All three indices recover

11/11/2012 11:43 AST

The MSM 30 index closed 0.37 per cent higher for the week ended November 8, at 5,709. All the three sector indices closed in the green led by the services sector which gained 1.28 per cent.

Oman United Insurance reported net profit of RO2.23 million in 9M 2012 against a loss of RO56,000 in the nine months of 2011. Gross written premiums grew 25.3 per cent year-on-year to RO30.21 million in the nine months of 2012 led by a 29 per cent year-on-year increase in non-motor premium income while motor insurance premiums grew 32 per cent year-on-year. The company owns a large investment portfolio which made a significant contribution to its bottom-line. This stock has a high correlation to MSM performance and is expected to move further to around RO0.209 in the near-term. It currently trades at 0.9x its book value.

Gulf International Chemicals gained 15 per cent in the previous week to close at RO0.173. The company is primarily engaged in the manufacture of construction and road treatment chemicals. It reported a net profit of RO251K on total revenues of RO2.43 million in the nine months of 2012, a decline of 9 per cent year-on-year which the company attributes to the slowdown of the construction industry in the UAE.

The company derives close to 47 per cent of its total revenues from the UAE, while the rest is earned in Oman. In the third quarter of 2012, the company secured some additional prestigious projects in Oman for supplying the new range of specialised products introduced in the market recently. Dividend yield is high at around 8.5 per cent. We expect the stock to outperform the market.

GCC markets do well

GCC bourses performed well while most developed markets tanked after United States President Barack Obama was re-elected in the presidential election. Despite a sharp fall in oil prices, the Saudi Arabia and Kuwait indices closed two per cent higher, while Dubai recovered on Thursday reducing its weekly loss to only 0.35 per cent.

Air Arabia reported a net profit of Dh65 million in the second quarter of 2012, a 31 per cent growth year-on-year, while revenues rose 23 per cent year-on-year to Dh730 million. In October, the airline reported a 22 per cent year-on-year growth in passenger traffic, boosted by addition of new routes and surge in traffic during Eid holidays. The stock trades at a P/E multiple of 8 times our estimated 2012 earnings per share and offers an attractive 8.7 per cent dividend yield.

The fall in oil prices is likely to benefit the company as it will reduce operating costs.

Dubai Investments reported a net profit of Dh81.4 million in the third quarter of 2012, a 227 per cent jump year-on-year, boosted by an Dh60 million fair value gain on investment properties. Revenues for the quarter rose 15 per cent year-on-year to Dh669 million.

The stock trades at 0.36 times its latest reported book value per share of Dh2.37. We have a bullish view on this stock

Sorouh Real Estate reported a net profit of Dh129 million in the third quarter of 2012, growing 55 per cent year-on-year, despite a 10 per cent decline in revenues as the company reversed Dh40 million of contingency provisions. The company said that no decision has been taken yet on the proposed merger with Aldar Properties, though talks are currently at an advanced stage. The stock currently trades at a P/BV multiple of 0.50 times.

Reuters