Down and Out: Saudi Stock Outlook

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

Kuwait Financial Centre S.A.K. “Markaz”

1

Down and Out: Saudi Stock Outlook Expect the Worse What has changed: In our January outlook report, we had expected the TASI Index to have an upside potential of 6%. The index in the YTD period has witnessed a 44% decline, which has wiped out all the gains made in the year 2007. Our expectations on a 6% upside was based on a 15% earnings growth with a PE discounting the 2007 earnings by 22x. Till H108, the aggregate earnings of Saudi Arabian companies have witnessed a YoY growth of 12% and our bottoms – up approach in earnings estimation points out to a similar growth for the full year 2008, which is a 200 bps reduction to our previous estimate. From a sectoral perspective, Chemicals earnings forms the bulk of the total earnings of Saudi Arabia at 39%, this segment is expected to witness a 20% growth in 2008E. Sabic forms 82% of the earnings in the chemicals segment is expected to grow at a rate of 13% for 2008 on a YoY basis, this indicates a decline in the rate of growth from 33% in 2007. The factor that has impacted the most to our index target call has been a significant contraction in the price to earnings. The markets have witnessed a contraction in Forward PE from 23x as at the end of 2007 to 12x at the current market prices. This lead to low premium over expected growth. As at the end of 2007, the Saudi Arabian markets were trading at a PEG (Forward earnings and growth) of 2.52, this has contracted significantly to 1.06 at the current market rates. We estimate the fair value PEG for emerging markets to be at 1 (base case - provides no premium over forward earnings growth), which provides to a down side risk of -6% and an index fair value of 5804.

October 2008 Markaz Research is available on Bloomberg. Type “MRKZ” <Go> M.R. Raghu CFA, FRM Head of Research +965 224 8280 [email protected] Amrith Mukkamala Senior Analyst +965 224 8281 [email protected] Kuwait Financial Centre “Markaz” P.O. Box 23444, Safat 13095, Kuwait Tel: +965 224 8000 Fax: +965 242 5828 www.markaz.com

Current Index: 6175

•

2008 Earnings Growth12%

•

P/E/GExpansion -6%

Fair Value Index5804Upside Potential-6%

11,895

6,1755,8046,175

Saudi Arabia TadawulIndex

2008 Year High

2008 Year Low

2008 Fair ValueIndexCurrent Value as on07 Oct 08

R E S E A R C H

October 2008

Kuwait Financial Centre S.A.K. “Markaz” 2

1. Muted Earnings Growth Table: 1 – Earnings Trend & Outlook

USD Mn 2002 2003 2004 2005 2006 2007 2008E

% Change 2008E

Chemicals 839 1,949 4,108 5,779 6,265 8,333 10,019 20% Banks 2,202 2,514 3,549 5,847 7,738 6,449 6,858 6% Telecom 945 2,272 2,483 3,044 3,602 3,582 3,820 7% Real Estate 45 225 357 563 555 715 1,003 40% Others 1,141 1,505 2,042 3,055 3,200 4,208 4,297 2% Total 5,173 8,465 12,538 18,287 21,360 23,287 25,997 12% Source: Thomson Reuters Knowledge, Zawya Investor, Markaz Research

Chemicals: The Chemicals segment, accounted for 36% of total earnings in 2007 and 40% of 2008E earnings(Table: 1). The sector’s earnings are expected grow at a rate of 17% for 2008, which will result in a reduction in growth rate by 13pps. Sabic alone provides to 86% of the chemical sector earnings. For 1H08, Sabic posted a 14% YoY increase in earnings at USD 3.86 Bn. We are expecting the company to post USD 8.18 Bn in earnings for 2008, which will result in a full year growth of 13%, a decline in growth rate as compared to 2007 full year growth of 33%. Sabic – a crucial determining factor for aggregate earnings Sabic is expected to provide to 31% of the aggregate 2008E Saudi Arabia earnings, therefore an earnings call on Sabic is a crucial determining factor on the aggregate Saudi Arabian corporate earnings. Our call for a 13% earnings growth is based on the fact that there has been a softening in the gross margins of the company and the impact of which is more profound in its petrochemical segment, which is the main stay of the company. The overall gross margins has declined to 34.25% in 2Q08 as compared to 34.49% and 38.61% in 1Q08 and 2Q07 respectively. The petrochemical gross margins have declined from 39.06% in 1H07 to 30.61% in 1H08. This can be primarily attributed to the inclusion of SIP (erstwhile GE plastics) numbers. The net margin of the petrochemicals segment witnessed a significant decline to 6.21% in 1H08 as compared to 19.03% in 1H07. SIP produces high - end plastics (polycarbonates) for which the basic raw material is Bisphenol-A. Bisphenol-A produced from Phenol and Acetone, derived basically from Benzene. Benzene prices are impacted significantly by Naptha prices. Benzene, which is the key raw material has witnessed a 37% increase in the YTD period and on a YoY basis has increased by 22% (Benzene, Europe CIF Rdam Spot $/MT Prices), Naptha on the other hand has witnessed a 39% increase on a YTD period and 76% increase on a YoY basis (Naphtha Far East CFR Japan Prices). This has a negative impact on SIP. SIP does not have the similar cost advantage in feed stock as Sabic does. The rest of the segments - fertilizers and steel have performed exceptionally well in the current quarter. Steel revenues were up by 66% and net profits were up by 145% in 1H08 as compared on a YoY basis. Going forward, we see a negative impact on margins due to declining global margins and its impact on SIP. Natural gas prices and Naptha (Naphtha Far East CFR Japan) have increased by 76% and 39% respectively in the YTD period. This might have a slight negative impact the margins on the petrochemical segment. However, steel prices continue to hold up. (For a more detailed report on Sabic please refer our company report on www.markaz.com/research)

Aggregate earnings growth for 2008E is expected to be at 12% for Saudi Arabia Inc. Sabic is expected to provide to 31% of the aggregate 2008E Saudi Arabia earnings, therefore an earnings call on Sabic is a crucial determining factor on the aggregate Saudi Arabian corporate earnings.

