Burgan Bank Group (BURG) Recommendation ACCUMULATE Risk Rating R-4 Share Price KWd 285 Target Price KWd 335 Implied Upside +19.2% Cheapest Bank in Kuwait; Initiating with an Accumulate Burgan Bank is the cheapest bank in Kuwait trading at a 1 discount to its book value (29% discount to its historical P/B) and a 2019e PEG of 0.6x. Moreover, the market is pricing in a sustainable RoE of 1 vs. 12% based on our estimates. The stock has significantly underperformed its peers over the last 12 months and we believe downside risk is low. We initiate coverage with an Accumulate rating and a PT of KWd (Fils) 335/sh. Highlights Strong earnings growth on the horizon. We pencil in a bottom-line (attributable) CAGR of 14.5% in 2017-2022e vs. flat earnings (2012-2017). This accelerating growth forecast in net income should be driven by net operating income, which we model to grow by 9.3% and flat credit provisions. Having said this, there could be further upside to our estimates if BURG reduces provisions more than our model expectations. Like all Kuwaiti banks, general/precautionary provisions (imposed by the Central Bank) are much greater than specific provisions. As such, hefty reversals or netting these built up reserves against impairments (when IFRS 9 is applied) can unlock value, boosting profitability (RoE should markedly increase). Geographically diversified bank. Due to limited growth in Kuwait, BURG has ventured into Turkey (material subsidiary), Algeria (material subsidiary), Iraq (insignificant) and Tunisia (insignificant). Turkey contributes ~23% (total loans) and ~2 (to total revenue), while Algeria contributes 1 and 14% to total loans and revenue, respectively. These subsidiaries generate strong margins for the bank as Kuwait operations yield tight margins. Clarity on IFRS 9 and lower CoR key to stronger profitability. BURG, along with all other banks in Kuwait, has been booking excessive precautionary provisions since 2012 at the request of the Central Bank. With IFRS 9, rather than booking a one-time impairment charge against equity, banks have been using the buffers built to write off Stage 2 loans that are expected to be impaired. Going forward, we are of the view that BURG would not have to book general provisions, resulting in a significant drop in CoR. It should be noted that so far the central bank has not updated the banks on IFRS 9 implementation. Efficiency ratio requires improvement. The bank is operating at an optimal level in Kuwait with a C/I ratio of 3 (past 3 years) given that it is corporate focused which is not cost-intensive. On the other hand, international operations have been inefficient (Turkey being the main contributor). Having said this, the efficiency ratio from international operations has improved from 64.5% in 2016 to 55.8% in 2017 (47.4% in 9M2018). We do not expect the efficiency ratio to drop below the ~4 level in our forecast horizon as the bank needs to grow revenue significantly vs. opex. Asset quality markedly improved; write-offs/reversals along with prudent risk control contributed positively. BURG s NPL ratio receded to 2.73% in 2017 from an all-time high of 11.5% in 2011, while the coverage ratio jumped to 144% vs. 35% (2012). We pencil in steady improvements in the NPL ratio. Strong capitalization position following KWD60mn rights issue. BURG s rights issue is expected to bolster CET1 ratio to 12.1% (vs. 10.8% in 9M2018) and Total Tier-1 ratio to 14.8% (vs. 13.5% in 9M2018) and CAR to 17.5% (vs. 16.5% in 9M2018) in 2018. Catalysts 1) Clarity on implementation of IFRS 9 on loan book, 2) Possible FTSE EM inclusion in 2019 & 3) Stabilization of Turkish Lira. Recommendation, Valuation and Risks Recommendation and valuation: We assign a Price Target of KWd 335 and an Accumulate rating. BURG is trading at a 2019e P/TB and