MENA-1 SUNDAY MORNING ROUND-UP

UAE
DPW 1H2011 results: net Income 25% ahead Nakheel issues first tranche of sukuk to trade creditors Dubais passenger traffic up 9.7% Y-o-Y, cargo marginally down

Kuwait
Madoff liquidator seeks USD95 million from National Bank of Kuwait

Qatar
Qatar Holding acquires 2% stake in Energias de Portugal QatarGas plans maintenance at three LNG trains GDI plans QAR1.4 billion investment to expand fleet UDC recommends a 50% capital increase to shareholders National Leasing hires Ernest & Young to study capital hike plans Qatar and Tajikistan sign deal for Diar Dushanbe Qatar to bid for 2020 Summer Olympics

EFG Hermes Research

Qatari Banking Sector Note - July 2011 Sector Balance Sheet Trends: Loan Growth above MENA Average, Private Sector Loan Growth Continues to Recover - 25 August 2011

Agenda
Qatar Sun 28 August >> Salam International press conference Wed 21 September >> Salam International AGM

UAE News
DPW 1H2011 results: net Income 25% ahead DP World (DPW) [DPW.DU] reported 1H2011 net income of USD246 million (after minorities), which is 25% ahead of our estimate, as the company benefitted from strong revenue growth in 1H2011. Revenues came in at USD1,502 million, 5% ahead of our estimate on volume growth of 11%, while EBITDA came in 4% ahead at USD645 million. EBITDA margins rose by 300 bps Y-o-Y due to a continued focus on cost management and improved terminal efficiencies. DPW is slightly cautious on the outlook, but we suspect DPW is being conservative: 2H volumes are typically stronger, but the group is citing low visibility due to uncertainty in the global economy. However, DPW has not seen any impact on its terminals yet, which suggests trading remains solid. The group expects to meet FY market expectations, but that should be a given following these strong numbers. We suspect the company is being typically conservative, and we believe there are likely to be earnings upgrades on these strong numbers. Overall, the strong results put upward pressure on our forecasts, and we would expect the market to react positively. The shares have fallen sharply in recent weeks on macro growth fears and trade well below our fair value. (Company Disclosure, Redwan Ahmed) DP World: USD10.75, Rating: Neutral, FV: USD15.00, MCap: USD2,431 million, DPW DU / DPW.DU Nakheel issues first tranche of sukuk to trade creditors

Nakheel announced that it has started issuing the first tranche of its AED4.8 billion sukuk to trade creditors. The sukuk, which will be listed on NASDAQ Dubai, covers a first tranche of AED3.8 billion and will be followed by a second AED1 billion tranche at a later date. The bond will be asset-backed and will carry a coupon of 10%. This announcement came after Nakheel announced that it has completed the restructuring plan on its AED59 billion debt. The company owes AED19 billion to trade creditors, AED8 billion to banks, and AED32 billion to Dubais government. Trade creditors were offered re-payment through a mix of 40% cash and 60% via sukuk. (Zawya Dow Jones) Dubais passenger traffic up 9.7% Y-o-Y, cargo marginally down According to Dubai Airports, passenger traffic at Dubai International Airport rose 9.7% Y-o-Y to a monthly record of 4.7 million in July. Traffic YTD has reached 29 million, up 9% Y-o-Y. Air freight volumes slipped 2.7% Y-o-Y to 192,538 tonnes in July. Dubai Airports handled a total of 1.25 million tonnes YTD, down 0.16% Y-o-Y. (Reuters)

Kuwait News
Madoff liquidator seeks USD95 million from National Bank of Kuwait Irving Picard, the liquidator of Bernard Madoffs firm, sued National Bank of Kuwait (NBK) [NBKK.KW] in one of five lawsuits demanding the return of about USD95 million withdrawn from so-called feeder funds to the Ponzi scheme. Picard has filed more than 1,000 suits pursuing relatively small amounts from investors who redeemed money before Madoffs arrest in 2008. Picard last month lost the right to claim almost USD9 billion in damages from HSBC Holdings. (Bloomberg) National Bank of Kuwait: KWD1.02, Rating: Buy, FV: KWD1.24, MCap: USD12,357 million, NBK KK / NBKK.KW