R E S E A R C H

October 2008


Banking: The Saudi Arabian banking sector continues to witness low to negative earnings growth rates. In 2007, the aggregate bank earnings fell by 17%. This was mainly due to an increase in provisioning and lower value traded in the markets. Both these factors, spilled over into 2008. Four banks have announced their results for 9M ending September 2008. The aggregate earnings of these four banks – Samba, BSF, Al Rajhi and ANB formed 68% of the total earnings of banks in 2007 and the growth for 9M08 has been flat at 1% on a YoY basis. Going forward, we expect the depressed sentiment on the Tadawul exchange to negatively impact the banking earnings by reducing the fees and commissions incomes. Credit growth has till now been the driver of earnings growth. SAMA statistics as at the end of June 2008 points out to a credit growth of 32% on a YoY basis for the sector. Given the increasing control to tame the money supply growth which is currently at more than 20% levels by increasing reserve requirements for banks, we believe that credit growth will also witness a decline. We are expecting a 6% growth in earnings for the banking sector as compared to a -17% growth witnessed in 2007. Telecom: The telecom segment in Saudi Arabia comprises of three telecom listed companies with aggregate market capitalization and 2007 earnings of USD 38.35 Bn and 3.5 Bn respectively. The Saudi Telecom company (STC) with 2007 earnings of USD 3.21 Bn forms 89% of the total earnings of the segment. STC witnessed robust growth in earnings of 18% in 1H08 to USD 1.83 Bn. We expect the company to post an earnings growth rate of 4% for the full year 2008. Some of the major trends supporting the telecom segment earnings were the 33% YoY growth in subscribers and 18% increase in mobile Average Revenue Per User (ARPU) in 1H08. By the end of June 2008, the subscriber base in Saudi Arabia had increased to 30 Mn from 22.5 Mn. The mobile ARPU also increased from USD 24.9 in June 2007 to USD 29.5 in June 2008. However, with the Saudi government opening up the telecom sector, new telecom players like Saudi Mobile Telecommunications Company (Saudi Zain) have entered the Saudi market. This is likely to increase competition among players operating in the telecom space and push ARPU down. The earnings growth of telecom companies is likely to moderate in the second half of the year. We expect the sector to close the year with 7% growth in earnings. Real Estate: The real estate segment, which contributed 3% to 2007 earnings, is expected to record a strong 40% growth in earnings for 2008. Companies in the real estate space reported healthy growth in earnings for 1H08. The earnings of companies such as Taiba Holding Co., Dar Al Arkan Real Estate Development Co. and Saudi Real Estate Company grew 90%, 27% and 17%, respectively, on YoY basis. Market Cap Segmentation Corporate earnings in Saudi Arabia are driven by the performance of Large cap stocks that accounts for 71% of total earnings (Table: 2). Earnings by large cap stocks grew at a rate of 13% in 2007. We expect large cap stocks to witness an increase in earnings by 10% in 2008E, the rate of growth is lesser as compared to 2007. Saudi Basic Industries Corporation and Saudi Arabia Fertilizers Co. are likely to drive large cap earnings in 2008. Saudi Basic

The Saudi Arabian banking sector continues to witness low to negative earnings growth rates. Corporate earnings in Saudi Arabia are driven by the performance of Large cap stocks

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October 2008


Industries Corporation is estimated to post 13% growth in earnings, while Saudi Arabia Fertilizers Co is set to record 55% growth in its bottom-line. Mid caps, which contributed 15% of Saudi Arabia’s corporate earnings in 2007, are expected to grow 9%. Saudi Hollandi Bank is expected to lead mid caps, in terms of earnings in 2008. The bank’s earnings increased 59% to USD 162 Mn in H108 compared to USD 102 Mn in 1H07. Small caps, accounting for a meager 11% of total earnings, are expected to record 29% growth in earnings. Companies such as Advanced Polypropylene Company and Emaar The Economic City are expected to lead small caps in terms of earnings growth in 2008.

Table: 2 - Corporate Earnings Trend – Market Cap Segmentation

Earnings (USD Mn) 2004 2005 2006 2007 2008E

YoY Change

2008

Avg Market

Cap (USD Mn)

Number of

Companies

Large 9218 13105 14413 16292 17904 10% 24239 9

Mid 1650 2480 3691 3463 3792 9% 5464 16

Small 1151 1568 2236 2220 2853 29% 1745 21

Ultra Small 519 1134 1021 1312 1449 10% 768 73 Total Earnings 12538 18287 21360 23287 25997 12% 119

Note: Segment classification: Large: Market Cap >USD 11.5 Bn, Mid: Market Cap >USD 3.2 Bn & Market Cap< USD 10.1 Bn Small: Market Cap> USD 1.0 Bn & Market Cap < 3.2 Bn Ultra Small: Market Cap> USD 550 Mn & Market Cap < USD 1100 Mn Source: Thomson Reuters, Markaz Research

Small caps are expected to record 29% growth in earnings, but contribute just 10% to overall earnings.

R E S E A R C H

October 2008


Current Account Surplus

$197.5b

37.3% of GDPService Balance

($75.4)b37.7% Growth

Exports

Imports

$386.8b

$110.2b

2008e

Trade Balance$276.6b

82% Growth

Revenues $294b

Surplus

2008e

$140bExpenditure

$154b

2. Economy – 2008

A. Growth Saudi Arabia’s Nominal GDP is expected to grow at a rate of 38.7% as compared to a 7.1% growth in 2007. The GDP estimate for 2008 has been revised upwards by 28% from the beginning of the year. This significant upward revision in GDP forecast can be primarily attributed to oil prices. At the beginning of the year, IIF had prepared 2008 forecasts based on Brent Oil prices at a rate of USD 74.25 per Bbl. As of September 2008, this has been revised to USD 116.41 per Bbl. This revision means an Oil GDP growth of 64% as compared to a non-oil GDP growth of 8.3% for 2008. B. Fiscal Situation

The change in estimate for oil prices is expected to carry a similar beneficial impact on the fiscal surpluses. The fiscal surplus for 2008 has been revised upwards by USD 81 Bn or 1.38x the forecast at the beginning of the year. This significant change in estimates is due to a 15% change in estimate for government expenditure and a 53% change in estimates for government revenues. C. Current Account The change in estimate for current account surplus is expected to result in the largest ever surplus for Saudi Arabia at USD 197.5 Bn. As at the beginning of 2008, IIF had forecasted a current account surplus of USD 90 bn, which was lower than the USD 95.7 Bn recorded in 2007.

