MENA-1 WEDNESDAY MORNING ROUND-UP

 
 
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UAE  
UAE government sees approval of public debt law soon  
Central Bank expects interbank rates to fall further  
RERA says Dubai transactions up 20% Q-o-Q  
Tabreed 1Q2011 results beat estimates  
Emirates NBD to swap two older notes with new 7-year securities  
TAQA reports 1Q2011 net income of AED152 million, down 47% Y-o-Y  
Eshraq IPO fully covered ahead of closing day  
 
Kuwait  
Government faces challenges on first encounter with parliament  
 
Qatar  
Hotel occupancy rates rise 9% Y-o-Y in 1Q2011  
Fitch affirms CBQ’s IDR at ‘A’  
 
Oman  
Consumer prices rise 4.1% Y-o-Y in March  
 
Bahrain  
United Gulf Bank’s 1Q2011 profits decline 36% Y-o-Y  
 
EFG Hermes Research  
Oman Cables Industry (OC) - 1Q2011 Results Disappoint, Adjust Forecasts and Fair Value; Reiterate
Neutral - Company Note 10 May 2011  
 
Agenda  
 
Qatar  
Wed 25 May >> Vodafone Qatar FY2010-2011 (March year-end) results  
 
UAE News  
 
UAE government sees approval of public debt law soon  
The UAE government expects approval of a law allowing the country to issue its first ever federal
sovereign bonds and create a local debt market to come soon, a finance ministry official said on 10 May
2011. The law, which regulates the issuance and amount of debt that the UAE may accumulate, is pending
presidential approval. The UAE’s top advisory council passed the proposed law in December 2010. The
legislation would limit UAE government debt to 25% of GDP. (Reuters)  
 
Central Bank expects interbank rates to fall further  
The UAE Central Bank expects interbank offered rates to fall further, and plans to introduce a repurchase
facility for Islamic lenders in the coming months, Saif Hadef al-Shamsi, senior executive director at the
central bank’s treasury department, has said. “Because of the surplus of liquidity that is available now,
banks have reduced (rates) and I would expect this reduction to continue in the EIBOR rates along the
curve,” he said. (Reuters)  
 
RERA says Dubai transactions up 20% Q-o-Q  
Marwan Bin Ghalita, Chief Executive of Dubai’s Real Estate Regulatory Agency (RERA), has said that
property transactions in the emirate totaled AED30 billion in 1Q2011. Bin Ghalita said that 10,554 units
changed hands during the quarter, adding that the transaction values were 20% higher Q-o-Q. (Bloomberg)  
 
Tabreed 1Q2011 results beat estimates  
Tabreed (TABR.DU) has reported 1Q2011 results, showing revenues of AED245.6 million, up 23% Y-o-Y, but
down 21% Q-o-Q due to the impact of seasonality, and well ahead of our AED191.5 million forecast. We
believe that the variance between our forecast and the actual top line figure could be due to higher-than-
expected chilled water capacity coming on stream during the quarter. Chilled water revenues, the
utility’s largest revenue generator, grew 32% Y-o-Y in 1Q2011 and was 38% ahead of our forecast. Gross
margins came in at 53.8%, significantly lower than our 63.8% forecast as cost of sales of AED113.4 million
beat our forecast of AED69.3 million, partly due to the stronger top line. Below the operating income
line, net interest expenses of AED77.2 million came in well ahead of our forecast of AED30.0 million. Our
interest expense estimates had factored in the refinancing of AED2.6 billion of liabilities from the
beginning of the year, however, the refinancing was only agreed upon towards the end of 1Q2011, which
is likely the reason for the higher-than-expected interest costs. These were largely mitigated by a higher-
than-expected other income line, which was boosted by a positive contribution from the company’s
change in fair value (FV) of derivative liability, which is a non-cash, non-operating item. This meant that
net income of AED31.9 million, down 21% Y-o-Y, but up 51% Q-o-Q, came in above AED26.0 million
estimate, mainly on stronger revenues.  
 
