MENA-1 TUESDAY MORNING ROUND-UP

UAE
ENBDs 2Q2011 results: spreads improve, but provisions continue to weigh on earnings Emirates NBD continues to look for bond issuing opportunities Agthias 2Q2011 net income down 18% Q-o-Q and 32% Y-o-Y, 29% below our estimate FGB sets initial guidance for sukuk sale Abdullah Saleh named DIFC Governor, replaces Al Tayer DIFC Investments in talks to merge assets with ICD Dubai Airports 1H2011 passenger traffic up 8.9% Y-o-Y Emirates Insurances 2Q2011 net profit up 31.6% Y-o-Y Gulf Medical Projects Co. reports AED27.4 million in 2Q2011 net income SHUAA Capital reports 2Q2011 profit versus a loss a year earlier

Kuwait
Aviation Lease Company expects record profits this fiscal year Investment Dar sets up restructuring committee Boubyan Petrochemicals shareholders approve KWD0.035/share dividend

Qatar
Al Khaliji Bank will open brokerage company

EFG Hermes Research

Raysut Cement Company (RCC) - 2Q2011 Net Profit Falls 13% Below Estimate on Lower Prices; Reiterate FV, Neutral Rating - Flash Note - 25 July 2011

Agenda
Qatar Tue 26 July >> Al Khalij Commercial Bank (Al Khaliji) press conference Wed 27 July >> Dlala Holding Company 2Q2011 results Wed 27 July >> Commercial Bank of Qatar (CBQ) 2Q2011 results Thu 28 July >> Qatar Industrial Manufacturing Company 2Q2011 results Thu 28 July >> Qatar National Bank 1H2011 press conference Thu 28 July >> Al Khalij Holding Company 2Q2011 results Sun 31 July >> Qatar Oman Investment Company 2Q2011 results Sun 31 July >> Medicare Group 2Q2011 results Sun 31 July >> Qatar Oman Investment Company 2Q2011 results Mon 1 August >> The National Leasing Holding Company 1H2011 press conference Mon 1 August >> Aamal Company 2Q2011 results Tue 2 August >> Masraf Al Rayan 2Q2011 results Wed 3 August >> Qatar National Cement Company 2Q2011 results Wed 3 August >> Aamal Company press conference Tue 9 August >> Masraf Al Rayan press conference Tue 9 August >> Qatar Electricity & Water Company (QEWC) 2Q2011 results Sun 14 August >> Qtel 2Q2011 results Sun 14 August >> Doha Insurance 2Q2011 results

UAE News
ENBDs 2Q2011 results: spreads improve, but provisions continue to weigh on earnings Emirates NBD (ENBD) [ENBD.DU] reported a net profit of AED744 million, up 87% Y-o-Y and significantly better compared to a loss of AED422 million (pre-Network International stake sale gains) in 1Q2011. Earnings were lower

