Value Picks in the KSA and MENA Markets Quarterly Quant Analysis
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Contents
Discovering value using quantitative analysis Methodology employed KSA Portfolio – Value Picks MENA Portfolio – Value Picks
Back-testing the performance of the portfolios
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Quant Analysis Methodology Description
E
• We rank companies based on market cap with a minimum limit of $XXX mn and select the top 75% companies from the region/exchange as the case may be to avoid small-cap bias
PL
• The selected companies are then ranked based on ROE (TTM*) with the company recording the highest ROE getting a rank one • A similar ranking is generated for the selected companies based on trailing twelve month’s Earnings Yield - the company with the highest yield getting a rank one
M
• Both ranks are then summed to arrive at a cumulative rank with lower scores resulting in top picks
SA
• The value pick portfolio is constructed by picking companies falling in the top decile i.e. top 10%
*TTM represents upto 4Q 2008
© 2014 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
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Value Picks – KSA Valuation and Market Data for 1Q 2009 Portfolio Rank
Company name
Sectors
Bloomberg
M Cap
LTP*
Price chg
ROE
EY
TTM (%)
Ticker
($US mn)
LCY
% YTD
Rank
Rank
ROE
Valuation
EY
PE-TTM
PE-09E
DY P/B-TTM
08 (%)
Company 1
Petrochem, O&G, Chem
XXX
XXX 111.8
24.5
1
1
64.0
16.0
6.2
14.5
4.0
11.6
2
Company 2
Building Materials
XXX
XXX
44.0
(0.7)
3
2
38.0
14.0
7.2
12.9
2.7
N/A
3
Company 3
Telecom
XXX
XXX
52.5
3.9
7
5
31.0
11.0
8.9
7.7
2.8
5.4
4
Company 4
RE & Construction
XXX
XXX
72.0
(5.4)
4
13
36.0
10.0
9.8
N/A
3.5
4.9
5
Company 5
Petrochem, O&G, Chem
XXX
XXX 116.8
42.4
6
14
31.0
10.0
10.2
9.5
3.2
7.0
6
Company 6
Building Materials
XXX
XXX
61.3
32.0
5
18
34.0
9.0
10.9
13.5
3.7
8.1
7
Company 7
RE & Construction
XXX
XXX
40.8
26.7
15
8
24.0
11.0
9.3
8.3
2.2
8.1
8
Company 8
Consumer Goods/Svcs
XXX
XXX
50.0
(8.8)
13
11
24.0
10.0
9.7
8.3
2.4
N/A
9
Company 9
Petrochem, O&G, Chem
XXX
XXX
67.0
27.2
19
6
23.0
11.0
8.9
11.0
2.0
4.6
10
Company 10
Building Materials
XXX
XXX
30.1
18.9
18
7
23.0
11.0
9.0
10.2
2.1
5.0
SA
M
PL
E
1
Portfolio and Market Valuation Metrics
Market KSA Porfolio KSA Market
Market Cap
ROE(%)
EY(%)
P/E
PBV
DY
P/E
($US mn)
TTM
TTM
TTM
TTM
08(%)
09E
XXXX
27.2
11.6
8.7
2.4
5.5
10.0
XXXX
9.5
8.4
11.9
2.0
4.7
11.4
The KSA portfolio trades at a P/E 09E of 10.0 versus the market at 11.4; the portfolio has a dividend yield of 5.5 vs the market at 4.7 © 2014 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
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Back-testing the KSA Portfolio • The KSA portfolio has consistently outperformed the TASI for inception years 2004 to date • The portfolio has underperformed the TASI YTD
E
Portfolio performance since 1st Jan 2004 180%
PL
150%
90% 60% 30% 0% -30% -60% -90% xxx
xxx
xxx
M
Cumulative Return
120%
xxx
xxx
xxx
xxx
xxx
SA
Saudi Portfolio- Top Decile
xxx
xxx
xxx
TASI
59.9%
77.9%
18.0%
Relative Performance
xxx
Annual Returns Date of inception Yr 1
Portfolio
xxx
TASI
Returns Since Inception Date of inception Yr 1
xxx
TASI 63.6%
Portfolio
Relative Performance
49.6%
-13.9%
Yr 2
-3.6%
28.3%
31.9%
Yr 2
76.0%
77.1%
1.1%
Yr 3
-79.6%
-48.8%
30.8%
Yr 3
-63.8%
-47.7%
16.0%
Yr 4
-15.9%
-1.1%
14.8%
Yr 4
32.8%
32.8%
0.0%
Yr 5
-48.6%
-33.9%
14.8%
Yr 5
-71.4%
-52.1%
19.3%
Yr 6^
22.8%
18.2%
-4.6%
Yr 6^
22.8%
18.2%
-4.6%
^ Yr 6 returns year-to-date
