Page 1

Kuwait Financial Centre “Markaz” RESEARCH January 2012

GCC Defensive Bellwether Stocks Specific Look at Large Caps

GCC stock markets were always about large caps; hence, we have Research Highlights: endeavored to take a closer look. When we looked at the top 20 companies Analyzing Large Cap GCC listed in the GCC stock markets (measured by market capitalization), certain stocks in terms of composition, themes emerged: stock performance, risk and  They are dominant (48% of market cap, 23% of total value traded, challenges facing the segment 61% from KSA, 70% from just two sectors banking and chemicals) and therefore skew the set  They enjoy large government ownerships (averaging 45%) and therefore sap liquidity (turnover velocity averages just 12%) &  Offer high dividend yields (5% on average) Markaz Research is available on Bloomberg Type “MRKZ” <Go>

However, the muted market performance during the last few years has seen them not deliver positive shareholder value. Measured in the shortterm (last one year), only 3 of the 20 managed to beat their stock market index in terms of performance. Are they Risky?

M.R. Raghu CFA, FRM Head of Research +965 2224 8280 rmandagolathur@markaz.com Layla Al-Ammar Assistant Manager lammar@markaz.com +965 2224 8000 Ext: 1205 Madhu Soothanan Senior Research Analyst Msoothanan@markaz.com +965 2224 8000 Ext: 4603 Kuwait Financial Centre S.A.K. “Markaz” P.O. Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 www.markaz.com

As a group, they share a medium to high risk profile measured in terms of standard deviation (ranging from 20% to 54%). Other key risk metrics like average monthly returns, monthly high/low, losing streaks, and drawdown also point to similar trend of medium to high risk. Hence, they would tend to exhibit more of the characteristics of a value stock than a growth stock. How are they correlated? Given the lack of market integration, the correlation looks mostly spurious. Otherwise how can you explain the highest positive correlation (95%) between Qatar National Bank and Saudi Arabian Fertilizer Co or highest negative correlation (-71%) between Saudi Telecom and Etihad Etisalat (both Saudi-based telecom companies). Hence, basing portfolio allocations on correlation may be misleading until markets integrate. In terms of stock picks, Qatar National Bank clearly stands out. Expected Risk/Return – 2012f


RESEARCH January 2012 Universe of Stocks

Value Traded for the group amounted to USD 59bn as of September 2011, though USD 31bn (53%) of that was accounted for by Sabic

In order to arrive at our universe of Large Cap stocks, we have taken the full group of listed stocks across the GCC markets, numbering 639, and have identified the stocks which account for a cumulative 48% of the total market cap (Table 1). This yielded a group of 20 stocks with a total market cap of USD 325 bn, spanning four countries and five main industries (Figures 1 & 2). The largest stock is Sabic, with 11% of GCC market cap, followed distantly by Al Rajhi Bank at 4%. Value Traded for the group amounted to USD 59bn as of September 2011 (Appendix 1), though USD 31bn (53%) of that was accounted for by Sabic followed by Al Rajhi with 8% of total value traded. The average turnover velocity for the group during the period was roughly 12%, relatively low given the high degree of government and institution holding of Large Caps in addition to the overall decline in trading across the region. The group has an average Dividend Yield of just over 5%, the highest yields coming from the Chemicals and Telecom sectors. Average RoE and RoA came in at 18.6% and 8%, respectively, during the period. Table 1: GCC Large Cap Stocks (As of Sept-11)

Company

The group has an average Dividend Yield of just over 5%, the highest yields coming from the Chemicals and Telecom sectors

Domicile

Market Cap % of USD mn Total

Gov’t Ownership

1

SABIC

Saudi Arabia

73,992

11.0%

75.2

2

Al Rajhi Banking and Investment Co

Saudi Arabia

27,697

4.1%

9.9

3

Qatar National Bank

Qatar

24,861

3.7%

50

4

Emirates Telecommunications Corp.

UAE

22,174

3.3%

60

5

Industries Qatar

Qatar

18,716

2.8%

70.1

6

Saudi Telecom Co

Saudi Arabia

18,131

2.7%

83.6

7

National Bank of Kuwait SAK

Kuwait

15,239

2.3%

0

8

Saudi Electricity Company

Saudi Arabia

14,776

2.2%

81.2

9

Mobile Telecommunications Co. (Zain)

Kuwait

14,708

2.2%

24.6

10

Saudi Arabian Fertilizers Co

Saudi Arabia

12,132

1.8%

59.6

11

Samba Financial Group

Saudi Arabia

10,511

1.6%

49.3

12

Etihad Etisalat Co

Saudi Arabia

9,892

1.5%

38.6

13

Riyad Bank

Saudi Arabia

9,439

1.4%

49.8

14

Kuwait Finance House KSC

Kuwait

8,791

1.3%

24.4

15

National Bank of Abu Dhabi

UAE

8,284

1.2%

70.5

16

Saudi British Bank

Saudi Arabia

7,859

1.2%

9.5

17

Banque Saudi Fransi

Saudi Arabia

7,482

1.1%

12.8

18

Kingdom Holding Co

Saudi Arabia

7,411

1.1%

0

19

Qatar Telecommunications (QTel)

Qatar

7,096

1.1%

65

20

First Gulf Bank

UAE

5,841

0.9%

5.3

325,032 671,572

48%

Group Total Total Universe Market Cap Source: Markaz Research, Reuters

Predictably, the geographical breakdown is skewed to Saudi Arabia, with 11 companies representing 61% of the total (Figure 1). This is followed by Qatar, with 3 stocks represented, and 16% share. Kuwait and the UAE have 3 Kuwait Financial Centre “Markaz”

2


RESEARCH January 2012 companies each while Oman and Bahrain have no presence in the large cap segment. Figure 1: Geographical Breakdown by Weight and Number of Companies

In terms of sectors, the group is somewhat evenly split between Banks and Chemicals. These sectors represent 37% and 33% of market cap, respectively. Ten banks are represented in the group while Chemicals are represented by three firms. Telecoms follow with 5 companies representing 15% of the market cap. Saudi Electricity Company is the only Utility to make an appearance in the list, amounting to 5% of market cap. Figure 2: Sector Breakdown by Weight and Number of Companies

GCC markets have been underperforming in 2011 due to poor corporate news, regulatory issues, weak global cues and political turmoil which have rattled markets. Consequently, the Large Caps, which are Blue Chip stocks that are heavily invested in by retail and institutional investors, have also taken some heavy hits along with the market. 16 of the group of 20 large caps are in negative territory for the year while over half are underperforming their exchanges. There doesn’t seem to be any sector/geographical bias to the underperformers although all but one Qatari stock are outperforming the Doha Exchange which is at 1% YTD. The biggest underperformance is in Zain, which due to poor corporate news has seen its stock down by 40% for the year. The highest outperformance comes from Qatar National Bank which is up 14% followed by NBAD which is at a gain of 12%.

Kuwait Financial Centre “Markaz”

3


RESEARCH January 2012 Kuwaiti companies are all underperforming the Kuwait Weighted Index, which is down 15% for the year. Islamic lenders Al Rajhi Bank and Kuwait Finance House are underperforming their indices by 11% and 1.2%, respectively. Islamic lenders Al Rajhi Bank and Kuwait Finance House are underperforming their indices by 11% and 1.2%, respectively

Table : Stock Performance (As of 14th Dec 2011) Annualized Returns YTD return

Alpha

13.9

12.9

2Y 33.5

3Y 30.1

12.3

22.3

10.2

19.9

5.4

24.5

14.7

1

Company Qatar National Bank

5Y 20.0

2

National Bank of Abu Dhabi

3

Saudi Arabian Fertilizers Co

8.9

15.4

19.9

4

Qatar Telecommunications (Qtel)

0.7

-0.2

11.6

12.6

0.1

5

Industries Qatar

-3.2

-4.1

8.3

18.6

14.6

6

Saudi Electricity Company

-4.3

2.2

12.3

13.4

0.4

7

Saudi British Bank

-4.7

1.8

-6.3

-3.3

-8.8

8

Etihad Etisalat Co

-5.0

1.5

11.8

27.9

4.9

9

First Gulf Bank

-7.1

2.9

7.6

23.8

9.0

10

Banque Saudi Fransi

-8.3

-1.8

0.2

3.3

-6.8

11

Kingdom Holding Co

-9.2

-2.7

-2.5

-4.0

NA

12

Saudi Basic Industries Corp

-10.0

-3.5

8.9

17.3

0.9

13

National Bank of Kuwait SAK

-11.4

3.6

15.6

1.6

-0.6

14

Emirates Telecommunications Corp.

-11.5

-1.5

-1.7

0.5

-1.5

15

Riyad Bank

-12.6

-6.1

-4.6

2.8

-7.3

16

Kuwait Finance House KSC

-16.2

-1.2

-2.3

-13.6

-2.6

17

Al Rajhi Banking and Investment Co

-17.5

-11.0

-1.9

4.7

-3.4

18

Saudi Telecom Co

-21.8

-15.4

-12.9

-11.9

-17.4

19

Samba Financial Group

-22.8

-16.3

-2.8

0.1

-12.6

20 Mobile Telecommunications Co. (Zain) -40.8 -25.8 Note: Alpha is calculated versus each stock's exchange performance, Kuwait stocks against Kuwait Weighted Index

-6.1

-7.0

-3.7

Source: Reuters Eikon, Markaz Research

Risk and Return

Returns over the past three years have fluctuated wildly in response to local, regional and international cues

We conducted an analysis of the stock’s return and risk behavior over the past three years in order to see who has managed to retain their return levels through this crisis-ridden period. The risk metrics involved encompassed eight parameters; Average return, Return Spread (disparity between highest and lowest return), Losing Streak, Percentage of negative months, Maximum drawdown, Standard Deviation, and the Change in MVX (Markaz Volatility Index) value. Average Returns Returns over the past three years have fluctuated wildly in response to local, regional and international cues. About half of the group of 20 has managed to maintain positive average monthly returns over the period; the highest of which is an average monthly return of 2.21% for Qatar National Bank, followed by 1.49% for Etihad Etisalat.

Kuwait Financial Centre “Markaz”

4


RESEARCH January 2012 The negative average monthly returns ranged from near zero for Al Rajhi Bank to an average monthly loss of 1.37% for STC. Figure: Average Monthly Returns – 3 yrs

The tumultuous period of the last three years has seen stocks vacillate between highs and lows on a fairly regular basis

Highs and Lows The tumultuous period of the last three years has seen stocks vacillate between highs and lows on a fairly regular basis. In our view, the wider the spread between a stock’s Highest and Lowest returns, the riskier it is. Kingdom Holding had the widest spread in the group; registering a high monthly return of 61% in January 2010 and a low of 30% in October of 2008 following the collapse of Lehman Brothers and the on-set of the global credit crisis. Kingdom Holding has investments in a number of US firms, including Citigroup, News Corp, Time Warner and Apple. Most firms had Highs and Lows in the (+/-) 20-30 range. The narrowest spread was in Saudi Electricity Company (SEC), which had a high monthly return of 19% in June 2010, i.e. two months after its Low of 10% in April 2010. Figure: High/Low Spread – 3 yr (%)

Most firms had Highs and Lows in the (+/-) 20-30 range

Kuwait Financial Centre “Markaz”

5


RESEARCH January 2012 Losing Streaks

Despite the wild fluctuations and highs/lows of the period, the Large Cap group managed to contain themselves to relatively short losing streaks

Despite the wild fluctuations and highs/lows of the period, the Large Cap group managed to contain themselves to relatively short losing streaks, i.e. consecutive months of declines. The majority of companies saw losing streaks of 4-5 months; Qtel, Al Rajhi, BSF and Samba had streaks of 6 consecutive months while Qatar National Bank and SAFCO saw only two straight months of declines during the whole period. Figure: Largest Losing Streak (# of months) – 3 yr

Maximum Drawdown Another consequence of the volatility of the recent period is an increase in maximum drawdowns for the stocks. The drawdown illustrates the degree of loss sustained by the stock after reaching its peak for the period. Kuwait Finance House sustained the highest drawdown; registering a decline of 47% from its peak of KD1.42 in October 2008 to a low of KD 0.758 just four months later. STC, Kingdom Holding and Samba also sustained high drawdowns of between 40%-45%. The lowest falls were seen in NBAD and Qtel, with drawdowns of less than 8%, indicating relatively stable trading. Figure: Maximum Drawdown – 3 yr

The lowest falls were seen in NBAD and Qtel, with drawdowns of less than 8%, indicating relatively stable trading

Note: Max Drawdown refers to the percentage decline from peak to trough during the period

Kuwait Financial Centre “Markaz”

6


RESEARCH January 2012 Correlation Long-term (3 years) A look at correlation among the group of twenty over a three year period showed some degree of convergence among the stocks

A look at correlation among the group of twenty over a three year period (See: Appendix 2 for full results) showed some degree of convergence among the stocks; however, some notable observations were made: - The highest correlation was found to be between Qatar National Bank and Saudi Arabian Fertilizer Co., at 95% followed by a 92% correlation between SABIC and Qatar Telecom. Conversely, the lowest correlation (-71%) was seen between Saudi Telecom and Etihad Etisalat, the two dominant players in the Saudi telecom market. - Saudi Telecom had negative correlation with nearly every stock in the group, barring six. Single-digit correlation was found between it and Zain and Riyad Bank while the highest was a 68% correlation with SABB. - The only stock to have positive correlation with all companies was Riyad Bank; the highest of which was with Al Rajhi Bank (87%) while the lowest was 3.7% with STC. Short-term (1 year) Convergence was predictably higher for the stocks over the last one year period (Appendix 2) as high volatility in the markets, brought on by regional and global cues, caused a generally negative sentiment to prevail. A few markets and stocks have managed to buck the negative trend, but by-andlarge, the effect has blanketed the markets in red.

Convergence was predictably higher for the stocks over the last one year period

- The highest correlation was found between two Saudi stocks, Al Rajhi Bank and Saudi Telecom, at 94.8% followed very closely by Samba and Riyad Bank which had a correlation of 94.7%. On the other end of the spectrum, Zain and NBAD had the lowest correlation at -77.6%. - Over the last one year period, Qatar National Bank had negative correlation with all stocks in the group except five; the highest of which was a 64% correlation with SAFCO followed by 60% with NBAD. The lowest correlation was seen between the bank and Emirates Telecom (Etisalat) at -77%. A 46% and 33% correlation was observed, respectively, with fellow Qatari firms Qtel and Industries Qatar. - SEC, Banque Saudi Fransi and Kingdom Holding had the highest crosscorrelations among the group. Their correlations with twelve stocks came in higher than 50%. The lowest were SAFCO and Etihad Etisalat who each only had one stock correlation that was higher than 50%. Risk and Return: Analysis & Expectations Long-term Risk/Return Over a three-year period the stocks have exhibited a Medium to High degree of risk (Figure ) with annualized standard deviation ranging from a low of 20% for SEC to a high of 54% for Kingdom Holding. Telecoms have shown annualized risk in the 30% range during the period. The notable exception to this was Zain Group, which exhibited a standard Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

7


RESEARCH January 2012 deviation of 47% due to the extreme stock fluctuations throughout the year on account of corporate news. On the annualized return front, nine of the stocks showed negative returns during the three-year period, the lowest of which was a loss of 18% in Saudi Telecom while Riyad Bank managed to keep its loss to 2%. Of the eleven remaining stocks which showed positive three-year CAGRs, the highest was On the annualized return front, 30% in QNB followed by 25% for SAFCO. nine of the stocks showed Figure: Annualized Risk/Return (3-yr) negative returns during the three-year period

Expected Risk/Return Following an in-depth analysis of each of the 20 stocks, we set about plotting them in terms of both expected return and risk associated with the stock. The return represents a combination of earnings forecast for 2012 and a call on valuation for the stock while Risk is a function of eight “Risk Metrics” measured over a one year period. Figure: Expected Risk/Return – 2012f Of the eleven remaining stocks which showed positive threeyear CAGRs

Source: Markaz Research

Kuwait Financial Centre “Markaz”

8


RESEARCH January 2012 The results of this exercise produced some interesting results; The majority of telecoms, regardless of domicile, ranked on the Medium scale in terms of risk

The majority of telecoms, regardless of domicile, ranked on the Medium scale in terms of risk; Zain is an exception again here, with a High risk scoring given the largely negative corporate news associated with the firm. Furthermore, Qtel and STC scored low on the expected return front while Zain, Etisalat and Etihad Etisalat have Medium return expectations given declines suffered by the stocks this year (thereby giving upside potential) for Zain and Etisalat while Etihad Etisalat’s expectation comes from its rapid attainment of market share in the Kingdom and high further growth potential.

- As for banks, which make up 50% of the number of companies, the results were far more dispersed; o Four out of five Saudi banks showed Medium Returns and High Risk except Riyad Bank which scored Medium in terms of both Risk and Return. o The two UAE banks, NBAD and FGB, both scored in Medium in terms of expected return for 2012, but differed in their Risk. NBAD shows Medium given relatively steady performance while FGB shows High risk potential having spent 6 of the last twelve months in negative territory. o Kuwait had two banks in the group, NBK and KFH; the former had Medium Risk/Medium Return profile while the latter had a Medium Risk/High Return scoring, due to positive 2012 earnings forecast. o QNB scored in the Low Risk/Medium Return quadrant; the only bank in the group to do so.

