Qatar: Weekly Market Review

Transcription

1. ` Market Review and Outlook QSE Index and Volume The Qatar Stock Exchange (QSE) Index gained by 58.72 points, or 0.56% during the week to close at 10,629.13. Market capitalization moved up by 0.16% to QR568.96 billion (bn) versus QR568.0bn at the end of the previous week. Of the 44 listed companies, 23 companies ended the week higher, while 20 fell and 1 remained unchanged. Barwa Real Estate Co. (BRES) was the best performing stock for the week with a gain of 12.0% on 4.9 million (mn) shares traded. On the other hand, Gulf International Services (GISS) was the worst performing stock with a decline of 8.6% on 1.4mn shares traded. Barwa Real Estate Co. (BRES), Masraf Al Rayan (MARK) and Aamal Co. (AHCS) were the primary contributors to the weekly index gain. BRES was the biggest contributor to the index’s weekly increase, adding 52.5 points to the index. MARK was the second biggest contributor to the gains, tacking on 17.3 points to the index. Moreover, AHCS contributed 15.6 points to the index. On the other hand, Industries Qatar (IQCD) deleted only 19.7 points. Trading value during the week increased by 29.18% to reach QR1.3bn versus QR997.9mn in the prior week. The Banks and Financial Services sector led the trading value during the week, accounting for 30.4% of the total trading value. The Real Estate sector was the second biggest contributor to the overall trading value, accounting for 25.0% of the total trading value. BRES was the top value traded stock during the week with total traded value of QR181.0mn. Trading volume increased by 30.47% to reach 43.0mn shares versus 32.9mn shares in the prior week. The number of transactions increased by 19.68% to reach 17,436 transactions versus 14,569 transactions in the prior week. The Real Estate sector led the trading volume, accounting for 31.2%, followed by the Telecoms sector, which accounted for 26.4% of the overall trading volume. Vodafone Qatar (VFQS) was the top volume traded stock during the week with total traded volume of 11.0mn shares. Foreign institutions turned bullish during the week with net buying of QR7.0mn vs. net selling of QR126.4mn in the prior week. Qatari institutions remained bullish with net buying of QR11.9mn vs. net buying of QR65.6mn the week before. Foreign retail investors remained bullish for the week with net buying of QR2.6mn vs. net buying of QR9.7mn in the prior week. Qatari retail investors turned bearish with net selling of QR21.1mn vs. net buying of QR51.0mn the week before. In 2017 YTD, foreign institutions bought (on a net basis) ~$55mn worth of Qatari equities. 10,660 18,000,000 10,653.83 10,629.13 10,600 10,609.64 10,596.39 9,000,000 10,584.94 10,540 0 5-Feb 6-Feb 7-Feb 8-Feb Volume Market Indicators Value Traded (QR mn) Exch. Market Cap. (QR mn) QSE Index Week ended Feb 09 , 2017 1,289.1 Week ended Feb 02 , 2017 997.9 568,961.2 568,052.9 0.2 43.0 32.9 30.5 17,436 14,569 19.7 43 43 0.0 23:20 4:39 – Volume (mn) Number of Transactions Companies Traded Market Breadth Market Indices Total Return ALL Share Index Banks and Financial Services Industrials Transportation Real Estate Insurance Telecoms Consumer Goods & Services Al Rayan Islamic Index Market Indices Weekly Index Performance 4.0% 9-Feb Close 17,254.13 2,923.64 2,999.83 3,263.20 2,588.28 2,326.57 4,346.62 1,234.48 6,236.45 4,021.08 WTD% 0.9 0.7 0.8 (0.5) 0.6 2.4 0.7 1.2 (0.6) 0.9 MTD% 0.6 0.5 1.3 (1.1) 0.5 1.9 (0.8) (0.3) (0.6) 1.1 Chg. % 29.2 YTD% 2.2 1.9 3.0 (1.3) 1.6 3.7 (2.0) 2.4 5.7 3.6 2.8% 1.6% 2.0% 0.6% 0.3% 0.0% (0.1%) (2.0%) (1.7%) (4.0%) Regional Indices Qatar (QSE)* Dubai Abu Dhabi Saudi Arabia# Kuwait Oman Bahrain Close WTD% MTD% YTD% 10,629.13 3,682.81 4,569.49 6,967.40 6,582.75 5,819.52 1,306.83 0.6 1.6 2.8 (1.8) (3.8) 0.3 (0.1) 0.3 1.1 0.5 (1.9) (3.7) 0.8 0.2 1.8 4.3 0.5 (3.4) 14.5 0.6 7.1 Weekly Exchange Traded Value ($ mn) 354.03 1,339.49 369.54 5,240.25 804.14 41.25 23.57 Exchange Mkt. Cap. ($ mn) 156,236.8 100,780.5# 119,209.1 434,941.9 96,116.5 23,374.2 20,404.1 Kuwa it Sa udi Ara bia Ba h ra in Om a n Qa ta r (QSE)* Duba i Abu Dh a bi (3.8%) TTM P/E** P/B** Dividend Yield 15.4 12.3 11.9 17.2 22.6 10.8 9.4 1.6 1.3 1.4 1.6 1.2 1.2 0.4 3.8 3.6 5.4 3.4 3.6 4.9 4.3 Source: Bloomberg, country exchanges and Zawya (** Trailing Twelve Months; * Value traded ($ mn) do not include special trades, if any; #Data as of February 8, 2017) Page 1 of 7
2. News Economic , Market & Corporate News  Initiating coverage on UDCD – QNBFS initiated coverage on United Development Co. (UDCD) with a QR25.50/sh target price (TP) and an Accumulate recommendation given a risk/reward profile that is skewed to the upside. UDCD offers potential investors exposure to the higher-end real estate market in Qatar through the Pearl island (the Pearl) with a land package underpinning future growth potential along with existing operations providing stable cash flows. Adj. EBITDA/Net Income are expected to grow in FY2016 by ~8%/9% y/y followed by ~13%/9% in FY2017. The shares are attractive on valuation backed by a stabilizing and strengthening macro environment supportive of encouraging fundamentals for real estate prices. The shares are currently trading at ~11.7x FY2017 adj. EBITDA and adj. EPS estimates respectively, which are both at a ~15% discount to peers. UDCD is expected to report FY2016 financials on February 7. (QNBFS Research)  UDCD’s 4Q2016 headline earnings beat our estimates on higher than expected revenue (first look) – United Development Company’s (UDCD) net profit for 4Q2016 came in at ~QR171mn vs. our estimate of ~QR157mn (+9%) or EPS of QR0.48 vs. our QR0.44. For the full year, headline earnings/EPS came in at ~QR623mn/QR1.76 vs. ~QR690mn/QR1.95 in FY2015 (-10% y/y) reflecting the weakness in the real estate market that was experienced in FY2016, which was mostly baked into the share price. Despite the earnings beat, the shares could potentially come under pressure at market open today given the lower-thanexpected dividend recommended by the Board of Directors of QR1.25 vs. our QR1.50 (-17% y/y); FY2015 dividend was QR1.50/sh. Should share weakness occur at market open, we would be buyers of the shares as we expect sequential earnings growth into FY2018 of ~8% annually but now with a more rapid improvement in dividend payouts in FY2017 (~65% vs. ~78%) and FY2018 (~60% vs. ~72%). We view this new dividend policy as supportive of UDCD’s future growth plans. We await release of the full financials to compare adjusted earnings and analyze the performance of the company. (QNBFS Research, QSE, GulfTimes.com)  IQCD posts QR230mn net profit in 3Q2016, well below our estimate of QR908mn and Reuters consensus of QR903mn despite QR389mn in one-off fertilizer impairments – Industries Qatar (IQCD) posted a 4Q2016 net profit of QR230mn. Reported net income included: (1) QR314mn of impairment in Qatar Melamine Co. and (2) QR100mn of impairment in a revamp project that was shelved. Excluding these items, earnings would have still been weaker vs. estimates, at QR619mn. Another reduction in dividends to QR4 a share. As we had stated in our report dated January 26, 2017, we were expecting a DPS of QR4.50 but we could not rule out a range of QR4-QR5 a share in dividends; the company paid QR5 in DPS for 2015. With QR11.3bn in cash and QR2.9bn in debt across the group at end2016, IQCD retains a strong balance sheet. The dividend cut could be due to a potential expansion at QAPCO beginning this year. Recommendation and valuation: We rate IQCD a Market Perform with a price target of QR130.00. We expect the stock to be weak in the near-term given 2016 results and the dividend cut. (Company