February 05, 2013 nbkcapital.com MENAinFocus Inside This Issue In Focus 1: MENA Telecoms FY2013 Dividends Outlook In this section, we discuss dividend sustainability and the potential (or lack thereof) for dividend growth among MENA telecom players. Dividend yield is arguably the valuation metric that paints the MENA telecom sector in the most favorable light, and current yields are very compelling compared to respective local market index dividend yields. Although yields have been steady for the last couple of years, absolute dividend payments have on average grown at a three-year compound annual growth rate (CAGR) of 2%. We highlight Telecom Egypt and Qatar Telecom as two attractive stocks, with the former having the highest dividend yield albeit the lowest potential for growth, while the latter has one of the lowest yields, but the best growth potential. By: Shrouk Diab In Focus 2: Performance of the GCC Cement Stocks in 2012 In this section, we provide an analysis of the Gulf Cooperation Council (GCC) cement stocks’ performance by comparing the performance of each GCC country’s cement index with that of the respective country’s general stock market index. By creating a synthetic market capitalization weighted cement index for each country, we are able to compare the GCC cement indices against one another to highlight the performance of the cement stocks in 2012. By: Shoug Al Khatrash Rebased Performance of Regional Indices 80 90 100 110 120 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 S&P Pan Arab Large/Mid Composite S&P GCC Large/Mid Composite MSCI Jordan+Egypt+Morocco MENA Market Caps 0% 1% 1% 2% 2% 3% 5% 6% 11% 14% 15% 40% 0 100 200 300 400 500 Palestine Tunisia Lebanon Oman Bahrain Jordan Morocco Egypt Kuwait Qatar UAE Saudi Arabia (%) Share of MENA Market Cap Market Cap. (USD billion) Summary of Performance of MENA Indices Index Level as of 31-Jan-13 % below 52-Week High % over 52-Week Low 1-Month Period YTD REGIONAL S&P Pan Arab Large/Mid Composite 133 139 122 -4.1% 8.8% 4.0% 4.0% 975 S&P GCC Large/Mid Composite 120 128 111 -6.3% 7.6% 4.6% 4.6% 798 MSCI Jordan+Egypt+Morocco 1,106 1,237 944 -10.6% 17.2% -1.1% -1.1% 135 GCC MSCI Bahrain 241 284 226 -15.1% 6.5% 3.2% 3.2% 16 MSCI Kuwait 843 844 741 0.0% 13.8% 3.9% 3.9% 103 MSCI Oman 957 997 838 -4.1% 14.2% 2.5% 2.5% 20 MSCI Qatar 1,072 1,087 1,009 -1.4% 6.3% 5.5% 5.5% 131 S&P Saudi Arabia Large/Mid Composite 166 184 153 -10.0% 8.8% 3.5% 3.5% 383 MSCI UAE 308 308 215 0.0% 43.4% 18.8% 18.8% 144 OTHER MENA MSCI Egypt 1,344 1,558 1,084 -13.7% 23.9% -2.1% -2.1% 55 MSCI Jordan 220 227 196 -3.4% 12.1% 4.2% 4.2% 28 MSCI Morocco 580 695 533 -16.6% 8.8% 1.2% 1.2% 52 MSCI Lebanon 905 931 835 -2.8% 8.3% 1.0% 1.0% 10 MSCI Tunisia 1,294 1,341 1,186 -3.5% 9.1% 6.1% 6.1% 9 Palestine SE 472 490 416 -3.6% 13.4% 0.0% -1.0% 3 Market Cap (USD billions) INDEX 52-Week High 52-Week Low % Change
Transcript
February 05, 2013
nbkcapi ta l .com
MENAinFocus
Inside This Issue
In Focus 1: MENA Telecoms FY2013 Dividends Outlook
In this section, we discuss dividend sustainability and the potential (or lack thereof) for dividend growth among MENA telecom players. Dividend yield is arguably the valuation metric that paints the MENA telecom sector in the most favorable light, and current yields are very compelling compared to respective local market index dividend yields. Although yields have been steady for the last couple of years, absolute dividend payments have on average grown at a three-year compound annual growth rate (CAGR) of 2%. We highlight Telecom Egypt and Qatar Telecom as two attractive stocks, with the former having the highest dividend yield albeit the lowest potential for growth, while the latter has one of the lowest yields, but the best growth potential.