The majority of Blue Chips enjoy a high degree of government ownership and support, averaging 42%

- The region’s petrochemical giants, SABIC and Industries Qatar, both ranked Medium in terms of Risk; Industries Qatar showed a High return expectation while Sabic scored Low given lower earnings expectations based on a slight slow-down in revenue growth. - The sole Utility stock, Saudi Electricity Company, was ranked on the Low Risk/Low Return scale due to steady, but relatively lower growth potential. Challenges Facing Blue Chips in the Current Environment - Liquidity The majority of Blue Chips enjoy a high degree of government ownership and support, averaging 42% but going as high as 84% in some cases. Government ownership can be a plus for the firm as it can lend increased stability and support, particularly in volatile times. However, on the flip side, it can lower liquidity and trading on a stock, which can produce high spreads and consequently, exacerbate an already volatile market. Additionally, Blue Chips are the stocks that tend to get hit first when a market starts going down, regardless of the fundamentals of a particular stock or its growth prospects going forward, these names are typically on the front lines when investor sentiment starts going south.

Kuwait Financial Centre “Markaz”

9


RESEARCH January 2012 - Shareholder Wealth

The challenge for these firms is continuing to produce this high shareholder wealth in increasingly uncertain market conditions

The Blue Chips are all, for the most part, leaders within their industries and countries and are considered operationally sound. They’ve been producing high shareholder wealth through the years, with Dividend Yields averaging a consistent 4%-5% while RoEs have averaged 19%. The challenge for these firms is continuing to produce this high shareholder wealth in increasingly uncertain market conditions and heightened competition. - Sector-specific Challenges Telecoms: These firms, most of which are incumbent operators, must contend with an environment of increasing competition in addition to lower growth prospects in markets where they’ve acquired interest. Moreover, home markets across the region have reached saturation, characterized by heightened penetration and declining ARPUs, and so revenue growth must come from value-added services rather than traditional means. Banks: Lenders should see a better year in 2012, with loans growth expected to increase across the Gulf in addition to lower provisions in most cases. A few select banks with exposure to distressed firms and sectors may face additional provisioning which would squeeze the bottom line and prove detrimental to stock performance. Petrochemicals: Sabic and Industries Qatar had a very good year in 2011 on account of high commodity process; however, these are expected to soften slightly in 2012 as demand eases in key international markets. The challenge for these firms is in diversifying and expanding their value chains in order to cater to local demand, which remains healthy.

Kuwait Financial Centre “Markaz”

10


RESEARCH January 2012 The Large Caps SABIC

Stock Volatility

Code: 2010.SE | Country: Saudi Arabia | Current MP: SAR 93.01 | YTD Performance: -9.6% Mcap: USD74.4Bn | Ann. St. Dev: 23% | YTD Turnover Velocity: 35% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-58%

-11%

-37%

-21%

-13%

-12%

89%

-23%

-2%

5%

2%

-69%

-29%

-14%

-13%

60%

43%

23%

2007 2008 2009 2010 2011

27%

7% -10%

Background Saudi Basic Industrial Corporation (SABIC) was established in 1976 by royal decree to exploit the country's natural gas supply to produce value-added commodities such as chemicals, polymers and fertilisers. Now, SABIC is one of the world’s five largest petrochemicals manufacturers. SABIC has 6 main strategic business units which include: Basic Chemicals, Performance Chemicals, Innovative Plastics, Polymers, Fertilizers, and Metals. According to Zawya, SABIC is the most profitable petrochemical company in the world and it is worthy to note that the government of KSA owns over 75% of SABIC which will ensure cheap feedstock and continuous support in the foreseeable future. SABIC holds equity stakes in major Saudi Arabian companies. Some of them are Saudi Arabian Fertilizers Co. (42.99%), Saudi Kayan Petrochemical Co. (35%), and Yanbu National Petrochemicals Co. (51.95%). Analysis: SABIC reported a good set of Q3 numbers with revenues increasing 29% YoY to USD 13.1bn. 3Q11 bottom-line grew 54% YoY (+1% QoQ) to USD 2.2bn. Finance costs decreased 19% over the quarter and total operating expenses decreased 1.1%. Over the first nine months of 2011, revenues increased 29% YoY to USD 38.1bn and net income grew 52% YoY to 6.4bn. Growth in net income is due to increase in production and sales volumes, improved product prices and lower financing charges. Production from Saudi Kayan Petrochemicals, of which SABIC owns 35%, started in October 2011 and is expected to further boost SABIC output when it is consolidated at the end of the year. Saudi Kayan’s Jubail Petrochemicals Complex is expected to be fully operational in Q1 2013 with annual capacity of nearly 6mtpa2. The company announced interim dividend of SAR 2/share, which amounts to nearly 40% of 1H11 earnings. The company is expected to increase its dividend in 2H11, implying an attractive dividend yield of close to 5%. The stock is trading at 10x earnings and is down 10% YTD versus 5.3% fall in Tadawul index indicating that market participants are pricing in slackening demand and lower prices. The stock has generated positive returns over 2Y (+18%), 3Y (+62%) and 5Y (+5%) periods. We rate the stock as carrying Medium risk given that it carries a standard deviation of 23% and a max drawdown of 17% over the year. Our Expectation We expect SABIC to end 2011 with USD 8.5bn in earnings, on the back of expected contribution from Saudi Kayan. Brokers expect SABIC’s FY12 net income to be between USD 7.95bn and 8.64bn but we expect USD 8.5bn in earnings given lower demand from Asia. The key risk will be softening of commodity prices. 1 2

As of 28th November 2011 Million Tonnes per annum

Kuwait Financial Centre “Markaz”

11


RESEARCH January 2012 Financials USD mn Income Statement Total Revenue Cost of Sales Total Operating Expense Net Income

2006

2007

2008

2009

2010

2011E

2012E

23,024 13,628 14,786 5,412

33,659 20,870 22,712 7,207

40,221 28,016 30,462 5,875

27,498 19,865 22,483 2,420

40,530 27,583 30,424 5,742

50,298 32,660 35,931 8,496

58,648 40,086 44,591 8,616

Balance Sheet Cash Total Assets Total Current Liabilities Total Liabilities Long Term Loans Total Shareholder's Equity

10,550 44,429 6,652 24,991 8,964 19,438

12,235 67,670 8,983 43,359 20,119 24,311

13,609 72,478 7,089 45,026 23,568 27,452

15,254 79,173 8,580 50,301 26,813 28,872

13,508 84,699 11,816 52,486 25,029 32,213

15,683 91,559 14,522 55,583 30,010 35,976

16,953 98,060 17,412 58,306 43,485 39,754

8.38 3.06 -31.63 -58.81 9.24 5.17 77,550 27.32 2.29 0.81 9.62 0.40 83 2,443 38,180 71% 65,991

17.82 6.78 47.39 137.26 6.98 11.57 95,321 14.59 2.60 1.91 10.74 0.93 105 1,054 26,198 35% 83,800

23.62 9.28 24.10 47.97 8.10 11.68 88,725 9.74 2.07 2.83 11.99

21.67 8.79 16.60 7.04 7.10 10.50

Analytics Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Historical EV (USD Mn) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (SAR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

27.84 29.64 21.40 12.18 10.65 8.11 10.32 46.19 19.50 5.92 33.15 -18.48 21.64 52.31 7.11 16.91 25.07 12.92 68,579 135,751 51,135 12.97 18.36 7.02 3.61 5.44 1.50 1.80 2.40 1.96 6.48 8.10 9.15 0.89 0.22 0.80 88 165 52 1,416 703 1,660 61,183 20,909 46,579 51% 21% 55% 70,165 127,867 41,177 Source: Reuters Knowledge, Company Accounts, Markaz Research

93 1,403 37,120 35% 74,398

Risk Metrics 6M

1Y

2Y

3Y

5Y

Monthly return stats Average Monthly Return

-2.00%

0.46%

0.82%

0.50%

0.41%

Highest Monthly Return

5.94%

12.87%

12.87%

36.55%

36.55%

Lowest Monthly Return

-10.46%

-10.46%

-15.24%

-32.07%

-32.07%

4

4

4

4

5

67% -17%

50% -17%

83% -17%

44% -17%

47% -78%

18.72%

23.34%

22.80%

44.97%

42.30%

-25%

-28%

-48%

-84%

-56%

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

Kuwait Financial Centre “Markaz”

12


RESEARCH January 2012 Al Rajhi Bank

Stock Volatility

Code: 1120.SE | Country: Saudi Arabia | Current MP: SAR 67.253 | YTD Performance: -17.5% Mcap: USD26.9Bn | Ann. St. Dev: 14% | YTD Turnover Velocity: 15% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-47%

-15%

-30%

-19%

-13%

-13%

35%

-20%

-6%

-1%

-5%

-52%

-22%

-11%

-13%

27%

22%

7%

16%

-2%

2007 2008 2009 2010 2011

-17%

Background Al Rajhi Bank is the largest lender in the Kingdom with a financing book worth USD 37.3 bn as of 3Q11. Al Rajhi offers a wide range of commercial banking and investment services complying with Islamic law. Ownership is stable with AlRajhi family owning 39.9%. Apart from 466 branches in the Kingdom, the bank operates 19 branches in Malaysia, 2 in Jordan and 1 in Kuwait. Strong retail presence, access to low cost funds and cost efficiency are the main reasons for Al Rajhi’s high RoE and NIMs. Analysis: 3Q results showed a flat performance for Islamic Banking Activities with financing income declining 3.6% YoY while being almost flat over the quarter. 9M11 Income from Islamic Banking was at USD 1.8bn, down 2.5% YoY. Other income (Investment, Fees & Commissions, ForEx) had a better showing, growing 28% YoY to USD 710mn in 9M11. In 3Q11, fee income grew 84% YoY and 22% QoQ to USD 177mn. While provisioning costs grew 18% QoQ to USD 109mn, YTD provisions were down 19% to USD 295mn as banks have begun easing up on the hyper-prudential provisioning of the last three years. Financing activities were up 16% YoY at September 2011 while Deposits surged 20% in the same period. The bank maintains a healthy Tier 1 ratio of 14.9% and Total Capital ratio of 19.1% at the end of third quarter. Consequently, 3Q11 net income came in at USD 516mn, an 18% increase YoY (+5% QoQ) while for 9M11 net income was at USD 1,461mn, a 7% increase. Based on these results, we would expect full year net income to amount to USD 1,833mn which would amount to a 2% annual growth. The bank announced a half year dividend of SAR 1.25/share, which would amount to over half of 1H11’s bottom line. The bank is a good dividend play; 2010 Dividend yield was at 4.6% and is expected to hold at the same level for 2011. The stock is trading at 15x earnings and 3.3x tangible book value while exhibiting Medium volatility with standard deviation of about 14% (ann.). The stock’s MVX value (Markaz Volatility Index) has increased 36% during the last one year. The stock has generated negative returns over 2Y (-4%) and 5Y (-16%) periods but is up 15% over the last 3 years. Our Expectation We expect 2012 to be a profitable year for Saudi banks in general as provisions continue declining, thereby freeing up the bottom line. Spreads may become squeezed as interest rates remain low while high yield deposits begin increasing (a trend witnessed among Saudi banks recently), but Al Rajhi should be able to sustain a wide margin, thereby boosting top line growth. Brokers expect FY12 net income to be between USD 2.1bn and USD 2.4bn. We expect a net profit of USD 2.2bn backed by stronger profit from Islamic banking, lower provisioning and healthy financing growth.

3

As of 26th November 2011

Kuwait Financial Centre “Markaz”

13


RESEARCH January 2012 Financial Analysis Income Statement

2006

2007

2008

2009

2010

2011E

2012E 2,812

(USD mn) Profit from Islamic Banking

2,047

2,289

2,513

2,647

2,491

2,273

Operating Income

711

427

555

574

680

847

850

Operating Expenses

521

648

753

794

795

856

1,074

Provisions

67

118

327

470

509

381

282

Net Profit

1,947

1,720

1,741

1,805

1,806

1,833

2,243

Cash

2,888

3,762

3,832

6,952

8,260

Loans

24,066

28,162

37,983

30,280

32,417

38,285

43,683

Deposits

20,243

24,732

31,991

33,173

38,627

46,044

53,042

Total Assets

28,406

33,719

44,111

46,097

49,907

59,618

68,024

Total Liabilities

22,958

27,346

36,812

38,337

41,721

Total Shareholder's Equity

5,448

6,374

7,299

7,760

8,186

8,738

9,328

Financing Growth (%)

11.5%

17.0%

34.9%

-20.3%

7.1%

18.1%

14.1%

Deposits Growth (%)

5.0%

22.2%

29.4%

3.7%

16.4%

19.2%

15.2% 82.4%

Balance Sheet

Key Ratios

Loan/Deposits (%)

118.9%

113.9%

118.7%

91.3%

83.9%

83.1%

Return on Assets (%)

6.9%

5.1%

3.9%

3.9%

3.6%

3.1%

3.3%

Return on Equity (%)

35.7%

27.0%

23.8%

23.3%

22.1%

21.0%

24.0%

Earnings Growth (%)

29.6%

-11.7%

1.2%

3.7%

0.1%

1.5%

22.3%

Revenue Growth (%)

25.3%

-1.5%

13.0%

5.0%

-1.5%

-1.6%

17.4%

Cost-to-Income (%)

18.9%

23.8%

24.5%

24.7%

25.1%

27.4%

29.3%

P/E

16.05

24.53

12.87

15.80

18.40

15.12

Price/Book

5.74

6.62

3.07

3.67

4.06

3.17

BVPS (USD)

4.04

4.72

4.87

5.17

5.46

5.83

Market Price (SAR)

86.85

117.23

56.00

71.25

83.00

69.30

EPS (USD)

1.44

1.27

1.16

1.20

1.20

1.22

Annual Trading Volume (mn)

341

484.6

566.1

466.6

305.0

232.5 4,713

Annual Trading Value (USD mn)

37,679

14,483

12,848

8,139

6,374

Turnover Velocity

84%

39%

40%

32%

21%

15%

M Cap (USD mn)

31,270

42,208

22,403

28,504

33,204

27,723

Source: Reuters Knowledge, Company Accounts, Markaz Research

Risk Metrics 6M

1Y

2Y

3Y

5Y

Average Monthly Return

-1.91%

-0.99%

-0.20%

0.00%

-0.47%

Highest Monthly Return

-0.72%

6.75%

13.25%

37.20%

37.20%

Lowest Monthly Return

-3.13%

-8.13%

-8.13%

-17.92%

-32.32%

6

6

6

6

6

% of Negative Months

100%

75%

63%

61%

60%

Maximum Drawdown*

-10%

-17%

-19%

-45%

-65%

Standard Deviation

3.31%

13.88%

17.15%

31.86%

41.39%

%Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

-26%

36%

-43%

-84%

-69%

Monthly return stats

Largest Losing Streak (# of Months)

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

14


RESEARCH January 2012 Qatar National Bank

Stock Volatility

Code: QNBK.QA | Country: Qatar | Current MP: QAR 142.44 | YTD Performance: 12.4% Mcap: USD24.88Bn | Ann. St. Dev: 24% | YTD Turnover Velocity: 7%

Year 2006 2007 2008 2009 2010 2011

Expected Return (2012) Low Medium High Low Medium High 2006 -19%

2007 -2% 18%

2008 -2% 8% -2%

2009 0% 8% 3% 9%

2010 11% 20% 20% 33% 62%

2011 11% 18% 18% 26% 35% 12%

Background Qatar National Bank (QNB) was established in 1964 and is the largest lender with loans of USD 46.1bn as of September 2011. Currently QNB employs over 1,300 personnel, serving 65 local branches and 9 international branches. QNB’s market share is close to 40% of Qatar’s banking sector assets. Its business units include; full range retail banking, treasury, Wealth management, and corporate finance. The bank is 50% owned by the government of Qatar. In October 2011, the group announced that it has entered into negotiation with DenizBank in Turkey with the aim of acquiring a controlling stake. Analysis: 3Q11 net profit increased 31% YoY and 5% QoQ to USD 522mn. The strong numbers were as a result of 63% YoY growth (+10.5% QoQ) in net interest income to USD 531mn partly offset by provisions, which more than doubled when compared to 3Q10. Loan loss provisions increased 20% sequentially to USD 69mn. Loan book increased 11.7% over the quarter to USD 46.1bn while deposits declined 0.5% to USD 53.6bn. Loans-to-deposit ratio is at 86%, giving the bank additional room to increase lending activity. Results for the first nine months were impressive: loans jumped 36% while deposits surged 56%. During the period, the bank also took control of PT Bank Kesawan Tbk (Indonesia) by way of a 69.6% stake in for a cash consideration of USD 108mn. 9M11 Net interest income was up 64% to USD 1,480mn as Interest Income increased 31% to USD2.1bn while Interest expense was down 13%. Net interest margins saw a small decline from 2.89% in Sep-10 to 2.73% in Sep-11. Profit from Islamic Banking was not reported due to a Qatar Central Bank directive requiring all commercial banks to divest themselves of any Islamic operations. Provisions doubled during the period, coming in at USD 175mn. Consequently, net profit came in at USD 1,487mn, a 30% growth. NPL ratio stood at 1.1% with coverage of 124%. The bank had a 25% Rights Issue in April of 2011, raising QAR 12.7 bn (USD 3.48bn) through 127mn shares. The bank’s capital ratio has increased to 20.9% from 15.3% in 2010, giving it a high buffer against shocks. In September, QNB announced plans to develop a Euro Medium Term Note (EMTN) for USD 7.5bn to fund the Bank’s normal operations. The stock is trading at 13x and is up 12% for the year, bucking the market which is up by only 1%. The stock has generated positive returns over 2Y (+78%), 3Y (+120%) and 5Y (+148%) periods. According to our Risk Metrics, the stock is of Low risk with an MVX value decline of 43% over the last year and only one month of negative returns. Our Expectation We expect QNB to report a net profit of USD 1,886mn in FY11 and USD 2,279mn in FY12, implying a growth of 21% in both 2011 and 2012. Brokers estimate FY12 net income to be between USD 2,119mn and USD 2,806mn. 4

