R E S E A R C H. July 2010

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1 Stock Volatility Kuwait Financial Centre Markaz R E S E A R C H Jabal Omar Development SSE Code: 4250 Reuters Code: 4250.SE Bloomberg Code: JOMAR AB Current Market Price: SAR 18.2 (As of July 20, 2010) Initial Coverage: Expected Return () Markaz Research is available on Bloomberg Type MRKZ <Go> Thomson Financial Reuters Knowledge Zawya Investor Noozz M.R. Raghu CFA, FRM Head of Research rmandagolathur@markaz.com Layla Al-Ammar Senior Analyst lammar@markaz.com Ext: 1205 Kuwait Financial Centre Markaz P.O. Box 23444, Safat 13095, Kuwait Tel: Fax: Low Medium High Low Medium High Jabal Omar Development Company (JODC) has been underperforming the Tadawul (TASI). The stock declined 3.7% YTD, in comparison; the index is down 0.87%. JODC stock contracted 7.1% during 2009 as against the index s 27.5% rise in the same period. JODC is currently trading at a P/B of 1.84x. P/B has been flat YTD. The multiple decreased 9.5% during We place the fair value PB at 1.9x, indicating limited upside potential. The company has been making losses since 2008 which renders P/E-based comparison meaningless. JODC s project is in the initial phase of development; therefore, the company is yet to record any revenues. In 1H10, the company incurred G&A expenses, which translated into a net loss of USD 4.40 Mn, a 3% expansion of net losses versus 1H09. For 2Q10, the company generated a net loss of USD 2 mn, 15% less than the 1Q10 loss and 36% narrower than the 2Q09 net loss. JODC s net losses decreased to USD 6.1 Mn during 2009 from USD 14.0 Mn in 2008 mainly due to the absence of pre-operating expenses. However, the decrease in other income in 2009 relative to 2008 partially offset the reduction in net losses during the year. JODC was incorporated with the sole purpose of developing the Jabal Omar area. The project, which spans a 230,000 sq m area, is estimated to be worth 1 SAR 12 Bn (USD 3 bn). The company s activities include acquiring and developing properties as organized plots for management, investment, sale or lease. This entails surveying, demolishing, constructing and maintaining buildings on the plot. JODC is likely to benefit from Saudi Arabia s religious travel, specifically pilgrims performing Hajj. The region hosted 2.44 Mn Hajj visitors during The number of arrivals is estimated to grow approximately 54% to 3.75 Mn during 2019, according to Jones Lang LaSalle. We expect the company to continue operating without generating any revenues in However, as construction advances, we expect costs to increase. In line with this, we expect JODC s expenses and net losses to grow in USD Mn F Revenues Net Income P/E (LFY) N/M N/M N/M P/B (LFI) M. Cap 3,634 3,375 3,249 Stock Returns -61% 7% -3.7% (YTD) 2010 figures - P/E, P/B on 1Q-2010 ending results and M.Cap. as on 20 Source: Reuters Knowledge, Tadawul Stock Exchange 1 Zawya Projects

2 JODC was incorporated solely to develop Jabal Omar region covering an area of 230,000 sq m Company Overview Jabal Omar Development (JODC), a Saudi joint stock company, was established by Makkah Construction & Development Company in October 2006 as a part of its plans to develop Makkah s central region by The company plans to develop the 230,000 sq m (2.5 Mn sq ft) of land it owns in the Jabal Omar area. The locality, also known as Western Gate Road, holds religious importance due to its proximity to the Grand Mosque in Makkah. JODC s activities include investing, developing and managing real estate. Construction activities include development of residential projects, lodging facilities, covered and uncovered prayer areas, parking facilities and all other infrastructure related work for the entire project. The development is carried out through contractors under the supervision of consultants appointed by the company. Project Details The project with a total built-up area of 1,950,000 sq m is valued at USD 3.3 