By: Shrouk Diab
In Focus 2: Performance of the GCC Cement Stocks in 2012
In this section, we provide an analysis of the Gulf Cooperation Council (GCC) cement stocks’ performance by comparing the performance of each GCC country’s cement index with that of the respective country’s general stock market index. By creating a synthetic market capitalization weighted cement index for each country, we are able to compare the GCC cement indices against one another to highlight the performance of the cement stocks in 2012.
By: Shoug Al Khatrash
Rebased Performance of Regional Indices
80
90
100
110
120
Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13
S&P Pan Arab Large/Mid Composite S&P GCC Large/Mid Composite MSCI Jordan+Egypt+Morocco
MENA Market Caps
0%
1%
1%
2%
2%
3%
5%
6%
11%
14%
15%
40%
0 100 200 300 400 500
Palestine
Tunisia
Lebanon
Oman
Bahrain
Jordan
Morocco
Egypt
Kuwait
Qatar
UAE
Saudi Arabia
(%) Share of MENA Market Cap Market Cap. (USD billion)
Most of the stocks in our sample of 11 MENA telecom companies are dividend plays, with the exception of Vodafone Qatar, which has yet to make its first dividend payment. The majority offer forecast FY2013 dividend yields exceeding 6%. Telecom Egypt and Batelco emerge as the strongest dividend plays, offering FY2013 forecast yields of 10% and 9.5%, respectively. Both stocks have a track record of high payout ratios, with a three-year average (FY2009-FY2011) of 75% for Telecom Egypt (as per Egyptian Accounting Standards) and 72% for Batelco.
Furthermore, if we compare the FY2013 estimated dividend yields of the stocks in our sample with those of the respective stock market indices (source: Bloomberg), Telecom Egypt, Nawras, and du emerge as the strongest outperformers, beating index yields by more than 300 bps (see table below). While Telecom Egypt has a long track record of high payout ratios, Nawras and du have much shorter track records, with their first dividend payments pertaining to FY2010 and FY2011 earnings, respectively.
Yield Outperformance (Underperformance) versus Local Index
FY2013Company
*Fiscal Year Ends March. Note: Prices as of close on January 31, 2013. Sources: Bloomberg consensus and NBK Capital
Assessing the Risk to Dividends
We use free cash flow (FCF) cover to assess potential risks to FY2013 dividends, and also review the operators’ CAPEX requirements in conjunction with their leverage structure.
For FCF cover, we use a simple calculation {EBITDA (1-tax rate) less CAPEX} for the forecast year divided by the total dividends expected to be paid for that respective year. Based on this measure, we find that Qtel, STC, Telecom Egypt, Mobily and Batelco have FCF covers exceeding 1.0x, indicating their sound capability to meet dividend payout requirements. However, at the lower end of our sample, we find that du and Jordan Telecom have FCF covers of 0.8x each. We are less worried about du, which maintains a strong competitive position and is expected to witness healthy revenue and EBITDA growth via a focus on subscriber growth, cost optimization, and mobile data. Here, we forecast three-year revenue and EBITDA CAGRs of around 8% and 10%, respectively, between FY2012 and FY2015. On the other hand, Jordan Telecom operates in a highly competitive and fragmented market, with its EBITDA declining at a CAGR of 5% between FY2009 and FY2011. In addition, its dividend payout ratio has been at the high end (average of 101% between FY2009-FY2011) relative to du’s (62% in FY2011).
Mobily Batelco Nawras Etisalat Omantel du JordanTelecom
VodafoneQatar
nmf
*TE’s FCF cover is based on proportionate FCF. Sources: Bloomberg consensus and NBK Capital
We have also assessed the leverage structure of our sample, and found that the majority of the stocks are expected to be net cash positive at the end of FY2013, indicating that they are well positioned to service their CAPEX requirements from a balance sheet standpoint, and that there is relatively lower risk to dividend distributions. Although Vodafone Qatar ranks highest on the net debt-to-EBITDA scale, we consider it to be an outlier, owing to its relatively low EBITDA margins (which we expect to pick up) vis-à-vis its peer group. Leaving it aside, we find that Qtel has the highest net debt-to-EBITDA at 1.2x for FY2013, which is still well below the maximum generally accepted gearing level for the industry of 2.5x .