As of 25th September 2011

Kuwait Financial Centre “Markaz”

15


RESEARCH January 2012 Financials Income Statement

2006

2007

2008

2009

2010

2011E

2012E

Net Interest Income

463

Operating Income

741

530

778

1,023

1,558

2,090

2,505

952

1,397

1,553

2,088

2,610

Net Profit

548

3,083

688

1,002

1,149

1,566

1,886

2,279

(USD mn)

Balance Sheet (USD mn) Cash

681

3,005

1,721

2,712

9,308

Loans

12,687

18,132

27,461

29,857

36,145

46,953

53,949

Deposits

15,312

21,782

28,613

34,547

45,415

54,498

62,673

Total Assets

19,669

31,387

41,711

49,219

61,310

75,411

90,493

Total Liabilities

17,352

27,584

37,143

43,789

54,657

67,761

82,078

Total Shareholder's Equity

2,317

3,803

4,568

5,429

6,652

7,650

8,415

Key Ratios Loans Growth (%)

47%

43%

51%

9%

21.1%

29.9%

14.9%

Deposits Growth (%)

52.0%

42.3%

31.4%

20.7%

31.5%

20.0%

15.0%

Loan/Deposits (%)

82.9%

83.2%

96.0%

86.4%

79.6%

86.2%

86.1%

Return on Assets (%)

3.3%

2.7%

2.7%

2.5%

2.8%

2.8%

2.7%

Return on Equity (%)

23.3%

22.5%

23.9%

23.0%

25.9%

24.7%

27.1%

Earnings Growth (%)

30.0%

25.5%

45.6%

14.7%

36.2%

20.5%

20.8%

Revenue Growth (%)

23.5%

28.4%

46.8%

11.1%

34.5%

25.0%

18.1%

Cost-to-Income(%)

28.9%

25.9%

20.5%

19.6%

17.0%

14.8%

13.8%

P/E

15.12

9.95

11.03

8.76

10.88

12.91

Price/Book Market Price (QAR)

5.53

2.09

2.46

1.86

1.84

3.18

119.29

74.16

104.54

93.78

113.88

150.30

EPS (USD)

2.17

2.04

2.60

2.94

2.87

3.20

Assets Growth (%)

43%

60%

33%

18%

25%

23%

Equity Growth (%)

-3%

64%

20%

19%

23%

15%

Annual Trading Volume (mn)

22.9

38.6

46.8

18.0

1.8

53

Annual Trading Value (USD mn)

493

948

1,615

492

979

1,660

Turnover Velocity

6%

10%

15%

4%

6%

7%

M Cap (USD mn)

8,548

9,670

11,246

12,256

19,876

26,259

Source: Reuters Knowledge, Company Accounts, Markaz Research

Risk Metrics 6M

1Y

2Y

3Y

5Y

Average Monthly Return

1.79%

2.45%

2.43%

2.21%

1.83%

Highest Monthly Return

6.55%

8.65%

14.83%

30.56%

30.56%

Lowest Monthly Return

0.07%

-17.41%

-17.41%

-34.39%

-34.39%

0

1

1

2

4

Monthly return stats

Largest Losing Streak (# of Months) % of Negative Months

0%

8%

13%

19%

32%

Maximum Drawdown*

0%

-17%

-17%

-17%

-17%

Standard Deviation

8.48%

24.43%

21.36%

40.49%

38.78%

%Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

-62%

-43%

-69%

-91%

-61%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

16


RESEARCH January 2012 Emirates Telecom (Etisalat)

Stock Volatility

Code: ETEL.AD | Country: UAE | Current MP: AED 9.75 | YTD Performance: -13.1% Mcap: USD21Bn | Ann. St. Dev: 14% | YTD Turnover Velocity: 3.78% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-24%

7%

-17%

-6%

-4%

-5%

50%

-13%

1%

2%

-1%

-49%

-17%

-10%

-11%

34%

20%

8%

7%

-4%

2007 2008 2009 2010 2011

-13%

Background Emirates Telecom (Etisalat) is one of two mobile operators mandated to operate in the UAE. The company is over 60% owned by the government. Etisalat has a large regional/international presence, spanning 18 countries across two continents and serving 135mn subscribers. Etisalat’s 30-year monopoly was broken in 2005, when the Emirates Integrated Telecommunications Company (Du) won the license to become the second fixed-line and mobile operator in the country. Analysis: Etisalat's 9M11 net profit declined 8.4% YoY despite a 3.3% increase in revenue. Revenues from UAE segment declined 0.8% during the nine month period. Strong competition from Du is denting Etisalat’s revenue and squeezing margins. During 9M11, Etisalat’s UAE operations accounted for 75% of revenues, compared to 78% in 9M10. Etisalat’s active mobile market share slid to 54.8% at the end of October 2011, versus 56.4% at the end of July 2011 and 59.8% at the end of December 20106. Du and Etisalat will be sharing the fixed line network by as early as the end of 2011, which will further increase Du’s competitiveness in the segment. Etisalat’s 3Q11 revenues grew 10% YoY and 1% QoQ to USD 2.2bn. Net income for the quarter came in at USD 469mn (-1% YoY, +8% QoQ). The company suffered foreign exchange loss of USD 32mn in this quarter and there was also a 33% YoY increase in ‘other operating expenses’ line item which dented margins. Based on these results, we expect 2011 full year net income to be USD 1.9bn, which would amount to a 6% annual decrease. The firm’s attempted acquisition of a considerable stake in Kuwait’s Zain fell through during the year, but we would expect the firm to be on the lookout for attractive acquisition targets in order to boost revenues through inorganic growth. The stock is trading at 11x earnings and is down about 13% YTD versus 11% decline on the Abu Dhabi Exchange. The stock has not shown large movements on either side over the medium / long term - 2Y (3%), 3Y (+1%) and 5Y (-7%). The stock is of Low risk with an annualized standard deviation of 14% and a 70% decline in MVX from last year. The stock has a dividend payout of over 60% while the dividend yield was at 5.5% in 2010 and is expected to hold steady over the coming years. Large government ownership (60%) and high institutional holding has resulted in low turnover velocity (3.8%) for the stock. Our Expectation Brokers expect FY12 net income to be between USD 1.8bn and USD 2.1bn. We expect a net profit of USD 2.05bn backed by a slight pickup in revenue and reduction in financing costs.

5 6

As of 24th November 2011 Du Investor Presentations

Kuwait Financial Centre “Markaz”

17


RESEARCH January 2012 Financials USD mn

2006

2007

2008

2009

2010

2011E

2012E

Net Revenue

4,434

5,809

7,992

8,392

8,691

8,259

8,509

Operating Profit

1,523

1,799

1,655

2,214

1,566

1,625

1,736

Net profit

1,581

1,829

2,178

2,336

2,022

1,891

2,048

Total Current Assets

3,801

3,512

4,752

5,332

5,257

5,265

5,760

Total Assets

12,496

14,276

17,126

19,429

20,580

21,229

22,322

Non-Current Liabilities

1,670

2,064

2,021

2,199

3,379

3,738

3,841

Total Liabilities

7,274

7,728

8,570

9,523

10,042

10,172

10,381

Total Shareholder's Equity

5,223

6,548

8,556

9,906

10,538

11,056

11,941

Return on Equity (%)

30.3%

27.9%

25.5%

23.6%

19.2%

17.1%

17.2%

Return on Assets (%)

12.7%

12.8%

12.7%

12.0%

9.8%

8.9%

9.2%

Revenue Growth (%)

26.6%

31.0%

37.6%

5.0%

3.6%

-5.0%

3.0%

Earnings Growth (%)

36.5%

15.7%

19.0%

7.3%

-13.4%

-6.5%

8.3%

Historical EV (USD Mn)

19,655

28,358

15,311

21,354

23,135

P/E

11.15

13.89

6.28

8.47

9.60

11.72

Price/Book

3.40

4.20

1.71

2.06

2.00

2.00

EPS (USD)

0.20

0.25

0.29

0.30

0.31

0.24

BVPS (USD)

0.66

0.83

1.08

1.25

1.46

1.40

Market Price (SR)

8.25

12.78

6.78

9.49

10.75

10.30

Assets Growth (%)

89%

14%

20%

13%

6%

3%

Equity Growth (%)

22%

25%

31%

16%

6%

5% 298

Income Statement

Balance Sheet

Analytics

Annual Trading Volume (mn)

389

542

615

279

259

1,089

1,751

2,368

720

768

856

Turnover Velocity

5%

8%

11.25%

4.11%

3.53%

3.78%

M Cap (USD mn)

17,754

27,503

14,591

20,423

23,135

22,174

Annual Trading Value (USD mn)

Source: Reuters Knowledge, Company Accounts, Markaz Research

Risk Metrics 6M

1Y

2Y

3Y

5Y

Ave. Return

0.00%

-0.28%

-0.12%

-0.23%

0.19%

Highest Return

6.80%

6.80%

8.33%

17.65%

22.95%

Lowest Return

-6.82%

-6.82%

-12.82%

-24.69%

-24.69%

Monthly return stats

Largest Losing Streak (# of Months) % of Negative Months Max. Drawdown* St. Dev. %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

1

3

5

5

5

33%

50%

58%

53%

50%

-7%

-10%

-12%

-38%

-55%

14.95%

14.43%

18.20%

27.46%

27.54%

-54%

-70%

-70%

-91%

-45%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

18


RESEARCH January 2012 Industries Qatar (IQCD)

Stock Volatility

Code: IQCD.QA | Country: Qatar | Current MP: QAR 132.27 | YTD Performance: -3.3% Mcap: USD20Bn | Ann. St. Dev: 25% | YTD Turnover Velocity: 13% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2006

-44%

1%

-10%

-4%

0%

0%

82%

14%

14%

16%

12%

-28%

-10%

0%

-1%

14%

17%

10%

21%

8%

2007 2008 2009 2010 2011

2011

-3%

Background Industries Qatar (IQCD) was established in 2003, the main objective of the company is to act as a holding company, for different industrial corporations, including Qatar Steel Company (QATAR STEEL), which manufactures steel billets and reinforcing bars; Qatar Petrochemical Company Limited (QAPCO), which manufactures and markets ethylene, polyethylene, hexane and other petrochemical products; Qatofin Company Limited (QATOFIN), which is a producer of linear low-density polyethylene; Qatar Fertilizer Company (QAFCO), which manufactures and markets ammonia and urea; Qatar Fuel Additives Company Limited (QAFAC), which is engaged in the production and export of methyl tertiary-butyl-ether and methanol, and Fereej Real Estate Company, which is engaged in real estate investment, property management and rental activities 8. The company is 70% owned by Qatar Petroleum. Analysis: IQCD’s 3Q11 revenue of USD 1.2bn was a 44% increase YoY and 5% increase over the quarter. Net Income of USD 569mn was up 46% YoY but flat on a QoQ basis. In August 2011, Qatar Steel Company put on hold two planned steel plants, in the industrial city of Mesaieed, worth USD 2.2b due to problems securing natural gas for the projects. 2011 was a good year for industrial/petrochemical firms as crude oil prices and those of other commodities saw a rally, specifically in the first quarter amid the political unrest in the region. Industries Qatar benefited from the same, with 9M11 revenues growing 46% to USD 3.4bn while net profit was up 54% to USD 1.7bn. Like all regional industrial firms, IQCD has a distinct advantage in the cost arena, with cheap feedstock, in this case Natural Gas, providing the company with a comfortable buffer in case of any decline in prices. IQCD’s steel business will benefit from large public spending in Qatar and Saudi Arabia. Moreover, the company’s diversified businesses and broad range of products confines exposure to a single commodity. We expect IQCD to deliver USD 2.2bn in FY11 earnings, implying a 45% growth over FY10. The stock is trading at 9x earnings and is down 3% YTD versus the Qatar index which has shed about 1%. The stock has generated positive returns over 2Y (+17%), 3Y (+67%) and 5Y (+97%) periods. As earnings have come back, the company is expected to post a higher dividend yield of around 6% in 2011 versus around 4% in 2010. The stock, in our view, is also Medium risk with an annualized standard deviation of 25% for the last year and a max drawdown of 16% over the last year. Our Expectation Broker estimates for FY12 net income are in the range of USD 2.3bn to USD 2.6bn but we expect the company to do USD 3.1bn in earnings in 2012 on the back of increased revenues. 7 8

As of 29th November 2011 Excerpt from Reuters

Kuwait Financial Centre “Markaz”

19


RESEARCH January 2012 Financials USD mn Income Statement Total Revenue Cost of Sales Total Operating Expense Net Income Balance Sheet Cash Total Assets Total Current Liabilities Total Liabilities Long Term Loans Total Shareholder's Equity

2006

2007

2008

2009

2010

2011E

2012E

2,135 1,123 1,237 993

2,560 1,206 1,331 1,368

4,046 2,034 2,197 1,997

2,705 1,575 1,780 1,361

3,384 1,757 1,969 1,530

4,403 1,940 2,207 2,223

5,513 2,194 2,499 3,090

1,270 4,084 460 1,045 538 3,039

1,694 5,528 1,056 1,777 647 3,751

2,592 7,534 1,389 2,527 925 5,007

1,644 7,529 563 2,299 1,610 5,230

1,452 8,757 934 2,788 1,679 5,969

1,841 10,167 883 2,953 1,474 7,214

2,132 11,713 931 3,124 1,556 8,589

26.02 18.08 -33.14 -31.85 -0.07 4.46 17,204 12.67 3.30 2.48 9.51 1.37 114 117 3,116 19% 17,238

25.64 17.47 25.10 12.44 16.32 14.13 21,076 13.61 3.49 2.78 10.85 1.51 138 74 2,277 12% 20,849

30.82 21.87 30.10 45.29 16.10 20.86 19,603 9.37 2.77 4.04 13.12

35.98 26.38 25.20 39.00 15.20 19.05

Analytics Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Historical EV (USD Mn) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (QAR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

32.69 36.46 39.88 24.32 24.74 26.51 18.24 19.90 58.09 12.62 37.69 46.00 23.10 35.36 36.28 18.37 23.44 33.48 10,848 20,127 13,528 10.61 14.04 7.61 3.82 5.63 3.04 1.99 2.74 3.63 5.53 6.82 9.10 1.25 1.00 2.20 77 140 101 62 88 124 1,596 2,610 4,524 10% 16% 25% 11,579 21,173 15,196 Source: Reuters Knowledge, Company Accounts, Markaz Research

132 73 2,685 13% 19,970

Risk Metrics 6M

1Y

2Y

3Y

5Y

Monthly return stats Average Monthly Return

-1.51%

1.32%

0.52%

0.46%

1.57%

Highest Monthly Return

7.36%

10.61%

10.61%

32.18%

36.31%

Lowest Monthly Return

-11.06%

-11.06%

-14.26%

-28.35%

-28.35%

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

2

2

3

3

4

67%

42%

46%

47%

47%

-16%

-16%

-16%

-16%

-67%

22.30%

24.67%

23.24%

45.46%

45.50%

7%

24%

-41%

-78%

-18%

Kuwait Financial Centre “Markaz”

20


RESEARCH January 2012 Saudi Telecom

Stock Volatility

Code: 7010.SE | Country: Saudi Arabia | Current MP: SAR33.49 | YTD Performance: -21.6% Mcap: USD17.8Bn | Ann. St. Dev: 16% | YTD Turnover Velocity: 16% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-40%

-22%

-29%

-25%

-21%

-21%

1%

-23%

-19%

-15%

-17%

-41%

-27%

-20%

-21%

-10%

-7%

-12%

-3%

-13%

2007 2008 2009 2010 2011

-22%

Background Saudi Telecom (STC), formed in 1998, has global presence in 10 countries spanning three continents with a total of 139m mobile and fixed line customers (2010 year end). STC was the only operator in Saudi Arabia until the monopoly was broken by mobile operator Etihad Etisalat in 2005. Saudi Telecom accounts for about 46% of the local mobile market of around 54 million subscribers, representing a penetration rate of 195% 10. Major shareholders include the Public Investment Fund (70%), General Organization for Social Insurance (6.9%). Analysis: STC’s 3Q11 earnings, at USD 422mn (-52% YoY and -30% QoQ) was affected mainly by a USD 211mn foreign exchange loss and USD 36mn one-time cost. Revenues grew 6% YoY and 1% sequentially to USD 3.8bn. Mobile broadband revenue increased 151% YoY led by higher usage and higher customer additions. 9M11 results were negative for the operator. 9M11 revenues were up 7% YoY to USD 11bn. About 34% of the Group’s revenue comes from International markets which have taken on increasing importance for the operator given intensifying local competition from Zain Saudi and Mobily. Consequently, in April 2011, STC increased its stake in PT Axis Telekom Indonesia (formerly NTS – Axis) to 80.1% from 51% leading to its full consolidation into STC’s financials, thereby boosting revenue. Net Income in 9M11 was down 25% to USD 1,443mn, due mainly to the aforementioned FX losses and one-time costs. STC is trading at about 9x and with a YTD decline of 22% is severely underperforming the broad index loss of 5.3%. The stock has generated negative returns over 2Y (-24%), 3Y (-32%) and 5Y (-61%) periods. However, the stock is trading at a lower valuation than other Blue Chips, and makes a good value play. Risk – as measured by the MVX – has been declining for the stock from the second quarter following market swings in 1Q11. MVX-STC fell by half in 3Q and is down 63% over the last one year. STC, like most regional telecoms, constitutes a good dividend play for investors. The operator’s dividend yield averages between 6%-8% p.a., about 2% higher than its nearest competitor ‘Mobily’. The yield registered 8.5% in 2010 and is expected to come down to about 6% in 2011 before increasing to about 7% in 2012. Top line growth has been slowing over the years; down to 7% and 2%, respectively, in 2009 and 2010, but has been showing some resumption recently, fueled mainly by Broadband and Value Added Services. Despite solid revenue growth, volatility in “other” income, foreign exchange losses and increasing Finance Costs have dented bottom line figures, with net income expected to decline about 25% in 2011 after a decline of 13% in 2010. Our Expectation We expect STC to report FY11 net income of USD 2.02bn and FY12 net income of USD 2.24mn. Broker estimates for FY12 net income range between USD 2.04bn and USD 2.34bn.

