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Dana Gas 1Q2011 results ahead of estimates; expect strong 2011 DP World shareholders approve share consolidation   Tabreed names Waleed Al Mokarrab Al Muhairi as new chairman   Deyaar 1Q2011 net profit reaches AED26 million  


  Kuwait     Qatar  

CBK 1Q2011 revenues up 21% Y-o-Y   Wataniya future depends on approval of capital increase by shareholders, says Chairman  

GDI awards contracts worth USD393 million to Keppel FELS



GCC force to stay in Bahrain beyond 1 June 2011   Alba 1Q2011 net income rises 26% Y-o-Y to USD88 million   Bapco fires 300 workers over protests  

  EFG Hermes Research  

MENA Strategy - Go With The Flow: Inflows Accelerate Across the Board; GCC and ME Equities Lag April Issue 11 May 2011   Renaissance Services (RNS) - 1Q2011 Results: Earnings Impacted by Higher Tax Rate, Operationally In Line; Maintain Buy - Flash Note 11 May 2011   Drake & Scull International (DSI) - 1Q2011 Revenues, Net Income Slightly Ahead of Estimates; Maintain Fair Value and Buy - Flash Note 11 May 2011  

Qatar   Wed 25 May >> Vodafone Qatar FY2010-2011 (March year-end) results  


UAE News  
Dana Gas 1Q2011 results ahead of estimates; expect strong 2011   Dana Gas (DANA.AD) has reported 1Q2011 gross revenues of AED616 million, up 50% Y-o-Y, 14% Q-o-Q, and in line with our AED601 million estimate on the back of: i) higher hydrocarbon prices; and ii) increased production in Egypt (up 20% Y-o-Y to 4.25 million barrels oil equivalent (BOE)) and Kurdistan. Net revenues (after royalties) of AED480 million were ahead of our AED436 million estimate. Cost of sales at AED37 million came in below our forecast of AED81 million, and meant that gross profit of AED443 million was 25% ahead of our AED355 million estimate. SG&A and exploration expenses were both higher than expected, but still led to a stronger-than-expected EBITDA of AED362 million (drawing from the stronger gross profit-line). Despite net interest expenses coming in at AED77 million, versus our AED58 million forecast, and taxes ahead of expectations, net income came in at AED92 million, well ahead of our AED62 million estimate.  

    Ahead of our expectations, 1Q2011 results were driven by higher hydrocarbon prices, in our view. We anticipate progression in earnings growth on a Q-o-Q basis during FY2011 as we expect Dana Gas to rampup production during 2011 (particularly in Kuridstan). We thus maintain our full year forecasts, which calls for net revenues of AED2,156 million and net income of AED563 million. Dana Gas continues to be our favourite pick across our coverage universe given its direct exposure to oil and gas, which should drive earnings in 2011, in our view. We remain Buyers of the stock as our fair value (FV) of AED1.04/share implies 53% upside potential. Dana Gas is holding a conference call today at 2 pm UAE time, where we will look to get more clarity on these results. (Company Disclosure, Abid Riaz, Nadine Hassouna)   Dana Gas: AED0.68, Rating: Buy, FV: AED1.04, MCap: USD1,223 million, DANA UH / DANA.AD   DP World shareholders approve share consolidation   DP World (DPW.DI) said on 11 May 2011 that its shareholders have approved a 1 for 20 share consolidation in a bid to boost the company’s stock price ahead of a planned London Stock Exchange listing. The company said that it is on track to list its shares on the London Stock Exchange around the end of May or early June. (Zawya Dow Jones)   DP World: USD0.68, Rating: Buy, FV: USD0.75, MCap: USD11,271 million, DPW DU / DPW.DI   Tabreed names Waleed Al Mokarrab Al Muhairi as new chairman   Tabreed (TABR.DU) has named Waleed Al Mokarrab Al Muhairi as the company’s new Chairman, replacing Khadem Al Qubaisi. The company said that Al Qubaisi has been reappointed as Managing Director. (Reuters)   Tabreed: AED1.41, Rating: NR, FV: NR, MCap: USD96.3 million, TABREED UH / TABR.DU   Deyaar 1Q2011 net profit reaches AED26 million   Deyaar Development PJSC (Deyaar) [DEYR.DU] has reported 1Q2011 net profit of AED26 million compared to a net loss of AED100 million in 1Q2010. Revenues came in at AED85 million. Deyaar’s total shareholders’ equity stood at AED4.4 billion during the quarter, while total assets reached AED8 billion. (Company Disclosure)  