In order to assess the potential for further dividend growth, we reviewed dividend payout ratios for FY2013 in conjunction with the forecast three-year EBITDA CAGR. The simple average FY2013 payout ratio for our sample (excluding Vodafone Qatar) stands at 65%. Stocks such as Batelco, Telecom Egypt, and Jordan Telecom have payout ratios exceeding 65%, in addition to the lowest EBITDA CAGRs in our sample, indicating limited (if any) room for dividend growth.
On the other hand, Qtel, STC, and Mobily have payout ratios far below the sample average, while all have forecast three-year EBITDA CAGRs exceeding 3%, making them prime candidates for dividend expansion. Mobily in particular has a high reinvestment rate due to network upgrades and expansions, which should decrease in the longer term as CAPEX reaches maintenance levels, which traditionally average around 11% to 13% of revenues.
Figure 1-4 Dividend Payout Ratios versus Forecast three-year EBITDA CAGRs
Mobily
STC
du
Etisalat
Qtel
Omantel
Nawras
Telecom Egypt*
Batelco
Jordan Telecom
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0% 20% 40% 60% 80% 100% 120%
High payout ratio and high operating growth
Low payout ratio but high operating growth
High payout ratio but low operating growth
Low payout ratio and low operating growth
EB
ITD
A C
AG
R (
%)
FY2013 Payout Ratio (%)
Average FY2013 payout ratio of 65%
*Telecom Egypt EBITDA CAGR based on proportionate EBITDA. Sources: Bloomberg estimates and NBK Capital
Qtel – Prime Candidate for Dividend Expansion
We consider Qtel to be a prime candidate for dividend expansion for multiple reasons. The company offers the lowest payout ratio (36% for FY2013 as per Bloomberg consensus) while also offering the highest FCF cover (5.0x for FY2013 as per Bloomberg consensus) in our sample. Although it has the highest leverage in our sample (excluding Vodafone Qatar), in terms of net debt-to-EBITDA, with 1.2x for FY2013 (per Bloomberg consensus), it is still well below the industry norm of 2.5x. In addition, the stock offers a three-year forecast EBITDA CAGR of 3.3% (as per Bloomberg consensus), ranking among the highest in our sample. We consider this to be fairly healthy, as Qtel ranks second only to STC (for which we estimate a three-year EBITDA CAGR of 5.9%) among the multi-country operators in our sample.
Telecom Egypt – long-Term Dividend Sustainability in Question
Although Telecom Egypt offers the highest FY2013 dividend yield (10%) in our sample, we believe certain risks could impact the operator’s payout capability over the medium to long term. The company’s payout ratio (85% for FY2013) is among the highest in our sample, while our forecast three-year EBITDA CAGR (0.6% based on proportionate EBITDA) is among the lowest. Together, these factors could test the operator’s dividend expansion capability over the long term. However, we note that it maintains a strong net cash position (EGP 5 billion at the end of September 2012, representing 18% of total assets).
In the medium term, uncertainty may stem from the Egyptian telecommunications regulator’s intention to grant Telecom Egypt a license by mid-2013 to provide mobile services. In late December, the National Telecom Regulatory Authority (NTRA) agreed to grant an integrated telecom license, which basically allows all telecom companies to provide all types of telecom services, sometime during the first half of 2013. The process of granting licenses will be done in two stages. The first, which will take two years, will see companies providing services to customers, but without the use of frequencies. The second stage will see services provided after the necessary frequencies and infrastructure have been obtained. Therefore, generally speaking, Telecom Egypt’s mobile operation would be close to that of an MVNO for the first two years after being awarded the license. There would then be a number of strategic options open to the company, but we believe that the most suitable would be to take 100% ownership of Vodafone Egypt, in which it already owns a 45% stake. It would subsequently not need to spend on network rollout as extensively as it would if it were to launch its own network. Additionally, the company would have access to Vodafone Egypt’s existing customer base and most of its efforts could be focused on marketing and re-branding. It is no secret that Telecom Egypt at one point tried to buy out Vodafone’s stake in Vodafone Egypt, but disagreement over pricing led to the talks being dissolved. In tandem with our line of thinking that CAPEX requirements would be essential during the second stage of the integrated license, we expect Telecom Egypt’s dividend policy to remain intact for the next couple of years, at least until more clarity is provided with regards to the license cost and plans for network rollout. We believe that dividend payouts, at least for fiscal-year 2012, should not be affected by either political/economic events in the country or by any acquisition of the integrated license. We expect dividend payouts for 2012 to remain steady compared to the 2011 level.
