gcc corporate earnings

Kuwait Financial Centre “Markaz” R E S E A R C H

GCC Corporate Earnings Slide Pack

Q4 and 2010 earnings until third week of March As of third week of March 2011, we have 90% visibility in terms of market cap and 72% visibility in terms of number of companies to measure performance in GCC corporate earnings. Saudi Arabia enjoys 100% market capitalization visibility while Bahrain lags at 69%, the lowest in the GCC region. In terms of GCC Corporate Earnings visibility, Saudi Arabia leads the region with 95% visibility while Kuwait lags at 37%. During 2010, GCC Corporate earnings grew by 25% YoY to USD43.1 Bn. The earnings were driven by an increase in the region’s commodities, telecom and banking segments’ earnings. Saudi Arabia (at 95% coverage) reported 34% YoY growth in corporate earnings to USD20.8 Bn in 2010 aided by commodities sector. KSA’s earnings received a boost from the commodities sector led by SABIC, which reported earnings of USD5.7 Bn in 2010. However, the real estate sector’s profits contracted 38% in YoY in 2010.

Kuwait recorded one of the fastest growths in earnings though on the back of poor visibility. Banks and Telecom led this surge. NBK and Zain are notable performers. Oman’s earnings increased 15% YoY in 2010, led by financial services sector. During 2010, UAE posted a 47% YoY decline in corporate earnings, marred by poor performances in real estate sector. UAE real estate sector was dragged by Aldar Properties PJSC that posted a loss of USD3.5 Bn in 2010 compared to profit of USD228 Mn in 2009. The banking sectors of Bahrain, Oman and Qatar posted YoY growths of 72%, 29% and 11%, respectively, during 2010, confirming the recovery trend.

Figure: 1 – Earnings trend – GCC

March 2011 Research Highlights: Provides a review of corporateearnings across the GCC. Markaz Research is available on: Bloomberg - Type “MRKZ” <Go> Thomson Research, Reuters Knowledge Nooz Zawya Investor ISI Emerging markets M.R. Raghu CFA, FRM Head of Research +965 2224 8280 [email protected] Layla Al-Ammar Senior Analyst +965 2224 8000 ext. 1205 [email protected] Madhu Soothanan Senior Research Analyst +965 2224 8000 ext. 4203 [email protected] Kuwait Financial Centre S.A.K. “Markaz” P.O. Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 markaz.com

Source: Reuters PowerPlus Pro, Markaz Research

GCC Statistics – 2010

GCC Corporate earnings grew 25%...GCC Corporate Earnings (USD Mn)

50,000

60,000

70,000

47,24750,180

64,751

6%

29%

25%

2009 Vs 2008 (%)

2010 Vs 2009 (%)

20 000

30,000

40,000Bahrain

Oman

Qatar

34,47433,106

43,088-49% 4%

NM72629

NM15-20

0

10,000

20,000

2005 2006 2007 2008 2009 2010

UAE

Kuwait

Saudi Arabia

-29NM25

-47NM34

GCC 4 25

-10,000

GCC corporates resumed healthy growth levels in 2010 as conditions stabilized; aggregate earnings grew 25% for the year to USD43.1 Bn versus just 4% in 2009.

f f fA return to profitability in Kuwait after two consecutive years of losses aided the growth in addition to a 34% growth in Saudi Arabia.Based on the number of companies that have declared results for 2010 for the GCC region, the current earnings visibility stands at 72% and the market capitalization visibility stands at 90%.

2

Source: Reuters Eikon, Markaz Research

Commodities and Telecom Sector earnings surge(Sectoral earnings trend (USD Mn)

Banks comprise a major portion of earnings in the GCC region. In 2010, banks’ total profit increased 12% YoY to USD16.7 Bn after declining by 3% in 2009, confirming the recovery trend.The Financial Sector witnessed a return to profitability after two consecutive years of losses coming inThe Financial Sector witnessed a return to profitability after two consecutive years of losses coming in at USD2.2 Bn. Commodity sector earnings increased 93.2% YoY to USD9.1 Bn in 2010. Factors such as the recovery in commodity prices, stable demand in major export markets, and weakening dollar supported strong growth in the commodities sector.

3

growth in the commodities sector.