We have suspended our rating on Tabreed given ambiguity regarding whether or not the share price will
be adjusted to reflect the additional number of shares that will be issued following the conversion of the
company’s convertible instruments (one is due in 2011 and two are due in March 2019). (Company
Disclosure, Abid Riaz and Nadine Hassouna)  
 
Tabreed: AED1.35, Rating: N/A, FV: N/A, MCap: USD89 million, TABREED UH / TARB.DU  
 
Emirates NBD to swap two older notes with new 7-year securities  
Emirates NBD (ENBD) [ENBD.DU] has invited holders of two of its USD500 million notes to swap them with
new seven-year securities. The notes, which mature in 2016, will be exchanged at face value with new
securities due 2018; the margin on them will be announced on 17 May 2011. The offer expires on 25 May
2011 and the deal is expected to be settled by 31 May 2011. The purpose of the move is to “retire a
portion of the existing notes, which represent surplus capital, in order to improve the efficiency of the
capital structure and optimise Emirates NBD’s liquidity profile by refinancing with senior unsecured
funding,” the bank said in a statement. (Bloomberg)  
 
ENBD: AED3.92, Rating: Buy, FV: AED4.50, MCap: USD5,936 million, EMIRATES UH / ENBD.DU  
 
TAQA reports 1Q2011 net income of AED152 million, down 47% Y-o-Y  
The Abu National Energy Company (TAQA) [TAQA.AD] has reported 1Q2011 results showing revenues of
AED5,506 million, up 15% Y-o-Y, and net income of AED152 million, down 47% Y-o-Y. Gross margins
increased to 38% from 34% in the same period last year. Pre-tax income of AED961 million represents an
11% increase Y-o-Y. Total assets stood at AED115,755 million, with shareholders equity of AED10,533
million. (Company Disclosure)  
 
Eshraq IPO fully covered ahead of closing day  
Eshraq Properties’ initial public offering (IPO) has been fully covered ahead of its closing day on 11 May
2011, according to Dubai-based Al Bayan. The IPO has attracted demand from institutions and individuals,
said Majd Maaitah, Head of IPOs and listing Services at the National Bank of Abu Dhabi (NBAD) [NBAD.AD],
adding that demand from institutions was higher. Eshraq is offering 825 million shares representing 55% of
its capital in the IPO, which opened on 1 May 2011. (Zawya Dow Jones)  
 
Kuwait News  
 
Government faces challenges on first encounter with parliament  
Two members of parliament have submitted requests to question the prime minister. The move comes
after several lawmakers walked out from the first meeting of the parliament after the new cabinet was
appointed. Ahmad Al Sadoun, leader of the opposition Popular Action bloc, submitted a request to
question the prime minister over issues including Kuwaiti telecom firm, Zain (ZAIN.KW), and the country's
four-year KWD30 billion development plan. Prime Minister Sheikh Nasser Al-Mohammad has urged all
political stakeholders to resolve differences and help the country overcome political hurdles by acting
responsibly. (Arabian Business, Kuwait Times)  
 
Zain Group: KWD1.16, Rating: Sell, FV: KWD0.9, MCap: USD15,969 million, ZAIN KK / ZAIN.KW  
 
Qatar News  
 
Hotel occupancy rates rise 9% Y-o-Y in 1Q2011  
Hotel occupancy rates in Qatar grew 9% Y-o-Y to 68% in 1Q2011, boosted by the Asian Cup football
tournament that was hosted in January, as well as a 48% Y-o-Y rise in the number of visitors from the GCC
region, according to the Qatar Tourism Authority. (Zawya Dow Jones)  
 
Fitch affirms CBQ’s IDR at ‘A’  
Global credit rating agency, Fitch, has affirmed Commercial Bank of Qatar’s (CBQ’s) [COMB.QA] long-term
issuer default rating (IDR) at ‘A’, Gulf Times reported. The outlook on the long-term IDR is “stable”,
according to a Fitch spokesman. (Gulf Times)  
 