In this section, we provide an analysis of the Gulf Cooperation Council (GCC) cement stocks’ performance by comparing the performance of each GCC country’s cement index with that of the respective country’s general stock market index. By creating a synthetic market capitalization weighted cement index for each country, we are able to compare the GCC cement indices against one another to highlight the performance of the cement stocks in 2012.
Methodology
In the absence of cement indices for Kuwait, the United Arab Emirates (UAE), Qatar, and Oman, we created a synthetic market capitalization weighted index for each country. The constituents of these indices comprise of all publicly listed cement companies under each country’s stock exchange.
Figure 2-1 Constituents of the Synthetic Indices
Indices Consitituents Market Cap (USD millions)*
UAE
National Cement Company 283.2
Fujairah Cement Industries 91.1
Gulf Cement 261.5
Ras Al Khaimah Cement 131.7
Union Cement 151.2
Umm Al Qaiwain Cement Industries 82.0
Sharjah Cement 115.9
Kuwa it
Kuwait Cement 984.0
Hilal Cement 42.6
Kuwait Portland Cement 109.1
Oman
Oman Cement 548.3
Raysut Cement 740.5
Qata r
Qatar National Cement 1,372.2
Al Khalij Holding Company 742.4
*As of February 4, 2013. Sources: Reuters and NBK Capital
Saudi Arabia already has an existing cement index, which was used in this report. Bahrain was excluded from our analysis due to the fact that Falcon Cement Company, the only integrated cement plant operating in the country, is privately owned.
Additionally, each respective country’s general stock market index was used as the comparable benchmark, with the exception of the UAE. In the UAE’s case, we used the MSCI UAE to help capture the Dubai and Abu Dhabi markets. We then analyzed the performance of each country’s cement index versus the respective country’s general stock market index for 2012.
The cement index in Saudi Arabia increased 14% in 2012, compared to a 6% increase in the Tadawul All Share Index (TASI).
Figure 2-2 Saudi Arabia’s Cement Index versus the Tadawul All Share Index
90
100
110
120
130
Tadawul Saudi Cement Index
Sources: Reuters and NBK Capital
As the star performer of 2011 (increasing 36%), the cement index in Saudi Arabia continued to rise, albeit to a lesser degree, during 2012, and continued to outperform the Tadawul All Share Index. The 14% increase in the cement index during 2012 occurred despite an increase in clinker capacity with Najran and Hail Cement starting operations in FY2012.
The number of listed cement companies in Saudi Arabia increased to 12 by the end of 2012 from 10 companies by the end of 2011. Thus, total clinker capacity during FY2012 exceeded 54 mt of clinker, translating into more than 56.5 mt of cement. Though supply remains plentiful in Saudi Arabia, along with an export ban still in place, pricing held up strongly in FY2012. During the first half of the year, cement prices increased due to cement shortages in the Western and Eastern regions. The shortages were mainly due to several idle lines in the Western region caused by fuel shortages (including Yanbu Cement and Safwa Cement). In addition, maintenance of lines was taking place in the Eastern region, causing temporary demand shortages. However, prices started to ease in the second half of the year as the circumstances affecting pricing in the first half of the year were temporary.
The massive government spending continues to be reflected in the stock prices of cement companies and, hence, in the cement index. During 2012, construction activity surged in the Western region, with major work undertaken in Jeddah, Makkah, and Medinah (shifting from the Central region in 2011). In 2012, government spending in Saudi Arabia increased 6%, as the government’s Ninth Development Plan continues to be implemented (source: GCC Economic Outlook: January 2013; NBK).
The continuous outperformance of the cement index in Saudi Arabia (versus the Tadawul All Share Index) is, in our view, attributed to two main reasons: the cement industry’s exceptionally high profitability mainly due to fuel subsidies (among the highest subsidies in the world) and the massive ongoing government spending.
Kuwait
The synthetic cement index in Kuwait, which consists of three stocks, Kuwait Cement Company, Hilal Cement Company, and Kuwait Portland Cement Company, increased 3% during 2012, compared to a 5% increase in the Kuwait Stock Exchange (KSE) weighted index.
