Kuwait Financial Centre “Markaz” RESEARCH
GCC Corporate Earnings – Q2 2012
Saudi, Kuwait and Bahrain decelerate
September 2012 Research Highlights: Provides a review of corporate earnings across the GCC Markaz Research is available on: Bloomberg - Type “MRKZ” <Go> Thomson Research, Reuters Knowledge Nooz Zawya Investor ISI Emerging markets Capital IQ FactSet Research Connect TheMarkets.com M.R. Raghu CFA, FRM Head of Research +965 2224 8280 rmandagolathur@markaz.com Deivanai Arunachalam Analyst +965 2224 8000 ext. 4606 Darunachalam@markaz.com
Report Highlights
YoY (2Q12 vs. 2Q11) decline of 1%
QoQ (2Q12 vs. 1Q12) decline of 6%
Kuwait, Bahrain and Saudi suffered considerable declines in net earnings
Banks accounting for 40% of GCC earnings recorded a 1% increase in profits YoY and a 3% decline over the quarter
Oman‟s 2Q12 earnings were the highest in the last seven quarters at USD 469mn
Telecom recorded a growth of 8% YoY, staying close to the 1Q12 figure at USD 2.1bn
We forecast 8% YoY growth in GCC corporate earnings in 2012 at USD 56.5bn
2Q12 saw a decline of 1% YoY in net earnings of GCC corporations. The decline was led by Bahrain and Kuwait companies whose aggregate net incomes dropped 29% and 27% YoY. Saudi Arabian firms too witnessed a decline in profitability over the same period, albeit lower at 6%. Oman, UAE and Qatar firms‟ net income grew 56%, 12% and 8% respectively. Total GCC earnings came in at USD 13.8bn, down 6% from 1Q2012. Figure: 1 – Earnings Trend – GCC – 2Q12 (USD mn)
Kuwait Financial Centre S.A.K. “Markaz” P.O. Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 markaz.com
Source: Thomson Reuters Eikon, Markaz Research
MARKAZ RESEARCH September 2012 2Q12 Earnings
KSA earnings decline 6% YoY in 2Q12 to USD 6.5bn
Saudi Arabia Earnings of Saudi Arabian companies totaled USD 6.5bn, a 6% decrease YoY. SABIC, which reported USD 1.4bn in 2Q profits, saw its bottom-line decline 35% YoY due to softening of global petrochemical prices and higher raw materials costs. Saudi Banks earnings increased 11% YoY while it fell 1% over 1Q12 to USD 2.0bn. Al Rajhi Bank reported a 14% YoY growth in net income to USD 558mn, on account of higher operating income. Telecom sector‟s earnings grew 18% YoY to USD 891mn as Etihad Etisalat‟s earnings rose 22% to USD 379mn due to higher revenue from data services. Saudi Telecom posted a 7% growth in earnings YoY at USD 642mn Kuwait Kuwait corporate earnings dropped 27% YoY to USD 811mn. Kuwait saw its earnings recover in the first quarter of 2012 after three consecutive quarters of decline. However Kuwait corporations haven‟t been able to sustain the recovery in 2Q12. Bank earnings declined 25% over the year and 32% over 1Q12 to USD 380mn. National Bank of Kuwait‟s earnings dropped 41% to USD 142mn owing to a USD 96.4mn provision it took due to the deteriorating operating environment. Telecom companies reported a bottom-line of USD 310mn (-20% YoY, -11% QoQ). Wataniya‟s profits fell almost 50% YoY as a result of competitive pressures in the country and negative exchange rate movements in Algeria. Zain earnings dropped 1% over the year, settling at USD 254mn. Real Estate sector, whose profits grew 39% YoY dropped 62% over the quarter to USD 34mn.
