Dubai Investments

Initiation of Coverage

Target Price Market Price Recommendation Upside Potential Investment Grade

AED1.65 AED1.44 Accumulate 14.9% NA

Dubai Investments PJSC (DI), 11.5% owned by the Dubai Government Share Data through the Investment Corporation of Dubai, was incorporated in 1995 Report Date October 12, 2009 with the primary objective of investing in companies and projects in the UAE Company Abbreviation DI and GCC. DI boasts of having established 47 subsidiary companies encompassing a diverse range of sectors including manufacturing, FMCG, health- Sector Financial Services care, industrial and commercial properties, real estate management and Traded Market DFM property development, distribution and logistics, publishing and telecommu- Report Reason Initiation of Coverage nications. Amongst these subsidiaries and Joint Ventures, we anticipate Valuation Methodology SOTP Glass LLC, Dubai Investments Park (DIP) and Dubai Investment Real Estate Company (DIRC) contribute majority of the parent company’s value. Previous Report Date N/A

Previous Target N/A Despite having a wide base of 47 investments, we believe, the financial Exchange Rate AED3.67/USD1 performance of DI is still largely tied to the real estate sector in Dubai, Stock Currency AED where a majority of its property related investments exist (1H09 50% of assets & 44% of revenues). Although during 1H09 the company’s Y-o-Y Reuters Code DINV.DU revenues and net profit declined by 34% & 44%, respectively, we believe Outstanding Shares (mn) 3,750.4 that DI financial position remains comfortable as its current ratio recorded Par Value/Share (AED) 1 1.54, debt to equity ratio (debt including total liabilities) registered 0.78 & Financial Year Ending December operating margins remained above 30%. However, we also remain cautious over the long term bank borrowings (AED2.8 billion or 44% of 1H09 liabili- Mkt. Cap (AED mn) 5,240.6 ties) of which limited disclosure is made regarding repayment & maturity Weight to (PEMI) 0.0% schedules. Price Low – High (AED) (52Wk.) 0.79 - 2.35 Relative Performance (52Wk.) 14% The lack of visibility on the delivery plan of DI’s major real estate projects amid the prevailing tight liquidity market conditions and limited disclosures

with regards to the profit margins on major subsidiaries have made it diffi- Shareholders Ownership Stake cult to forecast cash flows for all subsidiaries (except DIP). Hence, we have valued the company using sum-of-the-parts (SOTP) approach by valuing Investment Corporation of Dubai 11.5% DIP using the DCF approach and the rest of the company using the NAV Al Fardan Group 6.1% approach. Others 13.7% With DIP estimated to fetch the parent group ca. AED350 million in annual Free Float 68.7% rental income, we have chosen to value the remaining 88 years (out of the Prime Research Department 99 years lease) using the DCF method, conservatively assuming that rental income will increase by 10% every 5 years. Our valuation on DIP has Phone +971 2 6910800 yielded a value per share of AED0.80 (48% of DI value), with this business +971 4 4070100 segment considered to be the most stable source of income (1H09 17% of Email [email protected] revenue).

Stock Performance Chart Our SOTP valuation for Dubai Investments results in a value per share of (AED / Share) AED1.65, which is 14.9% above the current market price of AED1.44 per share. We therefore initiate coverage on Dubai Investments with an Accu- Price (AED) Volume ('000) mulate recommendation.

3.0 300,000 Fiscal Year 2004a 2005a 2006a 2007a 2008a Revenues 890.3 1,524.4 1,907.0 3,410.0 4,357.9 2.5 Growth 143.0% 71.2% 25.1% 78.8% 27.8% 2.0 200,000 EBITDA Margin 39.2% 49.0% 51.1% 41.5% 38.2% 1.5 Net Income 312.2 688.2 964.3 1,505.0 1,615.8 EPS (AED) 0.1 0.2 0.3 0.5 0.5 1.0 100,000 EPS Growth 559.0% 121.9% 44.4% 52.3% 5.1%

0.5 DPS (AED) 0.00 0.00 0.00 0.00 0.10

0.0 0 Book Value / Share (AED) 0.3 0.5 1.1 1.5 2.1 P/E (x) 15.2 6.9 4.8 3.1 3.0 Oct-08 Apr-09 Jun-09 Oct-09

Dec-08 Feb-09 Dividend Yield 0.0% 0.0% 0.0% 0.0% 6.9% Aug-09 P/BV (x) 4.3 2.6 1.3 0.9 0.7 Please refer to disclaimer on last page Figures are in AED mn unless stated otherwise Source: Company Financials Dubai Investments October 12, 2009

Initiation of Coverage UAE

Table Of Contents

Dubai Investments Initiation of Coverage

Company Profile, Shareholding Structure and Management Details 3

Business Model and Existing Investments 4 Glass LLC 5 Dubai Investment Park Development Co. LLC 6 M’Sharie 6 Dubai Investment Industries 7 Dubai Investments Real Estate Company 7 Al Taif Investment 9

SWOT Analysis and Key Concerns 10

Financial Breakdown 11

2008 Financial Assessment 12

1H09 Financial Assessment 13

Valuation 14

Financial Summary 15

Disclaimer 17

Prime Research 2 Dubai Investments October 12, 2009

Initiation of Coverage UAE

Dubai Investments – Company Profile

Dubai Investments PJSC (DI) was incorporated in 1995 with a paid up capital of AED650 million, with the primary objective of investing in companies and projects in the UAE and the wider GCC region. With a mission statement to be a world-class company that invests in viable and profitable entities, both existing and start- ups, the company boasts of having established 47 subsidiary companies encompassing a diverse range of sectors including manufacturing, FMCG, healthcare, industrial and commercial properties, real estate management and property development, distribution and logistics, publishing and telecommunications.

Shareholding Structure

The Dubai Government, via its SWF Investment The Dubai Government, through its SWF Investment Corporation of Dubai, is the largest shareholder holding Corporation of Dubai, is 11.5% of DI. Further, various other institutions and individuals hold strategic stakes totaling to 19.8%, leav- the largest shareholder ing 68.7% for public trading. The stock currently has a foreign ownership cap of 20% with actual ownership holding 11.5% of DI. currently at 2.92%.

