gcc corporate earnings - q211

Kuwait Financial Centre “Markaz”

R E S E A R C H

GCC Corporate Earnings-Q2 11 Earnings decline 7% during Q2 2011

As of first week of August 2011, we have 84% visibility in terms of market

cap and 59% visibility in terms of number of companies to measure the

performance of GCC corporate earnings. Saudi Arabia enjoys nearly 100%

market capitalization visibility, followed by Oman with 77% visibility. Bahrain’s

visibility at 49% is the lowest in GCC region.

During 2Q11, GCC corporate earnings declined by 7% when compared to

2Q10. Total earnings, which came in at USD 12.8bn was less than the profits

posted during the previous quarter (1Q11) by 7%. In 1H11, the GCC

corporate earnings show an upswing of 5% compared to 1H10. Total earnings

came at USD 26.5bn compared to USD 25.3bn in 1H10, mainly due to the

improved performance in 1Q11.

Corporate earnings declined due to weak performance by the Telecom sector

in the region. Nevertheless, Banks and Commodity companies continued to

perform strongly. The region’s continued dominance as a petrochemical hub,

global recovery, and spikes in commodity prices supported the performance of

companies across the region.

Aggregate Net Profits from the Commodity sector were USD 3.4bn (+54%

YoY, +4% QoQ). Amongst sectors, Banking continued to deliver the highest

profits, at USD 5.0bn. Robust demand and access to low cost funds improved

spreads in this quarter. Telecom sector registered 66% YoY decline in net

income due to Zain’s one time profit from discontinued income reported in

2Q10. Excluding this one-time adjustment, the sector’s earnings fell by only

11% YoY. Real Estate sector recovered from the slump experienced last year

and reported a profit of USD 386mn in 2Q11, up 127% YoY.

Figure: 1 – Earnings trend – GCC

August 2011

Research Highlights:

Provides a review of corporate

earnings across the GCC up to

Q2 2011.

Markaz Research is

available on:

Bloomberg - Type “MRKZ” <Go>

Thomson Research,

Reuters Knowledge

Nooz

Zawya Investor

ISI Emerging markets

M.R. Raghu CFA, FRM

Head of Research

+965 2224 8280

[email protected]

Layla Al-Ammar

Assistant Manager

+965 2224 8000 ext. 1205

[email protected]

Sanjay Chowdhary

Analyst

[email protected]

+965 2224 8000 Ext: 4605

Kuwait Financial Centre

S.A.K. “Markaz”

P.O. Box 23444, Safat 13095,

Kuwait

Tel: +965 2224 8000

Fax: +965 2242 5828

markaz.com

Source: Reuters Eikon, Markaz Research

R E S E A R C H August 2011


2

1H11 Earnings

During 1H11, Saudi Arabian companies posted a total profit of USD 12.7bn an

increase of 25% YoY. The increase was due to higher earnings reported

during the 2Q11 by all the sectors across the board. Earnings of Kuwaiti

companies during the 1H11 were down 33% YoY to 2.9bn. The decline in

earnings was mainly due the decreased profits reported by the

Telecommunication sector in Kuwait, however if we exclude extraordinary

earnings in the sector, corporate earnings growth would be at 9%. UAE

companies reported a profit of USD 5.2bn during the half year, an increase of

5% YoY. The surge in the Banking sector performance during the year

supported the increased profits.

Qatar earnings during the first half of the year was USD 4.3bn, almost flat

compared to the previous year. The banking and the commodities sectors

came up with good results during the year. However, the performance of the

telecommunication sector was disappointing. Oman’s corporate earnings

declined 16% YoY during the first half of the year to USD 0.8bn. The

decrease in profit was mainly due the low profits reported by the Banking and

the Telecommunication sectors. On a like-to-like basis, Bahrain’s corporate

reported a profit of USD 510mn in 1H11, an increase of 5% YoY. The increase

in profit was due to the improved results posted by the Banking sector in

Bahrain.

2Q11

Earnings of Saudi Arabian companies totaled USD 6.9bn, an increase of 28%

YoY and 20% QoQ. SABIC, which reported USD 2.2bn in 2Q profits, led the

growth which was driven by higher volumes and prices. Al Rajhi Bank

reported net income of USD 491mn, up 4% YoY. Saudi Telecom’s net profit

increased 9% YoY to USD 602mn. The increase in net profit is mainly on

account of higher sales and lower operating expenses in this quarter.

Kuwait Corporate earnings fell by 73% YoY, due to decrease in profit reported

by the Telecom sector. Telecom sector growth in 2Q10 was driven by one

time gain of USD 2.75bn reported by Zain from discontinued operations.

However, after adjusting for this one-time gain, corporate earnings increased

by 57% YoY in 2Q11, as other sectors performed well in the Kuwait region.

Banking sector was up 15% YoY, while Real Estate and Construction related

companies posted positive earnings compared to last year.