Bn Jabal Omar Development Company (JODC) was incorporated with the primary objective of developing the Haram s western court (aka as Jabal Omar area). Associated Consultants Engineers (ACE), Ateliers Lion Architectes Urbanistes and Abnia Design Consultants were appointed project consultants, while Professional Services Development Corporation (PSDC) and Kuala Lumpur City Center Property Berhad (KLCCPB) were appointed project management consultants. The under construction project, with a total built-up area of 1,950,000 sq m, is estimated to be worth 2 USD 3.3 Bn (SAR Bn). Residential space within the project s 38 towers aggregates 1.1 Mn sq m. The project also comprises 40 hotels (543,000 sq m), prayer courts, and covered and uncovered prayer spaces to accommodate over 200,000 worshippers. The project includes a 348,000 sq m parking space for 12,000 cars, an 187,000 sq m area reserved for commercial development, and a 2000-seat conference hall. Furthermore, it encompasses the development of infrastructure for public parks, roads, bridges, sanitation, water, electricity and telephone networks. Key Shareholders The founders of Jabal Omar Development Company, including Makkah Construction & Development Company (MCDC), have the largest share (37.4%), followed by MCDC (9.1%) and General Organization for Social Insurance - Saudi Arabia (8.2%). while other Saudi Arabian investors jointly hold 15.3%. The remaining 30% is in free float (Figure 1). 2 Zawya Projects Kuwait Financial Centre Markaz 2

3 Figure 1: Shareholding pattern (as of ) 30.0% 37.4% Founders of Jabal Omar Development Company Makkah Construction and Development Company General Organisation for Social Insurance - Saudi Arabia 15.3% 8.2% 9.1% Other Saudi Investors Public Source: Zawya, Markaz Research Investment Highlights Location The company was formed with the sole purpose of developing the Jabal Omar region, neighboring Haram s western court. Makkah attracts religious tourists due to the Grand Mosque. The Jabal Omar project is located in the heart of Makkah. Religious importance of the region is key demand driver Residential facilities are linked with the sound system of Haram, enabling residents to follow the imam while offering prayers The demand for the destination is driven by the 1.8 billion strong global Muslim community, due to its religious importance. Pilgrims to Makkah for Hajj are estimated to grow 54% from 2.44 Mn in 2008 to 3.75 Mn in 2019 as estimated by Jones Lang LaSalle (JLL). The project addressees the primary need of the people arriving to the destination, along with the infrastructure support. The Jabal Omar project s infrastructure plan includes a built-up prayer space for 202,000 pilgrims. This consists of an air-conditioned area for 100,000 worshipers, prayer places for 87,000 attendees within hotels and residents as well as open plazas for 15,000 people to offer prayer. Approval of mortgage law to provide a fillip to residential demand Saudi Arabia, just as other GCC countries, witnessed a downturn in real estate prices. However, the Saudi mortgage law, once it is approved, is expected to increase demand for real estate by 50%, as mentioned in our report Saudi Arabia Residential Real Estate Outlook. We estimate, demand for residential units during would range from 500, ,000. The favorable demographic situation too could add to the growth in demand. According to the Saudi Arabian Monetary Agency (SAMA), the total population in the region was Mn in Of this, 25% was in the age group, which is currently unable to own a house due to the high cost involved. Voting on the law by the Kingdom s Shura Council has been delayed till summer end. One of the attractive features of the Jabal Omar project s residential facilities is that the buildings will be linked to the sound system of Haram, the area inside the Grand Mosque. This would enable residents to follow the imam while offering prayers. The add-on feature of the residential units along with its location in the close vicinity of the Grand Mosque of Makkah provides a downturn support to the price and demand for the residential facilities of the Jabal Omar Project. Kuwait Financial Centre Markaz 3

