SABIC - Look beyond 1H12 (Buy)

January 25,2012

We expect a relatively weak start to 2012, but expect a recovery in petrochemical demand and margins in the second half of the year. SABIC has strong leverage to improving economic growth. We believe the stock is cheap at 5.3x 2012F EV/EBITDA, and we maintain our Buy recommendation.

STC releases preliminary 4Q11 (Buy)

January 19,2012

STC's preliminary 4Q11 results were broadly in line with our estimates. Growth was driven by a record Hajj season, demand for fixed and wireless broadband services and revenue from international operations. We maintain our target price at SR47.70 and our Buy recommendation.

Mobily releases preliminary 4Q11 (Buy)

January 19,2012

Mobily has released its preliminary 4Q11 results, which were in line with our estimates. Revenue from data, both fixed and mobile, was the main growth driver. We maintain our DCF-based target price for Mobily at SR79.78, which implies an upside of 48%. We reiterate our Buy recommendation.

Banks - Qatar preview (Still prefer CBQ)

January 18,2012

In 9M11, virtually all new lending went to the public sector as the economy prepared for the award of contracts. As these projects get under way in 2012, we expect broadbased growth. We believe CBQ will be a beneficiary of these trends, with the added attraction of being available at a discounted price.

Vodafone Qatar - Pre-earnings 3Q12 review (Hold)

January 17,2012

Vodafone Qatar, the second mobile entrant to the Qatari market, remains on track in terms of market share performance, with a 28% subscriber market share at the end of September 2011. We revise our estimates ahead of 3QFY12 results and downgrade the company to a Hold from a Buy.

Telecom Egypt - Persevering through (Buy)

January 16,2012

In light of the continued economic and political turbulence, we revise our forecasts for Telecom Egypt. We raise our discount rate from 10.5% to 14.5% in view of the political risk in the country. Hence, we cut our target price for Telecom Egypt to E£16.7, maintaining our Buy recommendation.

Mobinil - Concerns remain (Hold)

January 11,2012

Mobinil was the worst performer in the region on a 12-month basis (falling 56%) as the company faced more than just competitive and economic pressure during 2011. We have raised our cost of equity to reflect the political volatility and cut our target price to E£82. Hence, we move to a Hold recommendation from Buy.

Agility - G&A expense adjustment (Buy)

January 03,2012

We adjust our forecasts to account for higher-than-expected G&A expenses in 3Q11. As a result, we lower our EBITDA forecasts and target price. We value Agility using an SOTP methodology arriving at a fair value of KWD0.447, with the largest contribution coming from a DCF of Agility's core operations.

Orascom Construction Ind - Demerger should be the catalyst (Buy)

December 22,2011

OCI announced a string of positive news flow, but the share price remains depressed, likely the result of the uncertain political situation. Nevertheless, we believe patient investors should benefit from solid fundamentals in construction and fertilisers and that the announcement of the separation of the two businesses should be a major catalyst for the share in early 2012. We maintain a Buy recommendation.

MENA Fertilisers - We remain positive for 2012

December 22,2011

Urea prices have fallen steeply over the past few weeks, as traders have bid aggressively to sell urea to India and new spot demand has been weak. Nevertheless, we expect an improvement in 2012, with buyers returning for the winter wheat season and the approach of the spring planting season. We maintain our 2012 forecast of US$375/tonne for urea.

STC - Potential acquisitions in 2012 (Buy)

December 19,2011

We believe that news of an acquisition could be potentially positive for Saudi Telecom Company's (STC's) share price, as the company's recent growth has been mainly driven by its foreign operations. We revise our forecasts, and maintain our target price of SR47.70 and our Buy recommendation.

MENA Strategy - No upgrade, not a big surprise, but bad for sentiment

December 15,2011

MSCI has announced that its UAE and Qatar indices will remain under review for potential upgrade to EM status. The decision comes as no big surprise to us, but it has dashed any hope, however small, of a boost to sentiment and trading volumes.

Rasmala Organizes the 'Dynamism of Palestinian Economy' Event with the Palestinian Business Council

December 10,2011

Rasmala Investment Bank Ltd. ("Rasmala") along with the Palestinian Business Council and Al Arabi investment Group Co. (AB Invest - Palestine) organised a high profile event and seminar on the 'The Dynamism of the Palestinian Economy'. The event, held at the Jumeirah Etihad Towers in Abu Dhabi, was organised to highlight the dynamic nature of the Palestinian economy.

MENA Fertilisers - Yara confirms our positive view

December 08,2011

Following Yara's very bullish view on the outlook for fertilisers, we remain positive on MENA fertilisers. We reiterate our Buy recommendations on OCI and IQ, which should benefit through their imminent start-ups of new capacities.

NSCSA - Expansion plans sink dividend

December 08,2011

As the VLCC segment faces weak freight rates and high bunker fuel costs, we expect chemical carrier and RoRo segments to provide earnings stability. We believe dividend payouts are unlikely, given upcoming capital commitments.

Agility - Healthcare bid announcement

December 07,2011

Agility announced that it has entered an auction to acquire a 26% stake in Kuwait Health Assurance Company (KHAC). A winning bid could have a favourable impact on the stock's performance in the near term.

