The MSM index closed 0.91 per cent higher for the week ended on February 7, to close at 5,853 points. The Financial index rallied 2.67 per cent, Services index gained 0.41 per cent, while Industry index declined 0.58 per cent.
HSBC Bank Oman gained 8.52 per cent in the previous week after a sharp sell-off. The bank reported net profit of only OMR5.8 million in financial year 2012, a 62.7 per cent year-on-year decline mainly due to a one-off expense of OMR13.9 million towards integration of HSBC Oman and OIB. Net interest income rose 81.5 per cent year-on-year to OMR40.1 million as loan book expanded to OMR1.19 billion compared to OMR454 million post the merger. Dividend was slashed to just one baisa reflecting the sharp drop in net profit. Total operating income before loan provisioning climbed 74 per cent year-on-year to OMR60.5 million. Net profit adjusted for integration expense rose nearly 16 per cent to OMR18 million. The stock trades at 1.3 times its financial year 2012 book value per share of OMR0.147.
Ominvest was among the top gainers in the previous week. The stock rallied on expectations that the proposed initial public offering (IPO) of its banking subsidiary Oman Arab Bank will be floated soon.
The company which holds a 51 per cent stake in the bank has decided to divest a maximum of 21 per cent of its stake in the IPO. We estimate the fair value of the stock to be 462 baisias.
Bank Muscat is anticipating a credit growth of 14-15 per cent in 2013 driven by high government spending, and increase in private sector minimum wage for citizens. The bank's board had approved a capital allocation of OMR150 million for Islamic banking operations of which the bank has allocated only OMR20 million till date. Bank Muscat is also in an advanced stage of discussion with an international institution for private placement of OMR57 million worth shares, which is expected in the second quarter of 2013.
Mixed trend in GCC
GCC markets ended on a mixed note led by Abu Dhabi and Muscat markets while Dubai and Saudi markets ended in the red.
Aramex reported a net profit of Dh66 million in the fourth quarter of 2012, a 15 per cent growth year-on-year, while revenues rose 20 per cent year-on-year to Dh814 million. Full year 2012 net profit reached Dh244 million, up 15 per cent year-on-year. Growth continued to be supported by strong performance from its GCC operations and contribution from its acquisitions in South East Asia and Africa. The company plans to start rolling out its e-commerce solutions in key markets globally during 2013. The stock trades at 13.1 times its trailing twelve months earnings per share. We have a buy rating.
BUPA Arabia reported a net profit after zakat and taxes of 114 million Saudi riyals in the financial year 2012, a 284 per cent year-on-year growth. Gross written premiums for the year grew 10 per cent year-on-year to 2.19 billion riayls, while net claims incurred during the year also rose 10 per cent year-on-year to 1.70 billion riayls. The stock trades at 1.9x its latest reported book value per share. The size of the population that needs mandatory health insurance coverage in Saudi Arabia is 12 million, of which only 8 million are currently covered by insurance companies. All Saudis working in the private sector are required to have mandatory health insurance and domestic helpers too may be covered in the near future. .