QNBFS Daily Market Report January 17, 2018

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1. Page 1 of 7 QSE Intra-Day Movement Qatar Commentary The QSE Index rose 2.6% to close at 9,178.2. Gains were led by the Transportation and Industrials indices, gaining…
  • 1. Page 1 of 7 QSE Intra-Day Movement Qatar Commentary The QSE Index rose 2.6% to close at 9,178.2. Gains were led by the Transportation and Industrials indices, gaining 3.9% and 2.4%, respectively. Top gainers were Qatar Navigation and Masraf Al Rayan, rising 6.2% and 5.3%, respectively. Among the top losers, Ahli Bank fell 4.4%, while Qatar Cinema & Film Distribution Company was down 3.6%. GCC Commentary Saudi Arabia: The TASI Index rose 0.6% to close at 7,531.6. Gains were led by Food & Beverages and Telecom. Services indices, rising 2.3% and 1.8%, respectively. Emaar The Economic City rose 4.2%, while AXA Cooperative Ins. Co. was up 3.7%. Dubai: The DFM Index gained 0.9% to close at 3,525.6. The Real Estate & Construction index rose 1.4%, while the Financial & Inv. Services index gained 0.9%. National General Ins. rose 14.8%, while Gulf Navigation Hold. was up 4.6%. Abu Dhabi: The ADX benchmark index rose 0.3% to close at 4,615.4. The Banks index gained 0.7%, while the Real Estate index rose 0.6%. Abu Dhabi Shipbuilding Co. gained 6.0%, while Union Cement Co. was up 5.6%. Kuwait: The KSE Index declined marginally to close at 6,624.5. The Basic Materials index fell 1.1%, while the Banks index declined 0.6%. Kuwait Cable Vision fell 20.0%, while Credit Rating & Collection was down 6.6%. Oman: The MSM Index fell 0.6% to close at 5,039.9. Losses were led by the Financial and Services indices, falling 0.6% each. Gulf International Chemical fell 5.3%, while Al Batinah Dev. Inv. Holding was down 4.8%. Bahrain: The BHB Index fell 0.2% to close at 1,321.4. The Investment index declined 0.7%, while the Commercial Banks index fell 0.1%. GFH Financial Group declined 2.4%, while National Bank of Bahrain was down 1.6%. QSE Top Gainers Close* 1D% Vol. ‘000 YTD% Qatar Navigation 58.50 6.2 28.1 4.6 Masraf Al Rayan 42.12 5.3 998.0 11.6 Islamic Holding Group 39.00 5.1 147.8 4.0 Al Khaleej Takaful Insurance Co. 13.90 4.4 1.1 5.0 Qatari Investors Group 40.44 4.1 82.7 10.5 QSE Top Volume Trades Close* 1D% Vol. ‘000 YTD% Qatar First Bank 6.64 2.2 1,178.0 1.7 United Development Co. 16.43 0.5 998.8 14.3 Masraf Al Rayan 42.12 5.3 998.0 11.6 Vodafone Qatar 7.90 1.3 780.6 (1.5) Investment Holding Group 6.25 0.8 720.0 2.5 Market Indicators 16 Jan 18 15 Jan 18 %Chg. Value Traded (QR mn) 246.7 418.8 (41.1) Exch. Market Cap. (QR mn) 504,227.0 494,404.6 2.0 Volume (mn) 9.3 20.9 (55.3) Number of Transactions 5,001 5,733 (12.8) Companies Traded 43 43 0.0 Market Breadth 33:8 7:36 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 15,391.26 2.6 0.5 7.7 15.3 All Share Index 2,618.29 2.0 (0.0) 6.8 14.8 Banks 2,852.63 2.4 0.3 6.4 12.8 Industrials 2,841.98 2.4 1.3 8.5 18.9 Transportation 1,891.85 3.9 (0.9) 7.0 14.1 Real Estate 2,051.08 1.4 0.1 7.1 14.2 Insurance 3,698.82 (0.1) (4.8) 6.3 24.9 Telecoms 1,154.18 1.8 (0.0) 5.0 21.4 Consumer 5,220.48 1.0 (0.5) 5.2 12.5 Al Rayan Islamic Index 3,660.33 2.5 (0.7) 7.0 17.1 GCC Top Gainers ## Exchange Close # 1D% Vol. ‘000 YTD% Qatar Navigation Qatar 58.50 6.2 28.1 4.6 Masraf Al Rayan Qatar 42.12 5.3 998.0 11.6 Emaar Economic City Saudi Arabia 13.97 4.2 2,514.3 3.6 Bupa Arabia for Coop. Ins. Saudi Arabia 93.35 3.5 353.0 0.4 Emaar Malls Dubai 2.30 3.1 16,852.2 8.0 GCC Top Losers ## Exchange Close # 1D% Vol. ‘000 YTD% Al Ahli Bank of Kuwait Kuwait 0.31 (4.1) 0.5 5.5 Phoenix Power Co. Oman 0.13 (3.0) 18.6 (5.8) Bank Dhofar Oman 0.22 (2.7) 126.1 (1.8) Rabigh Refining & Petro. Saudi Arabia 20.21 (2.5) 6,252.7 22.9 Kingdom Holding Co. Saudi Arabia 9.31 (2.1) 813.4 4.1 Source: Bloomberg (# in Local Currency) (## GCC Top gainers/losers derived from the S&P GCC Composite Large Mid Cap Index) QSE Top Losers Close* 1D% Vol. ‘000 YTD% Ahli Bank 33.50 (4.4) 0.5 (14.1) Qatar Cinema & Film Distribution 22.99 (3.6) 0.1 (8.0) Qatar Islamic Insurance Co. 56.56 (1.6) 63.8 2.9 Qatar National Cement Co. 63.05 (0.7) 29.6 0.2 Al Khalij Commercial Bank 13.40 (0.7) 59.7 (5.6) QSE Top Value Trades Close* 1D% Val. ‘000 YTD% Masraf Al Rayan 42.12 5.3 41,509.8 11.6 QNB Group 136.00 2.1 32,002.1 7.9 United Development Co. 16.43 0.5 16,452.1 14.3 Industries Qatar 109.60 2.8 14,918.3 13.0 Ooredoo 97.99 2.1 14,160.7 8.0 Source: Bloomberg (* in QR) Regional Indices Close 1D% WTD% MTD% YTD% Exch. Val. Traded ($ mn) Exchange Mkt. Cap. ($ mn) P/E** P/B** Dividend Yield Qatar* 9,178.18 2.6 0.5 7.7 7.7 66.94 138,511.2 15.3 1.3 4.2 Dubai 3,525.59 0.9 0.9 4.6 4.6 123.28 111,428.8 24.9 1.3 3.9 Abu Dhabi 4,615.41 0.3 0.5 4.9 4.9 54.36 120,029.4 16.5 1.3 4.4 Saudi Arabia 7,531.56 0.6 2.6 4.2 4.2 970.59 470,258.3 17.7 1.7 3.2 Kuwait 6,624.53 (0.0) 1.0 3.4 3.4 49.78 96,015.6 16.0 1.1 5.2 Oman 5,039.86 (0.6) (0.9) (1.2) (1.2) 4.67 20,970.9 11.6 1.0 5.2 Bahrain 1,321.40 (0.2) 0.3 (0.8) (0.8) 2.93 20,488.4 7.8 0.8 5.9 Source: Bloomberg, Qatar Stock Exchange, Tadawul, Muscat Securities Market and Dubai Financial Market (** TTM; * Value traded ($ mn) do not include special trades, if any) 8,900 9,000 9,100 9,200 9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00
  • 2. Page 2 of 7 Qatar Market Commentary  The QSE Index rose 2.6% to close at 9,178.2. The Transportation and Industrials indices led the gains. The index rose on the back of buying support from non-Qatari shareholders despite selling pressure from Qatari and GCC shareholders.  Qatar Navigation and Masraf Al Rayan were the top gainers, rising 6.2% and 5.3%, respectively. Among the top losers, Ahli Bank fell 4.4%, while Qatar Cinema & Film Distribution Company was down 3.6%.  Volume of shares traded on Tuesday fell by 55.3% to 9.3mn from 20.9mn on Monday. Further, as compared to the 30-day moving average of 13.0mn, volume for the day was 28.1% lower. Qatar First Bank and United Development Company were the most active stocks, contributing 12.6% and 10.7% to the total volume, respectively. Source: Qatar Stock Exchange (* as a % of traded value) Earnings Releases, Global Economic Data and Earnings Calendar Earnings Releases Company Market Currency Revenue (mn) 4Q2017 % Change YoY Operating Profit (mn) 4Q2017 % Change YoY Net Profit (mn) 4Q2017 % Change YoY Al Jazeera Services* Oman OMR 8.0 -13.3% 1.1 -13.8% 1.6 -3.4% National Gas* Oman OMR 78.8 28.4% – – 2.2 -22.4% Sohar Power* Oman OMR 64.5 -2.7% – – 2.0 -56.0% Muscat City Desalination* Oman OMR 15.7 23.7% – – -0.3 N/A Packaging Co. Ltd.* Oman OMR 9.7 8.5% – – 0.7 -0.3% Oman Oil Marketing* Oman OMR 514.6 20.8% – – 8.8 -8.0% United Power* Oman OMR 4.2 -9.4% – – 0.1 -94.4% Dhofar Insurance* Oman OMR 44.8 -18.9% – – -1.3 N/A Gulf International Chemicals* Oman OMR 2.6 -14.0% 0.3 -51.2% 0.3 -49.7% Oman Chlorine* Oman OMR 8.1 11.4% 0.6 -68.4% 1.0 -52.7% Dhofar Fisheries and Food Ind.* Oman OMR 5.1 25.6% – – -0.3 N/A Dhofar Beverages Food Stuff* Oman OMR 4.5 -7.4% -0.2 N/A -0.3 N/A Al Batinah Hotels* Oman OMR 0.9 -37.3% – – -0.5 N/A Al Hassan Engineering* Oman OMR 40.2 -55.4% – – -26.7 N/A Source: Company data, DFM, ADX, MSM, TASI, BHB. (*Values for FY2017) Global Economic Data Date Market Source Indicator Period Actual Consensus Previous 01/16 UK UK Office for National Statistics CPI MoM December 0.4% 0.4% 0.3% 01/16 UK UK Office for National Statistics CPI YoY December 3.0% 3.0% 3.1% 01/16 Germany German Federal Statistical Office CPI MoM December F 0.6% 0.6% 0.6% 01/16 Germany German Federal Statistical Office CPI YoY December F 1.7% 1.7% 1.7% 01/16 Japan Bank of Japan PPI YoY December 3.1% 3.2% 3.6% 01/16 Japan Bank of Japan PPI MoM December 0.2% 0.4% 0.5% Source: Bloomberg (s.a. = seasonally adjusted; n.s.a. = non-seasonally adjusted; w.d.a. = working day adjusted) Earnings Calendar Tickers Company Name Date of reporting 4Q2017 results No. of days remaining Status WDAM Widam Food Company 17-Jan-18 0 Due QIBK Qatar Islamic Bank 17-Jan-18 0 Due ABQK Ahli Bank 17-Jan-18 0 Due MCGS Medicare Group 23-Jan-18 6 Due QATI