Kuwait earnings drop 27% YoY to USD 811mn, led by the banking sector
UAE During 2Q12, UAE companies posted earnings of USD 3.0bn, a 12% growth YoY, and a 4% decline over the quarter. Banking sector, which accounts for 54% of UAE profits, declined 7% YoY, but grew 2% over the quarter to USD 1.6bn. Emirates NBD which had recovered from its lackluster performance during 1Q12 registered a 13% YoY fall in net earnings this quarter. The bank‟s 1H12 profits settled 40% lower than that of 1H11 due to gain on the sale of a stake in Network International last year. NBAD reported 2% YoY growth in net income to USD 285mn primarily due to lower provisioning. Telecom earnings grew 22% YoY and 2% QoQ to USD 597mn. Etisalat reported a net profit of USD 508mn, 17% growth on a YoY basis buoyed by robust international operations. Real estate continued its recovery with profits of USD 355mn (1Q12: USD 342mn, 2Q11: USD 5mn). While Emaar witnessed a 146% YoY growth in earnings to USD 167mn driven by increase in contribution of subsidiaries, Aldar‟s 228% increase in profits was led by better occupancy. Table 1: Earnings Growth – Sectoral Trend (USD mn) Sector Banks Telecommunications Commodities Financial Services Real Estate Construction Related Conglomerates Others Total
2Q11 5,455
1Q12 5,705
2Q12 5,518
YoY 1%
QoQ -3%
1,943
2,095
2,100
8%
0%
3,648
3,139
2,570
-30%
-18%
47
536
127
169%
-76%
338
821
772
129%
-6%
717
780
688
-4%
-12%
400
425
342
-14%
-19%
1,448
1,118
1,688
17%
51%
13,996
14,619
13,806
-1%
-6%
Source: Thomson Reuters Eikon, Markaz Research
Kuwait Financial Centre “Markaz”
2
MARKAZ RESEARCH September 2012
Qatar sustains stability; corporate earnings grew 8% YoY to USD 2.6bn
Qatar Qatar‟s earnings continued to grow at a stable rate of 8% YoY and 5% over the quarter to USD 2.6bn. Industries Qatar‟s earnings sustained recovery this quarter with a 3% growth over the year to USD 585mn. Bank earnings continue to benefit from higher government spending with growth of 9% YoY and 3% sequentially to USD 1.14bn. Qatar National Bank‟s net income (USD 580mn) grew 17% YoY – the slowest bottom-line growth in the last 2 years. Oman Oman‟s corporate earnings grew 56% YoY and 7% over the previous quarter to USD 469mn. Banking sector profits grew to USD 173mn (+114% YoY, +5% QoQ). Bank Muscat‟s net income of USD 91mn was 19% higher on a YoY basis. Bahrain Bahrain‟s corporate profits dropped 29% YoY in 2Q12 to USD 370mn. The decline amounted to 11% on a sequential basis. Banking profits plunged 28% YoY and fell nearly 25% sequentially to USD 186mn. The drastic decline in banking income was led by Bahrain Islamic Bank (a loss of USD 44mn) and a 25% and 13% decline in earnings of Arab Banking Corpn and United Gulf Bank respectively. Higher gas costs and lower London Metal Exchange levels impacted Aluminium Bahrain‟s bottom-line (-49% YoY), while Bahrain Telecom‟s net profit was affected by lack of growth and stiff competition. The company‟s 2Q profit was USD 49mn (-13% YoY).
Bahrain’s corporate profits drop 29% YoY to USD 370mn led by banks again
Looking Ahead Based on the current trend, we expect a muted earnings growth of 8% during the year 2012. We expect Saudi Arabia to clock a 9% growth to USD 27b while UAE is expected to post a growth of 11% to USD 10.8 b. Kuwait earnings is expected to contract by 5% to USD 3.9b. Banks (38%), Commodities (23%) and Telecom(14%) account for over 75% of earnings. We expect Banks to post a growth of 8% to USD 21.5b, Commodities and Telecom are likely to contract by 1% each. Overall, stock markets should look for triggers other than earnings to support it in 2012.
Figure: 2 – Earnings Trend – GCC – Long-Term (USD mn) 70,000
80%
64,381
60,000 50,000
48,921
56,499 60% 40%
32%
41,581 20% 34,769 34,720
40,000 30,000
52,252
6%
0%
26%
20% 8%
20,000 10,000
0% -20% -40%
-46%
0
-60% 2006 2007 2008 2009 2010 2011 2012 E
Source: Thomson Reuters Eikon, Markaz Research
Kuwait Financial Centre “Markaz”
3
GCC Corporate Earnings â&#x20AC;&#x201C; 2Q12
GCC Market Cap Coverage at 98% Total market cap (USD Bn)
% Coverage in terms of market cap
Total Number of Companies
Coverage based on no. of companies
Saudi Arabia
352
100%
151
99%
Kuwait
97
95%
205
82%
U.A.E.
104
91%
110
95%
Qatar
123
100%
41
98%
Oman
17
98%
115
93%
Bahrain
17
95%
42
93%
710
98%
664
92%
Country
GCC Total
•
Market Capitalization-based coverage stood at 98% for all GCC countries.
•
Qatar & Saudi Arabia topped with almost 100% coverage, followed by Oman at 98%.
•
Earnings visibility (by number of companies) for the GCC region stood at 92% for 2Q12.
•
KSA’s coverage stood at 99% and Qatar’s at 98%. Kuwait’s coverage was the lowest at 82%.
