MENA-1 MONDAY MORNING ROUND-UP

UAE
New law to allow varied foreign ownership Ajman Bank reports 2Q2011 net income of AED556,000

Kuwait
Wataniya Telecom 2Q2011 results: normalised earnings up 16% Q-o-Q, 9% ahead of our forecast

Qatar
Industries Qatar to exceed profit and revenue goals this year, COO says Qatars construction market set for continuous growth

EFG Hermes Research

Arabtec Holding - 2Q2011: Slower Execution Continues, Bottom Line Misses Estimate by 9%; Reiterate Neutral - Flash Note - 07 August 2011

Agenda
Qatar Mon 8 August >> Qatar Cinema and Film Distribution Company 2Q2011 results Tue 9 August >> Masraf Al Rayan press conference Tue 9 August >> Qatar Electricity & Water Company (QEWC) 2Q2011 results Thu 11 August >> Barwa Real Estate Company 2Q2011 results Sun 14 August >> Qtel 2Q2011 results Sun 14 August >> Doha Insurance 2Q2011 results Sun 14 August >> Qatar German for Medical Devices Company 2Q2011 results Sun 14 August >> Ezdan Real Estate Company 2Q2011 results Sun 14 August >> Al Meera Consumer Goods Company 2Q2011 results Sun 14 August >> Qatar Fuel Company (Woqod) 2Q2011 results Mon 15 August >> Qatar German for Medical Devices Company press conference Mon 15 August >> Zad Holding Company 2Q2011 results Mon 15 August >> Salam International 2Q2011 results Mon 15 August >> The Qatar Company for Meat & Livestock Trading (Mawashi) 2Q2011 results

UAE News
New law to allow varied foreign ownership The UAE has completed the drafting of a federal law for investment. The law is awaiting final approval before it is enforced this year, Gulf News reported, citing Assistant Undersecretary for Economic Policies Affairs at the Ministry of Economy, Mohammad Saleh Shelwah. The law could allow foreign investors to have varied ownership limits, which will be set by the federal cabinet, in some projects. The limits will vary depending on type of investment and the size of the project. (Zawya Dow Jones) Ajman Bank reports 2Q2011 net income of AED556,000 Ajman Bank (AJBNK.DU) reported 2Q2011 net operating income of AED48.6 million, up 69% Y-o-Y, and net income of AED556,000 versus a AED2 million loss in the same period last year. Total assets stood at AED4,473 million, with shareholders equity of AED998.3 million. (Company Disclosure)

Kuwait News

Wataniya Telecom 2Q2011 results: normalised earnings up 16% Q-o-Q, 9% ahead of our forecast Wataniya Telecom (NMTC) [NMTC.KW] reported 2Q2011 headline figures showing a stronger-than-expected quarter on all levels. Revenue for 2Q2011 came in at KWD182 million (+7% Q-o-Q, +36% Y-o-Y), 4.3% ahead of our forecast. Note that starting in 1Q2011, Wataniya began to fully consolidate its Tunisian subsidiary Tunisiana, after increasing its stake to 75% in January 2011. This is partly the reason behind the Y-o-Y jump in revenue. We have been closely watching the performance of the Algerian and Tunisian subsidiaries in 2Q2011 and both did much better than forecasted. Tunisianas revenue grew 18% Q-o-Q and came in 16% ahead of our conservative forecast on higher additions, indicating that the adverse impact of the political situation did not feed through to 2Q2011. Nedjma (Algeria) also registered a 10% Q-o-Q growth in top line, 7% ahead of our forecast. This was the result of stronger-thanexpected ARPU, which grew 11% Q-o-Q, above our expected 4% quarterly growth. Nedjma continued to report negative net additions (versus our expected positive additions for 2Q2011), which we attribute to the companys ongoing subscriber clean-up process. Consolidated EBITDA came in at KWD82 million, implying an EBITDA margin of 45.0%, ahead of our 43.4% forecast and 1Q2011s 43.2%. This comes mainly on the back of strong margins at the Tunisiana level (57.5% versus 53.9% in 1Q2011). It is still unclear if this is sustainable or not. The Palestinian subsidiary broke even on an EBITDA level for the first time, one quarter ahead of our estimate. NMTCs 2Q2011 earnings came in at KWD23 million (-92% Q-o-Q, +19% Y-o-Y) and 8.6% ahead of our estimate, on the back of a stronger-than-forecast EBITDA margin. Last quarters earnings were boosted by a KWD266 million one-off due to a revaluation of the existing 50% held interest in Tunisiana following the stake increase. Excluding the one-off, earnings would have grown 16%. We still do not have clarity on items below the EBITDA line. We currently have a Neutral rating and a fair value (FV) of KWD2.25/share and maintain our positive view on the stock. Our fair value offers 15% upside potential over current market price. (Company Disclosure, Nadine Ghobrial) Wataniya Telecom: KWD1.96, Rating: Neutral, FV: KWD2.25, MCap: USD3,638 million, NMTC KK / NMTC.KW