Shareholding Structure 1H09 Al Fardan Group In v e s t m e n t Corp. of 6.1% Emirates Dubai 11. 5 % Bank Intl. 3.7% Al Futtaim Group

Other 1. 2 %

Individuals 8.8%

P ublic

68.7%

Source: Zawya

In 2008, the company After raising a total of AED1.7 billion via 2 rights issues since July 2005 (AED858 million each in 2005 and issued 10% bonus shares and also paid out a 10% 2008, respectively) and distributing bonus shares consistently over the last 4 years, DI’s current share capital cash dividend (AED325 now stands at AED3.6 billion (324% rise since 2004). Further, in 2008 the company issued 10% bonus shares million), which resulted in and also paid out a 10% cash dividend (AED325 million), which resulted in a cash dividend yield of 8.5%. a cash dividend yield of 8.5%. Management Details

We believe the performance and strategic investments of DI are strongly influenced by its well experienced and thoroughly networked Chairman, CEO and other Board members.

Mr. Anis Abdullah Al-Jallaf is the Chairman of DI. He holds several prominent positions in the U.A.E. and is also the Chairman of Union Properties PJSC, Fanar Group LLC and Tamra. Besides being a board member of Emirates Banks Association and Arabtec PJSC, Mr. Al-Jallaf is also a member of Dubai Council for Economic Affairs (DCEA) and Vice Chairman of Al Jallaf Investments LLC.

Mr. Khalid Jassim Kalban is the MD and CEO of DI and has a broad experience in different fields varying from industrial, financial and investment sectors. Mr. Kalban handles many important posts including member of the BoD of Emirates Bank International, Emirates International Brokerage LLC, Saudi International Petro- chemical Company, Arab Insurance Group, Dumoco LLC and Thuraya Satellite Telecommunications Company.

Prime Research 3 Dubai Investments October 12, 2009

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DI’s Business Model & Existing Investments

DI’s business model, as we see it, is focused on identifying existing private businesses that have growth potential, but require capital infusion to expand. DI contributes the requisite assets, therefore becoming a joint venture partner. Besides this, the company also fully acquires companies in high growth potential sectors Listed below are the pri- with the long term objective of gaining high returns through a private or public issue. mary subsidiaries of DI. Amongst them, we estimate Glass LLC, Dubai Listed below are the primary subsidiaries of DI. Amongst them, we estimate Glass LLC, Dubai Investments Investments Park (DIP) Park (DIP) and Dubai Investment Real Estate Company (DIRC) contribute majority of the parent company's and Dubai Investment Real Estate Company (DIRC) value. Although the company has a wide base of 47 investments, we believe, the financial performance of DI, contribute majority of the is still largely tied to the real estate sector in Dubai, where a majority of its property related investments exist value of the parent com- (1H09 50% of assets and 44% of revenues). pany. In the following sections of this report, our analysis will focus on the performance of each of the below mentioned subsidiaries.

Subsidiaries Ownership Glass LLC 100% Emirates Glass LLC 100% Saudi American Glass LLC 100% Lumi Glass Industries LLC 77% Emirates Float Glass LLC 54%

Dubai Investments Park Development Co. LLC 100%

M’Sharie LLC 60% Emirates Extrusion Factory LLC 100% Gulf Dynamic Switchgears Company LLC 100% Gulf Metal Craft LLC 100% Syscom Emirates LLC 100% Emirates Thermostone Factory LLC 100% Folcra Beach Constructions LLC 80% Gulf Dynamic Services LLC 70% Labtech Interiors LLC 70% Technological Laboratory Furniture - Manufacturers 70% National Insulated Blocks Industry (Insulite) LLC 52% Stromek Emirates Foundation LLC 51% International Rubber Company LLC 51% White Aluminum Extrusion LLC 51% Anchor Allied Factory Ltd LLC 51% Inter-Chemi International Limited 51%

Dubai Investments Industries LLC 100% Emirates Building Systems Company LLC 100% Globalpharma Company LLC 100% The Edible Oil Company (Dubai) LLC 54% Marmum Dairy Farm LLC 100% United Sales Partners LLC 100% Dubai Cranes and Technical Services LLC 80% Emirates Extruded Polystyrene LLC 51% Guassin Middle East LLC 51% Techsource LLC 100%

Dubai Investment Real Estate Company 100% Al Taif Investment Company LLC 60%

Source: Company Report; Table Includes Selected Data

Prime Research 4 Dubai Investments October 12, 2009

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Glass LLC

In 2006, DI announced the launch of Glass LLC, its new corporate arm which is the holding company of Emir- ates Glass LLC, Saudi American Glass Company, Lumi Glass Industries and Emirates Float Glass. The consoli- The consolidation of these dation of these glass companies under a single holding entity is intended to boost indigenous production of glass companies under a float glass in the UAE and position the country as a major manufacturing hub for glass products. single holding entity is intended to boost indigenous production of float As ca. USD1.5 trillion worth of infrastructure projects are planned and ongoing in the GCC (International In- glass in the UAE and posi- stitute of Finance and MEED Sep 2009), we believe the UAE and the rest of the GCC are rapidly growing mar- tion the country as a major kets for the glass industry particularly for companies supplying to the construction sector. Operationally, the manufacturing hub for glass products. UAE also provides an excellent geographic location as raw material is easily accessible and energy cost is low, apart from being situated very close to some of the fastest growing economies in the MENA and Asian re-

gions for re-exporting the product. Overall, we believe that Glass LLC over the medium term provides investors, in DI, the opportunity to benefit from the unlocked value via a spin off; something similar to the AED235 million profit from the private placement of M’Sharie (please refer to M’Sharie segment in Page 6)

Company Ownership

Glass LLC 100%

Emirates Glass LLC - processors of flat architectural glass 100%

Saudi American Glass LLC - one of Middle East's largest glass manufacturers 100%

Lumi Glass Industries LLC – manufacturers of automotive & architectural laminated glass products 77%

Emirates Float Glass LLC - integrated glass manufacturing & processing facility 54%

Source: Company Report

Emirates Glass LLC (EGL) was established by DI in 1998 and has secured a position as one of the leading providers of energy efficient architectural glass in the Middle East with a rapidly growing market stretching from Europe to Asia. Through the extensive EMICOOL range of sputter-coated solar control and thermal insu-

lated glass products, EGL is able to meet the demands of contemporary architecture for colour, light, comfort safety and efficiency in all types of buildings. Further, in September 2009, Emirates Glass LLC announced that its new AED100 million glass coating line started production. The Terra G coating line is expected to boost EGL's manufacturing capacity threefold to 3.5 million square metres of flat glass products per annum. The facility upgrade has been sourced from Germany and is part of an overall expansion programme worth

AED175 million as the company relocates its entire operations to Dubai Investments Park.