4 Delay in project completion, a concern Completion has been delayed by over two years to 2013 Construction on the project started in July 2008 and was scheduled to be completed in 3Q11; however, it has now been postponed to 4Q13. This delay of more than two years is deferring cash generation by the company and adversely impacting its performance. JODC is in the process of completing the financing deal for the first stage worth USD 1.3 Bn. The company plans to finance USD 800 Mn through a bank loan and the rest through a rights issue by 4Q10. Competition from other projects Competition is likely to intensify Jabal Omar is likely to face maximum competition from the Jabal Khandamah project due to its close proximity to the Grand Mosque, located to its east. The project comprises redeveloping 600,000 sq m of land area. The development includes Mn sq m of hotel space for various classes and units for 90,000 residents. The project is estimated to add 2,000 new hotel rooms at the end of 2010 to the market supply and another 5,000 rooms a year for the next three years. Another project approved by the authorities includes development of 3.5 km of King Abdul Aziz Road, starting from the west entrance of the city and ending at the east entrance of the Jabal Omar development. The degree of competition to Jabal Omar is influenced by the location of peers with respect to the Grand Mosque. Proximity to the mosque is a key factor determining the price in the region. The revenue per room and occupancy rate are primarily driven by distance from the Holy Mosque. During 2009, revenue per room varied from SAR 530 to SAR 198 among rooms of the same quality ones that are closest to the Grand Mosque charge a higher price for the stay. Discussion Notes Looking Back 2009 Results Jabal Omar s project is currently under construction; therefore, the company is yet to record revenues. JODC s net losses decreased to USD 6.1 Mn in 2009 from USD 14.0 Mn in The absence of pre-operating expense in 2009 compared to that a year earlier (USD 19.4 Mn) was partially offset by increased general and administrative costs. These factors together lowered the operating expense by USD 18.5 Mn. In 2009, the company s results were adversely affected by the reduction in other income from USD 20.6 Mn in 2008 to USD 1.3 Mn. However, this was partially offset by the absence of taxes in the year. The company had paid USD 6.2 Mn in taxes during In 1H10, JODC continued to operate without generating any revenues. The company incurred G&A expenses, which translated into a net loss of USD 4.40 Mn, a 3% expansion of net losses versus 1H09. For 2Q10, the company generated a net loss of USD 2 mn, 15% less than the 1Q10 loss and 36% narrower than the 2Q09 net loss. 3 Jones Lang LaSalle Kuwait Financial Centre Markaz 4

5 USD mn R E S E A R C H Looking forward 2010 The company s project is expected to be completed in 4Q13, as against 3Q11 scheduled earlier The company s project is expected to be completed in 4Q13, as against 3Q11 scheduled earlier. Hence, JODC is not expected to generate any revenue until completion of the project. However, it will continue to incur general and administrative expenses until then. These expenses are expected to increase marginally. We estimate the operating expense (solely general and administrative) to increase 6% YoY in Furthermore, we expect the same to translate into net losses, considering the absence of any other source of income for the company. Table 4: Broker estimates vis-à-vis Markaz estimates f Broker Estimate Table (2010 f) Annual (USD Mn) TAIB Markaz Date of Estimates Jun-10 Jul-10 Revenue: 0 0 EBITDA: (9) (3) EBIT: (10) (3) Net Profit: (13) (8) Growth NM NM Source: Zawya, Reuters Knowledge, Markaz Research Our call on 2010 net loss is a weighted product of three scenarios the Bull Case (23% increase in losses and 10% probability of occurrence), Base Case (24% increase in net losses and 60% probability of occurrence), and Bear Case (25% increase in net losses and 30% probability of occurrence). (See Figure 3). Figure 3: Net Income Trend (6.0) (6.5) (7.0) (7.5) (8.0) (7.5) (7.6) (7.6) (7.7) (8.5) (9.0) (9.5) F P ro bable (24%) B ull (23%) B ase (24%) B ear (25%) Source: Reuters Knowledge, Markaz Research Kuwait Financial Centre Markaz 5