Qatar Insurance Company 23-Jan-18 6 Due DHBK Doha Bank 23-Jan-18 6 Due QIIK Qatar International Islamic Bank 24-Jan-18 7 Due ERES Ezdan Holding Group 24-Jan-18 7 Due IHGS Islamic Holding Group 24-Jan-18 7 Due Overall Activity Buy %* Sell %* Net (QR) Qatari Individuals 32.25% 34.52% (5,609,134.17) Qatari Institutions 15.85% 24.04% (20,206,090.55) Qatari 48.10% 58.56% (25,815,224.72) GCC Individuals 1.03% 1.49% (1,154,068.48) GCC Institutions 2.33% 4.58% (5,567,457.59) GCC 3.36% 6.07% (6,721,526.07) Non-Qatari Individuals 15.61% 17.58% (4,858,735.96) Non-Qatari Institutions 32.94% 17.78% 37,395,486.75 Non-Qatari 48.55% 35.36% 32,536,750.79
  • 3. Page 3 of 7 KCBK Al Khalij Commercial Bank 24-Jan-18 7 Due QIGD Qatari Investors Group 25-Jan-18 8 Due CBQK The Commercial Bank 29-Jan-18 12 Due QEWS Qatar Electricity & Water Company 31-Jan-18 14 Due SIIS Salam International Investment Limited 4-Feb-18 18 Due QOIS Qatar Oman Investment Company 4-Feb-18 18 Due DOHI Doha Insurance Group 5-Feb-18 19 Due QNCD Qatar National Cement Company 5-Feb-18 19 Due ORDS Ooredoo 11-Feb-18 25 Due AKHI Al Khaleej Takaful Insurance Company 12-Feb-18 26 Due QISI Qatar Islamic Insurance Company 18-Feb-18 32 Due Source: QSE News Qatar  QNBK’s net profit rises 6% YoY to QR13.1bn in FY2017 – QNB Group (QNBK) reported 6% YoY increase in its FY2017 net profit to QR13.1bn. This was driven by growth in net fee and commission income, reduction in total expenses and lower impairment charges on loan book, demonstrating QNBK’s success in maintaining robust financial performance. Despite the impact of the devaluation of the EGP at the end of last year, QNBK was able to grow and diversify its sources of revenue with net interest income, fees and foreign exchange gains reaching QR17.9bn, QR3.6bn, and QR0.8bn, respectively. The Group’s drives for operational efficiency are yielding cost savings, in addition to sustainable revenue generating sources. This helped QNBK improve the efficiency ratio (cost to income ratio) to 29.1%, from 30.4% in FY2016, which is considered one of the best ratios among large financial institutions in the region. Also the Group’s conservative loan loss provisioning policy and strong recovery efforts helped reduce net impairment charge on its loan book during the year, demonstrating strong credit quality of its core asset base. The marginal growth in operating income was mainly affected by the devaluation of the EGP, which took place in late 2016. QNBK’s total assets at the end of December 31, 2017 increased 13% from December 31, 2016 to reach QR811bn, the highest ever achieved by the Group. This was driven by growth of 12% in loans and advances, which stood at QR584bn. QNBK was successful in attracting new customer deposits to comply with the cap on loans to deposits ratio of 100% set by Qatar Central Bank (QCB). These deposit mobilization efforts resulted in customer deposits expanding to QR586bn, up 16% from December 31, 2016. This led to the reduction in the Group’s loans to deposit ratio to 99.8%, compared with 102.7% in December 31, 2016. This clearly demonstrates the success of QNBK’s strategy to diversify its funding sources from new markets and improve liquidity. The ratio of non-performing loans to gross loans amounted to 1.8% as at December 31, 2017, a level considered one of the lowest amongst banks in the MEA region, reflecting the high quality of the Group’s loan book and the effective management of credit risk. The Group’s conservative policy in regard to provisioning resulted in coverage ratio of 112% as at December 31, 2017. QNBK estimates the initial impact of expected credit loss following implementation from January 1, 2018 of the new International Financial Reporting Standard (IFRS9) on financial asset impairment, to be in the region of QR2.3bn, which is subject to QCB approval. The impact of this new standard is insignificant to QNBK’s strong financial position. QNBK’s Capital Adequacy Ratio (CAR) stood at 16.49% as at December 31, 2017, higher than the regulatory minimum