Figure 2-3 The Kuwait Cement Index versus the Kuwait Weighted Index
80
90
100
110
KSE Weighted Index Kuwait Cement Index
Sources: Reuters and NBK Capital
With the government’s multi-billion dollar development plan covering the years 2010-2014, we believe that the Kuwaiti cement sector is likely to be one of the main beneficiaries. Looking back at 2011, the cement index in Kuwait witnessed a hard fall of 36% compared to a 16% decline in the country’s weighted index as delays in the implementation of the development plan were witnessed throughout 2011.
Though prospects for growth in the cement industry in Kuwait are strong, it is necessary to consider the fundamentals of the companies that comprise the cement index. When looking at Kuwait Cement Company (the only integrated producer), the company’s exposure to investments is noteworthy. Kuwait Cement has significant exposure to investments (KD 81.2 million), which accounted for 55% of shareholders’ equity as of September 2012, compared to 56% as of December 2011. The two other players, Kuwait Portland Cement and Hilal Cement, do not manufacture clinker as they operate by importing clinker, which increases the companies’ production costs.
Figure 2-4 The UAE Cement Index versus the MSCI UAE Index
90
100
110
120
130
140
MSCI UAE UAE Cement Index
Sources: Reuters and NBK Capital
Currently, there are seven publicly listed cement companies in the UAE. All cement companies currently trade on the Abu Dhabi Securities Exchange, with the exception of National Cement Company, which trades on the Dubai Financial Market. In 2012, the UAE cement index increased 5% compared to a 44% plunge in 2011.
The year 2012 started with rumors of UAE cement players agreeing to raise domestic cement prices as residential construction in Dubai surfaced and tentative signs of recovery in construction activity in Abu Dhabi emerged. Though signs of a recovery in the real estate market were observed in early 2012, the actual rise in the real estate market materialized during 2H2012, with the real estate companies being the main beneficiaries. Looking closely at Dubai, the real estate sector saw signs of revival, with rents, prices, and transaction volumes all reported to be rising in some areas (though these transaction volumes and prices remain around 45% below their boom-time peaks) (source: GCC Economic Outlook: January 2013; NBK).
However, when looking at the cement index in 2012, a strange phenomenon can be seen: the cement index declined during 2H2012 when there was an upsurge in the MSCI UAE Index (largely influenced by the real estate companies). This may reflect the cement industry’s continuous struggle with massive overcapacity, with clinker capacity of 24 mt translating into a cement capacity of about 25.2 mt, compared to an expected demand of 15 mt, implying clinker production of 14.3 mt. Though a rise in domestic prices occurred in 2012, UAE domestic cement prices remain the lowest in the region, hovering around AED 190-199/ton. In addition, the UAE cement players remain at a significant disadvantage in terms of cost of production as gas prices are not subsidized in the UAE, while they are generally subsidized across the GCC. Therefore, it may come as no surprise that the UAE cement index continued to underperform the MSCI UAE, which had increased 23% during 2012.
Figure 2-5 The Oman Cement Index versus the MSM Index
70
90
110
130
150
170
190
Muscat SE General Index Oman Cement Index
Sources: Reuters and NBK Capital
The Oman cement index consists of two stocks: Oman Cement and Raysut Cement. As these stocks rallied 48% and 90% in 2012, respectively, the cement index witnessed an increase of 70% during the year.
Looking back at 2011, the cement index in Oman dropped 36% despite massive government spending materializing that year. We believe this decline was mainly due to dumping by UAE cement companies, as Oman is the only country that the UAE can export to. However, during 2012, the cement index in Oman rallied due to easing in cement dumping from UAE cement players.
When factoring out the UAE situation, the fundamentals of the Omani cement market are extremely strong, backed by the government’s eighth Five-Year Development Plan (2011-2015), which includes massive infrastructure spending on new schools, hospitals, and transportation. In addition, the official budgeted spending for 2013 has spending increasing 29% to OMR 12.9 billion (source: GCC Economic Outlook: January 2013; NBK).
Qatar
The cement index in Qatar is comprised of two constituents: Qatar National Cement (which remains very much the dominant player in the country) and Al Khalij Holding Group. In 2012, the cement index increased 10%, while the QE index declined 5%.
