -7.0 -3.4 -3.0 TND (M) 20.0 USD (%) TND/USD 1.1 1.38 PRICE 39.00 5.99 9.89 USD (M) 14.4 % CHG 0.14

Source: African Alliance database

Dividends (TND)
COMPANY YEAR TYPE AMOUNT

Soc Tunsienne D' Adwya Soc Accum Tunis Cie Intl De Leas Soc Industrielle Cie D'assur-Astr Gif Filter
Source: Company filings

2011 2011 2011 2011 2011 2011 2011

Regular Regular Regular Regular Regular Regular Regular

1.80 0.20 0.37 0.75 0.07 1.60 0.15

N.A. 08-Jun-11 N.A. N.A. N.A. 01-Jun-11 N.A.

LAST CUM DATE

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MAURITIUS
Macroeconomic data
Mauritius Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -10.1 44.0 44.0 9.6 5.5 7,598.3 2009 -7.4 47.8 47.8 8.9 3.0 6,951.3 2010 -9.5 50.5 50.5 9.7 4.0 7,593.3 2011E -11.6 51.4 51.4 10.3 4.1 7,989.7 2012F -9.6 52.1 52.1 11.0 4.2 8,471.4 2013F -7.1 50.4 50.4 11.7 4.3 8,979.2

Political and economic news


New Freeport Piacenza revived
The proposed construction of a New Cargo and New Freeport Zone SSR International Airport slow to take off. Airports of Mauritius Co Ltd (AML) in conjunction with the Board of Investment (BOI) had yet initiated the first steps for this important project to take off quickly. However, the tendering exercise to identify a Master Developer has not delivered the expected results. The objective was to find a company willing to invest and finance the entire project. The folder is now the office of Prime Minister. The idea is to find a solution to this situation as soon as possible. For the latest indications, major developments are expected by next week. (Source: LeMatinal) Tourist arrivals in Mauritius increased in the first quarter, data released by the Central Statistics Office showed. The number of tourists visiting the country grew 5.1% y/y to 262,626 in the first quarter. There was a 29.2% surge in arrivals from the Asian market, while the number of tourists from Africa and Europe increased 7.5% and 2.3%, respectively. (Source: RTT News)

Tourist arrivals rise in 1Q11

Company news
Sun Resorts 1Q11 profits down 8.9%
Mauritius-based luxury hotel group Sun Resorts posted an 8.9% fall in pretax profit for the three months to 31 March due to a decline in the number of tourists from Europe. (Source: Reuters) Mauritius Commercial Bank (MCB), the countrys largest lender by market value, reported a 47% increase in profit for the third quarter through March as loan books grew. Net income advanced to MUR 1.43bn (USD 51m) from MUR 971.3m a year earlier. This includes a MUR 250m-out-of-court settlement with Mauritius Union Assurance Co. (MUA) and MUR 160m of profit from the exit of an equity investment. Net interest income increased to MUR 1.47bn from MUR 1.25bn. Based on current trends, MCBs performance is on course to return to pre-crisis levels, the company noted. Net results are expected to exceed the MUR 4bn mark for the full year to June after taking into account non-recurrent items of revenue. Mauritiuss central bank started capping commercial banks holdings of Treasury bills last month to encourage lenders to increase loans to the public and create a secondary market. The limit started at 20% of a banks MUR deposits, Governor Rundheersing Bheenick explained on 29 March. MCBs profit growth was driven by a 15% increase in loans in the year through March to MUR 115.3bn with the ratio of deposits to loans rising to around 90%. (Source: Bloomberg)

MCB profit rises 47% in 3Q11

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Mauritius Commercial Bank


9M TO MARCH (MUR 000) 3Q10 3Q11 % CHG

Net interest income Operating profit Profit/(loss) before tax Profit/(loss) after tax EPS
Source: Company report

6,971,831 2,924,978 3,205,702 2,721,827 11.38

7,367,802 3,880,718 4,075,745 3,443,649 14.39

5.7 32.7 27.1 26.5 26.4

Market activity
In Mauritius despite the strong performance from MCB which gained 0.5% and was the Mauritius, top trader at 37% of the total turnover, the market was dragged lower by SBM (-0.5%) as well as the hotels sector (-2.5%, Naiade down 3.6%, NMH 2.8% lower and Sun Resorts giving up 1.5%). The ALSI was down 0.4% as a result. Stock Exchange of Mauritius
TOP GAINER(S) Air Mauritius MDIT INNODIS TOP TRADER MCB MARKET PERFORMANCE SEMDEX (MUR) % CHG 5.3 3.7 3.1 MUR (M) 134.9 LEVEL 2,095 PRICE 19.80 5.60 40.00 USD (M) 4.80 MUR (%) -0.43 TOP LOSER(S) United Basalt Products Naiade Resorts Mauritius Oil Refineries TOTAL TRADED SEMDEX % CHG -6.2 -3.6 -3.5 MUR (M) 373.4 USD (%) MUR/USD -0.81 28.20 PRICE 136.00 32.00 27.50 USD (M) 13.3 % CHG -0.38

Source: African Alliance database

Dividends (MUR)
COMPANY YEAR TYPE AMOUNT

Les Moulins De Phoenix Beverage Robert Le Maire Livestock Feed Mauritius Union United Basalt Pr Ireland Blyth P.O.L.I.C.Y. Ltd Mauritius Oil Re Union Flacq Fides Plastic Industry
Source: Company filings

2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011

Final Final Final Final Interim Final Final Interim Final Interim Regular Final

5.33 6.70 5.80 0.45 1.50 2.75 1.50 0.15 0.45 0.12 3.25 2.50

20-May-11 25-May-11 26-May-11 26-May-11 26-May-11 27-May-11 27-May-11 30-May-11 31-May-11 31-May-11 31-May-11 08-Jun-11

LAST CUM DATE

MAURITIUS
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ZIMBABWE
Macroeconomic data
Zimbabwe Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -23.2 90.8 4.4 -17.7 351.1 2009 -24.4 96.1 5.8 6.0 464.1 2010 -18.3 56.3 7.5 9.0 594.3 2011E -17.5 70.5 9.1 7.3 724.6 2012F -17.5 66.9 9.9 5.7 790.1 2013F -16.2 64.9 10.6 5.2 845.0

Political and economic news


Govt to end railways monopoly
Government plans to open the countrys railways sector to private investors in order to bring in new capital as well as help modernise dilapidated infrastructure and improve service delivery. Vice President Joyce Mujuru told a recent infrastructure development forum in the resort town of Victoria Falls that the National Railways of Zimbabwes (NRZ) virtual monopoly over the sector was under review. "The Government is currently reviewing the regulatory framework governing rail transport with a view to establish a regulatory authority for the sub-sector, Mujuru revealed. "The rail transport system will be opened for strategic partnerships in rail construction, while rail services will be opened to the private sector." (Source: New Zimbabwe)

Company news
FBC Bank Sheds Steelnet Stake
FBC Bank has sold its 28% stake in Steelnet Zimbabwe Limited to a local consortium linked to businessman Mr Moses Chingwena. FBC had gained a controlling stake in Steelnet after SMM Holdings failed to settle a USD 8m debt arranged by the local financial institution from Africa Export and Import Bank. SMM was the controlling shareholder in Steelnet and had pledged shares of the diversified steel products manufacturer as security. SMM also lost 59% shareholding in listed firms, Turnall and 19% in General Beltings as their shares had also been pledged as security. Mr Chingwena could neither confirm nor deny the transaction. The deal involved a parcel of 155m Steelnet shares. This has come at a time when Steelnet is at an advanced stage of selling its Tube & Pipe Industries subsidiary. Africa Steel, an Indian consortium, has already agreed to pay for the business although the deal has yet to be approved by the shareholders. (Source: The Herald) Embattled flag carrier Air Zimbabwe has cancelled all of its regional flights after a creditor took back a leased plane over a USD 460,000 unpaid debt. The move leaves the airline flying only one route between Harare and London, in addition to its two domestic routes, chief executive Innocent Mavhunga told AFP. Boeing has given Air Zimbabwe the green light to continue flying its B737-200 planes. Although the aircraft manufacturer certified the B737-200s fit to continue flying, engineers say the planes are now expensive to operate. (Sources: fin24, The Herald)

Air Zimbabwe cancels regional flights

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Trading in two companies suspended; securities violations cited