P/E of 0.9x and 9.4x, respectively. The stock is cheap trading at a PEG of 0.6x (below 1.0x) based on earnings of CAGR 14.5% (2017-2022e). Risks: 1) Geo-political factors, 2) Unexpected asset quality deterioration, 3) CoR does not improve & 4) Volatility in Turkish lira. Key Financial Data and Estimates FY2017 FY2018e FY2019e FY2020e EPS (KWd) Reported 25.40 28.46 30.34 35.08 EPS Growth (%) -5.9 12.0 6.6 15.6 P/E (x) 13.1 10.0 9.4 8.1 Tangible BVPS (KWd) 255.0 281.7 328.9 356.6 P/TB (x) 1.1 1.0 0.9 0.8 DPS (Fils) 7.00 7.00 9.00 15.00 Dividend Yield (%) 2.1 2.5 3.2 5.3 Key Data Current Market Price (KWd) 285 Dividend Yield (%) 2.5 Bloomberg Ticker ADR/GDR Ticker Reuters Ticker ISIN BURG KK N/A BURG.KW KW0EQ0100077 Sector Banks & Financial Svcs. 52wk High/52wk Low (KWd) 309/241 3-m Average Volume ( 000) 2,426.2 Mkt. Cap. ($ bn/kwd bn) 2.3/0.7 Shares Outstanding (mn) 2,493.0 1-Year Total Return (%) (0.7) Fiscal Year End December 31 Source: Bloomberg (as of December 2, 2018) Shahan Keushgerian +974 4476 6509 shahan.keushgerian@qnbfs.com.qa Saugata Sarkar, CFA, CAIA +974 4476 6534 saugata.sarkar@qnbfs.com.qa Monday, 3 December 2018 1
We Expect BURG to Generate RoE of 11.2% in 2018e; Significant Improvement from 8.9% (2017) 16. 12. 8. 13.3% 12.3% 10.7% 10.4% 9.7% 9.2% 8.9% 8.4% 7. 6.6% 4. NBK Boubyan AUB KFH Average CBK Burg GBK KIB ABK International Operations In-Efficient; Kuwait Efficient at C/I of 3 6 51. 42.1% 42.9% 45.6% 4 30.9% 32. 32.3% 35.4% 37.7% 2 CBK AUB NBK GBK ABK Boubyan KFH Burg KIB Cost-to-Income Monday, 3 December 2018 2
NPL Ratio Highest Among Peers but has Drastically improved from 11.5% (2011) 3. 2.52% 2.57% 2.73% 2. 1.74% 1.79% 1.39% 1.42% 1. 0.8 0.53% CBK Boubyan AUB NBK GBK ABK KFH KIB Burg 3 rd Largest Market Share in Loans..... And Deposits 1 3% 5% 6% 9% 3% 5% 8% 6% 5% 21% 25% 33% 31% 7% 9% 6% 8% CBK Boubyan AUB NBK GBK ABK KFH Burg KIB CBK Boubyan AUB NBK GBK ABK KFH Burg KIB Monday, 3 December 2018 3
Valuation We value BURG using 2 variations of the Residual Income Model (RI) -- 1) Warranted Equity Valuation (WEV) and 2) RI based on a fundamental P/B: a) We utilize a WEV technique derived from the Gordon Growth Model: P/B = (RoAE-g)/(Ke-g). This model uses sustainable return on average equity (RoAE) based on the mean forecast over the next seven years, cost of equity (Ke) and expected longterm growth in earnings (g) to arrive at a fair value for this stock. We consider this method best suited to arriving at an intrinsic valuation through the economic cycle. b) We derive BURG's fair value by employing the RI valuation technique (based on a fundamental P/B), which is calculated based on the sum of its beginning book value, present value of interim residuals (net income minus equity charge) and the present value of the terminal value (we apply a fundamental P/B multiple based on the Gordon Growth Model to the ending book value at the end of our forecast horizon). We derive the P/B from the Gordon Growth Model: P/B = (RoAE-g)/(Ke-g). This model uses sustainable return on equity (RoE) based on the median over our forecast period, cost of equity (Ke) and expected long-term growth in earnings (g) to arrive at fundamental/justified P/B. Based on this method we arrive at a fundamental P/B of 1.2x. The RI model is suitable for the following reasons: 1) when the company does not pay dividends or the pattern of dividend payments is unpredictable; 2) the company is expected to generate negative free cash flows for the foreseeable future and 3) as the traditional free cash flow to equity (FCFE) formula does not apply to banks. A major advantage of RI in equity valuation is that a greater portion of the company's intrinsic value is recognized from the beginning BVPS as opposed to the terminal value (common in traditional FCFE methodology). We add Kuwait