requirements of the QCB and Basel Committee and a pro-forma CAR of 16.46% post IFRS9 impact. Based on the record financial results for FY2017 and in line with QNBK’s aim of maximizing returns to shareholders, the board of directors recommended to the General Assembly the distribution of cash dividend of 60% of the nominal share value (QR6.0 per share). (QNB Group Press Release)  MARK’s 4Q2017 net operating profit in-line, DPS QR2.00 in-line with estimates – Masraf Al Rayan (MARK) reported net profit of QR466.2mn in 4Q2017 (vs. QR542.0mn in 3Q2017), missing our estimate of QR559.5mn due to an unprecedented surge in provisions; bottom-line dropped by 14.0% QoQ (-9.6% YoY) solely due to provisions. However, Net operating income came (before provisions) in at QR588.6mn, in-line with our estimate of QR570.1mn (+3.2% variation). MARK booked provisions of QR115.8mn vs. a reversal in 3Q2017 (provisions of QR21.1mn in 4Q2016). The board of directors recommended cash dividend of QR2.00/sh., yielding 4.7%. Net loans increased by 5.3% QoQ (+6.6% YoY) to QR72.1bn, while deposits grew by 4.1% QOQ (+7.8% YoY) to QR62.5bn. The bank’s investments reached QR23.94bn at the end of 2017. MARK’s capital adequacy ratio reached 19.32% (vs. 18.85% at the end of 2016) using Basel-III and QCB standards. Operational Efficiency ratio (cost to income ratio) stood at 21.27%. NPL ratio moved to 0.47%, which still remains negligible. (QNBFS Research, Company financials)  VFQS’ customers reach 1.39mn; July network outage compensation totals QR90mn – Vodafone Qatar (VFQS) stated its mobile customers reached 1.39mn during the three months ended on December 31, 2017. The customer base saw postpaid members grow 9% to 0.32mn due to the popularity of its Flex plans, its spokesperson said. Additionally, VFQS reached commercial settlement with network vendors as compensation for the network outage experienced by the company in July 2017. The total compensation is equal to QR25mn in credit notes and QR65mn in credit vouchers to be utilized in the future. The company changed its financial year end from March 31 to December 31 at its extraordinary general assembly meeting held on October 18, 2017. Accordingly, the company’s audited financial statements for the financial year ending December 31, 2017 (nine months) will be issued before March 31, 2018. (Gulf-Times.com)
  • 4. Page 4 of 7  Qatar Chamber’s Chairman: Qatar-Turkey trade volume to increase in 2018 – Following a 30% growth in Qatar-Turkey bilateral trade in 4Q2017, trade volume between the two countries is expected to increase further this year, according to Qatar Chamber’s Chairman, Sheikh Khalifa Bin Jassim Bin Mohamed Al Thani. Speaking on the sidelines of the Qatar- Turkey Economic Forum, Sheikh Khalifa lauded the growing cooperation between the two countries’ public and private sectors. In 2017, Sheikh Khalifa said Qatar Chamber and the Union of Chambers and Commodity Exchanges of Turkey signed an agreement to enhance bilateral and economic ties between Qatar and Turkey. “We will soon sign a new trade agreement with Turkey, which will serve our commercial trade in Qatar,” Sheikh Khalifa noted, adding that Qatar-Turkey relations are growing, particularly in the banking sector, real estate, and other industries. In the long-term, Sheikh Khalifa said the trade agreements would lead to the establishment of more joint ventures between both the countries. (Gulf- Times.com)  Qatar to play a role in production of Turkey’s first automobile – Qatar, through Turkish commercial vehicle manufacturer BMC, will be involved in the production of Turkey’s first locally-built automobile, according to the Union of Chambers and Commodity Exchanges of Turkey’s (TOBB) President, Rifat Hisarciklioglu. Speaking at the Qatar-Turkey Economic Forum yesterday, Hisarciklioglu said Qatar is part of a consortium involved in the production Turkey’s first local and national automobile. During the forum, Turkey’s Minister of Customs and Trade, Bulent Tufenkci noted that the two countries