Oil GDP$340 b

64% GrowthNominal GDP

2008e

$528b

39% Growth Non Oil GDP

$188b8% Growth

Saudi economy on a stronger growth path in 2008 due to buoyancy in oil revenues Fiscal and current account surplus to rise

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October 2008


D. Money Supply The growth in the economy has come at the cost of inflation triggered by high money supply growth. Money supply (as measured by M3) as at the end of June 2008 was at USD 229 Bn, which is a 3% increase on a QoQ basis and 21% increase on a YoY basis. M1 (Currency + Demand deposits), which forms 50% of M3, witnessed an increase of 29% on a YoY basis in Q208. The Saudi central bank has raised reserve requirements for banks, with a view to rein in the growth in money supply. SAMA increased the reserve requirement four times in a span of six months (from 7% to 13% by May 2008).

54 59 72 76 80 78 83 86 89 94 102 110 11429 30

36 44 51 56 60 64 68 7075

78 75

21 2223

2829 31

32 31 3233

3334 40

0

50

100

150

200

250

20

02

20

03

20

04

20

05

Q2

06

Q3

06

Q4

06

Q1

07

Q2

07

Q3

07

Q4

07

Q1

08

Q2

08

Other Quasi DepositsTime & Saving DepositsM1

M3

Source: IIF, Markaz Research

E. Inflation Following the robust growth in money supply, rising real estate rentals and food prices, inflation in KSA has reached levels not seen for the last 30 years. Historically, the Saudi inflation rate, as measured by the rise in consumer prices, has been extremely low at 0.3%. However, IIF estimates inflation at 10% in 2008, a sharp rise from its earlier estimate of 3.9%. Housing rentals inflation (13.6%), which has 18% weightage in the ‘cost of living index’ (for July 2007-June 2008 period), as per the figures available with SAMA, and food inflation (10.5%), having 26% weightage, may be catalytic to a general rise in prices this year.

Continued money supply growth in 2008 Saudi, like its GCC peers, is witnessing unprecedented inflation this year; CPI inflation at 10%

Figure: 1

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October 2008


90

95

100

105

110

115

120

Oct

-03

Feb-

04

Jun-

04

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-04

Feb-

05

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05

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-05

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06

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06

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-06

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07

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-07

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08

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08

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Price Index Inflation Rate

Source: IIF, Markaz Research

The government has taken some key measures to curtail the steep rise in prices by reducing port fees and fees for certain licenses and permits, apart from cutting import duties and boosting subsidies. In addition, the government also plans to establish National Housing Agency for building low cost housing units and has allocated USD 2.7 Bn for the agency. In order to reduce the impact of rising prices for state employees, the government has introduced cost-of-living allowances. Also, Saudi Arabian Monetary Agency (SAMA) reduced the lending capacity of commercial banks by increasing the statutory reserve requirements of banks several times through 2008. SAMA increased the reserve requirement for the fourth time to 13% in May 2008 from 7% in November 2007. F. Exchange Rate The Saudi Riyal has been pegged to the US Dollar for the last two decades. KSA adopts the interest rate regime followed by the US in order to maintain the peg. However, due to weakening of the USD over the last two years, KSA has been importing inflation, adding to the recent price spikes.

USD/SAR

0.2655

0.2665

0.2675

0.2685

0.2695

2000 2001 2002 2003 2004 2005 2006 2007

Source: Bloomberg

Figure: 2

Figure: 3

The KSA government is taking several measures to rein inflation

The KSA has pegged its currency to the US dollar for last two decades

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October 2008


-2%

0%

2%

4%

6%

8%

01/03/2000 07/12/2001 12/11/2003 12/10/2005 12/09/2007D

isco

un

t R

ates

Saudi Discount RateUS Discount RateSpread

G. Interest Rates The Saudi monetary policy has remained closely tied to the US policy due to the currency peg. Discount rates in the Kingdom mirror the trend followed by the US, and spreads between the two have been narrow (generally within a percentage point).

Figure: 4

Source: Thomson Data Stream, Markaz Research

The KSA government maintains SAR-USD peg; mirrors interest rates in the US

R E S E A R C H

October 2008


3. Stock Market – 2008 A. Performance Stock markets reversed the upward trend seen last year until September this year. The Tadawul All Share Index (TASI) declined 33% after rising 41% last year. The Insurance (-46%), Banking (-45%) and Cement (-34%) sectors underperformed the TASI on YTD basis in 2008. Some of the sectors that outperformed the TASI, but yielded negative returns for investors were Agriculture (-8%) and Telecom (-21%). (Figure 5)

Table 3: Performance trends % change

YoY 2002 2003 2004 2005 2006 2007 2008*

Agricultural 23% 81% 112% 285% -61% 19% -8%

Telecom 50% 52% -45% 7% -21%

Electricity 6% 147% 32% 9% -55% 13% -29%

Industrial 0% 101% 150% 154% -61% 79% -32%

Services 19% 58% 70% 202% -68% 17% -33%

TASI** 4% 76% 85% 104% -53% 41% -33%

Cement 17% 28% 36% 87% -46% 26% -34%

Banking -1% 30% 97% 105% -43% 31% -45%

Insurance -25% 62% -46% Source: Stock Exchange, SAMA and Markaz Research 2008 indices return have been calculated using market cap weighted returns on the constituents of the indices ** TASI 2008 value as on 28 Sep 2008

Historically (2001-2007 CAGR), the Industrial (44%) and Agricultural (43%) sectors have provided handsome returns to investors, surpassing TASI’s 29% gain.

B. Activity By August 2008, close to 40 bn shares changed hands on the TASI. This is about 70% of the full year volumes on TASI in 2007. Going by current trends, volumes for the full year are likely to remain almost in line with the levels seen last year.

Saudi stocks have been declining in 2008 after recording large gains last year August 2008, close to 40 bn shares changed hands on the TASI. This is about 70% of the full year volumes on TASI in 2007.

