QNBFS Daily Market Report October 24, 2017

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1. Page 1 of 7 QSE Intra-Day Movement Qatar Commentary The QSE Index declined 0.5% to close at 8,117.4. Losses were led by the Insurance and Transportation indices,…
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  • 1. Page 1 of 7 QSE Intra-Day Movement Qatar Commentary The QSE Index declined 0.5% to close at 8,117.4. Losses were led by the Insurance and Transportation indices, falling 3.0% and 1.3%, respectively. Top losers were Ahli Bank and Doha Insurance Co., falling 7.7% and 6.6%, respectively. Among the top gainers, Ezdan Holding Group gained 4.5%, while and Qatar Industrial Manufacturing Co. was up 2.0%. GCC Commentary Saudi Arabia: The TASI Index fell 1.3% to close at 6,886.3. Losses were led by the Telecommunication Serv. and Media indices, falling 3.1% and 2.8%, respectively. Etihad Etisalat Co. fell 7.5%, while Southern Province Cement Co. was down 5.6%. Dubai: The DFM Index declined 0.7% to close at 3,618.2. The Real Estate & Construction index fell 1.3%, while the Financial & Inv. Services index declined 0.6%. Emirates Islamic Bank fell 10.0%, while GFH Financial Group was down 3.5%. Abu Dhabi: The ADX benchmark index rose marginally to close at 4,498.7. The Consumer Staples index gained 0.8%, while the Telecommunication index rose 0.6%. Ras Al Khaimah Ceramics gained 4.2%, while Al Khazna Ins. Co. was up 3.3%. Kuwait: The KSE Index declined 0.4% to close at 6,622.6. The Oil & Gas index fell 1.6%, while the Insurance index declined 1.4%. Warba Insurance Company fell 14.7%, while Nafais Holding Company was down 7.4%. Oman: The MSM Index fell 0.3% to close at 5,032.9. Losses were led by the Financial and Services indices, falling 0.3% and 0.2%, respectively. Al Anwar Holding fell 2.9%, while Oman Investment and Finance was down 2.2%. Bahrain: The BHB Index gained 0.3% to close at 1,287.7. The Commercial Bank index rose 0.9%, while the Service index gained 0.5%. Khaleeji Commercial Bank rose 3.7%, while Nass Corporation was up 3.1%. QSE Top Gainers Close* 1D% Vol. ‘000 YTD% Ezdan Holding Group 9.44 4.5 1,355.0 (37.5) Qatar Industrial Manufacturing Co 40.99 2.0 1.3 (7.9) Medicare Group 68.99 1.5 4.2 9.7 Dlala Brokerage & Inv. Holding Co. 17.00 1.4 6.1 (20.9) Mazaya Qatar Real Estate Dev. 8.79 1.2 251.9 (35.9) QSE Top Volume Trades Close* 1D% Vol. ‘000 YTD% Qatar First Bank 6.64 (2.4) 2,185.9 (35.5) Ezdan Holding Group 9.44 4.5 1,355.0 (37.5) Investment Holding Group 7.09 (2.1) 746.6 (29.1) Vodafone Qatar 7.20 (1.5) 428.7 (23.2) United Development Co. 12.98 (1.7) 412.7 (37.1) Market Indicators 23 Oct 17 22 Oct 17 %Chg. Value Traded (QR mn) 165.4 126.3 31.0 Exch. Market Cap. (QR mn) 443,245.8 445,085.8 (0.4) Volume (mn) 8.1 11.9 (31.6) Number of Transactions 2,201 1,505 46.2 Companies Traded 42 40 5.0 Market Breadth 8:33 16:14 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 13,612.41 (0.5) (0.7) (19.4) 13.1 All Share Index 2,285.21 (0.3) (0.5) (20.4) 12.7 Banks 2,551.97 (0.4) (0.7) (12.4) 13.3 Industrials 2,508.35 (0.5) (0.6) (24.1) 16.9 Transportation 1,691.06 (1.3) (1.3) (33.6) 11.7 Real Estate 1,604.97 2.5 1.8 (28.5) 10.9 Insurance 3,044.27 (3.0) (2.1) (31.4) 18.1 Telecoms 1,026.29 (0.7) (0.9) (14.9) 19.8 Consumer 4,944.71 (0.6) (0.7) (16.2) 11.7 Al Rayan Islamic Index 3,222.81 (0.5) (0.6) (17.0) 14.9 GCC Top Gainers ## Exchange Close # 1D% Vol. ‘000 YTD% DP World Ltd. Dubai 22.90 2.3 102.5 30.8 Dallah Healthcare Co. Saudi Arabia 99.79 2.1 74.6 5.1 Ahli United Bank Bahrain 0.69 1.5 625.7 17.7 Nat. Mobile Telecom. Co. Kuwait 1.17 1.5 5.0 (2.5) Co. for Cooperative Ins. Saudi Arabia 94.81 1.3 112.2 9.3 GCC Top Losers ## Exchange Close # 1D% Vol. ‘000 YTD% Etihad Etisalat Co. Saudi Arabia 14.10 (7.5) 3,088.6 (41.2) Southern Prov. Cement Saudi Arabia 41.08 (5.6) 67.7 (50.1) Nat. Commercial Bank Saudi Arabia 46.28 (4.7) 1,770.1 (8.6) Qassim Cement Co. Saudi