Beltone Egypt Orascom Construction Industries Valuation Update 13 April 2011

April 13th 2011 Recommendation

Hold*

Upside/Downside

9.4%

Target Price

s

Orascom Construction Industries (OCI)

E£262.71 Current Price

E£240.05

Valuation Update: Bumps won’t break stride Construction story intact for the long term…short term weakness to creep up

EPS FY11f

While government expenditure will be a key priority to kick-start the economy, we remain skeptical about the

E£21.04

resiliency the Egyptian government will show in tendering big ticket projects this year, amidst the instability.

Reuters Code

Elsewhere in the MENA region, infrastructure plans remain strong for markets such as Qatar, Abu Dhabi, and

OCIC.CA

Saudi Arabia, which OCI have highlighted as its main target markets. While management is optimistic that

Bloomberg Code

OCIC EY

construction activity in 2011 will be strong, reinforcing both, revenue and backlog growth during FY2011, we are inclined to be less optimistic. In the absence of a strong year on the awards side, revenue growth will be

Market Cap

limited to OCI’s current US$5.6 billion, its lowest backlog in three years, and 15% lower than the US$6.7

E£49.7 billion US$8.9 billion

billion recorded in December 2009. We expect construction’s EBITDA to decline by c.11% in FY2011, with backlog awards falling by 5%. We do not believe construction growth will rebound before FY2013.

Enterprise Value

E£60.1 billion US$10.9 billion

Excitement driven by fertilisers, EBITDA of US$1 billion by 2012

Number of Shares Outstanding

coupled with continued y-o-y price improvements for fertilisers, on the back of stretched grains supply /

Our optimism is derived from capacity additions at Sorfert, EFC, and a full year’s consolidation at DSM,

206.9 million shares

Through an increased contribution from the fertilisers’ portfolio, consolidated EBITDA margins are to reach

E£53.3 million

28% in FY2011, from the 22% achieved in FY2010. By FY2012, we expect OCI to command US$1 billion in fertilisers’ EBITDA (with Sorfert contributing 25%), almost double the US$500 million achieved in FY2010.

52-Week high/ low

E£291.81/204.37

E£ 315.0

demand dynamics. We expect OCI’s fertiliser’s EBITDA to grow at a CAGR of 30% over the next three years.

Average Daily Turnover

Lowering our FY2011 numbers, mainly due to construction

Shareholder Structure

Our top line estimates of E£28.8 and E£28.5 billion for FY2011f and FY2012f, are 2% and 12%, respectively,

55%|Sawiris Family 45%|Free Float

lower than our pre-crisis estimates, mainly due to the weak level of awards booked in FY2010, and because

OCI

EGX30

295.0

of the time lag of PPP infrastructure awards in Egypt. This has culminated into an EPS of E£21.04 (10% higher than consensus) and E£24.47 (2% lower than consensus) for FY2011 and FY2012, 8% and 13%, respectively, lower than our pre-January 27th estimates. Natural gas concessions to hold firm, in our view

275.0 255.0

“Water tight” agreements with the government over favourable natural gas concessions should withstand the

235.0 215.0

recent re-shuffle in government, in our opinion. Reneging on an agreement with an established private sector

195.0

employer of 80,000 people, would probably not be in the best interest of the government, looking to attract

175.0

FDI into Egypt. Assuming the scenario of an upward renegotiation of the agreement price in Egypt, to US$3.00 (what other energy intensive producers pay) our DCF valuation is E£234, a drop of 9%. We remain bullish on the OCI story, but see limited upside potential at current levels * Refer to back cover for investment rating

The stock has recently rebounded strongly from its low of E£203, rising by 20% to E£244, which is 12%

** Closing as of April 12h 2011

because of the turmoil in the MENA region, aside from a 200bps increase in the cost of equity used for

lower than the stock’s price of E£273 on January 24th. Our views on the company have not changed much construction and Egyptian fertilisers operations. The company has recently announced an MOU to explore fertiliser opportunities in Sub-Saharan Africa, along with bidding for BASF European fertiliser assets. We recommend a ‘Hold’ for OCI, until we get more color on the upcoming expansion plans. Selected Indicators

Omar Taha [email protected] Tel: +20 (0) 3531 0316 Allen Sandeep [email protected] Tel: +20 (0) 3531 0329

FY end December

2009a

2010a

2011f

2012f

2013f

2014f

Revenues (E£ mil.)

