Qatar Listed Stocks Handbook III

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Transcript of Qatar Listed Stocks Handbook III

Qatar Listed Stocks HandbookIII Edition, 2012

www.cbinvest.com.qa

Qatar Listed Stocks Handbook

Foreword

Dear Investors in Qatar, It gives us great pleasure to introduce the 3 edition of Qatar listed stocks Handbook. It highlights the performance and forecast of the Qatar Economy and describes the Qatar Exchange and its actors. It also contains brief note on each of the 42 companies listed on the Qatar Exchange. The Qatar stock exchange has continuously rewarded investors over the past 15 years with CAGR in excess of 15%. After having delivered solid dividends circa 4% over the past few weeks, the Qatari stocks still trade at an attractive P/E of around 9 times. We believe Qatar Exchange has a bright upside potential for the rest of 2012 and beyond. The aim of this handbook is twofold. First, is to provide you with relevant benchmarks on past performance and relative valuation of each existing listed Qatari company, and second is to initiate or reinforce your appetite for increasing your exposure to the Qatar economy and listed Qatari companies.rd

I hope you will find this handbook and future research editions of Commercialbank Capital (COMCAP) of interest.

Alex Carre de Malberg Global Head Commercialbank Capital

Dr. Abdulaziz A Al-Ghorairi Senior Vice - President & Chief Economist Commercialbank Capital

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Qatar Listed Stocks Handbook

April 2012 ContentsQatari Economy Economic indicators Qatar Exchange Recent announcements Overview List of Qatari funds Commercialbank Investment Services QE constituents Summary of companies traded in QE Company profiles Appendix 5 7 8 9 10 11 14 56 3 4

SummaryQatar is one of the worlds fastest growing economies. The countrys GDP grew at an impressive rate of 14.7% during 2011, amid times when most of the global economies were struggling to recover from the financial crisis. For 2012, Qatars GDP growth is estimated to be 6.0%, according to the IMF. Qatars GDP growth surpassed other GCC nations during 2011; Saudi Arabias GDP grew 6.5%, UAEs 3.3% and Bahrains just 1.5%. Oil & gas are major contributors to the GDP, accounting for 58.3% of the nominal GDP, 87% of the export earnings and 55% of the government revenues in 2011. LNG forms a major portion of revenues from the hydrocarbons sector. Qatars economic indicators signal strong signs of growth surging revenues from oil & gas, strong government financing support, diversification in non-hydrocarbon sectors, external surpluses, and easing of deflationary pressure. According to EIA, Qatar had a total of 896 cubic feet of proved natural gas reserves. The Qatar Exchange (QE) Index comprises of 20 stocks, selected based on criteria that ensure transparency as well as liquidity in the market. Recently, the exchange has announced new equity indices to further strengthen the existing QE Index. These will be All Share Index and Total Return Index to monitor market benchmark and sector performance in real time. Currently, 42 companies are listed on the Qatar Exchange. Qatar benchmark index gained 0.43% to close at 8779 points in 2011. Stocks in the Services sector were the most traded with 41.7% of the total traded value and 55.8% of the total traded volume. Banking and Financial sector was the second most traded sector, followed by Industrial sector and the insurance sector. Qatar Exchange also announced formation of QE Venture Market, an SME market exclusively for the small and medium sized enterprises for listing and trading their securities. This has been done as the government realized the importance of SMEs in economic development, creation of job opportunities and increasing the countrys output.2

ContactsCommercialbank Capital (Investment Banking & Research) Dr. Abdulaziz A Al-Ghorairi Senior Vice-President & Chief Economist Direct Tel: +974 4420 2663 [email protected] Rajat Gupta, CFA Associate Direct Tel: +974 4420 2627 [email protected]

Qatar Listed Stocks Handbook

Qatar Economy Poised for continuing strong growthQatar has maintained its growth trajectory primarily due to the resilient nature of the economy backed by significant enhancements in the production capacity of liquefied natural gas (LNG), growth in the nonhydrocarbon sectors, substantial government support to the banking system, and rising public expenditure. The LNG production in Qatar increased from 55 mn tons per year (mtpy) in 2010 to 74.8 mtpy in 2011. As a result, earnings from LNG exports rose 46% to USD 62bn in 2011 and contributed 56% to the total export earnings. Qatars nominal GDP for 2011 rose 36.3% YoY to reach QAR631.6bn driven by expansion in the production levels of LNG, other gas-related products and condensates, coupled with increases in hydrocarbon prices. Growth in the Mining and Quarrying sector increased 52% and manufacturing sector rose 27.5% in 2011.