financials, QNBFS Research)  GISS posts QR14mn in normalized net income for 4Q2016 – Reported net income including a QR133mn write-off for the Al Rayyan rig and a QR3mn loss (AFS and JV) was a significant QR122mn. Results on an operating basis were more in line with our estimates with revenue of QR674mn (-9% divergence), gross profits of QR123mn (-2% divergence) and normalized EBITDA of QR205mn (-11% divergence). DPS of QR1 was flat with 2015 and in line with our estimate. This translates into a 3.5% yield. The write-off of the Al-Rayyan rig was a surprise but all other 9 offshore rigs seem to be under contract (including one in preparation as per contract) per the February rig report. The Al- Rayyan rig was listed as warm stacked in the December rig report but was written off. According to the company “the rig has been off contract with Occidental Petroleum since March 15, 2015 and the company was unable to market the rig since it does not meet any customer specifications.” Despite this negative development, we point out eight rigs have been listed as contracted per the February rig report and one rig is under preparation as per contract. This compares to only six rigs being under contract as of end 2016. This should led to growth in the drilling segment in 2017. We continue to maintain our QR39 price target and Outperform rating. GISS’ stock price improvement is hinged on a resumption of confidence in company performance. With drilling segment performance closely linked to oil prices, an expected recovery in crude could help the stock price this year. (Company financials, QNBFS Research)  MPHC’s net profit rises to ~QR279mn in 4Q2016 – Mesaieed Petrochemical Holding Company’s (MPHC) net profit increased to ~QR279mn in 4Q2016 as compared to ~QR226mn in 3Q2016. For 2016, net profit declined 8% YoY to QR995mn, due to 7% decline in selling prices despite improved sales volumes in the midst of a challenging market. MPHC continued to benefit from the supply of competitively priced ethane feedstock and fuel gas under long-term supply agreements. These contractual arrangements are an important value driver for the group profitability in challenging market conditions. Earnings per share (EPS) amounted to QR0.79 in 2016 as compared to QR0.87 in 2015. The board of directors of the company recommended a dividend of QR0.6 per share for the period. The board also approved to convene Ordinary and Extraordinary General Assembly Meetings of the shareholders on March 6, 2017. (QSE, Gulf-Times.com)  CBQK changed the Board of Directors meeting – Commercial Bank of Qatar (CBQK) announced that the bank’s Board of Directors’ will change their meeting which was previously scheduled to take place on February 07, 2017 to February 21, 2017, to discuss the financial statements for the period ending December 31, 2016. Meanwhile, the new subscribed shares of CBQK have been deposited into the investors’ accounts, the new capital is QR(3,854,527,390), and the new total shares (385,452,739). The new subscribed shares will be available for trading starting from February 07, 2017. (QSE)  QIBK to hold its AGM on February 21 – The Board of Directors of Qatar Islamic Bank (QIBK) announced the Assembly General Meeting (AGM) which will be held on February 21, 2017. In case of incomplete required quorum, another meeting will be held on February 28, 2017. Some of the agenda of the meeting is approval of the board of directors’ proposal to distribute 47.5% cash dividends of the nominal value per share, i.e. QR4.75 per share. Discussion of the proposal to increase the limit of the perpetual Sukuk “Additional Tier 1 Capital (AT1) Sukuk” from QR5bn to QR7.5bn. (QSE) Page 2 of 7