Saudi American Glass LLC (SAG), established in 1978, supplies a comprehensive catalogue of glass products to the GCC and Asian markets. With an annual production capacity of 3 million metres, SAG supplies glass to some of the most prestigious projects such as the Al Faisali Tower and Kingdom Tower. In late 2006, DI com-

pleted the 100% acquisition of SAG with the objective of establishing itself as a leading player in the Middle East glass industry. EGL and SAG together now account for more than 3.5 million metres of coating capacity.

Lumiglass Industries LLC, established in 2003, specializes in manufacturing architectural and automotive safety products, catering to the domestic and regional demand for automotive, architectural, flat stock- laminated, bullet resistant, security, anti-blast and curved glass products. Housing one of the biggest automotive windscreen bending machines, the Lumiglass factory has the capacity to produce approximately 300,000 plus windscreens a year. The facility is located in Al Qouz, Dubai with the exports of the company primarily targeted for the Middle East and European markets.

Emirates Float Glass (EFG), engaged in the manufacturing of premium float glass products, is 54% owned by

DI with the remaining split amongst strategic investors namely Al Rostamani Enterprises, Al Fahim, Al Nasser Investments LLC, Capital Glass, Kuwait-based firms Amwai International Investment Company and Boubyan Petrochemicals Company and Oman-based Suhail Bahwan Group. In March 2009, EFG announced that it has started commercial operations at its manufacturing facility in Abu Dhabi. The USD200 million plant, located at the Industrial City 2 of Abu Dhabi, commenced manufacturing and supplying premium float glass products to

the architectural and automotive markets in the GCC, including its own sister companies EGL, Lumiglass and The two factories will SAG. The sister companies are expected to account for ca. 20% of the order book of EFG, anticipated to be cover a total area of 320,000 square meters worth AED20 million annually. The plant is built with technological assistance from US-based PPG Industries and will have a combined and boasts a capacity of 600 tonnes of float glass per day. Further, EFG’s second plant, which is also worth production capacity of USD200 million with a similar output of 600 tonnes per day is expected to be complete by late 2010. The two 1,200 tons per day. factories will cover a total area of 320,000 square meters and will have a combined production capacity of 1,200 tons per day.

Prime Research 5 Dubai Investments October 12, 2009

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Dubai Investments Park

Dubai Investments Park (DIP) is a project built by Dubai Investments Park Development Co. LLC, a 100% subsidiary of DI. The park, located in Jebel Ali industrial area, is spread across an area of 32 million square meters consisting of three zones – industrial, commercial and residential. DIP is built on land that has been obtained from the Government of Dubai in 1998 on a renewable, non-cancellable long-term lease of 99 years. DIP after having enjoyed a tax holiday over the past 10 years, after February 1, 2009 is obliged to pay 20%

of the net profits from the project to the Government of Dubai.

DIP currently houses more than 1,200 companies across various sectors such as manufacturing, education, trade, research and development, distribution and logistics. Most phases of the park have been leased out with portions of Phase 6 and the entire Phase 7 currently under construction.

With DIP estimated to fetch the parent group ca. AED350 million in annual rental income, we have chosen to With DIP estimated to value the remaining 88 years using the DCF method, conservatively assuming that rental income will increase fetch the parent group ca. by 10% every 5 years. Our valuation on DIP has yielded value per share of AED0.80 (48% of DI value), with AED350 million in annual rental income, we have the company's future cash flows discounted by a WACC of 9.0% and assuming a perpetual growth rate of chosen to value the re- 3.5%. Further, DIP is considered as one of the safest real estate investment of DI as the company did not maining 88 years using the book any revaluation loss during 1H09, when property prices declined in the emirate by an average 35-40%. DCF method. On the other hand, completion of construction progress on various stages of Phase 6 of DIP has enabled DI, during the past 3 quarters, to constantly book revaluation gains worth a combined AED530 million (AED230 million in 4Q09 and AED150 million per quarter during 1H09).

M’Sharie

M’Sharie was established in 1999 and is a 60% sub- Company Ownership sidiary of DI. It is the venture capital arm of DI as it M’Sharie LLC 60% focuses on private equity investments across di- Emirates Extrusion Factory LLC 100% verse sectors in medium and large scale establish- Gulf Dynamic Switchgears Company LLC 100% ments in the Middle East region. However, currently a large portion of its investments are primarily in Gulf Metal Craft LLC 100% the construction and manufacturing sectors in the Syscom Emirates LLC 100% In 3Q08, DI divested 40% UAE. M’Sharie’s investment strategy includes a mini- Emirates Thermostone Factory LLC 100% of its stake in M’Sharie mum investment of AED50 million targeting high Folcra Beach Constructions LLC 80% (from 100%) in a private growth or mature companies across diverse sectors placement, for a profit Gulf Dynamic Services LLC 70% consideration of AED235 with a 3-5 year investment horizon. In 3Q08, DI Labtech Interiors LLC 70% million, to strategic inves- divested 40% of its stake in M’Sharie (from 100%) tors. in a private placement, for a profit consideration of Technological Laboratory Furniture - Manufacturers 70% AED235 million, to strategic investors which in- National Insulated Blocks Industry (Insulite) LLC 52% cluded National Bonds Corporation (UAE), Gulf In- Stromek Emirates Foundation LLC 51% ternational Bank (Bahrain), Al Mal Capital (UAE), International Rubber Company LLC 51% The First Investor (UAE), Al Arif Investment (UAE), White Aluminum Extrusion LLC 51% Abdulaziz Alajlan Sons (KSA) and Ali Bin Hassan Anchor Allied Factory Ltd LLC 51% The management of DI Dayekh (Dammam). attributes M’Sharie’s value Inter-Chemi International Limited 51% at AED1 billion and has also announced intentions The management of DI attributes M’Sharie’s value to list ca. 55% of at AED1 billion and has also announced intentions to list ca. 55% of M’Sharie’s capital in an IPO within the M’Sharie’s capital in an IPO next 2-3 years depending on market liquidity and investor appetite. Although detailed financials for the sub- within the next 2-3 years sidiary are unavailable, management has said that M'Sharie has a consistent track record of growth and prof- depending on market liquidity and investor itability. Between 2004 and 2007, the company achieved a CAGR of 28% in total revenue and 62% in net appetite. income of portfolio companies.