Figure 2-6 The Qatar Cement Index versus the QE Index
80
90
100
110
120
Qatar General Index Qatar Cement Index
Sources: Reuters and NBK Capital
The government’s determination to develop the non-hydrocarbon sector has been projected through the budgeted government expenditures of more than USD 125 billion over five years (source: GCC Economic Outlook: January 2013; NBK), highlighted in both the National Development Strategy 2011-2016 and the Qatar National Vision 2030. In addition, the government has claimed it will directly fund USD 65 billion in infrastructure investment and manufacturing (including the 2022 FIFA World Cup development spending). Though we believe that projects related to the World Cup will not kick-off for at least another four years, the cement sector will be a main beneficiary once the projects are underway. This is also reflected in Qatar National Cement’s recent announcement of its intention to set up an additional cement plant of 7,500 tons of clinker per day to expand total capacity.
Figure 2-7 GCC Cement Indices
80
90
100
110
120
130
140
150
160
170
180
190
Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12UAE Cement Index Kuwait Cement Index Oman Cement Index
As mentioned before, the cement index in Oman surged in 2012, clearly outperforming both its GCC peers and the MSM Index. The signs of recovery in the UAE construction and real estate markets were reflected in the UAE cement index, and were subsequently reflected in Oman’s cement index for the year, as increased demand in the UAE led to easing of cement dumping in Oman. As for Saudi Arabia, the continuous increase in the cement index may be considered impressive after a surge of 36% in 2011. Going into 2013, the cement stocks in Saudi Arabia may seem fairly valued. However, when considering Kuwait’s economic conditions and budgeted infrastructure projects, it may seem surprising that the cement index was the worst performer among its peers in 2012. Though the cement index in Qatar increased 10%, this increase may also be considered conservative considering the country’s solid economic prospects. However, it should be highlighted that the cement index in Qatar is largely comprised of Qatar National Cement, which faces capacity constraints. With the company’s recent announcement regarding capacity expansion, the outlook for the company in the coming years is positive in our view.
Consumer Goods and Reta i lAbdullah Al Othaim Markets Saudi Arabia SAR 81.00 21-Jan-13 95.00 Accumulate 12.6 12.6 9.8 9.7 9.7 8.0Agthia UAE AED 2.20 29-Jan-13 2.25 Accumulate 12.7 12.7 13.7 8.5 8.6 8.2Alhokair* Saudi Arabia SAR 110.50 21-Jan-13 130.00 Buy 13.5 12.9 11.0 12.3 11.0 9.0Almarai Saudi Arabia SAR 65.75 29-Jan-13 82.00 Buy 18.9 18.9 12.6 15.5 12.8 10.3GB Auto Egypt EGP 27.00 28-Jan-13 29.30 Hold 18.8 18.8 10.3 6.7 6.3 4.6Juhayna Egypt EGP 8.69 07-Jan-13 7.30 Hold 50.8 19.6 15.4 13.8 12.0 9.7Oriental Weavers Egypt EGP 22.93 14-Nov-12 31.20 Buy 8.5 6.5 5.3 8.5 7.2 6.0Savola Saudi Arabia SAR 38.60 16-Jan-12 37.00 Hold 13.8 13.8 15.7 10.6 10.6 11.1
Petrochemicals and Oi lSaudi Arabian Fertilizer Co. Saudi Arabia SAR 156.00 13-Jan-13 144.60 Hold 13.4 13.4 13.8 10.7 10.7 11.2Saudi Basic Industries Corp. Saudi Arabia SAR 94.00 20-Jan-13 107.20 Accumulate 11.4 11.4 10.5 6.5 6.5 5.9Saudi Kayan Petrochemicals Saudi Arabia SAR 11.80 13-Jan-13 13.70 Hold na na 9.6 26.4 26.4 9.9Yanbu National Petrochemicals Saudi Arabia SAR 52.00 16-Jan-13 55.60 Accumulate 12.0 12.0 10.2 8.5 8.5 7.9
Real Estate Emaar UAE AED 4.87 03-Feb-13 3.67 Hold 12.9 13.7 13.8 16.3 11.0 10.9Mabanee Kuwait KWD 1.22 03-Jan-13 1.13 Hold 29.1 15.1 9.7 29.4 21.2 13.4Palm Hills Developments Egypt EGP 2.38 22-Oct-12 na na na na na na na naSalhia Real Estate Co. Kuwait KWD 0.35 27-Aug-12 0.30 Accumulate 22.0 35.7 37.4 13.2 15.1 15.6Sodic Egypt EGP 20.56 30-Jan-13 23.39 Hold nmf 9.6 4.4 nmf 5.9 2.9Sorouh UAE AED 1.76 31-Jan-13 2.33 Suspended 8.4 8.4 5.5 10.4 10.4 7.0Talaat Mustafa Group Egypt EGP 4.23 14-Jan-13 6.92 Buy 16.9 17.9 17.6 12.5 11.8 10.1