21,294

27,907

28,823

28,451

32,836

34,469

4,276

6,177

7,152

8,098

9,054

8,892

EBITDA (E£ mil.) EBITDA Margin (%)

20.1

22.1

24.8

28.5

27.6

25.8

Net Income (E£ mil.)

2,476

3,370

4,354

5,062

5,982

5,954

EPS after Approp. (E£)

11.97

16.29

21.04

24.47

28.91

28.77

20.1

14.7

11.4

9.8

8.3

8.3 2.0

P/E (x) P/B (x) EV/EBITDA (x) Net Debt/EBITDA (x)

Please see the important disclosures contained on the last page of this report.

Total Debt/Equity DPS (E£) Dividend Yield (%) Source: OCI, Beltone Financial estimates

3.0

2.8

2.6

2.4

2.2

14.2

9.8

8.5

7.5

6.7

6.8

1.8

1.9

1.6

1.1

0.6

0.2

0.8

1.0

0.9

0.7

0.6

0.3

10.08

11.80

15.00

16.25

16.50

17.70

4.2

4.9

6.2

6.8

6.9

7.4

Orascom Construction Industries (OCI)

Key Financial Figures FY End December (E₤ million)

2009a

2010a

2011f

2012f

2013f

2014f

18,733

18,967

18,416

16,335

19,975

21,796

2,561

6,893

10,407

12,116

12,862

12,673

21,294

25,861

28,823

28,451

32,836

34,469

Revenue Growth (%)

5.1

31.1

3.3

(1.3)

15.4

5.0

Construction EBITDA

2,776

2,997

2,762

2,369

2,796

3,051

Fertilisers EBITDA

1,589

2,988

4,696

5,990

6,591

6,209

OCI EBITDA

8,892

Construction Revenues Fertilisers Revenues OCI Revenue

4,276

6,177

7,152

8,098

9,054

EBITDA Margin (%)

20.1

22.1

24.8

28.5

27.6

25.8

EBITDA Growth (%)

(10.9)

44.5

15.8

13.2

11.8

(1.8)

Net Income

2,476

3,370

4,354

5,062

5,982

5,954

Net Profit Growth (%)

(34.6)

36.1

29.2

16.3

18.2

(0.5)

ROA (%)

5.3

6.2

7.9

9.3

10.2

10.8

ROE (%)

15.1

19.2

23.2

24.7

25.9

23.5

Total Debt/Equity (x)

0.8

1.0

0.9

0.7

0.6

0.3

Net Debt/EBITDA (x)

1.8

1.9

1.6

1.1

0.6

0.2

Times Interest Earned (x)

5.8

6.9

9.3

11.4

17.2

18.7

10.1

11.8

15.0

16.3

16.5

17.7

4.2

4.9

6.2

6.8

6.9

7.4

20.1

14.7

11.4

9.8

8.3

8.3

3.0

2.8

2.6

2.4

2.2

2.0

DPS (E£) Dividend Yield% P/E (x) P/BV (x) Source: OCI and Beltone Financial estimates

Beltone Financial Research

2

Orascom Construction Industries (OCI)

Valuation The stock is currently trading 12% lower than the price of E£273 on January 24th. Our views on the company have not changed much because of the turmoil in the MENA region, aside from a 200bps increase in the cost of equity used for construction and Egyptian fertilisers operations. We value OCI at E£262.71, assigning 100% to our three-stage DCF valuation, and removing our peers multiples valuation, which stood at E£307.78.