2 Source: Thomson Reuters Eikon, Markaz Research
GCC Earnings dip in 2Q12 GCC Corporate Earnings (USD Mn) 16,000 14,000
13,892
13,996
14,619 13,507
13,806
12,000
YoY
QoQ
(%)
(%)
Oman
-29
-11
Qatar
-56
7
8
5
Kuwait
12
-4
Saudi Arabia
-27
-45
-6
-2
-1
-6
Bahrain
9,810
10,000 8,000
UAE
6,000 4,000 2,000
GCC
0 Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
-2,000
•
Second quarter corporate earnings in the GCC dropped 1% YoY and 6% QoQ to USD 13.8bn.
•
The fall in YoY earnings was led by Bahrain (-29%), Kuwait (-27%) and Saudi Arabia (-6%).
•
In addition to these three countries, UAE too faced a decline in earnings on a QoQ basis
3 Source: Thomson Reuters Eikon, Markaz Research
Commodities drive the decline Sectoral Earnings Trend (USD Mn)
YoY
QoQ
(%)
(%)
17
51
-14
-19
-4
-12
129
-6
169
-76
-30
-18
8
0
1
-3
•
In 2Q12, Banking sector earnings grew 1% YoY and declined 3% over the quarter, settling at USD 5.5bn. The real estate sector earnings declined 6% over 1Q12 reaching USD 772mn, a 129% increase YoY, largely due to a base effect.
•
After a dismal performance in 2011, Telecom sector earnings grew 8% over the year, while it stayed flat on a QoQ basis at USD 2.1bn.
•
The commodities sector that drove earnings in 1Q12 saw a dip of 30% on a YoY basis and an 18% decline over the last quarter
4 Source: Thomson Reuters Eikon, Markaz Research
Top 10 companies grow 3% over 1Q12 Top 10 GCC companies by 2Q12 earnings (Mn USD) Company Name
Country
Sector
2Q11
1Q12
2Q12
QoQ(%)
YoY (%)
Saudi Arabia
Commodities
2,160
1,939
1,414
-27%
-35%
Saudi Arabia
Telecom
602
672
642
-5%
7%
Qatar
Commodities
570
524
585
12%
3%
Qatar
Banking
497
551
580
5%
17%
Saudi Arabia
Banking
492
536
558
4%
14%
UAE
Telecom
434
492
508
3%
17%
Saudi Arabia
Telecom
310
322
379
18%
22%
Saudi Electricity Co
Saudi Arabia
Others
356
-156
363
NM
2%
Samba Financial Group
Saudi Arabia
Banking
294
305
309
1%
5%
UAE
Banking
279 5,994
283 5,469
285 5,622
1% 3%
2% -6%
13,996
14,619
13,806
-6%
-1%
Saudi Basic Industries Corp Saudi Telecom Co Industries Qatar QSC Qatar National Bank SAQ Al Rajhi Banking and Invt Corp Emirates Telecom Corp Etihad Etisalat Company
National Bank of Abu Dhabi PJSC Total GCC earnings
ď&#x201A;§ 6 of the top 10 GCC companies are Saudi-based, 2 hail from UAE and 2 from Qatar. ď&#x201A;§ The composition of the top 10 is inclined towards banking, telecom and commodities firms 5
Saudi Arabia â&#x20AC;&#x201C; 2Q12
Saudi banks hold ground; commodities slide Quarterly Earnings Trend (USD Mn)
Earnings Growth – YoY (%)
8,000 6,956
7,000 6,000
6,870
6,676
6,542
5,813
Q2 2012 -6%
5,226
5,000
Q1 2012
15%
4,000 3,000
Q4 2011
2%
2,000 1,000
Q3 2011
22%
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Saudi Arabia’s earnings fell 6% YoY and 2% over the quarter to USD 6.5bn as a result of decline in earnings of commodities firms. Banking and telecom sectors performed well on a YoY basis registering increases in net income of 11% and 18% respectively.
Q2 2011
27%
Q1 2011
-10%
7 Source: Thomson Reuters Eikon, Markaz Research
23% 0%
10%
20%
30%
Alinma and Saudi Hollandi earnings surge Quarterly Sectoral Earnings Trend (USD Mn) 8,000 6,956
7,000 6,000
5,226
4,000
2,000 1,000
2,845
1,025 1,339
6,542 Others
5,111
1,776
6,676
5,813
5,646
5,000
3,000
6,870
2,108
798 1,399
2,650
2,898
Conglomerates
2,531 1,972
Construction Related
1,858
Real Estate Financial Services
753
501 1,668
1,821
576 1,731
920 1,610
853
891
2,043
2,019
Commodities Telecommunications Banks
0 Q3 2010
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
Q1 2012 Q2 2012
Saudi banks’ performance was led by Alinma and Saudi Hollandi Bank whose net incomes surged 90% and 24% YoY in 1H12. Al Rajhi and Riyad Bank witnessed YoY growth of 14% and 9% in 2Q12 earnings Earnings of players in the commodity sector were depleted in 2Q12: Sahara Petrochemicals, Advanced Petrochemicals and SABIC posted declines in profits of 74%, 65% and 35% respectively.