Qatar News
Industries Qatar to exceed profit and revenue goals this year, COO says Industries Qatar (IQ) [IQCD.QA] said that it will significantly exceed its profit and revenue targets for 2011, as the company starts operating a new fertiliser plant, Bloomberg quoted the companys Chief Operating Officer (COO), Abdulrahman Al-Shaibi, as saying. The company targets net income of QAR4.9 billion and revenue of QAR14.5 billion for 2011. The group is on course to deliver an exceptional 2011 full-year result, with the imminent start of Qatar Fertilizer Companys QAR9.6 billion Qafco 5 urea and ammonia plant, Al-Shaibi explained. The companys steel division has halted an expansion project because of natural gas allocation restrictions, Al-Shaibi added. The expansion plan was originally scheduled for completion by 2015. (Bloomberg) Industries Qatar: QAR136.80, Rating: Buy, FV: QAR170.00, MCap: USD20,670 million, IQCD QD / IQCD.QA Qatars construction market set for continuous growth Qatars construction market is set for continuous growth in 2011, new figures released from Qatars Statistics Authority have shown. Qatars construction market grew to QAR6.1 billion in 1Q2011 from QAR5.3 billion in 3Q2010, according to data revealed by the authority. (Gulf Base)

EFG Hermes Research

Arabtec Holding - 2Q2011: Slower Execution Continues, Bottom Line Misses Estimate by 9%; Reiterate Neutral - Flash Note - 07 August 2011 2Q2011 Misses Expectations on Lower Turnover, Weaker Margins; Neutral: Arabtec reported 2Q2011 revenues of AED1,217 million, 8% below expectations and 5% below consensus. Attributable net income stood at AED29 million, 9% below expectations and 17% below consensus. We reiterate our Neutral rating following 2Q2011 results, as our fair value (FV) of AED1.46/share offers limited upside potential over the current share price. As in 1Q2011, slower execution continued in tandem with working capital liquidation during the quarter, supporting our previously highlighted view of a weakened growth profile due to balance sheet constraints (see Balance Sheet Relief at the Expense of Execution; Downgrade to Neutral, published on 24 May 2011). Margin Compression Continues, Cost Control Supports EBIT: Margin compression continued into 2Q2011, with margins for 2Q2011 coming in at 11.2%, significantly below our 13.9% estimate. While we expect margin improvement in 2H2011, we

believe that there is downside risk to our 14.3% FY2011 gross margin forecast. Arabtec continued to manage its cost base during the quarter, with SG&A falling 23% Q-o-Q, well below expectations, and supporting EBIT of AED49.1 million. Despite the lower-than-expected minority interest, the weaker gross profit meant that net income of AED29 million was 9% below expectations. Balance Sheet Sees Little Change; 2Q2011 Backlog at AED13.9 Billion: Arabtecs cash balance remained stable Q-o-Q at AED634.1 million. In light of Arabtecs decreasing turnover, working capital liquidation continued, as expected. Current receivables decreased to AED3,823 million and payables to AED3,982 million, down 8% and 4% YTD, respectively. Total bank borrowings reached AED526.2 million, implying a debt-to-equity ratio of 0.2x and a net cash position of AED107.9 million. Arabtecs backlog stood at AED13.9 billion, up 14% Y-o-Y (ex-Russia), but down 8% Q-o-Q. (Jad Abbas)
[Note EFG Hermes is not responsible for the accuracy of news items taken from other media.] _________________________________________________________________________________________________________________ Our investment recommendations take into account both risk and expected return. We base our fair value estimate on a fundamental analysis of the companys future prospects, after having taken perceived risk into consideration. We have conducted extensive research to arrive at our investment recommendations and fair value estimates for the company or companies mentioned in this report. Although the information in this report has been obtained from sources that EFG Hermes believes to be reliable, we do not guarantee its accuracy, and such information may be condensed or incomplete. Readers should understand that financial projections, fair value estimates and statements regarding future prospects may not be realized. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice. This research report is prepared for general circulation and is intended for general information purposes only. It is not intended as an offer or solicitation with respect to the purchase or sale of any security. It is not tailored to the specific investment objectives, financial situation or needs of any specific person that may receive this report. We strongly advise potential investors to seek financial guidance when determining whether an investment is appropriate to their needs. No part of this document may be reproduced without the written permission of EFG Hermes.