Kuwait Financial Centre Markaz R E S E A R C H Research Highlights: Provide readers with weekly updates on analyst recommendations from different investment houses collate views on the state of MENA economy, sector developments and fixed income news. MENA Market Intelligence Week ending 29 th of March Market Performance: Mena Markets were mainly negative during the week, the same goes for GCC markets. Saudi Arabia and Turkey were the biggest gainers up 2.1% and 1.6% respectively. On the other hand Oman and Egypt posted the biggest losses; Oman lost 4.4% while Egypt shed 2.8%. Equity Research: analysts turned bullish this week, out of 9 research notes, 6 were Buy, while 3 were Neutral with no Sell recommendations. Fixed Income Development: positive fixed income news during the week; Drydock world announced that majority of its lenders has agreed on the $2.2bn restructuring deal while Kingdom Holding announced the approval of its shareholders to a USD 1bn sukuk offering. Markaz Research is available on Bloomberg Type MRKZ <Go> Table 1: Market Performance Indicators M. Cap (USD Bn) Last WTD MTD YTD 2011 Close % % % MENA Markets M.R. Raghu CFA, FRM Head of Research +965 2224 8280 rmandagolathur@markaz.com Layla Al-Ammar Assistant Manger +965 2224 8000 ext. 1205 Lammar@markaz.com Humoud Salah N AL Sabah Assistant Analyst +965 2224 8530 halsabah@markaz.com Saudi (TASI) 408 7,835 2.1% 9.12 22.09-3 Turkey ISE National 100 Kuwait SE WT.INDEX 201 62,423 1.6% 2.8 21.76-22 107 420-0.5% 2.64 3.6-16 Qatar(QE Index) 99 8,791 1.6% 0.5 0.13 1 Abu Dhabi (ADI) 76 2,553-0.8% -2.23 6.27-12 Morocco (CAI) 61 10,948-0.5% -3.95-0.72-13 Dubai (DFMGI) 52 1,649-0.9% -4.71 21.83-17 Egypt (Hermes) 59 495-2.8% -7 29.68-42 Jordan (Amman) 24 4,692-0.2% 3.82 0.94-13 Bahrain (BAX) 17 1,152 0.3% 0.33 0.77-20 Oman(Muscat SM) 14 5,690-4.4% -2.53-0.09-16 Lebanon (BSE) 13 1,224 1.0% 2.36 4.04-20 Kuwait Financial Centre S.A.K. Markaz Source: The Daily Morning Brief Markaz P.O. Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 markaz.com
What Analysts are Recommending Company Currency Recommendation Orascom Construction Industries Date of recommendation Market price on recom day Target House EGP Strong Buy 27-Mar 250 377 CICR Misr Beni Suef EGP Buy 29-Mar 48.48 64 CICR Salhiya Real Estate KWD Buy 29-Mar 0.224 0.3 Emaar AED Accumulate 28-Mar 2.97 3.58 National bank Of Abu Dhabi AED Accumulate 25-Mar 8.51 9.2 SAVOLA SAR Overweight 25-Mar 33.6 39.1 NCB Orascom Telecom Holding EGP Hold 29-Mar 4.14 4.8 CICR Qatar National Cement QAR Hold 29-Mar 106.2 105.58 Zain KWD Neutral 26-Mar 0.88 0.9 SICO Equity Recommendation - Key points Company Orascom Construction Industries (Egypt) SAVOLA (Saudi Arabia) Misr Beni Suef (Egypt) Orascom Telecom Holding (Egypt) Emaar (U.A.E) House CICR NCB CICR CICR Recommendatio n Strong Buy Overweight Buy Hold Accumulate Rationale Although net income was less than CICR s expectation, CICR believes that the demerger once completed will enhance OCI s strategic clarity thus unlocking potential value, thus, CICR issued a Strong Buy recommendation with a price target of EGP377 Stable food prices along with expansion in the retail segment led NCB capital to issue an Overweight recommendation with a price target of SAR 39.1. CICR upgraded Misr MBSC s outlook to Buy their main rationale was; 1) Full Operation of the new 1.5mpta production line and 4 cement grinders 2) The resumption of cement and clinker exports Uncertainty concerning the valuation on ORTE s Algerian segment led CICR to maintain its Hold recommendation with a price target of EGP 4.8 issued an Accumulate recommendation with a price target of AED 3.58 indicating a 20% upside potential over Emaar s current price. The main rationale behind this decision
National Bank Of Abu Dhabi (U.A.E) Qatar National Cement (Qatar) Salhiya Real Estate (Kuwait) Zain (Kuwait) SICO Accumulate Hold Buy Neutral includes; 1) Stronger performance from the hospitality and retail segment 2) A 30% increase in Emaar the Economic City s stock price (Emaar s associate ) Due to a 35% bonus share which increased outstanding shares from 2.8bn to 3.87bn, maintains its Accumulate recommendation while adjusting NBAD s fair value from AED12.4 to AED9.2 indicating an 8% upside potential Although demand for cement in Qatar is expected to increase in 2012, QNC has reached full capacity thus issued a Hold recommendation with a price target of QAR105.58. FY11 results are out; revenues increased 2% to KWD 43.85mn, EBITDA was up 9% to KWD22.8mn however investment income dropped by 83% to KWD 1.5mn. Based on the above reiterates its Buy recommendation with a price target of KWD 0.300 SICO maintains its Neutral rating while adjusting Zain s target price downwards from KWD1.06 to KWD 0.9 per share. SICO lowered FY12 revenue and growth forecast due to intense competition in the majority of Zain s markets.