We see limited upside beyond the current price, and recommend a ‘Hold’ until we get more color on the upcoming expansion plans

Figure 1| OCI SOTP valuation Cost of equity

% of total value

Stake

OCI EV

Per share

25,063

100.0%

25,063

121

38%

18.5%

14,176

100.0%

14,176

69

22%

Egypt

18.5%

10,790

60.0%

6,474

31

10%

Sorfert

Algeria

19.0%

29,918

37.5%

11,219

54

17%

OCI Nitrogen

Netherlands

17.0%

4,826

100.0%

4,826

23

7%

Notore Other equity investments

Nigeria

20.0%

6,773

13.5%

914

4

1%

2,813

14

4%

Operation

Country

Construction

MENA

17.8%

EFC

Egypt

EBIC

EV

2,813

Enterprise Value Latest net debt (as of FY2010)

65,486 (11,126)

Equity Value

54,359

Fair value per share

262.71

Source: OCI and Beltone Financial estimates

Possible expansion announcement coming soon… Although we are bullish on the OCI story, we find limited upside potential from the current price. A potential deal on the fertiliser front is possible, as management has previously emphasised its interest in the sector.

Possible deal on the horizon might act as a trigger

The company has recently announced an MOU to form a 50/50 partnership with Maire Technimont to explore fertiliser opportunities in Sub – Saharan Africa, which, depending on the opportunity, might represent an upside to our valuation. In addition, we know that the company is currently involved in negotiations with BASF for a portfolio of 2.5 million tonnes of nitrates fertilisers. Other companies also bidding for the assets include Yara, EuroChem, and K+S AG (Germany’s potash producer that already has an agreement to market BASF’s products). This acquisition would mimic OCI’s previous venture into Europe, with the OCI Nitrogen assets (previously DSM). Our main justification surrounding the DSM deal was its cheap acquisition price at EUR310 million, a 2.2x EV/EBITDA multiple on the subsidiary’s FY2010 results. We would be wary of OCI overpaying for such an asset, amidst the stern competition it is facing in the bidding process.

OCI talking to BASF for a nitrogen fertilisers portfolio, with competition from Yara, EuroChem and K+S AG

Figure 2| Implied valuation Current market price PE (x) EV/EBITDA (x) P/B (x) ROE (%) Implied from our target price PE (x) EV/EBITDA (x) P/B (x) Construction peers PE (x) EV/EBITDA (x) P/B (x) ROE (%) PEG (x) Fertilisers peers PE (x) EV/EBITDA (x) P/B (x) ROE (%) PEG (x)

2011

2012

2013

11.4 8.5 2.6 23.2

9.8 7.5 2.4 24.7

8.3 6.7 2.2 25.9

12.5 9.2 2.9

10.7 8.1 2.7

9.1 7.2 2.4

13.9 9.5 2.0 11.2 1.1

11.6 7.9 12.5 0.9

10.2 7.0 13.2 0.7

14.5 9.1 4.1 27.1 1.1

12.8 8.1 25.8 1.0

11.8 8.1 25.7 0.9

Source: OCI, Bloomberg and Beltone Financial estimates

Beltone Financial Research

3

Orascom Construction Industries (OCI)

Construction story intact for the long term… The recent political turmoil in the MENA region does not change our bullish view on the construction space, in view of the protestors’ demands of improved standards of living and eradication of corruption, vying for increased government expenditure. With an excess of c.US$800 billion outlined in infrastructure expenditure

We retain our bullish view on the MENA region construction story

throughout the region, and budget surplus in the GCC economies, we believe OCI’s prospects as an experienced contractor in the region, will allow the company to benefit from a vibrant sector. Management is of the view that the company will be able to record revenue growth, alongside an increase in its backlog during FY2011; we view this with some skepticism. Public expenditure will undoubtedly be a means for the Egyptian government to kick-start the economy, but we believe that the PPP tendering pipeline

A lag is expected in Egypt for infrastructure spending, due to the nature of the interim government

will be facing a c.12 – 16 months time lag, due to the nature of the current interim government. Elsewhere in the MENA region, infrastructure plans remain strong for markets such as Qatar, Abu Dhabi, and Saudi Arabia, which OCI have highlighted as its main target markets. Figure 3| Backlog shrinks by 15%, y-o-y

