Masraf Al Rayan: Quarterly Market Brief Report - 4Q 2021

Transcription

1. MARK Alert – 4Q2021 Misses Estimates on Account of Large CoR •MARK’s 4Q2021 earnings misses our estimate due to larger than estimated provisions: Masraf Al Rayan (MARK) reported a net profit of QR4.39mn in 4Q2021, short of our estimate of QR623.09mn. The bottom-line dropped by 99.1% and 99.2% YoY/QoQ as a result of large provisions. On a positive note, total revenue increased by 4.8% and 9.2% on YoY/QoQ basis to QR919.9mn (in-line with our estimate of QR916.7mn). •Surge in net provisions and impairments adversely impacted the bottom-line. MARK booked provisions and impairments of QR674.7mn vs. QR177.7mn in 4Q2020 (QR60.5mn in 3Q2021), which was the highest in its operating history. •Management proposes DPS, lower than our estimate but still an attractive yield. MARK proposes DPS of QR0.170 (vs. our estimate of QR0.185), which was in-line with 2020. This translates into a decent yield of 3.4%. •Asset quality came under some pressure; asset quality remains manageable as MARK’s main exposure is to the public sector. The bank’s NPLs surged by 109.1% YoY to QR2.05bn vs, QR1.29bn in 3Q2021. Moreover, MARK’s NPL ratio moved up to 1.67% vs. 1.46% in 3Q2021 (1.13% in FY2020). •Capitalization remained robust and one of the highest among its peers. MARK ended FY2021 with a CAR of 20.9% vs. 20.6% in FY2020. •Recommendation and valuation: We maintain our PT of QR6.10 and Outperform rating. We continue to like MARK as the upcoming implementation of its FOL increase to 100% and its weight increase in MSCI/FTSE, should act as potential catalysts. 1
2. Recommendations Risk Ratings Based on the range for the upside / downside offered by the 12month target price of a stock versus the current market price Reflecting historic and expected price volatility versus the local market average and qualitative risk analysis of fundamentals OUTPERFORM Greater than +20% R-1 Significantly lower than average ACCUMULATE Between +10% to +20% R-2 Lower than average MARKET PERFORM Between -10% to +10% R-3 Medium / In-line with the average REDUCE Between -10% to -20% R-4 Above average UNDERPERFORM Lower than -20% R-5 Significantly above average Saugata Sarkar, CFA, CAIA Head of Research +974 4476 6534 saugata.sarkar@qnbfs.com.qa Shahan Keushgerian Senior Research Analyst +974 4476 6509 shahan.keushgerian@qnbfs.com.qa DISCLAIMER: 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. 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. While this publication has been prepared with the utmost degree of care by our analysts, 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. 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. COPYRIGHT: No part of this document may be reproduced without the explicit written permission of QNBFS. 2