Lower-than-expected IQ dividend pulls down Qatar bourse index

12/01/2015 09:05 AST

DOHA: Qatari bourse retreated to negative territory yesterday, hurt by a lower-than-expected dividend announcement by Industries Qatar. The bellwether plunged its daily percent limit of 10 percent, dragging the benchmark index down 2.37 percent.

Weighed by Industries Qatar, the industrials sector index tumbled by 5.32 percent. The stocks accounts for nearly 14 percent of the main index, according to analysts.

On Thursday, Industries Qatar’s board of directors had recommended a dividend of QR7 per share for 2014 against QR11 distributed in 2013, meaning 36 percent year-on-year decline.

“The 2014 dividend (of Industries Qatar) implies a dividend yield of 4 percent at QR176/share stock price. This is much lower than what we were expecting and is a surprise given IQ’s strong net cash position. Having already posted QR7.80 in EPS for 9M2014 (first nine months of 2014), the dividend cut could also imply a very weak fourth quarter. We are currently expecting Q4, 2014 net income to decline 5 percent quarter-on-quarter (+7 percent year-on-year) to come in at QR1.78bn. But our estimate does not include the impact of one-off items, notably potential inventory provisions related to the steel segment given the decline seen in iron ore prices in 2014.”, QNB analysts said yesterday.

The stock could react negatively to the dividend cut. According to QNB analysts, after its significant dividend hike for 2013 (QR11/share, up from QR8.50/share plus 10 percent bonus shares in 2012) — given its higher-than-industry yield and relative dividend stability — IQ shares enjoyed appeal among investors. They noted Industries Qatar’s announced cut will likely put pressure on the stock in the very near-term.

Industries Qatar’s dividend was a potentially negative signal for petrochemical producers around the region; they face tougher times because of the plunge of crude oil prices, which has been dragging down petrochemical product prices and eroding the advantage which Gulf producers enjoy from cheap feedstock, Reuters reported.

The global oil prices also weighed on Qatari stocks yesterday sending blue chips to red territory.

QNB slipped 1.41 percent. Property stocks Barwa and Ezdan lost 2.10 percent and 1.09 percent, respectively.

Ooredoo was down by 1.94 percent. Energy-sensitive stocks MPHC and Gulf International also ended red.

Dubai’s bourse jumped 2.7 percent in a broad rally led by property-related stocks.

Abu Dhabi’s benchmark ended nearly flat. Oman’s index jumped 2.4 percent. Kuwait’s bourse added 1.1 percent and Egypt saw a pull back.

The Peninsula