Figure 4| Diversified exposure of backlog

US$ billion 8.00 7.00

7.61 6.87

7.00

6.93

7.21

7.20

MENA Other, GCC, 3.20% 1.70%

Africa Other, 1.10%

7.21 6.65

6.50

6.28

6.00

As ia, 3.90%

-15% y-o-y 6.02

Egypt, 27.50%

Euro pe, 11.00%

5.62

5.00

Dubai, 2.60%

4.00 3.00

2.90

2.00 0.97

1.00

1.16

1.17

0.93

0.79

0.71

0.45

0.36

0.68

0.60

Abu Dhabi, 15.00%

0.55

Algeria, 13.80%

0.00 1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

Backlog

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

Qatar, 20.30%

New awards

Source: OCI and Beltone Financial estimates

…while we expect short-term weakness to creep up OCI enters FY2011 with its lowest backlog value in three years, standing at US$5.62, with revenue outpacing new project awards in each of the last six quarters. The company has guided for construction revenue of US$3.6 – 4 billion, which would require the same number of new awards to at least maintain its level of

We forecast a range of US$3.0 – 3.2 billion, a drop of 8%, y-o-y

backlog. We forecast a range of US$3.0 – 3.2 billion for construction revenue, with our base case scenario incorporating a 5% drop in new awards, from the US$2.6 billion booked in FY2010. We forecast OCI’s EBITDA to drop by c.11% in FY2011, and another 9% decline in FY2012, stemming from a backlog of US$5.3 billion by year – end 2011. During the results call, Mr. Nassef Sawiris, OCI’s CEO, assured investors that the infrastructure portion of the backlog, (60% of the value as of 4Q10), does not expose the receivables on the company’s balance sheet to a default from sovereign clients, as the value of the contract is usually locked up in a fund until the project is complete. Nevertheless, we would not rule out a minor stretch in the working capital for FY2011, on the back of the increasing presence of sovereign entities in the company’s client list. However, this does not raise much concern. Figure 5| Construction awards recovery to be slow, in our opinion 2009a

2010a

2011f

2012f

2013f

2014f

6,930

6,650

5,620

5,076

5,729

5,780

6%

2%

-8%

-11%

22%

9%

Construction Revenue

3,351

3,411

3,121

2,769

3,386

3,694

Backlog Additions

3,200

2,620

2,470

3,300

3,300

3,700

Ending Backlog

6,650

5,620

5,076

5,729

5,780

5,938

EBITDA

497

539

468

401

474

517

EBITDA Margin (%)

14.8

15.8

15.0

14.5

14.0

14.0

Beginning Backlog % Revenue Growth

Source: OCI and Beltone Financial estimates

Beltone Financial Research

4

Orascom Construction Industries (OCI)

Analysing the two scenarios for construction We do not rule out the possibility of the governments taking extraordinary measures to provide an impetus for economic activity in 2011. Infrastructure projects tendering would be at the forefront of such measures, aiming to provide jobs and fulfill the protestors’ demands of better standards of living. We examine two scenarios for OCI, in terms of new project awards, over the coming three years. Figure 6| Construction awards recovery will be the catalyst

Assumption

Scenario 1 - Base case Slow pickup in Egypt’s infrastructure spending

Normalised construction awards (US$ million) Fair value of construction segment (E£ per share) OCI fair value (E£ per share)

Scenario 2 - Bull case Strong acceleration in infrastructure expenditure

3,150

4,250

121

167

262.71

305.14

Bullish scenario for construction would increase our valuation by 18%, and above the current price by 25%

Source: Beltone Financial estimates

Excitement driven by fertilisers Fertilisers’ EBITDA during FY2010 grew by 94%, y-o-y, mainly driven by the ramp-up at EBIC, the three quarters consolidation of OCI Nitrogen, price rebounds of 18% for urea, and 32% for ammonia, y-o-y. Consolidated volumes grew by c.80% in 2010, versus 2009. The main catalyst we see in 2011 is the commencement of production in Algeria, expected sometime between 3Q and 4Q 2011, and to a less extent,

We expect OCI’s fertilisers’ EBITDA to grow by 57% in FY11f, driven by a 25% increase in volumes…

the first full year of consolidation of OCI Nitrogen. We forecast a 23% increase in volumes in 2011, accompanied by another 25% increase in 2012, to reach 5 million tonnes by 2012, against the c.3.5 million tonnes sold in 2010. We expect fertiliser prices to continue growing in 2011, albeit at a slower pace than 2010. We forecast an 11% increase for both ammonia and urea in 2011, averaging US$367 and US$347, respectively. We do not expect grain supply / demand dynamics to improve much during the year, as weather conditions continue to