Treasury and central bank officials were concerned about the possibility that executives and insiders of Rainbow Tourism Group and Afre had engaged in transactions in violation the Securities Act The Zimbabwean Treasury and the Reserve Bank of Zimbabwe have ordered the Zimbabwe Stock Exchange to suspend trading in Rainbow Tourism Group and Afre Corporation shares following allegations of insider trading. Treasury and central bank officials were concerned about the possibility that the firms had engaged in transactions in violation the Securities Act. Rainbow Tourism and Afre Corporation are expected to remain suspended from trading until the investigation has been completed. (Source: Voanews) The Reserve Bank of Zimbabwe will soon audit all banks statutory capital requirements after a three week investigation in Renaissance Merchant Banks operations exposed a USD 16.5m hole, Finance minister Tendai Biti announced. Following a probe into Renaissance Banks corporate governance practices which unearthed an irregular shareholding structure, poor separation between shareholders and management, use of depositors funds and borrowed funds to capitalise the bank, the central bank would move in to ensure that financial services institutions comply with the 30 June deadline. (Source: ZImbabwe Indepentent) Several Zimbabwean banks are exposed to risks after RioZim Ltd failed to settle loans amounting to USD 50m, forcing the financial institutions to roll over the loans. Documents seen by Businessdigest show that a number of local banks were reeling from RioZims non-performing loans and have resorted to rollovers. Non-performing loans are loans that are in default or close to being in default. Trust Banking Corporation advanced USD 3.4m to RioZim. Trust Banks loan book stood at USD 1,436m by 31 Dec 2010. While the banks loan book could have grown in the quarter to March and to date, there is indication of concentration of RioZims USD 3.4m advances and their exposure is 239% to the banks December loan book. Concentration risk is very high on RioZims balance. Most of the loans were due in April and early May while others are due later this month. RioZim CEO Josh Sachikonye is also the Trust Holdings Ltd (THL) chairman. THL owns Trust Banking Corporation. (Source: Zimbabwe Indepentent) The Zimbabwean subsidiaries of South African banks are facing censure unless they submit plans showing how they intend complying with local empowerment. Zimbabwean central bank governor Gideon Gono pledged in a weekend interview in Harare to take punitive action against foreign-owned banks resisting demands to transfer majority shareholdings to local blacks. Under the indigenisation law, foreign companies must transfer 51% of their shares. (Source: Business Day) Toronto-based Caledonia Mining, which produces gold from the Blanket mine in Zimbabwe, reported much-improved first-quarter financial results, thanks to higher gold prices and increased production level. The group earned CAN 1.18m, compared with a CAN 566m loss posted a year earlier. (Source: Mining Weekly) Lafarge Cement Zimbabwe has shut down its plant in Harare for the next month to carry out plant capacity revamping that will see its productivity increasing to 80%. In a trading update to stakeholders the company said the facelift will cost USD 3.3m. This is the second stage of the refurbishment process that begun in 2010. During the course of this shutdown, the plant will save 4MVA which will be available for Zesa to distribute to other electricity users, noted Lafarge Cement Zimbabwe. (Source: Business Reporter)

RBZ to audit banks

Indigenous banks exposed to risks

SA banks feel heat in Zim

Caledonia posts 1Q11 profit, expects to reach targeted output by 3Q11

Lafarge Cement in USD 3.3m facelift

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Market activity
The Zimbabwean market was pulled down 1.2% this week due to selling pressure in the large cap stocks: Delta gave up 2.4%, CBZ was down 10.6% and Econet fell by almost 5%. Only Barclays Bank Zimbabwe was a notable gainer, surging by 15.9%, but this happened on very low volumes. Zimbabwe Stock Exchange
TOP GAINER(S) Barclays Zimbabwe Padenga OK Zimbabwe TOP TRADER Delta Corp Zimbabwe MARKET PERFORMANCE ZSE Ind (USD) % CHG 15.9 9.0 7.5 USD (M) 2.65 LEVEL 160.61 PRICE 0.07 0.05 0.09 USD (M) 2.65 USD (%) -1.20 TOP LOSER(S) Fidelity Life NMBZ Holdings Pearl Properties TOTAL TRADED ZSE Ind % CHG -19.5 -16.0 -13.3 USD (M) 6.49 USD (%) USD/USD -1.20 1.00 PRICE 0.07 0.01 0.03 USD (M) 6.49 % CHG 0.00

Source: African Alliance database

Dividends (USD)
COMPANY YEAR TYPE AMOUNT

Econet Wireless
Source: Company filings

2011

Final

0.12

16-May-11

LAST CUM DATE

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BOTSWANA
Macroeconomic data
Botswana Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 7.5 6.4 13.5 3.1 7,551.0 2009 -5.5 13.4 11.7 -3.7 6,437.0 2010 -2.5 13.2 14.0 8.6 7,627.5 2011E -2.4 16.0 15.2 6.0 8,179.4 2012F 0.0 14.1 16.5 6.6 8,758.3 2013F 1.7 12.4 18.2 7.2 9,491.8

Political and economic news


Inflation eases 30bp to 8.2% in April
Botswana's inflation eased 30bp to 8.2% y/y in April 2011, albeit with all constituent group indices registering increases between March and April. Significant increases were registered in the Recreation and Culture (+4.1%), Health (+3%) and Food & non-alcoholic beverages (+2.4%) indices. The food & non-alcoholic beverages index rose on the back of a general increase in food prices, largely driven by the Milk, Cheese & Milk products section index, which rose by 14.2% on the back of milk shortages in the country due to the outbreak of foot and mouth in South Africa. The transport index increased by 1% on the back of a rise in retail pump prices for both petrol and diesel by BWP 0.10 per litre, which came into effect on 22 March 2011. (Source: CSO) Indian based power and steel company, Monnet Ispat & Energy (MIEL) has indicated that it expects to buy coal and manganese ore assets in Mozambique, South Africa and Botswana. The company Executive Chairman and MD, Sandeep Jajodia indicated that the company has a budget of USD 100m for acquisitions. Jajodia told reporters that they will buy one or two assets overseas depending on the size and reserves, and noted that an acquisition might materialise this financial year. MIEL is building merchant power plants through its subsidiary and is currently setting up a 1,050MW power plant in Angul. Indian companies are buying mines overseas to secure raw materials for their plants, with mining in India facing social and environmental constraints. (Source: Livemint.com)

Indian firm eyes local coal assets for acquisition

Govt faces spending crisis, not revenue

As public workers move into the fourth week of their industrial action, even with resolve that it would remain indefinite for as long as government refuses to heed their demand, experts debate whether it is money or foresight on spending that government lacks. Government's position is that it cannot afford a 16% pay hike because the economy was dealt a blow by the global recession which hurt demand for the country's diamonds. However, economic experts suggest that it is misleading to conclude blame the recession for government's inability to raise salaries. The common position by economists is that the recession is not solely to blame, citing that government spending may also be a contributing factor. Commentators call on prioritising government spending, citing that future government policies must address not just growth issues but also equity and employment issues. (Source: Economic express) Government has announced plans to raise electricity tariffs by between 15% and 30% from 1 June 2011, citing operating pressures on the Botswana Corporation (BPC) and the need for cost reflective pricing. According to the announcement, tariffs for large users, which include medium and large business, government and water pumping, will rise by 30%.

Power tariffs to rise by between 15% and 30% in June

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Domestic and small business customers will see an increase of 15%, though this will rise to 30% for electricity consumption above 200kWh and 500kWh. The Ministry of Minerals, Energy and Water Resources officials described the impending adjustment as an interim adjustment, highlighting that instead a 70% increase is required to put BPC on a firm financial footing. The officials revealed that in FY11 (31 March 2011), BPC paid BWP 0.71 per kWh supplied to the country while charging customers only BWP 0.47. The law requires that BPC charge cost-reflective tariffs in order to meet its operating and maintenance costs, invest in infrastructure, pay its obligations and pay dividends to shareholders. Over 50% of its operating costs goes towards the importation of electricity. The officials stressed that various initiatives have been taken by government to support the corporation, including subsidies of nearly BWP 1bn, the cost of diesel based emergency power in Matshelagabedi and Orapa, and the BWP 5.6bn equity funding for Morupule B. Government has also underwritten the BWP 5.6bn BPC is borrowing for the project, which the utility is required to begin repaying in 2012 after the power station comes into commercial operation. (Source: Mmegi)

Botswana dumps Zim power deal, focuses on own capacity

A planned USD 8m power deal between Botswana and Zimbabwe, through which the former was to access 40MW from a Bulawayo thermal power station, has been shelved due to closure of a window of opportunity when Botswana was most desperate for power supply. Authoritative sources close the agreement have revealed that the window of opportunity stretched from 2009 to 2010 when Botswana needed to plug a domestic power supply shortfall. The sources noted that there was a point in 2010 when power from Zimbabwe was desperately required, and Cabinet even gave the Ministry of Minerals, Energy and Water Resources and the Botswana Power Corporation the go-ahead to sign memorandums of understanding to secure that power. However, when Zimbabwe backtracked and said they want to reserve the power station for their winter crop and later suggested that Botswana should lease the power station instead of only procuring power from it, Botswana could not accept the terms and instead shifted focus to the Morupule B expansion. Morupule B is expected to come on stream in 2012 and effectively renders the power deal unnecessary. According to the initial proposal, Botswana would have provided the USD 8m for the refurbishment of the Bulawayo thermal plant, as well as for the purchase of coal. In exchange, Botswana would have been entitled to 40MW of power supply from the power station. (Source: Mmegi)

