MENA-2 TUESDAY MORNING ROUND-UP

Egypt
New policy for raw milk pricing Supreme Administrative Court to start hearing the appeal filed by the NUCA and PHD for land in East Cairo in September Housing and Development Bank reported a consolidated net profit of EGP25.9 million in 2Q2011 Bank of Alexandria reported 1H2011 net profit, down 69% Y-o-Y

Saudi Arabia
Zamil won a contract worth SAR142.24 million from Koreas Doosan Heavy Industry NSCSA wins SAR230 million contract from Saudi Arabias Ministry of Defense and Aviation Nama Chemicals CEO resigns, new CEO appointed

Algeria
Algeria to unveil 3G tender documents by mid-September

Morocco
Finance.Com buys 4.68% stake in BMCE from Caja De Ahorros Del Mediterraneo Santusa Holding increased its stake in Attijariwafa Bank

EFG Hermes Research

EIPICO - Downgrade forecasts on Factory Delay, Higher Tax and 2Q2011 Trends; Maintain Buy - Company Note - 22 August 2011 Paints and Chemical Industries (Pachin) - 4Q2010-2011 Net Income Beats Our Estimate; Reiterate Fair Value and Neutral Rating - Flash Note - 22 August 2011

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

Egypt News
New policy for raw milk pricing A new policy to price raw milk has been agreed to by most dairy farms and dairy producing companies. The policy calls for varying raw milk prices based on changes in feed costs and taking into consideration the impact of seasonality. The price of raw milk increased to EGP3.25/kg from EGP3.0/kg, effective 1 July 2011, according to the new pricing formula. Juhayna (JUFO.CA) sent a letter to the Egyptian Competition Authority (ECA) confirming its compliance with the new pricing policy, according to Mist News. The policy will likely increase the cost pressures on Juhayna if the company doesnt opt to increase its dairy prices once more this year. YTD, Juhayna increased the price of some products across its three segments (dairy, juice, yogurt) to partly pass on rising costs of milk commodities, other inputs and labour. Our forecasts for FY2011 call for a 110 bps decline in the EBITDA margin to 22%, which, in our view, may look optimistic if Juhayna is not able to continue passing on rising cost pressures to the end consumer. (Mist News, Wafaa Baddour) Juhayna: EGP4.90, Rating: Neutral, FV: EGP5.60, MCap: USD595 million, JUFO EY / JUFO.CA

Supreme Administrative Court to start hearing the appeal filed by the NUCA and PHD for land in East Cairo in September The Supreme Administrative Court will start hearing on 24 September 2011 the appeal filed by the New Urban Communities Authority (NUCA) and Palm Hills Developments (PHD) [PHDC.CA] against the April court verdict that scrapped PHDs land purchase contract from the authority. An administrative court had ruled to scrap the land contract between PHD and the NUCA, which awarded c1 million square metres (sqm) of land in East Cairo to PHD, as it violated the law according to the court. PHD acquired the land for cEGP250/sqm in August 2006 and has to date paid c55% of contract amount; the remainder will be paid off in instalments until 2013. The land hosts PHDs Palm Hills Kattameya project, in which 407 out of a total of 507 offered villas have been sold already for a total of EGP1.1 billion (construction of the villas is nearing completion). PHD plans to deliver a lions share of the units this year. (Al Shorouk) Palm Hills Developments: EGP1.76, Rating: Sell, FV: EGP2.10, MCap: USD309 million, PHDC EY / PHDC.CA Housing and Development Bank reported a consolidated net profit of EGP25.9 million in 2Q2011 Housing and Development Bank (HDBK.CA), the Cairo-based lender, reported a consolidated (including the financial result of the real estate subsidiaries) net profit of EGP25.9 million in 2Q2011, down 57% Y-o-Y. The bank reported a six-month standalone net profit of EGP94.6 million in 1H2011, compared to EGP134.5 million in 1H2010, a decline of 29.6% Y-o-Y. The banks revenue declined by 7.4% Y-o-Y to EGP286 million. Earnings before tax were EGP114 million in 1H2011, compared to EGP148 million in 1H2010. (Bloomberg) Bank of Alexandria reported 1H2011 net profit, down 69% Y-o-Y Bank of Alexandria, the Egyptian subsidiary of Italy-based Intesa Sanpaolo SpA, reported a net profit of EGP53.2 million in 1H2011, compared to EGP172 million in 1H2010. The bank increased its share of treasury bills to EGP8,600 million in June 2011 from EGP4,790 million in December 2010. The loan book shrank by 1.1% Y-o-Y to EGP17,900 million in 1H2011, while deposits grew by 4.6% Y-o-Y to EGP28,600 million in 1H2011. The loans-todeposits ratio was 62% as at June 2011. (Bloomberg)