Fixed Income News Sources which include Bloomberg, Zawya, and daily newspapers were utilized in the creation of the fixed income section which is mainly from Markaz GCC daily report Title Market View Most Lenders Agree On $2.2 Bn Debt Deal, Says Drydocks Saudi Electricity Secures $1.4 Bn Loan To Fund Power Project UAE Drydocks World has secured the necessary level of support from its syndicated lenders to implement the restructuring of its $2.2bn debt, the company said. The Dubai World unit said a significant majority of the Group s lenders had formally confirmed their support for the restructuring. However, a small minority is yet to confirm support. The company did not specify what percentage of lenders needed to agree for it to go ahead with the restructuring proposal. The Group remains confident the absence of support from this minority will have no impact on the group s restructuring, said the chairman of Drydocks World Khamis Juma Buamim Saudi Electricity Co. said it signed a $1.4bn loan agreement with a group of international banks led by HSBC to help finance the construction of a power plant. The 15-year loan will be used to help finance the construction of SEC's Rabigh VI power plant on the Red Sea coast to the north of Jeddah city. The loan is guaranteed by Korea Trade Insurance Corp. and by the Export-Import Bank of Korea. The lenders participating in the loan include, among others, Bank of Tokyo-Mitsubishi, Sumitomo Mitsui Banking Corp, and Mizuho Bank. Mubadala Secures Abu Dhabi Commercial Bank Loan With Aldar Shares Saudi Kingdom Holding Wins Holders' Okay To Issue Bonds And Sukuk UAE Abu Dhabi Commercial Bank, the UAE's third-largest lender by assets, said it has made a secured loan to government-controlled investment firm Mubadala Development Co. through a repurchase agreement involving shares of developer Aldar Properties. "Under the terms of the agreement, Mubadala will transfer to ADCB 571.9mn Aldar shares, equating to approximately 14% of Aldar's outstanding share capital. At maturity in April 2013 (or earlier if terminated prior to maturity), the shares will be transferred back to Mubadala." Saudi Arabia's Kingdom Holding Co., run by billionaire Prince Alwaleed bin Talal, said it secured shareholder approval to sell Islamic and conventional bonds for the first time, worth up to SAR3.75bn ($1bn), adding to a flood of debt issuance expected this year by Saudi companies and government entities
Saudi SABB Sells SAR1.5 Bn Subordinated Maiden Sukuk Saudi Electricity Launches Two-Tranche, $1.75 Bn Sukuk; Orders Exceed $17.5 Bn DIB Repays $750 Mn Sukuk From Own Resources- Kuwait's IIG Says Close To Rescheduling Debt, Including $200 Mn Sukuk UAE Kuwait Saudi British Bank (SABB), has sold a SAR1.5bn ($400mn) sukuk, its first, through private placement. The sukuk was arranged and structured by HSBC Saudi Arabia. SABB owns 51% of HSBC Saudi. SABB opted for private placement of its five-year, domestic sukuk, which is restricted to sophisticated investors tax-resident in the Kingdom of Saudi Arabia. It pays 120bps over three months SIBOR, on a quarterly basis. Saudi Electricity Co., the biggest utility company in the kingdom, said it issued a two-tranche, $1.75bn sukuk after getting strong demand with orders exceeding $17.5bn. The five-year tranche worth $500mn carries a profit rate of 2.665%, while the 10- year tranche of $1.25bn has a profit rate of 4.211%. Dubai Islamic Bank said it has repaid in full a $750mn five-year sukuk which matured on March 22 from its own sources, demonstrating the bank s financial strength and comfortable liquidity position. The only capital market issuance done directly by DIB, the sukuk was issued through a SPV, DIB Sukuk Company Limited, established in the Cayman Islands, and was the first sukuk to be listed on both the DIFX and the London Stock Exchange. Dr Adnan Chilwan, Deputy CEO Chief of Consumer and Wholesale Banking, said: The repayment of the sukuk in full is a clear demonstration of the financial strength of DIB. The ability to repay from our own resources without the need to refinance is testament to the robust fundamentals we have built over the past years. Kuwait's International Investment Group (IIG) said yesterday it expects to an agreement soon with creditors to reschedule its debt, which mainly consists of sukuk maturing this year. These mudarabah sukuk, which represent 75% of IIG's overall financial obligations, had a nominal value of $200mn at the issue date, the Islamic investment bank said. IIG and the majority of the sukuk holders signed earlier this month a term sheet whereby the two parties have agreed in principle on the basic elements of the restructuring plan. IIG was one of nine companies that Kuwait's Markets Authority de-listed last month from the local bourse. The company's shares are still listed on the Bahrain and Dubai bourses.
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 owned by Markaz and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report cannot be quoted without the prior written consent of Markaz. Any user after obtaining Markaz permission to use this report must clearly mention the source as Markaz. 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. Markaz has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. This report may not consider 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 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. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. 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. For further information, please contact Markaz at P.O. Box 23444, Safat 13095, Kuwait; Email: research@markaz.com ; Tel: 00965 1804800; Fax: 00965 22450647.