Company news
Gope estimates resource at 20m carats
A technical report conducted on Gope Mine has indicated that the mine's current resource might increase as further drilling continues on the future. The report, which was released this week, indicates that while significant additional resources exist, mine planning has only been done for Phase 2 and phase 3 and has therefore been excluded from the mineral reserve. The report further states that Gope has a total resource of 20.5m carats with an average of USD 223 per carat. Gope Mine MD, Haile Mphusu indicated that since drilling has only been done up to 524 metres below surface, there is a likelihood that more resources could be contained which could extend mine life. Meanwhile, the company has indicated that it has terminated talks for a possible merger with Lucara Diamonds. Mphusu highlighted that the two parties agreed that the timing is not right to start talks. Lucara is currently developing the AK6 mine in Boteti, while Gope is expected to start production in 2013. Gope Mine has started phase one of the mine with a construction base in Lephephe. (Source: Botswana Guardian)

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Wilderness warns of lower FY11 operating results

Wilderness this week issued a profit warning indicating that the groups results for FY11 (28 Feb 11) will be significantly higher than in FY10. The company attributed the rise to sale of capital assets. However, at the same time, the company warned that operating results (excluding gains on capital asset sales) will be lower than in FY10. The results will be released on the BSE and on SENS on or about 27 May 2011. (Source: Company announcement)

Market activity
In Botswana, the Botswana DCI lost 0.5% on the back of price declines in Barclays Botswana, Botswana (2.5%), Letshego (-1.6%) and BIHL (-0.4%). Letshego was again the most actively traded stock, accounting for around 69% of total turnover, which declined 21% on the local board this week. Cresta (+55.2%), Primetime (+10.1%), and RDCP (4.9%) were the gainers for the week. Botswana Stock Exchange
TOP GAINER(S) Cresta Primetime RDCP TOP TRADER Letshego MARKET PERFORMANCE BSE DCI (BWP) % CHG 55.2 10.1 4.9 BWP (M) 3.18 LEVEL 6,898 PRICE 1.35 2.50 7.05 USD (M) 0.48 BWP (%) -0.49 TOP LOSER(S) ABCH Botswana Barclays Botswana Letshego TOTAL TRADED BSE DCI % CHG -3.1 -2.5 -1.6 BWP (M) 4.59 USD (%) BWP/USD -0.29 6.60 PRICE 3.15 5.75 1.80 USD (M) 0.69 % CHG 0.20

Source: African Alliance database

Dividends (BWP)
COMPANY YEAR TYPE AMOUNT

Turnstar Primetime Proper


Source: Company filings

2011 2011

Interest Interim

6.15 8.01

30-May-11 16-May-11

LAST CUM DATE

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BRVM
(Mali, Burkina Faso, Benin, Guinea Bissau, Togo, Cte dIvoire, Senegal, Niger)

Macroeconomic data
Cte d'Ivoire Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 1.9 75.3 23.5 2.3 1,132.2 2009 7.4 67.0 22.5 3.8 1,052.0 2010 3.9 67.2 22.8 2.6 1,036.2 2011E 0.0 0.0 23.0 -7.5 2012F 0.0 0.0 24.9 6.0 2013F 0.0 0.0 26.9 6.0 -

Macroeconomic data
Senegal Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -14.3 25.0 13.4 3.2 1,066.4 2009 -7.7 32.0 12.8 2.2 997.6 2010 -8.3 38.0 12.9 4.2 980.9 2011E -11.5 40.2 13.9 4.5 1,031.4 2012F -10.8 41.8 14.8 4.8 1,074.6 2013F -9.3 42.8 15.8 5.0 1,119.8

Political and economic news


Mali aims to lure investors with mining review
Mali plans to overhaul its mining code to lure investors into resources such as oil and uranium before an expected fall in output of its main export earner gold. Officials noted that soaring world market prices lifted revenues from gold in Africa's third biggest producer to a record USD 405.8m in 2010 over half of all export earnings. (Source: Reuters) The French Development Agency (AFD) has financed projects in the West African state of Mali to the tune of EUR 215m (about XOF 141bn) since 2001, the director of the agency in Mali, Herv Bougault, has announced. The amount does not include money for debt structural adjustment, he revealed in an interview published in the Malian private daily newspaper 'Le Rpublicain'. Over the period, budget assistance and monetary debt conversion amounted to EUR 122.9m, or XOF 81bn. (Source: Afrique en ligne) The Board of Executive Directors of the World Bank approved a USD 2.2m grant to support the water and energy sectors in Guinea-Bissau. This additional grant will complement the Emergency Electricity and Water Rehabilitation Project grant of USD 12.7m approved in July 2010, and will enable the purchase of a 5MW thermal power generator. (Source: Water World) India may sign an agreement with Senegals Agricultural Ministry to develop 150,000 hectares (370,658 acres) of farmland, the government announced. The land will be used to grow and process rice, corn, peanuts, cotton and cereals. The area will be equipped with irrigation pumps and machinery including tractors, the statement noted, without providing further details. (Source: Bloomberg)

French development agency has granted Mali XOF 141bn

Support to double electricity generation in Bissau

Plans to develop 150,000 hectares of farmland

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Company news
Newcrest to resume Cte dIvoire operations in June Cargill resumes cocoa operations in Cte dIvoire
Gold miner Newcrest has stated that it was taking steps to resume its Bonikro operations, in Cte dIvoire, after post-election conflict has quieted down. (Source: Mining Weekly) Cargills cocoa and chocolate operations at its production facility in Cte dIvoire have now resumed. Cocoa bean purchases have also recommenced, and exports of products and beans will also resume in the next few days. The companys farmer training programme for certified sustainable cocoa is planned to resume in June. (Source: FoodBev) IBM announced the opening of a new branch office in Dakar, Senegal, as part of the company's geographic expansion initiative to strategically increase its presence in key growth markets. (Source: PR Newswire)

IBM expands further into Africa, opens Senegal subsidiary

Market activity
The BRVM composite index edged up 0.2% this week, as a result of gains in CIE (+7.5%), SAPH (+3.6%), BOA CI (+3.6%) and ETI (+2.2%). SAPH was the most actively traded stock in a week which saw turnover dip around 10% from the previous week. Bollore Africa Logistics CI (-14.2%) and PALM CI (-4.2%) were the most notable decliners for the week. Bourse Regionale des Valeurs Mobilieres
TOP GAINER(S) CIE SAPH Bank of Africa CI TOP TRADER SAPH MARKET PERFORMANCE IC Comp (XOF) % CHG 7.5 3.6 3.6 XOF (M) 562.1 LEVEL 152.51 PRICE 15,050 23,005 29,000 USD (M) 1.22 XOF (%) 0.22 TOP LOSER(S) Bollore Africa Logistics CI SIVOA CI PALM CI TOTAL TRADED IC Comp % CHG -14.2 -7.5 -4.2 XOF (M) 1,091.1 USD (%) XOF/USD 0.7 459.37 PRICE 41,165 7,400 11,500 USD (M) 2.37 % CHG 0.5

Source: African Alliance database

Dividends (XOF)
COMPANY YEAR TYPE AMOUNT LAST CUM DATE 26-Apr-11

SONATEL
Source: Company filings

2011

Regular

12,600

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GHANA
Macroeconomic data
Ghana Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -10.8 34.3 29.2 28.5 8.4 1,266.1 2009 -4.0 39.2 35.4 26.0 4.7 1,124.7 2010 -7.2 41.2 38.3 31.1 5.7 1,311.6 2011E -6.8 42.3 39.3 37.5 13.7 1,542.2 2012F -5.2 42.7 38.0 43.7 7.3 1,753.4 2013F -3.8 43.0 36.8 48.8 6.1 1,907.8

Political and economic news


Policy rate down 50bp to 13%
Following a week-long review of the economy, the Monetary Policy Committee of the Bank of Ghana has reduced the policy rate by 50bp to 13%. The decision was based on the balance of risks to inflation and economic growth going forward, and the recognition of an improved economic environment. The central bank noted that economic activity, measured by the Composite Index of Economic Activity, registered a real growth of 23.7% y/y in the 1Q11 compared to 9.1% y/y in the 1Q10, due to a broad-based improvement in its components, with the exception of credit to private sector which remained weak. This compounded with an improvement in business confidence, according to the bank, pointed to a continued increase in economic activity in 2011. (Source: MPC report) Ghanas Gross International Reserves (GIR) declined marginally by 4.3% y/y to USD 4.5bn in the 1Q11, due to a deterioration in its balance of payments which was down 1.4% y/y to USD 154m. At the end of April, however, GIR improved to USD 4.9m, representing 3.8 months cover, mainly as a result of portfolio inflows associated with the 3-year bond. The figure however excludes the USD 112m accrued from the sale of the first lifting of crude oil, which is currently awaiting finalisation. (Source: MPC report) The countrys current account balance improved in the 1Q11 (down 61.1% y/y to a deficit of USD 220.2m) boosted by petroleum exports, higher commodity prices and larger export volumes. Total merchandise exports amounted to GHS 3bn (up 61.7% y/y) compared to total merchandise imports of USD 3.3bn (up by 32% y/y), resulting in a trade deficit of USD 248.6m (-57.4% y/y). Export receipts from cocoa increased by 25.9% y/y to USD 859.4m, revenue from gold exports increased by 52.5% y/y to USD 1.2bn while export of crude oil was estimated at USD 484.2m. (Source: MPC report) The Government of Ghana has decided to continue its crude oil hedging policy when the current deal expires in July. The current contract, entered into in October 2010, hedged 50% of the countrys crude oil purchases at USD 82 per barrel. According to the Finance Minister, Dr Kwabena Dufuor, this has been extremely beneficial to the countrys macroeconomic stability. (Source: Myjoyonline)