9

As of 06th December 2011 Communications and Information Technology Commission – Saudi Arabia, 1H11 report

10

Kuwait Financial Centre “Markaz”

21


RESEARCH January 2012 Financial Metrics USD mn Income Statement Wireless Revenue Fixed Line Gross Revenue Net profit Balance Sheet Cash Total Assets Total Current Liabilities Long Term Loans Total Shareholder's Equity Analytics Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Historical EV (USD Mn) P/E Price/Book EPS (USD) BVPS (USD) DPS Market Price (SR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

2006

2007

2008

2009

2010

2011E

2012E

6,494 2,626 9,120 3,413

6,795 2,509 9,304 3,207

7,546 5,266 12,812 2,942

8,157 5,554 13,711 2,897

8,577 5,405 13,982 2,518

8,394 5,620 14,014 2,017

9,131 5,159 14,291 2,236

786 12,453 2,571 9,222

2,057 18,579 4,649 3,515 9,687

2,177 26,936 6,183 7,582 10,162

2,082 29,589 7,922 6,132 11,349

1,594 29,891 7,193 5,869 12,150

30,489

32,014

12,879

13,522

37.01 27.41 3.81 2.83 3% 4% 34,559 10.00 3.75 1.73 4.61 1.73 64.79 966 38,589 86% 34,559

33.10 17.26 2.01 -6.05 49% 5% 41,445 11.69 3.92 1.62 4.84 1.62 71.11 409 7,589 21% 37,930

28.95 10.92 37.71 -8.26 45% 5% 31,356 7.98 2.34 1.49 5.08 1.49 44.57 395 7,103 23% 23,774

25.53 9.79 7.01 -1.52 10% 12% 29,655 8.02 2.07 1.47 5.67 1.47 44.10 202 2,534 11% 23,523

20.72 8.42 1.98 -13.10 1% 7% 28,592 8.92 1.87 1.27 6.07 1.27 42.60 223 2,426 10% 22,723

15.67 6.62 0.23 -19.87 2% 6%

16.53 6.98 1.97 10.82 5% 5%

8.83 1.38 1.01 6.44 33.40 208 3,336 16% 17,816

Source: Reuters Knowledge, Company Accounts, Markaz Research

Risk Metrics 6M

1Y

2Y

3Y

5Y

Average Monthly Return

-2.01%

-0.98%

-1.45%

-1.37%

-1.40%

Highest Monthly Return

3.31%

6.23%

7.22%

23.56%

23.56%

Lowest Monthly Return

-5.71%

-8.69%

-15.80%

-24.20%

-24.20%

4

4

4

4

4

Monthly return stats

Largest Losing Streak (# of Months) % of Negative Months

83%

58%

54%

56%

58%

Maximum Drawdown*

-9%

-20%

-28%

-44%

-63%

10.52%

15.50%

19.74%

29.96%

30.40%

-78%

-63%

-81%

-91%

-82%

Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

Kuwait Financial Centre “Markaz”

22


RESEARCH January 2012 National Bank of Kuwait

Stock Volatility

Code: NBKK.KW | Country: Kuwait | Current MP: KWD 1.1411 | YTD Performance: -12.9% Mcap: USD16Bn | Ann. St. Dev: 23% | YTD Turnover Velocity: 12% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2006

13%

11% 9%

-37%

-19%

0%

-4%

4%

25%

11%

2007 2008

2008

2009

2010

-8%

-5%

4%

1%

-17%

-10%

2%

-1%

2009 2010 2011

51%

2011

15% -13%

Background National Bank of Kuwait (NBK), established in 1952, is the state’s largest lender with loans amounting to USD 28.7bn at the end of September 2011. Apart from operating 70 branches in Kuwait, the bank’s international network now comprises more than 175 branches, subsidiaries and representative offices in 17 countries, of which 10 are in the Middle East. NBK offers a wide array of products including, retail banking, corporate banking, wealth management, structured and trade Finance. Moreover, NBK has a dedicated investment center – NBK Capital, which offers portfolio management, fund management and brokerage services. Analysis: The Bank reported a mixed set of numbers in 3Q with net income coming in at USD 286mn, an increase of 20% over 2Q11 but a decline of 0.5% over 3Q10. The bank booked increased provisions this quarter which dragged earnings. NPL ratio improved slightly from 1.61% in 2Q11 (and 3Q10) to 1.59% in 3Q11. In 9M11, net interest income was up 6% to USD 1,029mn as interest expense declined by 14% while interest income was flat at USD 1,325mn. Provisions were up nearly 5x to USD 126mn from just USD 26mn in the same period of the previous year, but only amounting to 0.45% of loans. Fee and commissions growth was also muted, at just 3% over 9M10. Net profit was flat at USD 896mn. Loans grew at 2% for the period to USD 28.7bn while deposits showed 4% growth to USD 23.4bn. Based on these results, we expect 2011 full year net income to be USD 1,071mn, a 2% annual decline. In 2Q11, Fitch Ratings has assigned National Bank of Kuwait (International) plc, a subsidiary of NBK, a longterm Issuer Default Rating (IDR) of 'AA-', short-term IDR of 'F1+' and support rating of '1' , with a stable outlook. The stock is down 13% YTD and trading at 14x, which is significantly cheaper than its peers in the market which are trading in the 26x-35x range. The stock has generated positive returns over 2Y (+34%) and 3Y (+5%) but is down 3% over the last 5 years. We find the stock to be of High risk; with an annualized standard deviation of 23% and a max drawdown of 19% over the last year. Our Expectation Brokers expect FY12 net income to be between USD 1.25bn and USD 1.44bn. We expect a net profit of USD 1.24bn backed by lower provisioning and healthier top line growth.

11

As of 29th November 2011

Kuwait Financial Centre “Markaz”

23


RESEARCH January 2012 Financials USD mn Income Statement Interest Income Net Interest Income Loan Loss Provision Net Income

2006

2007

2008

2009

2010

2011E

2012E

1,732 948 112 917

2,204 1,027 86 991

2,480 1,329 293 925

1,981 1,365 136 961

1,746 1,300 43 1,093

1,701 1,313 168 1,071

1,912 1,458 99 1,242

3,064 15,615 15,863 28,615 24,776 3,839

6,442 21,449 20,709 41,807 35,699 6,108

5,068 25,199 20,090 43,379 37,736 5,643

5,877 28,321 23,913 46,763 40,150 6,613

4,246 28,453 23,134 46,733 38,698 8,035

4,398 29,050 23,492 48,338 38,689 9,649

4,556 30,096 24,561 50,079 39,937 10,142

28.13 37.37 17.48 10.67 30.55 -2.99 98.43 103.57 125.43 23.90 16.23 16.39 3.21 2.37 2.13 44.42 27.22 12.52 23.15 8.03 -6.67 27.38 46.10 3.76 37.72 59.08 -7.61 25.02 26.65 31.25 13.44 14.68 10.41 3.42 2.56 1.69 0.33 0.33 0.29 1.28 1.87 1.79 0.18 0.22 0.14 1210 1321 832 302 837 1,203 1,243 3,929 5,376 9% 24% 36% 14,709 18,523 11,558 Source: Reuters Knowledge, Company Accounts, Markaz Research

12.39 19.03 118.44 14.53 2.05 -20.12 3.88 7.80 17.19 38.20 10.86 1.69 0.29 1.87 0.11 869 1,569 4,942 43% 11,612

0.46 -3.26 122.99 13.60 2.34 -11.86 13.75 -0.06 21.50 33.53 16.36 2.33 0.29 2.04 0.14 1309 810 3,180 21% 18,425

2.10 1.55 123.66 11.10 2.22 -2.60 -1.99 3.44 20.10 29.64 14.25 1.68 0.27 2.46

3.60 4.55 122.53 12.25 2.48 12.45 15.96 3.60 5.10 29.03

Balance Sheet Cash Loans/Advances Deposits Total Assets Total Liabilities Total Shareholder's Equity Analytics Loans Growth (%) Deposits Growth (%) Loan/Deposits (%) Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Cost-to-Income (%) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (KWD) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

1140 496 2,127 12% 16,008

Risk Metrics 6M

1Y

2Y

3Y

5Y

Monthly return stats Average Monthly Return

-1.05%

-1.36%

0.55%

-0.08%

0.11%

Highest Monthly Return

10.53%

12.50%

20.75%

20.75%

20.75%

Lowest Monthly Return

-6.90%

-10.43%

-10.43%

-27.16%

-27.16%

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

4

4

4

4

4

67%

67%

50%

47%

45%

-16%

-19%

-19%

-19%

-52%

21.29%

23.18%

27.18%

31.74%

26.91%

-33%

-24%

-9%

-60%

-6%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

24


RESEARCH January 2012 Saudi Electricity Company

Stock Volatility

Code: 5110.SE | Country: Saudi Arabia | Current MP: SAR 13.512 | YTD Performance: -2.9% Mcap: USD14.9Bn | Ann. St. Dev: 11% | YTD Turnover Velocity: 19% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-54%

-28%

-32%

-21%

-14%

-12%

13%

-16%

-5%

1%

1%

-38%

-13%

-2%

-2%

22%

23%

14%

24%

10%

2007 2008 2009 2010 2011

-3%

Background Saudi Electricity Company (SEC) is the sole power generator in Saudi Arabia. The firm operates through several subsidiaries in the power generation and distribution segment and is 74.3% owned by the government and 6.9% owned by Saudi Aramco. At the end of 2010, SEC owned 729 power generation units installed in 71 power stations with actual capacity of 40,697 MW. The company has an USD 80bn investment plan to increase its power generation capacity by 30,000 MW by 2018. Analysis: SEC made a net profit of USD 580mn for 3Q11, compared with USD 618mn in the same period a year earlier. The decline in earnings is due to increase in depreciation expenses as well as purchased energy. On a quarterly basis net income is up 63%. Total revenue increased 5.4% YoY and 19% over the quarter to USD 2.65bn. 9M11 Electricity sales revenue was up 10% to USD 5.85bn due to increase in tariff for industrial, commercial and government customers. Operating expenses were up 10%. Net profit was up 5% to USD 730mn, comprised of USD 578mn in 3Q11, USD 356mn in 2Q11 and a net loss of USD 206mn in 1Q11. The second and third quarters of the year are the most profitable for the firm due to higher seasonal demand during the summer months in addition to the Hajj season. Based on the results, we would expect full year net income to amount to USD 868mn which is a 43% annual increase. The stock is trading at 17x earnings and is down 3% for the year. The stock has generated positive returns over 2Y (+26%), 3Y (+46%) and 5Y (+2%) periods. The company has a high dividend yield of 5.2%. We see the stock as being Low risk given an annualized standard deviation of 11% and a max drawdown of 8% in the one year period; moreover, the stock’s MVX value has declined 60% in the last year. Our Expectation Brokers expect FY12 net income to be between USD 895mn and USD 911mn. We expect a net profit of USD 896mn backed by stable revenue growth.

12

As of 05th December 2011

Kuwait Financial Centre “Markaz”

25


RESEARCH January 2012 Financials All Figures in USD Mn Income Statement Electricity Sales Gross Revenues Total Operating Expenses Operating Profit Net profit Balance Sheet Total Current Assets Total Assets Non-Current Liabilities Total Liabilities Analytics ROE % ROA % Asset Growth (%) Equity Growth (%) Revenue Growth % Net Profit Growth % Hist EV (USD Mn) P/E (LFY) P/B (LFI) EPS (USD) Book Value per share (USD) DPS Market Price (SAR) Market Cap. (USD Mn) Traded Volume (Mn) Traded Value (USD Mn) Turnover Velocity %

2006

2007

2008

2009

2010

2011E

2012E

4,875 5,254 4,946 308 377

5,189 5,594 5,259 335 414

5,506 5,943 5,739 204 294

5,876 6,359 6,150 209 305

6,898 7,428 6,946 481 608

7,305 7,856 7,082 774 868

7,681 8,266 7,450 816 896

5,604 33,916 7,675 21,351

7,247 36,359 9,309 23,563

6,668 38,762 9,890 25,817

5,944 44,415 12,422 31,371

7,075 50,890 14,867 37,384

55,165

60,902

41,066

45,111

3.0% 1.1% 8% 2% 5.0% -4.7% 20,828 38.24 1.15 0.09 3.02 0.03 13.00 14,442 7,922 54,569 234%

3.2% 1.1% 7% 2% 6.5% 9.8% 21,394 39.86 1.28 0.10 3.07 0.03 14.75 16,386 2,205 7,878 51%

2.3% 0.8% 7% 1% 6.2% -28.9% 15,498 34.26 0.79 0.07 3.11 0.03 9.25 10,276 1,527 5,545 42%

2.3% 0.7% 15% 1% 7.0% 3.5% 18,216 41.67 0.96 0.07 3.13 0.19 11.25 12,498 564 1,517 13%

4.5% 1.2% 15% 4% 16.8% 99.5% 23,425 25.55 1.16 0.15 3.24 0.19 14.05 15,608 1,023 3,590 26%

6.2% 1.6% 8% 4% 5.9% 42.9%

6.2% 1.5% 10% 4% 5.2% 3.2%

16.61 1.07 0.22 3.37 13.50 14,944 840 2,832 19%

Source: Reuters Knowledge, Company Accounts, Markaz Research

Risk Metrics 6M

1Y

2Y

3Y

5Y

Average Monthly Return

-0.65%

-0.73%

1.31%

0.84%

-0.39%

Highest Monthly Return

2.31%

4.14%

18.69%

18.69%

18.69%

Lowest Monthly Return

-3.18%

-6.51%

-9.96%

-9.96%

-21.74%

3

3

3

3

9

% of Negative Months

50%

50%

42%

44%

52%

Maximum Drawdown*

-8%

-8%

-11%

-11%

-46%

Standard Deviation

8.63%

10.79%

21.39%

19.58%

23.15%

%Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

-63%

-60%

-62%

-83%

-79%

Monthly return stats

Largest Losing Streak (# of Months)

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

26


RESEARCH January 2012 Zain Group

Stock Volatility

Code: ZAIN.KW | Country: Kuwait | Current MP: KWD 0.9113 | YTD Performance: -40.8% Mcap: USD14.2Bn | Ann. St. Dev: 19% | YTD Turnover Velocity: 11% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

8%

37%

-7%

-1%

8%

-3%

73%

-14%

-4%

7%

-5%

-57%

-28%

-8%

-18%

21%

35%

2%

49%

-7%

2007 2008 2009 2010 2011

-42%

Background Zain Group was established in 1985 and was the first telecommunication company in the GCC. Zain started its robust expansion in the MENA region, with operations in 6 ME countries and 13 African counties including Sudan. In 2010, Zain sold the majority of its African assets to focus on regional expansion. In 2010, Zain booked a one-time gain of USD 2.7bn from sale of African assets to India’s Bharti Airtel for USD 10.7bn. Kuwait Investment Authority (KIA) holds 24.61% of the firm while Al Khair National for Stocks & Real Estate Co. holds 12.67%. Analysis: 3Q11 revenues were USD 1.2bn, down 2.6% YoY and 1.9% QoQ. Net income dropped 2.3% YoY but increased 11.7% sequentially to USD 284mn. Like most telecoms in the region, 9M11 results disappointed. Revenues were down 2% due to intensifying competition. Net income showed a decline of 78% due to the booking of USD 2.7bn in extraordinary income in 2Q10. Excluding this gain, net income fell by 10% in 9M11. Zain’s FX losses totaled USD 100mn in the first nine months of 2011. ARPUs continue to decline given the competition from Wataniya and Viva. The company added 6.1mn customers over the year and total active customer base as at September 2011 is 41.4mn. Based on these results, we expect Zain to end 2011 with a total net income of USD 1,099mn, which would be a 23% decline over adjusted FY 2010 net income. Zain has been prominent in the news over the last couple of years due to high level strategic divestments, including the aforementioned African asset sale, in addition to a proposed sale of 46% of the company to UAE telecom operator Etisalat for a proposed USD12bn. After months of negotiation and due diligence, Etisalat walked away from the deal at the beginning of the year citing regulatory issues and poor market conditions. In September, Kingdom Holding Batelco Consortium scrapped their joint USD 950mn bid to buy 25% in Zain KSA as terms for the deal could not be met. Recently the Kharafi Group has reportedly said that it will stick with its holding as the firm embarks on expansion plans. Given the news and speculation on the company, it’s not a shock that the stock has been battered by investors, losing 41% for the year and trading at 13x earnings. The stock has generated negative returns over 2Y (-12%), 3Y (-20%) and 5Y (-17%) periods. Moreover, according to our risk metrics, the stock is highly volatile, with an annualized standard deviation of 19% and a max drawdown of 38% over the last year. Our Expectation Brokers expect Zain’s FY12 net income to be between USD 1.12bn to USD 1.55bn. We expect a net profit of USD 1.11bn for FY12.