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Dubai Investments Industries

Dubai Investments Industries (DII), a 100% subsidiary of DI, acts as a holding arm with interests primarily in pharmaceuticals, steel, dairy and edible oil companies.

Company Ownership

Dubai Investments Industries LLC 100%

Emirates Building Systems Company LLC 100%

South Steel Company 10%

Globalpharma Company LLC 100%

The Edible Oil Company (Dubai) LLC 54%

Marmum Dairy Farm LLC 100% United Sales Partners LLC 100% Dubai Cranes and Technical Services LLC 80% Emirates Extruded Polystyrene LLC 51%

Guassin Middle East LLC 51%

Techsource LLC 100% Source: Company Report We believe that the Saudi based South Steel Company (SSC) and Emirates Building Systems (EBS) account We believe the Saudi for a majority of the value of DII with all the other subsidiaries anticipated to have a relatively much smaller based South Steel Com- asset base. In September 2008, DII bought a 10% stake in the Saudi based South Steel Company, with the pany and Emirates Building entire steel company valued at ca. AED1.3 billion. Promoted by Pan Kingdom Investments, SSC is scheduled Systems (EBS) account for to commence commercial operations in the last quarter of December 2011, with an initial capacity of 1 million a majority of the value of DII with all the other ton of plate and 500,000 tons of reinforced bars. The plant, being set up with technological assistance from subsidiaries anticipated to Germany-based SMS Group, is expected to produce top-quality steel billets and reinforcement bars in accor- have a relatively much dance with international standards. Further, SSC has also received a USD160 million loan from the Saudi Gov- smaller asset base. ernment's investment body, Saudi Industrial Development Fund, in an effort to partially fund the steel plant of which construction began in January 2009.

We estimate that Emirates Building Systems Company LLC (EBS), engaged in manufacturing, selling and erection of steel structures is valued at ca. AED150 million since DI in 2007 paid AED51 million to increase its

ownership to 100% from the 49% held earlier. In order to cater to the increasing demand for steel structures in the Gulf region, EBS recently completed the expansion of its factory in the UAE to take the company’s annual production capacity to over 75,000 metric tonnes.

Dubai Investments Real Estate Company (DIRC)

Dubai Investments Real Estate Company (DIRC) was established in 2005 and is a 100% subsidiary of DI, In July 2009, DIRC an- forming the real estate arm of the group. DIRC till date has undertaken various projects with residential, nounced that it is giving a commercial and retail functions. In July 2009, DIRC announced that it is giving a 100% refund to its investors 100% refund to its investors on the Mirdiff Hills on the Mirdiff Hills project due to unavailability of mortgage financing for the end users. The Mirdiff Hills pro- project due to unavailabil- ject is a AED2 billion development, launched in July 2008 with completion scheduled for 2010. ity of mortgage financing for the end users. Due to lack of information on the status of DIRC’s projects under development, we have chosen to be conservative and applied a 15% write-down, in our target scenario, to the aggregate cost incurred worth AED2.3 billion (15.5% of 1H09 assets) using NAV method. Primary projects of DIRC include the following:

Warehouse Project: DIRC’s warehouse complex at DIP provides high-tech, well-designed spaces for warehousing and logistics management. • Single units (5,000 sq. ft.) to entire warehouses (550,000 sq. ft.) • Proximity to Jebel Ali Free Zone • Long-term (30 years) lease

Ritaj: A residential community, Ritaj is located in DIP within easy access of Dubai’s largest trade zone, the Jebel Ali Free Zone. This low-rise (G+5) development has been planned to include a community centre with retail areas, restaurants and cafes, medical facilities as well as a mosque. • Low-rise, spacious residential apartments • Landscaped gardens • Leisure facilities • Community centre • Multi-storey and ground parking

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Mirdiff Hills (100% Refund Offered to Investors): Mirdiff Hills is an AED 2 billion complex which offers residential, commercial and retail spaces close to Mushriff

Park in Mirdiff. • 680 apartments, 380 offices,129 retail outlets • Located in Mirdiff, close to Mushriff Park • 2.7 million sq. ft. built-up area • Community features such as swimming pool, clubhouse, playschool, Internet facility, coffee shop

Violet Tower: Located in Jumeirah Village, Violet Tower is an AED300 million worth 25 storey residential tower.

• 25 storey tower (G+25) • Located in Jumeirah Village • 254 elegantly designed apartments • Studios, 1, 2 & 3 bedroom apartments

Meydan: A twin tower complex, Meydan offers retail, commercial spaces as well as hotel apartments. Meydan 1 houses

retail and office spaces while Meydan 2 is a combination of retail and hotel apartments over 20 floors. • Twin tower complex worth AED1 billion • Meydan 1: 38 floors (G+37) of retail and office space • Meydan 2: 20 floors (G+19) of retail and hotel apartments

Ajman Oasis: Ajman Oasis LLC, established in 2008, is a 50:50 JV between DIRC and Aqaar Properties (100% owned by the Government of Ajman) focused on the development, financing, construction and completion of an inte- The Ajman Oasis project, grated real estate project in Ajman. The Ajman Oasis project, which is expected to take 10 years to complete, which is expected to take 10 years to complete, is a is a mixed-use real estate project (substantially for sale to third parties) in Ajman with the company’s man- mixed-use real estate agement pegging its value at an estimated AED10 billion. The development, planned to have both commer- project (substantially for cial and residential buildings, is stretched over 3.72 square kilometers and is located between the cities of sale to third parties) in Ajman and Sharjah on Emirates Road. The land for this project has been allocated by Aqaar Properties and is Ajman with the company’s management pegging its valued at AED1 billion by the Land Department, Government of Ajman. The JV partner Aqaar Properties has value at an estimated provided DI with an undertaking that it will bear any diminution in the value of the aforementioned land be- AED10 billion. low the agreed value of AED1 billion.