During 2Q11, UAE posted earnings of USD 2.4bn as against a profit of USD

2.1bn in 2Q10. Real Estate recovery and profits from Banks led earnings

growth in UAE. Bank earnings at USD 1.5bn, were higher by 33% on YoY

basis. Abu Dhabi Commercial Bank led the growth in 2Q11 with positive

Countries 1H10 2H10 1H11 YoY Adj. YoY

Saudi Arabia 10,112 10,869 12,690 25% 25%

Kuwait 4,418 609 2,942 -33% 9%

UAE 4,966 144 5,198 5% -2%

Qatar 4,322 4,570 4,333 0% 0%

Oman 982 869 822 -16% -9%

Bahrain 472 341 510 5% 8%

Total 25,393 17,083 26,586 5% 16% Note: Adjusted YoY refers to Net Income Adjusted for Extraordinary Items Source: Reuters Eikon, Markaz Research



3

earnings reported during the quarter compared to last year. Emirates NBD

reported earnings growth of 87% YoY, due to higher other operating income.

Qatar earnings declined in 2Q11, with corporate earnings coming at USD

1.9bn, down 12% over 2Q10. Though, on a like-to-like basis the profit for the

quarter was up 18% YoY. Industries Qatar delivered a strong set of numbers

with net income of USD 570mn. Higher volumes and improved demand

proved beneficial for the company. Bank earnings grew 13% YoY to USD

944mn. Qatar National Bank grew its earnings by 26% YoY and 6% over the

quarter. QNB’s net income of USD 497mn was driven by lower cost of funds

and higher NIMs.

Oman’s corporate earnings declined 10% YoY basis, though it was up by 35%

on QoQ basis to USD 472mn as the Sultanate started to recover from the

political turmoil that had its effect during the last quarter. Banking sector’s

earnings were down at USD 94mn (-28% YoY, -38% QoQ), due to negative

earnings posted by Bank Dhofar. Bank Muscat’s net income of USD 76mn was

30% higher on YoY basis and 6% on QoQ basis.

On a like-to-like basis, Bahrain’s corporate reported a profit of USD 270mn in

2Q11, an increase of 28% YoY and 13% QoQ. On like-to-like basis, Banks

reported an earnings growth of 63% on YoY basis. Ahli United Bank grew its

earnings over the year by 20% to USD 84mn. Net income of Bahrain Telecom

suffered, declining 5% YoY, though increasing by 22% on a QoQ basis.

Table 1: Earnings Growth – Sectoral Trend (USD mn)

Sector 2Q10 1Q11 2Q11 YoY QoQ

Banks 4,334 5,252 5,019 16% -4%

Telecommunications 4,445 2,627 1,511 -66% -42%

Commodities 2,238 3,315 3,442 54% 4%

Financial Services (123) 273 522 N.M. 91%

Real Estate 170 549 386 127% -30%

Construction Related 799 568 580 -27% 2%

Conglomerates 271 351 289 7% -17%

Others 1,645 857 1,044 -37% 22%

Total 13,778 13,792 12,794 -7% -7%


GCC Statistics – 2Q11

2

GCC Market Cap Coverage at 84%

Country

Total market cap(USD Bn)

% Coverage

in terms of market cap

Total Number of Companies

Coverage based on no. of

companies

Saudi Arabia 341 99% 143 98%

Kuwait 103 72% 194 23%

U.A.E. 113 75% 110 54%

Qatar 121 66% 45 53%

Oman 17 77% 127 76%

Bahrain 21 49% 44 55%

GCC Total 716 84% 663 59%

• Market Capitalization-based coverage stood at 84% for all GCC countries.• Saudi Arabia topped with 99% coverage, followed by Oman at 77%, and UAE at 75%.• Earnings visibility (by number of companies) for the GCC region stood at 59% for 2Q11. • Saudi Arabia’s coverage stood at 98% and Oman at 76%. Kuwait’s coverage, was the lowest at

23%.


3

GCC Corporate Earnings fell 7% YoY in 2Q11

• GCC corporate earnings were down 7% on a YoY and QoQ basis in 2Q11. • Kuwait, Qatar and Oman contributed to the earnings decline in GCC, due to slowing growth rates in all

the sectors. • Saudi Arabia, Bahrain and UAE saw their 2Q11 earnings escalate by 28%, 12% and 11% YoY,

respectively.

GCC Corporate Earnings (USD Mn)

GCC -7 -7


YoY

(%)

12

QoQ

(%)

-10

-12

11

-73

28

-18

35

-21

-17

-57

20

11,615

13,778

11,429

5,654

13,792

12,794

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Bahrain

Oman

Qatar

UAE

Kuwait

Saudi Arabia

4

Telecom Affects GCC Earnings

• In 2Q11, the earnings decline was driven by Telecom companies. The Telecom sector registered a 66% YoY decline in net profit mainly due to decrease in profit reported by Zain. Zain had included USD 2.75bn in its reported net profit numbers in 2Q10 from discontinued operations. Excluding the one time gain from discontinued operations, the overall 2Q11 earnings increase by 16% YoY.