Qatar News
Qatar Holding acquires 2% stake in Energias de Portugal Qatar Holding announced that it has acquired a 2% stake in Portuguese energy company, Energias de Portugal, which is set to be fully privatised by the government, Zawya Dow Jones reported. The stake is worth EUR159.4 million at the current share price. (Zawya Dow Jones) QatarGas plans maintenance at three LNG trains QatarGas announced that it plans maintenance on three liquefied natural gas (LNG) production units, Reuters reported. Work on trains 5, 6 and 7 will take place from mid-September to early November, with a shut-down of about two weeks at each unit. (Reuters, Bloomberg) GDI plans QAR1.4 billion investment to expand fleet Gulf Drilling International (GDI), a subsidiary of Gulf International Services (GIS) [GISS.QA], announced that it plans to undertake a QAR1.4 billion capital investment programme to acquire four rigs (two offshore and two onshore) and an accommodation barge, The Gulf Times reported. The proposed investment is QAR64 million higher than the previously announced figure in the groups five-year business plan. The addition will be 80% debt-financed through a syndicate of local, regional and international banks. GDI is 70% owned by GIS and 30% owned by Japan Drilling Company. The two new offshore rigs are expected to start operations by 3Q2013 and 3Q2014, respectively, while the two new onshore rigs are scheduled to start operations by 1Q2012. The accommodation barge will commence operations in 4Q2011. (The Gulf Times) UDC recommends a 50% capital increase to shareholders United Development Company (UDC) [UDCD.QA] plans to recommend to its shareholders a 50% capital increase, the company said in a statement to the Qatar Exchange. The shares will be offered for public subscription, with priority given to existing shareholders, at a par value of QAR10 plus a premium that will be determined according to the market price at the time of issuance, subject to the approval of the Ministry of Business and Trade. (Qatar Exchange) National Leasing hires Ernest & Young to study capital hike plans The National Leasing Holding Company (NLCS.QA) announced that it has decided to engage Ernest & Young to conduct a feasibility study on increasing the companys capital, the company said in a statement to the Qatar Exchange. (Qatar Exchange) Qatar and Tajikistan sign deal for Diar Dushanbe Qatari Diar Real Estate Investment Company celebrated the signing of an agreement between the State of Qatar and the Republic of Tajikistan that allows the company to start construction work on the mixed-use project, Diar Dushanbe, in the capital of Tajikistan. (The Peninsula Qatar) Qatar to bid for 2020 Summer Olympics Qatar confirmed that it would make a late bid to host the 2020 Summer Olympics, Bloomberg reported. The deadline for submitting a bid for 2012 is Thursday, 1 September 2011, with the winning city announced on 13 September 2011. (Bloomberg)

EFG Hermes Research

Qatari Banking Sector Note - July 2011 Sector Balance Sheet Trends: Loan Growth above MENA Average, Private Sector Loan Growth Continues to Recover - 25 August 2011 Loan Growth Remains Strong in Qatar, up 14% Y-o-Y in July: According to recently released statistics by the Qatar Central Bank (QCB), total sector loans grew 14% Y-o-Y and 1% M-o-M in July 2011. While on a M-o-M basis growth slowed down versus a strong month in June (when loans were up 5% M-o-M, driven by a strong increase in public sector loans), loan growth in Qatars banking sector continues to be above the loan growth in most other MENA countries. Public sector loan growth was 8% Y-o-Y (+1.1% M-o-M), while private sector lending increased 16% Y-o-Y (1.1% M-o-M). Private sector loan growth picked up significantly over the past four months and current loan growth rates are well above 2010s average 7% Y-o-Y growth. Private Sector Loan Growth Driven by Real Estate, Trade and Consumer: In July, trade and real estate were the main drivers of private sector loan growth, with 28% Y-o-Y and 56% Y-o-Y, respectively. Consumer loan growth rates were also healthy at 4% M-o-M and 18% Y-o-Y. The QCBs reduction in retail lending rates introduced in April (the ceiling was set at 150 bps above the benchmark rates for personal loans) has lead to an improvement in volume growth, in our view. We would expect growth in consumer lending to be positively impacted by the QCBs second cut in policy interest rates to 4.5% from 5% (following the 0.5% cut in benchmark rates in April 2011) in August. Deposit Growth Strong, Driven by Public Sector Deposits: Total deposits grew 28% Y-o-Y and 5% M-o-M in July 2011. Growth was mainly driven by a solid increase in public sector deposits of 19% M-o-M and 63% Y-o-Y. Resident deposits grew 35% Y-oY and 6% M-o-M in July, compared to the sharp 31% Y-o-Y decline in non-resident deposits. Non-resident deposits continue to decline, driven by the decline in deposit rates in Qatar since the beginning of the year, which has lead to little deposit rate differentials in Qatar versus other GCC countries. Reiterate Buy on QNB and CBQ; Remain Neutral on QIB: We reiterate our Buy ratings on QNB and CBQ, and we believe that investor concerns regarding CBQs growth should have been partially cleared following the strong set of results reported in 2Q2011. We reiterate our Neutral rating on QIB; growth in 1H2011 has been disappointing, despite opportunities to gain market share following the QCBs restricting regulations on Islamic banking for conventional banks. QIB trades at multiples close to QNB, despite the latters higher returns and stronger franchise. (Elena Sanchez-Cabezudo, Mohamed El Hefny)
[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.