Kuwait Financial Centre “Markaz”

RESEARCH

MENA Market Intelligence

October 2010
Week ending 21st of October

Market Performance: Markets were mainly flat during this week

Research Highlights:
Provide readers with weekly
updates on analyst
recommendations from different
investment houses collate views
on the state of MENA economy,
sector developments and fixed
income news.
which may indicate that markets are correlated however wide
margins are noticed, Lebanon lost 9.1%WTD, while Egypt gained
3.8% WTD. Turkey continues to dominate YTD returns by
advancing 32.8%, while at the other side of the spectrum Lebanon
remains the worst performing market YTD.
Equity Research: During the week we reviewed 11 equity
research reports, out of which 10 were buy/overweight, 1 was
Neutral with no sell recommendation, this indicates that analyst risk
appetite have increased. During this week research coverage was
wider than usual (usually KSA and Egypt have the lion’s share of
coverage)

Fixed income Development: Spreads on Arabian Gulf Islamic

bonds widened by the most in five months this week as investors
Markaz Research is available sold sukuk with lower debt ratings to raise funds for new issuance
on Bloomberg from state-backed banks.
Type “MRKZ” <Go>
New Fund Launches: 3 Funds were introduced this week 2 were
based on Islamic shariah and one Plain vanilla Equity fund,
however, they all share one thing in common a “capital
appreciation” strategy.

M.R. Raghu CFA, FRM Table 1: Market Performance

Head of Research
+965 2224 8280 Indicators M. Cap Last Chg weekly MTD YTD 2009
rmandagolathur@markaz.com MENA Markets (USD Bn) Close (%) % % % %
Saudi (TASI) 332 6303 -0.7 0.6% -1.4 2.95 27
Humoud Salah N Al Sabah Turkey ISE National 100 282 70167 0.7 1.8% 6.68 32.8 97
Assistant Analyst Kuwait SE WT.INDEX 129 483 0.9 0.0% 3.61 25.2 -5
+965 2224 8000 ext. 1206 Abu Dhabi (ADI)^ 80 2745 1.2 -1.2% 2.67 0.03 15
halsabah@markaz.com Qatar(QE Index) 79 7828 0.9 -1.3% 1.72 12.5 1
Morocco (CAI) 66 11999 0.8 0.0% 0.87 14.9 -5
Dubai (DFMGI) 55 1759 0.9 0.0% 4.45 -2.49 10
Egypt (Hermes) 55 640 0.8 3.8% 3.79 11.7 34
Jordan (Amman) 26 5112 0.4 0.0% 1.41 -7.4 -12
Oman(Muscat SM) 18 6534 0.5 0.0% 0.95 2.59 17
Kuwait Financial Centre Bahrain (BAX) 17 1474 0.1 0.0% 2.03 1.08 -19
S.A.K. “Markaz” Lebanon (BSE) 10 1404 0.1 -9.1% -2.4 -10.4 33
Source: The Daily Morning Brief “Markaz”
P.O. Box 23444, Safat 13095,
Kuwait
Tel: +965 2224 8000
Fax: +965 2242 5828
markaz.com
 RESEARCH
October 2010

What Analysts are recommending

Market Price on
Date of Target Current
Market Currency Recommendation Recommendation House
Recommendation Price Price
Company day
Etisalat UAE AED Buy 20-Oct 11.6 22 11.7 CICR
Abu Dhabi Islamic Bank UAE AED Buy 20-Oct 3.18 3.65 3.2 Rasmala
Cairo Poultry Company Egypt EGP Buy 17-Oct 13.5 17.4 15.25 EFG Hermes
Qatar Navigation Qatar Qar Buy 20-Oct 81.9 103 82.8 EFG Hermes
Ma’aden KSA SAR Buy 19-Oct 21.8 25.1 21.6 Global
Union National Bank UAE AED Outperform 20-Oct 3.2 5.2 3.58 Credit Suisse
Kuwait Food Kuwait KWD Overweight 17-Oct 1.64 1.836 1.58 TAIB
AL-Othaim KSA SAR Overweight 18-Oct 72.8 87.4 70.5 NCB Capital
Qatar Electricity and water Qatar QAR Accumulate 20-Oct 115 131 114.5 NBK capital
The Commercial Bank of Qatar Qatar QAR Accumulate 19-Oct 86 92 83 NBK Capital
GB Auto EGYPT EGP Neutral 21-Oct 49 51.4 49.16 Credit Suisse