13

As of 30th November 2011

Kuwait Financial Centre “Markaz”

27


RESEARCH January 2012 Financials USD mn

2006

2007

2008

Income Statement Total Revenue 4,701 6,077 7,257 Cost of Revenue 995 1,381 2,069 Total Operating Expense 3,254 4,440 5,878 Net Income 1,069 1,161 1,167 Balance Sheet Cash 1,347 537 1,333 Total Assets 12,648 15,822 19,983 Total Current Liabilities 3,780 3,732 4,352 Total Liabilities 12,648 15,822 19,983 Long Term Loans 3,337 5,549 6,053 Total Shareholder's Equity 4,907 5,731 8,041 Analytics Return on Equity (%) 21.78 20.26 14.51 Return on Assets (%) 8.45 7.34 5.84 Revenue Growth (%) 123.89 29.28 19.43 Earnings Growth (%) - unadj 62.16 8.63 0.49 Assets Growth (%) 69.77 25.10 26.30 Equity Growth (%) 14.23 16.80 40.30 Historical EV (USD Mn) 14,721 31,484 17,724 P/E 14.27 21.90 9.33 Price/Book 3.04 4.49 1.46 EPS (USD) 0.29 0.33 0.33 BVPS (USD) 1.36 1.59 2.09 DPS (USD) 0.11 0.33 0.18 Market Price (KWD) 1142 1971 840 Annual Trading Volume (mn) 584 2,936 1,664 Annual Trading Value (USD mn) 2,192 19,762 9,435 Turnover Velocity 23% 101% 48% M Cap (USD mn) 12,731 26,473 13,004 Source: Reuters Knowledge, Company Accounts, Markaz Research

2009

2010

2011E

2012E

4,576 1,179 3,004 707

4,897 1,286 3,269 3,851

4,657 1,260 3,158 1,099

4,750 1,293 3,315 1,111

968 20,639 5,349 20,639 5,855 8,321

2,334 13,441 2,602 13,441 343 9,590

2,466 13,623 2,878 4,117 1,231 9,506

1,263 14,031 2,079 4,158 1,455 9,873

8.49 3.42 -36.95 -39.44 3.28 3.48 20,091 17.00 1.71 0.22 2.16 0.62 1020 2,754 11,370 81% 15,205

40.15 28.65 7.02 445.00 -34.88 15.26 19,303 19.00 2.22 0.29 2.48 0.72 1520 1,093 5,025 28% 21,294

11.56 8.07 -4.90 -71.46 1.35 -0.88 12,923 13.38 1.33 0.28 2.45

11.26 7.92 2.00 1.14 3.00 3.87

900 472 2,019 11% 14,158

Risk Metrics 6M

1Y

2Y

3Y

5Y

Average Monthly Return

-5.39%

-2.89%

-0.77%

-0.38%

0.62%

Highest Monthly Return

0.00%

7.04%

40.66%

40.66%

40.66%

Lowest Monthly Return

-13.33%

-13.33%

-16.42%

-23.64%

-23.64%

Monthly return stats

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

3

5

5

5

6

83%

67%

54%

53%

50%

-22%

-38%

-38%

-40%

-73%

17.45%

19.10%

39.88%

46.55%

43.31%

-45%

-23%

-48%

-73%

-1%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

28


RESEARCH January 2012 Saudi Arabian Fertilizers Co. (SAFCO)

Stock Volatility

Code: 2020.SE | Country: Saudi Arabia | Current MP: SAR 181.514 | YTD Performance: 10.5% Mcap: USD12.1Bn | Ann. St. Dev: 20% | YTD Turnover Velocity: 23% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2006

-57%

-14%

-25%

-13%

-6%

-3%

73%

-1%

10%

15%

14%

-43%

-12%

0%

3%

35%

33%

25%

32%

21%

2007 2008 2009 2010 2011

2011

11%

Background Saudi Arabia Fertilizers Co. (SAFCO) is engaged in the production and sale of fertilizer products in Saudi Arabia, Asia, Europe, and North America. It produces ammonia, urea, melamine and sulfuric acid. The ammonia and urea plants are located in Dammam, with an annual production capacity of 2.3 mn ton and 2.6 mn ton, respectively. SAFCO is also engaged in establishing, acquiring and operating chemical and nonchemical factories as part of its expansion strategy. The company is 42.9% owned by SABIC and 16.7% owned by General Organization for Social Insurance (GOSI). The Company has stakes in other companies, namely: National Chemicals Fertilizers Company (50%), Arabian Industrial Fibers Company (3.7%) and Yanbu National Petrochemicals Company (1.69%). Analysis: SAFCO reported a healthy YoY revenue and net income growth in 3Q11 on the back of increase in product prices internationally. Revenues grew 55% YoY and 22% QoQ to USD 368mn while net income doubled over the year (+53% QoQ) to USD 323mn. 3Q total operating expense was USD 85mn (-11% YoY, -15% QoQ). 9M11 revenue growth was also strong, up 43% to USD 946mn. Operating expenses were up 26% while Income from associated companies increased 30%. Net income grew 28% to USD 756mn. If we exclude the one-off gain booked in 2Q10 from a land sale in Dammam net income growth would have amounted to 49%. We expect SAFCO to report USD 1,007mn in earnings for the full year 2011. The stock is trading at 12x earnings and is up 10.5% for the year. The stock has generated positive returns over 2Y (+44%), 3Y (+93%) and 5Y (+98%) periods. The company recently announced that it will pay SAR 7/share as dividend for second half in addition to SAR 6/share paid for period ending June 2011. SAFCO will continue to maintain a dividend yield of around 7%, making it a good yield play. We classify the stock as Low risk with a losing streak of just 2 months over the last year and only four negative months in total. Our Expectation Broker estimates for FY12 earnings range from USD 873mn to USD 996mn but we expect USD 1,053mn in FY12 earnings due to stable prices and continued demand from Asia.

14

As of 03rd December 2011

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

29


RESEARCH January 2012 Financials USD mn Income Statement Total Revenue Cost of Sales Total Operating Expense Net Income Balance Sheet Cash Total Assets Total Current Liabilities Total Liabilities Long Term Debt Total Shareholder's Equity

2006

2007

2008

2009

2010

2011E

2012E

488 198 225 307

828 218 258 589

1,396 239 263 1,141

731 275 289 481

1,011 293 311 863

1,244 307 327 1,007

1,345 326 347 1,053

158 1,795 157 531 284 1,264

420 2,156 216 552 220 1,604

1,045 2,627 197 484 157 2,143

791 2,349 275 478 94 1,871

602 2,235 168 332 43 1,903

812 2,282 159 312 40 1,970

833 2,444 158 318 47 2,126

25.72 20.49 -47.65 -57.84 -10.58 -12.69 7,369 17.46 4.31 1.85 7.48 3.20 121 119 3,322 47% 8,066

45.34 38.61 38.27 79.27 -4.87 1.70 10,058 13.58 5.58 3.13 7.61 3.20 159 48 1,781 19% 10,617

51.11 44.13 23.10 16.70 2.10 3.53 11,311 11.71 6.13 4.03 7.88

49.51 43.07 8.10 4.55 7.10 7.92

Analytics Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Historical EV (USD Mn) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (SAR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

24.29 36.73 53.27 17.11 27.33 43.45 0.40 69.54 68.64 4.65 91.89 93.72 8.40 20.12 21.87 -1.02 26.90 33.58 6,205 10,044 5,092 19.78 17.75 4.95 4.81 6.55 2.79 1.23 2.37 4.83 5.06 6.42 8.57 0.64 1.07 3.47 91 158 90 416 114 246 16,394 3,487 9,803 164% 43% 121% 6,080 10,243 5,980 Source: Reuters Knowledge, Company Accounts, Markaz Research

181 43 2,667 23% 12,083

Risk Metrics 6M

1Y

2Y

3Y

5Y

Monthly return stats Average Monthly Return

-0.35%

2.12%

1.76%

0.62%

1.46%

Highest Monthly Return

6.74%

12.11%

12.40%

20.71%

24.34%

Lowest Monthly Return

-8.60%

-8.60%

-12.86%

-51.81%

-51.81%

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

2

2

2

2

5

50%

33%

29%

28%

33%

-10%

-10%

-10%

-10%

-67%

20.40%

19.83%

21.49%

37.96%

38.18%

-13%

139%

14%

-85%

-63%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

30


RESEARCH January 2012 Samba Financial Group

Stock Volatility

Code: 1090.SE | Country: Saudi Arabia | Current MP: SAR 45.515 | YTD Performance: -23.4% Mcap: USD10.8Bn | Ann. St. Dev: 22% | YTD Turnover Velocity: 10% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-28%

-4%

-27%

-21%

-14%

-16%

29%

-26%

-18%

-10%

-13%

-57%

-35%

-20%

-21%

-1%

9%

-3%

2007 2008 2009 2010 2011

21%

-4% -23%

Background Samba Financial Group (Samba) was formed in 1980 as a result of takeover of the then existing branches of Citibank, N.A. in Jeddah and Riyadh through partial sale of equity to Saudi nationals. Citigroup managed the bank until September 2003, when it handed over the management to Samba, and in May 2004 Citibank sold its remaining 20% share capital to a Saudi agency. The bank currently is 22.9% owned by Public Investment Fund, 15% by Public Pension Agency and 11.4% by GOSI. Samba offers a broad array of conventional and Islamic banking products and services, through a network of 68 branches across Saudi Arabia, as well as other three overseas branches. Analysis: Samba reported 3Q11 net profit of USD 303mn, up 3% YoY and QoQ. This is mainly due to gain on non-trading investments which grew 47% YoY. 3Q interest income decreased 7% YoY and 6% over the quarter to USD 313mn even though loan portfolio grew by 9% YoY (+7% QoQ) to USD 23.5bn. Deposits declined 6% QoQ, pushing the L/D ratio from 59% to 65%. In 9M11, the bank saw its net income decline 5% as top line growth was muted. Net Interest Income was down 6% to USD 868mn as Interest Income was down 9% and Interest Expense was down 24%. Provisions were also down, by about half, to USD 52mn. Despite a 12% growth in Fees from Banking, the bank saw non-interest income decline by 4%. Lending growth was better; loans grew 9% while deposits grew 2% to USD 36bn. We expect Samba to report net income of USD 1,264mn for the year 2011, implying a 7% growth. The stock is down 23% for the year and is trading at 10x earnings. The stock has generated negative returns over 2Y (-6%) and 5Y (-49%) but is flat over the 3 year period. We rate the stock as High risk given an annualized standard deviation of 22% and a maximum drawdown of 29% in the last year and a 15% increase in MVX. Our Expectation Brokers estimate Samba’s FY12 net income to be in the range of USD 1.3bn to USD 1.47bn. We expect the bank to earn USD 1.39bn in 2012 given stable loan growth and lesser provisioning.

15

As of 29th November 2011

Kuwait Financial Centre “Markaz”

31


RESEARCH January 2012 Financials USD mn Income Statement Special Commission Income Net Commission Income Loan Loss Provision Net Income Balance Sheet Cash Loans/Advances Deposits Total Assets Total Liabilities Total Shareholder's Equity

2006

2007

2008

2009

2010

2011E

2012E

1,864 1,147 70 1,390

2,237 1,319 113 1,288

2,247 1,350 122 1,188

1,694 1,352 161 1,216

1,385 1,210 149 1,183

1,332 1,199 66 1,264

1,487 1,302 48 1,387

2,735 17,876 25,467 33,075 28,994 4,080

2,960 21,484 30,887 41,182 36,423 4,759

3,680 26,176 35,799 47,710 42,417 5,293

9,560 22,442 39,239 49,478 43,528 5,950

8,689 21,403 35,595 49,984 43,202 6,782

8,881 23,779 36,164 55,178 47,507 7,671

9,911 26,537 39,455 61,579 52,903 8,675

-14.26 9.61 57.19 20.44 2.46 -24.62 2.39 3.70 12.42 27.45 9.96 2.04 1.35 6.61 0.48 51 132 1,604 13% 12,118

-4.63 -9.29 60.13 17.44 2.37 -18.21 -2.74 1.02 13.98 27.67 12.42 2.17 1.31 7.54 0.48 61 54 852 6% 14,700

11.10 1.60 65.75 16.47 2.29 -3.82 6.83 10.39 13.10 27.11 9.60 1.42 1.40 8.52

11.60 9.10 67.26 15.98 2.25 11.60 9.74 11.60 13.10 25.82

Analytics Loans Growth (%) Deposits Growth (%) Loan/Deposits (%) Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Cost-to-Income (%) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (SAR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

7.44 20.18 21.84 11.46 21.28 15.90 70.19 69.56 73.12 34.06 27.06 22.44 4.20 3.13 2.49 31.36 19.96 0.47 29.67 -7.33 -7.76 14.50 24.51 15.85 18.55 16.64 11.21 24.73 27.32 30.11 16.09 22.39 10.35 5.48 6.05 2.32 1.54 1.43 1.32 4.53 5.29 5.88 0.61 0.00 0.48 93 120 51 185 69 114 5,873 1,706 2,175 22% 7% 11% 22,359 28,488 12,293 Source: Reuters Knowledge, Company Accounts, Markaz Research

45 53 1,225 10% 10,848

Risk Metrics 6M

1Y

2Y

3Y

5Y

Monthly return stats Average Monthly Return

-4.18%

-2.83%

-1.07%

-0.56%

-0.48%

Highest Monthly Return

-0.23%

11.27%

11.27%

39.34%

39.34%

Lowest Monthly Return

-9.67%

-12.45%

-12.45%

-28.84%

-28.84%

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

6

6

6

6

6

100%

83%

54%

56%

55%

-21%

-29%

-31%

-42%

-67%

11.32%

22.22%

22.18%

43.29%

45.73%

-13%

15%

-56%

-70%

0%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

32


RESEARCH January 2012 Etihad Etisalat

Stock Volatility

Code: 7020.SE | Country: Saudi Arabia | Current MP: SAR 50.7516 | YTD Performance: -6.3% Mcap: USD9.47Bn | Ann. St. Dev: 20% | YTD Turnover Velocity: 47% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-63%

-28%

-35%

-21%

-13%

-12%

41%

-13%

2%

8%

5%

-47%

-14%

-2%

-3%

40%

34%

19%

2007 2008 2009 2010 2011

27%

9% -6%

Background Etihad Etisalat (EEC) is Emirates Telecommunication Company’s (Etisalat) Saudi arm. The company offers wireless services across the Kingdom; the government (through GOSI) has an 11.2% stake in the company while Etisalat holds 27.4%. The company is the second largest operator in the Kingdom, after STC, and holds about a third of the mobile market. Analysis: Revenue growth for the firm has been strong as it continues to compete with the incumbent for a larger share of the domestic market; 9M11 revenues were up 23% to USD 3.8bn while operating expenses increased 24% leading to a net profit growth of 23% to USD 903mn. The growth in revenue has largely been driven by explosive growth in the domestic broadband market (which comprises 15%-20% of the firm’s revenues) with the introduction of various smart phones and tablet which require high speed data packages. Given that the mobile market in the Kingdom is highly saturated (with a penetration rate of over 180%), the operators have been engaging in bundling of services in order to boost revenues and market share. The company launched Long-Term-Evolution services (4G) in September 2011 which will help to strengthen its position as the leader in mobile broadband services. Targeted areas exceed 32 cities and towns which covers 85% of the populated areas in Saudi Arabia. The company recently announced that it is close to signing Islamic refinance agreements to acquire long-term loans for USD 2.7bn, made up of four tranches for a payback period between five to seven years. EEC is trading at an attractive 8x earnings and is down 6.3% for the year. But the stock has generated positive returns over 2Y (+25%), 3Y (+109%) and 5Y (+27%) periods. EEC began issuing semi-annual dividend payouts this year with a 1H11 dividend of SAR1.25 and an expected payout of at least 40% for full year 2011 (Board authorized). This would boost EEC’s dividend yield from around 4%-5% to closer to 6% (which brings it significantly closer to STC’s yield of between 6%-7%). We rate the stock as having Medium risk given an annualized Standard Deviation of 20% and a max drawdown of 17% for the last year. Our Expectation We expect 2011 full year net income to come in at USD 1.3bn, which would amount to a 17% annual growth. Brokers expect FY12 net income to be between USD 1.36bn and USD 1.5bn and we expect FY12 net profit of USD 1.41bn, implying a 7% earnings growth in 2012.