DIRC’s Other Relatively Small Ventures:

QDI Sports Management Company LLC

QDI is a 50:50 JV between DIRC and Al Qudra Sports Management LLC. The principal activities of the JV are to engage in sports clubs and facilities management and other sports related activities. QDI’s first project, the Dubai Premier Club, will be an exclusive country club for the select few, built over 30,000 sq. mts. The project is valued by the management at ca. AED300 million. • Country Club over 30,000 sq. mt. • Capacity for up to 20,000 members • Luxury sports and heath club facilities • Exclusive membership privileges

AL Mujama Real Estate Company LLC

Al Mujamma Real Estate Company LLC, established in 2005, is a 50:50 JV between DIRC and ANC Investment LLC. The JV is mainly engaged in the business of real estate including construction, demolition and rebuilding as managers, developers, and investors, as well as leasing of properties. The JV has acquired some prime properties in BurDubai; the acquisition of Al Faris hotel apartments and the upcoming Four Star Hotel oppo- site Burjuman Mall make up significant portions of the property portfolio and investments. The JV also earns rental income from the Al Mujama labour camp project located in Jebel Ali Industrial area.

Prime Research 8 Dubai Investments October 12, 2009

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Financial Investments

As of 1H09, DI’s financial investments (both fair value and AFS) registered AED1.5 billion or 11% of assets. During 1H09 DI recorded These investments include quoted and unquoted equities, bonds and other managed funds. This, we believe, an AED37 million gain on fair value of the associated is in line with the company’s strategy of diversifying its investments and widening its geographic reach. Dur- investments; this opposed ing 1H09, DI recorded a AED37 million gain on fair value of the associated investments; this is opposed to to the AED508 million loss the AED508 million loss (AED370 million on income statement and AED138 million in equity) booked in 2008. (AED370 million on income statement and AED138 We expect equity markets to remain stable during 2H09 and have maintained the 1H09 book value of these million in equity) booked in investments in our target scenario. 2008. Financial Investments 2007 2008 1H09 Primary Investments Stake

Investments at Fair Value 931 662 566 Thuraya Satellite Telecommunications Company 5%

Available For Sale 709 954 982 First Energy Bank 5%

Saudi International Petrochemical Company NA

Total 1,640 1,616 1,549 Islamic Bank of Asia 5%

Energy City Navi Mumbai Investment Company NA

Sudanese French Bank NA GCC 75% 70% 68% Non-GCC 25% 30% 32% Takaful Re Limited 10% Tunisia Bay Investment Company NA Source: Company Report; Figures in AED Million Managed funds and structured products NA

Source: Company Report; Data as of 2008

Al Taif Investment

Al Taif Investment Al Taif Investment (AED500 million capital) is a real estate, industrial projects and Greenfield oriented JV (AED500 million capital) is formed in June 2007. DI owns a 60% stake with the remaining 40% held by the Fujairah Investment Estab- a real estate, industrial projects and Greenfield lishment, the investment arm of the Fujairah Government. The JV is involved in the development of 2 main oriented JV formed in June projects namely Fujairah Business Park and The Market. The Fujairah Business Park comprises of 2 towers, a 2007 with DI owning a 44-storey office tower and a 31-storey tower comprising 424 hotel rooms and apartment units. The hotel 60% stake with the re- tower will also feature a 2 level shopping mall spread over more than 300,000 sq ft of retail area. As of July maining 40% held by the Fujairah Investment. 2009, the company has floated a tender for a construction contractor on the project. The Fujairah Business Park venture is expected to built at a cost of AED700 million with the capital investment of Al Taif being

AED500 million.

On the other hand, The Market project planned to consist of housing facilities, business areas, retail and shopping outlets and an entire range of entertainment and cultural attractions, including a luxury hotel resort was cancelled this year. In July 2009, the CEO of DI announced that the company has decided to cancel The

Market project (launched in March 2008) as market research showed that a high-end project is unlikely to work out in current market conditions of tight liquidity. The company added that it did not record any sales on this project as it was to be sold only when the project was to be completed.

We believe the medium term strategy for Al Taif Investment also includes setting up of industrial projects in Fujairah. Some of these include the manufacturing of gypsum boards apart from the establishment of an aluminum extrusion plant. Overall, since the emirate of Fujairah contributes only ca. 3% to the UAE’s population and GDP, we do not expect to see any further major development plans to be announced soon.

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SWOT Analysis

Strengths

• Implicit support from the Dubai government – 11.5% ownership and free land provided • Comfortable level of short term liquidity is maintained – Cash and financial investments constitute 17.4% of 1H09 assets with a current ratio of 1.54 • Strong and established brand in real estate and glass industry. DI has executed key projects such as DIP and Jumeirah Village to name a couple and is the largest producer of float glass in the country and the GCC • 1H09 rental income worth AED303 million (17% of revenues) provides stable cash flow • Strong financial history (2002-08 61% revenue CAGR, 101% net profit CAGR, ROE above 20%, ROA above 10% and NP margin above 30%)

Weaknesses

• Severe slowdown in revenue and profitability (1H09 Y-o-Y 34% and 44% down, respectively) • Heavy dependence on real estate related assets (1H09 44% of revenues and 50% of assets) • Low visibility on subsidiary financials

Opportunities

• Expansion of operating margins (low double digit at present) within the glass business apart from ex- panding associated activities into China and India • Substantial improvement in liquidity can be expected from a private or public listing of a subsidiary, namely Glass LLC, M’Sharie, Emirates Building Systems or DIP • Approx. USD1.5 trillion worth of GCC planned and ongoing infrastructure projects (International Institute of Finance and MEED Sep 2009) provides a healthy outlook for a majority of its subsidiaries in the glass, engineering and contracting business • Better than expected GDP recovery in Asian and GCC regions can boost company’s operational performance

Threats

• Cancellation of more UAE based real estate projects • Regional political instability

Key Concerns

Lack of Management Guidance

Despite disclosing essential requirements, we believe the management of DI could be more forthcoming to release much more information, namely a capex breakdown and delivery timelines, on its key real estate and other ongoing projects. Further, investor confidence can be increased if detailed management guidance relat- ing to the company’s operational performance on key revenue generating divisions is provided.

Prolonged Banking Liquidity Crunch

Very strict lending by the UAE banks in 2009 has led to the lack of investor interest and the non availability of mortgage funding, which we believe have been partially responsible for the cancellation of 2 projects by DI, namely Mirdiff Hills and Fujairah based The Market. Any further cancellation or postponement of projects, due to prolonged credit deprivation, could stagnate growth for the company in the medium term.

