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GCC Equity Market Monitor - 16 April

Majed Salah
By Majed Salah
7 years ago
GCC Equity Market Monitor - 16 April

Ard, Dinar, Islam, Shariah , Participation, Provision, Sales

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  1. GBCM Morning Briefing GBCM  Morning Briefing Contents GCC Equity Markets Monitor MSM Statistics and Indicators MSM Statistics and Indicators MENA, Global markets, Benchmark Indices and Currencies Performance Global Commodities and Petrochemicals Oman News MSM Market Watch Regional News Coverage g g April 16, 2017 4/16/2017
  2. GCC  ‐ Equity Market Monitor 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% ‐5.0% Daily Return YTD Return YTD Return MTD Return Oman Saudi UAE (DFM) UAE (ADX) Kuwait ‐ PI 0.3% ‐3.7% 3.7% 0.4% ‐0.3% ‐1.9% 1.9% 1.1% ‐0.9% ‐0.6% 0.6% 0.8% ‐0.8% ‐0.6% 0.6% 1.7% ‐0.5% 21.9% ‐0.3% Source: Respective Stock Markets, Bloomberg, GBCM Research GBCM Morning Briefing 2 Kuwait ‐ Wtd ‐0.9% 9.6% 0.8% Qatar Bahrain ‐0.4% 0.1% 0.6% ‐0.1% 11.1% 0.0%
  3. MSM  ‐ Net Buy/(Sell) Position Top 5 ‐ Turnover Market Share – Previous Week Previous Week Turnover: RO 13.839 million (c. US$ 36.0 million) Figures In RO Value Leaders Sector Turnover (RO) Market Share Bank Muscat Financial 2,323,062 16.79% BUY SELL NET 10 519 476 10,519,476  9 143 369 9,143,369  1,376,107 1,376,107  Ooredoo Services 1 077 292 1,077,292 7 78% 7.78% GCC 990,677  1,120,767  (130,091) Bank Nizwa Financial 1,060,568 7.66% Arabs 105,952  139,930  (33,978) United Power ‐ Pref Services 970,440 7.01% 2,223,074  3,435,112  (1,212,038) Omantel Services 970,416 7.01% OMANIS OTHERS MSM ‐ Lead Indicators Value  Indicators ** Mkt. Cap (In RO 000s) Daily Market Performance y PER (X) P/BV (X) Dividend  Yield (%) Indices  Monitor Current Closing Previous  Daily %  MTD %  Closing Chg Chg YTD % Chg MSM 30 6,417,174  10.2 1.1 5.8% MSM 30 5,571.62 5,557.36 0.26% 0.38% ‐3.65% Financial 3,351,292  8.8 0.9 5.0% Financial 8,073.72 8,009.50 0.80% 3.06% 5.24% Industrial 985,523  16.5 1.4 5.0% Industrial 7,675.02 7,638.25 0.48% ‐1.61% 3.61% Services 2,746,223  11.7 1.6 6.7% Services 2,830.92 2,841.09 ‐0.36% ‐1.89% ‐7.45% MSM Shariah 2,603,929  10.6 1.6 6.3% 826.99 826.21 0.09% ‐1.96% ‐4.84% MSM Shariah 4/16/2017 GBCM Morning Briefing 3
  4. MENA  Markets Performance Index  Global Markets Performance Closing   MENA  % Chg %MTD %YTD   ‐0.2 ‐0.9 1.4 ‐1.3 ‐2.7 1.3 5.0 2.7 2.4 ‐3.7 ‐1.1 15.3 1.1 1.1 0.9 1.3 1.1 0.6 0.2 0.8 0.1 0.3 2.4 5.8 0.1 8.2 9.5 ‐0.1 Egypt Jordan Tunis  Morocco Palestine Turkey 12,967.4 ‐0.1 2,228.9 0.2 5,619.7 ‐0.1 23,562.6 ‐0.4 524.5 0.7 90,063.7 0.2 MENA Benchmark (S&P/ MSCI) S&P GCC LMC 121.8 0.0 S&P GCC (USD) 99.7 0.0 S&P GCC (40 Index) – Price Return  1,026.9 0.0 S&P GCC (40 Index) – Total Return  1,662.8 0.0 MSCI GCC MSCI GCC 477.2 0.0 MSCI Frontier  540.5 ‐0.2 MSCI Frontier ex GCC 825.1 ‐0.3 MSCI Arabian Index 518.5 0.0 Index  Closing   Americas  % Chg %MTD %YTD   S&P 500 Dow Jones Nasdaq Brazil 2,329.0 20,453.3 5,805.2 62,826.3 ‐0.7 ‐0.7 ‐0.5 ‐1.7 ‐1.4 ‐1.0 ‐1.8 ‐3.3 4.0 3.5 7.8 4.3 ‐0.3 ‐0.6 ‐0.4 0.1 ‐1.0 ‐1.7 2.6 4.3 5.5 ‐0.5 ‐0.2 ‐0 0.6 6 ‐0.9 ‐0.6 ‐1.5 ‐3.0 0.6 ‐0 0.5 5 0.7 ‐1.2 ‐3.6 ‐4.1 10.3 10 6 10.6 4.6 5.4 ‐6.9 %MTD %YTD %YTD  0.2 ‐0.3 ‐0.1 2.5 ‐0.2 ‐0.8 ‐0.3 0.0 0.0 0.7 ‐0.7 0.4 ‐2.0 0.0 0.0 0.0 0.0 0.0 0.0 ‐1.7 1.0 0.9 7.7 1.5 0.7 1.3 0.9 ‐0.2 5.5 5.1 1.5 ‐5.0 0.0 0.0 0.0 0.3 0.0 0.0 Europe FTSE 100 CAC 40 DAX Asia Pacific Nikkei  Hang Seng Sensex Shanghai Korea Russia Global Benchmark Indices Index Closing  % Chg %MTD %YTD  1,832.3 