s 10 year swaps rate of 1.08% to the 10 year US government bond yield (3.01%) to arrive at a risk free rate of 4.1%. We factor in a beta of 1.0x. Finally, we add a local equity risk premium of 6.5% to arrive at a Ke of 10.6. Valuation Methodologies Fundamental P/B (WEV) RI Based on Fundamental P/B Sustainable RoE (%) 11.6 Beginning BVPS (2018e) (KWd) 270 Estimated Cost of Equity (%) 10.60 Present Value of Interim Residuals (KWd) 7 Terminal Growth Rate (%) 5.0 Present Value of Terminal Value (KWd) 46 Fundamental P/B 1.2x Fundamental P/B 1.2x Intrinsic Value (KWd) 347 Intrinsic Value (KWd) 323 Current Market Price (KWd) 285 Current Market Price (KWd) 285 Upside/(Downside) Potential (%) +21.8 Upside/(Downside) Potential (%) +13.3 Source: QNBFS Research Methodology Equity Value (KWd) Weight (%) Weighted Fair Value (KWd) Residual Income 323 50 161 WEV 347 50 174 Target Price 335 Closing Price 281 Upside/(Downside) +19.2 Source: QNBFS Research Monday, 3 December 2018 4
Trading at a 29% Discount to its Historical P/B 2 1.75 Historical Average 1.4x P/B 2018e 1.0x 1.5 1.25 1 0.75 0.5 0.25 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Source: Bloomberg, QNBFS Research And a 46% Discount to its Historical P/E 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 Source: Bloomberg, QNBFS Research Historical Average Average - 18.5x Current P/E 2018e - 10.0x Oct-14 Jun-15 Feb-16 Oct-16 Jun-17 Feb-18 Oct-18 Consistently Pays Dividends (KWd), However Erratic 20.0 18.00 10 Do Not Expect Generous Dividends After Recent Rights Issue 6. 5.3% 15.0 15.00 75% 10.0 5.0 56% 5.00 18% 7.00 7.00 28% 25% 9.00 3 43% 5 25% 4. 2. 1.4% 2.1% 2.5% 3.2% 0.0 2015 2016 2017 2018e 2019e 2020e DPS (LHS) Payout Ratio (RHS) 2016 2017 2018e 2019e 2020e Monday, 3 December 2018 5
Key Forecasts Loan Portfolio BURG is a diversified bank in Kuwait and has a 1 market share in loans and 9% market share in deposits; we pencil in a loan book CAGR (2017-22e) of 5.. BURG is generally focused on corporates and has insignificant exposure to mass retail which contributes 1 to the loan book through a small domestic banking network of 29 branches (not retail focused as previously mentioned). Turkey and Algeria contribute 23% and 1 to BURG s loan portfolio, respectively. The Turkish subsidiary mainly caters to mid-corporates and some retail while Algeria is focused on trade finance. Loans (KWD mn) to Exhibit 5. CAGR vs. 5.5% (2012-17) 6,000 5,633 5,159 5,000 4,000 4,012 4,224 4,408 4,199 4,429 4,738 3,000 2,000 1,000 0 2015 2016 2017 2018e 2019e 2020e 2021e 2022e Retail Book Decreasing in Size; Corporate Oriented 10 With Decent Contribution from International Operations 10 75% 75% 33% 37% 34% 5 8 82% 87% 87% 88% 88% 89% 9 5 The decrease is mainly due to Turkish Lira depreciation 25% 25% 67% 63% 66% 2 18% 13% 13% 12% 12% 11% 1 2010 2011 2012 2013 2014 2015 2016 2017 Retail Corporate 2016 2017 9M2018 Kuwait International Monday, 3 December 2018 6
Operating Performance We pencil in a bottom-line CAGR of 14.5% in 2017-2022e vs. flat performance (2012-2017). The growth in net income is expected to be driven by net operating income which we model in a growth of 9.3% and flat credit provisions. Having said this, there could be further upside to our estimates if BURG reduces provisions more than our model expectations. Like all Kuwaiti banks, general/precautionary provisions (imposed by the Central Bank) are much greater than specific provisions. As such, hefty reversals or netting these built up reserves against impairments (when IFRS 9 is applied) can unlock value, boosting profitability (RoE should markedly increase). Net Profit (KWD mn) Total Revenue (KWD mn) 120 100 80 60 65 57 14.5% CAGR 54 71 76 87 99 107 400 300 200 12% 248 235 239 2% 12% 268 278 4% 292 5% 313 7% 345 1 14% 7% 40 100 20-5% 0 2015 2016 2017 2018e 2019e 2020e 2021e 2022e 0 2015 2016 2017 2018e 2019e 2020e 2021e 2022e Revenue (LHS) Growth (RHS) -7% Net Interest Income (KWD mn) 300 12. 250 200 150 5.9% 157 156 171 9.7% 8.7% 186 9.2% 203 217 6.8% 234 7.9% 1 8. 6. 4. 100 2. 50-0.6% 0 2015 2016 2017 2018e 2019e 2020e 2021e Net Interest Income (LHS) Growth (RHS) -2. Monday, 3 December 2018 7