than our estimate of AED1,115 million (Bloomberg consensus estimate: AED780 million), as we were expecting a relatively sharp drop in provisioning. ENBD took credit provisions of AED920 million in 2Q2011, most of them to account in advance for the potential impact of Dubai Holdings restructuring, in our view. We would be revisiting our 2011 earnings estimates for ENBD in light of these results to account for the higher-than-expected impact of Dubai Holding. The banks 2Q2011 revenues were 12.9% higher Q-o-Q, mainly due to an improvement in net interest spreads and a one-off gain of AED160 million related to the exchange of debt issued to its bond holders. Net interest spreads improved by 15 bps Q-o-Q to 2.22% in 2Q2011, mainly due to easing EIBOR rates, in our view. Fee and commission income was not adversely affected by the new retail regulations, as it declined marginally Q-o-Q. Loan growth continues to be sluggish, unlike National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB), who reported solid loan growth in 2Q2011. ENBDs net loans were broadly unchanged Q-o-Q at AED193 billion, with Islamic financing declining by 7.6% Q-o-Q. The banks deposits declined by 5.8% to AED188 billion, which raised the loans-to-deposits ratio to 96.3% in 2Q2011 from 91.7% in 1Q2011. ENBDs NPL ratio (ex-Dubai World and Dubai Holding) is estimated to have declined by 110 bps to 3.68% in 2Q2011, as the bank de-recognised a previously impaired corporate account, which was renegotiated on commercial terms. However, the bank continues to take precautionary provisions in the form of portfolio provisions to cover future restructurings. ENBD took an annualised provision charge of 190 bps in 2Q2011, most of it portfolio provisions. ENBDs portfolio provisions reserve have risen to 2.4% of unclassified credit risk-weighted assets, significantly higher than central banks requirement of 1.5%. Positives: i) 15 bps Q-o-Q improvement in net interest spreads; ii) fee income resilient to revised retail regulations; and iii) the NPL ratio declines on restructuring. Negatives: i) credit costs high on portfolio provisions; and ii) loan growth lagging Abu Dhabi peers. Bottom line: revenues continue to be strong despite the absence of loan growth, as net interest spreads widen. However, provisions continue to weigh on profitability. We will be revisiting our 2011 forecasts, particularly for provisions, as our current estimates look a little light in view of 1H2011 results. (Company Disclosure, Murad Ansari, Shabbir Malik) Emirates NBD: AED4.15, Rating: Neutral, FV: AED4.60, MCap: USD6,279 million, ENBD UH / ENBD.DU Emirates NBD continues to look for bond issuing opportunities Emirates NBD (ENBD) [ENBD.DU] continues to look for opportunities to sell bonds, CEO Rick Pudner said in a conference call on 25 July 2011. The bank is looking for alternative funding structures, he added. (Bloomberg) Emirates NBD: AED4.15, Rating: Neutral, FV: AED4.60, MCap: USD6,279 million, ENBD UH / ENBD.DU Agthias 2Q2011 net income down 18% Q-o-Q and 32% Y-o-Y, 29% below our estimate Agthia (AGTH.AD) reported 2Q2011 net income of AED18.2 million, down 18% Q-o-Q and 32% Y-o-Y, and 29% below our estimate of AED25.7 million. The earnings miss is due to cost of sales beating our estimate by 5%, coming in at AED224 million, up 2% Q-o-Q and 20% Y-o-Y. This cost overrun is attributed to high input costs (PET for the beverages division and grains for the flour and feed division). Sales came in at AED280 million, up 1% Q-o-Q and 14% Y-o-Y and in line with our estimate; 1H2011 net profit came in at AED40 million, down 25% Y-o-Y. Input costs continue to pressure margins in the flour and feed and beverage segments: The flour and feed segments operating income missed our estimate by 32%, even though revenues beat our estimate by 4%, due to higher-thanexpected grains prices. The beverages segments operating income significantly missed our estimate by 61%, although revenues were in line with our estimate. The company was not able to pass on the continued increase in PET cost to consumers. Management expects 2H2011s performance to improve in response to a planned increase in beverages selling prices. Conclusion: The impact of the rise in soft commodity and PET prices on earnings intensified compared to 1Q2011, especially because Agthia could not pass on these cost increases in time to consumers. It remains to be seen how management will price Agthias final products and rationalise its costs in 2H2011. We will review our forecasts in the light of the companys 2Q2011 results and the companys plans to mitigate the impact of rising input costs. (Company Disclosure, Ahmed Gad) Agthia: AED1.96, Rating: Neutral, FV: AED2.28, MCap: USD320 million, AGTHIA UH / AGTH.AD FGB sets initial guidance for sukuk sale

First Gulf Bank (FGB) [FGB.AD] has set initial price guidance for a five-year USD-denominated benchmark Islamic bond at 210 basis points above mid-swaps, Reuters reported, citing a document from the lead banks on 25 July 2011. Joint bookrunners for the Islamic bond, or sukuk, issue are Citibank, HSBC and Standard Chartered. (Reuters) First Gulf Bank: AED17.00, Rating: Buy, FV: AED24.30, MCap: USD6,369 million, FGB UH / FGB.AD Abdullah Saleh named DIFC Governor, replaces Al Tayer Abdullah Mohamed Saleh, Chairman of the Dubai Financial Services Authority (DFSA), was named Governor of the DIFC, replacing Ahmed bin Humaid Al Tayer. The change is effective immediately, according to a statement posted on the website of Dubais Ruler, Sheikh Mohammed Bin Rashid Al Maktoum. (Bloomberg) DIFC Investments in talks to merge assets with ICD DIFC Investments is in talks with Investment Corp. of Dubai on the possibility of merging assets into the holding company. (Bloomberg) Dubai Airports 1H2011 passenger traffic up 8.9% Y-o-Y Dubai Airports said that passenger traffic rose to a record high of 24.6 million in 1H2011 from 22.6 million in 1H2010, an increase of 8.9% Y-o-Y. In June 2011, passenger traffic was 4.07 million passengers compared to 3.68 million in June 2010. Freight handled at the airport rose 3.4% Y-o-Y in June 2011 to 183,365 tonnes from 177,285 tonnes in June 2010. (Bloomberg) Emirates Insurances 2Q2011 net profit up 31.6% Y-o-Y Emirates Insurance (EIC.AD) reported a net profit of AED41.7 million in 2Q2011, up 31.6% Y-o-Y. Premium income earned came in at AED161.2 million in 2Q2011 compared to AED156.9 million in 2Q2010. Total assets came in at AED1,590 million as at 30 June 2011. (Company Disclosure) Gulf Medical Projects Co. reports AED27.4 million in 2Q2011 net income Gulf Medical Projects Company (GMPC.AD) reported 2Q2011 revenues of AED95.8 million, up 9.7% Y-o-Y, and attributable 2Q2011 net income of AED27.4 million, up 20% Y-o-Y. Total assets stood at AED1,475 million, with shareholders equity of AED755.5 million. (Company Disclosure) SHUAA Capital reports 2Q2011 profit versus a loss a year earlier SHUAA Capital (SHUA.DU) reported a net profit of AED0.6 million in 2Q2011 after a loss of AED56.6 million in 2Q2010, the company said in an emailed statement. (Bloomberg)