Continuing Pressure on Profit Margins

DI’s 1H09 ROA and ROE registered 4% and 7%, respectively, representing a Y-o-Y decline of 410 bps and 740 bps. The lack of fair value gains on real estate (after Phase 6 and 7 completion), a severe slow down in real estate sales and relatively thin margins in the glass business (15% EBITDA margin expected), are all capable of keeping the profitability ratios in low double digits, thus dampening investor interest in the company.

Prime Research 10 Dubai Investments October 12, 2009

Initiation of Coverage UAE

Financial Breakdown

Revenue from DI’s glass and real estate & construction related business continue to dominate the financials Revenue from DI’s glass of the company. With more than AED1.4 billion in assets, Glass LLC’s infrastructure occupies close to one-fifth and real estate & construc- of the groups balance sheet and contributes ca. one-third of revenues. On the other hand, real estate related tion related business con- assets (investment properties, properties under development for sale, development properties and invento- tinue to dominate the financials of the company. ries) as of 1H09 made up 50% of DI balance sheet with associated revenue forming 44% of the income base. Within this segment, investment properties (primarily DIP) has increased to 22% of the balance sheet over the last 18 months, this clearly being reflected in the 400 bps rise of the related and most stable rental income relative to total revenues. Further, fair value gains from investment properties have also continued to form more than 10% of revenues over the past 4 years. Lastly, although financial investments (fair value and AFS) formed 11% of the company’s 1H09 assets, the contribution to the top-line was only 2%.

Overall, we believe that DI has over the years successfully scaled the entire real estate value chain and hence achieved decent diversification within the related segment. As other subsidiaries of DI are still in a compara- tively nascent stage, we expect glass and real estate related income to continue dominating the financials of the company in the medium term.

Income Statement 2007 2008 1H09 Sales 28% 24% 34% Contract Revenue 17% 20% 19%

Sale of Properties 19% 19% 0%

Sale of Development Properties 0% 6% 8% Rental Income 13% 13% 17% Gain on Fair Valuation of Investment Properties 13% 19% 17% Gain on Sale of Investment Properties 3% 0% 2% Other Income 6% -1% 2%

Total 100% 100% 100%

Balance Sheet Assets 2007 2008 1H09 Cash 7% 10% 7% Trade & Other Receivables 16% 12% 14% AFS Investments 7% 7% 7%

Investments at Fair Value 9% 5% 4%

Inventories 21% 9% 10% PP&E 15% 17% 18% Investment Properties 18% 20% 22% Properties Under Development for Sale 0% 16% 16%

Development Properties 3% 2% 2%

Other Assets 4% 3% 2% Total 100% 100% 100% Source: Company Report

Prime Research 11 Dubai Investments October 12, 2009

Initiation of Coverage UAE

2008 Financial Assessment

Revenue & Operating Margins

DI reported a modest 28% total income growth (relative to a 73% 5 year average expansion) in 2008 figures to AED4.4 billion, versus a previous AED3.4 billion realized in 2007. The growth rate was relatively subdued, primarily attributable to the AED370 million loss recorded on the fair value of financial investments. On the

other hand, strong real estate sales during 2008 helped the company achieve AED2 billion (59% Y-o-Y rise) from sales of properties and sales of development properties and contract revenue combined, versus AED1.3 It must be noted that fair billion in 2007. Further, in 2008, DI also recorded an AED235 million profit from the sale of its 40% stake in value gains worth AED813 M’Sharie LLC, thus reducing its ownership to the current 60%. It must also be noted that fair value gains million, on the year ending investment property worth worth AED813 million, on the year ending investment property worth AED2.9 billion, formed 19% of total AED2.9 billion, formed income for the year. 19% of total income in 2008. Revenue and Revenue Growth Fair Value Gain on Investment Property As a % o f To ta l In co m e 5,000 200% 10 0 % 4,000 13 % 4,358 12 5 % 19 % 17 % 79% 80% 38% 3,000 28% 25% 3,410 50% 60% 2,000 87% AED mn AED 1, 9 0 7 40% 81% 83% -60% -25% 1, 0 0 0 62% 1, 7 3 9 20%

0 -100% 0% 2006 2007 2008 1H09 2006 2007 2008 1H09

Revenue Revenue Growth Income from Operations Gain on Fair Value of Investment Properties

Source: Company Report Operating Profit

Although DI recorded a gross profit and EBIT growth of 28% and 16%, down 1300 bps and 2800 bps over 2007, associated margins during 2008 remained strong at 51% and 35%, respectively. Further, the company also recorded a AED69 million as net other income backed by a AED41 million in gain from sale of lease rights of certain properties in DIP, offset primarily by AED104 million in net interest expense on long term borrowings worth AED4.2 billion.

Net Income and Dividend

Net income accordingly Net income accordingly came in at AED1.6 billion, reflecting a 7% rise over the AED1.5 billion booked in came in at AED1.6 billion, 2007, with the lower growth in the bottom-line (relative to a 165% 5 year average expansion) reflective of reflecting a 7% rise over DI’s in-ability to avoid the slowdown in the real estate sector and consequently record lower sales revenue. the AED1.5 billion booked Further, 2008 ROA and ROE registered 11% and 21%, respectively, highlighting a drop of 400 bps and 700 in 2007. bps from the previous year.

DI paid out a 10% cash dividend (AED325 million) and issued 10% bonus shares (worth AED325 million) for 2008, thus resulting in a cash dividend yield of 8.5% during 2008.

Net Profit and NP Margin RO E and RO A

2,000 60% 40% 15 % 15 % 16 % 51% 1, 6 16 44% 28% 11% 1,500 30% 25% 12 % 37% 40% 34% 21% 1,000 1,505 20% 8% 964

AED mn AED 20% 500 10 % 4% 4% 587 7% 0 0% 0% 0% 2006 2007 2008 1H09 2006 2007 2008 1H09

Net P rofit NP Margin ROE ROA

Source: Company Report

Prime Research 12 Dubai Investments October 12, 2009

Initiation of Coverage UAE

1H09 Financial Assessment

During 1H09, DI reported a total income of AED1.7 billion, representing a 34% Y-o-Y decline, primarily due to During 1H09, DI reported nil revenue from the sale of properties as opposed to AED992 million booked in 1H08. Such revenue decline a total income of AED1.7 was registered despite total assets having expanded by 14% Y-o-Y to reach AED15 billion. However, revenue billion, representing a 34% Y-o-Y decline, primarily from other related business segments remained strong as product sales (primarily glass) recorded a 22% Y- due to nil revenue from o-Y rise to AED597 million, contract revenue and sale of development properties combined reached AED461 the sale of properties as million (15% Y-o-Y rise), rental income registered AED303 million and fair value gains from investment prop- opposed to AED992 million booked in 1H08. erties recorded AED302 million. The balance of income was primarily contributed by dividend income and gain on sale of investments.