16

As of 26th November 2011

Kuwait Financial Centre “Markaz”

33


RESEARCH January 2012 Financials USD mn Income Statement Total Revenue Cost of Revenue Total Operating Expense Net Income Balance Sheet Cash Total Assets Total Current Liabilities Total Liabilities Long Term Loans Total Shareholder's Equity

2006

2007

2008

2009

2010

2011E

2012E

1,649 710 1,341 187

2,251 1,011 1,740 368

2,879 1,272 2,213 558

3,483 1,470 2,627 804

4,271 1,928 3,109 1,123

4,937 2,215 3,579 1,315

5,732 2,553 4,262 1,407

146 4,718 3,079 3,509 427 1,209

188 5,302 1,608 3,725 2,110 1,577

337 7,252 2,867 4,651 1,771 2,601

249 8,220 3,223 4,955 1,720 3,265

443 8,916 3,269 4,761 1,475 4,155

425 8,746 2,992 4,280 1,280 4,467

24.62 9.78 20.97 44.08 13.35 25.52 9,571 10.07 2.48 1.15 4.66 0.33 43 259 2,586 37% 8,100

27.03 12.60 22.63 39.74 8.46 27.25 11,345 9.18 2.48 1.61 5.94 0.53 55 234 3,162 34% 10,313

29.45 15.04 15.60 17.12 -1.90 7.50 10,329 7.44 2.11 1.88 6.38

Analytics Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Historical EV (USD Mn) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (SAR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

15.45 23.33 21.44 3.96 6.94 7.69 267.98 36.50 27.89 N.M. 96.97 51.63 8.84 12.39 36.77 14.47 30.43 64.98 7,214 11,659 7,218 36.98 26.62 7.75 5.74 6.22 2.22 0.30 0.58 1.07 1.91 2.49 3.72 0.00 0.10 0.20 41 58 31 602 206 313 14,602 2,539 3,240 114% 30% 42% 6,933 9,736 5,783 Source: Reuters Knowledge, Company Accounts, Markaz Research

29.91 15.30 16.10 6.92

51 274 4,641 47% 9,473

Risk Metrics 6M

1Y

2Y

3Y

5Y

Monthly return stats Average Monthly Return

0.42%

0.11%

1.16%

1.49%

0.44%

Highest Monthly Return

3.38%

12.26%

12.26%

30.80%

42.86%

Lowest Monthly Return

-2.80%

-11.77%

-11.77%

-24.00%

-25.96%

1

3

3

3

11

Largest Losing Streak (# of Months) % of Negative Months

33%

42%

38%

42%

55%

Maximum Drawdown*

-3%

-17%

-17%

-17%

-60%

Standard Deviation

7.74%

19.65%

19.35%

30.70%

39.58%

%Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

-32%

20%

-42%

-85%

-69%

Kuwait Financial Centre “Markaz”

34


RESEARCH January 2012 Riyad Bank

Stock Volatility

Code: 1010.SE | Country: Saudi Arabia | Current MP: SAR 23.317 | YTD Performance: -12.6% Mcap: USD9.3Bn | Ann. St. Dev: 17% | YTD Turnover Velocity: 8% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-53%

-16%

-33%

-21%

-18%

-17%

48%

-21%

-7%

-6%

-7%

-57%

-26%

-19%

-17%

27%

12%

3%

-1%

-7%

2007 2008 2009 2010 2011

-13%

Background Riyad Bank (Riyad) was established in 1957 and provides banking and investment services, including Shariah-compliant products, to its retail and corporate clients. Riyad Bank operates through 216 branches, the third largest branch network after Al Rajhi and NCB. As of September 2011, the bank had USD 29.9bn in loans and USD 35.3bn in deposits. The Saudi Public Investment Fund holds 21.7% in the bank while GOSI has 21.6%; other shareholders include Al Nahla Trading & Contr. (9.3%), Mohammad Al Issa (8.6%) and SAMA (6.5%). Analysis: 3Q11 net income came in at USD 212mn (+30% YoY, -5% QoQ). The growth was driven by increase in non-interest income (+16.2% YoY) and a drop in provisioning (-49.6% YoY). Net Interest income was almost flat at USD 284mn. The Loan portfolio grew +1.4% QoQ to USD 29.9bn and deposits were almost flat at USD 35.3bn. In 9M11, Net Interest Income was flat at USD 831mn as top line growth was flat on low interest rates. Provisions came down by about half to USD 106mn leading to a net income growth of 15% to USD 632mn. Loans and deposits grew 7% to USD 29.9bn and USD 35.3bn respectively giving an L/D ratio of 85%. The bank maintains a healthy Tier 1 ratio of 15.1% (3Q10: 16%) and Capital Adequacy ratio of 17% (3Q10: 17.8%). NPL ratio stood at 1.58% (3Q10: 1.81%). The stock is trading at about 11x earnings and is down over 13% for the year. The stock has generated negative returns over 2Y (-9%) and 5Y (-31%) but is up 9% over the 3 year period. The bank maintains a dividend yield of 5.5%-5.8% with a 52% payout in 1H11. We rate the stock as Medium risk with a standard deviation of 17% while its MVX has declined by 6% over the year. Our Expectation We expect Riyad Bank to end 2011 with a total net income of USD 824mn, implying a 9% growth. Our FY12 net income estimate is USD 959mn driven by stable growth in interest income and lower provisioning. Broker estimates for FY12 earnings are in the range of USD 923mn to USD 1,064mn.

17

As of 04th December 2011

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

35


RESEARCH January 2012 Financials USD mn 2006 2007 2008 Income Statement Special Commission Income 1,469 1,656 1,797 Net Commission Income 780 871 1,053 Loan Loss Provision 99 92 93 Net Income 776 803 704 Balance Sheet Cash 1,380 4,422 2,955 Loans/Advances 13,917 17,960 25,718 Deposits 18,453 22,491 28,018 Total Assets 25,074 32,364 42,579 Total Liabilities 21,876 28,847 35,728 Total Shareholder's Equity 3,198 3,517 6,852 Analytics Loans Growth (%) 14.42 29.05 43.20 Deposits Growth (%) 30.73 21.88 24.57 Loan/Deposits (%) 75.42 79.85 91.79 Return on Equity (%) 24.25 22.84 10.27 Return on Assets (%) 3.09 2.48 1.65 Revenue Growth (%) 36.00 12.73 8.49 Earnings Growth (%) 2.51 3.53 -12.37 Assets Growth (%) 17.40 29.07 31.56 Equity Growth (%) 10.11 9.96 94.82 Cost-to-Income (%) 32.85 35.05 43.07 P/E 13.87 19.74 12.05 Price/Book 3.36 4.51 1.24 EPS (USD) 0.65 0.67 0.47 BVPS (USD) 2.66 2.93 4.57 DPS (USD) 0.44 0.00 0.37 Market Price (KWD) 34 50 21 Annual Trading Volume (mn) 131 78 192 Annual Trading Value (USD mn) 1,993 689 1,767 Turnover Velocity 12% 5% 15% M Cap (USD mn) 10,750 15,254 8,475 Source: Reuters Knowledge, Company Accounts, Markaz Research

2009

2010

2011E

2012E

1,551 1,159 165 808

1,300 1,105 249 753

1,254 1,064 131 824

1,381 1,154 111 959

6,246 28,407 33,412 47,046 39,515 7,530

6,182 28,279 33,856 46,287 38,491 7,796

4,882 30,570 36,260 50,868 42,752 8,116

5,655 33,658 39,560 56,006 47,475 8,530

10.46 19.25 85.02 10.73 1.72 -13.69 14.84 10.49 9.91 38.78 13.32 1.43 0.54 5.02 0.35 27 156 1,015 11% 10,759

-0.45 1.33 83.53 9.66 1.63 -16.20 -6.79 -1.61 3.53 37.13 14.15 1.36 0.50 5.20 0.35 27 121 903 8% 10,640

8.10 7.10 84.31 10.15 1.62 -3.46 9.39 9.90 4.10 39.58 11.08 1.15 0.55 5.41

10.10 9.10 85.08 11.24 1.71 10.10 16.38 10.10 5.10 35.89

23 82 801 8% 9,320

Risk Metrics 6M

1Y

2Y

3Y

5Y

Average Monthly Return

-1.78%

-1.39%

-0.88%

-0.45%

-0.37%

Highest Monthly Return

4.86%

9.09%

9.09%

28.88%

28.88%

Lowest Monthly Return

-6.05%

-7.28%

-7.28%

-21.73%

-21.73%

Monthly return stats

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

3

3

3

5

6

67%

67%

58%

61%

57%

-10%

-12%

-23%

-23%

-60%

14.75%

17.09%

15.63%

29.25%

34.01%

-10%

-6%

-47%

-87%

-57%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

36


RESEARCH January 2012 Kuwait Finance House

Stock Volatility

Code: KFIN.KW | Country: Kuwait | Current MP: KWD 0.91018 | YTD Performance: -17.1% Mcap: USD8.84Bn | Ann. St. Dev: 16% | YTD Turnover Velocity: 18% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2006

3%

2007 2008

2008

2009

2010

2011

33%

0%

-2%

1%

-3%

72%

-1%

-4%

0%

-4%

-43%

-28%

-16%

-17%

2%

-5%

2009 2010 2011

-9%

14%

-3% -17%

Background Kuwait Finance House (KFH) was the first Islamic bank in Kuwait, established in 1977. The bank offers banking, investment, real estate, trading and leasing services through six business units: Banking, Commercial, Corporate, Real Estate, Investment and Private Banking. The bank had financing amounting to USD 20.9bn as of September 2011 while deposits stood at USD 31.7bn. The bank is 24% owned by the Kuwait Investment Authority (KIA); other major shareholders are, Public Authority for Minority Affairs (10.48%), Awqaf Public Foundation (8.29%), and Public Institution for Social Security (PIFFS) (5.63%). Analysis: Top line growth for the bank was muted in 9M11; net financing declined 6% to USD 777mn. Financing Income was down 5% to USD 1,341mn while Distributions were down 3%. Provisions continued to climb; increasing 27% in the period to USD 562mn. Other Expenses were also up as the bank encountered an FX loss of USD 33mn. Consequently, net income was down 27% in 9M11 to USD 257mn. Financing was up 2% YoY to USD 20.9bn while deposits grew 18% to USD 31.7bn, giving the bank an L/D ratio of 66%. As of 2010 (quarterly figures not reported), the bank had one of the highest NPL/Loan ratios, at 15%, with the coverage ratio at 0.43 as non-performing loans increased by almost 31% in 2010. Also as of 2010, the bank had a Capital Adequacy Ratio (CAR) of 14%, on the lower end of its peer group. The bank went through a capital increase in the first half of the year, raising share capital by 8% to USD 974mn, which should provide further buffer against any shocks. In September, Fitch downgraded KFH’s Viability Rating to 'bb+' from 'bbb-', and affirmed Long-term Issuer Default Rating at 'A+' with a Stable Outlook. The downgrade reflects the bank's weak asset quality ratios, high impairment charges, and capitalisation that is lower than some peers despite significant sector concentrations in its financing book. Recently, the bank formed a partnership with Grosvenor Investment Management US to invest up to USD 600mn in healthcare-related real estate in the U.S. The stock is down 17% for the year and is trading at 30x earnings; furthermore, we rate the stock as Medium risk given an annualized standard deviation of 16% and a max drawdown of 22% over the last year. The stock has generated negative returns over 2Y (-5%), 3Y (-35%) and 5Y (-12%) periods. Our Expectation We expect KFH to report a net income of USD 320mn for FY11 and USD 508mn for FY12, implying a 59% growth in 2012.

18

As of 01st December 2011

Kuwait Financial Centre “Markaz”

37


RESEARCH January 2012 Financials USD mn 2006 2007 2008 Income Statement Financing Income 1,187 1,692 2,033 Net Financing Income 432 575 954 Loan Loss Provision 98 138 764 Net Income 587 997 569 Balance Sheet Cash/Balances with Bank 841 2,006 1,333 Loans/Advances 10,065 14,449 17,317 Deposits 13,514 19,423 23,954 Total Assets 22,875 31,875 38,201 Total Liabilities 20,330 27,491 33,708 Total Shareholder's Equity 2,545 4,384 4,494 Analytics Loans Growth (%) 32.02 43.55 19.85 Deposits Growth (%) 16.95 43.73 23.32 Loan/Deposits (%) 74.48 74.39 72.29 Return on Equity (%) 23.06 22.75 12.66 Return on Assets (%) 2.57 3.13 1.49 Revenue Growth (%) 66.47 42.55 20.21 Earnings Growth (%) 36.51 69.92 -42.97 Assets Growth (%) 34.88 39.34 19.85 Equity Growth (%) 17.04 72.24 2.50 Cost-to-Income (%) 39.13 28.69 33.37 P/E 17.76 16.70 17.35 Price/Book 3.80 4.08 2.01 EPS (USD) 0.22 0.40 0.22 BVPS (USD) 1.02 1.63 1.88 DPS (USD) 0.11 0.00 0.11 Market Price (KWD) 1066 1837 1041 Annual Trading Volume (mn) 391 807 1,036 Annual Trading Value (USD mn) 1,460 4,625 6,582 Turnover Velocity 17% 35% 47% M Cap (USD mn) 8,250 18,076 10,144 Source: Reuters Knowledge, Company Accounts, Markaz Research

2009

2010

2011E

2012E

1,914 1,019 739 430

1,875 1,123 720 384

1,684 981 711 320

1,880 1,122 648 508

1,612 18,443 26,310 40,906 36,407 4,499

1,622 20,093 27,713 45,463 40,788 4,675

1,668 20,917 32,729 46,383 41,669 4,715

1,753 21,983 37,671 48,749 43,322 5,427

6.50 9.84 70.10 9.56 1.05 -5.85 -24.36 7.08 0.12 45.97 23.58 2.01 0.14 1.70 0.07 943 1,582 5,734 60% 8,842

8.95 5.33 72.50 8.21 0.84 -2.05 -10.75 11.14 3.91 48.02 26.85 2.22 0.14 1.76 0.07 1074 689 2,527 26% 10,271

4.10 18.10 63.91 6.79 0.69 -10.18 -16.66 2.02 0.85 49.20 29.67 1.88 0.12 1.75

5.10 15.10 58.36 9.36 1.04 11.63 58.66 5.10 15.10 45.82

910 468 1,735 18% 8,841

Risk Metrics 6M

1Y

2Y

3Y

5Y

Average Monthly Return

-2.57%

-1.36%

-0.79%

-1.18%

0.30%

Highest Monthly Return

2.27%

5.17%

13.46%

33.49%

33.49%

Lowest Monthly Return

-12.00%

-12.00%

-12.00%

-22.73%

-22.73%

Monthly return stats

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

3

3

3

5

7

50%

58%

54%

56%

47%

-19%

-22%

-22%

-47%

-69%

18.45%

15.81%

20.28%

33.66%

34.08%

-25%

-34%

-29%

-63%

27%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

38


RESEARCH January 2012 National Bank of Abu Dhabi

Stock Volatility

Code: NBAD.AD | Country: UAE | Current MP: AED 10.819 | YTD Performance: 12.2% Mcap: USD8.4Bn | Ann. St. Dev: 21% | YTD Turnover Velocity: 2.7% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-55%

-19%

-33%

-17%

-14%

-10%

44%

-18%

1%

1%

3%

-53%

-16%

-10%

-5%

52%

25%

21%

2007 2008 2009 2010 2011

3%

7% 12%

Background National Bank of Abu Dhabi (NBAD) is the second largest lender in the UAE and the largest in Abu Dhabi with loans amounting to USD 42.6bn as of September 2011. The Bank has a network of more than 110 branches in the UAE and nearly 50 branches outside the UAE. NBAD is 70.48% owned by Abu Dhabi Investment Council. NBAD is rated long term/short term A+/A-1 by Standard & Poor's, Aa3/P1 by Moody’s, AA-/F1+ by Fitch. Analysis: NBAD posted a 12% YoY increase in 3Q11 net income to USD 281mn. Net income growth was flat over the quarter. Interest income saw muted growth of 1.4% YoY to USD 516mn. Net income growth was mainly on account of higher foreign exchange gain. Capital Adequacy was strong at 20.7% (3Q10: 22.1%), while Tier I ratio stood at 15.3% (3Q10: 15.7%). During the first nine months, revenue growth was strong for the bank, driven by a surge in lending. Loans were up 12% in 9M11 to USD 42.6bn while deposits grew at 18% in the same period. Lending rates bucked the UAE sector growth; where lending has been relatively flat overall. NBAD’s growth is driven by high government lending and deposits given its ownership structure. The bank’s L/D ratio is high at 110%. Net Interest Income came in at USD 1,109mn in 9M11, a growth of 10% as Interest Income grew 9%. Provisions grew 30% to USD 277mn while non-interest expense was up 19% for the period. Consequently, net income came in at USD 812mn, an increase of just 1.1%. The NPL ratio increased to 2.83% in September 2011, up from 2.65% in 2Q11 and 2.3% in 4Q10. Net Interest margin was flat at 2.53% (9M10: 2.51%). Continued high provisions remain a concern for NBAD even though the bank maintains a comfortable coverage. Fitch has recently issued a statement that weak global economy and slowdown in Abu Dhabi will represent new headwinds for the UAE banking system. NBAD is trading at 9x earnings and has gained 12% for the year. The stock has generated positive returns over 2Y (+21%), 3Y (+72%) and 5Y (+30%) periods. It also carries a dividend yield of about 2.5%-3%. We see the stock as carrying a Low risk with a standard deviation of 21% and max drawdown of just 8% over the last year. Large government ownership (70.5%) and high institutional holding has resulted in low turnover velocity (2.7%) for the stock. Our Expectation We expect NBAD to report a net profit of USD 960mn in FY11 and USD 1,199 in FY12, implying a growth of 4% in 2011 and +25% in 2012. Brokers estimate FY12 net income to be between USD 1,191mn and USD 1,400mn.