© 2014 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
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5
Value Picks – MENA (1/2) Valuation and Market Data for 1Q 2009 Portfolio Company Name
Country
Sector
MCap
LTP*
Price Chg
ROE
EY
LCY
% YTD
Rank
Rank
1
Company 1
Kuwait
Consumer Goods/Svcs
XXX
($US mn) XXX
2
Company 2
Egypt
RE & Construction
XXX
XXX
3
3
Company 3
Qatar
Petrochem, O&G, Chem
XXX
XXX
168
4
Company 4
UAE
RE & Construction
XXX
XXX
3
5
Company 5
Egypt
Petrochem, O&G, Chem
XXX
XXX
43
6
Company 6
Bahrain
Financials
XXX
XXX
Valuation
(10)
1
3
119
36
PETTM 2.8
15
5
5
61
31
30
4
10
61
(11)
14
9
36
(11)
10
14
1
36
20
7
1
PL
Ticker
TTM (%)
DY
N/A
P/BTTM 3.3
3.2
2.9
2.0
N/A
24
4.2
5.5
2.6
6.0
26
3.8
3.4
1.4
4.2
45
23
4.4
3.8
2.0
N/A
32
29
3.4
4.8
1.1
5.3
ROE
E
Rank
Bloom berg
EY
PE-09E
08 (%) N/A
Company 7
Saudi Arabia RE & Construction
XXX
XXX
4
(1)
24
4
29
34
2.9
2.8
0.8
3.2
Company 8
Saudi Arabia Petrochem, O&G, Chem
XXX
XXX
112
25
3
26
64
16
6.2
14.5
4.0
11.6
9
Company 9
Egypt
Petrochem, O&G, Chem
XXX
XXX
10
(3)
11
18
39
19
5.3
5.7
2.0
16.9
10
Company 10
Bahrain
Financials
XXX
XXX
4
(29)
16
21
35
18
5.6
4.6
1.9
1.0
11
Company 11
UAE
Financials
XXX
XXX
1
30
36
2
26
37
2.7
1.7
0.7
N/A
12
Company 12
Egypt
Others
XXX
XXX
11
12
26
17
29
20
5.0
4.4
1.4
17.6
13
Company 13
Saudi Arabia RE & Construction
XXX
XXX
44
(1)
12
35
38
14
7.2
12.9
2.7
N/A
14
Company 14
Bahrain
Others
XXX
XXX
2
75
25
25
29
16
6.1
4.2
1.8
8.3
15
Company 15
Qatar
Petrochem, O&G, Chem
XXX
XXX
106
5
8
44
46
12
8.0
9.0
3.7
7.5
16
Company 16
UAE
Petrochem, O&G, Chem
XXX
XXX
187
17
7
51
51
12
8.6
16.6
4.4
N/A
17
Company 17
Bahrain
Financials
XXX
XXX
0
(23)
57
1
22
42
2.4
N/A
0.5
15.7
18
Company 18
Qatar
Financials
XXX
XXX
41
(5)
35
24
26
17
6.0
N/A
1.6
12.1
19
Company 19
UAE
Financials
XXX
XXX
26
40
31
31
27
14
6.9
8.6
1.9
3.9
20
Company 20
Oman
Telecom
XXX
XXX
1
(17)
18
46
33
12
8.2
7.2
2.7
7.7
SA
M
7 8
© 2014 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
www.sutherlandglobal.com February 20, 2014
6
Value Picks – MENA (2/2) Value Picks and Market Valuation Metrics Market Cap
ROE(%)
EY(%)
P/E
PBV
DY
P/E
($US mn)
TTM
TTM
TTM
TTM
08(%)
09E
E
Market
XXXX
39.0
17.9
5.6
2.2
7.1
6.4
MENA Market
XXXX
11.2
9.9
10.1
1.7
5.2
8.4
PL
MENA Porfolio
• The MENA portfolio trades at a P/E 09E of 6.4 vs the market at 8.4
SA
M
• The dividend yield of the portfolio is 7.1% vs the market’s yield at 5.2%
© 2014 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
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7
Back-testing the MENA Portfolio •
The MENA Portfolio has outperformed MSCI Arabia since inception
E
Portfolio Performance Since 1st June Yr 1* 120%
PL
Cumulative Return
90% 60% 30% 0% -30%
M
-60% -90% xxx
xxx
xxx
xxx
xxx
xxx
xxx
Returns Since Inception Date of inception
MSCI Arabia
Portfolio
xxx
xxx
xxx
xxx
MENA Portfolio- Top Decile
SA
MSCI Arabia
xxx
Annual Returns
Relative Performance
Date of inception
MSCI Arabia
Portfolio
Relative Performance
Yr 1^
-40.0%
29.5%
69.6%
Yr 1^
30.4%
35.6%
5.2%
Yr 2
-70.4%
-6.1%
64.3%
Yr 2
-46.9%
-20.8%
26.1%
Yr 3
-23.5%
14.7%
38.2%
Yr 3
37.8%
47.2%
9.5%
Yr 4
-61.3%
-32.5%
28.8%
Yr 4
-74.4%
-46.3%
28.1%
Yr 5
13.1%
13.8%
0.7%
Yr 5^
13.1%
13.8%
0.7%
* Since inception of MSCI Arabia
^ From June Yr 1; Yr 5 returns till date
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8
Thank You
Š 2014 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
www.sutherlandglobal.com February 20, 2014
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