Arabia 38.55 (3.5) 40.4 (42.7) GFH Financial Group Dubai 1.67 (3.5) 33,719.0 (9.5) 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 29.07 (7.7) 1.0 (21.7) Doha Insurance Co. 14.01 (6.6) 0.0 (23.0) Qatar Oman Investment Co. 7.61 (4.5) 5.5 (23.5) Qatar Insurance Co. 45.87 (3.2) 85.5 (37.8) Qatari Investors Group 29.59 (3.0) 39.2 (49.4) QSE Top Value Trades Close* 1D% Val. ‘000 YTD% QNB Group 122.00 (0.3) 33,132.8 (17.6) Qatar First Bank 6.64 (2.4) 14,563.9 (35.5) Ezdan Holding Group 9.44 4.5 12,690.8 (37.5) Ooredoo 85.40 (0.6) 10,761.8 (16.1) Qatar International Islamic Bank 49.59 (0.8) 10,019.2 (21.0) 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* 8,117.41 (0.5) (0.7) (2.3) (22.2) 43.73 121,759.6 13.1 1.2 4.9 Dubai 3,618.24 (0.7) (1.5) 1.5 2.5 134.16 102,845.9 N/A 1.3 3.9 Abu Dhabi 4,498.71 0.0 (0.1) 2.3 (1.0) 23.59 118,235.1 16.5 1.3 4.6 Saudi Arabia 6,886.26 (1.3) (1.8) (5.4) (4.5) 714.99 434,880.5 16.5 1.6 3.5 Kuwait 6,622.56 (0.4) (0.2) (0.9) 15.2 33.63 98,009.4 18.0 1.2 5.2 Oman 5,032.87 (0.3) (0.7) (2.0) (13.0) 7.35 20,750.7 12.1 1.0 5.2 Bahrain 1,287.68 0.3 0.7 0.3 5.5 2.44 20,265.6 7.7 0.8 6.1 Source: Bloomberg, Qatar Stock Exchange, Tadawul, Muscat Securities Exchange, Dubai Financial Market and Zawya (** TTM; * Value traded ($ mn) do not include special trades, if any) 8,080 8,100 8,120 8,140 8,160 8,180 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 declined 0.5% to close at 8,117.4. The Insurance and Transportation indices led the losses. The index fell on the back of selling pressure from Qatari shareholders despite buying support from GCC and non-Qatari shareholders.  Ahli Bank and Doha Insurance Co. were the top losers, falling 7.7% and 6.6%, respectively. Among the top gainers, Ezdan Holding Group gained 4.5%, while and Qatar Industrial Manufacturing Co. was up 2.0%.  Volume of shares traded on Monday fell by 31.6% to 8.1mn from 11.9mn on Sunday. Further, as compared to the 30-day moving average of 9.4mn, volume for the day was 14.0% lower. Qatar First Bank and Ezdan Holding Group were the most active stocks, contributing 27.0% and 16.7% 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) 3Q2017 % Change YoY Operating Profit (mn) 3Q2017 % Change YoY Net Profit (mn) 3Q2017 % Change YoY Middle East Paper Co. Saudi Arabia SR – – 27.7 197.8% 22.2 873.6% Saudi Cement Company Saudi Arabia SR – – 94.0 -55.0% 87.0 -56.9% Etihad Etisalat Co. Saudi Arabia SR – – -3.7 N/A -174.5 N/A Dallah Healthcare Holding Co. Saudi Arabia SR – – 76.4 47.5% 76.8 26.3% Zahrat Al Waha for Trading Co. Saudi Arabia SR – – 19.3 -0.1% 17.2 3.5% Saudi Paper Manufacturing Co. Saudi Arabia SR – – 6.3 N/A -3.1 N/A Al Abdullatif Industrial Investment Co. Saudi Arabia SR – – 6.4 -14.2% 3.5 134.4% Abdulmohsen Alhokair Group for Tourism and Development Saudi Arabia SR – – 7.2 -87.4% 9.0 -83.9% Middle East Healthcare Co. Saudi Arabia SR – – 50.9 -44.2% 60.0 -39.8% Dur Hospitality Co. Saudi Arabia SR – – 16.1 -46.7% 15.0 -49.3% Saudi Arabia Fertilizers Co. Saudi Arabia SR – – 175.0 -13.6% 188.4 1.2% United Insurance Co. Abu Dhabi AED 15.7 44.9% – – -0.6 N/A Source: Company data, DFM, ADX, MSM, TASI, BHB. Global Economic Data Date Market Source Indicator Period Actual Consensus Previous 10/23 EU European Commission Consumer Confidence October -1.0 -1.1 -1.2 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 3Q2017 results No. of days remaining Status KCBK Al Khaliji Commercial Bank 24-Oct-17 0 Due QIMD Qatar Industrial Manufacturing Company 24-Oct-17 0 Due QGRI Qatar General Insurance & Reinsurance 24-Oct-17 0 Due BRES Barwa Real Estate Company 24-Oct-17 0 Due UDCD United Development Company 25-Oct-17 1 Due QISI Qatar Islamic Insurance Company 25-Oct-17 1 Due QFLS Qatar Fuel Company 25-Oct-17 1 Due VFQS# Vodafone Qatar 25-Oct-17 1 Due QCFS Qatar Cinema & Film Distribution Company 25-Oct-17 1 Due IGRD Investment Holding Group 25-Oct-17 1 Due QEWS Qatar Electricity & Water