• Commodities, however, posted a steady set of numbers with earnings growing 54% YoY and 4% QoQ.

Sectoral earnings trend (USD Mn)

-66

16

4

-4


YoY

(%)

-37

QoQ

(%)

7

-27

127

NM

54

22

-17

2

-30

91

-42

1,549

4,639 4,334 4,481 3,887 5,252 5,019 1,663

1,777

4,445

2,150 2,087

2,627 1,511

1,810

2,199

2,238

2,176 2,586

3,315

3,442 4,673

11,615

13,778

11,429

5,654

13,792

12,794

(3,500)

(1,500)

500

2,500

4,500

6,500

8,500

10,500

12,500

14,500

Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Others

Conglomerates

Construction Related

Real Estate

Financial Services

Commodities

Telecommunications

Banks

Saudi Arabia – 2Q11

6

Saudi Earnings Get a Commodities Boost Yet Again..Quarterly Earnings Trend (USD Mn) Earnings Growth –YoY (%)

�Corporate profits rose 28% YoY in 2Q11 to USD 6.9bn.

�Commodity companies saw their earnings grow by 56%YoY and 7% QoQ led by SABIC which registered a 62%earnings growth over 2Q10. Bank earnings grew 11% andTelecom earnings saw 24% growth over 2Q10.


4,702

5,410 5,609

5,261

5,779

6,911

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

69%

24%

19%

33%

23%

28%

0% 20% 40% 60% 80%

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

7

Higher Petchem Prices Drive SABIC’s Earnings

�Commodities sector recorded earnings of USD 2.9bn in 2Q11, as against USD 1.8bn in 2Q10, led bySABIC’s strong performance. The company reported a net income of USD 2.2bn (2Q10: USD 1.3bn),as higher petrochemical prices boosted company’s performance.

�Bank earnings increased by 11% YoY to USD 1.7bn. Al Rajhi Bank reported a 4% YoY growth in itsnet income of USD 491mn. Telecom sector’s earnings grew 50% QoQ to USD 753mn, and was up24% on a YoY basis. Saudi Telecom’s earnings were up 43% QoQ and 9% YoY to USD 602mn.

Quarterly Sectoral Earnings Trend (USD Mn)


1,639 894

1,543 1,580 1,339 1,488 1,668 1,749

637

901 477 609 1,025 759 501

753

1,217 1,497

1,836 1,831 1,778 2,152 2,660 2,857

4,695

3,941

4,702

5,410 5,609 5,261 5,779

6,911

-1,000

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Others

Conglomerates


Real Estate

Financial Services

Commodities

Telecommunications

Banks

8

Top companies – Sector – Growth Rate – 2Q11


Top Companies – Saudi Arabia – Banking

Company Name

Market Cap

(USD mn) 2Q10 2Q11 Growth

Al Rajhi Bank 29,000 474 491 4%

Samba Financial Group 11,761 325 294 -10%

Riyad Bank 9,980 204 223 9%

Banque Saudi Fransi 8,351 202 206 2%

The Saudi British Bank 8,640 119 227 91%

Arab National Bank 6,801 168 186 11%

Alinma Bank 3,920 1 27 NM

The Saudi Investment Bank 2,677 6 55 NM

Saudi Hollandi Bank 2,540 NA NA NM

Bank Albilad 1,444 9 22 149%

Bank Aljazira 1,380 6 17 205%

Industry Total 86,495 1,514 1,749 16%

Top Companies – Saudi Arabia – Commodities

Company Name

Market Cap


Saudi Basic Industries Corporation 83,409 1,337 2,160 62%

Saudi Arabia Fertilizers Co. 11,618 242 211 -13%

Saudi Kayan Petrochemical Company 6,921 -0 -4 NM

Yanbu National Petrochemicals Company 7,501 134 257 92%

Saudi Arabian Mining Company (Ma'aden) 6,488 8 17 100%

Saudi Industrial Investment Group 2,622 8 39 422%

Saudi International Petrochemichal Co. 2,073 23 44 89%

Sahara Petrochemical Company 1,833 27 56 107%

Advanced Polypropylene Company 1,210 17 41 138%

Saudi Chemical Company 744 23 20 -12%

Industry Total 1,24,419 1,819 2,841 56%

Top Companies – Saudi Arabia – Conglomerates

Company Name

Market Cap


Kingdom Holding Company 7,660 36 44 21%

National Industrialization Company 6,348 103 158 54%

Industry Total 14,008 139 202 45%

Top Companies – Saudi Arabia – Telecom

Company Name

Market Cap


Saudi Telecom Company 19,149 550 602 9%

Etihad Etisalat Company 10,221 240 310 29%

Saudi Mobile Telecommunications

Company 2,446 -168 -120 NM

Industry Total 31,815 622 793 28%

Note: Companies that have not declared their 2Q11 results on the date of

this report are marked as NA in the 2Q10 and 2Q11 columns.