8 Source: Thomson Reuters Eikon, Markaz Research
Top companies – Sector – Growth Rate – 2Q12 Top Companies – Saudi Arabia – Banking Market Cap Company Name (USD mn) 2Q11 2Q12
Growth
Top Companies – Saudi Arabia – Commodities Market Cap Company Name (USD mn) 2Q11 2Q12 Growth Saudi Basic Industries Corp 73,196 2,160 1,414 -35%
Al Rajhi Bank
29,398
492
558
14%
Samba Financial Group
10,751
294
309
5%
Saudi Arabian Fertilizers Co
11,399
211
209
-1%
Riyad Bank
9,300
223
244
9%
Saudi Kayan Petrochemical Co
5,960
-4
-88
NM
Banque Saudi Fransi
8,027
206
202
-2%
Yanbu National Petrochemical Co
6,570
257
173
-33%
Saudi British Bank
8,640
227
244
7%
Saudi Arabian Mining Co
7,498
17
34
105%
Arab National Bank
5,893
186
191
3%
Saudi Industrial Investment Group
2,448
39
27
-31%
Alinma Bank
4,880
29
48
68%
Saudi International Petrochemical Co
1,765
44
36
-18%
1,574
56
14
-74%
1,047
42
14
-65%
Saudi Investment Bank
2,303
56
59
7%
Sahara Petrochemical Co
Saudi Hollandi Bank
2,805
70
89
26%
Advanced Petrochemical Co
81,996
1,782
1,944
9%
Total
Total
Top Companies – Saudi Arabia – Conglomerates Market Cap Company Name (USD mn) 2Q11 2Q12 Growth Kingdom Holding Co National Industrialization Co Total
11,809
44
48
9%
5,512
158
155
-2%
17,320
202
202
0%
Top Companies – Saudi Arabia – Others Market Cap Company Name (USD mn) 2Q11 2Q12 Saudi Electricity Co 14,332 356 363 Almarai Trading Co Ltd 6,880 93 101
111,457
2,821 1,835
-35%
Top Companies – Saudi Arabia – Telecom Company Name Saudi Telecom Co Etihad Etisalat Company Saudi Mobile Telecommunications Co Total
Growth 2% 9%
9 Source: Thomson Reuters Eikon, Markaz Research
Market Cap (USD mn) 21,012 11,666 2,912 35,590
2Q11 602 310 -120 793
2Q12 642 379 -105 916
Growth 7% 22% NM 16%
Kuwait – 2Q12
Kuwait banks and telecom companies disappoint Quarterly Earnings Trend (USD Mn)
Earnings Growth – YoY (%)
2,500 2,000
2,009
1,473
1,500 1,112 1,000
Q2 2012
-27%
Q1 2012
-27%
978 811
500 Q4 2011
0%
Q1 2011
Q2 2011
Q3 2011
Q4 2011 -118
Q1 2012
Q2 2012 Q3 2011
-500
Kuwait’s financial services sector ended in a loss of USD 39mn in 2Q12 while conglomerates closed with a loss of USD 67mn. Among the profitable sectors too, most experienced a lull. Banking and telecom sector earnings dropped 25% and 20% respectively over the year.
The real estate sector posted a growth of 39% YoY. 11 Source: Thomson Reuters Eikon, Markaz Research
-65%
-9%
Q2 2011
Q1 2011
-100%
-50%
80% 0%
50%
100%
NBK, Gulf Bank and KIB deliver lackluster numbers Quarterly Sectoral Earnings Trend (USD Mn) 3,000
2,009
2,000 1,080 1,000
-
1,277
345
383
595
524
Q3 2010
Q4 2010
1,473
1,112
811 301
565
505
571
405
555
310 380
Q1 2011
Q2 2011
978 Q3 2011
Q4 2011
Q1 2012
Q2 2012
-1,000 -628 -2,000
351
388
Others Construction Related Financial Services Telecommunications
367
-118
Conglomerates Real Estate Commodities Banks
In 2Q12, Kuwait Banks saw their bottom-line come in at USD 380mn (-25% YoY, -32% QoQ). All major banks witnessed a net income decrease on YoY basis, for the second consecutive quarter. National Bank of Kuwait took a severe beating, its net income declining 41% YoY; Gulf Bank and Kuwait International Bank’s incomes plunged 38% and 22% respectively.