19

As of 06th December 2011

Kuwait Financial Centre “Markaz”

39


RESEARCH January 2012 Financials USD mn Income Statement Interest Income Net Interest Income Total Operating Income Provisions Net Income Balance Sheet Loans Deposits Total Assets Total Shareholder's Equity Key Ratios Loans Growth (%) Deposits Growth (%) Loan/Deposits (%) Return on Assets (%) Return on Equity (%) Earnings Growth (%) Revenue Growth (%) Assets Growth (%) Equity Growth (%) Cost-to-Income (%) P/E Price/Book BVPS (USD) Market Price (AED) EPS (USD) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

2006

2007

2008

2009

2010

2011E

2012E

1,486 550 805 27 573

1,929 655 998 11 682

1,996 973 1,443 195 822

1,823 1,209 1,742 383 822

1,946 1,366 1,954 329 1,003

1,953 1,383 1,995 349 960

2,232 1,623 2,282 364 1,199

16,389 19,258 27,488 2,452

22,477 22,253 37,960 3,053

31,370 28,173 44,827 3,909

36,910 32,998 53,581 5,565

38,362 33,522 57,561 6,565

43,867 39,539 68,819 7,175

49,724 45,451 80,533 7,599

37.1% 15.5% 101.0% 1.8% 22.3% 19.0% 24.0% 38.1% 24.5% 28.8% 12.06 2.70 1.31 13.03 0.29 58.8 349 5.0% 8,245

39.6% 26.6% 111.3% 1.8% 21.0% 20.5% 44.6% 18.1% 28.0% 28.2% 4.80 1.01 1.64 6.10 0.35 132.0 676 11.1% 3,951

17.7% 17.1% 111.9% 1.5% 14.8% 0.0% 20.7% 19.5% 42.4% 29.7% 7.45 1.10 2.33 9.39 0.34 80.1 248 4.9% 6,114

3.9% 1.6% 114.4% 1.7% 15.3% 22.0% 12.2% 7.4% 18.0% 30.5% 6.36 0.97 2.74 9.79 0.42 62.9 200 3.2% 6,375

14.4% 18.0% 110.9% 1.4% 13.4% -4.3% 2.1% 19.6% 9.3% 33.2% 8.79 1.18 2.50 10.80 0.33 78 199 2.7% 8,439

13.4% 15.0% 109.4% 1.5% 15.8% 24.9% 14.4% 17.0% 5.9% 30.1%

85.1% 2.1% 23.4%

23.7% 10.07 2.35 1.06 9.16 0.25 30 265 5,762

Source: Reuters Knowledge, Company Accounts, Markaz Research

Risk Metrics 6M

1Y

2Y

3Y

5Y

Average Monthly Return

1.75%

0.83%

0.42%

0.71%

0.47%

Highest Monthly Return

16.49%

16.49%

21.66%

40.31%

40.31%

Lowest Monthly Return

-7.83%

-7.83%

-15.00%

-22.51%

-22.51%

Monthly return stats

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

1

1

2

4

4

33%

33%

38%

39%

43%

-8%

-8%

-8%

-8%

-62%

28.23%

21.30%

27.17%

38.33%

37.84%

-20%

124%

34%

-76%

-45%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

40


RESEARCH January 2012 Banque Saudi Fransi

Stock Volatility

Code: 1050.SE | Country: Saudi Arabia | Current MP: SAR 40.420 | YTD Performance: -8.7% Mcap: USD7.9Bn | Ann. St. Dev: 29% | YTD Turnover Velocity: 5% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-23%

4%

-25%

-16%

-12%

-11%

40%

-26%

-14%

-9%

-9%

-61%

-33%

-21%

-18%

17%

13%

5%

2007 2008 2009 2010 2011

9%

0% -9%

Background Banque Saudi Fransi (BSF) operates through three main segments: Personal, Business and Wealth Management, and has a loan book of almost USD 24bn. The bank is 31.1% owned by Credit Agricole Corporate and Investment Bank. Credit Agricole CIB is a member of the Credit Agricole Group. Its other major shareholders include GOSI (12.8%), Rashid Al Rashid & Sons (9.8%) and Mohammad Al Issa (5%). The bank has 2,439 employees and a network of 106 branches. The bank has entered into joint ventures to offer various services; Allianz Saudi Fransi to provide insurance services; CAAM Saudi Fransi a JV with Credit Agricole Asset Management; Calyon Saudi Fransi to offer investment banking services; and a JV with SOFINCO to operate in Saudi Arabian consumer credit market. Analysis: In 3Q11, the bank’s bottom-line increased 22% YoY (-1.8% QoQ) to USD 203mn mainly on account of higher lending activity. Loan book increased 10.8% over the year and 6% over the quarter to USD 24bn. Deposits saw a decline of 2% QoQ. Net interest income during 3Q11 amounted to USD 216mn (+3.9% YoY, +2.5% QoQ). For the nine month period ending September 2011, net income grew 8% to USD 600mn as net interest income increased 3% to USD 628mn. Provisions continue to decline, dropping 65% to USD 27mn. Loans grew at 11% to USD 24bn while deposits grew 7% to USD 26.1bn, giving the bank an L/D ratio of 92%. The bank’s fee income grew 22% while trading income decreased 42% due to market volatility. Based on these results, we expect BSF to report a net income of USD 832mn of full year 2011. Recently, the bank announced plans to sell its 27% stake in Bemo Saudi Fransi Syria and its 10% share in Bemo Lebanon. The stock is down 9% for the year and is trading at 10x earnings. The stock is flat over the 2Y period, +10% over 3Y period and -30% over 5Y period. We rate the stock as High risk given a high annualized standard deviation of 29% and a max drawdown of 28% over the year. Our Expectation Brokers estimate BSF’s FY12 net income to be in the range of USD 942mn to USD 1,093mn. We expect USD 905mn, implying a growth of 9% for 2012.

20

As of 30th November 2011

Kuwait Financial Centre “Markaz”

41


RESEARCH January 2012 Financials USD mn Income Statement Special Commission Income Net Commission Income Loan Loss Provision Net Income Balance Sheet Cash Loans/Advances Deposits Total Assets Total Liabilities Total Shareholder's Equity

2006

2007

2008

2009

2010

2011E

2012E

1,135 538 24 802

1,316 611 11 723

1,413 752 25 748

1,091 814 153 659

943 818 91 747

990 869 32 832

1,109 957 26 905

906 13,636 16,535 21,224 18,716 2,508

2,708 15,962 19,738 26,619 23,621 2,998

1,540 21,567 24,747 33,568 29,822 3,746

3,369 20,887 24,333 32,157 27,961 4,196

2,897 21,596 24,944 32,862 28,061 4,802

3,362 24,426 26,965 36,954 31,715 5,239

3,769 27,381 29,688 41,425 35,762 5,663

-3.15 -1.67 85.84 15.70 2.05 -22.82 -11.94 -4.20 12.00 28.71 11.96 1.88 0.91 5.80 0.27 41 29 340 5% 7,887

3.40 2.51 86.58 15.56 2.27 -13.50 13.37 2.19 14.43 28.61 11.55 1.80 1.03 6.64 0.27 45 25 299 4% 8,621

13.10 8.10 90.58 15.89 2.25 4.91 11.42 12.45 9.10 30.20 10.05 1.49 1.15 7.24

12.10 10.10 92.23 15.98 2.18 12.10 8.74 12.10 8.10 30.23

Analytics Loans Growth (%) Deposits Growth (%) Loan/Deposits (%) Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Cost-to-Income (%) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (SAR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

18.97 17.05 35.12 21.34 19.37 25.38 82.47 80.87 87.15 31.97 24.12 19.97 3.78 2.72 2.23 41.36 15.90 7.38 35.72 -9.84 3.49 17.90 25.42 26.11 35.72 19.52 24.97 21.36 25.61 34.19 15.48 24.01 9.04 4.95 5.79 1.81 1.11 1.00 1.03 3.47 4.15 5.18 0.28 0.36 0.27 64 90 35 62 47 54 1,290 730 814 9% 5% 7% 12,420 16,804 6,761 Source: Reuters Knowledge, Company Accounts, Markaz Research

40 34 447 5% 7,907

Risk Metrics 6M

1Y

2Y

3Y

5Y

Monthly return stats Average Monthly Return

-3.52%

-1.40%

-0.37%

-0.55%

-0.42%

Highest Monthly Return

-0.65%

18.14%

18.14%

19.35%

29.33%

Lowest Monthly Return

-8.29%

-15.35%

-15.35%

-17.99%

-25.92%

Largest Losing Streak (# of Months) % of Negative Months

6

6

6

6

6

100%

75%

67%

64%

57%

Maximum Drawdown*

-16%

-20%

-20%

-20%

-61%

Standard Deviation

9.00%

28.72%

24.89%

30.36%

35.81%

%Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

-20%

-28%

11%

-76%

-36%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

42


RESEARCH January 2012 Saudi British Bank

Stock Volatility

Code: 1060.SE | Country: Saudi Arabia | Current MP: SAR 3921 | YTD Performance: -4.7% Mcap: USD7.8Bn | Ann. St. Dev: 26% | YTD Turnover Velocity: 5% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-46%

-19%

-27%

-21%

-18%

-16%

21%

-14%

-10%

-9%

-8%

-40%

-22%

-17%

-14%

0%

-4%

-4%

-7%

-6%

2007 2008 2009 2010 2011

-5%

Background The Saudi British Bank (SABB) is an associated member of the HSBC Group and provides banking and noninterest bearing products through 81 branches across the kingdom. The bank operates through four main business segments: Retail Banking, Corporate Banking, Treasury, and Others, which includes activities of its wholly owned subsidiary, SABB Securities Limited. HSBC has a 40% stake in the bank while Olayan Saudi Investment Co. has 16.9% and GOSI owns 9.5%. Analysis: SABB reported a net income of USD 168mn in 3Q11, up 50.4% YoY but down 26% QoQ. Provisions dropped sharply over the year to USD 52mn. Interest income came in at USD 238mn, a decrease of 0.6% over 3Q10 but a 2% increase QoQ. Loans & Advances increased 10% over the year and 3% over the quarter to USD 22bn while Deposits grew 11% YoY and 2% QoQ to USD 26.9bn. Fitch Ratings recently affirmed SABB’s Long-term Issuer Default Rating at 'A' with a Stable Outlook. The agency cited the bank's consistent profitability, comfortable liquidity and adequate capital position as reasons for the affirmation. Net income was up 50% during 9M11 to USD 596mn despite an 8% decline in top line growth. Net income was boosted by a 61% decline in provisions to USD 105mn in addition to a 78% growth in Other Income and a 25% decline in Other Expenses. Lending was up 11% YTD to USD 22bn while deposits grew 6% YTD to USD 26.9bn, thus keeping the L/D ratio at 82%. We expect the bank to report USD 714mn in earnings for FY11, implying a 42% bottom-line growth for 2011. The stock is down 5% for the year and is trading at 11x earnings. The stock has generated negative returns over 2Y (-12%), 3Y (-10%) and 5Y (-37%) periods. We rate the stock as Medium risk given a high annualized standard deviation of 26% and a maximum drawdown of 14% in the last year. Our Expectation Broker expectations for FY12 net income in the range of USD 718mn to USD 957mn. We expect a net income of USD 838mn from SABB on the back of robust growth in net interest income and lower provisioning.

21

As of 01st December 2011

Kuwait Financial Centre “Markaz”

43


RESEARCH January 2012 Financials USD mn Income Statement Special Commission Income Net Commission Income Loan Loss Provision Net Income Balance Sheet Cash Loans/Advances Deposits Total Assets Total Liabilities Total Shareholder's Equity

2006

2007

2008

2009

2010

2011E

2012E

1,183 689 60 811

1,392 816 106 695

1,564 855 99 779

1,220 917 399 542

993 865 329 502

877 768 153 714

1,030 891 147 838

2,079 11,321 15,804 20,586 18,078 2,508

4,439 16,536 19,162 26,193 23,413 2,780

3,021 21,399 24,717 35,114 32,011 3,103

4,431 20,371 23,786 33,828 30,349 3,479

4,039 19,802 25,249 33,437 29,391 4,046

4,382 22,060 27,749 36,829 32,180 4,649

5,022 24,949 30,829 41,515 36,396 5,119

-4.80 -3.77 85.64 15.58 1.60 -22.02 -30.40 -3.66 12.13 32.22 16.01 2.50 0.72 4.64 0.00 43 30 393 5% 8,679

-2.79 6.15 78.43 12.41 1.50 -18.56 -7.34 -1.16 16.30 36.14 16.02 1.99 0.67 5.40 0.18 40 26 307 4% 8,040

11.40 9.90 79.50 15.36 1.94 -11.67 42.23 10.14 14.90 32.00 10.54 1.68 0.95 6.20

13.10 11.10 80.93 16.36 2.02 17.36 17.26 12.72 10.10 29.30

Analytics Loans Growth (%) Deposits Growth (%) Loan/Deposits (%) Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Cost-to-Income (%) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (SAR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

3.93 46.06 29.41 22.09 21.25 28.99 71.64 86.29 86.58 32.33 25.01 25.10 3.94 2.65 2.22 39.94 17.65 12.36 21.40 -14.25 12.01 17.08 27.24 34.06 25.51 10.85 11.60 30.04 32.21 34.43 14.54 20.55 11.11 4.70 5.14 2.78 1.08 0.93 1.04 3.34 3.71 4.14 0.53 0.50 0.23 59 72 43 54 28 32 1,367 417 557 8% 3% 5% 11,775 13,904 8,635 Source: Reuters Knowledge, Company Accounts, Markaz Research

39 30 397 5% 7,800

Risk Metrics 6M

1Y

2Y

3Y

5Y

Monthly return stats Average Monthly Return

-2.20%

-1.16%

-0.97%

-0.56%

-0.79%

Highest Monthly Return

1.11%

19.68%

19.68%

21.54%

27.89%

Lowest Monthly Return

-5.44%

-9.68%

-15.73%

-23.90%

-23.90%

Largest Losing Streak (# of Months) % of Negative Months

2

2

3

4

7

67%

58%

58%

58%

58%

Maximum Drawdown*

-14%

-14%

-27%

-33%

-58%

Standard Deviation

9.31%

25.73%

25.34%

32.22%

36.14%

%Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

-21%

5%

-30%

-74%

-47%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

44


RESEARCH January 2012 Kingdom Holding Co

Code: 4280.SE | Country: Saudi Arabia | Current MP: SAR 7.3522 | YTD Performance: -4.3% Mcap: USD7.3Bn | St. Dev: 27% | YTD Turnover Velocity: 17%

Stock Volatility

Expected Return (2012) Low

Medium

High

Low Medium High

Year

2008

2009

2010

2011

2008

-62%

-39%

-27%

-22%

0%

1%

-1%

3%

-1%

2009 2010 2011

-4%

Background Kingdom Holding Company (KHC), founded in 1980, is engaged in investment activities, with a focus on hotels and hotel management companies, within the Kingdom of Saudi Arabia and worldwide. Prince AlWaleed bin Talal owns 95% of the Company. Kingdom Holding has stakes in a number of global and regional companies, such as Apple Inc., Time Warner Inc., EBay Inc., Citigroup Inc., PepsiCo Inc., The Walt Disney Company, Four Seasons Hotels Inc., and many others. KHC was listed in Tadawul Stock Exchange on July 2007. Analysis: 9M11 revenues were down 11% to USD 658mn due to 21% decline in Hotels and other operating revenues. However, Income from Investments grew 80% in the nine month period to USD 80mn. Net Income in 3Q was up 24% YoY to USD 53mn (+21% QoQ). Net income for 9M11 also increased 22% to USD 120mn on account of 11% drop in operating expenses. Total Investments (Available for Sale & Investments in Associates) decreased 8% over the quarter to reach USD 6.7bn at the end of 3Q11. Cash & Cash equivalents were USD 270mn (-13% YoY, -34% QoQ). In June, KHC reached an agreement with Egyptian Ministry of agriculture regarding the Toshka land in Egypt. Under the agreement, KHC will retain 10,000 acres for current usage in addition to the right to develop 15,000 acres ending in eventual ownership. KHC will also return the remaining 75,000 acres it had earlier purchased. Recently, Kingdom Holding Batelco Consortium scrapped their joint $950mn bid to buy 25% in Zain KSA as terms for the deal could not be met. The company has also signed contracts to build the world’s tallest building (Kingdom Tower) in Saudi Arabia. KHC is trading at about 43x and with a YTD decline of 4.3%, compared to broad index loss of 5.3%. The stock is down over the last 2Y (-5%) and 3Y (-11%) time period. KHC trades at a P/BV multiple of 1.1x. Total Revenue and Costs decreased in 2010 due to a change in reporting for two investments from consolidated method to the equity method. 2010 net income was USD 161mn, an increase of 50% over 2009. We expect Kingdom Holding to report 8% revenue decline in 2011 while net income is expected to decrease by 12% mainly due to decrease in other income. Volatility in global capital markets will affect mark to market valuations of KHC’s financial assets. Our Expectation We expect KHC to deliver USD 143mn in net profit for FY11 and USD 173mn in FY12 implying a 21% bottom-line growth for FY12.

22

As of 26th November 2011

Kuwait Financial Centre “Markaz”

45


RESEARCH January 2012 Financial Metrics USD mn Income Statement Total Revenue Cost of Revenue Total Operating Expense Net Income Balance Sheet Cash Total Assets Total Current Liabilities Total Liabilities Long Term Debt Total Shareholder's Equity Analytics Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Historical EV (USD Mn) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (SAR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

2006

2007

2008

2009

2010

2011E

2012E

83 48 82 -1

1,983 867 1,500 323

1,642 843 1,383 -7,977

1,206 743 1,122 107

893 510 814 161

822 430 684 143

823 390 651 173

661 24,654 462 7,118 4,653 17,536

616 21,724 579 8,063 4,777 13,661

505 13,526 660 7,761 4,001 5,765

596 13,332 599 6,777 3,588 6,555

346 11,252 605 4,029 2,888 7,223

237 11,263 588 3,944 3,152 7,318

357 11,499 587 3,940 3,149 7,559

0.00 0.00 16.35 N.M. 5554.59 13270.81 3,992 N.M.

