Almarai said it is targeting a 50% share of the dairy market in Egypt – the Middle East's most populous country - as the expansive Saudi group further raised its ambitions.

The group, the region's biggest dairy group, with a stockmarket value of $4.8bn, is to spend about $18m expanding in Egypt, where it bought milk group Beyti earlier in the autumn, board member Hatim Saleh told the Al-Madina newspaper.

The proposals, which would bring the company into competition with French giant Danone, came as Savola Group, one of Almarai's biggest investors unveiled $32m plans to build a 50,000-tonne pasta factory in Egypt.

And they represent the latest in a series of expansion plans by Almarai, which is also in the process of absorbing its $253m purchase of Hadco, a Saudi chicken group.

Last December it spent $126m on a 75% stake in Teeba, a Jordanian food and dairy company.

Almarai has also announced $1.6bn in capital investment by 2013 on expansion outside the Gulf Arab region, where its operations fall under the International Dairy and Juice Company joint venture with PepsiCo.

And Almarai is to spend $500m increasing Hadco's chicken production fivefold by 2015 or so.

H1N1 hit 

The group, which was set up during the late 1970s by the Saudi royal family to improve the country's ability to feed itself, has proven one of the region's investment darlings over the last two years, during which its shares have doubled.

Pictet Asset Management investor Emad Mostaque described the company two months ago as "one of the companies all fund managers own".

However, its shares have faded since it last month unveiled a slowdown to 11% in annual sales growth in the July-to-September quarter, well short of analysts' forecasts.

The decline in part reflected a shortfall in religious tourists to Mecca and Medina blamed on concerns about the H1N1 virus.

'Double-digit earnings growth'

Deutsche Bank on Monday restated a buy rating on Almarai shares, with a target price of 197 riyals.

"Almarai offers consistent double-digit earnings growth on our estimates due to a sustainable margin advantage compared to peers and a leading positioning in the fresh milk category, where per capita consumption is still growing," the bank said.

Almarai shares closed on Tuesday up 2.4% at 160.75 riyals.

Shares in Savola, which owns 26% of Almarai , ended up 2.4% at 29.40 riyals.