MENA Strategy - What next for the Egyptian pound

December 01,2011

We believe there has been an increase in the rate of decline in CBE reserves during November, which would put further pressure on the Egyptian pound. But, Tuesday's US$1.53bn sale of US$-denominated bills gives some relief. IMF loans or other bilateral facilities would also help, but time is of the essence.

Aldar Properties - Debt overhang to remain (Hold)

November 25,2011

Aldar reported total revenue of Dh3,133m, beating our estimate of Dh858m and consensus estimate of Dh957m. The significant jump in revenue was due to recognition of Dh2,600m from land sale to the government. We expected the gain from land sale to be recognised directly below gross profit as in the case of the gain from transfer of Ferrai world assets in 1H11. Revenue ex-land sales of Dh533m was 38% below our estimate of Dh858m as revenue from property sales of Dh247m missed our estimate by 55% and rental income missed our estimate by 6%. SG&A expenses and finance costs were in line with our estimates. Net income of Dh144m was 4% above our estimate of Dh138m as the gross profit miss on revenue ex-land sales was more than offset by a higher-than-expected gain from land sale to the government.

Dana Gas - Bond takes gas out of Dana (Buy)

November 17,2011

Dana's current receivables stand at US$191m (Dh701m) in Kurdistan and US$207m (Dh760m) in Egypt. In 9M11, Dana Gas received US$80m (Dh294m) in Kurdistan and US$48m (Dh176m) in Egypt. By comparison, in 9M10, we estimate Dana Gas was paid US$11m (Dh42m) in Kurdistan and US$148m (Dh543m) in Egypt.

Drake & Scull - Continue to remain constructive (Buy)

November 17,2011

DSI reported total revenue of Dh847m (up 15% qoq and 96% yoy), beating our estimate of Dh701m by 21% and consensus estimate of Dh668m by 27%. The revenue beat was mainly due to better-than-expected execution. The company's annualised backlog to revenue conversion rate of 45% was 700bp ahead of our estimate. Gross margin moved up 30bp qoq to 14.6% after falling from 18.6% in 2010 to 14.3% in 2Q11 and was 30bp ahead of our estimate. The EBIT margin of 6.5% was also better than our estimate of 6.1%. Overall net profit of Dh58m (up 12% qoq and 89% yoy) beat both our forecast and consensus estimate of Dh49m by 18%.

Orascom Construction Ind - 3Q11 results due 21 November (Buy)

November 16,2011

OCI will report 3Q11 results on Monday, 21 November. We expect another strong quarter, with EBITDA of US$364m (+37% yoy) and net income of S$185m (+25% yoy) 2% and 1% above company compiled consensus, respectively.

Sorouh Real Estate - Reduce TP to Dh1.00; maintain Hold

November 03,2011

Sorouh's earnings missed our expectations on lower revenue from handovers and recognition of provisions primarily against investment properties. We maintain Hold, but reduce our target price to Dh1.00 as we cut our 2011-13F earnings by 22% mainly on lower margins and higher provisions.

Banks 3Q11 – flattered by falling rates

October 31,2011

The most distinctive element of the 3Q11 results has been the enormous benefit seen at three banks under our coverage from falling rates. However, loan growth remains weak and provisioning high, limiting any sector-wide re-rating.

SABIC - How about the super cycle? (Buy)

October 31,2011

We initiate coverage of SABIC with a Buy recommendation and target price of SAR115/share. We believe the stock should be a core holding for investors who want exposure to MENA markets.

Emaar Properties - Results roughly in-line (Buy)

October 27,2011

The results were roughly in-line with our expectations, with revenue coming in slightly below and in-line EPS. We maintain our Buy rating on the stock. In our view, the main near-term catalyst for the stock may be debt refinancing.

Saudi Real Estate Co - 3Q11 results update (Buy)

October 21,2011

3Q11 results were above our expectations due to higher-than-expected rental and investment income. We continue to prefer SREC due to its higher value generation from recurring income assets and reasonably healthy dividend yield.

Dar Al Arkan Real Estate - 3Q11 results update (Hold)

October 21,2011

Operating performance was better than our expectations due to higher-thanestimated land sales and gross margin, but we believe the stock may continue to experience an overhang from debt repayments of SR4.8bn in next 15 months.

STC releases 3Q11 results (Buy)

October 20,2011

Initial reaction to Saudi Telecom Company's (STC's) 3Q11 results: revenues and EBITDA in-line with our estimates, but net profit misses expectations.

Real Estate Cautiously optimistic

October 07,2011

We are cautiously optimistic on the Saudi real estate market due to an uncertain global economy and inherent structural challenges facing the Saudi economy. We expect house prices to appreciate between 0% and 5% annually in the next two years.

Qatar Electric & Water Co. - Where to now? (Hold)

October 05,2011

QEWC is well positioned to capitalise on strong free cash flow through a stable and defensive business model. Given that the company's power-generation and water-desalination capacity additions are completed, we see limited growth opportunities going forward. We initiate coverage with a Hold recommendation.

Emaar Properties - Cut TP to Dh3.00; maintain Buy

October 04,2011

We lower our TP to Dh3.00 from Dh3.50 on weak international handovers outlook. But we maintain our Buy rating as valuation looks attractive at current levels and Emaar currently trades near our recurring income portfolio valuation of Dh2.44.