GCC market cap coverage at 90%

Aggregate market cap of companies

CountryTotal market cap

(USD Bn)

cap of companies that have

announced 2010 earnings

% coveragein terms of market

capSaudi Arabia 352 351 100%Saudi Arabia 352 351 100%Kuwait 120 100 83%United Arab Emirates 115 95 83%Qatar 123 94 76%Oman 19 18 98%Bahrain 22 15 69%GCC Total 751 673 90%

Market Capitalization-based coverage stood at 90% for all GCC countriesSaudi Arabia reported 100% coverage, followed by Oman at 98%. Kuwait and UAE’s coverage stood at 83%.

4


Significant coverage across the GCC region

Number of companies that have

d

2010 coverage

b dTotal number of companies

reported 2010 results

so far

based on no. of companies

(%) PE TTMSaudi Arabia 143 136 95% 14 Kuwait 194 71 37% 18 United Arab Emirates 110 88 80% 9 Qatar 45 33 73% 11Oman 127 110 87% 11Oman 127 110 87% 11Bahrain 44 39 89% 11Total 663 477 72% 13

Earnings visibility (by number of companies) for the GCC stood at 72% for 2010. Saudi Arabia reported a coverage of 95%, while Kuwait’s coverage is at 37% during the same period, the lowest visibility in the GCC.GCC markets are currently trading at a multiple of 13 their TTM earnings.

5


On QoQ basis, earnings dipped in Q4 2010…YoY Earnings Growth –2010Quarterly Earnings Trend (USD Mn) gQ g

34%

15%20%30%40%

Saudi Arabia Kuwait UAE Qatar Oman Bahrain

2,2091,887

2 100

1,968

2,15410,500

15,500

8 470

12,261

10,0824 917

11,523

13,682

11,469

8,745

N.M.

-20%

N.M.

-50%-40%-30%-20%-10%

0%10%

2,788 4,368 4,695 3,949 4,694 5,424 5,609 5,515 167

1,572 506 1,087

3,300 1,029 1,097

2,879

3,756

2,651

472

2,840

2,209

2,129 1,854

1,671

4,282

2,100 2,154

2,477

500

5,500

Bahrain

Oman

Qatar

UAE

8,470 4,917

QoQ Earnings Growth – Q410

-47%-60%50%

(3,363)(1,067)

(4,500)

500

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Kuwait

Saudi Arabia

Earnings in the GCC region decreased 24% QoQ in Q4 2010 to USD8.7 Bn, but rose 79% on a YoY basis.

2009 2009 2009 2009 2010 2010 2010 2010

,GCC earnings decreased mainly due to loss of USD1.1 Bn incurred by UAE in Q4 2010, due to Aldar Properties.

6


GCC Corporate earnings increased in 78% YoY in Q4 2010Quarterly Earnings Trend (USD Mn)

% Number

2 225

219 1,396

1,078

1,428

1,716 1,246 10,500

12,500

14,500 Others

Conglomerates

Construction

12,261

10,082

11,523

13,682

11,469 8,745

TotalNumber of companies

% Number of

companiesBanks 66 62 94%Telecommunications 14 12 86%Commodities 32 27 84%Financial Services 183 113 62%

1,853 3,099

1,801 1,747

4,445 2,150 2,210

308

1,011

1,572

1,810

2,199

2,225

2,176 2,538 631

419

507

1,479

421 566

1,117

157

4,500

6,500

8,500 Construction RelatedReal Estate

Financial ServicesCommodities

Telecommunicat

8,470

4,917

Financial Services 183 113 62%Real Estate 57 29 51%Construction Related 74 56 76%Conglomerates 32 25 78%Others 205 153 75%Aggregate 663 477 72%

Q410 – QoQ Earnings Growth

4,752 4,485 4,086

1,477

4,542 4,227 4,393 4,067 2,190

(39)

(2,883)

(3,500)

(1,500)

500

2,500 TelecommunicationsBanks

The real estate sector proved to be a drag on GCC

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

corporate earnings. Real Estate Sector incurred a loss of USD2.9 Bn in Q4 2010 mainly due to Aldar Properties.On a quarterly basis, commodities and financial sectors pushed Q4 2010 earnings growth in the region.

7


Saudi Arabia – Q4 2010 and 2010

Commodities sector boosts Saudi earnings in 2010Yearly Earnings Trend (USD Mn) Yearly Earnings Growth (%)Yearly Earnings Trend (USD Mn) Yearly Earnings Growth (%)

Saudi Arabia 2010 corporate earnings grew 34% YoY ledby the commodities sector, which witnessed a 130% YoYincrease in earnings The sector contributed 36% toincrease in earnings. The sector contributed 36% tocorporate earnings during the period.Saudi’s banking sector earnings remained flat in 2010 ashigh provisioning continued to erode the sector’searnings amidst a slow lending scenario

9

earnings amidst a slow lending scenario.