6 Price (rebased) Traded Volume (in '000) Jun-10 May-10 Apr-10 Feb-10 Jan-10 Nov-09 Oct-09 Aug-09 Jul-09 Jun-09 Apr-09 Mar-09 Jan-09 Dec-08 Oct-08 Sep-08 Jul-08 Jun-08 May-08 Mar-08 Feb-08 Jan-08 Jun-10 May-10 Apr-10 Feb-10 Jan-10 Nov-09 Oct-09 Aug-09 Jul-09 Jun-09 Apr-09 Mar-09 Jan-09 Dec-08 Oct-08 Sep-08 Jul-08 Jun-08 May-08 Mar-08 Feb-08 Jan-08 R E S E A R C H Valuation JODC underperformed the Tadawul (TASI) index on YTD basis, declining 3.7% compared to the index s loss of 0.87%. During 2009, the stock price dropped 7.1%, whereas the TASI surged 27.1%. The stock is currently trading at a P/B multiple of 1.84x, which fell marginally by 0.03% YTD. We estimate the fair value PB at 1.90x, indicating limited upside potential. The company s sole project to develop the Jabal Omar area is currently under construction. It is expected to attract investors due to its close proximity to the Grand Mosque of Makkah. However, JODC is likely to face competition from the Jabal Khandamah and King Abdul Aziz Road projects that have been approved by the authorities. The Jabal Omar project is now scheduled to be completed in 4Q13, a delay of more than two years from the scheduled completion. We expect JODC s net losses to increase, considering the anticipated marginal growth in operating expenses until the project is complete. JODC s turnover velocity decreased to 47.0% in 2009 (from 336.5% in 2008) due to equal decline in trading value and volumes. Given project delays and increasing competition in the area, we expect the stock to produce Low returns coupled with Low volatility as per the Markaz Volatility Index (Figure 6). Figure 4: Price & Volume Trend Figure 5: PB Trend & Fair Value 125 Volume Jabal TASI 64, ,500 JA B A L P B F air Value P B ,500 40, , ,500 16, , Source: Bloomberg, Markaz Research Source: Bloomberg, Markaz Research Figure 6: Markaz Volatility Index (June 2010) Source: Bloomberg, Markaz Research Kuwait Financial Centre Markaz 6

7 Appendix 1: Industry Overview The Saudi Construction sector grew 3.9% in 2009 compared to the 2.2% growth recorded in The sector contributed 5% of the total GDP in Furthermore, the construction sector is likely to witness growth in the near to medium term, as the government has increased infrastructure spending from USD 9.3 Bn in 2009 to USD 12.2 Bn in Saudi government is expected to invest USD 400 Bn in the infrastructure sector by 2013 The Kingdom s construction sector grew phenomenally during the last few years mainly due to government initiatives to transform and cater to the growing demand. Going forward, the Saudi government is expected to continue pumping huge capital in infrastructure projects. The Kingdom awarded development contracts worth USD 5.6 Bn in 1Q10 to boost the sector. Saudi Arabia plans to spend more than USD 400 Bn on infrastructure projects by While the overall impact of these projects would be positive for real estate demand growth, it could also increase construction costs. The construction sector is already feeling the brunt of the 30-35% hike in steel prices during April. According to MEED estimates, Saudi is ranked second in terms of value of on going projects, stood at USD Bn in February 2010 (Table 5). Table 5: Ongoing & on-hold projects in GCC Projects On going Projects - Feb 2010 (USD Mn) On Hold Projects -Feb 2010 (USD Mn) Bahrain 68,502 13,113 Kuwait 268,745 45,093 Oman 106,022 