Saudi Arabia News

Zamil won a contract worth SAR142.24 million from Koreas Doosan Heavy Industry Zamil Projects, a business unit of Zamil Air Conditioning and Refrigeration Services Company (2240.SE), has been awarded a new contract worth SAR142.25 million (USD 37.9 million) by Doosan Heavy Industries & Construction Company, one of Koreas largest heavy industrial firm and the EPC contractor for the Rabigh 6 project, to provide engineering, procurement and construction (EPC) services and mechanical works at Rabigh Power Plant Stage 2, owned by the Saudi Electricity Company (SEC) and located on the Red Sea coast in the western region of Saudi Arabia. It is expected that the project will be commissioned in 2013, with final acceptance in December 2015. (Company Disclosure) Zamil: SAR25.70, Rating: Neutral, FV: SAR33.24, MCap: USD411 million, ZIIC AB / 2240.SE NSCSA wins SAR230 million contract from Saudi Arabias Ministry of Defense and Aviation The National Shipping Company of Saudi Arabia (NSCSA) [4030.SE] announced that it has won a three-year SAR230 million (USD61 million) transport and shipping services contract from the Kingdoms Ministry of Defense and Aviation, the company said in a statement to the Saudi Stock Exchange. The contract will be effective starting 11 September 2011 and will contribute to the companys financial results in 4Q2011, the company explained. (Tadawul) NSCSA: SAR11.10, Rating: Neutral, FV: SAR13.70, MCap: USD932 million, NSCSA AB / 4030.SE Nama Chemicals CEO resigns, new CEO appointed The Nama Chemicals Company (Nama) [2210.SE] has announced that the Chief Executive Officer (CEO) of the company, Abdulmohsen Al Ogaili, has resigned for personal reasons and has been replaced with Abdulrahman Al Hammad. According to the announcement, Al Ogaili will continue to be a member of the board of directors (BOD). (Tadawul, Argaam)

Algeria News
Algeria to unveil 3G tender documents by mid-September Algeria will make available tender documents for the long-awaited 3G licences by mid-September 2011, according to Algerias Telecommunications Minister, Moussa Benhamadi, who added that the tender will likely be held in early

2012 for all three mobile operators, Orascom Telecoms (OT) [ORTE.CA] Djezzy, Wataniyas [NMTC.KW] Nedjma, and Algrie Telecoms Mobilis. Local press reported that the licences would be priced at USD41 million each. Wataniyas Nedjma has already declared its interest in the auction, according to the companys CEO, Joseph Ged. Plans for the 3G auction had been in place since mid-2008, but have been delayed so far. (TeleGeography) OT: EGP3.39/USD2.76, MCap: USD2,896 million, ORTE EY / ORTE.CA Wataniya: KWD1.920, Rating: Buy, FV: KWD2.751, MCap: USD3,564 million, NMTC KK / NMTC.KW

Morocco News
Finance.Com buys 4.68% stake in BMCE from Caja De Ahorros Del Mediterraneo Moroccan conglomerate Finance.Com has purchased the 4.68% stake that Spains Caja De Ahorros Del Mediterraneo (CAM) held in Banque Marocaine du Commerce Extrieur (BMCE) [BMCE.CS]. Finance.Com bought 7,937,000 shares for MAD1.5 billion, increasing its stake to 9.36%. CAM was asked by the European authorities to strengthen its equity after failing the stress test in July 2011, which lead the bank to divest its minority stake in BMCE. (L'conomiste) BMCE: MAD202.00, Rating: Sell, FV: MAD150.33, MCap: USD4,085 million, BCE CM / BMCE.CS Santusa Holding increased its stake in Attijariwafa Bank Santusa Holding, a subsidiary of the Spanish bank Grupo Santander purchased 1,929,400 shares for MAD773.9 million from the Moroccan market in Attijariwafa Bank (ATW.CS). Santusas stake reached 5.55% in AWB, with management planning to withhold its purchases in the upcoming twelve month. (L'conomiste) Attijariwafa Bank: MAD368.00,Rating: Neutral, FV: MAD309.80, MCap: USD9,047 million, ATW CM / ATW.CS