Kuwait News  
CBK 1Q2011 revenues up 21% Y-o-Y   Figures released by the Central Bank of Kuwait (CBK) show that actual revenue in 1Q2011 reached KWD5.8 billion, up 21% Y-o-Y, of which oil revenues totaled KWD5.3 billion. Expenditure during the quarter reached KWD4.3 billion, down 22% Y-o-Y. Kuwait spent KWD425 million on development projects in 1Q2011, according to the data. (Al Watan)   Wataniya future depends on approval of capital increase by shareholders, says Chairman   Chairman and CEO of Wataniya Airlines (KNAK.KW), Abdusalam Al-Bahar, has said that the company can resume operations only if its shareholders approve adding KWD15 million to its capital. Al-Bahar added that it may take six months to raise capital and would require an Amiri decree for the purpose of reconstruction. (Al Watan)  



Qatar News  
GDI awards contracts worth USD393 million to Keppel FELS   Gulf Drilling International Ltd (GDI), a subsidiary of Gulf International Services Company (GIS) [GISS.QA], has awarded contracts to Keppel FELS to build two high-specification KFELS B Class Bigfoot jack-up rigs worth about USD393 million. (The Peninsula Qatar)  


Bahrain News  
GCC force to stay in Bahrain beyond 1 June 2011   The Gulf Cooperation Council (GCC) force that arrived in Bahrain on 15 March 2011 will stay beyond 1 June 2011, Bahrain News Agency (BNA) reported yesterday. (Bloomberg)  


Alba 1Q2011 net income rises 26% Y-o-Y to USD88 million   Alumninium Bahrain (ALBH.BH) 1Q2011 net income rose 26% Y-o-Y to USD88 million. Revenue increased 27% Y-o-Y to USD578 million as sales volume gained 8.2% Y-o-Y in 1Q2011, the company said in an emailed statement on 11 May 2011. (Bloomberg)   Bapco fires 300 workers over protests   Bahrain Petroleum Company (Bapco) has fired nearly 300 employees for being absent from work during recent protests, Bahrain News Agency reported, citing the country’s Energy Minister Abdul-Hussain bin Ali Mirza. Mirza stated that 293 employees were dismissed, 50 were under investigation, and 11 board members from the workers’ union had been referred to the general prosecutor. (Reuters)  



EFG Hermes Research  
MENA Strategy - Go With The Flow: Inflows Accelerate Across the Board; GCC and ME Equities Lag April Issue 11 May 2011   Egypt Inflows Accelerate; GCC Funds See Higher Outflows: Egypt funds recorded strong positive inflows during every week of April. In contrast, the GCC region recorded strong outflows for the month, although the first week of April accounted for the bulk of net redemptions. Saudi Arabia saw the highest outflows, followed by Kuwait.   MEA-Dedicated Fund Outflows Ease Further: Outflows from Middle East and Africa (MEA) dedicated funds eased further in April due mostly to a reversal of the previous month’s redemptions into Africa and EMEA funds. Middle East & Africa funds were the only regional group to see outflows worsen M-o-M.   GEM Funds Modestly Reduce Exposure to MEA: GEM funds reduced their exposure to MEA in March 2011, albeit modestly. The reduction was mostly in two off-benchmark territories, Qatar and Saudi Arabia, although its impact was somewhat compensated for by a slight increase in the allocation to the UAE and Egypt.   Improvement in Developed Equity Inflows Outdoes Emerging Equity: The increased inflow into equity funds was led by a strong increase into developed equity funds, led by North America funds. Emerging market equity funds lagged, but still recorded a substantial improvement in inflows, with diversified GEM funds accounting for the bulk of inflows and Asia ex-Japan funds seeing the previous month’s net outflows reverse direction. Frontier market funds recorded meagre inflows for April, although this was nevertheless an improvement from March’s net redemptions.   Emerging Bond Inflows More Than Double; Developed Bonds Resilient: Emerging bond fund inflows continued to fall behind their developed market peers in absolute terms, but all regional groups saw inflows increase at least twofold M-o-M. Inflows into developed bond funds remained resilient, despite a M-o-M drop in inflows to North America funds as developed Europe and Asia funds recorded a sharp increase in inflows. (Fahd Iqbal, Simon Kitchen, Ahmed Difrawy, Ahmed Hesham Hassan)   Renaissance Services (RNS) - 1Q2011 Results: Earnings Impacted by Higher Tax Rate, Operationally In Line; Maintain Buy - Flash Note 11 May 2011   Maintain 2011 Forecasts, Fair Value of OMR1.220/Share; Reiterate Buy: Renaissance (RNS) saw an operationally slow 1Q2011 due to seasonality. While overall 1Q2011 numbers were mixed given a higher tax rate and one-offs, we expect numbers to pick up Q-o-Q as RNS adds new ships to its fleet in 2011. We do not expect to revise our 2011 estimates at this stage as higher tax rate provisioning can be reversed in later quarters. We maintain our Buy rating as our fair value (FV) implies 29% upside potential.   1Q2011 Operationally In-Line, Tax Rate Increases Lead to Earnings Miss: Renaissance Services (RNS) reported revenues of OMR68.3 million; up 22.5% Y-o-Y and 15% ahead of our estimates of OMR59.6 million for 1Q2011. Revenue growth was driven by the company’s marine and engineering divisions, which led to an operating profit of OMR9.5 million (up 15% Y-o-Y), 7% ahead of our expectations. Net income of OMR0.935 million came in below our expectation of OMR2.65 million, impacted by a higher-than-expected tax charge of OMR1.77 million. We believe this may have been partly due to the late booking of one-off legal charges of OMR2.2 million during 1Q2011, while the tax rate was calculated on the pre-provision income which led to a higher tax rate of 51%.  