Global Investment House and KAMCO experienced 2Q12 losses of USD 34mn and USD 12mn respectively. Wataniya’s profits fell 50% to USD 68mn, while Zain’s dropped 1% to USD 254mn. 12 Source: Thomson Reuters Eikon, Markaz Research
Top companies – Sector – Growth Rate – 2Q12 Top Companies – Kuwait – Banking Market Cap Company Name (USD mn) 2Q11 2Q12
Top Companies – Kuwait – Financial Services Growth
Company Name
Market Cap (USD mn)
2Q11
2Q12
Growth
1,555
31
31
-1%
National Bank of Kuwait
16,090
240
142
-41%
Kuwait Projects Co Holding
Kuwait Finance House
7,588
83
79
-5%
National Investments Co
326
18
-3
NM
Gulf Bank
4,100
31
19
-38%
Commercial Bank of Kuwait
3,551
0
0
-7%
ALAFCO Aviation Lease & Finance Co
781
13
12
-7%
Boubyan Bank
3,880
8
10
17%
Commercial Facilities Co
538
9
18
93%
Al Ahli Bank of Kuwait
3,250
44
35
-21%
International Finance Co
239
-9
0
NM
Burqan Bank Ahli United Bank
2,378 3,812
49 39
49 38
-1% -2%
KIPCO Asset Management Co
219
1
-12
NM
Kuwait Financial Centre
217
5
-6
NM
947 45,595
9 505
7 380
-22% -25%
Global Investment House
228
-61
-34
NM
4,102
7
6
-19%
2Q12 32 29 28 4 4 97
Growth -35% 37% -2% -85% -95% -51%
Kuwait International Bank Total
Top Companies – Kuwait – Telecom Market Cap Company Name (USD mn) 2Q11 2Q12
Top Companies – Kuwait – Others Growth
Mobile Telecommunications Co
11,425
256
254
-1%
National Mobile Telecom
3,969
136
68
-50%
15,394
393
322
-18%
Total
Total
Company Name Kuwait Food Company Americana Mabanee Co Agility Public Warehousing Co National Industries Group Holding Gulf Cable and Electrical Industries Total
Note: Companies that have not declared their 2Q12 results on the date of this report are marked as NA in the 2Q12 and 2Q11 columns. 13 Source: Thomson Reuters Eikon, Markaz Research
Market Cap (USD mn) 1,842 2,363 1,443 955 857 7,458
2Q11 49 21 29 25 76 199
United Arab Emirates â&#x20AC;&#x201C; 2Q12
UAE earnings fairly stable Quarterly Earnings Trend (USD Mn) 3,500
3,000
3,130
2,836
Earnings Growth – YoY (%) 3,009
Q2 2012
12%
2,693
2,500 Q1 2012
2,050
10%
2,000 1,416
1,500
Q4 2011
NM
Q3 2011
-4%
1,000 500 Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2011
Q2 2012
UAE 2Q12 corporate profits grew 12% YoY; registered a 4% decline over the quarter settling at USD 3bn. Banking continued to dominate corporate profits with more than half the country’s earnings coming from that sector. Earnings deteriorated 7% YoY, while a 2% increase over the quarter was recorded.
Q1 2011
-20%
15 Source: Thomson Reuters Eikon, Markaz Research
37%
1% 0%
20%
40%
Real Estate sustains its recovery Quarterly Sectoral Earnings Trend (USD Mn)
4,000 3,000 2,000 1,000
2,126 518
1,304
Q3 2010
-2,287
2,836
2,693
551
490
1,640
1,740
1,354
Q1 2011
Q2 2011
Q3 2011
800 903 Q4 2010
2,050 536
1,416 312 960 Q4 2011
3,130
3,009
583
597
1,588
1,618
Q1 2012
Q2 2012
-1,000 -2,000 -3,000 -4,000
Others
Conglomerates
Construction Related
Real Estate
Financial Services
Commodities
Telecommunications
Banks
-5,000
Abu Dhabi Commercial Bank’s 2Q12 net income dropped 45%, ENBD’s by 13% and Commercial Bank of Dubai’s by 7% over the year. The Telecom sector posted a strong 22% YoY growth at USD 597mn; a 2% increase over the quarter. Emirates Integrated Telecom (Du) posted a 57% YoY rise in net profit taking the figure to USD 89mn, while ETISALAT’s earnings rose 17% during the same period.
The Real Estate sector sustained its recovery with 2Q12 profits of USD 355mn; a QoQ increase of 4%.