EFG Hermes Research

EIPICO - Downgrade forecasts on Factory Delay, Higher Tax and 2Q2011 Trends; Maintain Buy - Company Note - 22 August 2011 Lower FV by 10% on Tax Increase; Fundamentals Intact: We reduce our fair value (FV) to EGP40.0/share from EGP44.3/share to reflect: i) an increase in Egypts standard corporate tax rate to 25% from 20%, and ii) a delay until 1Q2012 in launching the new factory. We broadly maintain our 2011 net profit estimate as our revenue cut was offset by the removal of amortisation and the new factorys pre-operating expenses. Our estimated 2010-2017 net profit CAGR falls to 10% from 12%. We remain positive on the companys investment thesis, as EIPICO should be able to capitalise on resilient consumption growth, boosted by higher government spending and facilitated by EIPICOs new capacity. We reiterate our Buy rating, as our FV offers 19% upside potential to the share price. Expect Flat 2011 Bottom Line on Lower Revenue Growth and Margin: We downgrade our 2011 revenue forecast by 10% to EGP1.14 billion (+3% Y-o-Y), as: i) 1H2011 showed marginal revenue growth on sluggish local revenue growth, a slight export decline and a sharp drop in ampoule sales to third parties, and ii) we shift the impact of the new factory to 2012 instead of 2H2011, as per management guidance. Workers went on a three-day strike in midAugust, primarily protesting against a delay in dissolving the employee fund; management does not expect this to significantly impact 3Q2011 results. Our 41.7% EBITDA margin (-55 bps Y-o-Y) captures lower economies of scale and higher costs, mainly wages, and the EGP weakening. This is offset by lowered amortisation (on a change in accounting policies), which leaves our EBIT growth at 5%. Adjust 2012-2017 Outlook on New Facility Drag: Our 12% revenue CAGR reflects the expectation of export recovery and capacity expansion. We forecast pre-operating expenses related to the new plant will be capitalised, in line with management guidance, rather than booked in the income statement as we had assumed previously. Over the past few years EIPICO has run at nearly fully utilised capacity. The new factory is expected to comprise c30-40% of existing output by 2014. We broadly keep our terminal EBITDA margin forecast at 40.0%. Lastly, our estimated 20122017 net profit CAGR is 12%. (Nada Amin, Wafaa Baddour) Paints and Chemical Industries (Pachin) - 4Q2010-2011 Net Income Beats Our Estimate; Reiterate Fair Value and Neutral Rating - Flash Note - 22 August 2011 Reiterate Neutral Rating with a FV of EGP36.0/Share: We reiterate our Neutral rating, as our fair value (FV) is 4% below the current market price. We believe that the companys strong cash position, allowing for an attractive estimated dividend yield of 12% in FY2010-2011, is well-balanced with: i) rising global raw material costs and EGP

depreciation, ii) limited upside potential on selling prices, and iii) an end of the tax holiday. We believe that these concerns justify the stocks seemingly attractive multiples (over 50% cheaper than Pachins peers). 4Q2010-2011 Net Income Significantly above Our Expectations: Paints and Chemical Industries (Pachin) announced unaudited consolidated 4Q2010-2011 net income of EGP24.3 million, significantly above our estimate of EGP13.5 million. We believe this was driven by: i) lower-than-estimated costs, despite higher raw material prices, on the sale of low-cost inventory, and ii) lower provisions. Net Income was down 40% Y-o-Y (on higher costs) and up 57% Q-o-Q (on demand seasonality). Sales reached EGP204.5 million (up 5% Y-o-Y and 42% Q-o-Q), beating our estimate of EGP183 million, on higher-than-estimated prices, in our view. (We estimated flat prices Q-o-Q on weak demand.) The gross profit margin came in at 15.3%, down from 17.5% in 3Q2010-2011 and 25.5% in 4Q2009-2010, but above our estimate of 11% on higher-than-expected prices and lower-than-expected costs. Expected 2010-2011 Dividend Yield of 12%; End of Tax Holiday: We expect the company to pay a EGP4.50/share cash dividend for FY2010-2011 (flat Y-o-Y), implying a 68% payout ratio and a 12% dividend yield. We highlight that the companys tax holiday ends this year, and therefore we expect FY2011-2012 net income to drop 21% Y-o-Y to EGP106 million (assuming a 20% income tax). Pachin did not mention the tax rate that will be paid starting in 20112012; however, if we assume a 25% income tax, this would reduce both our net income and FV estimate by 5%. (Malak Youssef, Ahmed Gad)
[Note EFG Hermes is not responsible for the accuracy of news items taken from other media.] _________________________________________________________________________________________________________________ Our investment recommendations take into account both risk and expected return. We base our fair value estimate on a fundamental analysis of the companys future prospects, after having taken perceived risk into consideration. We have conducted extensive research to arrive at our investment recommendations and fair value estimates for the company or companies mentioned in this report. Although the information in this report has been obtained from sources that EFG Hermes believes to be reliable, we do not guarantee its accuracy, and such information may be condensed or incomplete. Readers should understand that financial projections, fair value estimates and statements regarding future prospects may not be realized. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice. This research report is prepared for general circulation and is intended for general information purposes only. It is not intended as an offer or solicitation with respect to the purchase or sale of any security. It is not tailored to the specific investment objectives, financial situation or needs of any specific person that may receive this report. We strongly advise potential investors to seek financial guidance when determining whether an investment is appropriate to their needs. No part of this document may be reproduced without the written permission of EFG Hermes.