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 RESEARCH
October 2010

Equity Recommendation-Key points

Company House Recommendation Rationale

Etisalat CICR Buy Although, 9 month consolidated results were below
(UAE) consensus CICR issued a “Buy” recommendation with a
price target of AED 22 based on expansions in regional
and international markets, 9 months ending September
30 results shows 1.6% YoY decline, in revenues to AED
23.3Bn, EBIT declined 22% to AED 10.2Bn and Net
earnings declined 18% to AED5.6Bn.
Abu Dhabi Rasmala Buy Abu Dhabi Islamic Bank Continues to post impressive
Islamic Bank numbers, higher spreads, better fees and commission
(UAE) and improving asset quality lead income to rise by more
than 30%. Furthermore ADIB surpassed Rasmala’s
estimates which lead Rasmala to reiterates its “Buy”
recommendation thus updating, price target to DHS
3.65
Cairo Poultry EFG Buy EFG Hermes estimates that Net profits will grow 17%
Company Hermes CAGR in the next 5 years. On the back of the increased
(Egypt) demand for frozen birds due to new regulation, this
regulation would help speed up the consolidation of a
fragmented market. In its initiation report EFG Hermes
issued a “ Buy” Recommendation with a price target of
EGP 17.4
Qatar EFG Buy EFG Hermes issued a “ Buy” recommendation with a
Navigation Hermes price target of QAR 103 the rationale behind this
(UAE) recommendation was 1) the company is trading at a
50% discount to its peers 2) QNAV is positively geared
to the local economy thus would benefit from, robust
growth levels.
Ma’aden Global Buy Core business expansion, which will transform Ma’aden
(KSA) from a plain vanilla mining company into a mining and
processing company. Furthermore Ma’aden is continually
expanding its product portfolio thus stabilizing revenue
streams and the commencement of the phosphate
project in the 4thQ would contribute to bottom line
growth. Global issued a “Buy” rating with a target price
of SAR25.1
Union Credit Outperform 3Q10 numbers are in, net income increased 28.4% YoY
National Suisse to AED 459mn. 26.8% above CS estimates. ROE
Bank increased to 19.6% the highest since 3rd quarter 2008.
(Qatar) Asset quality remains high NPl stood at 1.5%. Credit
Suisse reiterates its “Outperform” ratio with a price
target of AED 5.2 per share.
Kuwait Food Taib Overweight 1H10 numbers are in, Sales increased 10.7% YoY to
(Kuwait) KWD334.42, Net Profits doubled to KWD27.7, while cost
of sales increased 10.8% to KWD273.69. Taib sees a
12% upside potential from current prices thus reiterates
its Overweight recommendation
AL Othaim NCB Overweight 3rd quarter 2010 was positive and in line with NCB
(KSA) Capital capital’s estimates. However NCB believes that net
income growth levels is unsustainable due to a reversal
in provision taken for 2009 it project. Adjusted net
income increased 28% to SAR32mn, COGS decrease
which lead to 1.01% increase in gross margin to 7%.

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 RESEARCH
October 2010

NCB Capital maintains its “Overweight”

Recommendation with a price target of SAR 87.4.
QEWC NBK Accumulate Strong Q3 numbers in line with NBK capital’s estimates,
(Qatar) Capital Total revenue increased 27% to QAR 944mn, Electricity
remains the largest contributor to revenue
[55%].Operation levels were improving EBITDA
increased 17% YoY to QAR 555mn. Based on positive
results NBK Capital reiterated its “Accumulate”
recommendation with a price target of QAR 131.
GB Auto Credit Neutral After more than 101% YTD stock price gain, Credit
(Egypt) Suisse Suisse issued a “Neutral” recommendation with a price
target of 51.4 EGP mainly because the increased in
demand is priced in current price levels. Furthermore
Credit Suisse may turn bullish on GB Auto, if Iraq sales
numbers went up and the sustainable growth of GB’s in-
house financing number.
The NBK Accumulate Net profits increased 29% to QAR 508mn on the back of
Commercial Capital lower provisions, Operating income increased 1% a 7%
Bank of Qatar increase on NBK’s forecast. Furthermore total assets
(KSA) increased 5% in 3Q10, mainly due to increase in loans,
net loans increased by 4% to QAR 37.4bn. NBK Capital’s
recommendation was “Accumulate” with a price target
of QAR 92.