R E S E A R C H

October 2008


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2001 2002 2003 2004 2005 2006 2007 2008*

Others

Agricultural Sector

Insurance Sector

Telecom. Sector

Electricity Sector

Services Sector

Cement Sector

Industrial Sector

Banking

Volume Traded (Mn)

Source: Saudi Stock Exchange 1 2008 figures are YTD figures till 31st Aug 2008 figures are calculated by retaining the old sector classification The Telecom sector drew a lot of investor attention in 2008 as volumes traded in YTD 2008 were dominated by companies from this industry. In all, 4.5 bn Telecom shares (accounting for 11% of total volume) changed hands. On annualized basis, this works out to 6.8 bn shares, about 12 times higher than 2007 levels. The Banking sector also recorded a robust increase in trading volumes relative to 2007. The sector accounted for 10% of total volumes traded in 2008 relative to just 3% last year.

Trading volume declined across other sectors. For instance, the Agricultural sector (1.9 bn shares in 2008 – annualized) is set to witness a sharp decline in volume traded for 2008. The sector accounted for 14% of total trading volume in 2007, but may account for just about 3% in 2008. (Appendix 1)

Overall liquidity levels moderate in 2008 compared to last year Telecom, Banking show robust volume growth. Agricultural, Services were laggards.

Figure: 6

R E S E A R C H

October 2008


0

200

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20

08

*

Others

Agricultural Sector

Insurance Sector

Telecom. Sector

Electricity Sector

Services Sector

Cement Sector

Industrial Sector

Banking

Value Traded (USD Bn)

Source: Saudi Stock Exchange 2 2008 figures are YTD figures till 31st Aug 2008 figures are calculated by retaining the old sector classification At USD 416 bn, the total value traded, till August this year is set to decline by 9% on full year basis, going by the trend seen so far. Value traded has seen a sharp drop of 51% during 2007. On YTD basis, the value of trade in Telecom and Banking stocks increased in 2008. On annualized basis, the Telecom sector is all set to record the maximum rate of growth in turnover (5 times to USD 50 bn in 2008). The Industrial sector dominated other sectors in terms of value traded with a share of 36% in 2007. Other sectors are set to decline this year. At 128%, turnover velocity in the Saudi market is lower compared to last year (161%). (Appendix 1)

57%

144%

210%234%

288%

161%

128%

-30%

20%

70%

120%

170%

220%

270%

320%

2002 2003 2004 2005 2006 2007 2008*

Turn

over

Vel

ocit

y

0

200

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600

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1,000

1,200

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Val

ue

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ed (

US

D B

n)

Turnover Velocity(LHS) Value traded Source: Saudi Stock Exchange, Markaz Research

Figure: 7 Value traded decline in 2008, Telecom, Banking buck the trend

Figure 8: Turnover Velocity

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October 2008


Bank & Financial Services

Petrochemicals

TASI

Telecom

Real EstateAgriculture

Industrial Investment

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

33% 35% 37% 39% 41% 43% 45% 47% 49%

Risk

Ann

ua

lised

Ret

urns

(2

007-

08)

Risk & Return From a sectoral perspective, Petrochemicals segment has been an outperformer in the last two years (2007-Sep 08), however, with a higher risk. The TASI index has generated a negative return of -6% during the same period. (Figure – 9) D. Others Fund Raising Saudi Arabian corporates, especially the banking space witnessed high level of activity in raising funds in the YTD 2008 period. Riyad Bank raised USD 3.5 Bn through a rights issue in May in order to boost its reserves (1/3rd of the total amount raised) and paid-up capital. In April, Alinma Bank raised USD 2.8 Bn, or 70% of the bank’s total capital, through an initial public offering (the biggest IPO in the Kingdom) that was oversubscribed by 1.74x. Mohammad Al Mojil Group, which is in the business of construction and maintenance of oil & gas facilities, raised USD 560 Mn through an IPO and has been oversubscribed by 3.14x. Methanol Chemical Company raised USD 193 Mn, or 50% of its share capital, through public offering in August. The IPO was oversubscribed 815 times. (See Appendix 4)

Most IPOs have given excellent returns to investors in 2008 so far, despite the fact that the listing gains have been eroded a lot, given the bearish market sentiments that have prevailed this year. Notwithstanding the declining YTD trend, 8 out of the 13 new listings are still yielding double digit returns, while one stock (United Cooperative Assurance Co) is trading 182% higher than the issue price. (See Appendix 5) Expansionary & Green Field Projects Other major developments during the year include the approval of projects worth USD 17 Bn to produce over 3 Mn tonnes of aluminum per year. The five smelters being built are expected to turn the Kingdom into a net aluminum exporter. KSA currently meets its aluminum requirement through imports. The Insurance sector also recorded strong growth in 2008. Health insurance, accounting for 32% of the total insurance industry, stole the limelight.

IPO market and M&A transactions moderated in 2008, yet remain very active

Figure 9: Risk-Return

Source: Saudi Stock Exchange, Reuters, Markaz Research

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October 2008


Arabian Shield Cooperative Insurance Co estimated total volume in the Saudi insurance market at USD 1.9 Bn during 2007. It expects volumes to increase beyond 2.1 Bn in 2008. (See Appendix 2) Mergers & Acquisitions Mergers and acquisitions (M&A) in the Kingdom were witnessed in the Banking, Investment, Telecom and Oil & Gas sectors. Major M&A deals in 2008 include: Saudi Telecom’s acquisition of a 35% stake in Oger Telecom for over USD 2.5 Bn; Swicorp’s acquisition of 20% interest in Jordon Aviation for USD 180 Mn; and Global Investment House’s acquisition of 60% stake in retail firm Al Sawani Food & Industrial. In September, Dubai Group, a diversified financial services company of Dubai Holding, announced an investment of USD 135 Mn for 20% stake in Mazaya Saudi. (See Appendix 3) Regulatory Developments Capital Market Authority (CMA) allowed foreigners to buy shares listed on the Saudi stock market through licensed intermediaries. The new directive took effect this August. The reclassification of Saudi indices to reflect the free float methodology is aimed at improving market efficiency and attracting investment. In the Pharmaceuticals sector a new regulation was passed which reduced prices of around 1,400 prescription drugs.

SAMA raised reserve requirements to limit the lending ability of the Banking sector

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October 2008


Blue Chip Analysis Company Vital Statistics

(Refer note for abbreviations)

Return Potential

Rationale

Saudi Basic Industries Corporation (SABIC)

CMP (Sar): 78.00 M.Cap: $62 bn Q208 Profit: $2.02 bn Q208 Gr: 17% 2008E Pr: $8.1 bn 2008E Gr: 13%

Medium SABIC’s net income for Q2 2008 increased 17% YoY to USD 2.02 bn; on QoQ basis, it grew 9%.