Kuwait News
Aviation Lease Company expects record profits this fiscal year According Aviation Lease and Finance Companys (Alafco) [ALAFCO.KW] Chairman Ahmad al-Zabin, the company will produce record profits this fiscal year ending September 2011 after it allowed other purchasers to pick up planes that it had ordered from Airbus and Boeing. The KWD38 million gain from waving the rights to aircraft will come on top of growth in operating profit following a fleet expansion. (Bloomberg) Investment Dar sets up restructuring committee Investment Dar (TIDK.KW) said that it has set up an investor coordination and liaison committee as part of the companys restructuring plan. The committee will liaise with the company at regular face-to-face meetings, establish regular reporting processes, and will appoint a qualified individual to be the first point of contact for all banks and investors to disseminate information. The members of the committee include Al-Rajhi Banking and Investment Corporation, Bank of Bahrain and Kuwait, and Arab Banking Corporation. Investment Dar said last month that it will start implementing a plan to restructure KWD1.37 billion of debt. (Arabian Business) Boubyan Petrochemicals shareholders approve KWD0.035/share dividend Boubyan Petrochemical Companys (BPC) [BPCC.KW] shareholders approved a cash dividend pay-out of KWD0.035 per share for fiscal year 2011. BPC invests mainly in chemical and petrochemical projects. (Zawya Dow Jones)

Qatar News
Al Khaliji Bank will open brokerage company Al Khaliji (KCBK.QA) plans to open a brokerage company after abandoning plans to merge with International Bank of Qatar earlier this year, CEO Robin McCall said. The bank has obtained a licence and plans to hire people to manage the brokerage, he added. (Bloomberg)

EFG Hermes Research

Raysut Cement Company (RCC) - 2Q2011 Net Profit Falls 13% Below Estimate on Lower Prices; Reiterate FV, Neutral Rating - Flash Note - 25 July 2011 FV of OMR0.979/Share Implies 9% Downside Potential; Maintain Neutral: We currently maintain our Neutral rating for Raysut Cement Company (RCC) as our fair value (FV) of OMR0.979/share implies 9% downside potential over the current market price. We continue to believe that RCCs expansion in Omans highly oversupplied cement market and the companys debt burden are already priced in. We will likely revisit our forecasts related to Pioneer Cements operations, given that its contribution to RCCs revenue and costs in 2Q2011 missed our expectations. 2Q2011 Net Profit Below Estimate on Lower Prices, Higher SG&A: RCC has reported 2Q2011 consolidated net profit of OMR3.9 million, missing our estimate by 13% on: i) lower selling prices, given strong competition from UAE producers (RCCs selling prices averaged OMR20.70/tonne, down 24% Y-o-Y and 21% Q-o-Q, versus our estimated OMR23.50/tonne); and ii) higher selling, general and administrative expenses (1.63% of sales versus 1.5% historically). Net profit for 2Q2011 declined 43% Y-o-Y and 21% Q-o-Q. We highlight that 2Q2010 net profit was inflated by OMR1.59 million received from a claim against the government. Revenue Beats Expectation, Margins Disappoint: Revenue came in at OMR23.3 million, 18% above our estimate, mainly on stronger-than-estimated volumes from Pioneer Cement. Consolidated sales volume, including clinker, reached 1.1 million tonnes, up 56% Y-o-Y and 30% Q-o-Q, beating our estimate by 34%. This was partially offset by lower-than-estimated selling prices. EBITDA margins reached 28% in versus 37% in 1Q2011 and our estimated 35%. We believe that this is attributable to higher transportation costs at Pioneer Cement. (Malak Youssef, Ahmed Gad)
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