Kuwait – 2Q11

10

Kuwaiti Companies Register Negative ProfitsQuarterly Earnings Trend (USD Mn) Earnings Growth –YoY (%)

� Corporate profits fell by 73% YoY in 2Q11, due to the onetime profit of USD 2.75 bn from discontinued operationsreported by Zain in 2Q2010. Excluding this one time gain,the profit was up 57% YoY, supported by recovery in thebanking and financial services.� On a QoQ basis aggregate net profit was down 57%


1,109

3,309

1,002

-394

2,062

880

-1,000

-500

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

551%

113%

96%

N.M.

86%

-73%

-200% 0% 200% 400% 600%

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

11

Financial Services and Real Estate - Back to Profits

�In 2Q11, Financial Services sector registered profits of USD 74mn, versus a loss of USD 334mn in2Q10. Real Estate also recovered from a USD 50mn loss in 2Q10 to post a profit of USD 30mn in2Q11.

�Banking sector earnings were at USD 496mn, a growth of 15% YoY but a decline of 13% QoQ.National Bank of Kuwait’s earnings came in at USD 240mn, up 2% YoY.



512 -3,152

1,109

3,309

1,002 -394

2,062

880

-4,000

-3,000

-2,000

-1,000

-

1,000

2,000

3,000

4,000

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Others Conglomerates

Construction Related Real Estate

Financial Services Commodities

Telecommunications Banks

12



Top Companies – Kuwait – Banking

Company Name

Market Cap


National Bank of Kuwait 15,960 237 240 2%

Kuwait Finance House KSC 8,774 137 83 -39%

Gulf Bank KSC 4,599 5 31 522%

Commercial Bank of Kuwait SAK 3,870 8 1 -91%

Boubyan Bank KSC 3,781 5 8 73%

Al Ahli Bank of Kuwait 3,537 38 44 18%

Burgan Bank 2,670 -28 49 NM

Bank of Kuwait & the Middle East KSC 3,718 22 39 73%

Kuwait International Bank 1,122 NA NA NM

Industry Total 48,031 423 496 17%

Top Companies – Kuwait – Financial Services

Company Name

Market Cap


Kuwait Projects Company Holding KSCC 1,633 33 31 -5%

National Investments Company KSCC 694 NA NA NM

Boubyan Petrochemical Company KSC 1,031 12 5 -57%

Aviation Lease & Finance Company KSCC 986 10 13 35%

Commercial Facilities Co SAK 670 16 9 -44%

International Finance Company 283 NA NA NM

Securities House KSCC 322 NA NA NM

Kipco Asset Management Co KSCC 240 NA NA NM

Kuwait Financial Centre SAKC 214 NA NA NM

Global Investment House KSCC 159 NA NA NM

Industry Total 6,233 71 58 -18%

Top Companies – Kuwait – Telecom

Company Name

Market Cap


Mobile Telecommunications Company KSC 15,641 2,894 256 -91%

National Mobile Telecom Co KSS 3,732 NA NA NM

Industry Total 19,374 2,894 256 -91%



United Arab Emirates – 2Q11

14

Earnings continue with their positive trend in 2Q11…

Quarterly Earnings Trend (USD Mn) Earnings Growth – YoY (%)

Like-to-Like Earnings Analysis

�UAE corporate profits (like-to-like basis) were up 22% YoYto USD 2.4bn, against a profit of USD 1.9bn in 2Q10.

�Banking sector recorded a growth of 65% YoY, due to AbuDhabi Commercial Bank which reported a profit of USD363mn compared to a loss of USD 84mn in 2Q10.Financial Services were up 40% YoY basis.

2,415

1,923 2,041

1,911

2,421 2,354

-

500

1,000

1,500

2,000

2,500

3,000

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

-6%

-48%

-9%

72%

0%

22%

-100% -50% 0% 50% 100%

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

15

Banking and Real Estate Lead the GrowthLike-to-Like Earnings Analysis

�In 2Q11, Banking profits grew 65% YoY to USD 1.5bn. Though, on QoQ basis, Bank profits were up byonly 3%. Abu Dhabi Commercial Bank led the growth in 2Q11 with positive earnings of USD 363mn.

�Telecoms were a drag on earnings, declining 10% on YoY basis and 11% QoQ. Emirates Telecom’s(Etisalat) net profit this quarter was USD 434mn (2Q10:USD 510mn, 1Q11:USD 495mn).

�Construction sector also showed a slow down with earnings of USD 37mn, a 28% YoY decline.

