Thursday, April 3, 2014

Corporate news from Naeem Brokers




 

Cabinet approves use of coal for power generation

EGP weakens at central bank dollar sale

CAPMAS: 27% YoY decrease in tourist arrivals in February 2014, reaching 617k tourists cf. 845k in Feb. 2013

Cairo International Airport has reported a decline in passenger traffic by 1.9% YoY in 1Q14

Blackouts in Egypt will be reduced, but not ended: Electricity officials

Red Sea Ports Authority announces new development plans  

EGAS receives plot of land in Rashid to establish gas processing plant, which pertains to BP's North Alexandria project

North Giza, Banha, and Ain El Sukhna power plants are to commence operations next June, adding 2,400MW to the national grid

Bombs kill two, including police officer, at Cairo University

Egypt to pass new "anti-terrorism" law - ministers

Misr Cement Qena OGM approves the distribution of a cash dividend of EGP6/share, representing a payout of 66% and a yield of 8%

Egyptian Transport Company invests EGP170m in new project

Arabtec Holding appoints CEO for Egypt subsidiary

National Bank of Egypt and Banque Misr warn investors against making any transactions on the assets of Ahmed Bahgat group, as ownership is transferred to the Egyptian Company for Real Estate Asset Management and Investment

 

KEY STORY

Cabinet approves use of coal for power generation

Egypt's cabinet on Wednesday approved the use of coal for power generation after a fierce debate within the government over whether the highly pollutant fuel should be permitted for use by the energy-intensive cement industry. Struggling to avoid public unrest over blackouts, the government has cut natural gas supplies to factories, prompting cement companies to renew their demand to use the fuel. Companies including Lafarge and Suez Cement, have said the industry is operating at half capacity since the gas cuts began in January. Government spokesman Hani Salah said no approval from the interim president was required since the decision was taken by the cabinet and is not a law. Asked when companies would have the green light to use coal, he said that "most environmental studies" had already been conducted and predicted it would "not be very long" before plants would be using coal. Suez Cement CEO Bruno Carre told Reuters last week one of the company's four plants could be ready to run on coal by September. (Source: Ahram Online)

Our take – Positive for cement companies

*         The latest development follows indications (in March) of a permit to use coal from Egypt's  Industry and Investment Minister, Mounir Fakhry Abdel Nour. The minister had said that the first factory to begin running on coal will do so in September

*         Nevertheless, this comes as positive news for the cement industry, given the additional option of being able to switch to coal in times of gas/mazut shortages

*         The cabinet approval comes on the back of energy supply shortages (especially with regards to natural gas) impacting production levels and in turn, resulting in a sudden surge in cement prices. As per some indications, cement prices are still hovering around EGP750/ton, up by around 20% owing to the shortage of energy supplies hurting plant operating rates

*         However, in our opinion, this is something that would take time to implement. Essentially, companies also need to have the logistics/supply chain (from import-to-the-plant) in place to use the commodity in Egypt

*         We need to confirm if the standards to use coal (for energy generation) would be similar to those applied in the EU; which stipulates a mix/ratio  

*         Also, it should be a tough task on the government to agree on granting a blanket license  to all cement producers to import coal. It is going to be hard for companies located close to towns and cities (or residential areas) to be able to get permits to use coal (due to environment concerns)

*         Areas that are tourist destinations could also be barred from the use of coal. Hence, unless there is clarity from the government/authorities on the permits/licenses, it is unlikely that companies would pump capex into coal infrastructures

Regarding implications of coal usage on valuations within our coverage universe, our estimates have already accounted for the opportunity cost of using the alternative fuel. 

ECONOMIC & POLITICAL NEWS

EGP weakens at central bank dollar sale

The Egyptian pound (EGP) weakened against the dollar at a central bank dollar sale on Wednesday for the third time in four auctions. The central bank sold USD38.3m to banks with a cut-off price of EGP6.9624, down from Monday's EGP6.9575. It had offered USD40m. A trader on the parallel market said the dollar traded at EGP7.39 earlier this week. (Source: Reuters)

CAPMAS: 27% YoY decrease in tourist arrivals in February 2014, reaching 617k tourists cf. 845k in Feb. 2013. (Source: Al Allam Al Youm Newspaper)

Cairo International Airport has reported a decline in passenger traffic by 1.9% YoY in 1Q14. (Source: Alborsa Newspaper)