Saudi earnings remained flat in Q4 2010 QoQQuarterly Earnings Trend SectoralQuarterly Earnings Trend Sectoral

(USD Mn)

In Q4 2010, with the exception of banks, commodities, and conglomerates, other segments in KSA witnessed a decline in earnings. g

On YoY basis, earnings of real estate, and construction sectors fell 35% and 4%, respectively.

10


Top companies – Sector – Growth Rate –2010Top Companies – Saudi Arabia – Banking Top Companies – Saudi Arabia – Commodities

Company Name

Market Cap

(USD mn) 2009 2010 GrowthAl Rajhi Bank 33,199 1,804 1,805 0%Samba Financial Group 14,700 1,216 1,183 -3%Riyad Bank 10,640 808 753 -7%B S di F i 8 620 659 747 13%

Company NameMarket Cap(USD mn) 2009 2010 Growth

Saudi Basic Industries Corporation 83,798 2,419 5,741 137%Saudi Arabia Fertilizers Co. 10,650 481 863 79%Saudi Kayan Petrochemical Company 7,700 -5 -4 NMYanbu National Petrochemicals Company 7,140 -8 446 NM

Banque Saudi Fransi 8,620 659 747 13%The Saudi British Bank 8,060 542 502 -7%Arab National Bank 6,534 632 510 -19%Alinma Bank 4,200 161 4 -97%The Saudi Investment Bank 2,640 139 114 -18%Saudi Hollandi Bank 2,593 23 211 820%B k Albil d 1 564 66 25 NM

Saudi Arabian Mining Company (Ma'aden) 5,377 105 -2 NMSaudi Industrial Investment Group 2,610 82 108 32%Saudi International Petrochemichal Co. 2,471 38 101 168%Sahara Petrochemical Company 1,849 20 88 331%Advanced Polypropylene Company 1,025 34 88 158%Saudi Chemical Company 702 80 81 1%

Bank Albilad 1,564 -66 25 NMBank Aljazira 1,316 7 8 5%

Top Companies – Saudi Arabia – ConglomeratesMarket

Top Companies – Saudi Arabia – Telecom

Company Name

Market Cap

(USD mn) 2009 2010 GrowthKingdom Holding Company 8,103 107 161 50%National Industrialization Company 4,797 139 393 184%


Saudi Telecom Company 22,719 2,896 2,516 -13%Etihad Etisalat Company 10,313 804 1,123 40%Saudi Mobile Telecommunications Company 2,893 -826 -629 NM

Note: Companies that have not declared their 2010 results on the date of

11


pthis report are marked as NA in the 2010 and 2009 columns.

Kuwait – Q4 2010 and 2010


Kuwait returned to positive earnings in 2010Yearly Earnings Trend (USD Mn) Yearly Earnings Growth (%)Yearly Earnings Trend (USD Mn) Yearly Earnings Growth (%)

Corporate earnings turned positive in 2010 Recovery inCorporate earnings turned positive in 2010. Recovery in the Financial Services sector boosted earnings.On a QoQ basis, companies earned USD1.1 Bn in Q4 2010, a 7% increase over Q3

13


Banks and Telecom led the growth Q t l E i T d S t lQuarterly Earnings Trend Sectoral

(USD Mn)

3,300

3,000

4,000

167

1,572

506 1,087 1,029 1,097

-

1,000

2,000

,

Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

4 000

-3,000

-2,000

-1,000 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

OthersConglomeratesConstruction RelatedReal Estate Financial ServicesCommoditiesT l i ti

The country’s banking sector drove earnings growth in Q4 2010 and 2010. The sector earnings doubled in 2010.

-3,363 -4,000 TelecommunicationsBanks

doubled in 2010. Kuwait’s telecom sector also contributed to the country’s growth recording 965% YoY and 262% YoY rise in Q4 2010 and 2010 respectively. Mobile Telecommunications Company (ZAIN) 2010 earnings increased 456% YoY in 2010 due to the Bharti Airtel asset sale.