NIMs to Further Expand With Expected Rate Hikes; International Operations Support NIM due to Higher Margin Environment 4.0 3.7 3.55% 3.53% 3.57% 3.5 3.28% 3.27% 3.0 2.5 3.14% 2.6 2.46% 2.79% 2.82% 2.59% 2.5 2.95% 2.58% 2.77% 2.9 2.72% 2.6 2.63% 2.0 1.5 1.0 0.5 0.0 2013 2014 2015 2016 2017 2018e 2019e 2020e 2021e 2021e NIM Spread NIMs to expand with further interest hikes and contributions from international operations. BURG s Kuwait operations is corporate banking based, as such margins are not as large vs. retail banks. The bank has maintained a NIM of 2% from Kuwait operations, while margins are much wider in Turkey and Algeria given the operating environment in those countries. On a side note, Kuwait has an advantage that allows it to instantly reprice corporate loans when interest rates go up. As such, BURG is a corporate oriented bank can reprice loans in a rising interest rate environment allowing it to increase its margins. RoE is Steadily Improving 16. 1.3% 1.3% 1.4% 1.4% 1.4% 1.5% 12. 13.2% 1.1% 9.7% 1. 8.9% 11.2% 10.8% 10.7% 11.1% 1. 8. 0.5% 4. 2015 2016 2017 2018e 2019e 2020e 2021e Tangible RoE (LHS) RoRWA (RHS) Room for further upside dependent on CoR. RoE is steadily increasing based on our estimates. However, clarity from the central bank regarding IFRS 9 and precautionary provisions would determine the level of RoE. Hence, reversals or netting these built up reserves against impairments (when IFRS 9 is applied) can boost RoE significantly. Monday, 3 December 2018 8
Efficiency Burgan Operating Inefficiently at Elevated C/I 5 48.5% 46.5% 45. 4 45.6% 42. 41.6% 41. 41.6% 3 2 1 2014 2015 2016 2017 2018e 2019e 2020e 2021e International operations are a drag on efficiency but has been improving. The bank is operating at an optimal level in Kuwait with a C/I ratio of 3 (past 3 years) given that it is corporate focused which is not cost-intensive. On the other hand, international operations have been inefficient (Turkey being the main contributor). Having said this, the efficiency ratio from international operations has improved from 64.5% in 2016 to 55.8% in 2017 (47.4% in 9M2018). It is worth mentioning here that small banks in Turkey generally have high C/I ratios. We do not expect the efficiency ratio to drop below the ~4 level in our forecast horizon as the bank needs to grow revenue significantly vs. opex. Asset Quality Asset Quality Has Materially Improved 5% 4.28% 4.05% 4% 143.8% 156.1% 157.1% 162.1% 156.7% 18 3% 92.6% 110.1% 2.73% 2.99% 2.81% 2.73% 2.5 12 2% 6 1% 2015 2016 2017 2018e 2019e 2020e 2021e NPL Ratio (LHS) Coverage Ratio (RHS) Asset quality unlikely an issue going forward. BURG has cleaned up its books since 2011 when the NPL ratio reached a high of 11.52% to 2.73% in 2017, although we expect a small increase to 2.99% in 2018e. Moreover, as of 9M2018 the coverage ratio stood at 17. Monday, 3 December 2018 9
CoR Significantly Improved but Still Remains on the High Side 5 130 130 140 4 3 42.6% 34.4% 97 31.9% 92 37.5% 115 32. 100 27.9% 85 24.1% 120 100 80 2 60 1 40 2015 2016 2017 2018e 2019e 2020e 2021e 20 Provisions to PPP (LHS) CoR (RHS) Cost of risk needs to significantly improve. Burgan s high cost of risk is mainly driven from the central bank of Kuwait (CBK) imposing excessive precautionary provisions on banks. CBK s precautionary provisions contributed 52.9% to total credit provisions in 2017, 57.8% in 2016, and 41.6% in 2015. Excluding these excess provisions, Burgan s 2017 domestic CoR would have contributed only 13bps to total CoR vs. 31bps from international operations in 2017. A reversal of these provisions would be earnings accretive and would materially enhance profitability metrics (RoE, RoA, Net Profit Margin etc.) and thus value. Capitalization Capitalization Levels to Improve with KWD60mn Capital Increase 2 15. 