SABIC is the largest producer of chemicals, fertilizers, plastics and metals in Saudi Arabia. The company produced 54.8 mn tons in 2007. The company is expected to leverage its joint venture projects with Eastern Petrochemical Co (SHARQ 3rd expansion plant), Yanbu National Petrochemical Co (YANSAB) and Saudi Kayan Petrochemical Co (Saudi Kayan) to increase production capacity by 12.8 mn tons per annum by the end of 2010.

SABIC enjoys a huge cost advantage over its global peers because of the low cost feedstock it sources from Saudi Aramco. The lower cost and increased output supported by the anticipated increase in demand for petrochemicals is expected to boost revenues and (consequently) profits. We expect SABIC’s net income to grow by 13% YoY in 2008.

Saudi Telecom Company (STC)

CMP (Sar): 56.25 M.Cap: $30 bn Q208 Profit: $1.03 bn Q208 Gr: 24% 2008E Pr: $ 3.6 bn 2008E Gr: 12%

High STC’s net income increased 24% YoY to USD 1.03 bn in Q2 2008; on QoQ basis, it grew 26%.

Total operating revenues, including revenue from both the Wireless and Wireline businesses, grew 52% YoY to USD 3.21 bn. While revenue from the Wireline business grew 116% YoY to USD 1.09 bn, revenue from the Wireless business increased 32% YoY to USD 2.12 bn. STC’s Wireless business contributed 66% to it's total revenues during Q2 2008.

On August 26, 2008, Zain launched its wireless service in Saudi Arabia, covering 95% of the country. We expect Zain’s entry to intensify competition for STC, going forward.

STC had 18 mn subscribers at the end of June 2008 compared to Mobily’s (Etisalat) 8 mn subscriber base. We expect STC to benefit from the growing Saudi Wireless Phone industry and its dominant presence in the industry. The company’s net income is expected to grow 12% YoY in 2008.

Al Rajhi Bank

CMP (Sar): 65 M.Cap: $26 bn Q208 Profit: $465 mn Q208 Gr: 8% 2008E Pr: $ 1.79 bn 2008E Gr: 4%

High Al Rajhi Bank’s net income increased 8% YoY to USD 465 mn in Q2 2008. On QoQ basis, the net profit increased 9%, supported by the 50% QoQ growth in Banking Fees and Commissions (USD 120 mn) and a 47% QoQ increase in income from Murabahat (USD 27 mn). However, the QoQ growth in earnings was partially offset by the 47% QoQ increase in provisions to USD 74 mn.

The bank’s net advances increased 14.7% YoY to USD 33.4 bn in Q2 2008, whereas deposits increased 17% YoY to USD 29 mn. On QoQ basis, growth in advances and deposits was a little sluggish with advances and deposits growing 2% and 7%, respectively, during Q2 2008 compared to 14% and 13% in Q1 2008.

We expect the growth in advances to boost income from financing activities. The coupled with growing income from banking fees and commission are expected to boost overall profitability. We expect Al Rajhi Bank’s net income to increase 13% YoY in 2008.

Samba Financial Group (SFG)

CMP (Sar): 56 M.Cap: $13 bn Q208 Profit: $327 mn Q208 Gr: 5.6% 2008E Pr: $1.20 bn 2008E Gr: -7%

High SFG’s net income declined 5.6% YoY to USD 326.8 mn in Q2 2008; on QoQ basis, it grew 2%.

Net interest income for Q2 2008 declined 8.6% QoQ to USD 320.1 mn; however, on YoY basis, it increased a marginal 0.6%. Non-interest income grew 15.5% QoQ to USD 146.6 mn in Q2 2008 resulting in an overall QoQ growth in net income despite declining net interest income. On YoY basis, non-interest income declined 20.3% to USD 147.6 mn, offsetting the growth in net

R E S E A R C H

October 2008


interest income and resulting in a YoY decline in net income. We expect SFG’s net income for 2008 to be affected by the YoY decline in non-interest income and record a moderate growth of 4%.

Saudi Arabian Fertilizer Company (SAFCO)

CMP (Sar): 141 M.Cap: $9.4 bn Q208 Profit: $318 mn Q208 Gr: 125% 2008E Pr: $1.1 bn 2008E Gr: 87%

High SAFCO’s net income for Q2 2008 surged 125% YoY to USD 318 mn; on QoQ basis, it grew 39%.

The extraordinary growth in net income can be primarily attributed to rising prices of Urea and Ammonia and lower feedstock costs. Prices of Urea which accounts for almost 84% of SAFCO’s total production almost doubled during Q208.

The sudden hike in prices were largely due to the rising demand of fertilizer worldwide coupled with a hike in export tariffs on Urea to 135% in China (20 April 2008 to 31 September 2008), which accounts for almost 15% of global Urea trade. The increase in export tariffs in China is expected to be extended due to higher energy prices and power shortages.

Natural gas which is the prime feedstock for production of Urea is currently priced at USD 11.4/MMBTU (million British thermal units) is sourced by SAFCO at USD 0.75/MMBTU based on a long term contract with Saudi Aramco. This low cost feedstock provides an absolute cost advantage to SAFCO against its global peers.

SAFCO’s increased capacity (from 2.8 mn tons to 5.1 mn tons) due to the successful completion SAFCO IV in April 2007. However, the expected closure of SAFCO’s Dammam Urea plant in late 2008 is likely to reduce the overall production by 0.33 mn tons a year.

The rising demand and prices of Urea, an increased production capacity and low feedstock cost is expected to boost the overall performance of SAFCO. We expect the bottom line of SAFCO to expand significantly with a YoY increase of 87% in 2008.

1. Note: Abbreviations used: CMP: Current Market Price (As on 08 Oct 08), MCap: Market Capitalization (As on 08 Oct Sep 08), Q108 Profit: First Quarter 2008 Profit, Q108 Gr: First Quarter 2008 Profit in comparison to First Quarter 2007 Profit, 2008E Pr: Expected 2008 Profits, 2008E Gr: Expected 2008 Profit Growth in comparison to full year 2007. 2. Note: USD numbers are conversion of SAR numbers at average exchange rates for the period.