14


Top companies – Sector – Growth Rate – 2010Top Companies – Kuwait – Banking

Company NameMarket Cap

(USD mn) 2009 2010 GrowthNational Bank of Kuwait 18,420 924 1,072 16%Kuwait Finance House KSC 10,269 414 377 -9%Gulf Bank KSC 5,082 -98 68 NM

Top Companies – Kuwait – Financial Services


(USD mn) 2009 2010 GrowthKuwait Projects Company Holding KSCC 1,875 161 160 -1%National Investments Company KSCC 1,417 -91 16 NMBoubyan Petrochemical Company KSC 931 70 74 6%,

Commercial Bank of Kuwait SAK 4,161 1 144 NMBoubyan Bank KSC 3,916 -180 22 NMAl Ahli Bank of Kuwait 3,283 136 189 39%Burgan Bank 2,641 22 17 -24%Bank of Kuwait & the Middle East KSC 2,518 50 98 96%Kuwait International Bank 1,254 -29 60 NM

Aviation Lease & Finance Company KSCC 887 36 38 6%Commercial Facilities Co SAK 725 50 61 23%International Finance Company 455 0 NA NMSecurities House KSCC 314 -201 NA NMKipco Asset Management Co KSCC 300 21 NA NMKuwait Financial Centre SAKC 259 9 29 222%

Top Companies – Kuwait – TelecomMarket Cap

Global Investment House KSCC 243 -518 NA NM


(USD mn) 2009 2010 GrowthMobile Telecommunications Company KSC 23,197 679 3,778 456%National Mobile Telecom Co KSS 3,405 377 277 -26%


15



United Arab Emirates – Q4 2010 and 2010

Earnings continue to decline at an accelerated paceYearly Earnings Trend (USD Mn) Yearly Earnings Growth (%)g Yearly Earnings Growth (%)

10,746 11,677

15,228

12,940

12,000

14,000

16,000

9,157

4,853

4 000

6,000

8,000

10,000

-

2,000

4,000

2005 2006 2007 2008 2009 2010

In 2010, earnings in the UAE fell 47% YoY to USD4.9 Bn. Earnings declined primarily due to a substantial lossEarnings declined primarily due to a substantial loss (USD3.1 Bn) in real estate owing to Aldar Properties. The country’s banking sector continued to support earnings growth registering a 5% YoY growth in 2010 to USD4 6 Bn

17

to USD4.6 Bn.


Slowdown in Real Estate and Conglomerates sectorsQuarterly Earnings Trend SectoralQuarterly Earnings Trend Sectoral

(USD Mn)

4,000

5,000

2 879

3,756

2 840

1,000

2,000

3,000 2,879

2,657

472

2,840

2,209 2,129 -1,067

-2,000

-1,000

-

Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

Others ConglomeratesConstruction Related Real Estate

Real estate sector registered a USD3.1 Bn in loss in 2010 compared to a gain of USD368 Mn in 2009. Ald P ti PJSC i d l f USD3 5 B i 2010 d t USD228 M i i 2009

-3,000 Financial Services CommoditiesTelecommunications Banks

Aldar Properties PJSC incurred a loss of USD3.5 Bn in 2010 compared to USD228 Mn gain in 2009.Conglomerates, accounting for a smaller share of total earnings, reported 18% YoY and 25% YoY decline in Q4 2010 and 2010, respectively.Telecoms were also weak, declining 2% in 2010 to USD 2.5 bn.

18


Top companies – Sector – Growth Rate – 2010T C i U it d A b E i t B ki

Top Companies – United Arab Emirates – Real EstateTop Companies – United Arab Emirates – Banking


National Bank of Abu Dhabi 7,554 822 1,003 22%First Gulf Bank PJSC 6,832 901 931 3%Emirates NBD PJSC 4,176 911 637 -30%Mashreqbank psc 3 821 272 219 20%

p p


Emaar Properties PJSC 5,888 89 667 648%Aldar Properties PJSC 1,593 228 -3,446 NMSorouh Real Estate PJSC 1,158 131 2 -98%Deyaar Development PJSC 463 8 NA NM

Mashreqbank psc 3,821 272 219 -20%Abu Dhabi Commercial Bank PJSC 2,724 -152 104 NMDubai Islamic Bank PJSC 2,254 329 NA NMUnion National Bank PJSC 1,940 316 370 17%Commercial Bank of Dubai P.S.C. 1,829 219 223 2%National Bank of Fujairah PSC 1,497 28 47 64%United Arab Bank PJSC 1 476 76 84 10%

