By Shailesh Kuber
Forecast improved Q2 numbers for Egyptian companies reflect general improvement in business sentiment.
Beltone Financial said on Wednesday almost all Egyptian companies should see sequentially improved second-quarter results, reflecting the return of consumers to the market and an improvement in general business sentiment.Half-year results for many Egyptian companies will show a fall in profits on a year-over-year basis, but this is a fact which the market has already discounted, Beltone said in a pre-earnings report on Egypt's banking, consumer goods, construction and telecoms sectors.
The investment bank, however, said Egypt's National Societe Generale Bank should do better in the second quarter on a year-over-year basis, aided by provisions being reversed and a sharp rise in investment income.
Beltone said its long-term outlook was positive on the Egyptian banking sector.
"We are still positive about the sector's performance and believe that the potential for its growth is significant, despite our expectation of slower balance sheet growth going forward, compared to the last few years, affected by the overall level of economic activity," it added.
On the consumer goods/leisure & services sector, the investment bank said certain companies in this space had witnessed a gradual improvement in unit sales - a trend that continued into the second quarter with sales in each month since March seeing rises from the preceding month.
"This should be evident when GB Auto, Olympic Group and OrientalWeavers Carpet Co publish their first-half results," Beltone said.
The investment bank also expects the construction and building materials companies it covers to maintain an overall good performance in the second quarter as construction activity in Egypt remained robust during the period.
Beltone expects Orascom Construction Industries to post sequentially higher second-quarter results due to the cyclical nature of the business.
On Egypt's telecommunications sector, Beltone said despite the economic slowdown, free cash flow remains strong for the local operators, namely Orascom Telecom, Mobinil and Telecom Egypt, with expectations of healthy dividends at year end 2009. (Reuters)