Gross International Reserves down by 4.3% y/y in 1Q11

Ghana records improved current account balance

Government to continue hedging oil

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Defective oil flow meters could shortage oil revenue

The flow meters used to independently monitor the volume of crude oil produced from the Jubilee field have become defective, and could lead to a miscalculation of expected revenues. According to reports, the Ghana National Petroleum Corporation and the Ministry of Energy have been using the ullaging system in which a ruler is used to manually calculate the volume of oil for export. The Ministry of Energy has indicated that it has acquired flow meters to be installed by the beginning of July 2011. (Source: Daily Graphic) The Ministry of Roads and Highways announced a 33.8% y/y growth in revenues for the Road Fund for the FY10 to GHS 182m, on the back of increases in road and bridge tolls, vehicle registration fees, road user fees and international transit fees. According to the Minister, the fund is currently operationally strained as its capacity can only finance approximately 60% of the countrys road maintenance needs. The fund also carried forward and indebtedness to the tune of GHS 74.2m from 2010 to 2011. Revenue for the FY11 is projected to increase marginally to GHS 185m. (Source: Myjoyonline) The US Embassy has developed a toolkit aimed at providing information on the various Ghanaian laws on intellectual property rights, including copyright, trademark and patent laws. The toolkit is expected to benefit both local and international businesses and individuals. According to Trade Specialist, Gretchen Krantz-Evans, Ghana has adequate intellectual property rights, contrary to perceptions. (Source: Myjoyonline)

Revenue for Road Fund up 33.8% y/y to GHS 182m

US Embassy assembles IP rights toolkit for Ghana

Company news
PBC purchases additional 25 trucks
Produce Buying Company (PBC), Ghanas largest cocoa licenced buying company has purchased 25 new articulated trucks to boost its secondary evacuation activities. The trucks are expected to enable the company increase its market share of secondary evacuation from 41% to the targeted 50%. According to the company, the additional trucks can transport up to 12,000t of cocoa from the depots to the take-over-centres from now till the end of the major season (end of May). PBC in 2008 separated the haulage division to be responsible for both primary and secondary evacuation of cocoa. The company currently undertakes 97% of primary evacuation. The haulage division earned GHS 10.24m as turnover for the FY10, representing 1.6% of total turnover. (Source: Business & Financial Times) The 14,500km West Africa Cable System, Ghanas fourth undersea internet cable has reached Accra and is expected to drive down broadband costs when it goes online early 2012. According to lead financier, MTN, the cable will connect Ghana and 11 other African countries to Europe, with an initial capacity of over 500 gigabits per second, upgradeable at any stage of its 25-year lifespan. MTN has invested over USD 90m in the project which is estimated at a total cost of USD 650m. (Source: Reuters)

West Africa Cable System reaches Ghana

Market activity
Ghanas GSE-CI gained 2.3% as nine equities recorded gains while three lost value. FML (+15.4%) led the gainers to close at a record high of GHS 3.00 and also recorded the highest value of trades, pushing market turnover to a 10-week high of GHS 8.28m. GCB reached an all-time high of GHS 3.03 during the week, but subsequently dropped to GHS 3.00, representing a w/w gain of 9.5%. The other gainers were UTB (+6.7%), SIC (+3.9%), BOPP (+3.7), UNIL (+3.4%), GGBL (+1.6%), TOTAL (+1.1%), and EBG (+0.3%). On the losing side were GOIL (-3.2%), CAL (-3.3%), and Cocoa Processing Company (-33.3%).

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Ghana Securities Exchange


TOP GAINER(S) Fan Milk Ghana Commercial Bank UT Financial Services TOP TRADER Fan Milk MARKET PERFORMANCE GSE ALSI (GHS) % CHG 15.4 9.5 6.7 GHS (M) 5.17 LEVEL 1,179 PRICE 3.00 3.00 0.32 USD (M) 3.42 GHS (%) 2.3 TOP LOSER(S) Cocoa Processing Cal Bank Ghana Oil TOTAL TRADED GSE ALSI % CHG -33.3 -3.3 -3.2 GHS (M) 8.28 USD (%) GHS/USD 1.9 1.51 PRICE 0.02 0.29 0.30 USD (M) 5.48 % CHG -0.38

Source: African Alliance database

Dividends (GHS)
COMPANY YEAR TYPE AMOUNT

Enterprise Group Total Petroleum Ghana Camelot Ghana


Source: Company filings

2010 2010 2010

Final Final Final

0.0060 0.6759 0.0050

LAST CUM DATE

26-May 14-Jul 15-Jul

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ZAMBIA
Macroeconomic data
Zambia Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -7.2 26.8 26.1 14.6 5.7 1,160.1 2009 4.2 28.6 11.3 12.8 6.4 990.0 2010 3.8 26.9 10.3 16.2 7.6 1,221.4 2011E 5.9 26.3 10.8 19.1 6.8 1,405.0 2012F 3.3 29.4 14.5 21.5 7.4 1,541.4 2013F 2.9 30.2 16.0 23.6 7.8 1,655.2

Political and economic news


China lends Zambia USD 180m for regional trade road
A state-owned Chinese bank will lend Zambia USD 180m to upgrade a road that should help boost trade with Africa's Great Lakes countries. The region, loosely defined as Rwanda, Burundi, Uganda, the eastern Democratic Republic of Congo and western Tanzania, is a key market for Zambian sugar and cement exports. The plan is to upgrade 170km of road leading to Zambia's Mpulungu harbour at the southern tip of Lake Tanganyika. Work is scheduled to begin in July. (Source: Reuters) Zambia raised the price of electricity for mining companies by 30% in a move that will spike costs for the sector in Africa's leading copper producer. The main supplier of power to the mines, Copperbelt Energy Corporation (CEC) and state-owned ZESCO Ltd explaied in a joint statement the price hike would be backdated to take effect from January 2011. The cost of electricity to CEC and the mines it supplies was last raised by 35% in 2008. The 2011 increase would provide the funding necessary to build new plants and invest in distribution infrastructure. (Soure: Reuters) Zambia will decide on oil and gas exploration licences for about 14 blocks in the next two months, as petroleum prospecting interest in the copper miner increases. Zambia last year started issuing oil and gas exploration licences to local and foreign companies in a bid to become an energy producer, after it passed a law on new licensing fees. The government has received applications for about 14 open blocks, but it does not necessarily mean they will all be awarded. To date, Zambia has granted licences for seven blocks to various exploration companies including Britain's GP Petroleum and Petrodel Resources, Exile Resources of Canada along with Zambian firms Majetu, Barotse Petroleum Company and Chat Milling Ltd. Zambia does not yet produce oil, but the government says soil samples sent to European laboratories have shown good traces of oil, particularly in areas bordering producer Angola. The country has about 41 exploration blocks, of which five are held by the government, which has discretion to hand them to prospectors for exploration. The government has already handed over two further blocks. (Source: Reuters)

Miners to pay 30% more for electricity

Zambia to decide on oil block awards in two months

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Company news
Zambia Breweries profits soar to ZMK 45bn
ZAMBREW profits jumped to ZMK 45bn from a ZMK 720m loss in 2010 after restructuring its expansion loan to reflect lower interest rates as beer sales volumes surged. The SABMiller majority-owned brewer has restructured the loan liquidation path from the high interest short-term loans to low interest long term loans. Three years ago, ZAMBREW acquired a syndicated loan of ZMK 400bn for its expansion programme for new plant installation in Ndola, new cellars and new transportation fleet. The company would not declare any dividends to its shareholders to consolidate its loan repayment programme. ZAMBREW profits were also boosted by growth in volumes of beer sales which was aided by last years governments reduction in excise duty on clear beer from 60% to 40% which helped to reduce beer prices and also stemmed off pressures from smuggled brands aided into the country by lower prices. Indirect taxes increased above inflation despite a 33% excise rate reduction for lager beer, showing that the current excise strategy to align with regional average rates has had a win-win benefit for the Zambian government, wholesalers, retailers, consumers and also the company. The local soft drink market continued to cope with high taxes encouraging smuggling and making locally-produced products quite uncompetitive. (Source: The Post)