Company 25-Oct-17 1 Due AKHI Al Khaleej Takaful Group 26-Oct-17 2 Due QOIS Qatar Oman Investment Company 26-Oct-17 2 Due MERS Al Meera Consumer Goods Company 26-Oct-17 2 Due QFBQ Qatar First Bank 26-Oct-17 2 Due Overall Activity Buy %* Sell %* Net (QR) Qatari Individuals 32.70% 39.49% (11,237,740.63) Qatari Institutions 10.80% 43.87% (54,702,651.33) Qatari 43.50% 83.36% (65,940,391.96) GCC Individuals 0.62% 0.30% 530,347.56 GCC Institutions 24.56% 0.22% 40,265,080.74 GCC 25.18% 0.52% 40,795,428.30 Non-Qatari Individuals 5.95% 7.38% (2,359,879.49) Non-Qatari Institutions 25.38% 8.76% 27,504,843.15 Non-Qatari 31.33% 16.14% 25,144,963.66
  • 3. Page 3 of 7 QGMD Qatar German Company for Medical Devices 26-Oct-17 2 Due GISS Gulf International Services 26-Oct-17 2 Due SIIS Salam International Investment Limited 29-Oct-17 5 Due ORDS Ooredoo 29-Oct-17 5 Due MPHC Mesaieed Petrochemical Holding Company 29-Oct-17 5 Due MCCS Mannai Corporation 30-Oct-17 6 Due ERES Ezdan Holding Group 30-Oct-17 6 Due AHCS Aamal Company 30-Oct-17 6 Due ZHCD Zad Holding Company 30-Oct-17 6 Due Source: QSE ( # Financial Year ending March 31) News Qatar  DHBK's 3Q2017 Operating Income In-Line; Bottom-Line Beats on Lower Provisions – 3Q2017 earnings on an operating level in- line. Doha Bank (DHBK) reported a net operating income of QR459.5mn in-line with our estimate of QR451.4mn (variation +1.8%). Total Revenue also came in-line at QR732.9mn vs. our estimate of QR716.4mn (variation of 2.3%). DHBK’s reported net profit of QR333.1mn in 3Q2017 beat our estimate of QR295.4mn on the back lower than expected net provisions and impairments. Bottom-line drop sequentially was due to a decline in net interest income coupled with an increase in provisions & impairments; YoY growth was driven by strong net interest income and fees. DHBK reported net income of QR331.1mn vs. QR351.1mn in 2Q2017, declining by 5.1% QoQ (QR310.6mn in 3Q2016, +7.2% YoY). Net interest income slipped sequentially to QR552.1mn while provisions increased by 3.0% to QR125.8mn (we were expecting provisions of QR155mn). On the other hand, growth in fees (+20.7%) and flat opex prevented a further drop in the bottom-line. Growth in earnings YoY was driven by net interest income (+8.4%) coupled with fees (+17.1%). Provisions increased by 21.3% on a YoY basis. Spreads tightened QoQ vs. expanding in 2Q. Net interest income decreased by 2.1% QoQ (+8.4% YoY) to QR552.1mn. DHBK’s net interest margin contracted by 11bps QoQ (flat YoY) to 2.64%. The tightening of the spread sequentially was due to cost of funds climbing up by 18bps while yield on assets moved up by 3bps. On a YoY basis the NIM was stable as result of yields and cost of funds both growing by ~20bps. Efficiency ratio remained stable QoQ and improved YoY. Opex dipped by 0.6% QoQ (+3.1% YoY) to QR273.4mn, resulting in a stable C/I ratio at 37% vs. 37% in 2Q2017 (39% in 3Q2016). Asset quality came under some pressure. DHBK’s asset quality worsened with the bank’s NPLs gaining by 4.9% QoQ (+8.3% vs. 1Q2017) to QR2.0bn. Moreover, The NPL ratio moved to 3.26% from 3.11% in 2Q2017 (2.99% in 1Q2017). The coverage ratio increased to 121% vs. 112% in 2Q2017 (120% in 4Q2016). Loans remained muted while deposits contracted. Net loans were flat QoQ & YTD at QR59.0bn, while deposits declined by 6.2% QoQ (down 5.7% YTD). Hence, the LDR was lifted to 112% vs. 106% in 2Q2017 (110% in 1Q2017). Capitalization remains at healthy levels. DHBK ended 3Q2017 with a CAR of 16.9% (post rights issue in 2Q) vs. 14.8% in 1Q2017 (15.4% at the end of 2016). Recommendation and valuation: DHBK trades at a P/E and P/TB of 10.0x and 0.8x on our 2017 estimates, respectively. (QNBFS Research, Company financials)  IQCD's bottom-line rises 9.7% QoQ in 3Q2017 coming in-line with our estimate – Industries Qatar's (IQCD) net profit rose 9.7% QoQ (+1.6% YoY) to QR747.81mn in 3Q2017, in line with our estimate of QR733.30mn (variation of +2%). The consensus net income mean estimate was QR804.33mn, primarily because of an outlier estimate. The company's steel revenue came in at QR1,149.29mn in 3Q2017, which represents an increase of 25.3% QoQ (+14.2% YoY). This was higher our estimate of QR963.18mn, a somewhat surprising number given the blockade; we await more details from management but our sense is blockade’s impact was only felt from the month of September, as flagged in our preview note on October 2, 2017. However, as expected, steel margins were impacted by higher iron ore prices; the trading statement also pointed to utility costs as a contributor to the margin compression. Other details remain limited but fertilizer and petchems JV income came in QR567.25mn, below our estimate of QR645.00mn, while selling costs doubled its quarterly run rate to QR17.36mn. The group’s financial position remains solid as cash across the group stands at QR11.4bn after paying 2016’s dividend of QR2.4bn, and periodic debt payments. Total debt stood at QR2.4bn; down QR0.6bn from December 2016-end levels. We retain our Market Perform rating on the stock. (QNBFS Research, Company financials, Gulf-Times.com)  QIIK's bottom line rises 2.7% QoQ in 3Q2017, in-line with our estimate – Qatar International Islamic Bank's (QIIK) net profit rose 2.7% QoQ (+5.2% YoY) to QR234.87mn in 3Q2017 , in line with our estimate of QR221.59mn (variation of +6%). Total income from financing & investing activities increased 9% QoQ and 7.4% YoY in 3Q2017 to QR444.15mn. The bank's total assets stood at QR50.64bn at the end of September 30, 2017, up 10.4% QoQ (+17.5% YoY). Financing assets were QR29.91bn, registering a rise of 4.2% QoQ (+9.8% YTD) at the end of September 30, 2017. Deposits expanded by 15.1% QoQ (+24.5% YTD) to QR33.2bn. In 9M2017, QIIK’s Chief Executive Officer, Abdulbasit Ahmad Al Shaibei said, “total revenues for the third quarter reached QR1.38bn, up 10% on QR1.26bn in 3Q2016. QIIK’s financing portfolio reached QR29.9bn in the third quarter compared to QR26.8bn in the same period last year, the growth rate being 11.5%.” With regard to the major financial indicators, the CEO said, “QIIK’s capital adequacy ratio based on the Basel III requirements reached 17.36%, which proves the strength of the bank’s financial position and the wise policies it pursues, especially in risk management. “The cost to income ratio at 24.4% is one of the best in the banking sector. The credit to deposits ratio at 84.2% reflects the growth of customer
  • 4. Page 4 of 7 deposits and increased liquidity in compliance with Qatar Central Bank regulations.” (QNBFS Research, Company financials)  IBQ’s net profit up 16% at QR432mn – The International Bank of Qatar (IBQ) has reported a net profit of QR432mn for the first nine months of this financial year ended September 30, 2017, up 16% compared to the corresponding period last year. The Bank’s operating income has also rose by 13% during the period compared to the same period in 2016. The performance in total operating income was delivered on the back of core underlying transactions emanating from IBQ’s strong client franchise. Corporate Banking delivered a stellar set of nine month results by advancing its net profit by 27% on 2016 results with retail banking and private banking also generating positive returns, despite the current climate. IBQ’s Managing Director, Omar Bouhadiba said, “This is a credible set of results for IBQ considering the unique challenges we are facing in today’s environment. These results prove yet again that IBQ’s revenue streams are sustainable and strong. The positive momentum is clear.” The Bank’s expenses remain in line with expectations with the cost income ratio showing a 10% reduction from last year, as IBQ continues to relook and reshape its cost structure where appropriate while keeping pace with technology, complying with the highest security standards and