Bullish trend on MSM



Muscat: The MSM 30 index closed 0.23 per cent higher for the week ended January 23 at 5,819. The financial and industrial indices closed 0.81 per cent and 0.88 per cent higher respectively, while the services index declined 0.33 per cent.

Al Anwar Holding gained 3.55 per cent in the previous week to end at 146 baisas. The company's net profit doubled to OMR715,000 for the first half of 2012-13 from OMR313,000 in the first half of 2011-12. Share of profit from associates increased year-on-year due to good performance of two of its associate companies — Al Maha Ceramics and Taageer Finance. There was significant cost savings and lower interest expense which gave a further boost to its bottomline. The stock trades at 0.93 times its latest book value and is one of our top picks in 2013.

Al Jazeera Steel Products has risen close to 10 per cent sharply since it announced that its exports to United States would not attract any anti-dumping duty and countervailing duty. Net profit climbed 20 per cent year-on-year in the nine months ended 2012 to OMR3.29 million driven by 16 per cent growth in sales volume. Merchant bar mill has reached 80 per cent capacity utilisation and may soon operate 24 hours a day. The stock currently trades at 11.3 times its trailing 12 months earnings.

Oman Cement declared initial annual results posting a 36 per cent year-on-year increase in full year net profit to OMR17.5 million from OMR12.7 million in 2011. Total revenues grew 17 per cent year-on-year to OMR59.3 million, while total expenses were higher by 9 per cent year-on-year. The stock trades at 12.3 times its financial year 2012 EPS of 53 baisas.

National Bank of Oman reported a 19 per cent year-on-year growth of net profit to OMR40.7 million in the financial year 2012, with net interest income rising 15 per cent  year-on-year to OMR67.2 million. The bank's loan book grew 14 per cent year-on-year to OMR1.91 billion while customer deposits increased by 18 per cent  year-on-year to OMR1.88 billion. The stock trades at 1.09 times its latest reported book value of 275 baisas.

GCC markets rise
Most GCC markets ended in the green while Aldar, Sorouh merger details were finally made public. Investors sold off Aldar as it was valued lower than Sorouh which is fair in our view given the former's its high debt level and weaker cashflows.

Saudi Ceramic Company reported a net profit of 66 million Saudi riyals in the fourth quarter of 2012, growing 26 per cent year-on-year and 19 per cent quarter-on-quarter with profit growth driven by an increase in production and sales.

Full year profit in 2012 grew 7 per cent year-on-year to 248 million riyals. Growing construction activity in Saudi Arabia is expected to keep demand for building materials strong. The stock trades at a P/E multiple of 12.2x its trailing 12 months earnings.

Commercial Bank of Qatar may report a 29 per cent year-on-year growth in net profit for the fourth quarter of 2012, the fastest rate of growth in two years according to Bloomberg consensus estimates. The bank had recorded a strong 10 per cent quarter-on-quarter growth in its loan book in the third quarter of 2012. The lender is currently in talks to acquire a 75 per cent stake in Turkey's Alternatifbank and expects to complete the purchase by end of March 2013. The stock currently trades at a P/BV multiple of 1.31x its last reported book value per share of 58.60 Qatari riyals and offers an attractive dividend yield of 7.8 per cent.

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.

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