…and 11% increases for ammonia and urea prices

constrain the harvesting season, against the ever-growing demand for food. Oil prices have increased by c.25% since September 2010, on the back of instability in the MENA region, which will provide for an upswing in fertiliser demand, increasing the use of agricultural produce to obtain biofuels. The seasonal upswing witnessed in fertiliser prices over the last two months was expected, as farmers and traders re-stocked their inventories prior to the spring application season. Sorfert as the catalyst to earnings The inclusion of the 51% owned Sorfert, with an annual capacity of 1.2 million tonnes of urea and 0.8 million tonnes of ammonia, is the major driver we foresee for the stock. Gradually ramping up capacity at the plant, we expect Sorfert to account for 24% of OCI’s consolidated fertiliser EBITDA by FY2012f, operating at a

Sorfert to account for 24% of fertilisers’ EBITDA by FY2012f

c.75% EBITDA margin. For FY2011f we expect Sorfert to operate at 25% utilisation. Ramp-up at the plant should take c.18 months, as demonstrated by the recent experience at EBIC. Clear benefits to Sonatrach, owning 49% of the plant and entitled to an extra 13.5% of the dividends above a certain level of urea pricing (which management has indicated is currently implementable), reassures us that OCI will be able to continue managing the plant with little hassle from the Algerian authorities. For an added measure of scrutiny, we have only added 37.5% (post the extra dividend payment) of the plant’s valuation to OCI’s fair value. Operational uncertainties that might arise from the plant are mainly geared toward any possible repatriation of dividends

We only include 37.5% of Sorfert’s valuation to OCI

issues, or any extraordinary tax, but in reality: −

The company has not experienced any problems yet with the Algerian government, with respect to repatriating dividends

−

Substituting for the tax holiday, a 19% of net income re-investment clause, to be spent over four years time, is currently in place

OCI Nitrogen investment proves to be a profitable one The subsidiary recorded an annualised EBITDA of US$184 million for FY2010, against an acquisition cost of US$400 million. At the time of the deal, we argued in favour of the deal because of the cheapness of the acquired assets, diversification into nitrates fertilisers, potential synergies with OCI’s plants in North Africa,

OCI Nitrogen realises an acquisition multiple of 2.2x EV/EBITDA

and the proximity to European markets, allowing the company to better distribute its products. We expect OCI Nitrogen to continue reaping benefits, going forward, as the company moves away from its fixed gas contracts towards a spot rate, as the oversupply in the Natural Gas market continues to weaken spot prices. Beltone Financial Research

5

Orascom Construction Industries (OCI)

Natural Gas concessions to hold firm, in our opinion Natural Gas concessions to hold firm, in our view…

OCI’s favourable natural gas concessions, a major contributor to the company’s competitive advantage in the fertilisers industry, representing c.65% of cash costs for the plants in Egypt, will continue to be a risk the market factors in. We are of the belief that the Egyptian government will not want to renege on a contract with a strong private sector participant such as OCI, employing over 80,000 people, especially in view of the government’s plan to attract FDI back into Egypt. In the case of the government requesting to renegotiate

In the scenario of a renegotiated price with the government (US$3.00), our DCF valuation comes to E£234

the current contracts, international arbitration is a possible route for the company, as its strong contractual agreements are “water-tight”, and are backed up by strong international and local law firms. Examining the scenario of an upward renegotiation of the agreement price in Egypt, to US$3.00 (what other energy intensive producers pay), our DCF valuation comes to E£234, 5% lower than the current market price. Figure 7| Fertiliser forecasts 2009

2010

2011

2012

2013

2014

Urea

266

313

351

365

376

368

Ammonia

251

331

371

389

405

397

236

287

286

291

282

1,359

1,323

1,323

1,425

1,440

1,455

Revenues (US$ million)

361

414

464

520

541

535

EBITDA (US$ million)

216

270

317

361

379

347

Ammonia (000 tonnes)

385

630

665

672

679

679

Revenues (US$ million)

97

209

247

262

275

269

EBITDA (US$ million)

61

148

181

195

207

202

Urea (000 tonnes)

0

0

153

490

563

581

Ammonia (000 tonnes)