6,560 Qatar 220,315 9,837 Saudi Arabia 653,641 53,008 UAE 963, ,132 Total GCC 2,280, ,743 Source: MEED Projects According to the International Finance Corporation (IFC), the Kingdom has one of the highest population densities in the world (6.4% in 2008). Due to the high density, Saudi Arabia is expected to register strong pent up demand in the near to medium term. The Kingdom has one of the youngest population profiles in the world. This augurs well for the economy and development in the long term. The Saudi population, which grew 2.3% YoY to Mn in 2009, is expected to double over the next 30 years. Figure 7: Saudi Arabia s population growth trend. Source: Central Department of Statistics Kuwait Financial Centre Markaz 7

8 Residential Sector Outlook: According to our estimates, mentioned in the report titled Saudi Arabia - Residential Sector Outlook, we expect demand for residential units in the Kingdom to range from 500, ,000 units during This demand is likely to be driven by the expected economic recovery. The demand for housing in Kingdom is primarily driven by young and growing population, looking for affordable dwellings rather than villas or penthouses. On the supply side, IFC estimates 4.5 Mn housing units would enter the market over the next 15 years. These are expected to be added in the economic cities and other ongoing projects. Hospitality Sector Outlook The hospitality sector in Saudi Arabia serves religious tourism; hence it attracts the 1.8 Bn global Muslim population to visit Makkah and Madinah to perform Hajj and Umrah, respectively. The growth in pilgrims arriving at the holy cities is based on the increase in the Muslim population and macroeconomic factors. Jones Lang LaSalle (JLL) estimates a 54% rise in pilgrims arriving to Makkah to perform Hajj to 3.75 Mn during 2019 from 2.44 Mn in This is likely to provide a major thrust to Jabal Omar s hospitality sector. According to JLL, there are currently 50,000 rooms available in Makkah. These rooms experience 100% occupancy rate during the Hajj period. With only 9,000 rooms of these classified as excellent by the Saudi Committee for Tourism and Antiquities (SCTA) and only 5,300 matching international standards, Jabal Omar lacks quality accommodation facilities. The new projects under development, spread across the next 10 years (if all are approved), are estimated to add 50,000 rooms and improve the quality of accommodation facilities. However, approval of all these projects could result in a situation of oversupply by Kuwait Financial Centre Markaz 8

9 Appendix 2: Key Statistics `USD mn e Income Statement Revenues Gross Profit NM NM NM Operating Profit Net profit Balance Sheet Non-Current Assets 1,535 1,827 Total Assets 1,788 1,834 Current Liabilities Total Liabilities Total Shareholder's Equity 1,776 1,770 Analytics Gross Margin % NM NM NM Return on Equity (%) -0.5% -0.3% -0.4% Return on Assets (%) -0.5% -0.3% -0.4% Revenue Growth (%) NM NM NM Earnings Growth (%) NM -34.1% 24.0% Historical EV (USD Mn) 3,634 3,375 P/E NM NM Price/Book EPS (USD) BVPS (USD) DPS Market Price (SR) Assets Growth (%) NM 3% Equity Growth (%) NM -0.3% Annual Trading Volume (Mn) 1, Annual Trading Value (USD Mn) 12,230 1,648 Turnover Velocity % 47.02% M Cap (USD Mn) 3,634 3,375 Source: Reuters Knowledge, Gulfbase, Company Accounts, Markaz Research Kuwait Financial Centre Markaz 9