3. Qatar Stock Exchange Top Gainers Top Decliners 15 .0% 0.0% 12.0% 10.0% -3.0% -2.4% -2.5% -2.7% 7.0% -3.8% 5.1% 5.0% 4.1% 3.5% -6.0% 0.0% Barwa Real Est at e Qat ar Islamic In suran ce Aamal Doh a Ban k Commercial Ban k of Qat ar -9.0% -8.6% Gulf In tern ation al Services Source: Qatar Stock Exchange (QSE) Un ited Developmen t Zad Holdin g Al Meera Qatar First Ban k Con sumer Goods Source: Qatar Stock Exchange (QSE) Most Active Shares by Value (QR Million) Most Active Shares by Volume (Million) 210.0 12.0 182.0 140.0 11.0 8.0 116.3 101.7 101.0 5.5 83.8 70.0 4.9 4.0 2.8 2.1 0.0 0.0 Barwa Real Est at e Masraf Al Rayan Vodafon e Qat ar QNB Group Source: Qatar Stock Exchange (QSE) Ezdan Real Est at e Vodafon e Qat ar Ezdan Real Est at e Barwa Real Est at e Salam In t ern at ion al In vest men t Source: Qatar Stock Exchange (QSE) Investor Trading Percentage to Total Value Traded Net Traded Value by Nationality (QR Million) 9 100% 24.82% 24.28% 80% 10.63% 10.45% 25.73% 24.81% 38.83% 40.47% Non-Qatari 60% Masraf Al Rayan 448 457 40% (9) 20% Qatari 841 832 0% Buy Sell Qa t a ri In div idu a ls Qa t a ri In st it u t ion s Non -Qa t a ri In div idu a ls Non-Qa t a ri In st it u t ion s Source: Qatar Stock Exchange (QSE) (200) - 200 Net Invest ment 400 Tot a l Sold 600 800 1,000 Tot a l Bou gh t Source: Qatar Stock Exchange (QSE) Page 3 of 7
4. TECHNICAL ANALYSIS OF THE QSE INDEX Source : Bloomberg The Index closed end of week slightly in the green, gaining 0.56% (now at 10,629.13) for the week. We await stronger signals to help deciding the next move to the Index; our support level remains at 10,500 and the resistance at the 11,500 level. DEFINITIONS OF KEY TERMS USED IN TECHNICAL ANALYSIS RSI (Relative Strength Index) indicator – RSI is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between 0 to 100. The index is deemed to be overbought once the RSI approaches the 70 level, indicating that a correction is likely. On the other hand, if the RSI approaches 30, it is an indication that the index may be getting oversold and therefore likely to bounce back. MACD (Moving Average Convergence Divergence) indicator – The indicator consists of the MACD line and a signal line. The divergence or the convergence of the MACD line with the signal line indicates the strength in the momentum during the uptrend or downtrend, as the case may be. When the MACD crosses the signal line from below and trades above it, it gives a positive indication. The reverse is the situation for a bearish trend. Candlestick chart – A candlestick chart is a price chart that displays the high, low, open, and close for a security. The ‘body’ of the chart is portion between the open and close price, while the high and low intraday movements form the ‘shadow’. The candlestick may represent any time frame. We use a one-day candlestick chart (every candlestick represents one trading day) in our analysis. Doji candlestick pattern – A Doji candlestick is formed when a security's open and close are practically equal. The pattern indicates indecisiveness, and based on preceding price actions and future confirmation, may indicate a bullish or bearish trend reversal. Shooting Star/Inverted Hammer candlestick patterns – These candlestick patterns have a small real body (open price and close price are near to each other), and a long upper shadow (large intraday movement on the upside). The Shooting Star is a bearish reversal pattern that forms after a rally. The Inverted Hammer looks exactly like a Shooting Star, but forms after a downtrend. Inverted Hammers represent a potential bullish trend reversal. Page 4 of 7