Union Properties PJSC 335 -136 -416 NMRas Al Khaimah Properties PJSC 240 46 51 10%

Top Companies – United Arab Emirates – Construction RelatedMarket CapUnited Arab Bank PJSC 1,476 76 84 10%

Top Companies – United Arab Emirates – Telecom


Emirates Telecommunications Corporation 23,140 2,406 2,077 -14%E i I d T l C PJSC 3 560 72 357 396%


Arkan Building Materials Company PJSC 800 1 NA NMArabtec Holding PJSC 641 135 84 -38%National Marine Dredging Company 620 113 123 9%Drake & Scull International LLC 617 91 44 -52%Gulf Cement Company P S C 355 10 20 104%Emirates Integrated Telecomm. Co. PJSC 3,560 72 357 396% Gulf Cement Company P.S.C. 355 10 20 104%National Cement Company PSC 334 36 16 -56%Union Cement Company P.S.C. 292 15 NA NMFujairah Cement Industries PSC 291 22 NA NMTamweel PJSC 270 -15 7 NM


19



Qatar – Q4 2010 and 2010

Decline in 2010, 2009 witnesses strong positive growthYearly Earnings Trend (USD Mn) Yearly Earnings Growth (%)Yearly Earnings Trend (USD Mn) Yearly Earnings Growth (%)

Qatar’s corporate earnings fell nearly 20% YoY in2010 relative to the 26% YoY growth in2009, mainly due to USD2.3 Bn gain booked byEzdan real estate (Ezdan) during Q4 2009Ezdan real estate (Ezdan) during Q4 2009.The performance was healthy acrosssectors, except Real Estate and Telecom, whereearnings declined 78% YoY to USD550 Mn and55% YoY to USD608 Mn respectively in 2010

21

55% YoY to USD608 Mn, respectively, in 2010.


Ezdan and Qtel dampen Q4 2010 earnings on a YoY basis Quarterly Earnings Trend

Sectoral (USD Mn)

4,000

4,500 OthersConglomeratesConstruction RelatedReal Estate

4,282

2,000

2,500

3,000

3,500 Real Estate Financial ServicesCommoditiesTelecommunicationsBanks

1,854 1,8872,100

1,9682,154

2,477

500

1,000

1,500

2,000 , 1,8871,671

Ezdan and Qatar Telecom (Qtel) dampened Q4 2010 earnings. Ezdan recorded a gain of USD2.3 Bn in Q4 2009 The company is yet to file its Q4 2010 Results Qtel profits declined 82% YoY to USD124 Mn

-Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

Q4 2009. The company is yet to file its Q4 2010 Results. Qtel profits declined 82% YoY to USD124 Mn in 2010 due to an extraordinary earning posted in 4Q09. All major Qatari banks registered positive growth in 2010, adding USD333 Mn in incremental earnings. The sector advanced strongly supported by the government’s capital infusions in the form of deposits and other facilities to reduce risk-bearing assets

22

and other facilities to reduce risk bearing assets.


Top companies – Sector – Growth Rate –2010Top Companies Qatar Commodities Top Companies – Qatar – BankingTop Companies – Qatar – Commodities


Industries Qatar Q.S.C. 20,851 1,362 1,531 12%

Top Companies – Qatar – Banking


Qatar National Bank SAQ 19,895 1,154 1,567 36%The Commercial Bank of Qatar Q.S.C. 5,733 782 471 -40%Qatar Islamic Bank (S.A.Q.) 4,790 363 367 1%Masraf Al Rayan (Q S C ) 3 935 242 333 38%Top Companies – Qatar – Telecom


Qatar Telecom (QTel) Q.S.C. 7,200 776 793 2%

Masraf Al Rayan (Q.S.C.) 3,935 242 333 38%Doha Bank (Q.S.C) 3,383 267 290 8%Qatar International Islamic Bank QSC 1,776 140 153 9%Al Khalij Commercial Bank QSC 1,661 46 117 155%Ahli Bank Q.S.C. 1,110 83 113 37%

Top Companies – Qatar – Real Estate OperationsMarket Cap


Ezdan Real Estate Company QSC 22,225 2,383 NA NMBarwa Real Estate Company QSC 3,859 210 386 84%United Development Company P.S.C. 1,028 139 164 18%


23



Oman – Q4 2010 and 2010

Increase in earnings for the second consecutive yearYearly Earnings Trend (USD Mn) Yearly Earnings Growth (%)g Yearly Earnings Growth (%)

In 2010, Oman’s corporate earnings increased 15% YoY to USD1.5 Bn.About 34% of the total market earnings for FY10

t ib t d b O t l d B k M t hi hwas contributed by Omantel and Bank Muscat, which featured among the top earners.