0.0 ‐1.2 4.6 MSCI World ‐Ex MSCI World  Ex USA USA 1,779.6 ‐0.1 ‐0.8 5.2 MSCI Europe‐ USD 1,555.7 0.0 ‐0.9 5.8 960.4 ‐0.3 0.2 11.4 MSCI EM Index Dollar Index USD Vs EURO  USD Vs Canadian Dollar  USD Vs Japanese Yen  USD Vs GBP  USD Vs Swedish Krona USD Vs Swiss Franc  USD Vs Chinese Renminbi USD Vs Hong Kong Dollar  USD Vs Indian Rupee  USD Vs Aus Dollar  USD Vs Indonesia Rupiah  USD Vs Turkish Lira Spot  USD Vs Omani Riyal  USD Vs UAE Dirham  USD Vs Saudi Riyal  USD Vs Kuwait Dinar  USD Vs Qatar Riyal  USD Vs Bahrain Dinar  Fixed Income (Bloomberg/EFFAS Bond Indices)  US 10+ Yr TR 573 7 573.7 00 0.0 21 2.1 41 4.1 Euro Liquid 10+ Yr TR 229.1 0.0 0.5 ‐1.0 1.1 ‐1.4 Commodity (Bloomberg)  Commodity  86.3 0.5 Source: Data taken from Bloomberg GBCM Morning Briefing 18,335.6 24,261.7 29 461 5 29,461.5 3,246.1 2,134.9 1,073.2 Global Currencies Index Global Equity (MSCI) MSCI World – USD , 7,327.6 5,071.1 12,109.0 4 Closing Closing  % Chg % Chg In Comparison with USD 100.510 1.062 1.333 108.640 1.252 9.041 1.006 6.885 7.773 64.411 0.758 13274.000 3.709 0.385 3.673 3.750 0.305 3.641 0.377 0.0 0.0 0.0 0.4 0.2 0.0 0.0 0.1 0.0 0.4 0.1 ‐0.1 ‐1.2 0.0 0.0 0.0 0.0 0.0 0.0
  5. Commodities  Performance Index  Petrochemical Performance Closing   % Chg %MTD %YTD  NYMEX Crude 53.2 0.1 5.1 ‐5.1 ICE Brent Crude 55.9 0.1 4.4 ‐4.4 Crude Oil, Oman  54.7 0.1 5.5 0.9 NYMEX Natural Gas  3.2 1.3 1.2 ‐8.9 173.5 ‐0.4 1.9 ‐7.2 Precious Metals Gold Spot  1,285.7 ‐0.2 2.9 11.6 Silver Spot 18.5 0.0 1.5 16.5 Platinum Spot  973.2 ‐0.1 2.4 7.7 Palladium Spot  795.9 ‐0.1 ‐0.3 16.4 Base Metals  LME Aluminium‐Spot 1 895 0 1,895.0 06 0.6 ‐2.9 29 11 2 11.2 LME Copper‐Spot 5,660.0 1.0 ‐2.7 2.5 LME Zinc‐Spot 2,610.5 0.8 ‐5.1 2.1 LME Lead‐Spot 2,239.8 ‐0.3 ‐3.9 12.0 LME Nickel‐Spot 9 695 3 9,695.3 02 0.2 ‐2.7 27 ‐2.7 27 Steel  655.0 US ‐ Hot Roll Coil Steel  0.0 4.0 %YTD Benzene FOB Korea Spot 840.0 4.4 1.2 Benzene CFR Japan Spot 845.0 4.3 1.2 Benzene CFR India Spot 850.0 4.3 1.2 5.2 4.4 Condensates (in USD/ MT)  European Naptha  483.4 Naphtha C&F Japan  494.3 5.4 ‐0.5 Naphtha CIF NWE Cargo 483.1 3.1 ‐0.6 p g p p Naphtha fob Singapore Spot  53.6 5.6 ‐0.1 ‐2.1 26.0 Olefins (in USD/ MT)  Ethylene Spot  1,165.0 Ethylene FOB Korea Spot 1,125.0 2.7 1.8 Ethylene FOB Japan Spot 1,120.0 2.8 1.8 820 0 820.0 ‐1.8 18 ‐5.2 52 Propylene FOB Korea Spot Propylene FOB Korea Spot Intermediate (in USD/ MT)  2EH CFR Far East Asia 1,015.0 ‐1.5 16.7 2EH CFR South East Asia 1,035.0 ‐1.4 16.3 960.0 ‐0.5 ‐2.5 DOP CFR Far East Asia Polymers (in USD/ MT)  ‐2.8 ‐8.9 0.9 ‐1.7 Film Grd Poly HDPE SE Asia 1,160.0 0.0 ‐0.9 y p Film Grd Poly HDPE India Spot 1,170.0 , 0.0 3.5 1,600.0 ‐3.6 3.2 UREA Cornbelt 245.0 ‐2.0 ‐10.9 UREA Middle East 221.0 4.3 ‐9.8 US Urea Avg Retail Price US Urea Avg. Retail Price 364 9 364.9 ‐1.5 15 57 5.7 38 3.8 Wheat ‐ Active Contract  442.8 ‐0.8 0.9 2.0 CBOT ‐ Soya bean  966.3 ‐5.2 Shipping  ‐0 1 ‐0.1 2.9 8,895.0 17 1.7 11 1.1 6.7 1,150.0 05 0.5 1.0 875.0 Film Grd Poly HDPE Far E Spot 378 0 378.0 0.8 Benzene Aromatics Rotterdam  7.4 C Corn ‐ A i C Active Contract  B lti D I d Baltic Dry Index  %MTD LLDPE Future Contract (CNY/ MT)  Agriculture  1 296 0 1,296.0 Closing A Aromatics (in USD/ MT)  i (i USD/ MT) Energy  NYMEX Gasoline  Index  34 9 34.9 Urea (in USD/ MT)  Urea Price (RMB/ MT)  Source: Data taken from Bloomberg 4/16/2017 GBCM Morning Briefing 5
