Business recap: Small caps market, new EgyptAir charter service and Sinai Cement in the news

Ahmed A. Namatalla
6 Min Read

CMA Chairman: small-caps market coming

CAIRO: Capital Market Authority (CMA) Chairman Hani Sarie El-Din says the proposed small caps stock market is at least a year away. Speaking to The Daily Star Egypt, Sarie El-Din says the goal is to make it easier for small and medium-sized companies to comply with capital market regulations even if they can t meet those of the Cairo and Alexandria Stock Exchange (CASE).

Despite the fact that this market is not regulated, and is in no way associated with the CASE, people continue to make the mistake of believing their investments are safe, says Sarie El-Din. We still have to warn people and inform companies of the conditions they must abide by.

Currently the CMA is only responsible for reporting daily stock transactions for companies in the outside market and serves no regulatory functions, he says. Off-CASE trading appeared as a way to allow de-listed companies to continue trading. Sarie El-Din says the launching of a small-caps market has succeeded in curbing over-the-counter activities in markets such as South Africa, Italy and India.

Just 14 former CASE companies now enjoy daily trading activity, recording average daily volumes of LE 4 million to LE 5 million. Sarie El-Din says he expects a proposal for the establishment of a second market to be ready by the end of the year with actual implementation coming in the end of 2007 or beginning of 2008.

What we re trying to say is anything associated with the CASE from that point forward will be subject to full disclosure rules, he says. There will be different levels for disclosure, but every company that wishes to issue shares will be required to comply.

Sarie El-Din further confirms the ongoing investigation into insider trading of National Company for Glass (NCG) shares and the CMA s decision to reverse all transactions that took place between July 24 and Aug. 9. But contrary to what was reported in Friday s issue of The Daily Star Egypt, he says NCG was not traded on the outside market and was, in fact, CASE-listed at the time of the alleged violations.

EgyptAir launches new charter service

EgyptAir Chairman Atef Abdel Hamid announced this week the company is now setting up its own charter service, Express, to better compete on the local market. Abdel Hamid says the company has reached agreement with Brazilian aircraft manufacturer Embraer to purchase six 76-passenger jets valued at more than $100 million.

Catherine Fracchia, Embraer Europe, Africa and Middle East press relations officer, confirms the company has held talks with EgyptAir which have resulted in the signing of a commercial proposal pending contract execution. The agreement, she adds, is for the purchase of six E170 models, the company s short-medium range jet in production since 2002. Fracchia declined to comment on pricing or a possible delivery date until the deal is finalized.

When concluded, the deal will help the national flag carrier cope with the imminent implementation of Open Skies at Cairo International Airport (CIA). The company now commands more than 60 percent market share of domestic travel. But as the Ministry of Civil Aviation (MCA) is preparing to transform CIA into a regional hub and fully implement Open Skies, the company is expected to face fierce competition from local and regional low cost carriers.

The impending deal is set to become the first civilian aircraft purchase by Egypt from Embraer. The Egyptian Air Force is the Embraer s biggest customer for its Tucano trainer aircraft, having purchased more than 130 since it entered production in the early 1980 s.

In 2005, EgyptAir signed a deal worth an estimated $850 for six Boeing 737-800s and options on six more to be delivered by 2009. In March, Abdel Hamid announced MCA is studying floating 20 percent of the company s shares in order to finance the purchase of 12 more aircraft by 2010.

Sinai Cement to build second production line

Just a day after reporting a 50 percent in YOY sales to LE 277 million, and a 53 percent rise in net income to LE 147 million, Sinai Cement announced last Thursday it plans to build a 4,000 ton-capacity clinker production line. The line is expected to double the company s clinker and cement production capacities to 2.5 million tons per annum from 2.7 mtpa, respectively.

The company captured 4 percent market share in Q1, 2006 and credits the earnings increase to an 18 percent increase in sales and 22 percent increase in local OPC bagged cement price to nearly LE 300 per ton.

Companies across the country s cement sector have all reported double and triple digit growth in earnings, widely credited by analysts to the increase in price. Analysts also expect lower earnings increases for the sector overall in the coming year as a result of the government s decision last week to cap OPC bagged prices at LE 290 per ton.

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