TelecommunicationsBatelco Bahrain BHD 0.420 Suspended Suspended Suspended 10.0 na na 5.2 na nadu UAE AED 3.61 12-Dec-12 3.60 Hold 11.6 9.3 9.6 4.5 4.3 3.8Etisalat UAE AED 9.66 20-Jan-13 12.50 Buy 11.6 10.0 10.5 4.4 4.4 4.3Jordan Telecom Jordan JOD 5.35 Suspended Suspended Suspended 12.7 na na 7.6 na naMobily Saudi Arabia SAR 75.25 20-Jan-13 77.90 Accumulate 9.6 9.6 9.6 7.6 7.6 7.2Nawras Oman OMR 0.474 Suspended Suspended Suspended 8.3 na na 3.6 na naOmantel Oman OMR 1.432 Suspended Suspended Suspended 9.0 na na 4.5 na naQatar Telecom Qatar QAR 112.00 Suspended Suspended Suspended 11.9 na na 3.9 na naSaudi Telecom Saudi Arabia SAR 40.90 21-Jan-13 53.50 Buy 11.1 11.1 7.9 5.3 5.3 4.7Telecom Egypt Egypt EGP 14.43 12-Nov-12 17.70 Buy 9.0 8.8 8.5 3.0 3.0 3.0Vodafone Qatar* Qatar QAR 8.57 20-Jan-13 9.30 Accumulate nmf nmf nmf 45.1 31.7 19.7
The information, opinions, tools, and materials contained in this report (the “Content”) are not addressed to, or intended for publication, distribution to, or use by, any individual or legal entity who is a citizen or resident of or domiciled in any jurisdiction where such distribution, publication, availability, or use would constitute a breach of the laws or regulations of such jurisdiction or that would require Watani Investment Company KSCC (“NBK Capital”) or its parent company, its subsidiaries or its affiliates (together “NBK Group”) to obtain licenses, approvals, or permissions from the regulatory bodies or authorities of such jurisdiction. The Content, unless expressly mentioned otherwise, is under copyright to NBK Capital. Neither the Content nor any copy of it may be in any way reproduced, amended, transmitted to, copied, or distributed to any other party without the prior express written consent of NBK Capital. All trademarks, service marks, and logos used in this report are trademarks or service marks or registered trademarks or registered service marks of NBK Capital.
The Content is provided to you for information purposes only and is not to be used, construed, or considered as an offer or the solicitation of an offer to sell or to buy or to subscribe for any investment (including but not limited to securities or other financial instruments). No representation or warranty, express or implied, is given by NBK Capital or any of its respective directors, partners, officers, affiliates, employees, advisors, or representatives that the investment referred to in this report is suitable for you or for any particular investor. Receiving this report shall not mean or be interpreted that NBK Capital will treat you as its customer. If you are in doubt about such investment, we recommend that you consult an independent investment advisor since the investment contained or referred to in this report may not be suitable for you and NBK Capital makes no representation or warranty in this respect.
The Content shall not be considered investment, legal, accounting, or tax advice or a representation that any investment or strategy is suitable or appropriate for your individual circumstances or otherwise constitutes a personal recommendation to you. NBK Capital does not offer advice on the tax consequences of investments, and you are advised to contact an independent tax adviser.
The information and opinions contained in this report have been obtained or derived from sources that NBK Capital believes are reliable without being independently verified as to their accuracy or completeness. NBK Capital believes the information and opinions expressed in this report are accurate and complete; however, NBK Capital gives no representations or warranty, express or implied, as to the accuracy or completeness of the Content. Additional information may be available upon request. NBK Capital accepts no liability for any direct, indirect, or consequential loss arising from the use of the Content. This report is not to be relied upon as a substitution for the exercise of independent judgment. In addition, NBK Capital may have issued, and may in the future issue, other reports that are inconsistent with and reach different conclusions from the information presented in this report. Those reports reflect the different assumptions, views, and analytical methods of the analysts who prepared the reports, and NBK Capital is under no obligation to ensure that such other reports are brought to your attention. NBK Capital may be involved in many businesses that relate to companies mentioned in this report and may engage with them. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information, opinions, and estimates contained in this report reflect a judgment at the report’s original date of publication by NBK Capital and are subject to change without notice.