2.36 1.49 2,289.12 N.M. -11.89 -22.10 24,326 64.39 1.54 0.09 3.69 0.13 21 654 3,500 17% 20,165

-138.38 -58.98 -17.17 N.M. -37.74 -57.80 11,387 N.M. 1.37 -2.15 1.56 0.00 8 611 2,736 20% 7,892

1.64 0.81 -26.59 N.M. -1.43 13.72 10,888 72.64 1.20 0.03 1.77 0.00 8 625 1,444 18% 7,895

2.23 1.43 -25.98 50.34 -15.61 10.18 10,645 51.25 1.12 0.04 1.95 0.13 8 879 2,501 31% 8,104

1.95 1.27 -7.90 -11.66 0.10 1.33 10,178 42.65 1.01 0.04 1.97

0.00 4.73 0.00

7 282 1,289 17% 7,264

Source: Reuters Knowledge, Company Accounts, Markaz Research

Risk Metrics 6M

1Y

2Y

3Y

Monthly return stats Average Monthly Return

-3.06%

-0.27%

0.63%

-0.34%

Highest Monthly Return

4.09%

15.92%

60.64%

60.64%

Lowest Monthly Return

-9.55%

-10.80%

-16.52%

-29.86%

3

3

5

5

67%

58%

63%

64%

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

-17%

-19%

-43%

-43%

17.98%

26.68%

51.23%

54.05%

-57%

80%

-45%

-82%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

46


RESEARCH January 2012 Qatar Telecom (Qtel)

Stock Volatility

Code: QTEL.QA | Country: Qatar | Current MP: QAR 148.223 | YTD Performance: 0.7% Mcap: USD7.3Bn | Ann. St. Dev: 29% | YTD Turnover Velocity: 6% Expected Return (2012) Low Medium High Low Medium High

Year

2006

2007

2008

2009

2010

2011

2006

-4%

-2%

-18%

-8%

-2%

-2%

0%

-25%

-9%

-2%

-1%

-43%

-14%

-3%

-2%

32%

27%

18%

23%

11%

2007 2008 2009 2010 2011

1%

Background Qatar Telecom (Qtel) is the incumbent player in the domestic market providing various services such as local and international fixed telephone, mobile, internet, data, and cable television services. It has holdings across the Middle East and select Asian markets; most notably, its 52.5% stake in Wataniya Telecom (Kuwait). The company has a total subscriber base of 82mn across 17 countries. The government of Qatar owns 55% of the company while Abu Dhabi Investment Authority owns 9.99%. Analysis: Qtel reported revenues of USD 2.25bn for 3Q11, up 18% YoY and 1.8% QoQ. Net profit at USD 157mn, registered a YoY & QoQ decline of 13.0% & 15.8% respectively. Total customer base increased to 82.4mn, a YoY growth of 19.4%. The decrease in bottom-line is mainly attributed to seasonal promotions and foreign exchange losses. Revenue was up 17.5% in 9M11 to USD 6.5bn. During the period, Qtel acquired an additional 25% in Orascom Telecom Tunisie, bringing its overall stake to 75%, resulting in a full consolidation of the operation in Qtel’s numbers. Qtel recognized interest carried over from this consolidation with a minority interest charge, which put a dent in net profit, causing an overall decline of 17.8% for the period to USD 554mn. We expect FY11 net profit of USD 736mn from the company. In November 2011, the company acquired 7.45% in StarHub, Singapore's second biggest telecom firm, through its Asia Mobile Holdings joint venture with Singapore Technologies Telemedia. Qtel's effective holding now stands at 14.1%. The stock is trading at 13x earnings and is up 1% for the year. The stock has generated positive returns over 2Y (+25%), 3Y (+43%) and 5Y (+1%) periods. Qtel maintains a dividend yield in the 3%-3.5% range. Moreover, we rate the stock as having Medium risk due to a standard deviation of 29% while MVX has increased 12% during the last year. Our Expectation Broker estimates for FY12 net income are in the range of USD 769mn to 898mn. We expect Qtel to report USD 832mn in FY12 earnings on the back of increased revenues from overseas markets with lower penetration levels.

23

As of 01st December 2011

Kuwait Financial Centre “Markaz”

47


RESEARCH January 2012 Financials USD mn Income Statement Wireless Revenue Fixed Line Gross Revenue Net Profit Balance Sheet Cash Total Assets Total Current Liabilities Total Liabilities Long Term Debt Total Shareholder's Equity

2006

2007

2008

2009

2010

2011E

2012E

833 381 1,214 467

2,487 362 2,850 461

4,904 714 5,618 664

5,798 845 6,643 781

6,856 999 7,515 798

7,614 889 8,503 736

8,653 1,011 9,664 832

389 2,143 501 681 179 1,371

893 12,996 2,537 8,293 5,780 1,895

2,154 20,425 5,496 16,773 5,573 3,647

3,183 23,492 4,359 19,173 9,345 4,319

7,072 28,037 4,894 22,775 12,095 5,262

6,771 30,924 8,632 26,362

6,957 35,965 12,958 30,514

4,563

5,451

18.09 3.33 18.24 17.58 15.01 18.41 12,008 7.52 1.36 4.44 24.54 1.61 121 13 377 7% 5,846

15.18 2.85 13.13 2.21 19.35 21.84 12,223 9.07 1.38 4.54 29.90 1.15 149 11 413 6% 7,199

16.12 2.38 13.15 -7.89 10.30 -13.29

15.26 2.31 13.65 13.10 16.30 19.48

Analytics Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Historical EV (USD Mn) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (QAR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

34.06 24.31 18.22 21.80 3.54 3.25 48.22 134.67 97.14 42.84 -1.40 44.23 22.36 506.34 57.16 17.14 38.18 92.47 5,977 11,156 7,830 13.41 13.56 6.22 4.58 3.31 1.22 3.33 3.29 4.07 9.75 13.47 20.72 0.84 0.92 2.30 161 161 92 9 8 20 391 378 796 6% 6% 15% 6,187 6,268 4,411 Source: Reuters Knowledge, Company Accounts, Markaz Research

13.10 1.58 4.18 25.92 148 10 414 6% 7,327

Risk Metrics 6M

1Y

2Y

3Y

5Y

Monthly return stats Average Monthly Return

1.56%

0.38%

0.92%

0.80%

0.03%

Highest Monthly Return

16.06%

16.06%

16.06%

18.19%

18.19%

Lowest Monthly Return

-7.23%

-17.14%

-17.14%

-17.14%

-17.14%

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

2

3

3

6

10

50%

50%

42%

47%

50%

-8%

-8%

-8%

-8%

-58%

27.09%

28.68%

24.78%

27.55%

27.21%

-57%

12%

-67%

-85%

-34%

Kuwait Financial Centre “Markaz”

48


RESEARCH January 2012 First Gulf Bank

Stock Volatility

Code: FGB.AD | Country: UAE | Current MP: AED 16.524 | YTD Performance: -10.8% Mcap: USD6.6Bn | Ann. St. Dev: 30% | YTD Turnover Velocity: 5% Expected Return (2011) Low Medium High Low Medium High Year

2006

2007

2008

2009

2010

2011

2006

-36%

7%

-20%

-2%

1%

-1%

82%

-10%

13%

13%

8%

-55%

-10%

-3%

-5%

79%

42%

22%

2007 2008 2009 2010 2011

13%

0% -11%

Background First Gulf Bank (FGB) was established in 1979 and offers services through four primary business segments: Corporate Banking, Retail Banking, Treasury & Investments and Real Estate Activities. Retail segment contributes to 45% of the bank’s revenues and corporate segment contributes 41%. The bank operates through its 19 branches across the UAE, with staff strength of 897. FGB expanded geographically with presence in Singapore, Qatar, India and London. In March 2011, the bank disassociated itself from its partially owned subsidiary in Libya. FGB is the fourth largest bank in UAE in terms of Assets and Loans. Abu Dhabi ruling family owns 67% in the bank with the remaining 33% held by public. Analysis: 3Q11 net profit increased 8.5% YoY and 3.4% QoQ to USD 251mn. The strong numbers were as a result of 26.5% YoY growth (+11.2% QoQ) in net interest income to USD 369mn. Provisions also saw 6.6% YoY decrease to USD 103mn. Non-interest revenue decreased 43.5% YoY to USD 73mn on account of lower Fee Income (-65%). Loan book increased 3.4% over the quarter to USD 27.8bn while deposits declined 4.4% to USD 26.1bn. Results for the first nine months were stable: loans jumped 6.7% while deposits grew 4.1%. 9M11 Net interest income was up 18% to USD 1,013mn as Interest Income increased 8% to USD1,430mn while Interest expense was down 10%. Net interest margins saw a small increase from 3.6% in Dec-10 to 3.7% in Sep-11. Provisions decreased 5% over 9M10, coming in at USD 340mn. Consequently, net profit came in at USD 731mn, a 5% growth. NPL ratio stood at 3.4% (4Q10: 3.7%) with coverage of 105.1% (4Q10: 89.4%). Tier 1 ratio was 19.2% and Total Capital ratio was 22.3%. Asset quality issues continue to haunt banks in the emirates. Recently, Fitch ratings issued a warning that weak global economy and slowdown in Abu Dhabi will represent new headwinds for the UAE banking system. Fragile real estate sector, Dubai GRE's and several UAE corporates continue to pose asset quality challenges. FGB is trading at 7x earnings and has lost 11% for the year. The stock has generated positive returns over 2Y (+16%), 3Y (+90%) and 5Y (+54%) periods. It carries a dividend yield of about 3.5%-4%. We see the stock as carrying high risk given a standard deviation of 30% while MVX has increased 25% over the last year; the stock also had a max drawdown of 22% during the one year period. Our Expectation We expect FGB to report a net profit of USD 917mn in FY11 and USD 1,178mn in FY12, implying a growth of 28% in 2012. Brokers estimate FY12 net income to be between USD 1,050mn and USD 1,335mn. 24

As of 12th December 2011

Kuwait Financial Centre “Markaz”

49


RESEARCH January 2012 Financials USD mn Income Statement Interest Income Net Interest Income Loan Loss Provision Net Income Balance Sheet Cash Loans/Advances Deposits Total Assets Total Liabilities Total Shareholder's Equity

2006

2007

2008

2009

2010

2011E

2012E

785 329 36 418

981 362 56 547

1,349 702 154 818

1,767 1,044 457 901

1,791 1,159 446 931

1,788 1,246 419 917

1,891 1,394 381 1,178

1,136 6,849 9,373 13,000 10,554 2,446

2,444 12,088 14,224 19,924 17,170 2,755

1,362 21,603 20,133 29,267 24,845 4,422

1,510 24,603 23,524 34,154 28,024 6,129

2,321 26,030 26,878 38,314 31,747 6,567

2,483 28,138 27,442 40,722 33,689 7,033

2,695 30,980 28,842 44,196 36,452 7,744

13.89 16.85 104.59 14.70 2.64 30.92 10.15 16.70 38.61 19.31 7.22 0.97 0.58 4.31 0.13 15 186 626 13% 6,046

5.80 14.26 96.85 14.18 2.43 1.37 3.33 12.18 7.14 17.83 7.79 0.98 0.61 4.81 0.16 17 157 681 11% 6,832

8.10 2.10 102.54 11.93 1.74 -0.17 -1.48 6.29 7.10 18.05 6.60 0.94 0.61 4.69

10.10 5.10 107.42 15.21 2.67 5.77 28.41 8.53 10.10 16.53

Analytics Loans Growth (%) Deposits Growth (%) Loan/Deposits (%) Return on Equity (%) Return on Assets (%) Revenue Growth (%) Earnings Growth (%) Assets Growth (%) Equity Growth (%) Cost-to-Income (%) P/E Price/Book EPS (USD) BVPS (USD) DPS (USD) Market Price (SAR) Annual Trading Volume (mn) Annual Trading Value (USD mn) Turnover Velocity M Cap (USD mn)

84.95 76.50 78.71 98.89 51.76 41.54 73.07 84.98 107.30 17.09 19.84 18.50 3.22 2.74 2.80 52.42 24.92 37.59 45.49 30.75 49.65 81.71 53.26 46.89 14.84 12.63 60.52 19.35 21.61 24.15 9.96 13.80 4.30 1.70 2.74 0.76 0.29 0.38 0.54 1.69 1.91 3.07 0.17 0.17 0.09 11 19 9 185 366 500 814 1,652 2,710 15% 28% 50% 4,152 7,540 3,365 Source: Reuters Knowledge, Company Accounts, Markaz Research

16 79 367 5% 6,596

Risk Metrics 6M

1Y

2Y

3Y

5Y

Monthly return stats Average Monthly Return

-1.53%

0.37%

-0.05%

0.51%

1.12%

Highest Monthly Return

14.38%

14.38%

14.38%

27.82%

35.59%

Lowest Monthly Return

-10.63%

-10.68%

-16.08%

-24.76%

-30.50%

Largest Losing Streak (# of Months) % of Negative Months Maximum Drawdown* Standard Deviation %Change in MVX *Largest decline from a previous high Source: Reuters, Markaz Research

3

3

4

4

6

67%

50%

54%

53%

48%

-22%

-22%

-22%

-22%

-72%

30.99%

29.61%

29.49%

40.61%

41.97%

-16%

25%

7%

-79%

60%

Kuwait Financial Centre â&#x20AC;&#x153;Markazâ&#x20AC;?

50


RESEARCH January 2012 Appendix 1: Large Caps

Company Name

SABIC Al Rajhi Bank

Domicile Saudi Arabia Saudi Arabia

Market Cap (USD mn)

Value Traded (USD mn)

Turnover Velocity (%)

P/E Ratio

P/B Ratio

Dividen d Yield (%)

RoE, TTM (%)

RoA, TTM (%)

Govt. Ownershi p

73,992

31,235

39.6

9.5

2.1

4.2

24

13.9

75.2

27,697

4,698

15.4

14.4

3.3

4

23.8

3.6

9.9

Qatar National Bank

Qatar

24,861

1,653

7.4

12.2

2.4

3.1

22.2

2.9

50

Emirates Telecommunications Corp.

UAE

22,174

864

3.8

10.5

1.9

6.3

18.9

7.1

60

Industries Qatar

Qatar

18,716

2,328

11.8

9.5

3

4.1

34.8

23.9

70.1

Saudi Telecom Co

Saudi Arabia

18,131

1,763

8.6

8.7

1.5

6.8

17

7.1

83.6

National Bank of Kuwait

Kuwait

15,239

1,918

11.4

15.7

2

3.4

14.3

2.4

0

Saudi Electricity Company

Saudi Arabia

14,776

2,829

18.7

23.2

1.1

5.2

4.7

1.2

81.2

Zain Group

Kuwait

14,708

1,876

9.9

12.4

1.9

22.2

12.1

9

24.6

12,132

1,764

15.5

11.3

6.3

6.9

59.5

50.5

59.6

10,511

658

5.2

10

1.6

3.3

16.2

2.3

49.3

9,892

3,399

33.6

7.6

2.2

4.3

31.4

14.1

38.6

9,439

493

4.9

11.1

1.2

5.4

10.8

1.8

49.8

Saudi Arabian Fertilizers Samba Financial Group Etihad Etisalat Co Riyad Bank

Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia

Kuwait Finance House

Kuwait

8,791

1,573

16.5

30.2

1.9

2.2

6.2

0.4

24.4

National Bank of Abu Dhabi

UAE

8,284

199

2.5

9

1.2

2.7

15

1.6

70.5

7,859

305

3.8

11

1.8

1.8

16.8

2

9.5

7,482

344

4.3

10

1.5

2.9

16

2.4

12.8

7,411

619

8

39.7

1.1

6.7

2.7

1.7

0

Saudi British Bank Banque Saudi Fransi Kingdom Holding Co

Saudi Arabia Saudi Arabia Saudi Arabia

Qatar Telecommunications

Qatar

7,096

368

5.1

10.8

1.3

3.3

12.7

5.5

65

First Gulf Bank

UAE

5,841

367

5.8

6.9

0.9

3.7

14.4

2.5

5.3

Note: Market Cap and Value Traded are till Sep-11 Source: Reuters Knowledge, Markaz Research

Kuwait Financial Centre “Markaz”

51


RESEARCH January 2012 Appendix 2: Correlations 3 Year Correlations

1 Year Correlation

Kuwait Financial Centre “Markaz”

52


RESEARCH January 2012 Disclaimer This report has been prepared and issued by Kuwait Financial Centre S.A.K (Markaz), which is regulated by the Central Bank of Kuwait. The report is owned by Markaz and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report cannot be quoted without the prior written consent of Markaz. Any user after obtaining Markaz permission to use this report must clearly mention the source as “Markaz “.This Report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to its accuracy or completeness. Markaz has no obligation to update, modify or amend this report. This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is historical and is not necessarily indicative of future performance. Kuwait Financial Centre S.A.K (Markaz) does and seeks to do business, including investment banking deals, with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. For further information, please contact ‘Markaz’ at P.O. Box 23444, Safat 13095, Kuwait. Tel: 00965 1804800 Fax: 00965 22450647. Email: research@markaz.com

Kuwait Financial Centre “Markaz”

53


RESEARCH October 2011


RESEARCH January 2012


RESEARCH January 2012

GCC Defensive Bellwether Stocks  

GCC Defensive Bellwether Stocks

Read more
Read more
Similar to
Popular now
Just for you