16 Source: Thomson Reuters Eikon, Markaz Research
Top companies – Sector – Growth Rate – 2Q12 Top Companies – United Arab Emirates – Banking Company Name National Bank of Abu Dhabi First Gulf Bank Emirates NBD Bank Mashreqbank Abu Dhabi Commercial Bank Dubai Islamic Bank Union National Bank Commercial Bank of Dubai National Bank of Fujairah United Arab Bank Total
Market Cap (USD mn) 8,714 6,723 4,101 2,993 5,043 1,933 1,889 1,554 1,587 841 35,380
2Q11 279 242 203 78 363 90 113 71 20 20 1,480
2Q12 285 277 176 87 200 84 124 66 19 32 1,351
Top Companies – United Arab Emirates – Real Estate Growth 2% 14% -13% 12% -45% -6% 10% -7% -5% 64% -9%
Company Name Emaar Properties Aldar Properties Sorouh Real Estate Co Deyaar Development Union Properties Total
Market Cap (USD mn) 4,727 1,235 729 467 371 7,529
2Q11 68 35 30 5 -142 -4
2Q12 167 114 40 5 23 349
Growth 146% 228% 34% 3% NM NM
Top Companies – United Arab Emirates – Telecom Market Cap Company Name (USD mn) 2Q11 2Q12 Growth Emirates Telecom. Corp 19,741 434 508 17% Emirates Integrated Telecom. 3,809 56 89 57% Total 23,550 490 597 22%
Top Companies – United Arab Emirates – Construction Related Company Name Arkan Building Materials Co Arabtec Holding National Marine Dredging Drake and Scull International Total
Market Cap (USD mn) 372 1,210 589 493 2,664
2Q11 3 8 29 14 54
2Q12 Growth 5 60% -3 NM 26 -12% 7 -49% 35 -36%
Top Companies – United Arab Emirates – Others Market Cap Company Name (USD mn) 2Q11 2Q12 Growth Dubai Financial Market 2,065 4 3 -31% Abu Dhabi National Energy 2,048 118 122 3% Dana Gas Co 665 34 49 46% Total 4,778 156 174 11%
17 Source: Thomson Reuters Eikon, Markaz Research
Qatar – 2Q12
Qatar growth firms up Quarterly Earnings Trend (USD Mn)
Earnings Growth –YoY (%)
2,900
2,790
2,800
Q2 2012
2,738
8%
2,700 2,605
2,600 2,500
2,445
Q1 2012
2%
2,485 Q4 2011
2,413
50%
2,400 Q3 2011
2,300
35%
2,200 Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Qatar 2Q12 earnings grew 8% YoY and 5% over the quarter stabilizing at USD 2.6bn. Earnings of the commodities sector (Industries Qatar) grew 3% YoY and 12% over the quarter reaching USD 585mn. The real estate sector witnessed a 35% growth in net income YoY and a 14% growth over the quarter. Financial services and construction related sectors posted YoY net income growth of 18% each, while income decline on a QoQ basis.
Q2 2011
23%
Q1 2011
19 Source: Thomson Reuters Eikon, Markaz Research
14% 0%
20%
40%
60%
Banking continues its stable growth while telecom suffers Quarterly Sectoral Earnings Trend (USD Mn) 3,000 2,500 2,000 1,500
Others Construction Related Financial Services Telecommunications
2,030
132 391
1,000 500
Conglomerates Real Estate Commodities Banks
1,859
212
2,738
2,790 2,485
2,445
2,413
211
146
575
570
570
479
691
463
172
2,605
196
524
585
390
917
848
978
1,049
1,069
1,023
1,105
1,142
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
-
Qatar banks registered a 9% increase in 2Q12 net income over the year even as they maintained 3% increase over the quarter. While Qatar National Bank and Commercial Bank of Qatar held up the sector’s results, Qatar Islamic Bank was a dampener recording a 9% YoY decline in second quarter earnings. The telecom sector failed to impress with net income falling 6% in 2Q12 as compared to 2Q11, while the QoQ fall was 11%. Qatar Telecom’s quarterly earnings plunged 11% YoY to USD 176mn whereas Vodafone Qatar incurred a loss of USD 32mn. 20 Source: Thomson Reuters Eikon, Markaz Research
Top companies – Sector – Growth Rate –2Q12 Top Companies – Qatar – Banking Market Cap Company Name (USD mn) 2Q11 2Q12 Qatar National Bank 25,560 497 580 Commercial Bank of Qatar 4,750 140 150 Qatar Islamic Bank 4,952 105 96 Masraf Al Rayan 5,562 100 102 Doha Bank 3,122 93 96 Qatar International Islamic Bank 2,025 45 45 Al Khalij Commercial Bank 1,661 36 38 Ahli Bank 1,817 33 34 Total 49,449 1,049 1,142
Growth 17% 7% -9% 2% 3% 1% 8% 1% 9%