  6. Oman News National  Bank of Oman reports Q1 results (Source: MSM, GBCM Research) Overall review: Revenue growth supported by strong non‐interest income, PAT‐ In line  Positives • The bank has reported strong loan book growth of 6.6% YoY and  The bank has reported strong loan book growth of 6.6% YoY and +4.9% 4.9% QoQ. In absolute terms, the loan book grew by c. RO 130 million  QoQ. In absolute terms, the loan book grew by c. RO 130 million during the quarter • End Q1 2017, Customer deposits stood at RO 2.530 billion, an increase of 5.7% YoY and 5.5% QoQ. The deposit growth remains in line  with the credit off‐take during the quarter. Credit to deposit ratio remained at 110.6% levels • Total non‐operating income for Q1 grew by 21.4% YoY and 21.9% QoQ to RO 10.2 million. This is well above our estimates. Negatives • Net interest income and income from Islamic financing for Q1 2017 declined by 2.8% YoY and ‐5.8% QoQ revealing margin pressure.  • As per our estimates, Q1 2017 net interest margin has declined to c. 3% levels as compared to 3.2% levels seen during Q1 2016 amid  increase in funding costs. • Estimated Cost of risk for the quarter stood at 0.43% increased from 0.38% levels for 2016. This is still lower than our estimates of 0.5%  levels. Outlook and valuations: Overall a reasonable set of numbers reported by the bank support by strong growth in loans and deposits. The margin pressure had a negative  impact for the quarter, which is compensated majorly by the growth in the non‐interest income. Overall cost of risk remains in line with our  estimates.  At the current levels, the stock trades at PE (2017E) of 6.4X and PBV (2017E) of 0.76X, with our RoE (2017E) estimates of 12.4%. The dividend  yield also remains attractive at 6.5% levels. We have a Buy rating on the bank with the 12 month fair value of RO 0.284.  GBCM Morning Briefing 6
  7. Oman News Bank  Dhofar‐ Q1 results (Source: MSM, GBCM Research) Overall review: In line with our estimates Positives • Loan book grew by 9.8% YoY and 3.1% QoQ. In absolute terms, the loans grew by RO 93 million. The bank continued its momentum in  Loan book grew by 9.8% YoY and 3.1% QoQ. In absolute terms, the loans grew by RO 93 million. The bank continued its momentum in achieving growth.  • The bank has reported strongest growth of +11.5% YoY and 8.4% QoQ in customer deposits. We believe that the bank has taken its  strategy of increasing its deposits during the quarter. We would be keen to look at the cost of funding post the disclosure of detailed  Q , p p p results. End Q1 2017, the Credit to deposit ratio improved to 98.5% levels as compared to 103.6% levels seen at the end of 2016 • Total provisioning levels remain lower than our estimates. Estimated cost of risk for Q1 2017 is at 0.35% levels as compared to our  estimates of 0.5%.  Negatives • Net interest margins seem to be under pressure which could be on the back of sharp increase in deposits during the quarter.  • Total operating costs for Q2 increased by 7.9% YoY to RO 14.7 million. This is above our estimates. The cost to income ratio stood at 46%  levels. Outlook and valuations There are positives to take from the quarterly results of the bank. The stronger growth rate in credit would mean increased capital requirement,  we do see the bank to come out with its capital raising program during the coming quarters. End 2016, total capital adequacy ratio of the bank is at  14.4% levels, one of the lowest among the local banks. Added, the margins may continue to remain under pressure with increase in cost of funding. We would also keenly watch out for provisioning  trend of the bank going forward.  At th At the current levels, the stock trades at PE (2017E) of 9.7X and PBV (2017E) of 1X, the estimated RoE (2017E) is at 10.8% levels. The bank provides  t l l th t k t d t PE (2017E) f 9 7X d PBV (2017E) f 1X th ti t d R E (2017E) i t 10 8% l l Th b k id dividend yield of 5.8%. We have a neutral rating on the bank with the 12 month fair value of RO 0.234.  GBCM Morning Briefing 7