In terms of costs, the Y-o-Y decline in construction activity resulted in COGS falling by 32% annually to The 1H09 bottom-line AED890 million whereas the gross profit margin slipped only by a slight 100 bps to 49%. Further, G&A ex- registered AED587 million penses during 1H09 witnessed an 11% Y-o-Y decline as marketing activities declined and management in- (44% Y-o-Y decline) with tended to control overhead costs. The bottom-line meanwhile registered AED587 million (44% Y-o-Y decline) an additional boost in the with an additional boost in the form of AED23 million in ‘other income’, primarily offset by net interest ex- form of AED23 million in ‘other income’, primarily pense worth AED79 million. As a result, the company’s 1H09 net profit margin reached 34%, down 600 bps offset by net interest from 1H08, with an EPS of AED0.16. expense worth AED79 million. Overall, we believe that as of 1H09, DI’s financial position remains comfortable as its current ratio recorded 1.54, debt to equity ratio (debt including total liabilities) registered 0.78 and as operating margins remained above 30%. However, we remain concerned over the long term bank borrowings of which, we believe, limited disclosure is made about repayment and maturity schedules in both the annual and quarterly reports.

Income Statement 1H 2008 1H 2009 Y-o-Y 1Q 2009 2Q 2009 Q-o-Q

Total Income 2,614.9 1,739.3 -33.5% 831.5 907.8 9.2%

Sales 487.8 597.2 22.4% 282.2 315.0 11.6%

Contract Revenue 398.5 322.0 -19.2% 157.5 164.5 4.4% Sale of Properties 991.6 0.0 -100.0% 0.0 0.0 0.0% Sale of Development Proper- 1.1 139.1 12616.1% 79.4 59.7 -24.7% ties Rental Income 310.1 302.7 -2.4% 154.0 148.7 -3.4%

Gain on Fair Valuation of 342.0 302.0 -11.7% 150.0 152.0 1.3% Investment Properties Other Income 83.7 76.2 -9.0% 8.3 67.9 715.4%

COGS 1,314.5 890.4 -32.3% 436.1 454.2 4.2%

Gross Profit 1,300.3 848.9 -34.7% 395.3 453.6 14.7% Administrative & General Costs 230.5 205.9 -10.7% 86.5 119.5 38.2% Operating Profit (EBIT) 1,069.8 643.0 -39.9% 308.9 334.1 8.2% Net Interest Income/Expense -51.0 -78.8 54.4% -25.0 -53.8 115.4% Other Income/Expenses 25.5 23.1 -9.3% 7.0 16.1 128.4% Net Profit 1,044.3 587.3 -43.8% 290.9 296.4 1.9% Basic EPS 0.29 0.16 -45% 0.08 0.08 0% GP Margin 49.7% 48.8% -1% 47.5% 50.0% 2% EBIT Margin 40.9% 37.0% -4% 37.1% 36.8% 0% NP Margin 39.9% 33.8% -6% 35.0% 32.6% -2%

Balance Sheet 1H 2008 1Q 2009 1H 2009 Y-o-Y Q-o-Q Cash at Bank & in Hand 1,104.2 1,318.5 990.6 -10.3% -24.9% AFS & Fair Value Financial Invest- 1,823.1 1,489.3 1,548.6 -15.1% 4.0% ments PP&E 2,026.4 2,514.3 2,641.7 30.4% 5.1% Investment Properties & Properties 2,320.7 5,323.3 5,466.5 135.6% 2.7% Under Development for Sale Total Assets 12,789.0 14,355.9 14,590.5 14.1% 1.6% Total Liabilities 5,635.0 6,118.6 6,389.2 13.4% 4.4% Debt/Equity Ratio 78.8% 77.0% 77.9% -0.9% 0.9% Cash/Total Assets Ratio 8.6% 9.2% 6.8% -1.8% -2.4% AFS & Fair Value Financial Invest- 14.3% 10.4% 10.6% -3.6% 0.2% ments/Total Assets Ratio PP&E /Total Assets Ratio 15.8% 17.5% 18.1% 2.3% 0.6% Investment Properties & Properties Under Development For Sale/Total 18.1% 37.1% 37.5% 19.3% 0.4% Assets Ratio Source: Company Report

Prime Research 13 Dubai Investments October 12, 2009

Initiation of Coverage UAE

Valuation

The lack of visibility on the delivery plan of DI’s major real estate projects amid the prevailing tight liquidity market conditions and limited disclosures with regards to the profit margins on major subsidiaries have made We have valued the com- it difficult for us to forecast cash flows for all subsidiaries (except DIP). Hence, we have valued the company pany using sum-of-the- using sum-of-the-parts (SOTP) approach by valuing DIP using the DCF approach and the rest of the company parts (SOTP) approach by using the NAV approach. valuing DIP using the DCF approach and the rest of the company using the Our SOTP valuation for Dubai Investments results in a value per share of AED1.65, which is 14.9% above the NAV approach. current market price of AED1.44 per share. We therefore initiate coverage on Dubai Investments with an Accumulate recommendation.

Dubai Investments Net Asset Value AED mn Comments Cash & Equivalents 991 1H09 value, including AED811 million in term deposits Trade and Related Parties Receivables 1,617 1H09 value, net of provisions AFS Investments 982 1H09 value, includes equity securities and unquoted funds FV Investments 566 1H09 value, 60% in trading and 40% in FV via income statement 1H09 value, also includes current portion of properties held and under Inventories 1,388 development for sale Total Current Assets 5,544

1H09 value, representing assets of the glass business with more than 50% Property, Plant & Equipment 2,642 in capital Work In Progress Intangibles 196 1H09 value Investment in Associates 10 1H09 value Investment in Property - Primarily DIP, valued at book value 1H09 value, includes the cost of land and expense incurred for properties Properties Under Development for Sale 2,268 mainly including Ritaj, Mirdiff Hills, Martime City, Maidan, Jumeira Village, Ajman Oasis and Al Raffa 1H09 value, includes costs towards development of Green Community Development Properties 271 West in DIP and the development cost of Phase 6 and 7 of DIP Long Term Rent Receivable 74 1H09 value Long Term Finance Lease Receivable 26 1H09 value Trade and Related Parties Receivables 361 1H09 value Total Non Current Assets 5,847