0

0

102

326

408

408

Revenues (US$ million)

0

0

91

306

377

376

EBITDA (US$ million)

0

0

71

238

295

291

Ammonia ('000 tonnes)

0

296

462

397

397

397

CAN ('000 tonnes)

0

906

1,167

1,410

1,410

1,410

UAN ('000 tonnes)

0

133

100

0

0

0

Melamine ('000 tonnes)

0

147

168

169

169

169

Total Revenues (US$ million)

0

870

917

920

940

920

Total EBITDA (US$ million)

0

145

193

186

199

177

OCI Revenues (US$ million)

444

1,168

1,764

2,054

2,180

2,148

OCI EBITDA (US$ million)

269

507

796

1,015

1,117

1,052

Price assumptions (US$ per tonne)

CAN EFC (Egypt) Urea (000 tonnes)

EBIC (Egypt)

Sorfert (Algeria) at proportionate consolidation

OCI Nitrogen *

OCI fertilisers EBITDA to grow at a CAGR of 29% between 2011 2013

Source: OCI and Beltone Financial estimates * FY2010 figures are for the last three quarters only

1Q2011 estimates We expect a strong set of results from OCI, as fertiliser prices continued their strong seasonal upswing during the quarter. Ammonia prices rose by 15%, while CAN prices strengthened by 14%, while urea (consumed less during a wet season), remained flat. We do not expect much repercussion on construction from the recent

1Q2011 to show strong growth, on the back of seasonal upswing in fertiliser prices

events in Egypt, with only c.10 days of idle activity. Figure 8| Expecting a strong 1Q2011 1Q10a

2Q10a

3Q10a

4Q10a

Beltone 1Q11e

Consensus 1Q11e

Beltone FY11e

Consensus FY11e

1,214

4,885

5,147

Revenue

986

1,342

1,250

1,319

1,300

EBITDA

234

269

266

318

351

Net Income

117

144

148

186

200

1,212 145

740

672

Source: OCI and Beltone Financial estimates

Beltone Financial Research

6

Orascom Construction Industries (OCI)

Income Statement FY End December (E₤ million) Construction Revenues Fertilisers Revenues

2009a

2010a

2011f

2012f

2013f

2014f

18,733

18,967

18,416

16,335

19,975

21,796

2,561

6,893

10,407

12,116

12,862

12,673

21,294

27,907

28,823

28,451

32,836

34,469

(14,594)

(15,401)

(15,101)

(13,477)

(16,579)

(18,091)

(903)

(3,534)

(5,129)

(5,454)

(5,562)

(5,762)

5,797

8,301

8,593

9,521

10,695

10,616

Selling and General Administrative Expenses

(1,283)

(1,646)

(1,441)

(1,423)

(1,642)

(1,723)

Depreciation

Total Revenues Construction Costs Fertilisers Costs Gross Profit

(1,015)

(1,475)

(1,218)

(1,320)

(1,302)

(1,258)

EBITDA

4,276

6,177

7,152

8,098

9,054

8,892

EBIT

3,449

4,702

5,934

6,778

7,752

7,635

(450)

(613)

(556)

(516)

(354)

(283)

3,093

4,524

5,614

6,498

7,633

7,587

(479)

(846)

(954)

(1,105)

(1,298)

(1,290)

2,614

3,678

4,660

5,393

6,336

6,298

1,445

-

-

-

-

-

5,444

2,614

3,678

4,660

5,393

6,336

Net Financing Cost EBT Income Tax Net Income from continuing operations Gain on sale of discountinued operations Net Profit for the period Investment Income

2

93

434

236

236

236

Minority Interest

(77)

(138)

(308)

(306)

(331)

(353)