1,250

233

1,332 935

1,132 924

1,506 1,547

635

481

569

547 518 800

551 490

2,235

1,108

2,415

1,923 2,041 1,911

2,421 2,354

-500

-

500

1,000

1,500

2,000

2,500

3,000

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Others

Conglomerates


Real Estate

Financial Services

Commodities

Telecommunications

Banks

16



Top Companies – United Arab Emirates – Banking

Company Name

Market Cap


National Bank of Abu Dhabi 8,830 272 279 2%

First Gulf Bank PJSC 6,821 214 242 13%

Emirates NBD PJSC 6,492 108 203 87%

Mashreqbank psc 3,439 55 78 41%

Abu Dhabi Commercial Bank PJSC 4,616 -84 363 NM

Dubai Islamic Bank PJSC 2,068 NA NA NM

Union National Bank PJSC 2,276 92 113 23%

Commercial Bank of Dubai P.S.C. 1,586 70 71 2%

National Bank of Fujairah PSC 1,195 12 20 66%

United Arab Bank PJSC 1,221 21 20 -4%

Industry Total 38,544 760 1,389 83%

Top Companies – United Arab Emirates – Real Estate

Company Name

Market Cap


Emaar Properties PJSC 4,677 218 68 -69%

Aldar Properties PJSC 981 NA NA NM

Sorouh Real Estate PJSC 872 8 30 258%

Deyaar Development PJSC 441 NA NA NM

Union Properties PJSC 356 NA NA NM

Ras Al Khaimah Properties PJSC 191 NA NA NM


Top Companies – United Arab Emirates – Telecom

Company Name

Market Cap


Emirates Telecommunications

Corporation 22,065 510 434 -15%

Emirates Integrated Telecomm. Co.

PJSC 3,933 37 56 51%

Industry Total 25,998 547 490 -10%

Top Companies – United Arab Emirates – Construction Related

Company Name

Market Cap

(USD mn) 2Q10 2Q11Growth

Arkan Building Materials Company

PJSC 586 NA NA NM

Arabtec Holding PJSC 550 NA NA NM

National Marine Dredging Company 649 50 29 -41%

Drake & Scull International LLC 552 NA NA NM

Gulf Cement Company P.S.C. 233 NA NA NM

National Cement Company PSC 299 NA NA NM

Union Cement Company P.S.C. 201 NA NA NM

Fujairah Cement Industries PSC 107 NA NA NM

Tamweel PJSC 231 1 8 413%




Qatar – 2Q11

18

Qatar – Like-to-Like Earnings

Quarterly Earnings Trend (USD Mn) Earnings Growth –YoY (%)

�Total profits augmented 18% YoY to USD 1.9bn, due topositive performance across majority of the sectors. Netprofit of Industries Qatar grew 46% over the year toUSD 570mn.

�On a QoQ basis net profit increased by 8% due toconsistent performance by all the sectors in the region.

1,485 1,615 1,566 1,568

1,767 1,907

-

500

1,000

1,500

2,000

2,500

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

10%

33%

44%

51%

19%

18%

0% 20% 40% 60%

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

19

Commodities, Banks Drive Earnings in 2Q11


�Banking sector profits grew 25% YoY to USD 944mn as all major Qatari banks saw earnings growth. Qatar National Bank was up 26% YoY and 6% QoQ to USD 497mn in 2Q11.

�Profit of Commodity companies grew 46% YoY but declined by 1% when compared on QoQ basis. Industries Qatar grew by 46% YoY.

Like-to-Like Earnings

572 521 706 753 833 730

889 944

329 311

334 389

391 418

575 570 1,088 1,036

1,485 1,615

1,566 1,568 1,767

1,907

-500

-

500

1,000

1,500

2,000

2,500

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Others

Conglomerates

Construction

Related

Real Estate

Financial Services

Commodities

Telecommunicatio

ns

Banks

20

Top companies – Sector – Growth Rate –2Q11


Top Companies – Qatar – Banking

Company Name

Market Cap


Qatar National Bank SAQ 24,793 395 497 26%

The Commercial Bank of Qatar Q.S.C. 5,030 112 140 25%

Qatar Islamic Bank (S.A.Q.) 5,030 NA NA NM

Masraf Al Rayan (Q.S.C.) 4,861 83 100 20%

Doha Bank (Q.S.C) 2,981 82 93 13%

Qatar International Islamic Bank QSC 1,996 36 45 24%

Al Khalij Commercial Bank QSC 1,701 15 36 141%

Ahli Bank Q.S.C. 1,353 30 33 13%

Industry Total 47,745 753 944 25%

Top Companies – Qatar – Commodities

Company Name

Market Cap


Industries Qatar Q.S.C. 20,878 389 570 46%

Industry Total 20,878 389 570 46%

Top Companies – Qatar – Telecom

Company Name

Market Cap


Qatar Telecom (QTel) Q.S.C. 7,575 NA NA NM

Industry Total 7,575 NA NA NM

Top Companies – Qatar – Real Estate Operations

Company Name

Market Cap


Ezdan Real Estate Company QSC 16,422 NA NA NM

Barwa Real Estate Company QSC 3,196 NA NA NM

United Development Company P.S.C. 893 62 95 53%

Industry Total 20,511 62 95 53%



Oman – 2Q11

22

2Q11 Earnings Decline but at a slower rate


�Oman’s corporate earnings declined 10% YoY to USD472mn. However, earnings were up 35% on QoQbasis, as the markets started recovering during thequarter.