10 Markaz Research Offerings Strategic Research The New Regulations on Kuwait Investment Sector (Jun-10) Persistence in Performance (Jun-10) Kuwait Capital Market Law (Mar-10) What to expect in 2010 (Jan-10) GCC Banks - Done with Provisions? (Jan-10) What is left for 2009? (Sept-09) Kuwait Investment Sector (Jun-09) Missing The Rally (Jun-09) Shelter in a Storm (Mar-09) Diworsification: The GCC Oil Stranglehold (Jan-09) This Too Shall Pass ( Jan-09) Fishing in Troubled Waters(Dec-08) Down and Out: Saudi Stock Outlook (Oct-08) Mr. GCC Market-Manic Depressive (Sept-08) Global Investment Themes (June-08) To Yield or Not To Yield (May-08) The Golden Portfolio (Apr-08) Banking Sweet spots (Apr-08) The Vicious Square Monetary Policy options for Kuwait (Feb-08) China and India: Too Much Too Fast (Oct-07) A Potential USD 140b Industry: Review of Asset Management Industry in Kuwait (Sep-07) A Gulf Emerging Portfolio: And Why Not? (Jun-07) To Leap or To Lag: Choices before GCC Regulators (Apr-07) Derivatives Market in GCC (Mar-07) Managing GCC Volatility (Feb-07) GCC for Fundamentalists (Dec-06) GCC Leverage Risk (Nov-06) Daily Periodic Research Markaz Daily Morning Brief Markaz Kuwait Watch Daily Fixed Income Update Weekly KSE Market Weekly Review International Market Update Real Estate Market Commentary Monthly Mena Mergers & Acquisitions Option Market Activity GCC Quants Market Review GCC Corporate Earnings Quarterly GCC Equity Funds Thought Speaks Equity Research Statistics Infrastructure Sector Research GCC Power GCC Ports GCC Water GCC Airports GCC Roads & Railways GCC ICT Real Estate Market Outlook Dubai Real Estate - Trends and Outlook(Apr-10) Egypt Real Estate - Trends and Outlook(Feb-10) Kuwait Real Estate Outlook(Dec-09) Abu Dhabi Residential (Nov-09) Office Investment in KSA (Jul-09) Saudi Arabia Residential Real Estate Outlook (Jun-09) Saudi Arabia (Sep-08) Abu Dhabi (July-08) Algeria (Mar-08) Jordan (Mar-08) Kuwait (Feb-08) Lebanon (Dec-07) Qatar (Sep-07) Saudi Arabia (Jul-07) U.S.A. (May-07) Syria (Apr-07) Real Estate Strategic Research GCC Distressed Real Estate Opportunities (Sep-09) GCC Real Estate Financing (Sept-09) Real Estate Earnings (May-09) Supply Adjustments Are we done? (Apr-09) Dubai Real Estate Meltdown (Feb-09) Kuwait Financial Centre Markaz 10

11 Saudi Arabia Jabal Omar Development (Jul-10) Arabian Cement Co (Jul-10) Yanbu Cement Co. (Jun-10) Saudi Telecom Co. (Jun-10) Emaar Economic City (Jun-10) Qassim Cement Company (Jun-10) Savola Group (May-10) Alinma Bank (May-10) Jarir Marketing (May-10) Bank Al Bilad (May-10) Bank Al Jazira (Apr-10) Makkah Construction (Apr-10) Saudi Cement Company(Apr-10) Southern Province Cement Co(Mar-10) Saudi Electricity Company(Feb-10) Saudi Arabian Mining Co(Feb-10) Yamama Saudi Cement (Feb-10) Etihad Etisalat (Feb-10) Al Marai Company (Dec-09) Arab National Bank (Oct-09) SAFCO (Oct-09) Al Rajhi Bank (Aug-09) Riyad Bank (Jul-09) Saudi Telecom Co. (May-09) Sabic (Mar-09) Samba Financial Group (Feb-09) Saudi Investment Bank (Jan-09) Kingdom Holding Co (Dec-08) Saudi Kayan Petro Co. (Aug-08) Banque Saudi Fransi (Jun-08) Kuwait (For Internal Use Only) Agility (June-10) Gulf Bank of Kuwait (May -10) National Bank of Kuwait (Mar-10) Al Deera Holding (Aug-09) Kuwait Finance House (Apr-09) Kuwait Financial Centre (Dec-08) Commercial Bank of Kuwait (Oct-08) National Industries Group (Sept-08) Zain (Sept-08) Global Investment House (Sept-08) Kipco (Sept-08) The Investment Dar (Sept-08) Burgan Bank (Sept-08) Automated Systems Co (Aug-08) Al Safat Investment Co (July-08) Markaz Research Offerings Company Research UAE Qatar Dubai Financial Market (Sept-09) ADCB (Jun-09) DP World (Jun-09) NBAD (Feb-09) Sorouh Real Estate (Feb-09) Aldar Properties (Feb-09) Gulf Cement Company (Jan-09) Abu Dhabi National Hotels (Dec-08) Dubai Investments (Dec-08) Arabtec Holding (Dec-08) Air Arabia ( Nov-08) Union Properties (Nov-08) Dubai Islamic bank (Oct-08) Union National Bank (Aug-08) Emaar Properties (July-08) Dana Gas (July-08) FGB (July-08) Etisalat (Jun-08) Masraf Al-Rayan (Jun-10) Commercial Bank of Qatar (Mar-10) Qatar Telecom (Jun-09) Industries Qatar (Apr-09) Qatar National Bank (Feb-09) United Development Co. (Feb-09) Qatar Fuel Co. (Dec-08) Qatar Shipping Co (Dec-08) Barwa Real Estate Co. (Nov-08) Qatar Int l Islamic bank (Nov-08) Qatar Insurance Co. (Nov-08) Qatar Gas Transport Co. (Oct-08) Doha Bank (Aug-08) QEWC (July-08) QISB (July-08) Bahrain Gulf Finance House (Oct-08) Esterad Inv. Company (Aug-08) Bahrain Islamic Bank (Aug-08) Ithmaar