Zambia Sugar output up 22%

Zambia Sugar output rose 22% to 385,000t in FY10. Sugar exports increased to 233,000t FY10 from 175,000t in FY09. Increased sugar production combined with duty free, quota free access granted to Zambia by the European Union led to 108,000t of sugar being exported to the EU. A world sugar deficit boosted sugar demand regionally and a record 125,000t of sugar was exported into the region in the year ended 31 March. Record sugar production and sales increased revenue to ZMK 1,232bn and operating profit to ZMK 174bn from ZMK 908bn and ZMK 159bn. Firm world sugar prices were expected to sustain revenue realisation from all export markets where more sugar would be sold compared to previous years. (Source: Reuters) Barrick Gold Corporations planned takeover of Lumwana Copper Mine through its USD 7.5bn acquisition of Equinox Minerals Ltd is likely to be approved by the Competition and Consumer Protection Commission. Lumwana accounts for 19% of Zambias copper production and Equinox is targeting copper concentrate production of 145,000mt from Lumwana this year. Barrick made an application to the commission on 9 May and by law a decision must be made on an application within 90 days. Zambia is trying to boost its copper production to accelerate economic growth and cement its position as Africas biggest producer of the metal. (Source: Bloomberg)

Zambia likely to approve Barrick deal soon

Market activity
In Zambia, The index shed 2.2% to close at 4,079.77. StanChart Zambia (-12.0%), Zambeef (-11.8%), and Investrust Bank (-5.9%) were behind the decline. Zambeef was also the most active stock, in a week in which turnover fell over 60% from the previous week. A number of stocks however managed to post gains, including Cavmont Capital Zambia (+20.0%), BAT (Zambia) (+18.5%), Bata Zambia (+9.7%), ZANACO (+8.9%), and Farmers House (+8.0%).

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Lusaka Stock Exchange


TOP GAINER(S) Cavmont Capital Zambia BAT (Zambia) Bata Zambia TOP TRADER Zambeef MARKET PERFORMANCE LuSE ALSI (ZMK) % CHG 20.0 18.5 9.7 ZMK (M) 581.0 LEVEL 4,080 PRICE 6.00 1,600 170.00 USD (M) 0.12 ZMK (%) -2.22 TOP LOSER(S) StanChart Zambia Zambeef Investrust Bank TOTAL TRADED LuSE ALSI % CHG -12.0 -11.8 -5.9 ZMK (M) 1,775.9 USD (%) ZMK/USD -1.91 4,750 PRICE 132.00 3,000 16.00 USD (M) 0.37 % CHG 0.32

Source: African Alliance database

Dividends (ZMK)
COMPANY YEAR TYPE AMOUNT

Zanaco Stanchart Batz Lafarge Zamefa Aelz


Source: Company filings

2010 2010 2010 2010 2010 2010

Final Final Final Final Final Final

28 20 80 300 32 93

15 April 2011 21 April 2011 27 May 2011 TBA 15 April 2011 30 April 2011

LAST CUM DATE

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TANZANIA
Macroeconomic data
Tanzania Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -11.1 40.1 19.0 7.3 478.8 2009 -10.2 40.9 21.0 6.7 517.0 2010 -8.6 43.8 22.7 6.5 548.3 2011E -9.5 47.5 23.3 6.4 552.3 2012F -10.7 48.9 25.4 6.6 591.1 2013F -10.1 49.6 27.8 7.4 634.1

Political and economic news


April inflation up to 8.6%
Tanzania's inflation rate rose to 8.6% in April from 8.0% in March on higher food and fuel prices. The oil and energy basket` went up by 6.9% compared to 1.1% of food. High fuel prices were caused by the MENA region unrest that has accelerated the world crude oil value. The government has imposed export curbs because of worries about rising food prices and domestic supply shortages. According to the National Bureau of Statistics the inflation rate could start to decline if the government takes policy measures to curb the increase in food prices. (Source: Reuters, Daily News)

Company news
TRA loses bid on Barclays and CRDB Bank
The Tanzania Revenue Authority (TRA) has lost a bid to have Barclays and CRDB Bank remit income tax on bad and doubtful debts that according to the TRA were not deductible. The two banks won appeals against the income tax assessments. Last year, the banks separately filed appeals at the Tax Revenue Appeals Board (Trab) to challenge the TRA refusal to allow them to deduct bad and doubtful debts of TZS 12bn and TZS 3bn respectively from their annual accounts. TRA refused to allow them to include in their final accounts a provision for impairment losses on loans and advances for 2005 and 2006 which they had charged to the profit and loss account as deductible expenses. The banks felt that the prohibition, after the Bank of Tanzania approved their accounts, was subjected them to an unlawful assessment of tax and asked Trab to uphold their appeals. Trab ruled in favour of the two banks. (Source: The Citizen)

Market activity
The Tanzanian DSE gained 0.5% as a result of a 6.7% gain in the price of NMB and 1.1% gain in TWIGA. There were no price declines for the week. CRDB Bank was the most actively traded stock, followed by NMB; however turnover slumped compared to last weeks unusually heavy trading week.

TANZANIA
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Dar es Salaam Stock Exchange


TOP GAINER(S) NMB TWIGA -TOP TRADER CRDB Bank MARKET PERFORMANCE DAR ALSI (TZS) TZS (M) 172.3 LEVEL 1,190 USD (M) 0.11 TZS (%) 0.5 % CHG 6.7 1.1 PRICE 800.00 1,900 TOP LOSER(S) No losers --TOTAL TRADED DAR ALSI USD (%) -0.24 TZS (M) 339.8 TZS/USD 1,535 USD (M) 0.22 % CHG -0.75 % CHG PRICE

Source: African Alliance database

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NAMIBIA
Macroeconomic data
Namibia Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 2.7 17.3 8.5 9.0 4.3 4,338.8 2009 -0.7 15.4 9.5 9.3 -0.8 4,477.6 2010 -1.1 18.5 15.7 11.9 4.4 5,651.7 2011E -0.9 24.6 18.5 13.5 4.8 6,363.6 2012F -3.3 27.8 18.9 14.0 4.5 6,549.9 2013F -2.4 33.2 19.7 14.8 4.4 6,854.6

Political and economic news


Namibia April NCPI rose
Namibia April NCPI rose by 0.9% m/m and rose by 4.8% y/y compared with a 0.8% m/m rise and 3.8% y/y rise in March, according to the CBS. (Source: NPC) On 12 May 2011, the Bankers Association of Namibia and the Namibian Stock Exchange introduced the Windhoek Inter Bank Agreed Rate (WIBAR) rates. The rates will be quoted over two terms, namely an overnight WIBAR and a 3-month WIBAR. The NSX will make the WIBAR rates available to interested parties as from 10h00 every business day. (Source: NSX) The City of Windhoek is set to fork out roughly NAD 15m, nearly five times the usual yearly amount, to fix roads damaged by an unprecedented rainy season this year. According to Dirk Reed, the divisional chief engineer of the City of Windhoeks Roads and Storm Water Division, on average the citys budget for fixing potholes in a year does not exceed NAD 2m or NAD 3m. (Source: The Namibian) NAAMSA April 2011 vehicle sales decreased by 22.9% m/m and increased 13.8% y/y to 917 units from 1189 units sold in March. Passenger sales decreased by 28.1% m/m and increased 15.6% y/y to 378 units, while commercial vehicle sales decreased by 18.7% m/m and increased 12.5% y/y to 539 units.(Source: NAAMSA) The final bill of fixing Namibias damaged national road network after the rainy season could top NAD 600m. According to the Ministry of Works and Transport, the initial estimate of NAD 500m has shot up to approximately NAD 600m or more after Mays heavy rains in the south and at the coast. (Source: New Era) Namibia, home to the worlds largest uranium reserves, is looking to introduce a minerals windfall tax for the state to benefit more from its vast mineral resources, according to Mines and Energy Minister Isak Katali. The move would be the latest by a government in the region seeking to benefit from profits made by mining companies. (Source: Mining Weekly)

WIBAR rates introduced

NAD 15m to fix damaged roads

NAAMSA Vehicle sales decreased

Final bill for fixing roads could top NAD 600m

Namibia to introduce a minerals windfall tax

Company news
Namibia Rare Earths Lofdal Project update
Namibia Rare Earths announced that drills are being mobilized for an initial 7,500m diamond drilling program at the Lofdal Rare Earth Project in north western Namibia which is scheduled to begin before the end of May. This first phase of the 2011 drilling program will employ two rigs and take three months to complete. (Source: Bloomberg)

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Epangelo not to commit itself to a fixed share in joint ventures

