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Egyptian billionaire Samih Sawiris. AFP PHOTO / FABRICE COFFRINI
Egyptian billionaire Samih Sawiris. AFP PHOTO / FABRICE COFFRINI

Orascom lifted by chief's reprieve

What's Up:Orascom Development Holding's shares leap after a prison sentence against the resort developer's chairman is nullified, leaving it to focus on its recovery from the Egyptian revolution.

It is little understatement to say that Samih Sawiris had a good day - not least because he avoided two years in prison. The prospects for his company, the resort builder Orascom Development Holding, are also improving.

A settlement between Orascom and Egypt's market watchdog announced yesterday nullifies a prison sentence handed down last month against Mr Sawiris and ends a maudlin episode in the company's history, allowing it to refocus its energies on recovering from the Egyptian revolution.

Shares of the company trading in Cairo jumped 9.2 per cent to 6.97 Egyptian pounds each, while its stocks listed in Switzerland increased 13.1 per cent to 19.35 Swiss francs per share.

Mr Sawiris had received a two-year prison sentence and a fine of 6,780 Swiss francs from the Egyptian Financial Supervisory Authority last month over accusations of stock price manipulation and providing incorrect financial data.

The settlement of the case removes a big question mark over Orascom. The company had until now been trading at lower valuation multiples compared with many of its peers, said Ankur Khetawat, a property analyst at AlembicHC.

"At current levels, the stock looks pretty attractive," he said. "The stock has significantly underperformed after the Egyptian revolution and especially after the arrest of the chairman."

The company may also be less exposed to political recriminations following the downfall of the Mubarak regime, Mr Khetawat said.

"They're not really directly involved in any politics, which helps a bit."

Although Egyptian hotel occupancy rates plunged during the first months of the year, the hotels have made a slow but steady recovery. Cairo hotels were 52.9 per cent full in July, according to the latest data from STR Global, a hotel research provider.

For Orascom, which generates more than three quarters of its revenues from its home market, that is welcome news.

The company reported a loss of 13.7 million Egyptian pounds for the first half of this year as property developments were delayed and tourists visited elsewhere.

A rebound in Egypt will also help the company add to its existing resorts in Oman, Switzerland and Ras Al Khaimah, Mr Khetawat said.

 

ghunter@thenational.ae

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