25


Banking sector’s profits increased in Q4 2010 and 2010; growth in the real estate sector

Quarterly Earnings Trend SectoralQuarterly Earnings Trend Sectoral(USD Mn)

426487

453

527 505

500

600

426

339

219

453

388

200

300

400 OthersConglomeratesConstruction RelatedReal Estate Financial Services

-100

-

100

200

Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

CommoditiesTelecommunicationsBanks

The country’s banking and financial sector continued to support earnings growth registering a combined YoY growth of 37% in 2010 BankMuscat posted a strong YoY recovery during

-100

combined YoY growth of 37% in 2010. BankMuscat posted a strong YoY recovery during 2010, with earnings increasing 37% to USD264 Mn.On the other hand, Telecom, Conglomerates and construction-related sectors, all witnessed annual declines.

26


Top companies – Sector – Growth Rate – 2010Top Companies – Oman – Banking


BankMuscat (SAOG) 3,358 192 264 38%Bank Dhofar 1,566 66 86 31%National Bank of Oman 991 55 71 29%

Top Companies – Oman – Construction Related


Raysut Cement Company SAOG 637 75 54 -28%Oman Cement Company SAOG 550 63 65 3%Galfar Engineering & Contracting Co SAOG 335 10 NA NM

Oman International Bank SAOG 660 56 46 -18%Ahli Bank 535 22 37 65%Bank Sohar SAOG 509 21 27 27%Muscat Finance Company Limited (SAOG) 85 7 9 24%

Galfar Engineering & Contracting Co SAOG 335 10 NA NMOman Cables Industry 275 17 21 22%

Top Companies – Oman – Telecom Top Companies – Oman – Real Estate OperationsTop Companies – Oman – Telecom


Oman Telecommunications Company 2,484 325 291 -11%

p p p


Sahara Hospitality Company SAOG 36 4 4 11%


27



Bahrain – Q4 2010 and 2010

Bahrain Corporate Earnings back in the positive in 2010Yearly Earnings Trend (USD Mn) Yearly Earnings Growth (%)g Yearly Earnings Growth (%)

In 2010, Bahrain posted a net profit of USD1.2 Bn as against a loss of USD635 Mn in 2009, mainly due to the recovery of the financial services sector in 2010.The financial services sector dragged 2009 earnings byThe financial services sector dragged 2009 earnings by posting a loss of USD1.5 Bn in 2009. Earnings increased across all segments except Real Estate which lost USD10 Mn

29Source: Reuters Eikon, Markaz Research

Banking and Telecom sectors leads the Surge..Quarterly Earnings Trend SectoralQ y g

(USD Mn)

The banking sector proved to be a strong support amidst a slowingeconomy, registering a robust 72% YoY growth in 2010.Real estate sector remained a major drag to Bahrain’s earnings registering losses forReal estate sector remained a major drag to Bahrain s earnings registering losses forthe fifth consecutive quarter. It suffered losses amounting to USD10 Mn in 2010compared to a profit of USD30 Mn in 2009, as real estate firms continued to facechallenging environment in the light of price declines due to oversupply.

30


Top companies – Sector – Growth Rate – 2010Top Companies – Bahrain – Banking


Ahli United Bank B.S.C 3,395 201 265 32%Arab Banking Corporation (B.S.C.) 1,586 122 143 17%National Bank of Bahrain BSC 1,279 114 114 0%

Top Companies – Bahrain – Financial Services


Investcorp Bank 1,012 -781 102 NMTAIB Bank B.S.C. 307 -26 -39 NMGulf Finance House BSC 237 -728 NA NM,

Al Baraka Banking Group BSC 1,186 92 106 15%United Gulf Bank B.S.C. 1,031 20 39 92%BBK B.S.C. 971 93 104 12%Ithmaar Bank B.S.C. 399 -235 NA NMAl Salam Bank BSC 282 37 19 -48%Bahrain Islamic Bank B.S.C. 249 -51 -105 NM