could further enhance investment and cooperation ties in various sectors. Tufenkci said Turkey is home to the world’s second largest construction and contracting sector. With 250 construction companies at the global level, he said Turkey is keen to increase cooperation between Qatar and Turkey in the field of construction. (Gulf-Times.com)  QCB Governor: Qatar monitors investors’ interest in virtual currency – Qatar Central Bank (QCB) is closely watching the global investors’ growing interests in virtual currencies and might introduce them in the country if an opportunity arises in the future, QCB’s Governor, HE Sheikh Abdulla Bin Saoud Al Thani said. “We will think about virtual currency in case we see some opportunity in future. We don’t mind to have something in digital currency,” Sheikh Abdulla said. He further added, “We haven’t taken any big initiative in setting up regulations and policies on Bitcoin. In fact, we are not targeting one currency but we look at the virtual currencies, whether it might come some means of exchange. We are in touch with friends in other countries on how we can set best practices and rules to regulate virtual currency”. (Peninsula Qatar) International  UK’s Inflation falls back for first time since June as Brexit hit wanes – UK’s inflation eased off its post-Brexit vote high in December suggesting the financial squeeze on many households could be about to get a little bit easier. Consumer price inflation slipped to an annual rate of 3.0% in December, below November’s nearly six-year high of 3.1% and the first fall since June. The figure was in line with the median forecast of economists in a Reuters poll. Inflation jumped in Britain after the decision by voters in June 2016 to leave the European Union which hammered the value of the pound and pushed up the cost of imports. In the Eurozone, inflation was just 1.4% in December, less than half the rate in Britain. The combination of high inflation and slow wage growth, as well as uncertainty about the terms on which Britain will leave the EU in 2019, is expected to mean Britain grows more weakly than other European economies this year. Consumer price growth looks set to wane as the peak impact from sterling’s sharp fall in mid- 2016 drops out of the data. (Reuters)  EU finance ministers to call on Germany to boost wages, investment – European Union (EU) finance ministers will call on Germany next week to boost wages and investment, EU documents show, underlining a longstanding demand that Berlin strengthen the bloc’s recovery by rebalancing its export- oriented economy. In their monthly talks next Tuesday, ministers will agree on the euro zone’s economic policy for this year and will discuss how to tackle imbalances that each EU economies develop. In draft conclusions of the talks, obtained by Reuters, the ministers agree with the European Commission’s opinion that Germany has an excessive current account surplus that it should address. (Reuters)  China’s economy set to slow to 6.5% in 2018 as government turns off cheap money – China’s economy is expected to cool this year as a government-led crackdown on debt risks and factory pollution drag on overall activity, a Reuters poll showed. Beijing is in the second year of a relentless campaign to wean China off its debt-heavy investment model, clamping down on everything from speculative property lending to shadow-bank financing activities as policy makers look to foster sustainable longer term growth. That has pushed up borrowing costs and taken some of the momentum off the world’s second-largest economy, especially in the final months of 2017, with growth forecast at 6.5% this year, according to economists from 70 institutions surveyed by Reuters. It was slightly above the poll’s October forecast of 6.4% expansion, but would still lag the survey’s 2017 projection of a 6.8% GDP increase. (Reuters) Regional  GCC countries’ credit strength likely to weaken in 2018 – The credit strength of a number o
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