GulfBase GCC Cap Indices
Large Cap4,019 -0.10
Med Cap3,848 -0.05
Small Cap4,895 -0.24
Micro Cap8,498 -0.25

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Ticker Price Volume
GFH 0.5 1,361,733
BKSB 0.14 70,617
DANA 0.62 13,288,208
DAMAC 3.85 372,716
DSI 0.39 34,049,322
ALINMA 16.47 22,194,374
SABIC 98.09 2,208,800

Bank Muscat

Source: Vision Securities

Bank Muscat (BKM) continues to display strong earnings momentum with its 1H FY08 results. Net Interest Income of the bank registered 26% growth Year on Year (YoY) to RO 74.7 million, and the Other Operating Income grew by 106% to RO 42.7 million. This growth, combined with a lower cost ratio has enabled BKM to post a 53% growth in operating profits for the same period at RO 74 million.
Given that the sharper loan growth in 1HFY08 could repeat again in the second half, we have maintained our growth estimates for FY08 at 25%. Despite such strong growth expectations, management feels that the more worrying factors could be the weakening trend in Oil prices and rising inflation.
Assuming a loan growth of 25% and non-interest income growth of 35%, we estimate an EPS of RO 0.140 for BKM in 2009. With the India investment gains being leveraged further, the book value is estimated to be at RO 0.771 by the end of 2009. The current market price discounts the EPS estimate by 12.4 times and the book value by 2.3 times. We are upgrading the stock – rating from HOLD to BUY.

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