Bull run continues on MSM

04/03/2012 09:57 AST

MSM 30 index rose 2.55 per cent in the week ended Mar 1, 2012 closing at 5,842. Amongst the three sectors, the industry sector gained 5.41 per cent for the week, while the services sector rose 4.14 per cent and the financial sector rose 3.15 per cent.

Market turnover during the week was 62.6 per cent higher at RO33.7 million compared to the previous week. Key factors that influenced market movement in the previous week include; The MSM 30 index ended February on a bullish note led by a recovery in industrials and services sectors. Major index gainers include Oman Cement, Galfar and Renaissance. Omanis and foreigners were net sellers while GCC investors were net buyers during the previous week.

Galfar Engineering & Contracting (GECS) was awarded a RO139 million contract by the tender board for construction of Al Batinah South Expressway (Phase 1).

Transgulf Investment Holding (TGII) and Port Services (PSCS) gained 22 per cent and 19 per cent respectively. TGII holds a 9.0 per cent stake in Al Madina Real Estate which may get listed soon. We estimate the fair value of TGII at RO0.075 without including IPO listing and around RO0.100 if IPO gets materialised.

Port Services rose sharply driven by its high dividend yield of nearly 10 per cent. The port operator reported a 19 per cent decline in net profit in 2011 at RO4.45 million driven by higher operating expenses and lower investment income.

GCC market outlook

Many GCC markets gained sharply in February led by Dubai, Saudi Arabia and Abu Dhabi. Real Estate, construction and banking sectors did well in the UAE bourses while in Saudi Arabia, petrochemicals too joined the rally as oil traded high on geo political risks.

Abu Dhabi based First Gulf Bank (FGB) reported a net profit of 3.71 billion dirham in FY 2011, 8.0 per cent higher year-on-year, driven by a 19 per cent growth in net interest and Islamic financing income. During fourth quarter of 2011, net profit rose 18 per cent year-on-year to Dh1.02 billion.

Its board has recommended Dh 1 a share cash dividend and 100 per cent stock dividend. FGB enjoys a high net interest spread of around 4.5 per cent and has a low cost-to-income ratio of around 18 per cent. We expect this stock to move higher to Dh 24.

RAK Properties reported a net profit of Dh108.4 million in FY 2011, 42 per cent lower year-on-year, while revenue rose 244 per cent year-on-year to Dh520.5 million.

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Times of Oman