CBQ: QAR73.9, Rating Buy, FV: QAR100.3, MCap: USD4,395 million, CBQK QD / COMB.QA  
 
Oman News  
 
Consumer prices rise 4.1% Y-o-Y in March  
Oman’s consumer prices rose 4.1% Y-o-Y in March, according to data published by the Ministry of National
Economy on its website. The rise in the March Consumer Price Index (CPI) was lead by food, beverage and
tobacco prices, which rose 5.6% Y-o-Y, as well as by rent, electricity, water and fuel prices, which
increased 3.3% Y-o-Y. We expect an annual average inflation of 4.7% in 2011. (Bloomberg, Monica Malik)  
 
Bahrain News  
 
United Gulf Bank’s 1Q2011 profits decline 36% Y-o-Y  
United Gulf Bank (UGB) [UGBB.BH], the asset management and investment banking arm of Kuwait
Projects (KIPCO) [KPRO.KW], has reported a net profit of USD4.8 million for 1Q2011 compared to a profit
of KWD7.5 million in 1Q2010. (Al Watan)  
 
EFG Hermes Research  
 
Oman Cables Industry (OC) - 1Q2011 Results Disappoint, Adjust Forecasts and Fair Value; Reiterate
Neutral - Company Note 10 May 2011  
Reduce FV on 2011 Earnings Outlook Downgrade; Reiterate Neutral: We lower our fair value (FV) for Oman
Cables (OC) to OMR0.966/share from OMR1.161/share as we reduce our 2011 earnings outlook in light of
the company’s weak 1Q2011 results. OC's shares have fallen by more than 12.4% following the
disappointing results; our new FV now implies 2% downside potential, hence we maintain our Neutral
rating. We also increase our risk premium by 50 bps to account for increased risk perception on OC’s
mark-up.  
 
Revise Estimates and Margins on Lower Mark-Ups and Higher Copper Prices: The risk of higher copper
prices destroying demand has materialised and is pressuring OC’ mark-up. We thus take a conservative
stance and lower our earnings estimate for OC by 28% in 2011 and 20% in 2012 to account for lower mark-
ups given high copper prices. We increase our revenue estimate for OC by 24.4% in 2011 and 2.3% in 2012
(see chart: 1), however, to incorporate for our higher copper price estimate.  
 
1Q2011 Profitability Declines on Drop in Demand as Copper Prices Rise: Intense competition, coupled with
demand destruction due to higher copper prices, lead to a steep decline in OC’s profitability during the
quarter, in our view. We estimate that OC’s mark-up was reduced by approximately 280 bps to
USD700/tonne during 1Q2011, which was also accompanied by lower volumes, resulting in a 75% Y-o-Y and
34% Q-o-Q drop in gross profit during 1Q2011. Revenue increased 69.2% Y-o-Y and 20.9% Q-o-Q, in line
with the increase in copper prices. Gross margin decreased by 400 basis points (bps) Y-o-Y and Q-o-Q to
4.7%. We had expected a 160 bps Q-o-Q decline in margins in 1Q2011, mainly due to competition.
Operating costs increased 29% Y-o-Y, which lead to a decrease in the operating margin to 2.2%. (Gigi
Tharian Varghese, Ahmed Gad)  
 
[Note – EFG Hermes is not responsible for the accuracy of news items taken from other media.]  
__________________________________________________________________________________________________
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fundamental analysis of the company’s future prospects, after having taken perceived risk into consideration. We have
conducted extensive research to arrive at our investment recommendations and fair value estimates for the company or
companies mentioned in this report. Although the information in this report has been obtained from sources that EFG
Hermes believes to be reliable, we do not guarantee its accuracy, and such information may be condensed or incomplete.
Readers should understand that financial projections, fair value estimates and statements regarding future prospects may
not be realized. All opinions and estimates included in this report constitute our judgment as of this date and are subject
to change without notice. This research report is prepared for general circulation and is intended for general information
purposes only. It is not intended as an offer or solicitation with respect to the purchase or sale of any security. It is not
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