Top Companies – Qatar – Real Estate Operations Company Name
Market Cap (USD mn)
2Q11
2Q12
Growth
Ezdan Real Estate Company
14,512
18
54
196%
Barwa Real Estate Company
2,859
56
83
48%
United Development Company
1,639
56
44
-22%
19,010
131
181
39%
Total
Top Companies – Qatar – Commodities Market Cap Company Name (USD mn) 2Q11 2Q12 Industries Qatar 19,215 570 585 Total 19,215 570 585
Top Companies – Qatar – Telecom Market Cap Company Name (USD mn) 2Q11 2Q12 Qatar Telecom(Q Tel) 9,281 198 176 Vodafone Qatar 2,104 -45 -32 Total 11,385 153 144
Growth 3% 3%
Growth -11% NM -6%
Top Companies – Qatar – Others Market Cap Company Name (USD mn) 2Q11 2Q12 Qatar Electricity & Water Co 3,653 121 96 Aamal Co 2,381 14 14 Qatar Gas Transport Co Ltd 2,371 53 56 Qatar Fuel 3,312 91 88 Qatar Navigation 1,850 43 43 Total 13,566 322 297
21 Source: Thomson Reuters Eikon, Markaz Research
Growth -21% 0% 6% -3% 1% -8%
Oman – 2Q12
Oman delivers steady earnings Earnings Growth –YoY (%)
Quarterly Earnings Trend (USD Mn) 500
469 439
450 400
56%
396
370
Q2 2012
334
350
300
300
19%
Q1 2012
250 200
10%
Q4 2011
150 100 Q3 2011
-1%
50 Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Oman’s corporate earnings grew an impressive 56% over the year, and 7% QoQ to USD 469mn, the highest in the last 8 quarters. Banks and telecom held their positions recording increases in earnings of 5% each on a QoQ basis.
Q2 2011
-45%
Q1 2011
-22%
-100% -50%
23 Source: Thomson Reuters Eikon, Markaz Research
0%
50%
100%
Banking contributes to majority of incremental growth Quarterly Sectoral Earnings Trend (USD Mn) 500
Others
Conglomerates
Construction Related
Real Estate
Financial Services
Commodities
Telecommunications
Banks
450 400
401
305 41
250
53
150
92
300 35 17
27
200
39
99
19
32 7
334 24 27 106
33 13 107
45 47
39 46
103
109
165
173
Q1 2012
Q2 2012
101
100 50
469
396
370
350 300
439
119
126
138
Q3 2010
Q4 2010
Q1 2011
154
140
Q3 2011
Q4 2011
81
Q2 2011
Most banks showed positive earnings growth in 2Q12. Bank Muscat’s net profit was up 19% YoY in 2Q at USD 91mn while Bank Dhofar’s first quarter earnings came in at USD 27mn. Financial services delivered a decent set of numbers with bottom-line staying close to 1Q12 figure at USD 46mn, increasing more than 6 times over the 2Q11 number. Telecom earnings rose 7% YoY (QoQ: 5%) to USD 109mn; Oman Telecom reported a 11% YoY increase in net income to USD 83mn. 24 Source: Thomson Reuters Eikon, Markaz Research
Top companies – Sector – Growth Rate – 2Q12 Top Companies – Oman – Banking Company Name Bank Muscat Bank Dhofar National Bank of Oman Ahli Bank Bank Sohar Total
Market Cap (USD mn) 2,763 1,195 838 510 384 5,689
2Q11 76 -39 24 9 10 81
2Q12 91 27 27 15 13 173
Growth 19% NM 10% 64% 30% 114%
Top Companies – Oman – Telecom Company Name Oman Telecommunications Company Omani Qatari Telecommunications Total
Market Cap (USD mn) 2,601 861 3,462
2Q11 75 26 101
2Q12 83 25 109
Growth 11% -3% 7%
Top Companies – Oman – Construction Related Market Cap Company Name (USD mn) 2Q11 2Q12
Growth
Raysut Cement Co
698
10
18
75%
Oman Cement Co
553
8
10
22%
Galfar Engineering & Contracting
235
3
4
14%
Oman Cables Industry
191
5
8
58%
1,676
27
40
48%
Total
Top Companies – Oman – Real Estate Operations Market Cap Company Name (USD mn) 2Q11 2Q12 Sahara Hospitality Company 37 1 1 Total 37 1 1
25 Source: Thomson Reuters Eikon, Markaz Research
Growth 21% 21%
Bahrain – 2Q12
Bahrain corporate earnings falter Quarterly Earnings Trend (USD Mn)
Earnings Growth –YoY (%)
600 521 475
500 419
Q2 2012
-29%
Q1 2012
0%
Q4 2011
N.M.
416 370
400 300 200
162
100
Q3 2011
332%
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Bahrain’s corporate profits plunged in 2Q12, a 29% YoY fall spurred largely by the commodities and banking sectors. The QoQ decline in Bahrain net income was 11%. Bahrain Islamic Bank ended in a loss of USD 44mn, while Arab Banking Corp and United Gulf Bank saw their earnings deplete on a YoY basis by 25% and 13% respectively.
