MENA-1

MONDAY MORNING ROUND-UP

UAE

du repays AED3 billion loan facility UAE bank deposits fall 0.4% M-o-M in May Turkey-listed poultry producer to sell shares to Aabar Abu Dhabis hotel occupancy drops to 64.7% in 2010 Tamweels shares included in Dubais main index

Kuwait

Kuwait Investment Authority injects capital into Kuwait Airways Kuwait Finance gets preliminary debt restructuring approval Aviation Lease and Finance Company to lease six planes

EFG Hermes Research

MENA Fertilisers Sector Flash Note - Chinese Export Window Opens: Lower-Than-Expected Volumes Possible, Further Upside Potential for Urea Prices - 03 July 2011

Agenda

UAE Wed 6 July >> Dana Gas BOD meeting Qatar Wed 6 July >> Qatar National Bank 2Q2011 results Sun 10 July >> The National Leasing Holding Company 2Q2011 results Thu 14 July >> Vodafone Qatar (VFQ) 2Q2011 results Mon 18 July >> Ahli Bank 2Q2011 results Tue 19 July >> Nakilat 2Q2011 results Tue 19 July >> Doha Bank 2Q2011 results Thu 21 July >> UDC 2Q2011 results Sun 24 July >> Ahli Bank press conference Mon 25 July >> Nakilat press conference Thu 28 July >> Qatar National Bank 1H2011 press conference Mon 1 August >> The National Leasing Holding Company 1H2011 press conference Tue 2 August >> Masraf Al Rayan 2Q2011 results Tue 9 August >> Masraf Al Rayan press conference Sun 14 August >> Qtel 2Q2011 results

UAE News

du repays AED3 billion loan facility du (DU.DU) announced that it has fully repaid a three-year AED3 billion dual currency syndicated loan facility, as part of its ongoing capital optimisation programme. The loan was repaid to a syndicate of 16 banks using existing financing facilities and cash. The AED3 billion loan was dus first debt offering, in 2008. (Company Disclosure) du: AED3.20, Rating: Buy, FV: AED3.66, MCap: USD3,983 million, DU UH / DU.DU UAE bank deposits fall 0.4% M-o-M in May

The UAEs overall bank deposits fell 0.4% M-o-M in May to AED1,123.5 billion, while lending decreased by 0.5% M-o-M to AED1,048.7 billion, according to an email statement from the Central Bank of the UAE on 3 July 2011. (Bloomberg) Turkey-listed poultry producer to sell shares to Aabar Banvit Bandirma Vitaminli Yem Sanayii AS, a Turkish poultry producer announced that its shareholder, Valid Faruk Ebubekir, signed a preliminary agreement to sell 16.3 million Banvit shares from his portfolio to Aabar Investments. In a statement to the Istanbul Stock Exchange Banvit said that the shares will be sold at USD3.00 each, provided that certain conditions within the agreement are met. (Bloomberg) Abu Dhabis hotel occupancy drops to 64.7% in 2010 Abu Dhabis hotel occupancy rate fell to 64.7% in 2010 from 72.2% in 2009, according to the Statistics Centre- Abu Dhabi (SCAD). The number of hotel rooms increased by 1,740 to 18,800, while the number of visitors climbed 18% to 1.81 million, SCAD added. (Bloomberg) Tamweels shares included in Dubais main index The shares of Tamweel (TAML.DU) were included in the DFM General Index and the banking sub-index from 3 July 2011. The announcement was made in a statement at the Dubai bourse. (Bloomberg)

Kuwait News

Kuwait Investment Authority injects capital into Kuwait Airways Kuwait Investment Authority (KIA) will contribute KWD35 million to Kuwait Airways equity. Kuwait Airways equity dropped to KWD185 million from KWD220 million. KIAs capital injection is part of the plan to privatise the carrier. (Al-Watan) Kuwait Finance gets preliminary debt restructuring approval Kuwait Finance and Investment Company (KFIC) [KFIC.KW] said that it has received preliminary approval from most of its creditors to restructure the companys debt. KFIC cancelled a KWD20 million capital increase and recommended a KWD50 million share issue to lenders and KWD30 million share issue to current shareholders. (Bloomberg) Aviation Lease and Finance Company to lease six planes Aviation Lease and Finance Company (ALAFCO) [ALAFCO.KW] is set to lease six Airbus A350-900 XWB planes to Thai Airways. The planes, which are worth USD1.6 billion, would be leased for 12 years from the date of delivery in 2017. ALAFCOs monthly rental charge would be 1% of the list price of the planes. (Al Watan)

EFG Hermes Research

MENA Fertilisers Sector Flash Note - Chinese Export Window Opens: Lower-Than-Expected Volumes Possible, Further Upside Potential for Urea Prices - 03 July 2011 Chinas Urea Exports Could be Lower than Expected: Chinas urea export window opened on 1 July 2011 and will run until 31 October 2011. Chinas government has set USD440/tonne as a reference price for urea exports, which implies an effective tax rate of 33.4% (versus 7% at the original benchmark price of USD325/tonne). The governments reference price is well below the current spot price of USD515/tonne, at which we estimate the effective tax rate would be around 44%. This suggests a netback to exporters of cUSD288/tonne, which is below the current domestic price (cUSD348/tonne) of urea in China, implying that Chinese exports could be significantly weaker than anticipated. Further Upside Risks to Urea Prices: Lower exports from China, coupled with currently strong global demand and the approaching peak agricultural season in India (the worlds largest urea importer), pose material upside risks to our urea price assumptions. Our current estimates are based on an average urea price of USD441/tonne in 2011 (USD475/tonne in 3Q2011 and USD500/tonne in 4Q2011) and USD465/tonne in 2012. We note that increasing the benchmark price to USD440/tonne would lower the effective export tax rate to 22% based on the current spot price, resulting in a netback of cUSD404/tonne, which would make exports more attractive than domestic sales. Major Beneficiaries: SAFCO, OCI and IQ: The major beneficiary from a urea price hike will be the Saudi Arabian Fertiliser Company (SAFCO), the only pure play nitrogen fertiliser stock under our coverage. Additionally, SAFCO is about to announce its 1H2011 dividend, which we expect will positively surprise the market. We also

expect it to enjoy the highest dividend yield amongst Saudi stocks this year at 8.5%. We highlight Orascom Construction Industries (OCI) and Industries Qatar (IQ) as potential beneficiaries from increasing urea prices, but to a lesser extent than SAFCO, due to their more diversified business models. Fertiliser Fundamentals Remain Intact: Extremely squeezed markets were seen in 2Q2011, driven by strong global demand, tight supplies (partially on turnarounds in the Former Soviet Union (FSU) and Latin America) and concerns that Chinas export volumes could be materially lower than expected during the low-tariff window. Beyond 3Q2011, we believe that the market could tighten further as demand in India surges during the Kharif season, which coincides with the end of Chinas low-tariff window. Grain prices are expected to start reflecting lower expectations for inventories in fertiliser year 2011-2012, which stand at 18.6% stock-to-use, well below their comfort range of 20-25%, which would further support fertiliser prices. Please refer to our note 2Q2011 Preview: Chinas De-Stocking Healthy, Prices Should Bottom Out Near Current Levels, published on 30 June 2011 for more details. (Ahmed Shams El Din, Rita Guindy)
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