MENA-1 MONDAY MORNING ROUND-UP
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UAE
Dubai and Egypt stock markets to allow dual listings
Abu Dhabi Insurance House to launch operations within days
UAE air traffic movements up 6.7% Y-o-Y in April 2011
Kuwait
MPs file request to question Deputy PM
Agility’s 1Q2011 profit declines following business restructuring
Kuwait Gulf Link wins US Army contract
Qatar
QIB plans up to USD1 billion sukuk sale by the end of 2011
QFCRA appoints Errol Kruger as new Managing Director
Al Khaliji’s BOD meets on 1 June 2011 to discuss merger with IBQ
Oman
Central bank approves new bank to provide Islamic services
EFG Hermes Research
Emaar Properties - 1Q2011 Results In Line; Overhangs and ST Risks Remain; Maintain Buy - Flash Note - 15
May 2011
Industries Qatar (IQ) - Key Takeaways from Our Meeting with Management - Flash Note - 15 May 2011
Agenda
Qatar
Wed 25 May >> Vodafone Qatar FY2010-2011 (March year end) results
Wed 1 June >> Al Khaliji Commercial Bank BOD meeting
UAE News
Dubai and Egypt stock markets to allow dual listings
The stock markets in Egypt and Dubai plan to allow listed companies on both exchanges to dual list their shares in an
attempt to diversify investment opportunities and boost liquidity. The Dubai Financial Market (DFM) and The
Egyptian Exchange (EGX) will set up a comprehensive framework that will pave the way for listed companies on both
exchanges to dual list their shares, according to a statement from the DFM. Chief Executive Officer (CEO) of the
DFM, Essa Kazim, said “Taking the relations between two of the major exchanges in this part of the world a step
forward will further improve the liquidity and benefit both investors and companies”. (Zawya Dow Jones)
Abu Dhabi Insurance House to launch operations within days
Abu Dhabi Insurance House, which has recently completed its initial public offering (IPO), has received all regulatory
approvals and expects to launch its operations within a few days. Abu Dhabi Insurance House offered 55% of its share
capital of AED120 million in an IPO, which was completed on 9 March 2011. (Zawya Dow Jones)
UAE air traffic movements up 6.7% Y-o-Y in April 2011
Air traffic movements in the UAE grew 6.7% Y-o-Y in April 2011, according to the General Civil Aviation Authority
(GCAA). The GCAA monthly report showed that total air traffic movements in April 2011 were 55,842, with an
average 1,861 movements per day. (Trade Arabia)
Kuwait News
MPs file request to question Deputy PM
Two MPs have filed a request to question Deputy Prime Minister Sheikh Ahmad Al-Fahd Al-Sabah on allegations of
corruption just one week after the Popular Bloc filed a request to question the prime minister. The questioning is almost
similar to the one filed before the resignation of the cabinet in which MPs alleged corruption in housing contracts and
the Olympic Council headquarters that cost around KWD250 million of public funds. (Kuwait Times)
Agility’s 1Q2011 profit declines following business restructuring
Agility ([Link]) reported a net profit of KWD7.7 million for 1Q2011, which was down 56% Y-o-Y. Revenues
dropped 21% Y-o-Y to KWD319 million, while operating profit dropped 91% Y-o-Y to KWD1.7 million. Agility’s
Chairman Tarek Sultan said that after readjusting the business in 2010, which included transition away from
government business, 2011 represents a new financial benchmark for the firm. (Company Statement)
Kuwait Gulf Link wins US Army contract
Kuwait and Gulf Link Transport ([Link]) said that it has won a USD870 million logistics contract along with three
other companies with the US Army. The contract starts from September 2011 and will span five years. (Reuters)
Qatar News
QIB plans up to USD1 billion sukuk sale by the end of 2011
Qatar Islamic Bank (QIB) [[Link]] plans to raise as much as USD1 billion through the sale of an Islamic bond,
known as sukuk, by the end of this year, Reuters reported quoting two unnamed sources familiar with the matter. The
sources indicated that the bank is planning to raise between USD500 million and USD1 billion from the sukuk sale, but
did not say whether the bank had mandated banks for the proposed issue. QIB invested QAR1.25 billion (USD343.6
million) in June 2010 in a sukuk issued by the Qatar Central Bank on behalf of the government to boost the domestic
bond market. The lender also launched a USD750 million Islamic bond in late September 2010. (Reuters)
Qatar Islamic Bank: QAR80.80, Rating: Neutral, FV: QAR90.00, MCap: USD4,590 million, QIBK QD / [Link]
QFCRA appoints Errol Kruger as new Managing Director
The Qatar Financial Centre Regulatory Authority (QFCRA) announced that it has appointed Errol Kruger as Managing
Director of the Supervision and Authorisation Division, The Gulf Times reported. Kruger, who will join the QFCRA in
August, replaces Michael Lesser, who will retire next month after five years of service in a similar capacity. (The Gulf
Times, Gulf Base)
Al Khaliji’s BOD meets on 1 June 2011 to discuss merger with IBQ
Al Khaliji Commercial Bank ([Link]) announced that its board of directors (BOD) will hold a meeting on 1 June
2011 to discuss the merger with International Bank of Qatar (IBQ), the bank said in a statement to the Qatar Exchange.