�Financial Services sector was up 845% YoY as AlSharqiya Investment Holding reported a profit of USD271mn during the quarter compared to a loss of USD0.25mn in 2Q10.


455

527

386

483

350

472

-

100

200

300

400

500

600

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

-49%

8%

13%

118%

-23%

-10%

-100% -50% 0% 50% 100% 150%

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

23

Financial Services Profit Supports Oman’s Earnings in 2Q11Quarterly Sectoral Earnings Trend (USD Mn)

�Bank earnings declined to USD 94mn, a fall of 28% over the year and 38% over the quarter, due to loss reported by Bank Dhofar during the current quarter. Though Bank Muscat’s earnings grew by 30% YoY to USD 76mn and 6% on QoQ basis.

�Constructed-related sectors also posted negative growth of 57% on YoY basis, as profits of Raysut Cement and Oman Cement declined 43% and 72% respectively.


111 41

134 130 129 138 150 94

85

50

84 159

60 73 68

-

-8

5

62

29

61

112

19 278 55

39

45

66

43

41

37

28 342

221

455

527

386

483

350

472

-100

-

100

200

300

400

500

600

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Others

Conglomerates


Real Estate

Financial Services

Commodities

Telecommunications

Banks

24



Top Companies – Oman – Construction Related

Company Name

Market Cap


Raysut Cement Company SAOG 535 18 10 -43%

Oman Cement Company SAOG 455 29 8 -72%

Galfar Engineering & Contracting Co. 241 NA NA NM

Oman Cables Industry 207 6 5 -13%


Top Companies – Oman – Telecom

Company Name

Market Cap


Oman Telecommunications Company 2,081 NA NA NM

Industry Total 2,081 NA NA NM

Top Companies – Oman – Real Estate Operations

Company Name

Market Cap


Sahara Hospitality Company SAOG 36 1 1 -7%

Industry Total 36 1 1 -7%

Top Companies – Oman – Banking

Company Name

Market Cap


BankMuscat (SAOG) 2,928 59 76 30%

Bank Dhofar 1,426 23 -39 NM

National Bank of Oman 898 21 24 16%

Oman International Bank SAOG 644 9 10 10%

Ahli Bank 543 9 12 29%

Bank Sohar SAOG 369 8 10 21%

Muscat Finance Company Limited 82 2 2 12%




Bahrain – 2Q11

26

Bahrain’s Corporate Earnings Recover in 2Q11


�Bahrain’s corporate earnings were up by 28% YoY in2Q11 and 13% on QoQ basis.

�Banking sector registered profit of USD 190mn up 63%YoY, and 16% on a QoQ basis.


260

212 202

139

239

270

-

50

100

150

200

250

300

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Like-to-Like Earnings Analysis

-20%

-12%

-6%

48%

-8%

28%

-40% -20% 0% 20% 40% 60%

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

27

Telecom continues to be a Drag on Profit

�Telecom sector, represented mainly by Bahrain Telecommunications, continue to drag Bahrain’s earnings. The company’s net income was USD 56mn in 2Q11, a drop of 5% YoY.

�On a like-to-like basis, Financial services sector earnings were down 32% YoY and 42% QoQ.



105

5

156

117 123

43

164 190

67

68

65

59 51

55

46

56 214

94

260

212 202

139

239

270

-50

-

50

100

150

200

250

300

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Others

Conglomerates

Construction

RelatedReal Estate

Financial Services

Commodities

Telecommunication

sBanks

Like-to-Like Analysis

28



Top Companies – Bahrain – Banking

Company Name

Market Cap


Ahli United Bank B.S.C 3,614 70 84 20%

Arab Banking Corporation (B.S.C.) 1,431 34 68 100%

National Bank of Bahrain BSC 1,339 27 28 4%

Al Baraka Banking Group BSC 1,009 NA NA NM

United Gulf Bank B.S.C. 840 NA NA NM

BBK B.S.C. 944 NA NA NM

Ithmaar Bank B.S.C. 215 NA NA NM

Al Salam Bank BSC 199 3 4 5%

Bahrain Islamic Bank B.S.C. 257 -18 4 NM

Khaleeji Commercial Bank B.S.C. 138 NA NA NM

The Bahraini Saudi Bank BSC 86 1 2 156%

Industry Total 10,069 117 190 63%Top Companies – Bahrain – Telecom

Company Name

Market Cap


Bahrain Telecommunications Company 1,597 59 56 -5%


Top Companies – Bahrain – Financial Services

Company Name

Market Cap


TAIB Bank B.S.C. 307 NA NA NM

Gulf Finance House BSC 194 NA NA NM

Securities and Investment Co. BSC 229 NA NA NM

Esterad Investment Company BSC 55 -7 -8 NM

BMB Investment Bank BSC 44 NA NA NM

Industry Total 1,739 -7 -8 NM



29

Annual Results Saudi Earnings (USD Mn)

Kuwait Earnings (USD Mn)

GCC Earnings (USD Mn)