R E S E A R C H

October 2008


Appendix 1: Key data

Value Traded (USD Bn) Indices 2001 2002 2003 2004 2005 2006 2007 2008*

TASI 22 36 159 473 1,103 1,403 682 416 Banking 7 7 10 14 64 79 30 33 Industrial Sector 7 9 46 167 494 566 249 206 Cement Sector 6 7 6 12 45 55 10 6 Services Sector 2 9 39 146 260 406 222 82 Electricity Sector 1 3 29 56 49 55 8 5 Telecom. Sector 28 43 79 53 10 34 Insurance Sector 16 8 52 36 Agricultural Sector 0 1 2 36 96 180 101 12 Others 2 * 2008 data till 31 August 2008

Volume Traded (Mn) Indices 2001 2002 2003 2004 2005 2006 2007 2008*

TASI 692 1,736 5,566 10,298 12,281 54,437 58,862 39,928 Banking 78 78 87 95 272 1,135 1,689 4,050 Industrial Sector 214 373 1278 2968 4159 18348 21532 16,041 Cement Sector 124 127 88 119 266 1067 527 268 Services Sector 200 929 2304 4178 4094 20056 21798 10,030 Electricity Sector 57 143 1267 1557 1403 5193 2205 1,282 Telecom. Sector 324 294 420 894 564 4,538 Insurance Sector 112 130 2528 2,213 Agricultural Sector 18 86 219 1086 1555 7614 8019 1,289 Others 216 * 2008 data till 31 August 2008

Index Performance Indices

2001 2002 2003 2004 2005 2006 2007 2008

(31 Sep 08) TASI 2,430 2,518 4,438 8,206 16,713 7,933 11,176 7,459 Banking 7,802 7,742 10,080 19,867 40,766 23,367 30,612 16,725 Industrial Sector 3,207 3,221 6,477 16,189 41,105 16,044 28,683 19,512 Cement Sector 2,754 3,228 4,129 5,633 10,561 5,697 7,159 4,693 Services Sector 666 795 1,252 2,132 6,429 2,044 2,397 1,605 Electricity Sector 787 838 2,066 2,725 2,969 1,324 1,502 1,064 Telecom. Sector 2,487 3,738 5,667 3,115 3,323 2,623 Insurance Sector 1,948 1,457 2,355 1,272 Agricultural Sector 468 575 1,041 2,206 8,496 3,346 3,980 3,669

Turnover Velocity 2001 2002 2003 2004 2005 2006 2007 2008*

Value traded 22 36 159 473 1,103 1,403 682 623 Market Cap (USD Bn) 61.8 63.6 156.9 293.3 648.9 326.1 521.4 452.6 Turnover Velocity(LHS) 57% 144% 210% 234% 288% 161% 128% * Annualized for 2008

R E S E A R C H

October 2008


Appendix 2: Key Market Developments in 2008

Month Key Development

Saudi manufacturing investment hit SR 306 b with chemical and plastic industries accounting for 59.2% of total investments

The Saudi Arabian Monetary Agency cut the reverse repo to 3.5% from 4% Jan-08

Saudi Arabia creates a new SR 22 b water company - the National Water Company (NWC)

Saudi Aramco and Jadwa Investment Company agreed with ExxonMobil to acquire ExxonMobil’s 30% interest in the Saudi Aramco Lubricating Oil Refining Company Feb-08

Saudi inflation hit 7% in January, its highest level in 25 years on the back of spurring rents and food costs

Saudi Arabia signed a SR 1.4 b agreement with a Turkish company to lay a water pipeline network to supply potable water Mar-08 A consortium that includes Verizon Business was awarded a license to provide public, fixed-line telecommunications services in

Saudi Arabia

Saudi Arabia loan defaults increased by SR 2 b in just one year Apr-08 A new Islamic bank - Imaar International Bank, announced plans to start operations in the fourth quarter after raising funds for

its USD 11 b capital

The Kingdom of Saudi Arabia announced intentions to set up an SR 20 b investment firm

The Kingdom of Saudi Arabia announced plans to build a USD 426 m worth dockyard at the Islamic Port in Jeddah under a Saudi-Malaysian pact

The International Islamic Trade Finance Corporation (ITFC) signed agreements totaling approximately USD 129 m to finance three major deals in Morocco and Tunisia

Saudi Oger won two contracts worth SR 1.57 b for the execution of the ministry of finance projects in Jeddah and Riyadh

The volume of Saudi health insurance sector soared 62% over the past two years, reaching to over to SR 2.7 b at May 2008

May-08

Salah Al-Hujailan tied Up with the British law firm Freshfields Bruckhaus Deringer for mutual cooperation and legal consultancy

Saudi Arabia signed a bilateral accession deal to give its consent for Russia to become a member of the World Trade Organisation

Saudi Arabia’s Alshoula Holding Company has set up a USD 5.33 b real estate firm to tap into the Middle East construction boom

Total investment in the Saudi retail sector is estimated at around SR 220 b

Intel Corporation and King Abdu Aziz City for Science and Technology signed an agreement to launch first wireless mobile services R&D lab in Saudi Arabia

Saudi Aramco and Total signed a shareholders agreement and other deals to establish a joint venture — the Jubail Refining and Petrochemical Company

Jun-08

Saudi Arabia planned more than USD 12 b worth of water and power projects

Saudi Arabia eyes sale of international airports and have plans to transform civil aviation into different sectors Jul-08 The General Authority for Civil Aviation signed contracts worth more than SR 16 b to develop Jeddah’s King Abdul Aziz

International Airport

Increases in food and housing costs pushed the Kingdom’s inflation to a 30-year high of 10.6%

Almajdouie Group and Sinotrans Ltd of China signed an agreement to operate a joint venture logistics company in Saudi Arabia Aug-08

Saudi Arabia announced plans to set up a new investment fund to buy agricultural land overseas

Saudi Arabia and India announced intentions to set up a joint investment fund with an initial capital of USD 1.5 b to invest in infrastructure and energy projects in South and Southeast Asia Sep-08

Saudi Arabia approved projects worth more than USD 17 b to produce over three million tonnes of aluminum per year

Source: Zawya and other news sources

R E S E A R C H

October 2008


Appendix 3: M&As in 2008

Acquirer Acquired

Acquirer Country

Target Country

Value (USD mn) Notes

Aref Investment Group Co Makamin Saudi Co Kuwait Saudi Arabia 32 Acquired 10% stake