Exhibit 1: GDP growth rates GCC Countries20.0% 15.0% 10.0% 5.0% 0.0% 2007 -5.0% -10.0% Bahrain Qatar Source: IMF Kuwait KSA Oman UAE 2012E 2010 463.5 16.6 55.0 8.4 25.3 70.8 1.7 2011E 631.6 14.7 74.8 9.0 32.6 87.4 1.8 2012F 654.9 6.0 77.0 9.0 30.1 89.5 1.8 2013F 680.9 4.3 77.0 9.0 26.8 93.4 1.93

Exhibit 2: Qatar Economic HighlightsEconomic Highlights Nominal GDP (QAR bn)* Real GDP Growth (%)* LNG Production (mn tones) Non-hydrocarbon GDP growth (%) CA/GDP (%) External Debt (USD bn) Population (mn)

Source: IMF, * QSA for 2011

Qatar Listed Stocks Handbook

Exhibit 3: GCC Long-Term Ratings, 2011Sovereign Bahrain Kuwait Oman Qatar Saudi Arabia UAE Japan Singapore Germany S&P BBB AA A AA AAN/R AAAAA AAA Moody's Baa1 Aa2 A1 Aa2 Aa3 Aa2 Aa3 Aaa Aaa Fitch BBB AA N/R N/R AAN/R AA AAA AAA

Exhibit 6: Impressive credit growth continued in 201132% 28% 24% 20% 16% 12% 8% 4% 0% Bahrain Kuwait Oman 2010 UAE 2011 KSA Qatar 4% 2% 0% 14% 9% 1%2% 10% 5% 17% 17% 28%

U.S. AA+ Aaa AAA Source: S&P (29 Nov 2011), Moody's (9 Mar 2012)and Fitch (6 Jan 2012)

Source: GCC Central Banks .

Exhibit 4: GCC population Annual growth (2006-10)Qatar UAE Bahrain GCC Kuwait KSA Oman 0% Total 5% 10% Expatriates 15% Nationals 20%

Exhibit 7: Deposit growth has outpaced peers28% 24% 20% 16% 13% 12% 8% 4% 4% 0% Bahrain Kuwait Oman 2010 UAE 2011 KSA Qatar 1% 7% 4% 2% 5% 20% 14% 12% 23% 24%

Source: IMF

Source: GCC Central Banks

Exhibit 5: Qatar - Real GDP growth forecast35% 30% 25% 29% 31%

Exhibit 8: Qatar - GDP per capita forecast250 200 191 167 149 QAR '000 150 100 50 -0.30% 0 2009 2010 2011F 2012F 2013F 194 195

20% 15% 10%

18% 9% 3% 9% 9%

8% 5%

5% 0% -5% 2009 2010 2011

2012F

2013F

Hydrocarbon % Real GDP Growth %

Non-hydrocarbon %

GDP Per Capita (QAR '000)

Source: IMF

Source: IMF

4

Qatar Listed Stocks Handbook

Qatar Exchange: Core IndicesQE Index QE Total Return Index QE All Share Total Return Index

Contains 20 largest liquid stocks Ranked by free float and average daily turnover Single constituent weight capped at 15% Only captures price performance of constituent stocks

Contains 20 largest liquid stocks Ranked by free float and average daily turnover Single constituent weight capped at 15% Captures prices performance as well as reinvests dividend income in the overall index

Contains all stocks in the market with a minimum velocity of 1% No capping of single constituents Captures prices performance as well as reinvests dividend income in the overall index

Source: Qatar Stock Exchange

Qatar Exchange: Recent AnnouncementsThe Qatar Exchange intends to offer a bond trading platform to capital market investors. The exchange plans to implement short selling as well as bond and Sukuk trading on the index as a measure to encourage the formation of a local debt market. Qatar Exchange recently announced launch of equity indices to complement the exchange. These will include All Share Index and Total Return Index, to help the investors monitor overall market benchmark and performance of various sectors on real time basis. These indices will go live from April st 1 , 2012. The new sectoral indices will be in conjunction with the new sector classification to be introduced on the exchange. This intends to offer investors better market visibility. Exhibit 9 & 10 shows that the average traded volumes and turnover have dropped in past few months due to the regional uncertainty and global risk aversion

Exhibit 9: Traded Volume60 50 40 Millions 30 20 10 0 2006 2007 2008 2009 2010 2011 2012

Source: Zawya

Exhibit 10: Turnover (USD mn)800 700 600 USD Millions 500 400 300 200 100 0 2006 2007 2008 2009 2010 2011 2012

Source: Zawya

5

Qatar Listed Stocks Handbook Also, the Qatar Exchange has recently announced the formation of Qatars new SME market The QE Venture Market. This market will provide the infrastructure to list and trade securities of small and medium sized enterprises. This move aims to provide an efficient capital raising platform for the cash-starved SMEs. Qatar exchange plans to successfully implement and develop the Venture market in association with Qatar Development Bank, Enterprise Qatar and Silatech. The exchange is also planning to launch Exchange Traded Funds (ETFs). Exhibit 12 showcases the drop in correlation between the QE Index, Gas prices and Crude Prices during past few months; hence, pointing to the fact that commodity no longer acts as a proxy exposure to QE Index. Qatar Exchange (QE) launched its own debt market by listing Qatari Government short term treasury bills (T-Bills) to trade on the bourse from December 29, 2011. The launch of debt market is expected to stimulate investment in debt instruments by commercial banks and other institutions. The Central Bank of