Kuwait Financial Centre “Markaz” RESEARCH
MENA Market Intelligence
Week ending 14th of October
Research Highlights: Provide readers with weekly updates on analysts‟ recommendations from different investment houses, collate views on the state of MENA economy, sector developments and fixed income news.
Markaz Research is available on: Bloomberg - Type “MRKZ” Thomson Research, Reuters Knowledge Nooz Zawya Investor ISI Emerging markets Capital IQ FactSet Research Connect TheMarkets.com
Market Performance: MENA Markets were mainly negative during the week, weak global growth estimates were the main culprit. Morocco and Saudi Arabia were the biggest losers shedding 1.9% and 1.3% respectively. Turkey and Egypt led the weekly gainers by gaining 3.3% and 0.5% respectively. Equity Research: During the week we covered 9 research notes. It is interesting to observe that with the exception of 1 note, all notes covered were concentrated on the Saudi Market. Out of the 9 research notes four were “Buy/Overweight” while five were “Hold/Neutral”. Fixed Income Development: Sukuk issuance is back on the rise, Bank Saudi Fransi got approval for a SAR 2.5 Sukuk; while in Qatar, QIIB priced its USD 700mn Sukuk at a profit rate of 2.668%. By the end of this month Dana Gas will mature its USD 1 Bn Sukuk; preliminary reports suggest that creditors and the company will reach an equitable solution in terms of repayments.
Table 1: Market Performance Indicators
M. Cap (USD Bn)
M.R. Raghu CFA, FRM Head of Research +965 2224 8280 email@example.com
Humoud Salah N AL Sabah Financial Analyst +965 2224 8530 firstname.lastname@example.org
Kuwait Financial Centre S.A.K. “Markaz”
P.O. Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 markaz.com
Turkey ISE National 100
Kuwait SE WT.INDEX
Abu Dhabi (ADI)
Note: 1 Weekend Details – Saudi Arabia – Thursday & Friday; Turkey, Morocco & Lebanon – Saturday & Sunday; MENA Ex-Saudi Arabia, Turkey, Morocco & Lebanon – Friday & Saturday; US, European & Emerging Markets – Saturday & Sunday
RESEARCH August 2012
What Analysts are Recommending Market price on recom day
Date of recommendation
Qatar National Bank
Arab National Bank
Jarir Marketing Company
House NCB Capital Audi Sardar Audi Sardar Audi Sardar Audi Sardar NAEEM NCB Capital NCB Capital NCB Capital
Equity Recommendation - Key points Company
Qatar National Bank (Qatar)
Yamama Cement (Saudi Arabia)
Jarir Marketing Company (Saudi Arabia)
Extra (Saud Arabia)
Despite 3Q12 disappointment, Audi Sardar issued an “Accumulate” recommendation with a price target of QAR164.8, citing strong loan book growth and close dealings with the government of Qatar as positive indicators.
NCB Capital issued a “Neutral” recommendation with a price target of SAR 52.2. The main Rationale behind this decision was: limited capacity, lower than average growth and plant relocation.
NCB Capital estimates that all positive events are priced in Jarir‟s stock price; thus, NCB reiterates its neutral recommendation with a price target of SAR151
3Q12 results were positive; revenue increased by 14.5% YoY , Operating income increased 8.2% YoY, while, net income grew by 7.5% to SAR 28.4 mn.
RESEARCH August 2012
AlMarai ( Saudi Arabia)
Qassim Cement (Saudi Arabia)
Despite positive 3Q12 results, Audi Sardar reiterates a Hold recommendation with a price target of SAR 66.71 citing higher input costs as the main reason for this recommendation.
Higher cost and lower sale volume send 3Q12 net profit down 3.9% YoY to SAR 111mn. NCB Capital remains “Neutral” with a price target of SAR 79.3 pending full financial results.