Bank (July-08) Tameer (July-08) Batelco (July-08) Oman Shell Oman Marketing (Apr-10) Galfar Engineering & Cont. (Nov-08) Oman Telecommunications (Sept-08) Bank Muscat(Sept-08) Oman Cement (Sept-08) Raysut Cement Company (Aug-08) National Bank of Oman (Aug-08) OIB (July-08) Jordan Arab Bank (Sept-08) Cairo Amman Bank (Oct-08) Morocco Maroc Telecom (Mar-10) Egypt Egypt Kuwait Holding (Mar-10) Commercial Int l Bank (Oct-08) Orascom Telecom (Sep-08) Mobinil (Sep-08) Telecom Egypt (Aug-08) EFG-Hermes (Jun-08) Markaz Research is available on: Bloomberg Type MRKZ <GO>, Thomson Financial, Reuters Knowledge, Zawya Investor & Noozz. To obtain a print copy, kindly contact: Kuwait Financial Centre Markaz Media and Communications Department Tel: Ext Fax: Postal Address: P.O. Box 23444, Safat, 13095, State of Kuwait info@markaz.com markaz.com/research Markaz Company Research Coverage MSCI Arabian Markets MSCI Arabian Markets Conventional Islamic Local Index Saudi Arabia 60% 64% 78% Kuwait 73% 80% 51% Qatar 92% 90% 95% UAE 79% 25% 58% Bahrain 58% 74% 23% Oman 63% 100% 50% Egypt 60% 85% 40% Jordan 39% 0% 32% Morocco 50% 70% 24% MENA 78% 91% 62% Kuwait Financial Centre Markaz 11

12 Analyst Certification Each research analyst(s), strategist(s) or research associate(s) responsible for the preparation and content of this research report hereby certifies that, with respect to each issuer or security that the research analyst, strategist or research associate covers in this research report, all of the views expressed in this research report accurately reflect their personal views about those issuer(s) or securities. Each research analyst(s) strategist(s) or research associate(s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst, strategist or research associate in this research report. Important Disclosures Analysts' compensation is determined based upon activities and services intended to benefit the investor clients of Kuwait Financial Center S.A.K. Markaz ("the Firm"). Like all Firm employees, analysts receive compensation that is impacted by overall firm profitability, which includes revenues from other business units including Investment Banking. Investment ratings are determined by the ranges described herein at the time of initiation of coverage, a change in investment and/or risk rating,. Your decision to buy or sell a security should be based upon your personal investment objectives and should be made only after evaluating the stock's expected performance and risk. Definitions - Return Low Where the potential return is less than 10% Medium Where the potential return is between 10% and 25% High Where the potential return is greater than 25% Definitions Volatility (Risk) High Where the Current MVX and band width of stock is more than the respective country benchmark Medium Where the current MVX is lower than benchmark and band width higher than or lower than benchmark Low Where the current MVX is lower than the benchmark and the band width lower than the benchmark MVX refers to Markaz Volatility Index calculated by Markaz based on in-house proprietary model Disclaimer This report has been prepared and issued by Kuwait Financial Centre S.A.K (Markaz), which is regulated by the Central Bank of Kuwait. The report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinion of Markaz and are subject to change without notice. This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is historical and is not necessarily indicative of future performance. Kuwait Financial Centre S.A.K (Markaz) does and seeks to do business, including investment banking deals, with companies covered in its research reports. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of Markaz, Markaz has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz 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 website or following such link through this report or Markaz s website shall be at your own risk. Kuwait Financial Centre Markaz 12