Muscat: The MSM 30 index closed 1.65 per cent higher for the week ended December 6, at 5,625. All the three sector indices closed with gains, led by a 3.1 per cent advance in the financial sector.
Alizz Islamic Bank listed on the MSM this week and contrary to general expectations, the initial public offering (IPO) performed well, rising 7.8 per cent during the week to close at RO0.110, after touching an intra-day high of RO0.113. The IPO which closed in October, was oversubscribed only 1.14 times.
As an early entrant in Islamic banking in Oman, we expect Alizz Islamic Bank to benefit from the high growth potential that should unfold in this industry in the next few years. We have valued the stock at 1.2x its expected 2013 book value per share of RO0.096 with a target price of RO0.115.
A recovery in banking stocks on the MSM this week, led by Bank Sohar and Alizz Bank, has raised expectations of the planned Oman Arab Bank IPO coming to market early next year. Oman Arab Bank is a subsidiary of Ominvest and has recorded a 28 per cent year-on-year increase in gross loans and advances in the third quarter of 2012 coupled with 12.6 per cent year-on-year increase in customer deposits.
Dhofar Cattlefeed reported a consolidated net profit of RO515,000 for the third quarter of 2012 compared to RO193,000 in the third quarter of 2011, with revenues increasing 12 per cent year-on-year to RO20.8 million. The company is expecting to receive a subsidy from the government to compensate for the high import cost of corn required for the manufacture of feed.
This subsidy will be applicable for the period retrospectively from January 1, 2011. The medium-term outlook for this stock is bullish.
Mixed trend in GCC
GCC markets ended the week on a mixed note led by Saudi benchmark index (+3 per cent) while the Kuwait main index declined 1 per cent. Major global markets mostly ended in the green led by the Shanghai index .
Air Arabia reported a net profit of Dh226 million in the third quarter of 2012, a 126 per cent growth year-on-year, while revenues rose 19 per cent year-on-year to Dh836 million.
Passenger traffic during the period increased 14 per cent year-on-year, boosted by addition of new routes and surge in traffic during Eid holidays.
The stock trades at a P/E multiple of 8.7 times our estimated 2012 earnings per share and offers an attractive 8.1 per cent dividend yield.
Industries Qatar reported a net profit of 2.62 billion Qatari riyals in the third quarter of 2012, a 26 per cent year-on-year growth and 23 per cent sequential improvement. Revenues grew 18 per cent year-on-year to 5.15 billion riyals boosted by incremental fertiliser volumes from newly commissioned QAFCO-5 and QAFCO-6 facilities.
Profitability was also boosted by an improvement in net margin to 51 per cent in the third quarter of 2012 compared to 47 per cent in the same period in 2011 and 45 per cent in the first half of 2012. Management also announced that it has raised the foreign ownership limit in the company to 12.25 per cent from 7.50 per cent previously. The stock trades at 9.2 times its annualised earnings per share of 16.54 riyals. We are bullish on this stock.
Aldar Properties reported a net profit of Dh206 million in the third quarter of 2012, a 43 per cent year-on-year growth, while revenues declined 49 per cent year-on-year to Dh1.6 billion.
Disclaimer: This column expresses only the views of the contributor and investing in stocks carries risk of financial loss for which the contributor is in no way liable.