Q2 2011
Q1 2011
-100%
27 Source: Thomson Reuters Eikon, Markaz Research
7%
0%
0%
100% 200% 300% 400%
Dismal performance from Aluminium Bahrain Quarterly Sectoral Earnings Trend (USD Mn) 600
521 475
500 419
400 300
110
200
51
100
179
-100 -200 -300
88 -58
46
111
232
416
185 214 47 260
197
55 -51 Q3 2010
Q4 2010 -108
Q1 2011
57 43
56
Q2 2011
Q3 2011
162
94 49
76
248
62 35 Q4 2011
Others Construction Related Financial Services Telecommunications
370
Q1 2012
186 Q2 2012
Conglomerates Real Estate Commodities Banks
Lower London Metal Exchange levels and higher gas costs impacted Aluminium Bahrain’s bottomline. The company’s net income (USD 94mn) was 49% lower than 2Q11. Bahrain Telecom’s net profit of USD 49mn declined 13% over the year, impacted by lack of growth and stiff competition.
28 Source: Thomson Reuters Eikon, Markaz Research
Top companies – Sector – Growth Rate – 2Q12 Top Companies – Bahrain – Banking Market Cap (USD mn)
2Q11
2Q12
Ahli United Bank
3,035
84
88
4%
Arab Banking Corporation
1,431
68
51
-25%
National Bank of Bahrain
1,248
28
29
5%
Al Baraka Banking Group
959
34
38
BBK
903
30
United Gulf Bank
518
Ithmaar Bank
Company Name
Growth
Top Companies – Bahrain – Financial Services Market Cap Company Name (USD mn) 2Q11 2Q12
Growth
Gulf Finance House
285
-11
5
NM
Securities and Investment Co
350
3
-1
NM
Esterad Investment Co
60
-8
0
NM
13%
Bahrain Middle East Bank
42
1
0
-87%
30
-1%
Total
1,375
-15
4
NM
8
7
-13%
322
1
1
61%
Al Salam Bank Bahrain
163
4
-7
NM
Bahrain Islamic Bank
237
4
-44
NM
Khaleeji Commercial Bank
104
1
-
-100%
TAIB Bank
307
-3
-8
NM
9,227
260
186
Total
-28%
Top Companies – Bahrain – Telecom Company Name Bahrain Telecommunications Co. Total
Top Companies – Bahrain – Others Company Name Aluminium Bahrain
Market Cap (USD mn) 2,034
2Q11 185
2Q12 94
Growth -49%
29 Source: Reuters Eikon, Markaz Research
Market Cap (USD mn) 1,757 1,757
2Q11 56 56
2Q12 49 49
Growth -13% -13%
Annual Results
Saudi Earnings (USD Mn) 30,000 25,000
GCC Earnings (USD Mn) 70,000
50,000
15,000
48,921
20,844 15,643
52,252
56,499
12,472
10,000 5,000
41,581
40,000
23,044 21,445
20,000
64,381
60,000
27,187 24,837
-
34,769 34,720
2006 2007 2008 2009 2010 2011 2012E
30,000 20,000
Kuwait Earnings (USD Mn)
10,000
18,000
15,802
16,000
2006
2007
2008
2009
2010
2011
2012E
14,000 12,000 10,000
8,983
8,000 4,906
6,000 4,000
2,000
4,147 3,940
-1,003 -76
-2,000 2006
30 Source: Thomson Reuters Eikon, Markaz Research
2007
2008
2009
2010
2011 2012E
Annual Results Qatar Earnings (USD Mn)
UAE Earnings (USD Mn) 15,039
16,000 14,000 12,000
12,000
12,758 10,815
9,756
9,064
10,000
10,828
6,000 4,961
6,000
6,482
11,233
8,121
7,507
4,733
4,000
4,000
2,000
2,000 -
-
2006 2007 2008 2009 2010 2011 2012E
2006
Oman Earnings (USD Mn) 1,800
1,690
1,569
1,600
1,400 1,200
9,482
10,000 8,000
8,000
10,367
1,463
1,650 1,405
1,255
2009
3,000 2,500
800
1,000
600
500
400
-
200
-500
2007
2008
2009
2010
2011 2012E
2010
2011 2012 E
2,445
1,909
1,781
1,741 1,660
1,500
1,000
2006
2008
Bahrain Earnings (USD Mn)
2,000
1,036
2007
1,058
2006 2007 2008 2009 2010 2011 2012E
-1,000
-1,500
31 Source: Thomson Reuters Eikon, Markaz Research
-856
MARKAZ RESEARCH September 2012
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