Gulf Finance House BSC 237 728 NA NMSecurities and Investment Co. BSC(c) 229 8 10 23%Esterad Investment Company BSC 90 -10 -7 NMBMB Investment Bank BSC 44 -34 6 NM

Top Companies – Bahrain – TelecomKhaleeji Commercial Bank B.S.C. 199 8 -17 NMThe Bahraini Saudi Bank BSC 86 -11 3 NM Company Name

Market Cap(USD mn) 2009 2010 Growth

Bahrain Telecommunications Company BSC 1,948 279 230 -17%


31



R E S E A R C H March 2011

Economics Kuwait Investment Sector (Sept-10) The New Regulations on Kuwait Investment Sector (Jun-10) Kuwait Capital Market Law (Mar-10) The “Vicious Square” Monetary Policy options for Kuwait (Feb-08) To Leap or To Lag: Choices before GCC Regulators (Apr-07) GCC for Fundamentalists (Dec-06) GCC Leverage Risk (Nov-06)

Sectors

Infrastructure GCC Power (Jul-09) GCC Ports (Aug-09) GCC Water (Nov-09) GCC Airports (Nov-09) GCC Roads & Railways (Dec-09) GCC ICT (Feb-10)

Real Estate Abu Dhabi Algeria Dubai Egypt Jordan KSA Kuwait Lebanon Qatar Syria U.S.A.

Banking GCC Banks - Done with Provisions? (Jan-10) Shelter in a Storm (Mar-09) Banking Sweet spots (Apr-08)

Oil & Gas Diworsification: The GCC Oil Stranglehold (Jan-09)

Periodic Research Monthly Regional Petroleum Projects Commentary Weekly Real Estate Market Commentary Daily Oil & Gas Bulletin

Strategic Research What to expect in 2011 (Jan-11) The Golden Portfolio (Sept-10) Persistence in Performance (Jun-10) What to expect in 2010 (Jan-10) What is left for 2009? (Sept-09) Missing the Rally (Jun-09) This Too Shall Pass (Jan-09) Fishing in Troubled Waters (Dec-08) Down and Out: Saudi Stock Outlook (Oct-08) Mr. GCC Market-Manic Depressive (Sept-08) Global Investment Themes (June-08) To Yield or Not To Yield (May-08) China and India: Too Much Too Fast (Oct-07) A Potential USD 140b Industry: Review of Asset Management Industry in Kuwait (Sep-07) A Gulf Emerging Portfolio: And Why Not? (Jun-07) Derivatives Market in GCC (Mar-07) Managing GCC Volatility (Feb-07)

Periodic Research Annual GCC Market Outlook Quarterly Thought Speaks GCC Equity Funds GCC Corporate Earnings GCC Equity Research Statistics Monthly Market Review Weekly MENA Market Intelligence KSE Market Review International Market Update Daily Markaz Daily Morning Brief Markaz Kuwait Watch Daily Fixed Income Update

Company Research (See the list attached)

Capital Markets

Markaz Research Offerings


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)

Qatar • Qatar National Bank (Oct-10) • 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) • 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)

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)

Oman • Bank Muscat(Mar-11) • Raysut Cement Company (Sept-10) • Shell Oman Marketing (Apr-10) • Galfar Engineering & Cont. (Nov-08) • Oman Telecommunications (Sept-08) • Oman cement (Sept-08) • National Bank of Oman (Aug-08) • OIB (July-08)

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)

Jordan • Arab Bank (Sept-08) • Cairo Amman Bank (Oct-08) Morocco • Maroc Telecom (Mar-10)

Saudi Arabia • Al Rajhi Bank (Mar-11) • Saudi Telecom Co. (Feb-11) • Samba Financial Group (Aug-10) • Jabal Omar Development (Jul-10) • Arabian Cement Co (Jul-10) • Yanbu Cement 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) • 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

Company Research

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: [email protected] 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)

Markaz Company Research Coverage

MSCI Arabian Markets

Conventional MSCI Arabian

Markets Islamic Local Index

Saudi Arabia 56% 55% 76%

Kuwait 70% 68% 43%

Qatar 92% 90% 95%

UAE 79% 25% 58%

Bahrain 58% 74% 23%

Oman 63% 100% 50%

Egypt 60% 85% 40%

Jordan 39% 0% 32%

Morocco 50% 70% 24% MENA 75% 84% 60%

Markaz Research Offerings


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.

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