Kuwait Financial Centre “Markaz” RESEARCH
MENA Market Intelligence
November 2012
Week ending 22nd of November
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
M.R. Raghu CFA, FRM Head of Research +965 2224 8280 rmandagolathur@markaz.com
Humoud Salah N AL Sabah Financial Analyst +965 2224 8530 halsabah@markaz.com
Kuwait Financial Centre S.A.K. “Markaz”
P.O. Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 markaz.com
Market Performance: With the exception of Turkey and Kuwait [+0.3% and +1.95% respectively] MENA markets ended the week on a negative note. Egypt was the biggest decliner [-3.87%] following fresh political setbacks. Equity Research: Equity research reports had split recommendation outlook, out of 7 research notes covered, 50% were “Buy” while 50% were “Neutral”. Fixed Income Development: GCC debt security issuance in circulation reached USD 233 Bn, which is equivalent to 17% of GDP – this is relatively low when compared with developed markets. In developed markets, Government bonds alone exceeded 100% of GDP. Table 1: Market Performance M. Cap (USD Bn) MENA Markets
Last
WTD
MTD
YTD
2011
Close
%
%
%
%
Saudi (TASI)
361
6,665
-1.88
-1.85
3.86
-3
Turkey ISE National 100
230
71,004
0.30
-2.1
38.5
-22
Kuwait SE WT.INDEX
104
418
1.95
2.72
3.03
-16
Qatar(QE Index)
97
8,410
-0.45
-1.6
-4.21
1
Abu Dhabi (ADI)
79
2,642
-1.82
-1.12
10
-12
Morocco (CAI)
53
9,662
-0.23
1.65
-12.39
-13
Dubai (DFMGI)
48
1,597
-1.24
-1.42
17.97
-17
Egypt (Hermes)
60
546
-3.87
-5.14
43.13
-42
Jordan (Amman)
23
4,562
-0.26
0.24
-1.86
-13
Bahrain (BAX)
16
1,041
-1.51
-1.61
-8.98
-20
Oman(Muscat SM)
15
5,555
-1.42
-1.86
-2.47
-16
Lebanon (BSE)
12
1,114
-0.18
0.4
-5.34
-20
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 November 2012 What Analysts are Recommending Market price on recom day
Target
House
Currency
Recommendation
Date of recommendation
Aramex
AED
Overweight
20-Nov
1.92
2.51
Al-Jazira Capital
Maridive
USD
Accumulate
19-Nov
1.04
1.3
Audi Sardar
GB Auto
EGP
Buy
22-Nov
29
38.7
NAEEM
Sixth of October development 7 Investment
EGP
Hold
18-Nov
20.1
19.2
PHAROS
Vodafone Qatar
QAR
Market Perform
18-Nov
8.68
9.36
QNB Capital
Qatar international Islamic Bank
QAR
Market Perform
19-Nov
52.2
57.25
QNB Capital
Raysut Cement
OMR
Neutral
21-Nov
1.391
1.365
Oman Bank
Company
Equity Recommendation - Key points Company Sixth Of October Development and Investment (Egypt)
House
Pharos
Recommendation
Rationale
Hold
SODIC have a strong franchise and solid business model; however, it lacks positive triggers. Based on the previous Pharos issued a “Hold” recommendation with a price target of EGP 19.2.
Vodafone Qatar (Egypt)
Qatar National Bank
Aramex (U.A.E)
ALJAZIRA Capital
Overweight
Commercial International Bank (Qatar)
Qatar National Bank
Market perform
Maridive (Egypt)
Audi Sardar
Accumulate
Market Perform
Subscriber base increased 6.6% during the 3rd quarter, this came at the expense of ARPU‟s which declined by 5.1% during the quarter. Based on the above, QNB reiterates its “Market perform” recommendation with a price target of QAR8.68, indicating a 7.8% upside potential. Despite lower than expected 3Q12 results, Al-Jazira remains bullish on Aramex. Recommendation is maintained at “Overweight” with a new target price of AED2.51, implying a 32% upside potential over current price. 3Q12 profitability was lower than expected; nevertheless, QNB forecast that CIB will benefit from Qatar‟s continuous economic growth. QNB initiated its report on CIB with a “Market perform” recommendation and a price target of QAR 57.25, indicating a 9.7% upside potential. 3Q12 revenues stood at USD 62.3mn, 7% above expectation; while, Cost of Goods Sold dropped by 46% YoY to USD 36.9 mn. The ability to renew contracts were one of the top reasons that lead to an “Accumulate” recommendation with a price target of USD1.04
RESEARCH November 2012
Raysut Cement (Oman)
GB Auto (Egypt)
Oman Arab Bank
NAEEM
Neutral
Valuations indicate that Raysut is fairly valued; thus, Oman Arab Bank issued a “Neutral” recommendation with a price target of OMR 1.365.
Buy
Supply remains the main issue affecting GB Auto, However, its being addressed by Hyundai Motor Corporation. Recovery in the commercial vehicle segment lead NAEEM to reiterates its “Buy” recommendation with a price target of EGP 38.7, implying a 33% upside potential.
RESEARCH November 2012 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
Title Dana Gas Debt Deal Said to Include $100 Million Cash Payout
NBB, SIO Hold Talks With Investment Dar on Bahrain Islamic Stake
GCC Utilization of Bond Markets is Growing
Record Gulf Sukuk Mask Dearth of Private Sales: Islamic Finance
Market
View
U.A.E
Dana Gas PJSC plans to pay bondholders about $100 million in cash as part of the $920 million debt restructuring accord. The cash would be paid to holders of the Shariah-compliant notes, or Sukuk, once a lockup agreement between Dana Gas and its creditors is signed, likely later this month.
Bahrain
National Bank of Bahrain and the Social Insurance Organization are in talks with Investment Dar, the Kuwait-based majority owner of Aston Martin Lagonda Ltd., for a potential acquisition of shares in Bahrain Islamic Bank. The talks are at a preliminary stage and a potential acquisition is subject to completion of the due diligence process and regulatory approvals. It didnâ€&#x;t specify the amount of shares. Investment Dar holds a 39.75 percent stake in the Bahraini bank. Investment Dar last year restructured the terms on about $5 billion of loans after defaulting in 2009.
GCC
There is US$233bn in debt securities issued in the GCC in circulation, equivalent to 17% of the region's GDP. This is a relatively low level compared with advanced economies where government bonds alone often amount to over 100% of GDP. According to analysis by QNB Group, this debt includes US$17bn in central bank T-bills (short-term debt instruments that are generally used to manage domestic liquidity) and US$216bn in longer-term bonds & Sukuks.
GCC
Gulf governments, spending their oil wealth on $1 trillion worth of projects from airports to soccer stadiums, which will fuel a second year of record Islamic bond sales in 2013 as private companies remain reliant on bank loans. Sukuk issuance by governments and state-linked companies in the sixnation Gulf Cooperation Council made up more than 80 percent of the $20 billion of notes sold this year. Thatâ€&#x;s about 10 percentage points more than in Malaysia, home to the biggest global Sukuk market.
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