Riyad Bank (Saudi Arabia)
Arab National Bank (Saudi Arabia)
Suez Cement (Egypt)
3Q12 loan growth was flat on a QoQ basis and non-interest income were below Audi Sardar‟s estimates. Based on the above Audi Sardar lowered the target price of Riyad Bank to SAR 27.3 while reiterating the “Accumulate” recommendation indicating a 20% upside potential. 3Q12 results: net interest income increased 8% YoY to SAR 846mn, non-interest income decreased 6% to SAR 342mn while net profits increased 10% YoY to SAR 573 mn. Audi Sardar reiterates its “Buy” recommendation with a new target price of SAR 36.4. 2Q12 were a disappointment. Revenues declined by 12% YoY to EGP 1,175mn, while net profits slid by 11% YoY to EGP 125mn. NAEEM issued a “Hold” recommendation with a price target of EGP24.5.
Fixed Income News Sources which include Bloomberg, Zawya, and daily newspapers were utilized in the creation of the fixed income section which is mainly from Markaz GCC daily report
Qatar QIIB Prices $700 Mln Sukuk After Orders Top $5 Bln
Qatar International Islamic Bank (QIIK.DO) has priced a $700 million, five-year Islamic bond, or Sukuk, carrying a profit rate of 2.688%, at par, after receiving strong demand, according to a lead arranging bank. Orders booked were in excess of $5 billion, a person familiar with the deal, who declined to be identified, told Zawya Dow Jones earlier in the day. HSBC, QNB Capital and Standard Chartered Bank were book runners on the issue. They helped arrange the investor meetings for QIIB in the Middle East, Asia and Europe. QIIB 's bond follows the $750 million Sukuk issued by Qatar Islamic Bank last week and indicates the healthy global appetite for Gulf debt.
RESEARCH August 2012
Banque Saudi Fransi Gets Approval for 2.5 Billion Riyal Sukuk
Sukuk Yields at Record Low on World Growth Cuts
Morocco delays $1 bln sovereign bond sale
Dana Rises as Investors See Sukuk Resolution
Abu Dhabi's NBAD places $32 mln renminbi bond
Banque Saudi Fransi, partly owned by Credit Agricole SA, said it received approval from the Saudi central bank to issue as much 2.5 billion riyals ($667 million) in Sukuk. The Islamic bonds will enhance the bank‟s capital base and help expand its lending activities, the Riyadh-based lender said in a statement to the Saudi bourse website today. The maturity of the Sukuk is no more than five years, it said. Sales of Sukuk in the six-member Gulf Cooperation Council have almost quadrupled this year to $18.5 billion as Saudi Arabia‟s state-run General Authority of Civil Aviation and Qatar‟s government sold $4 billion each.
Investors say a rally in Islamic bonds that‟s driven borrowing costs to a record low will last through year-end as global growth-forecast cuts boost demand for safer securities. The International Monetary Fund predicted this week that the world economy will expand 3.3 percent in 2012, the slowest pace since the 2009 recession. Appetite for Shariah-compliant notes will be supported so long as Europe‟s fiscal crisis lingers, according to OCBC Al Amin Bank Bhd. in Kuala Lumpur.
Morocco has delayed its maiden dollar bond sale to end-November pending market stability, the budget minister said in published remarks on Wednesday, but banks have already been mandated for an issue that may exceed the initial $1 billion mark. The delay's announcement, carried by L'Economiste newspaper, comes amid speculation King Mohammed would soon make a rare official tour of the Gulf Arab region from where Rabat hopes to raise a substantial share of the issue.
Dana Gas PJSC surged to the highest level since April on investor optimism the fuel producer may reach a resolution with investors on $1 billion in Islamic bonds maturing this month. The shares soared 4.4 percent to 47 fils, the highest level since April 25. Shareholder Crescent Petroleum Co.‟s President Badr Jafar said he was “very optimistic about the professionalism of Dana Gas management to reach a reasonable resolution with investors. Discussions are ongoing with Egypt regarding scheduling payments.”
National Bank of Abu Dhabi , Hong Kong branch, has completed its second offshore renminbi bond in a CNH200m (USD32m) 1-year issue at 3.1%. That pricing translated to around 135bp over Libor, assuming mid-swaps. BNP Paribas arranged the deal,
RESEARCH August 2012 which will settle on October 16. NBAD's debut offshore renminbi bond issue was a CNH100m 1-year note issue at 2.9% in early September this year. That piece was quoted at 3.418%/2.917% in the secondary market.
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