The value of any investment or income may fall as well as rise, and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price, or income of that investment. In the case of investments for which there is no recognized market, it may be difficult for investors to sell their investments or to obtain reliable information about their value or the extent of the risk to which they are exposed.
NBK Capital has not reviewed the addresses of, the hyperlinks to, or the websites referred to in the report and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to NBK Capital’s own website material) is provided solely for your convenience and information, and the content of the linked site does not in any way form part of this document. Accessing such websites or following such links through this report or NBK Capital’s website shall be at your own risk.
NBK Group may have a financial interest in one or any of the securities that are the subject of this report. Funds managed by NBK Group may own the securities that are the subject of this report. NBK Group may own units in one or more of the aforementioned funds.
NBK Group may be in the process of soliciting or executing fee-earning mandate or doing business for companies that are either the subject of this report or are mentioned in this report. As a result, you should be aware that NBK Group may have material conflict of interest that could affect the objectivity of this report.
NBK Capital SecuritiesEgypt SAE20 Aisha EL Taymouria St. Garden City Cairo, EgyptT. +202 2798 5900F. +202 2798 5905
NBk CAPITAl
Kuwait
National Bank of Kuwait SAKAbdullah Al-Ahmed StreetP.O. Box 95, Safat 13001Kuwait City, KuwaitT. +965 2242 2011F. +965 2243 1888Telex: 22043-22451 NATBANK
INTERNATIoNAl NETWoRk
Bahrain
National Bank of Kuwait SAKBahrain BranchGB Corp Tower, Block 346 Road 4626, Building 1411.P.O. Box 5290, Manama, Kingdom of BahrainT. +973 17 155 555F. +973 17 104 860
Saudi Arabia
National Bank of Kuwait SAKJeddah BranchAl-Andalus Street, Red Sea PlazaP.O. Box 15385Jeddah 21444, Saudi ArabiaT. +966 2 653 8600F. +966 2 653 8653
United Arab Emirates
National Bank of Kuwait SAKDubai BranchSheikh Rashed Road, Port Saeed Area, ACICO Business ParkP.O. Box 88867, DubaiUnited Arab EmiratesT. +971 4 2929 222F. +971 4 2943 337
Jordan
National Bank of Kuwait SAKHead OfficeAl Hajj Mohd Abdul Rahim StreetHijazi Plaza, Building # 70P.O.Box 941297,Amman -11194, JordanT. +962 6 580 0400F. +962 6 580 0441
Lebanon
National Bank of Kuwait(Lebanon) SALSanayeh Head OfficeBAC Building, Justinian StreetP.O. Box 11-5727, Riyad El Solh1107 2200 Beirut, LebanonT. +961 1 759 700F. +961 1 747 866
Iraq
Credit Bank of IraqStreet 9, Building 187Sadoon Street, District 102P.O.Box 3420, Baghdad, IraqT. +964 1 7182198/7191944 +964 1 7188406/7171673F. +964 1 7170156
Egypt
Al Watany Bank of Egypt13 Al Themar StreetGameat Al Dowal AlArabiaFouad Mohie El Din SquareMohandessin, Giza, EgyptT. +202 333 888 16/17F. +202 333 79302
United States of America
National Bank of Kuwait SAKNew York Branch299 Park Avenue, 17th FloorNew York, NY 10171, USAT. +1 212 303 9800F. +1 212 319 8269
United Kingdom
National Bank of Kuwait (Intl.) PlcHead Office13 George Street,London W1U 3QJ, UKT. +44 20 7224 2277F. +44 20 7224 2101
National Bank of Kuwait (Intl.) PlcParis Branch90 Avenue des Champs-Elysees75008 Paris, FranceT. +33 1 5659 8600F. +33 1 5659 8623
Singapore
National Bank of Kuwait SAKSingapore Branch9 Raffles Place #51-01/02Republic Plaza, Singapore 048619T. +65 6222 5348F. +65 6224 5438
China
National Bank of Kuwait SAKShanghai Representative OfficeSuite 1003, 10th Floor,Azia Center, 1233 Lujiazui Ring Rd.Shanghai 200120, ChinaT. +86 21 6888 1092F. +86 21 5047 1011
ASSoCIATES
Qatar
International Bank of Qatar (QSC)Suhaim bin Hamad StreetP.O.Box 2001Doha, QatarT. +974 447 3700F. +974 447 3710