  8. Oman News Bank Sohar reports Q1 results (Source: MSM, GBCM Research) Overall review: Revenue‐ Lower, PAT – In line on lower provisions Positives • The bank reported strong growth in customer deposits seen during the quarter. Deposits grew by 18% YoY and +10% 10% QoQ to RO 1.682 billion. In absolute terms, the deposit grew by RO 150 million. • On higher deposit growth, the credit to deposit ratio lowered to 113.8% levels as compared to 124.9% levels seen towards end of 2016 • per our estimates,, the bank has reported p considerablyy lower p provisioningg duringg the q quarter. The breakup p is not disclosed in the As p preliminary results Negatives • Loan book growth lowered on a sequential basis. End Q1 2017, gross loan book is at RO 1.958 billion, reporting an increase of 12.8% YoY and meager 0.2% QoQ. This clearly points out to the strategy of the bank to lower growth amid tight liquidity. • Net interest margins are under pressure amid increase in the funding costs. Outlook and valuations Overall mixed set of numbers reported by the bank for the quarter, with positives seen in the form of higher deposit growth which led to better liquidity position. The capital position of the bank remains tight with CAR at 14% levels (end 2016). At the current levels, the bank trades at PE (2017E) of 11.4X and PBV (2017E) of 0.87X, the estimated RoE (2017E) is at 8% levels. We have a neutral rating on the bank with a 12 month fair value of RO 0.146 GBCM Morning Briefing 8
  9. Oman News Ahli Bank Oman reports Q1 results (Source: MSM, GBCM Research) Overall review: Revenue and PAT lower than our estimates • End Q1 2017, the net loan book is at RO 1.538 billion, increased marginally by 0.4% YoY and 1% QoQ. The deposits grew by 4.2% YoY and 1.3% QoQ to RO 1.289 billion. Credit to deposit ratio of the bank is at 119.4% levels, this is more similar to 119.8% seen towards end of 2016. • Q1 operating income of the bank stood at RO 12.1 million, declining by 5.8% YoY and ‐14.4% QoQ. This is lower than our estimates of RO 14 million. The breakup of the operating income is not disclosed in their preliminary results. • p g expenses p for the q quarter is at RO 5 million,, reporting p g an increase of 14.4% YoY and 2.1% Q QoQ. Q This is more in line with our Total operating estimates. • Net profit after tax for Q1 2017 declined sharply by 26% YoY and 39% QoQ to RO 5.2 million, this is well below our estimates. We see the lower operating income and also higher than estimated provisions have lead to lower profits for the quarter. Outlook and valuations Overall a weak set of numbers amid estimated higher provisioning by the bank during the quarter. The deposits grew stronger as compared to the credit growth. At the current levels, the bank trades at PE (2017E) of 9.4X and PBV (2017E) of 1X, the estimated RoE (2017E) is at 11.5% levels. We have a neutral rating on the bank with a 12 month fair value of RO 0.194 GBCM Morning Briefing 9
