Quarterly Update

• Americana’s total sales increased 10.4% to KWD 680.73 million during 2010.
• Net profit advanced 27.4% to KWD 46.22 million.
• We have revised our FY2011 sales estimate to KWD 780.51 million. Accordingly, our net profit estimate stands at KWD 47.98 million.
• We reiterate our earlier OVERWEIGHT rating on Americana with a revised DCF target price of KWD 1.800, implying an upside of 21.6%.

Profitability
Gross profit rose 12.3% to KWD 153.48 million from KWD 136.69 million in 2009. Accordingly, gross margin improved 37 bps to 22.5%. Operating profit increased 11.9% to KWD 57.75 million due to strong revenue growth. Net gain from available-for-sale investments amounted to KWD 11.63 million, as against a net loss of KWD 7.45 million in 2009. As a result, net profit was up 27.4% to KWD 46.22 million from KWD 36.28 million in 2009. Additionally, lower borrowing costs coupled with net gain of KWD 0.45 million from foreign exchange improved net profit margin by 90 bps to 6.8% from 5.9% in 2009. Adjusted earnings per share increased to KWD 0.118 from KWD 0.093 during the earlier year.


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