Saudi Telecom Co Oger Telecom Ltd Saudi Arabia UAE 2850 Acquired 35% stake Jan-08 Amwal Al Khaleej Investment Dubai Contracting Co Saudi Arabia UAE N/A Acquired 49% stake

Al Khaznah Insurance Co Sanad Insurance & Reinsurance UAE Saudi Arabia N/A May-08

Saudi Research And Marketing University Bookshop Saudi Arabia UAE 20 Acquired 51% stake

Jun-08 National Bank Of Kuwait Al-Tala'a International Transportation Company Ltd

Kuwait Saudi Arabia N/A Acquired 40% stake

Global Investment House Al Sawani Food & Industrial Kuwait Saudi Arabia N/A Acquired 60% stake

Al-Futtaim Group Futech Software Solutions Saudi Arabia UAE N/A

Fitaihi Holding Group Oriental Weavers Saudi Arabia Egypt 28 Acquired a 5% stake

Aug-08

Swicorp RAK Ghani Glass LLC Saudi Arabia Saudi Arabia N/A

Swicorp Jordan Aviation Saudi Arabia Jordan 180 Acquired a 20% interest Sep-08

Dubai Group Mazaya Saudi UAE Saudi Arabia 135 Acquired a 20% interest


R E S E A R C H

October 2008


Appendix 4: New Funds, Issuances and Initiatives

Company Initiative Amount (USD m) Rabigh Refining and Petrochemical Company

IPO represented a 25% capital of Rabigh - a joint venture between Saudi Aramco and Japans Sumitomo Chemicals 1228 Jan-08

Abu Dhabi Investment House Opened its first European office in Geneva, Switzerland

Saudi Industrial Investment Group Right issue for 100% of its stake 600 Mobile Telecommunications Company Saudi Arabia IPO comprising a 50% of the company's capital 1867

Feb-08

Saudi International Petrochemical Company Listed its 66.7% capital right issue 534

Saudi Reinsurance Company IPO for 40% of the share capital 107 BUPA Arabia for Cooperative Insurance Company IPO representing a 40% of the company's capital 43

Bakheet Investment Group Bakheet IPO Fund

EFG Hermes EFG-Hermes Saudi Arabia Equity Fund

Jadwa Investment Jadwa Conservative Allocation Fund

Jadwa Investment Jadwa Balanced Allocation Fund

Mar-08

Jadwa Investment Jadwa Aggressive Allocation Fund

Alinma Bank IPO comprising a 70% of the Bank's capital 2800 Apr-08

Saudi Aramco Planned to bolster the number of wells drilled to 248, compared with an original target of 187 13700

National Industrialization Company Right issue of 32% stake 533

Basic Chemical Industries IPO of 30% of the company's stake 53

Riyad Bank Right issue with capital increase by 140% 3505

HSBC Saudi Arabia Limited HSBC Saudi Construction and Cement Equity Fund

May-08

Mohammad Al Mojil Group IPO representing a 30% of the company's capital 560

Halwani Brothers Company IPO representing a 30% of the company's capital. 46 Jun-08 Abdullah Al Othaim Markets Company IPO, which represents 30% of Al Othaim's capital 72

NCB Capital Al-Ahli Saudi Mid-Cap Equity Fund

Saudi Mada Gypsum Company To increase production by 260% with new plant facilities

Islamic Development Bank Launched its first local currency sukuk to finance projects in Malaysia 308

Jul-08

UBS Secured license to open an investment banking branch in Saudi Arabia

Saudi Industrial Services Company Right issue of 70% stake 86

Methanol Chemicals Company Completed its IPO for 50% of share capital 193

Arbah Global Gulf Arbah Global Gulf to open branches in Asia

Saudi BinLadin Group Investment in Indonesia’s agriculture sector 4300

Aug-08

Al-Rajhi Steel Industries To more than double its production capacity by 2012 1070

Sep-08 The Saudi Binladin Group Issuance of a privately placed Saudi riyal sukuk with 5-year maturity 267


R E S E A R C H

October 2008


Appendix 5: IPO listing and since floatation gains

Returns

Issuer Listing Date Oversubscription

1st Day (a)

Since Floatation

(b)

Benchmark since Floatation

(c)

% Chg post

1st day (b-a)