46,986 50,335

65,836

34,145 34,388

41,615

26,586

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2005 2006 2007 2008 2009 2010 1H11

18,427

21,443 23,035

12,392

15,532

20,752

12,690

-

5,000

10,000

15,000

20,000

25,000

2005 2006 2007 2008 2009 2010 1H11

11,477

9,473

16,430

-1,900 -462

5,341

2,942

-5,000

-

5,000

10,000

15,000

20,000

2005 2006 2007 2008 2009 2010 1H11

30

Annual Results

Oman Earnings (USD Mn)Bahrain Earnings (USD Mn)

UAE Earnings (USD Mn)Qatar Earnings (USD Mn)


10,748 11,639

16,427

13,910

9,152

4,730 5,198

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2005 2006 2007 2008 2009 2010 1H11

3,773

4,725

5,682

7,487

9,434

8,113

4,333

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2005 2006 2007 2008 2009 2010 1H11

945

1,107

1,645

1,270 1,380

1,607

822

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2005 2006 2007 2008 2009 2010 1H11

1,617

1,947

2,618

987

-647

695 600

-1,000

-500

-

500

1,000

1,500

2,000

2,500

3,000

2005 2006 2007 2008 2009 2010 1H11


Economics

MENA Unrest (Apr-11) Kuwait Development Plan (Apr-11) MENA Unrest (Apr-11)

Kuwait Investment Sector (Sept-10) The New Regulations on Kuwait Investment Sector (Jun-10) Kuwait Capital Market Law (Mar-10) The “Vicious Square” Monetary Policy options for Kuwait (Feb-08) A Gulf Emerging Portfolio: And Why Not? (Jun-07) To Leap or To Lag: Choices before GCC Regulators (Apr-07)

GCC for Fundamentalists (Dec-06) GCC Leverage Risk (Nov-06)

Sectors

Infrastructure GCC Power (Jul-09) GCC Ports (Aug-09) GCC Water (Nov-09) GCC Airports (Nov-09) GCC Roads & Railways (Dec-09) GCC ICT (Feb-10)

Real Estate Abu Dhabi Algeria Dubai Egypt Jordan KSA Kuwait Lebanon Qatar Syria U.S.A.

Banking

Stress testing Kuwait Banks (May-11)

GCC Banks - Done with Provisions? (Jan-10) Shelter in a Storm (Mar-09) Banking Sweet spots (Apr-08)

Oil & Gas Diworsification: The GCC Oil Stranglehold (Jan-09)

Periodic Research

Monthly Regional Petroleum Projects Commentary Weekly Real Estate Market Commentary Daily Oil & Gas Bulletin

Strategic Research GCC Outlook 2H11 (Aug-11) What to expect in 2011 (Jan-11)

The Golden Portfolio (Sept-10) Persistence in Performance (Jun-10) What to expect in 2010 (Jan-10) What is left for 2009? (Sept-09) Missing the Rally (Jun-09) This Too Shall Pass (Jan-09)

Fishing in Troubled Waters (Dec-08) Down and Out: Saudi Stock Outlook (Oct-08) Mr. GCC Market-Manic Depressive (Sept-08) Global Investment Themes (June-08) To Yield or Not To Yield (May-08) China and India: Too Much Too Fast (Oct-07)

A Potential USD 140b Industry: Review of Asset Management Industry in Kuwait (Sep-07) A Gulf Emerging Portfolio: And Why Not? (Jun-07) Derivatives Market in GCC (Mar-07) Managing GCC Volatility (Feb-07)

Periodic Research Annual GCC Market Outlook Quarterly GCC Equity Funds GCC Corporate Earnings GCC Equity Research Statistics Monthly Market Review Weekly MENA Market Intelligence KSE Market Review International Market Update Daily Markaz Daily Morning Brief Markaz Kuwait Watch Daily Fixed Income Update

Company Research (See the list attached)

Capital Markets

Markaz Research Offerings


Bahrain • Batelco (Aug-10) • Al Salam Bank (Aug-10) • Gulf Finance House (Oct-08) • Esterad Inv. Company (Aug-08) • Bahrain Islamic Bank (Aug-08) • Ithmaar Bank (July-08)

• Tameer (July-08)

Qatar • Qatar National Bank (Oct-10) • Qatar Gas Transport Co. (Sept-10) • QISB (Sept-10) • Masraf Al-Rayan (Jun-10) • Commercial Bank of Qatar (Mar-10) • Qatar Telecom (Jun-09)

• Industries Qatar (Apr-09) • United Development Co. (Feb-09) • Qatar Fuel Co. (Dec-08) • Qatar Shipping Co (Dec-08) • Barwa Real Estate Co. (Nov-08) • Qatar Int’l Islamic bank (Nov-08) • Qatar Insurance Co. (Nov-08)

• Doha Bank (Aug-08) • QEWC (July-08)

UAE

• NBAD (Mar-11) • Union National Bank (Sept-10) • FGB (Aug-10) • Etisalat (Aug-10) • Dubai Financial Market (Sept-09)