Namibian state-owned mining company Epangelo Mining will not commit itself to a fixed share in future joint ventures with mining firms, according to Managing Director Eliphas Hawala. Mining Minister Isak Katali made international headlines last month when he said certain minerals, including uranium, would be declared strategic and their future mining would fall under Epangelo. Any company wishing to mine for those minerals would need to enter into a joint venture with the state-owned firm. The minister has since dispelled fears that the move would be tantamount to nationalisation, saying that the government would not take rights away from existing license holders. The industry has speculated that Epangelo will take a minor 10% to 15% share in new operations, but according to Hawala that would be a minimum. Epangelo, which looks at mining on its own as well as establishing joint ventures, has a working capital of NAD 5m. (Source: Fin24) Namdeb reports that it is not going to allow any shallow marine mining vessel to operate in its mining license area until the issue of safety assurance has been resolved to its satisfaction. The mining company states it wants to correct its position following recent reporting whereby an indication was given that consideration would be given to allow independent shallow marine contractors to resume operations once all safety risks had been addressed. (Source: New Era)

Namdeb to disallow shallow marine mining vessels

Market activity
The Namibian local index was flat this week as no stocks registered price changes. FNB and TrustCo were the most active traders, as turnover improved marginally from last week. Namibian Stock Exchange
TOP GAINER(S) No gainers -TOP TRADER FNB Namibia MARKET PERFORMANCE NMB LOCAL (NAD) NAD (M) 0.10 LEVEL 185.41 USD (M) 0.01 NAD (%) 0.00 % CHG PRICE TOP LOSER(S) No losers -TOTAL TRADED NMB LOCAL NAD (M) 0.15 USD (%) NAD/USD 0.41 6.88 USD (M) 0.02 % CHG 0.41 % CHG PRICE

Source: African Alliance database

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MALAWI
Macroeconomic data
Malawi Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -10.2 46.2 39.7 4.1 8.6 274.4 2009 -5.9 48.6 44.5 4.7 7.6 309.9 2010 -1.3 42.9 37.6 5.1 6.6 321.9 2011E -3.8 38.8 34.1 5.6 6.1 349.3 2012F -3.7 37.0 32.8 6.1 5.7 365.3 2013F -3.0 35.1 31.4 6.5 5.5 380.7

Political and economic news


Government adamant on devaluation
Government will not rush to devalue the Malawi Kwacha despite calls from local and international financial institutions and economic experts, Secretary to the Treasury Joseph Mwanamveka reported. Mwanamveka says devaluation of the Kwacha will not benefit local Malawians hence government's current stand. Currently the local currency is pegged at the official exchange rate of MWK 150 to one US dollar and MWK 250 to one UK Pound (GBP) while its exchange rate against EUR 1 is fixed at MWK 220. The latest institution to make the call on the need to devalue the Kwacha is the International Monetary Fund (IMF), but the request has landed on deaf ears. Mwanamveka reiterated government stand when he appeared before the Budget and Finance Committee of Parliament. He instead asked the Budget and Finance Committee of Parliament to consider the pros and cons of devaluing the Kwacha against the dollar and other major currencies. Speaking in Lilongwe, Mwanamveka asked the committee to consider that devaluing the Kwacha would benefit exporters and not ordinary Malawians. Devaluation, Mwanamveka announced, would mean the immediate increase in prices of basic commodities like salt and cooking oil and government would need to mitigate this. (Source: The Daily Times) The International Monetary Fund (IMF) Malawi office has asked Malawi to clear distortions in the foreign exchange market by ensuring fair pricing of the Malawi Kwacha which would help to incentivise export diversification. Blunt as ever, IMF Malawi country representative Ruby Randall said that the distortions in the foreign exchange market are working against the much talked about diversification. (Source: The Nation)

IMF boss toughens forex policy talk

Company news
General insurance deals by June-says NICO
Financial services group, Nico Holdings Limited, is expected to conclude negotiations with strategic equity partners in NBS Bank and general insurance business within the first half of this year, managing director Felix Mlusu announced. The Malawi Stock Exchange-listed group has since last year been involved in negotiations with strategic equity partners to acquire a stake in NBS Bank where it owns 60% shareholding and general insurance, wholly-owned by the group. (Source: Company Data)

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Market activity
The Malawi all share index gained 0.1% due to a price gain in NITL (+8.9%). NITL was also the most actively traded stock, followed by NBM. Turnover more than doubled from the previous week, and no stocks recorded price declines. Malawi Stock Exchange
TOP GAINER(S) NITL -TOP TRADER NITL MARKET PERFORMANCE MSE ALSI (MWK) % CHG 8.9 PRICE 14.70 TOP LOSER(S) No losers -TOTAL TRADED MSE ALSI MWK (M) 107.2 USD (%) MWK/USD 0.7 150.80 USD (M) 0.71 % CHG 0.6 % CHG PRICE

MWK (M) 78.0 LEVEL 4,904

USD (M) 0.52 MWK (%) 0.12

Source: African Alliance database

Dividends (MWK)
COMPANY YEAR TYPE AMOUNT

FMB ILLOVO NBS Standard MPICO PCL NBM NICO TNM


Source: Company filings

2010 2011 2010 2010 2010 2010 2010 2010 2010

Final Final Final Final Final Final Final Final Final

0.05 3.23 0.5 3.66 0.08 3.00 2.68 0.16 0.02

LAST CUM DATE

TBA 20 May TBA 24 June TBA 22 July 10 June TBA 1 July

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UGANDA
Macroeconomic data
Uganda Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -3.1 28.0 14.4 8.7 456.2 2009 -6.8 26.3 15.8 7.2 481.9 2010 -9.9 25.4 17.0 5.2 500.7 2011E -10.6 30.3 16.4 6.0 465.5 2012F -9.2 30.1 16.6 6.5 456.4 2013F -6.8 29.3 17.6 7.0 465.8

Political and economic news


Museveni says police, courts lax on protests
Ugandan President Yoweri Museveni blamed the country's courts and police for being lenient with opposition groups protesting against the rising cost of living. Last month, opposition chief Kizza Besigye launched "walk to work" protests against high food and fuel prices, sparking a heavy crackdown by police who beat him up, forcing him to seek treatment in neighboring Kenya. Opposition leaders, including Besigye, have been released on bail after they were arrested for the recent protests. At least nine people have been killed in the protests according to Human Rights Watch, which called for a probe into the unrest. The opposition blames poor governance for the rising commodity prices, but the government has reported that it is due to global economic factors and unfavorable weather. (Source: The East African)

Company news
Nestl Foods to process milk from Kenya and Uganda locally
The Swiss food giant Nestl is set to start buying powdered milk from Kenya and Uganda. According to the firm, this will cut import costs for its Kenya factory as it positions Nairobi as its regional hub. Nestl had delayed its local purchases due to what it termed the poor quality of milk produced in the region and lack of a quality processor of powdered milk. The shift will offer a fresh income stream for milk farmers in the region. The company reported that it is in talks with a local processor in Uganda to begin buying fresh milk and process it on its behalf. According to the Food and Agricultural Organisation, milk production increased from 2.4m litres in 2000 to 4.1m litres in 2008. (Source: The East African)

Market activity
In Uganda, there was a slight decline in the weekly turnover by 2% to UGX 342.6m with Stanbic generating the highest turnover, 36% of total turnover, followed by DFCU which generated 31%. Demand for Stanbic has increased this week to average 2m shares per session, while its price also rose mid-week from below UGX 265 to around UGX 270. In terms of news around Stanbic, it is expected to announce a bonus share issue soon. DFCU is still experiencing appetite from investors despite having hit a 12 month high of UGX 1,000 recently. The top gainer this week was NVL closing at UGX 810 which values it at a rolling PE of 28x. However, retail investors are still willing to buy into NVL which is expected to announce higher FY11 profits in September. BATU this week hit the UGX 1,000 mark from UGX 960 previously, though this was on low volumes. The market is bullish on Stanbic, DFCU and NVL while its bearish following announcement of a UGX 3.8bn loss for FY10. The market closed 2.6% lower for the week.