(Qatar Exchange)
Oman News
Central bank approves new bank to provide Islamic services
The Central Bank of Oman said that it has given approval to establish Bank Nizwa to provide Islamic banking services
inside Oman, adding that “it will consider any application to open windows for the Islamic banking by any bank
operating in the Sultanate wishing to provide such services.” (Reuters)
EFG Hermes Research
Emaar Properties - 1Q2011 Results In Line; Overhangs and ST Risks Remain; Maintain Buy - Flash Note - 15
May 2011
Focus to International Operations, Overhangs Remain; Maintain Buy: Emaar’s 1Q2011 revenues came in at AED1,983
million and earnings at AED421 million, both in line with expectations, but 14% and 30% below Bloomberg consensus
estimates, respectively. We maintain our Buy rating on Emaar as our fair value (FV) of AED5.15/share provides
significant upside potential. We note, however, that 2011 may be impacted by a slow start to Emaar's international
operations. We look forward to a resolution on Amlak and EMGF, which continue to act as overhangs on the stock.
Hospitality Revenue of AED336 Million Counters Lower Property Revenue: Emaar’s hotels saw 87% occupancy rates
in 1Q2011, bolstered by additional traffic from regional unrest. Hospitality revenue was 26% above expectations,
offsetting lower property revenue of AED1,139 million, 11% below estimate. Handovers within Burj Khalifa and
Eighth Gate (Syria) continued. We believe future quarters may be impacted by delivery delays in Egypt and Syria. We
are not surprised by lower Y-o-Y turnover given the ongoing shift in Emaar’s focus to international operations.
Margins Beat Estimates, Associate Losses Continue: Gross margins of 52% were better than expected due to the
improved performance of Emaar’s hospitality portfolio and better margins on property deliveries. Operating profit of
AED574 million was impacted by AED127 million in losses from associates, meaning that net income of AED421
million was in line with expectations.
Sukuk Issued - Cash at AED6 Billion; ST Refinancing Risk Remains: Emaar completed the issue of its USD500
million 2016 sukuk (8.5% profit distribution) during 1Q2011. While cash balances of AED6 billion are comforting, we
continue to highlight AED7.5 billion in debt maturing within a year, the bulk of which will need to be refinanced. (Jad
Abbas)
Industries Qatar (IQ) - Key Takeaways from Our Meeting with Management - Flash Note - 15 May 2011
IQ’s 2011-2015 Budget Appears Conservative; Maintain Our Forecasts: Management expects its plants to maintain
their historically high operating rates and does not see any material increase in petrochemical and fertiliser production
costs. This supports our view that the significant variance in IQ’s budget versus our forecasts is attributable to IQ’s
bearish commodity price assumptions. We maintain our forecasts (2011 EPS of QAR13.8) and believe that the rise in
global feedstock costs has set commodities floor prices 10-15% higher than prices implied by IQ’s budgeted earnings.
We are more confident that IQ will achieve our 26% 2011-2012 EPS growth estimate, implying an attractive estimated
P/E of 10.6x in 2011 and 9.3x in 2012. We thus reinstate our fair value (FV) of QAR170/share, implying 16% upside
potential, and Buy rating.
Steel Outlook Strong; High Margins Intact: IQ expects steel demand to grow by at least a 7% CAGR in the next 10
years on significant infrastructure plans in Qatar and Saudi Arabia. IQ’s management attributes its relatively higher
steel margins compared to other regional DRI-based players to: i) a higher content of iron ore in pellets sourced from
its 25%-owned GIIC, ii) relatively higher prices, partially helped by its monopoly situation in the local market, and iii)
a 5% import tariff in the GCC, enabling it to pass on material price increases.
QAFCO V on Track to Start in 3Q2011: IQ’s management confirmed that the QAFCO V expansion is on track to start
commercial production in 3Q2011. Production was initially planned to start in 2Q2011, but was delayed by one quarter
mainly due to engineering-related issues.
Gas Contracts Stable, Prices Could Be Higher: IQ’s gas contracts with Qatar Petroleum (QP) include a variable part
that is linked to commodity prices. IQ’s management expects minimal natural gas price inflation (CAGR of 1.4%) from
2010’s average of USD1.91/mmBtu. We believe average gas prices could be mildly above IQ’s estimates as our
commodity price assumptions are well above those in IQ’s budget. (Ahmed Shams El Din, Rita Guindy)
[Note – EFG Hermes is not responsible for the accuracy of news items taken from other media.]
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analysis of the company’s future prospects, after having taken perceived risk into consideration. We have conducted extensive research
to arrive at our investment recommendations and fair value estimates for the company or companies mentioned in this report.
Although the information in this report has been obtained from sources that EFG Hermes believes to be reliable, we do not guarantee
its accuracy, and such information may be condensed or incomplete. Readers should understand that financial projections, fair value
estimates and statements regarding future prospects may not be realized. All opinions and estimates included in this report constitute
our judgment as of this date and are subject to change without notice. This research report is prepared for general circulation and is
intended for general information purposes only. It is not intended as an offer or solicitation with respect to the purchase or sale of any
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