  10. Oman News National Gas reports Q1 2017 results (Source: MSM)  Total income of the company for Q1 stood at RO 19.761 million as compared to RO 15.845 million, a significant increase of 24.7% YoY. However the total expenses surged by 30.7% YoY to RO18.957 million which weighed on the earnings of the company.  Net profit after tax for the period stood at RO 500k as compared to a profit of RO 933K in the same period of last year. Al Izz Bank reports Q1 2017 results (Source: MSM)  The financing receivables of the bank during Q1 grew by 56.7% YoY to 361.236 million. The total deposits of the bank during Q1 grew by 82.3% YoY to 374.044 million.  The Net operating income witnessed a surge by 36.2% YoY to RO 2.711 million from RO 1.990 million in Q1 2016. The bank reported a loss of RO 744k as against a loss of RO 1.294 million an increase of 42.6% YoY. Ominvest reports Q1 2017 results (Source: MSM) (PAT‐ Above our estimates)  Total revenue of the company for Q1 stood at RO 60.969 million as compared to RO 54.963 million, a modest increase of 11% YoY. This is above our estimates of RO 56 million.  Profit attributable to the shareholders surged considerably by 32% YoY to RO 8.255 million in Q1 2017. This is above our estimates of RO 6.5 million. The Group early adopted IFRS 9 with effect from 1 January 2016, previous period numbers are adjusted accordingly. National Finance reports Q1 2017 results (Source: MSM)  Net investment in finance activities grew marginally by 0.57% YoY to RO 190.694 million in Q1 2017. The Net operating income of the company for Q1 17 declined by 8.6% YoY to RO 3.126 million.  The company reported a Net profit of RO 1.479 million a marginal rise of 3.3% YoY. GBCM Morning Briefing 10
  11. Oman News Al Jazeera Steel reports Q1 2017 results (Source: MSM) Overall review: Revenue and PAT – Above our estimates  Total revenue of the company for Q1 stood at RO 23.093 million as compared to RO 14.746 million, an increase of 57% YoY. This is above our estimates of RO 20.200 million.  Profit surged considerably by 59% YoY to RO 1.302 million in Q1 2017. This is also above our estimates of RO 1.200 million. The company continued to report stronger growth driven by increased sales volumes amid diversified markets and also product base Bank Nizwa reports Q1 2017 results (Source: MSM) Overall review: Revenue‐ In line, PAT‐ Below our estimates  Financing to Customers during Q1 grew by 43% YoY to 452.910 million. Customer Deposits of the bank during Q1 grew by 82% YoY to 396.715 million.  The operating income witnessed a surge by 37% YoY to RO 5.306 million from RO 3.862 million in Q1 2016. The bank reported a Net profit of RO 593k as against a loss of RO 466k an increase of 227% YoY. Taageer Finance reports Q1 2017 results (Source: MSM)  Net investment in finance leases surged modestly by 16.5% YoY to RO 153.5 million in Q1 2017. The company reported total revenue of RO 3.571 million for Q1 17 which declined 15.2% YoY.  The company reported a Net profit of RO 910k a moderate decline of 14.5% YoY. Oman Chlorine reports Q1 2017 results  (Source: MSM) The Net sales of the company for Q1 17 increased marginally by 5.3% YoY to RO 1.899 million. The company reported a Net profit of RO 301k as against RO 447k reported in Q1 2016 a considerable decline of 32.7% YoY. GBCM Morning Briefing 11
  12. Oman News Oman Oil marketing reports Q1 2017 results (PAT‐ Below our estimates) (Source: MSM)  Total revenue of the company for Q1 stood at RO 118.888 million as compared to RO 92.497 million, reporting an increase of 29% YoY. This is above estimates of RO 112 million.  