16.7% 13.9% 16.2% 13.5% 17.5% 14.8% 18.4% 15.7% 17.3% 17.1% 14.6% 14.4% 1 5. 2016 2017 2018e 2019e 2020e 2021e CAR Tier-1 KWD60mn rights issue to bolster CET1 ratio. BURG s rights issue is expected to bolster CET1 ratio to 12.1% (vs. 10.8% in 9M2018) and Total Tier-1 ratio to 14.8% (vs. 13.5% in 9M2018) in 2018. Monday, 3 December 2018 10
Company Description Established in 1977 Burgan Bank is a diversified full service bank with a footprint across North Africa, Turkey and Iraq; BURG is a corporate oriented bank in Kuwait and has a 1 market share in loans and 9% market share in deposits. BURG is a universal bank offering services to corporates and retail customers, private banking, investment banking and brokerage. The bank operates across a spectrum of 7 countries and has a network of 167 branches (29 branches in Kuwait). Stable Shareholder base. Strong shareholder base as KIPCO is affiliated with the royal family. Major Shareholders Shareholders Investor Type Country Share (%) KIPCO Private Kuwait 63.04 The Public Institution for Social Security Government Kuwait 8.43 73.47 Source: Company data Subsidiaries Company Country Share (%) Algeria Gulf Bank Algeria 86.01 Bank of Baghdad Iraq 51.79 Tunis International Bank Tunisia 86.70 Burgan Bank A.S. Turkey 99.26 Burgan Bank Financial Services Dubai 100.00 Source: Company data Monday, 3 December 2018 11
Detailed Financial Statements Ratios FY2017 FY2018e FY2019e FY2020e Profitability (%) RoE (Tangible) 8.9 11.2 10.8 10.7 RoAA 0.9 1.1 1.2 1.3 RoRWA 1.0 1.3 1.4 1.4 NIM (% of IEAs) 2.95 3.27 3.55 3.53 NIM (% of RWAs) 3.07 3.38 3.69 3.55 NIM (% of AAs) 2.33 2.57 2.82 2.86 Spread 2.6 2.8 2.9 2.7 Efficiency (%) Cost-to-Income (Headline) 45.6 42.0 41.6 41.0 Cost-to-Income (Core) 48.3 44.5 43.3 43.0 Liquidity (%) LDR 85.9 87.1 86.3 85.4 Loans/Assets 59.4 59.5 60.5 60.5 Cash & Interbank Loans-to-Total Assets 21.2 21.2 21.9 21.8 Deposits to Assets 56.0 55.5 56.7 57.2 Wholesale Funding to Loans 49.5 46.0 44.9 42.3 IEAs to IBLs 1.2x 1.2x 1.2x 1.2x Asset Quality (%) NPL Ratio 2.73 2.99 2.81 2.73 NPLs to Shareholder's Equity 18.6 17.9 15.3 14.8 NPLs to Tier 1 Capital 20.1 20.6 17.3 16.8 Coverage Ratio 143.8 156.1 157.1 162.1 ALL/Average Loans 4.0 4.6 4.5 4.6 Cost of Risk 92 130 115 100 Capitalization (%) Tier 1 Ratio 13.5 14.8 15.7 14.6 CAR 16.2 17.5 18.4 17.3 Tier 1 Capital to Assets 10.4 11.1 12.3 12.1 Tier 1 Capital to Loans 17.5 18.7 20.3 20.1 Tier 1 Capital to Deposits 18.5 20.1 21.6 21.2 Leverage (x) 11.0 9.6 8.6 8.6 Growth (%) Net Interest Income 9.7 8.7 9.2 6.8 Non-Interest income -13.2 20.7-8.9-0.6 Total Revenue 2.0 12.1 3.6 4.8 Opex -4.0 3.2 2.7 3.1 Net Operating Income 7.7 19.6 4.3 6.0 Net Provisions & Impairments 12.5 14.2-3.5-8.1 Net Income (Reported/Headline) -4.3 25.6 5.7 13.6 Net Income (Attributable) -5.3 30.9 6.6 15.6 Loans 4.3-4.7 5.5 7.0 Deposits 11.2-5.8 6.0 8.0 Assets 2.0-4.8 3.7 7.1 RWAs 5.2-7.4 7.8 13.9 Monday, 3 December 2018 12