Marine Segment Surprises Positively; Engineering Segment Disappoints: Performance was also mixed across the company’s segments during 1Q2011. Contract services reported profits slightly lower-thanestimate due to cost inflation while the marine segment reported strong growth in revenues and earnings Y-o-Y. We believe that this out-performance was driven by higher charter rates for vessels that are on the spot market. Results from the engineering segment disappointed, showing a loss of OMR0.9 million for 1Q2011, compared to our expected profit of OMR0.5 million. We believe operational problems with a JV in Kazakhstan lead to the losses in this division.   Risk to Earnings from Potential further One-Offs in 2011, In Our View: Management has indicated the potential for further legal cases. The two issues faced by the engineering business are: i) operational challenges in a currently unprofitable marine repair joint venture (JV) in Kazakhstan; and (ii) a Force Majeure claim due to a natural calamity in a fabrication project in Fujairah. Management has not provided details on the size of either of the claims. (Abid Riaz, Gigi Tharian Varghese)   Drake & Scull International (DSI) - 1Q2011 Revenues, Net Income Slightly Ahead of Estimates; Maintain Fair Value and Buy - Flash Note 11 May 2011   Robust Results in a Tough 1Q2011 for Regional Contractors; Maintain Buy: Drake & Scull International (DSI) has reported 1Q2011 revenues of AED645.1 million, slightly ahead of our AED613.4 million forecast, and attributable net income of AED45.9 million, 6% ahead of expectations. We view this set of results positively in light of a tough 1Q2011, and expect further earnings momentum in 2Q2011 as focus shifts to execution of DSI’s solid AED7.5 billion backlog. We reiterate our Buy rating on the stock, which lagged the market and its peers in April, as our current fair value (FV) of AED1.27/share provides 19% upside potential.   Revenues Slightly Ahead, Margin Contraction In Line with Expectations: Revenue in 1Q2011 of AED645.1 million was 5% ahead of our expectations and 11% ahead of Bloomberg consensus. The civil contracting contribution continued its upward trend, in line with expectations, to AED292.7 million (c45% of turnover). The increase in civil contracting services coincided with a drop in gross margins to 15.6%, in line with expectations. We highlight that the recently acquired Saudi business was consolidated during the quarter. Despite the increase in contribution from civil contracting, DSI’s MEP business continued to contribute c47% of DSI’s top line.   Balance Sheet Remains Stable; Backlog at AED7.5 Billion: DSI’s balance sheet saw little change Q-o-Q. Cash balances increased 4% Q-o-Q to AED645.9 million, with net debt increasing to AED96.3 million. We note that the recent acquisition of Riyadh-based ICCC will be 50% financed through debt. With execution in focus, working capital accounts edged up (including the impact of the Saudi consolidation), with receivables reaching AED1,423 million, 1.2x current payables. DSI’s comfortable working capital and liquidity position improves the firm’s ability to execute its backlog, which stood at AED7.5 billion as at 31 March 2011, in our view. (Jad Abbas)  






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