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Uganda Stock Exchange


TOP GAINER(S) New Vision BAT (Uganda) Stanbic Uganda TOP TRADER Stanbic Uganda MARKET PERFORMANCE USE ALSI (UGX) % CHG 5.2 4.2 0.7 UGX (M) 135.6 LEVEL 1,181 PRICE 810.00 1,000 272.00 USD (M) 0.06 UGX (%) -2.55 TOP LOSER(S) No losers --TOTAL TRADED USE ALSI UGX (M) 372.6 USD (%) UGX/USD -2.47 2,385 USD (M) 0.16 % CHG 0.08 % CHG PRICE

Source: African Alliance database

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RWANDA
Macroeconomic data
Rwanda Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -4.9 21.2 4.7 11.2 489.3 2009 -8.5 20.2 5.2 4.1 532.6 2010 -6.8 23.9 5.6 6.5 562.3 2011E -9.2 23.5 6.1 6.5 593.2 2012F -6.2 23.5 6.6 7.0 631.6 2013F -4.1 22.0 7.2 6.8 674.5

Political and economic news


Central Bank targets inflation at below 7.5%
Rwandas Central Bank will aim to keep inflation below 7.5% for 2011, lower than a previous estimate of 8.0%, according to the newly appointed Governor. The inflation rate climbed to 5.0% in April 2011 from 4.1% in March as food and fuel prices increased. Last month, former Governor had estimated that inflation may reach 8.0% in 2011. The National Bank of Rwanda kept its key lending rate unchanged at 6.0% for April, after three reductions in the past year, to help boost lending and support the economys expansion. Rwandas Finance Ministry forecasts that economic growth will slow to 7.0% in 2011 from 7.5% in 2010 owing to poor rains which curb agricultural production. The central bank hasnt decided whether it will raise interest rates to curb inflation however. Rwandas national budget will increase to RWF 1.12tn (USD 1.85bn) in the 2011/2012 fiscal year, from RWF 984bn a year earlier according to the Ministry of Finance. The increase has been accounted for in the central banks inflation projection. Inflation advanced last month largely because of higher food and fuel costs. While food prices are still rising, the rate of increase has slowed, he said. In April, food prices climbed 6 percent, after jumping 8.0% in the previous month. Gasoline prices in Rwanda increased 14% between January and April, according to industry regulators. (Source: Bloomberg)

Company news
Bralirwa reports strong FY10 results
Bralirwa reported its first results as a listed company. In the 12 month period to Dec10 it reported a 62% rise in EPS, much stronger than the management expected in the IPO prospectus. The company had a good net revenue growth of 16.1% on the back of higher volumes (+12.5%) and increased pricing (+3.6%). The gross profit margin jumped substantially, from 41% in FY09 to almost 49% in FY10, resulting in GP growth of 37% y/y. Selling and distribution costs, as well as administrative expenses rose quite fast (+13% y/y), but did not upset the strong GP performance Bralirwa currently trades on FY10 PE of 11.1x, despite the 64% gain in the share price since the IPO. The company declared a dividend of RWF 20.09 per share (100% of net profit, in line with its dividend policy); this equals to div yield of 9.0% on the current share price. (Source: Company filings, African Alliance)

RWANDA
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Bralirwa Ltd
12M TO DEC (RWF M) Net Turnover Cost of sales Gross profit / (loss) 2009 45,478 -26,730 18,749 2010 52,799 -27,115 25,684 % CHG 16.1 1.4 37.0

Gross margin
Other income Selling and distribution expenses Administrative expenses Other operating expenses Operating profit / (loss) Net Finance cost Profit before taxation Taxation Profit after taxation EPS (RWF) DPS (RWF) Source: Company report

41.2%
5,966 -5,336 -8,948 -693 9,738 -405 9,333 -2,986 6,347 12.34 12.34

48.6%
5,850 -6,449 -10,240 -315 14,530 -128 14,402 -4,071 10,331 20.09 20.09 -1.9 20.9 14.4 -54.6 49.2 -68.4 54.3 36.4 62.8 62.8 62.8

Rwandair launches Libreville, Gabon route

National carrier, RwandAir, over the weekend, launched flights between Kigali and Libreville the capital of the Republic of Gabon, the carrier's 12th route. RwandAir will operate three flights a week on the new route in a move designed to operate a triangular schedule between Kigali, Libreville and Brazzaville. RwandAir's CEO reported that the new route would boost business between the two countries by connecting business, culture and the hearts of the people of Rwanda and Gabon. The launch comes shortly after the inauguration of the Brazzaville route. The Director General of Gabon Civil Aviation Authority stated that the Libreville route would enhance business transactions between Rwanda and Gabon. The government of Rwanda was commended for fulfilling the needs of the travelling public from Gabon and Rwanda by launching this route. Libreville, located on the west coast of Africa along the banks of Komo River, overlooking the Atlantic Ocean. Libreville becomes the fourth port city for RwandAir after Mombasa, Dar es Salaam and Dubai. (Source: New Times)

Market activity
In Rwanda Bralirwa gained a total of 8.8% to close at RWF 223, on the back of RWF 77.1m Rwanda, in turnover.

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SWAZILAND
Macroeconomic data
Swaziland Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 -11.1 16.6 -4.1 2.8 3.1 2,432.0 2009 -16.8 13.3 -3.9 3.0 1.2 2,541.9 2010 -20.6 18.5 8.4 3.6 2.0 3,061.1 2011E -16.0 25.0 17.5 3.6 0.5 3,108.7 2012F -12.9 29.3 22.4 3.7 1.5 3,179.6 2013F -10.4 31.9 25.4 3.7 2.5 3,202.4

Political and economic news


Swaziland in 'severe fiscal crisis'
Swaziland, one of Africa's poorest countries and its last absolute monarchy, is near financial collapse, with a budget deficit of 14.3% of GDP and rapidly dwindling foreign reserves, the IMF said. In its annual assessment of the troubled landlocked state, the International Monetary Fund said the government of polygamous monarch King Mswati III could dig up SZL 600m (USD 87m) in cuts "swiftly" to improve the health of its finances. However, it conceded that the measures would be likely to push the economy into a 1.9% contraction this year, while inflation surges to 8%. Swaziland's predicament stems from a sharp decline in revenues from the regional Southern African Customs Union (Sacu), which has historically accounted for two-thirds of the government's receipts. (Source: Fin24) The Central Bank of Swaziland (CBS) in consultation with the Monetary Policy Consultative Committee (MPCC) held a meeting on 13 May 2011 and decided to leave its discount rate unchanged at 5.5%.The domestic economy is expected to remain subdued with upside risk expected from the persistent strength of the domestic currency which erodes the competiveness of domestic exports in the world market. The implementation of the Fiscal Adjustment Roadmap although will yield positive results in the long run, will in the short to medium term exert further pressure on the economy as government implements more expenditure cuts. Futhermore, if the weak foreign direct investment inflows persist, it is most likely to impact negatively on the economic growth in 2011. Outlook for inflation indicates that overall inflation will remain at single digits in the short to medium-term, mainly supported by a stronger domestic currency. The hikes in domestic fuel prices have so far been cushioned by a stronger exchange rate, rising world oil prices remain an imminent risk to the inflation outlook. (Source: Swazi Observer)

Central Bank of Swaziland leaves rates unchanged

Government forces 10% pay cuts on politicians

Government as reflected in an addendum to Finance Circular No.1 of 2010 issued a Memorandum confirming a 10% cut on all politicians including the Prime Minister with effect from 1 May 2011. The memorandum dated 29 April 2011 instructed the Accountant General to with immediate effect reduce the salaries by the aforementioned percentage. The Senators however took a resolution to government demanding an explanation of the implemented cut without their prior consultation and consent. (Source: Times of Swaziland)

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Company news
Swaziland Electricity Company opens Maguga Hydro Power Station
His Majesty King Mswati III officially opened the Maguga Hydro power station constructed by the Swaziland Electricity Company (SEC). The SZL 220m station is an important facility for the country at large as it produces 20MW of electricity which is 10% of the overall national demand. Other local hydro power plants include Ezulwini which contributes 20MW and Dwaleni at 31MW to the national grid. Unlike the other power plants this one is fully automated and remotely-operated. Making it a more worthwhile investment is that the unit cost of the power produced is less than half of what SEC spends when importing electricity from South Africa and Mozambique. (Source: Times of Swaziland) Swaziland Royal Insurance Corporation (SRIC) declared SZL 60m as dividend payment to its shareholders. The companys major shareholder is government with 41% while the remaining 39% is held by private investors. A total of SZL 41.5m was from the non-life insurance business while the remainder was from life businesses. The dividend was SZL 10m higher than that declared in 2009 of SZL 50m. (Source: Swazi Observer)

Swaziland Royal Insurance Corporation declares SZL 60m dividend

Market activity
There was no trading in Swaziland this week.