Blackouts in Egypt will be reduced, but not ended: Electricity officials

Following two days of increased power cuts, Egypt's government on Wednesday announced plans to increase the country's supply of electricity by importing natural gas and diesel in the short term and beginning construction on three new power plants. Energy consumption is currently peaking at around 22,000MW, much lower than the 34,000MW used in the hottest months of summer – which raises concerns about continuing fuel shortages in the coming months. Gaber El-Desouki, chairman of the Egyptian Electricity Holding Company, addressed this week's power cuts on Wednesday at a joint press conference with Khaled Abdel-Badie, of the Egyptian Natural Gas Holding Company (EGAS). El-Desouki said that the electric grid had been missing between 3000MW - 4000 MW per day on Monday and Tuesday – compared to an average of 1000MW - 2000MW during the last two weeks. He said the blackouts became more frequent as several units of power plants had been out of service for maintenance, while others had been stopped due to previous plans as well as being out of fuel. But he said that while the cuts would decrease, no one should expect them to end anytime soon. In the short term, Egypt is preparing to import natural gas beginning in August, as the government is finalising a deal to buy a floating unit to re-gas LNG in Ain Sokhna, Abdel-Badie said. (Source: Ahram Online)

Red Sea Ports Authority announces new development plans  

The Red Sea Ports Authority (RSPA) announced the implementation of new projects in the Adabiya and Tawfik ports with the aim of stimulating both domestic and foreign investment opportunities. Minister of Transportation Ibrahim El-Demeiry said that the projects include the building of a new cargo terminal which will "open new business opportunities and jobs" in Port Tawfik. The cargo terminal will span 250,000 sqm. and accommodate medium-sized ships. The ministry said the capacity of the port would increase to 1.5mt and offer 500 new job opportunities during the construction period and 2,000 opportunities after its completion. RSPA Chairman Hassan Falah said a station for stocking wheat will be established in the Adabiya Port. The expected capacity of the station will be 2.5mt and will offer 700 job opportunities while under construction and 1,500 jobs after the project is completed. (Source: Reuters)

EGAS receives plot of land in Rashid to establish gas processing plant, which pertains to BP's North Alexandria project. (Source: Alborsa Newspaper)

North Giza, Banha, and Ain El Sukhna power plants are to commence operations next June, adding 2,400MW to the national grid. (Source: Alborsa Newspaper)

Bombs kill two, including police officer, at Cairo University

Explosions outside Cairo University killed two people including a police brigadier-general on Wednesday in what appeared to be a militant attack targeting security forces. A group calling itself Ajnad Misr, or Soldiers of Egypt, claimed responsibility for the blasts, which follow a string of operations launched against police and soldiers since 3 July. Hours after the explosions in an upmarket area near the zoo in Giza, a high-level government security committee said it would present legislation "connected to combating terrorism" for the cabinet's approval on Thursday, without going into further details. (Source: Reuters)

Egypt to pass new "anti-terrorism" law - ministers

Senior Egyptian ministers said they would pass legislation on Thursday "connected to confronting terrorism", in a statement released hours after three explosions killed two people in Cairo. The statement from a high-level security committee including the prime minister and ministers of defence and interior, did not go into further details on the contents of the law. It said the bill would be presented to the cabinet for approval. (Source: Reuters)

CORPORATE NEWS

Misr Cement Qena OGM approves the distribution of a cash dividend of EGP6/share, representing a payout of 66% and a yield of 8%. (Source: Al Allam Al Youm Newspaper)

Egyptian Transport Company invests EGP170m in new project

Egytrans said it started negotiations with local and international investors to establish a new project at EGP170m to transport grains to and from the Port of Alexandria through Nubaria canal. The company announced dividend distribution of EGP0.5/share as of 17 April 2014 and shareholders as of 14 April 2014 are entitled to the dividend distribution. (Source: Mubasher)

Arabtec Holding appoints CEO for Egypt subsidiary

Arabtec Holding announced in a press release the appointment of Sami Asad as Chief Executive Officer for its newly created subsidiary: Arabtec Egypt for Real Estate Development, and reporting directly to the MD and CEO of Arabtec Holding. (Source: Mubasher)

National Bank of Egypt and Banque Misr warn investors against making any transactions on the assets of Ahmed Bahgat group, as ownership is transferred to the Egyptian Company for Real Estate Asset Management and Investment.  (Source: Al-Ahram Newspaper)

 

 

 

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