• ADCB (Jun-09) • DP World (Jun-09) • NBAD (Feb-09) • Sorouh Real Estate (Feb-09) • Aldar Properties (Feb-09) • Gulf Cement Company (Jan-09) • Abu Dhabi National Hotels (Dec-08)

• Dubai Investments (Dec-08) • Arabtec Holding (Dec-08) • Air Arabia ( Nov-08) • Union Properties (Nov-08) • Dubai Islamic bank (Oct-08) • Emaar Properties (July-08)

• Dana Gas (July-08)

Oman • Bank Muscat (Mar-11) • Raysut Cement Company (Sept-10) • Shell Oman Marketing (Apr-10) • Galfar Engineering & Cont. (Nov-08) • Oman Telecommunications (Sept-08) • Bank Muscat(Sept-08)

• Oman cement (Sept-08) • National Bank of Oman (Aug-08) • OIB (July-08)

Egypt • Sidi Kerir Petrochemicals (Jul-10) • Egypt Kuwait Holding (Mar-10) • Commercial Int’l Bank (Oct-08)

• Orascom Telecom (Sep-08) • Mobinil (Sep-08) • Telecom Egypt (Aug-08) • EFG-Hermes (Jun-08)

Jordan • Arab Bank (Sept-08) • Cairo Amman Bank (Oct-08) Morocco

• Maroc Telecom (Mar-10)

Saudi Arabia

• Al Rajhi Bank (Mar-11)

• Saudi Telecom Co. (Feb-11)

• Samba Financial Group (Aug-10) • Jabal Omar Development (Jul-10)

• Arabian Cement Co (Jul-10)

• Yanbu Cement Co. (Jun-10) • Emaar Economic City (Jun-10)

• Qassim Cement Company (Jun-10)

• Savola Group (May-10)

• Alinma Bank (May-10)

• Jarir Marketing (May-10) • Bank Al Bilad (May-10)

• Bank Al Jazira (Apr-10)

• Makkah Construction (Apr-10) • Saudi Cement Company(Apr-10)

• Southern Province Cement Co(Mar-10)

• Saudi Electricity Company(Feb-10) • Saudi Arabian Mining Co(Feb-10)

• Yamama Saudi Cement (Feb-10)

• Etihad Etisalat (Feb-10) • Al Marai Company (Dec-09)

• Arab National Bank (Oct-09)

• SAFCO (Oct-09) • Riyad Bank (Jul-09)

• Sabic (Mar-09)

• Saudi Investment Bank (Jan-09)

• Kingdom Holding Co (Dec-08)

• Saudi Kayan Petro Co. (Aug-08) • Banque Saudi Fransi (Jun-08

Company Research

Markaz Research is available on: Bloomberg Type

“MRKZ” <GO>, Thomson Financial, Reuters Knowledge, Zawya Investor & Noozz. To obtain a print copy, kindly contact:


Media and Communications Department

Tel: +965 2224 8000 Ext. 1814

Fax: +965 2249 8740

Postal Address: P.O. Box 23444, Safat, 13095, State of

Kuwait

Email: [email protected]

markaz.com/research

Kuwait (For Internal Use Only)

• Qurain Petrochem. Ind. (Aug-10)

• Wataniya (Jul-10) • Boubyan Bank (June-10) • Agility (June-10) • Gulf Bank of Kuwait (May -10) • National Bank of Kuwait (Mar-10) • Al Deera Holding (Aug-09) • Kuwait Finance House (Apr-09) • Kuwait Financial Centre (Dec-08) • Commercial Bank of Kuwait (Oct-08) • National Industries Group (Sept-08) • Zain (Sept-08) • Global Investment House (Sept-08) • Kipco (Sept-08)

• The Investment Dar (Sept-08) • Burgan Bank (Sept-08) • Automated Systems Co (Aug-08) • Al Safat Investment Co (July-08)

Markaz Company Research Coverage

MSCI Arabian Markets

Conventional MSCI Arabian Markets

Islamic Local Index

Saudi Arabia 60% 64% 78%

Kuwait 83% 92% 56%

Qatar 92% 90% 95%

UAE 79% 25% 58%

Bahrain 79% 100% 21%

Oman 63% 100% 50%

Egypt 62% 100% 45%

Jordan 39% 0% 32%

Morocco 50% 70% 24%

MENA 79% 93% 63%

Markaz Research Offerings


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 “. The 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 no representation or

warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinion of Markaz and are subject to change without notice. Markaz has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. This report may not consider 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 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. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of Markaz, Markaz has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz’s own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through this report or Markaz’s website shall be at your own risk. For further information, please contact ‘Markaz’ at P.O. Box 23444, Safat 13095, Kuwait; Email: [email protected] ; Tel:

00965 1804800; Fax: 00965 22450647.

gcc corporate earnings - q211

Documents

total earnings

sectors earnings

extraordinary earnings

higher earnings

qatar earnings

earnings trend gcc

review of corporate

corporate earnings growth