SWAZILAND
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ANGOLA
Macroeconomic data
Angola Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 8.6 29.5 84.2 13.8 4,671.1 2009 -10.0 34.8 75.5 2.4 4,082.0 2010 -1.8 31.4 85.3 1.6 4,477.7 2011E 6.2 26.0 110.1 7.8 5,608.3 2012F 9.5 22.2 122.5 10.5 6,062.4 2013F 7.9 22.0 129.7 6.5 6,230.6

Political and economic news


Investors wooed with law changes
New legislation on private investment will help Angola attract overseas investors, with a return to growth this year ensuring the economy has left its payment problems behind, the head of the country's investment agency has announced. Oil-exporter Angola announced last August that it owed USD 6.8bn - twice what was previously estimated - to foreign firms involved in the southern African country's post-war reconstruction. "Angola cannot face its huge economic challenges on its own. We have to bring in private, foreign capital, so we have just approved new laws which will come into force next week," Aguinaldo Jaime, head of the Anip investment agency told reporters on the sidelines of a conference in Lisbon. (Source: fin24)

Company news
Alrosa may add mining projects as diamond prices advance
OAO Alrosa, Russias diamond monopoly, may add operations in Angola, where it already owns a 32.8% interest in the Catoca mining venture. All interesting concessions we have seen were considered through the Catoca venture, Alrosas Vice President Sergey Pushkin stated yesterday in the countrys capital, Luanda. This does not mean that we will refuse to analyse a concession especially for Alrosa. (Source: Bloomberg) The Emirates Airline in Angola is considering increasing the number of flights on the Dubai-Luanda route from three to five a week, angop learned Wednesday in Luanda. The fact was announced by the companys delegate to Angola, Lus Manuel Berenguel, during a press conference intended to release the net results of the 23 consecutive years of profits of the Emirates Group, which stood at USD 1.6bn this year. The official noted that this year the Angola route expects to increase its transportation capacity as the firm is planning to introduce a Boeing 777-300 aircraft. (Source: Angola Press)

Emirates Airline to increase Dubai-Luanda flights

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LESOTHO
Macroeconomic data
Lesotho Current account balance (% GDP) Govt gross debt (% GDP) Govt net debt (% GDP) Nominal GDP (USDbn) GDP growth (%, constant prices) GDP per capita (USD) Source: IMF WEO April 2011 2008 7.9 53.4 0.1 1.6 4.7 653.0 2009 -0.5 39.6 0.1 1.7 3.0 689.2 2010 -16.2 37.7 0.0 2.1 2.4 836.9 2011E -23.4 42.4 0.1 2.4 3.1 931.8 2012F -17.8 46.1 0.1 2.6 4.1 968.6 2013F -13.1 46.9 0.0 2.7 4.7 1,017.9

Political and economic news


Lesotho looks to Malaysia for investments and expertise
Lesotho, has invited Malaysian companies to develop its water resources which holds huge investment potential. Besides supplying treated water for domestic and industrial usage, the world's major producer of diamond is keen to see Malaysian companies venture into hydro power generation. The Honorable Prime Minister, Pakalitha Mosisili said there was a huge potential in hydro power generation waiting to be tapped in the country. "Our hydro power generation centre has the capacity to generate 72MW of electricity but we need more so there is a potential for investment," he stated in a joint press conference with Malaysian Prime Minister Najib Tun Razak. The two leaders earlier held bilateral discussions where both countries pledged to strengthen human capital development besides exploring new areas of investments. Najib said Malaysia would help train Lesotho's police force and invite its diplomats to enrol in the Institute of Diplomacy and Foreign Relations (IDFR) under the Malaysian Technical Cooperation Programme (MTCP). The Prime Minister, who was on his first official visit to Malaysia, later opened the country's high commission in Kuala Lumpur. (Source: Malaysian Digest)

Company news
Gem and Lucara end merger talks
Gem Diamonds has announced the termination of talks with Lucara Diamonds over a possible merger that could have culminated in the two Southern Africa-focused companies creating a billion dollar mining house. No agreement has been reached in its preliminary discussions with Lucara Diamond Corp. and these discussions are no longer on going, Gem Diamonds stated. The company added that it continues to monitor potential value enhancing opportunities outside its existing portfolio. Gem Diamonds operates the Letseng mine in Lesotho and Ellendale in Australia. According to earlier reports, Gem and Lucara - which are valued at about USD 606m and USD 412m respectively - have been in negotiations since February and had signed a confidentiality accord. Lucara, which took over AK6 Mine from African Diamonds, is currently constructing the mine with production set for early 2012. AK6 is expected to have a throughput of up to 3mtpa in the first phase of development, instead of the previously anticipated 2mtpa (Source: Diamonds.Net)

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60 | African Alliance Pan-African Securities Research

20 May 2011

African Alliance Botswana Securities African Alliance House Fairgrounds Office Park Gaborone, Botswana Telephone: +267 318 8958 African Alliance Lesotho Suite 4, SA Trust Building 214 Moshoeshoe Road Maseru, Lesotho Telephone: +266 22 312 673 African Alliance Rwanda 6th Floor, Centenary House Avenue de la Paix Kigali, Rwanda Telephone: +250 785 694 490 African Alliance Uganda 1st Floor, Workers House 1 Pilkington Road Kampala, Uganda Telephone: +256 417 777700

African Alliance Securities Ghana 2nd Floor, Heritage Towers 6th Avenue, Ridge Ambassadorial Enclave Accra, Ghana Telephone: +233 30 267 9761-2 African Alliance Securities (Malawi) 4th Floor, Livingstone Towers Glyn Jones Road Blantyre, Malawi Telephone: +265 183 1995 African Alliance South Africa Securities 4th Floor, 23 Melrose Boulevard Melrose Arch 2196 Johannesburg, South Africa Telephone: +27 11 214 8300 African Alliance Securities Zambia The Colosseum, Block A, Ground Floor Bwinjimfumu Road Lusaka, Zambia Telephone: +260 211 840 512

African Alliance Kenya Securities 1st Floor, Transnational House Mama Ngina Street Nairobi, Kenya Telephone: +254 20 276 2000 IJG Securities* 1st floor, Heritage Square 100 Robert Mugabe Avenua Windhoek, Namibia Telephone: +264 61 383 500 * Associate company African Alliance Swaziland Securities 2nd Floor, Nedbank Centre Cnr Sishayi and Sozisa Roads Mbabane, Swaziland Telephone: +268 2 404 8394 African Alliance Stockbroking Holdings 1st Floor, Ebene Heights 32 Ebene Cybercity Ebene, Mauritius Telephone: +230 466 9591

Terms of use - disclaimer disclosure This document is confidential and issued for the information of internal and external clients of African Alliance Ltd (Reg no 79171C, Isle of Man) and its subsidiaries (African Alliance). It is subject to copyright and may not be reproduced in whole or in part without written permission from the author. The information, opinions and recommendations contained herein are and must be construed solely as statements of opinion and not statements of fact. No warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such recommendation or information is given or made by African Alliance in any form or manner whatsoever. Each recommendation or opinion must be weighed solely as one factor in any investment or other decision made by or on behalf of any user of the information contained herein and such user must accordingly make its own study and evaluation of each strategy / security that it may consider purchasing, holding or selling and should appoint its own investment or financial or other advisors to assist the user in reaching any decision. African Alliance will accept no responsibility of whatsoever nature in respect of any statement, opinion, recommendation or information contained in this document. African Alliance is an investment bank, and provides a full range of investment banking services. It and its affiliate companies conduct investment banking business that relates to companies covered in its research, including market making, proprietary trading, fund management and providing investment services. African Alliance has a policy in place to avoid or manage conflicts of interest that may arise due to its diverse activities. Our traders or other professional staff may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, our proprietary trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research.

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Important US regulatory disclosures on subject companies


This material was produced by African Alliance Securities, solely for information purposes and for the use of the recipient. It is not to be reproduced under any circumstances and is not to be copied or made available to any person other than the recipient. It is distributed in the United States of America by Enclave Capital LLC. and elsewhere in the world by African Alliance or an authorized affiliate of African Alliance (such entities and any other entity, directly or indirectly, controlled by African Alliance, the Affiliates). This document does not constitute an offer of, or an invitation by or on behalf of African Alliance or its Affiliates or any other company to any person, to buy or sell any security. The information contained herein has been obtained from published information and other sources, which African Alliance or its Affiliates consider to be reliable. None of African Alliance or its Affiliates accepts any liability or responsibility whatsoever for the accuracy or completeness of any such information. All estimates, expressions of opinion and other subjective judgments contained herein are made as of the date of this document. Emerging securities markets may be subject to risks significantly higher than more established markets. In particular, the political and economic environment, company practices and market prices and volumes may be subject to significant variations. The ability to assess such risks may also be limited due to significantly lower information quantity and quality. By accepting this document, you agree to be bound by all the foregoing provisions. 1. African Alliance or its Affiliates have not recently been the beneficial owners of 1% or more of the securities mentioned in this report. 2. African Alliance or its affiliates have not managed or co-managed a public offering of the securities mentioned in the report in the past 12 months. 3. African Alliance or its affiliates have not received compensation for investment banking services from the issuer of these securities in the past 12 months and do not expect to receive compensation for investment banking services from the issuer of these securities within the next three months. 4. However, one or more of African Alliance or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or sell those securities or options thereon either on their own account or on behalf of their clients. 5. As of the publication of this report African Alliance does not make a market in the subject securities. 6. African Alliance or its Affiliates may, to the extent permitted by law, act upon or use the above material or the conclusions stated above or the research or analysis on which they are based before the material is published to recipients and from time to time provide investment banking, investment management or other services for or solicit to seek to obtain investment banking, or other securities business from, any entity referred to in this report. Enclave Capital LLC. is distributing this document in the United States of America. African Alliance Securities accepts responsibility for its contents. Any US customer wishing to effect transactions in any securities referred to herein or options thereon should do so only by contacting a representative of Enclave Capital LLC.

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