Kuwait Financial Centre “Markaz” 4

 RESEARCH
October 2010

Fixed Income development1

Company Market View

Apicorp KSA Saudi Arabia-based Arab Petroleum Investments
Corp. (Apicorp) may issue more conventional or
Islamic bonds after successfully raising SAR2bn
($533mn) via its debut bond issue last week that
was three times oversubscribed, the lender's top
executive said.
Sukuk All Spreads on Arabian Gulf Islamic bonds widened by
the most in five months this week as investors sold
sukuk with lower debt ratings to raise funds for new
issuance from state-backed banks. The difference
between average yields over the London interbank
offered rate widened 41bps to 481bps, the biggest
increase since the week ended May 21, according to
the HSBC/NASDAQ Dubai GCC US Dollar Sukuk
Index, which tracks 19 corporate and sovereign
bonds. The spread on global Islamic debt rose
23bps to 377bps, the HSBC/NASDAQ US Dollar
Sukuk Index shows
Emirates UAE Emirates Aluminium (Emal), a joint venture
Aluminium between Abu Dhabi's Mubadala Development Co.
and Dubai Aluminum Co., plans to sell more than
$1bn of bonds and secure about $700mn of export
credit financing in 2011 to finance the expansion of
its smelter, the company's CEO said
Doha Bank Qatar Doha Bank will go on a global roadshow early next
year ahead of a planned $500mn, five-year bond
issue, the lender's CEO said. Raghavan
Seetharaman, Doha Bank's CEO, said that the
company would meet investors in Asia, Europe and
the US--including in Hong Kong, New York and
London--either in January or February to market
the bond. "It looks like it, yes," he said. "We have
good experience in these markets
Islamic KSA Saudi-based Islamic Development Bank has
Development launched a $500mn, five-year sukuk offering at
Bank 40bps over mid-swaps, one of the banks running
the sale said. Pricing is at the tight end of guidance
set Tuesday at 40-50bps over mid-swaps. The
issuer is rated AAA by all three major credit rating
agencies.
Dubai Electricity UAE Fitch has assigned Dubai Electricity and Water
and Water Authority's (DEWA) $500mn and $1.5bn notes a
Company senior unsecured rating of 'BBB-'. The $500mn
DEWA notes are due in 2016 and bear a coupon of
6.375% while the $1.5bn notes are due in 2020 and
bear a coupon of 7.375%

A number of sources which include Bloomberg, Zawya, and daily newspapers were utilized in the creation of the fixed income section
which is mainly from Markaz GCC daily report

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 RESEARCH
October 2010

Qatar telecom Qatar Qatar Telecom may raise a further $1.25bn from a
dual-tranche bond issue, a week after issuing bonds
worth $1.5bn. Qtel's planned $500mn six-year
tranche is priced at 100.15, a slight discount to the
current trading price of the six-year bond issued
last week. "The fresh raising is an extension to the
previous six-year bond issue with similar terms and
maturity date," a banker said. In addition, Qtel
plans to raise $500mn to $750mn in a new 15-year
tranche, priced at 262.5-267.5 basis points over 10-
year treasuries
Bank Of Bahrain Bahrain Bahrain-based Bank of Bahrain and Kuwait plans to
and Kuwait issue a five-year benchmark, USD bond as early as
this week, a person familiar with the deal said
Tuesday. "The book runners for BBK's bond sale,
slated for this week, are Citi, Deutsche Bank and
HSBC," the banker said.
Dubai UAE Dubai’s finance department denied asking lenders
for a $500mn loan as part of an arrangement to sell
a sovereign bond, al-Bayan newspaper reported
today. The Financial Times reported yesterday that
the emirate asked lenders seeking to manage its
recent sovereign bond sale to offer the government
a $500mn loan over 3 years at 300bps over the
LIBOR

Kuwait Financial Centre “Markaz” 6

 RESEARCH
October 2010

New Fund Launches

Fund Name Type Geo focus Details

AL Hayah Fund Open- Egypt AL Hayah fund is a “Capital Appreciation “fund that invests in
Ended Islamic equity and to lesser extent fixed income offering, the
Equity fund invests in Egypt and is managed by Al Watani Bank of
Egypt.

Al Haya Fund fee structure: Admin Fees of 0.6% per annum

paid monthly, Management fees of 0.6 per annum paid
monthly, performance fee 10% (over 10% Hurdle rate) and
0.1% per annum paid monthly custodian fee. the fund is in
its initial subscription phase and is open to all investors .
Invest AD- Open- Iraq Iraq Opportunity fund is a “Capital” Appreciation fund with a
Iraq Ended fixed geographical location; the fund aims to grow investor’s
opportunity capital by investing in the Iraqi stock market. The fund is
Fund Equity administrated by Apex Fund Services Dubai and is domiciled
in the Cayman Island, the fund is open to all investors except
U.S nationals.

Iraq Opportunity Fund, Fee Structure: Admin fee 0.12% per

Annum, Subscription fee 3% of value, redemptions are
executed once a month with a 1% fee, Performance fee is
20% and the management charge 0.8% management fee
per annum.
MAC Ethical Open- Tunis Mac Ethical fund is a “Capital appreciation fund” mainly
FCP Ended targeting Islamic Complaint Equity and to a lesser extent
invest in cash and cash equivalents. The fund will invest in
Equity the Tunisian Stock Market and will be domiciled in Tunisia.
The Ethical Fund is open to all investors and is managed by
MAC SA.