2,476

3,370

4,354

5,062

5,982

5,954

2009a

2010a

2011f

2012f

2013f

2014f

Net Income Source: OCI and Beltone Financial estimates

Balance Sheet FY End December (E₤ million) Cash

5,925

5,511

5,130

6,445

8,304

4,876

Receivables

9,750

11,283

11,857

10,070

12,039

11,943

Inventory

1,402

1,857

1,821

1,661

2,044

2,230

Other Current Assets

1,523

2,187

2,270

2,014

2,463

2,687

19,350

21,548

21,788

20,901

25,560

22,447

Net Fixed Assets

10,697

12,177

13,202

13,019

12,578

12,215

Other Long Term Assets

12,517

13,870

13,870

13,870

13,870

13,870

Total Long Term Assets

23,214

26,047

27,073

26,889

26,448

26,086

Total Assets

46,858

54,099

55,364

54,293

58,511

55,036

Short Term Debt

2,266

4,178

996

1,346

7,091

694

Payables

8,494

10,489

10,964

9,231

10,901

11,400

650

888

361

361

361

361

4,019

3,301

3,706

3,142

3,905

4,157

15,429

18,856

16,026

14,079

22,258

16,611

750

1,020

1,326

1,657

2,010

2,354

11,219

12,816

15,260

13,915

6,823

6,130

3,066

3,853

3,948

4,138

4,347

4,578

Total LT Liabilities

14,285

16,669

19,208

18,052

11,171

10,707

Net Worth

16,393

17,554

18,804

20,504

23,072

25,364

Total Liabilities & Equity

46,858

54,099

55,364

54,293

58,511

55,036

Total Current Assets

Provisions Other Current Liabilities Total Current Liabilities Total Grey Area Long Term Debt Other LT Liabilities

Source: OCI and Beltone Financial estimates

Beltone Financial Research

7

Orascom Construction Industries (OCI)

Key Ratios 2009a

2010a

2011f

2012f

2013f

5.1

31.1

3.3

(1.3)

15.4

5.0

EBITDA Growth (%)

(10.9)

44.5

15.8

13.2

11.8

(1.8)

Net Profit Growth (%)

Revenue Growth (%)

2014f

(34.6)

36.1

29.2

16.3

18.2

(0.5)

EBITDA Margin (%)

20.1

22.1

24.8

28.5

27.6

25.8

Net Profit Margin (%)

12.3

13.2

16.2

19.0

19.3

18.3

EPS (E£)

12.0

16.3

21.0

24.5

28.9

28.8

ROA (%)

5.3

6.2

7.9

9.3

10.2

10.8

ROE (%)

15.1

19.2

23.2

24.7

25.9

23.5

Current Ratio (x)

1.3

1.1

1.4

1.5

1.1

1.4

Total Debt/Equity (x)

0.8

1.0

0.9

0.7

0.6

0.3

Net Debt/EBITDA (x)

1.8

1.9

1.6

1.1

0.6

0.2

Times Interest Earned

5.8

6.9

9.3

11.4

17.2

18.7

DPS (E£)

10.1

11.8

15.0

16.3

16.5

17.7

Dividend Payout (%)

84.2

72.5

71.3

66.4

57.1

61.5

Dividend Yield% P/E (x) P/BV (x) EV/EBITDA (x)

4.2

4.9

6.2

6.8

6.9

7.4

20.1

14.7

11.4

9.8

8.3

8.3

3.0

2.8

2.6

2.4

2.2

2.0

14.2

9.8

8.5

7.5

6.7

6.8

Source: OCI and Beltone Financial estimates

Beltone Financial Research

8

Beltone Financial Financial District, Building B211, Cairo / Alexandria Desert Road, Smart Village, 6 October, Egypt Tel: +202 35310200 Fax: +202 35370685 E-mail: [email protected] Website: www.beltonefinancial.com

Beltone Enclave Securities Investment Rating

Upside

25%

5% -5%

Buy Significantly overweight vs. the Index

Beltone Enclave Securities 19 West 44th street, 14th floor New York, NY. 10036 Tel: +1 646 454 8620

Beltone Financial Securities - Emirates

Add Overweight vs. the Index

The Fairmont, 2105 Sheikh Zayed Road Dubai, UAE, 213534 Tel: +971 (4) 509 0300 Fax: +971 (4) 332 1203

Hold Maintain index weight

Beltone Financial Qatar LLC

Reduce Underweight vs. the Index -25%

Sell Do not hold the stock

Al Fardan Office Tower, West Bay P. O. Box 23959 Doha, State of Qatar Tel : +974 4410 1566 Fax : +974 4410 6610

Downside

*The Rating is flexible and is subject to analysts’ general outlook on the individual companies

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