5. Price (February 09) % Change WTD % Change YTD Qatar National Bank 145.00 (2.74) (2.09) 133,928 11.0 2.5 2.2 Qatar Islamic Bank 108.40 2.26 4.33 25,614 12.6 1.8 3.9 Commercial Bank of Qatar 32.90 3.46 1.23 12,681 32.4 0.8 8.8 Doha Bank 38.10 4.10 9.17 9,844 11.8 1.0 7.9 Al Ahli Bank 36.50 1.39 (6.41) 6,964 11.1 1.6 4.1 Qatar International Islamic Bank 67.80 (0.29) 7.96 10,263 13.1 1.5 5.9 Masraf Al Rayan 41.50 1.72 10.37 31,125 15.1 2.4 4.2 Al Khalij Commercial Bank 16.20 (0.67) (4.71) 5,832 13.7 0.8 6.2 Qatar First Bank 9.52 (2.36) (7.57) 1,904 N/A 0.9 N/A National Leasing 15.85 2.59 3.46 784 155.6 0.8 3.2 Dlala Holding 21.29 (0.05) (0.93) 605 155.1 2.3 N/A Qatar & Oman Investment 10.34 2.89 3.92 326 28.4 1.0 5.8 Islamic Holding Group Banking and Financial Services 57.00 (1.72) (6.56) 323 77.9 2.3 2.6 Zad Holding 86.00 (2.71) (3.59) 1,125 10.5 1.3 4.7 9.72 (1.82) (3.76) 112 N/A 1.1 N/A Com pany Nam e Qatar German Co. for Medical Devices Market Cap. QR Million TTM P/E P/B Div. Yield 240,194 Salam International Investment 11.95 2.22 8.14 1,366 12.0 0.8 8.4 Medicare Group 65.40 (0.76) 3.97 1,841 28.3 1.9 2.8 Qatar Cinema & Film Distribution 28.10 0.00 2.37 176 41.3 1.3 5.3 158.70 (0.81) 9.15 14,476 12.6 2.1 4.8 Widam Food Co. 68.00 (1.88) 0.00 1,224 N/A 4.1 4.0 Mannai Corp. 84.40 1.44 5.50 3,850 7.7 1.5 5.9 174.00 (2.52) (0.85) 3,480 22.0 2.6 5.2 Qatar Fuel Al Meera Consumer Goods Consum er Goods and Services 27,651 Qatar Industrial Manufacturing 47.60 1.17 6.97 2,262 11.7 1.5 6.3 Qatar National Cement 92.50 1.20 7.56 5,496 11.6 1.8 3.9 113.50 (1.73) (3.40) 68,668 23.2 2.1 4.4 55.00 (0.90) (5.98) 6,838 24.7 2.7 2.3 Industries Qatar Qatari Investors Group Qatar Electricity and Water 225.00 1.35 (0.88) 24,750 16.1 3.0 3.3 Aamal 15.35 5.14 12.62 9,671 15.2 1.2 N/A Gulf International Services 27.00 (8.63) (13.18) 5,018 75.9 1.3 3.7 Mesaieed Petrochemical Holding Industrials 15.31 (1.86) (3.10) 19,234 19.3 1.4 4.6 Qatar Insurance Doha Insurance 84.40 0.48 (0.47) 20,352 18.5 2.5 2.5 17.95 (1.91) (1.37) 898 12.4 0.8 5.6 Qatar General Insurance & Reinsurance 41.00 1.23 (12.77) 3,588 3.7 0.6 3.3 Al Khaleej Takaful Insurance 20.24 0.20 (4.08) 517 17.5 1.0 4.9 Qatar Islamic Insurance Insurance 57.80 7.04 14.23 867 14.2 2.6 6.9 United Development 21.50 (3.80) 4.12 7,613 12.2 0.7 7.0 Barw a Real Estate 38.40 11.95 15.49 14,942 9.3 0.8 5.7 Ezdan Real Estate 15.10 0.60 (0.07) 40,053 22.9 1.3 3.3 Mazaya Qatar Real Estate Development Real Estate 14.28 (0.90) (0.76) 1,574 16.7 1.1 N/A 104.90 1.84 3.05 33,602 15.3 1.5 2.9 9.27 (1.90) (1.07) 7,837 N/A 1.7 N/A Qatar Navigation (Milaha) 94.10 0.86 (1.57) 10,777 11.9 0.8 5.3 Gulf Warehousing Qatar Gas Transport (Nakilat) 54.60 1.11 (2.50) 3,200 15.3 2.1 2.9 24.12 0.29 4.46 13,363 13.8 3.5 5.2 Ooredoo Vodafone Qatar Telecom s Transportation Qatar Exchange 141,935 26,221 64,182 41,438 27,340 568,961 Source: Bloomberg Page 5 of 7
6. Contacts Saugata Sarkar 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 Mohamed Abo Daff QNB Financial Services Co. W.L.L. Senior Research Analyst Contact Center: (+974) 4476 6666 Tel: (+974) 4476 6589 PO Box 24025 mohd.abodaff@qnbfs.com.qa Doha, Qatar Disclaimer and Copyright Notice: This publication has been prepared by QNB Financial Services Co. W.L.L. (“QNBFS”) a wholly-owned subsidiary of QNB SAQ (“QNB”). QNBFS is regulated by the Qatar Financial Markets Authority and the Qatar Exchange QNB SAQ 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 tech nical 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 . Page 6 of 7
7. Contacts Saugata Sarkar 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 Mohamed Abo Daff QNB Financial Services Co. W.L.L. Senior Research Analyst Contact Center: (+974) 4476 6666 Tel: (+974) 4476 6589 PO Box 24025 mohd.abodaff@qnbfs.com.qa Doha, Qatar Disclaimer and Copyright Notice: This publication has been prepared by QNB Financial Services Co. W.L.L. (“QNBFS”) a wholly-owned subsidiary of QNB SAQ (“QNB”). QNBFS is regulated by the Qatar Financial Markets Authority and the Qatar Exchange QNB SAQ 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 tech nical 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 . Page 7 of 7