safeguarding client’s data and assets. The shape of the balance sheet continues to evolve but the asset quality has remained stable, with the non-performing loan ratio at 1.20%. IBQ’s net interest margin, return on average assets and most operating metrics continued to improve, and the Bank’s return on average equity now stands at a healthy 12.7%, compared to 11.4% last year. (Peninsula Qatar)  IHGS reports net loss of QR0.57mn in 3Q2017 – Islamic Holding Group (IHGS) reported net loss of QR0.57mn in 3Q2017 as compared to net loss of QR0.54mn in 2Q2017. The company's net brokerage & commission income came in at QR0.64mn in 3Q2017, which represents a decrease of 43.5% QoQ (-64.1% YoY). Loss per share remained flat at QR0.10 in 3Q2017 as compared to 2Q2017. (QSE, QNBFS Research)  MRDS net profit narrows to ~QR4mn in 3Q2017 – Mazaya Qatar Real Estate Development (MRDS) reported net profit of ~QR4mn in 3Q2017 as compared to QR8.4mn in 2Q2017. EPS amounted to QR0.152 in 9M2017 as compared to QR0.640 in 9M2016. (QSE)  Nebras Power signs Heads of Agreement for 800MW power project – Nebras Power, Perusahaan Listrik Negara (PLN) and PT Pembangkitan Jawa-Bali (PJB) signed a Heads of Agreement (HOA)on October 19, 2017, for developing a circa 800 MW Power Plant along with a Floating Storage and Regasification Unit (FSRU) and sourcing of the LNG at Medan, Sumatra, Indonesia. This would be a Gas to Power (GTP) Project. (QSE)  QCB Governor, Swedish counterpart hold discussions – Qatar Central bank (QCB) Governor HE Sheikh Abdullah Bin Saud Al Thani discussed with Sweden Central Bank’s Governor Stefan Ingves, ways and mechanisms to promote joint cooperation between the two central banks. This came during a recent official visit by the Governor of Qatar Central Bank to Sweden, where he held a number of meetings with officials representing various financial and commercial sectors in the Kingdom of Sweden, according to QNA. The QCB Governor was accompanied during the visit to Sweden by a number of specialists in the financial and banking sectors in Qatar. (Peninsula Qatar)  Commercial Bank takes part in IIF and IMF meetings in Washington – Commercial Bank recently participated in the 2017 Annual Meetings of the Institute of International Finance (IIF) and the International Monetary Fund (IMF) held simultaneously in Washington DC. Commercial Bank representatives used the conference for bilateral meetings with banks from various countries, building relationships, and promoting the strength of the Qatari economy despite the economic blockade. During the annual meetings, discussions of key issues included the outlook for the global financial services industry, cyber security and financial stability, global financial regulation, and developments in artificial intelligence within finance. (Gulf-Times.com)  Envoy: Turkish firms to build facilities in Qatar – Plans are in the pipeline for the establishment of Turkish manufacturing facilities in Qatar to help in the production of more locally-made products, Turkey’s Ambassador to Qatar Fikret Ozer said. The Ambassador pointed out that “as Turkey’s contribution to Qatar,” the Turkish companies will be involved in direct production to help Qatari companies make their own products. Ozer said a delegation composed of major furniture manufacturing companies from Turkey’s Kayseri province visited Qatar earlier this month to seek investment opportunities and potential partnerships with Qatari companies. Yakup Deveci, the Chairman of Kayseri Furniture Industrialists’ Association (Kaymos), told Gulf Times during the visit that “as a business and government policy,” Qatar is “a priority country” for Turkey. (Gulf-Times.com)  New land route via Iran to give a fillip to Qatar-Turkey trade – Turkey hopes to boost its exports to Qatar, through a new land route in Iran, Turkey’s Ambassador to Qatar Fikret Ozer
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