Total cost of sales and operating expenses for the quarter stood at RO 117.6371million, increase of 29% YoY. While net profit for the quarter stood at RO 1.865 million, declining by 12% YoY. This is below our estimates of RO 2.5 million Galfar Engg reports Q1 2017 results (PAT‐ Above our estimates) (Source: MSM)  Total revenue of the group company for Q1 2017 stood at RO 80.810 million as compared to RO 84.810 million, reporting a decline of 3.9% YoY. This is below our estimates of RO 85.00 million. Total expenses declined by 2.6% YoY to RO 80.419 million.  Q1 2017 Net profit after tax of the group company is at RO 66k as compared to RO 1.218 million, decline of 94.5% YoY. This is above our estimated loss of RO 1.250 million. Muscat gases reports Q1 2017 results  (Source: MSM) Total revenue of the company for Q1 remained flat at RO 2.357 million as compared to RO 2.338 million in Q1 2016. Profit declined considerably by 40.3% YoY to RO 175k in Q1 2017. Gulf International chemicals reports Q1 2017 results  (Source: MSM) The total revenue of the company for Q1 17 declined significantly by 29% YoY to RO 673k. The company reported a Net profit of RO 140k as against RO 238k reported in Q1 2016 a considerable decline of 41% YoY. This is in line with our estimates OIFC reports Q1 2017 results (PAT‐ Below our estimates) (PAT (Source: MSM)  The total revenue of the company for Q1 17 almost remained flat at RO 4.373 million. This is below our estimates of OR 6.9 million.  The company reported a Net profit of RO 1.312 a modest decline of 14.9% YoY. This is below our estimates of RO 1.600 million. GBCM Morning Briefing 12
  13. Oman News Omani banking sector data ‐ Feb 2017 (Source: Times of Oman)  Omani banks, including Islamic institutions, have achieved a year‐on‐year growth of 8.1% in credit at RO 22.2 billion by the end of February 2017. Credit to the private sector increased by 9.5% to RO 20.1 billion as at the end of February 2017, as per the CBO data.  Of the total credit to the private sector, the household sector (mainly under personal loans) stood at 46.2% closely followed by the non‐ financial corporate sector at 45.8%, financial corporations at 5% and other sectors the remaining 3%.  The financial position of the Omani banks in terms of asset quality, provision coverage, capital adequacy and profitability remained sound.  Total deposits registered a growth of 7.1% to RO 20.8 billion as at the end of February 2017. The report said that private sector deposits y registered g a ggrowth of 7.2% to RO 13.7 billion as at the end of Feb 2017. of the bankingg system  Sector‐wise, the share of households was 48.6% of the total private sector deposit base, followed by non‐financial corporations at 29.5%, financial corporations at 19% and the other sectors at 2.9%.  Conventional banks have achieved an annual growth in total outstanding credit of 5.1% as at the end of February 2017. Credit to the private sector increased by 7.4% to reach RO 17.8 billion as at the end of Feb 2017. Oman Orix Leasing‐ Strategic Alliance with National Finance Co (Source: MSM)  With reference to the proposal for strategic collaboration between Oman Orix leasing Co (OOLC) and National Finance Co (NFC) in the form of the Merger, OOLC has updated that the independent consultants (Deloitte) have concluded their exercise on merger rationale.  Based on the merger rationale findings and the observations on the viability assessment of the merger, the Board of Directors of OOLC have directed Deloitte to conduct valuations of both the companies.  The outcome of the valuation exercise will be considered by the shareholders to decide upon possibility of the merger. Further disclosure in this regard will be made to Shareholders and concerned Authorities as and when there are further developments to report. GBCM Morning Briefing 13