United Cooperative Assurance Company 21Jun08 12.56 x 193% 182% -24% -11%

Mobile Telecommunications Company Saudi Arabia 22Mar08 2.70 x 110% 88% -21% -23%

Rabigh Refining and Petrochemical Company 27Jan08 3.48 x 149% 84% -20% -65%

Alinma Bank 03Jun08 1.74 x 60% 47% -22% -14%

BUPA Arabia for Cooperative Insurance Company 17May08 9.22 x 258% 40% -24% -218%

Mohammad Al Mojil Group 26May08 3.14 x 17% 27% -23% 10%

Methanol Chemicals Company 16Sep08 6.01 x 17% 25% 3% 8%

Basic Chemical Industries 16Jun08 9.30 x 283% 23% -23% -260%

Halwani Brothers Company 16Jul08 9.38 x 54% 16% -18% -38%

Saudi Reinsurance Company 24May08 3.66 x 105% 9% -23% -96%

Saudi Arabian Mining Company 28Jul08 2.00 x 53% 5% -17% -48%

Abdullah Al Othaim Markets Company 14Jul08 6.56 x 73% 0% -18% -72%

Astra Industrial Group 18Aug08 3.25 x 12% -22% -11% -34%

Source: Zawya

R E S E A R C H

October 2008


Appendix 6: Economic Indicators

Saudi Arabia: Economic Indicators

Unit 2002 2003 2004 2005 2006 2007f

2008f - Sep 07

2008f - Sep 08

% Deviation

From Sep 07

Real GDP SAR Bn 637.23 686.04 722.17 762.61 786.35 813.09 882.60 861.50 -2%

% change 7.7% 5.3% 5.6% 3.1% 3.4% 8.5% 6.0%

Real GDP USD Bn 169.8 182.8 192.4 203.2 209.5 216.6 235.1 229.5 -2%

% change 7.7% 5.3% 5.6% 3.1% 3.4% 8.5% 6.0%

Nominal GDP USD Bn 188.4 214.4 250.1 315.2 355.8 381.1 412.5 528.5 28%

13.8% 16.7% 26.0% 12.9% 7.1% 8.3% 38.7%

Hydrocarbons real GDP SAR Bn 189.1 221.6 236.5 251.2 249.3 250.5 253.5 263.8

% change 17.2% 6.7% 6.2% -0.8% 0.5% 1% 5.3%

Hydrocarbons real GDP USD Bn 50.4 59.0 63.0 66.9 66.4 66.7 67.5 70.3

% change 17.2% 6.7% 6.2% -0.8% 0.5% 1% 5.3%

Non-hydrocarbons real GDP SAR Bn 448.1 464.5 485.7 511.4 537.1 562.8 629.1 597.7

% change 3.7% 4.6% 5.3% 5.0% 4.8% 12% 6.2%

Non-hydrocarbons real GDP USD Bn 119.4 123.7 129.4 136.2 143.1 149.9 167.6 159.2

% change 3.7% 4.6% 5.3% 5.0% 4.8% 12% 6.2%

Oil prodn ('000 bpd; avg 7,550 8,790 9,020 9,450 9,200 8,800 8,800 9,350 6%

Central government balance SAR Bn -20.50 36.00 107.09 217.40 280.30 176.50 220.50 525.71 138%

Central government revenue SAR Bn 213.00 293.00 392.29 567.80 678.80 642.80 720.80 1103.91 53%

% change 38% 34% 45% 20% -5% 12% 72%

Central government spend SAR Bn 233.50 257.00 285.20 350.40 398.50 466.30 500.30 578.20 16%

% change 10% 11% 23% 14% 17% 7% 24%

Central government surplus SAR Bn -20.50 36.00 107.09 217.40 280.30 176.50 220.50 525.71 138%

% of revenues -10% 12% 27% 38% 41% 27% 31% 48%

Net foreign assets SAR Bn 209.60 264.20 371.10 589.90 899.80 1170.90 NA

Domestic credit SAR Bn 304.79 348.49 391.50 354.83 296.02 242.80 NA

Broad money SAR Bn 390.40 417.50 496.10 553.70 660.60 789.80 NA

% change 7% 19% 12% 19% 20%

Consumer prices % change 0.2% 0.6% 0.3% 0.7% 2.3% 4.2% 3.9% 10.0% 6%

Merchandise exports USD Bn 72.4 93.1 126.2 180.8 211.3 234.3 240.9 386.8 61%

Merchandise imports USD Bn 29.6 33.9 41.1 54.5 63.9 82.7 84.5 110.2 30%

Population (million) 21.92 22.48 23.05 23.61 24.17 24.75 26.00 25.34 -3%

% change 2.6 2.6 2.5 2.4 2.4 2.4 2.9 2.4

Per capita GDP USD 8,613 9,558 10,875 13,379 14,755 15,434 15,904 20,903 31%

Source: IIF

R E S E A R C H

October 2008


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. 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. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of Markaz, Markaz has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz’s own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through this report or Markaz’s website shall be at your own risk.

R E S E A R C H

October 2008

Strategic Research Kuwait Stocks: Fair Value Not Far Away (Sept-08) Mr. GCC Market-Manic Depressive (Sept-08) Global Investment Themes (June-08) To Yield or Not To Yield (May-08) The Golden Portfolio (Apr-08) Banking Sweet spots (Apr-08) The “Vicious Square” Monetary Policy options for Kuwait (Feb-08) Outlook 2008: GCC (Jan-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) To Leap or To Lag: Choices before GCC Regulators (Apr-07)

Periodic ResearchGCC Asset Allocation & Volatility (Monthly Since Jul-07) GCC Equity Funds (Monthly since May-07) Markaz Daily Morning Brief KSE Weekly Snapshot KSE Technical Analysis (Weekly) Private Equity Update International Market Update

Company Research

Real Estate Abu Dhabi (July-08) Algeria (Mar-08) Jordan (Mar-08) Kuwait (Feb-08) Lebanon (Dec-07) Qatar (Sep-07) Saudi Arabia (Jul-07) U.S.A. (May-07) Syria (Apr-07)

Infrastructure Power Water Airports Seaports Roadways Railways ICT

Sector Research

Bahrain • Esterad Investment Company

(Aug-08) • Bahrain Islamic Bank (Aug-08) • Ithmaar Bank (July-08) • Tameer (July-08) • Batelco (July-08)

Qatar • Doha Bank (Aug-08) • Qatar National Bank (Aug-08) • QEWC (July-08) • QISB (July-08) • Masraf Al-Rayan (Jun-08) • Commercial Bank of Qatar (Jun-08) • Industries Qatar (May-08)

Saudi Arabia • Saudi Kayan Petro Co. (Aug-08) • Al Rajhi Bank (Aug – 08) • Arab National Bank (July-08) • Saudi Telecom Co. (Jun-08) • SAFCO (Jun-08) • Banque Saudi Fransi (Jun-08) • Riyad Bank (Jun-08) • Samba Financial Group (May-08) • Sabic (May-08)

UAE • Aldar Properties (Sept-08) • Union National Bank (Aug-08) • Dubai Financial Market (July-08) • Emaar Properties (July-08) • Dana Gas (July-08) • FGB (July-08) • DP World (July-08) • ADCB (Jun-08) • Etisalat (Jun-08) • NBAD (May-08)

Oman • 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)

Egypt • Commercial Int’l Bank (Oct-08) • Orascom Telecom (Sep-08) • Mobinil (Sep-08) • Telecom Egypt (Aug-08) • EFG-Hermes (Jun-08)

Kuwait • Commercial bank of Kuwait (Oct-08) • Kipco (Sept-08) • Global Investment House (Sept-08) • The Investment Dar (Sept-08) • Zain (Sept- 08) • NBK (Sept-08) • Gulf Bank (Sept-08) • Burgan bank (Sept-08) • Kuwait Finance house (Sept-08) • Al Safat (Sept-08) • Automated Systems (Sept-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” Client Relations & Marketing Department Tel: +965 2 224 8000 Ext. 1804 Fax: +965 22414499 Postal Address: P.O. Box 23444, Safat, 13095, State of Kuwait Email: [email protected] markaz.com

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