The fee structure of this fund includes but not limited to;
Management fees 1% paid quarterly, 15% performance fee
above 10% ”Hurdle rate”, custodian fees 0.1% paid
Quarterly and Redemption fee structure is as follows less
than 1 year 3% Fees, between 1-2 2% fee and between 2-3
years 1% fee shares are redeemable weekly.

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 RESEARCH
October 2010

Markaz Research Offerings

Strategic Research Periodic Research Sector Research

The Golden Portfolio (Sept-10) Infrastructure
The New Regulations on Kuwait Investment Sector (Jun-10) Daily
Persistence in Performance (Jun-10) Markaz Daily Morning Brief GCC Power
Kuwait Capital Market Law (Mar-10) Markaz Kuwait Watch GCC Ports
What to expect in 2010 (Jan-10) Daily Fixed Income Update GCC Water
GCC Banks - Done with Provisions? (Jan-10) GCC Airports
What is left for 2009? (Sept-09) Weekly GCC Roads & Railways
Kuwait Investment Sector (Jun-09) GCC ICT
Missing The Rally (Jun-09) KSE Market Weekly Review
Shelter in a Storm (Mar-09) MENA Market intelligence Real Estate – Market Outlook
Diworsification: The GCC Oil Stranglehold (Jan-09) International Market Update
This Too Shall Pass ( Jan-09) Real Estate Market Commentary  Dubai Real Estate - Trends and Outlook(Apr-10)
Fishing in Troubled Waters(Dec-08)  Egypt Real Estate - Trends and Outlook(Feb-10)
Down and Out: Saudi Stock Outlook (Oct-08) Monthly  Kuwait Real Estate Outlook(Dec-09)
Mr. GCC Market-Manic Depressive (Sept-08)  Abu Dhabi Residential (Nov-09)
Global Investment Themes (June-08) Mena Mergers & Acquisitions  Office Investment in KSA (Jul-09)
To Yield or Not To Yield (May-08) Option Market Activity  Saudi Arabia – Residential Real Estate Outlook (Jun-09)
Banking Sweet spots (Apr-08) GCC Quants  Saudi Arabia (Sep-08)
The “Vicious Square” Monetary Policy options for Kuwait (Feb-08) Market Review  Abu Dhabi (July-08)
China and India: Too Much Too Fast (Oct-07) GCC Corporate Earnings  Algeria (Mar-08)
A Potential USD 140b Industry: Review of Asset Management  Jordan (Mar-08)
Industry in Kuwait (Sep-07) Quarterly  Kuwait (Feb-08)
A Gulf Emerging Portfolio: And Why Not? (Jun-07) GCC Equity Funds  Lebanon (Dec-07)
To Leap or To Lag: Choices before GCC Regulators (Apr-07) Thought Speaks  Qatar (Sep-07)
Derivatives Market in GCC (Mar-07) Equity Research Statistics  Saudi Arabia (Jul-07)
Managing GCC Volatility (Feb-07)  U.S.A. (May-07)
GCC for Fundamentalists (Dec-06)  Syria (Apr-07)
GCC Leverage Risk (Nov-06)
Real Estate Strategic Research

 GCC Distressed Real Estate Opportunities (Sep-09)

 GCC Real Estate Financing (Sept-09)
 Real Estate Earnings -2009 (May-09)
 Supply Adjustments Are we done? (Apr-09)
 Dubai Real Estate Meltdown (Feb-09)

Kuwait Financial Centre “Markaz” 8


Saudi Arabia
 Samba Financial Group (Aug-10)
 Jabal Omar Development (Jul-10)
 Arabian Cement Co (Jul-10)
 Yanbu Cement Co. (Jun-10)
 Saudi Telecom 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)
 Al Rajhi Bank (Aug-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)
Markaz Research Offerings
Markaz Research is available on: Bloomberg Type “MRKZ” <GO>,
Thomson Financial, Reuters Knowledge, Zawya Investor & Noozz.
To obtain a print copy, kindly contact:
Kuwait Financial Centre “Markaz”
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: info@markaz.com
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)
Company Research
UAE
 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)
Qatar
 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)
 Qatar National Bank (Feb-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)
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)
Kuwait Financial Centre “Markaz”
RESEARCH
October 2010
Oman
 Shell Oman Marketing (Apr-10)
 Galfar Engineering & Cont. (Nov-08)
 Oman Telecommunications (Sept-08)
 Bank Muscat(Sept-08)
 Oman cement (Sept-08)
 Raysut Cement Company (Aug-08)
 National Bank of Oman (Aug-08)
 OIB (July-08)
Jordan
 Arab Bank (Sept-08)
 Cairo Amman Bank (Oct-08)
Morocco
 Maroc Telecom (Mar-10)
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)
9
 RESEARCH
October 2010

Kuwait Financial Centre “Markaz” 10

 RESEARCH
October 2010

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 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 does not have regard to 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 historical and 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.