  14. Oman News Omantel reports Q1 2017 results (Source: MSM) Overall review: Revenue and PAT above our estimates  Total revenue for Q1 2017 stood at RO 132.6 million as compared to RO 133.9 million in the same period of last year, reporting a decline of 1.3% YoY. Operating expenses for the quarter also declined by 2% YoY to RO 63.8 million.  Total royalty charges for the quarter increased RO 6.4 million during the quarter, this is on the back of increase in the charges to 12% of sales as compared to 7% levels previously.  Q1 2017 depreciation and amortization charges increased by 21% YoY to RO 28.5 million. Net profit before amortization and royalty stood p g a decline of 15.7% YoY at RO 41.3 million,, reporting  Net profit before tax of the company for Q1 2017 is at RO 26.7 million, this is more in line with our estimates. The loss from discontinued operations is at RO 1.2 million.  While the company’s tax charge for the quarter remained lower and henceforth the net profit after tax stood at RO 23.8 million, reporting a decline of 11% YoY. This is above our estimates. Ooredoo Oman reports Q1 2017 results (Source: MSM) Overall review: Revenue‐ In line, PAT ‐ Marginally below our estimates  Total revenues of the company for Q1 2017 stood at RO 67.8 million, reporting an increase of 2.6% YoY. This is in line with our estimates. EBITDA for the quarter stood at RO 37 million as compared to RO 37.3 million in the same period of last year.  End Q1 2017, total customer base of the company is at 3.059 million, reporting an increase of 9.2% YoY.  Q1 2017 Net profit has declined by 44% YoY to RO 7 million. The negative impact on the earnings is due to the increase in royalty fees from 7% to 12% and the corporate tax increase from 12% to 15% levels. This is still marginally lower than our estimates GBCM Morning Briefing 14
  15. MSM ‐ Market Watch Source: Bloomberg, GBCM Research Market Outlook – To react for ongoing earnings season, Key support seen at 5,530 levels… During the previous trading week, we saw most of the regional markets ended on a negative note with the ongoing earnings season along with relatively dull market participation. UAE‐ADX and UAE‐DFM ended lower by c. 2% WTD. Oman ended lower by 0.7% for the week amid lower investor participation. We expect the MSM and GCC markets to open on a flattish note for the week and to see stock specific activity with more Q1 earnings anticipated. In Oman, as estimated we saw a weak Q1 corporate earnings trend with the impact on the higher corporate tax and royalty charges seen. While the banking sector numbers in MSM seems to be reasonable amongg the other sectors. On the technical side,, MSM see support pp closer to 5,530 , levels. GBCM Morning Briefing 15
  16. UAE  News Mubadala Development raises US$1.5 billion in two‐part bond sale (Source: Gulf Base)  Mubadala Development Company said it raised US$1.5 billion via a two‐part international bond sale earlier this week, which will be one of its last financing before it officially merges with International Petroleum Investment Company (Ipic) in May.  It sold $850 million of bonds maturing in seven years and another $650m bonds maturing in 12 years, to a diversified international investor b base, after f being b greater than h three h times oversubscribed b b d at very competitive price.  The company said the seven and 12‐year bonds carried annual interest rate coupons 3% and 3.75% respectively. Abu Dhabi property market data‐ Q1 2017 (Source: Gulf Base)  Abu Dhabi’s property market weakened in the first quarter with rentals and sale prices falling, according to the Abu Dhabi Residential Market first quarter 2017 report from Chestertons Mena.  