Income Statement (In KWD mn) FY2017 FY2018e FY2019e FY2020e Net Interest Income 171 186 203 217 Fees & Commissions 37 33 36 35 FX Income 10 18 16 17 Other Income 22 31 24 23 Non-Interest Income 69 83 75 75 Total Revenue 239 268 278 291 Operating Expenses (109) (113) (116) (120) Net Operating Income 130 156 162 172 Net Provisions & Investment Impairments (50) (57) (55) (51) Net Profit Before Tax & Minority Interest 80 98 107 121 Tax (11) (14) (15) (17) Net Profit Before Minority Interest 69 84 92 104 Minority Interest (4) (3) (5) (6) Net Profit (Headline/Reported) 65 82 87 98 Interest on Tier-1 Note (11) (11) (11) (11) Net Profit (Attributable) 54 71 76 87 Balance Sheet (In KWD mn) FY2017 FY2018e FY2019e FY2020e Assets Cash & Balances with Central Bank 937 901 926 1,000 Interbank Loans 632 596 673 711 Net Investments 1,097 950 1,045 1,114 Net Loans 4,408 4,199 4,429 4,738 Investment in Associates 15 16 17 18 Other Assets 188 252 76 95 Net PP&E 102 110 121 133 Goodwill & Intangibles 37 33 29 25 Total Assets 7,415 7,056 7,315 7,833 Liabilities Interbank Deposits 884 668 643 552 Customer Deposits 5,130 4,822 5,130 5,550 Subordinated Notes 322 358 365 383 Other Liabilities 212 274 125 224 Tier-1 Notes 144 144 144 144 Total Liabilities 6,692 6,267 6,407 6,854 Shareholders Equity 672 735 849 914 Total Liabilities & Shareholders Equity 7,415 7,056 7,315 7,833 Monday, 3 December 2018 13
Recommendations Based on the range for the upside / downside offered by the 12 - month target price of a stock versus the current market price Risk Ratings Reflecting historic and expected price volatility versus the local market average and qualitative risk analysis of fundamentals OUTPERFORM Greater than +2 R-1 Significantly lower than average ACCUMULATE Between +1 to +2 R-2 Lower than average MARKET PERFORM Between -1 to +1 R-3 Medium / In-line with the average REDUCE Between -1 to -2 R-4 Above average UNDERPERFORM Lower than -2 R-5 Significantly above average Contacts Saugata Sarkar, CFA, CAIA Shahan Keushgerian Zaid Al Nafoosi, CMT, CFTe Head of Research Senior Research Analyst Senior Research Analyst Tel: (+974) 4476 6534 Tel: (+974) 4476 6509 Tel: (+974) 4476 6535 saugata.sarkar@qnbfs.com.qa shahan.keushgerian@qnbfs.com.qa zaid.alnafoosi@qnbfs.com.qa QNB Financial Services Co. WLL Contact Center: (+974) 4476 6666 PO Box 24025 Doha, Qatar Disclaimer and Copyright Notice: This publication has been prepared by QNB Financial Services Co. WLL ( QNBFS ) a wholly-owned subsidiary of Qatar National Bank Q.P.S.C. ( QNB ). QNBFS is regulated by the Qatar Financial Markets Authority and the Qatar Exchange QNB is regulated by the Qatar Central Bank. This publication expresses the views and opinions of QNBFS at a given time only. It is not an offer, promotion or recommendation to buy or sell securities or other investments, nor is it intended to constitute legal, tax, accounting, or financial advice. QNBFS accepts no liability whatsoever for any direct or indirect losses arising from use of this report. Any investment decision should depend on the individual circumstances of the investor and be based on specifically engaged investment advice. We therefore strongly advise potential investors to seek independent professional advice before making any investment decision. Although the information in this report has been obtained from sources that QNBFS believes to be reliable, we have not independently verified such information and it may not be accurate or complete. QNBFS does not make any representations or warranties as to the accuracy and completeness of the information it may contain, and declines any liability in that respect. For reports dealing with Technical Analysis, expressed opinions and/or recommendations may be different or contrary to the opinions/recommendations of QNBFS Fundamental Research as a result of depending solely on the historical technical data (price and volume). QNBFS reserves the right to amend the views and opinions expressed in this publication at any time. It may also express viewpoints or make investment decisions that differ significantly from, or even contradict, the views and opinions included in this report. This report may not be reproduced in whole or in part without permission from QNBFS COPYRIGHT: No part of this document may be reproduced without the explicit written permission of QNBFS. 14