Average apartment sale prices in Abu Dhabi fell by 1% in the Q1 2017 while villa prices dropped by 9% cent amid public and private sector downsizing.  Al Ghadeer, Al Reef and Khalifa City witnessed the largest percentage drop in villa sales resulting in prices falling to Dh915 per square feet, Dh897 per square feet and Dh747 per square feet respectively.  Al Raha Gardens also witnessed a sales decrease, although less severe, of just under 6% to Dh931 per square foot. Apartment sales prices, on average, declined by 1% in Q1 with Al Gadeer witnessing a 3% decrease to Dh1,009 per sqft, while Al Raha Beach fared slightly better with a decline of just under 1% to Dh1,601 per sqft.  Areas bucking the trend included Al Reef Downtown, Downtown which saw an increase of 1% to Dh948 per square feet, feet Al Reem Island remained flat at Dh1,362 per square feet. GBCM Morning Briefing 16
  17. UAE  News Saudi Aramco invites firms to bid on $4.5 billion gas project (Source: Argaam)  Saudi Aramco is tendering the main packages of a project worth $4.5 billion to expand gas processing capacity at Haradh and Hawiyah. Prequalified companies have until July 3, 2017 to submit their bids for four engineering, procurement and construction (EPC) packages.  The project will build new gas compression plants at Haradh and expand the plant at Harawiah, enabling the facilities to process over 1 billion cubic b feet f per day d (cg/d) ( /d) off additional dd l gas produced d d at the h Ghawar h onshore h oill field, f ld the h world’s ld’ largest. l  The Hawiyah Gas Plant Expansion project has an estimated budget of $1‐1.3 billion, while the budget for the North Haradh, Satellite Haradh and South Haradh compression plants is estimated at $1‐1.2 billion per plant. Dallah Healthcare inks deal to build hospital in Jeddah (Source: Argaam)  Dallah Healthcare Co. signed a non‐binding agreement with AWJ Investment Co. to set up a company to build and operate a general hospital in Jeddah after obtaining the required approvals and licenses, the company said.  Under the agreement, the company’s capital will consist of cash and in‐kind shares represented in a 150,000 square meter land in Manar district, North East Jeddah. The deal does not involve any related parties.  AWJ Investment in this agreement replaces Shibh AlJazira Real Estate Development Co, which signed on May 25, 2016 a memorandum of understanding (MoU) on the same deal with Dallah Healthcare. GBCM Morning Briefing 17
  18. | Institutional Sales ‐ Hunaina Banatwala, (+968) 2235 0717 |Institutional Brokerage ‐ Talal Al Balushi, (+968) 2235 0725| | Equity Research ‐ Kanaga Sundar, Sundar (+968) 2235 0727 | Vijay Sridharan, Sridharan (+968) 2235 0728 | Disclaimer: This document has been prepared and issued by Gulf Baader Capital Markets SAOC ("the Company") on the basis of publicly available information, internally developed data and other sources believed to be reliable. While all care has been taken to ensure that the facts stated are accurate and the opinions given are reasonable, neither Gulf Baader Capital Markets SAOC nor any employee shall be in anyway responsible for the contents of this report. report The Company may have a position and may perform buying/selling for itself or its clients in any security mentioned in this report. This is not an offer to buy or sell the investments referred therein. 4/16/2017 GBCM Morning Briefing 18