Total Assets 11,391 Less: Liabilities & Minority Interest 7,096 1H09 NAV (excluding Investment Property) 1.20 Add: Investment Property Value Per Share 0.90 DIP valued at book value 1H09 NAV 2.10 Key Assumptions: Trade and Related Parties Receivables 1,374 15% write-down during 2009, assuming higher default rate AFS Investments 982 No write-down during 2H09, expect equity markets to remain stable FV Investments 566 No write-down during 2H09, expect equity markets to remain stable Inventories 1,180 15% write-down during 2009 on property WIP portion

Property, Plant & Equipment 2,378 10% write-down during 2009 Intangibles 176 10% write-down during 2009 Properties Under Development for Sale 1,927 15% write-down during 2009 Development Properties 271 No write-down during 2009, do not expect any impact on DIP value Long Term Rent Receivable 66 10% write-down during 2009, assuming renegotiation of rental contracts Long Term Finance Lease Receivable 24 10% write-down during 2009, assuming renegotiation of contracts Trade and Related Parties Receivables 325 10% write-down during 2009

2009e NAV (Excluding DIP) 0.86 Discounted at 12% Add: Investment Property Value Per Share 0.80 DIP valued using DCF Method (WACC of 9%) Target 2009e NAV 1.65 Upside potential of 14.9% Key Assumptions: Trade and Related Parties Receivables 1,294 20% write-down during 2009 AFS Investments 884 10% write-down during 2009 FV Investments 510 10% write-down during 2009 Inventories 1,111 20% write-down during 2009

Property, Plant & Equipment 2,113 20% write-down during 2009 Intangibles 157 20% write-down during 2009 Properties Under Development for Sale 1,587 30% write-down during 2009 Development Properties 244 10% write-down during 2009 Long Term Rent Receivable 59 20% write-down during 2009 Long Term Finance Lease Receivable 21 20% write-down during 2009 Trade and Related Parties Receivables 288 20% write-down during 2009

2009e NAV (Excluding DIP) 0.59 Discounted at 12% Add: Investment Property Value Per Share 0.80 DIP valued using DCF Method (WACC of 9%) Conservative 2009e NAV 1.38 Downside potential of 3.9% Source: Company Report; Prime Estimates Prime Research 14 Dubai Investments October 12, 2009

Initiation of Coverage UAE

FINANCIAL SUMMARY Income Statement 2004a 2005a 2006a 2007a 2008a (Figures in AED million)) Revenues 890.3 1,524.4 1,907.0 3,410.0 4,357.9 Growth 143.0% 71.2% 25.1% 78.8% 27.8% COGS 425.6 599.4 686.7 1,685.2 2,150.3 S,G & Admin. Expenses 116.1 178.4 246.4 309.3 543.3 EBITDA 348.6 746.6 973.8 1,415.4 1,664.4 Growth 266.0% 114.2% 30.4% 45.3% 17.6% EBITDA Margin 39.2% 49.0% 51.1% 41.5% 38.2% Depreciation & Amortization 39.4 33.6 40.3 77.3 117.7 Operating EBIT 309.2 713.0 933.6 1,338.1 1,546.7 Interest Income 0.0 0.0 51.5 41.6 44.3 Interest Expense 17.0 41.9 64.6 145.7 148.0 Non-Operating Income 20.0 17.1 43.9 271.0 172.8 Pre Tax Income 312.2 688.2 964.3 1,505.0 1,615.8 Pre Tax Income Growth 492.5% 120.4% 40.1% 56.1% 7.4% Income Tax 0.0 0.0 0.0 0.0 0.0 Effective Tax Rate 0.0% 0.0% 0.0% 0.0% 0.0% NPAT 312.2 688.2 964.3 1,505.0 1,615.8 Growth 492.5% 120.4% 40.1% 56.1% 7.4% Extraordinary Items 0.0 0.0 0.0 0.0 0.0 Net Income 312.2 688.2 964.3 1,505.0 1,615.8 Profit Share to Employees & Board 0.0 0.0 0.0 0.0 0.0 Net Attributable Income - NAI 312.2 688.2 964.3 1,505.0 1,615.8 Growth 492.5% 120.4% 40.1% 56.1% 7.4%

Balance Sheet 2004a 2005a 2006a 2007a 2008a

Cash 84.1 194.8 815.7 716.4 1,395.0

Trade Receivables-Net 161.6 173.6 417.3 1,053.0 995.3

Inventory 89.5 193.3 384.9 2,172.2 1,217.3

Other Current Assets 509.7 718.8 1,528.2 2,084.5 2,297.3

Total Current Assets 844.9 1,280.4 3,146.1 6,026.1 5,904.9

Net Fixed Assets 568.9 728.6 970.6 1,491.3 2,355.7

Investment Property 556.4 930.3 1,745.0 1,891.5 2,879.5

Properties Under Development for Sale 0.0 0.0 0.0 0.0 2,263.7

Development Properties 144.6 54.8 175.3 342.8 347.9

Other Assets 135.2 275.4 352.1 492.7 485.6

Total Assets 2,250.0 3,269.5 6,389.1 10,244.4 14,237.3

Accounts Payable 114.0 174.0 273.3 1,781.2 2,084.4

Dividend Payable 0.0 0.0 0.0 0.0 324.6

Short Term Debt 321.9 355.8 681.9 1,642.7 1,607.8

Other Current Liabilities 207.8 292.6 637.0 0.0 0.0

Total Current Liabilities 643.7 822.4 1,592.2 3,423.9 4,016.8

Long-Term Debt 460.4 607.7 958.6 1,500.8 2,600.2

Other Non Current Liabilities 11.8 0.0 0.0 0.0 0.0

Provisions & Minority Interest 56.5 57.2 162.2 359.6 690.2

Total Shareholders' Equity 1,077.5 1,782.2 3,676.0 4,960.1 6,930.2

Total Liab.& Shareholders' Equity 2,250.0 3,269.5 6,389.1 10,244.4 14,237.3

Source: Company Financials

Prime Research 15 Dubai Investments October 12, 2009

Initiation of Coverage UAE

Stock Recommendation Guidelines

Recommendation Target-to-Market Price (x)

Strong Buy x > 25%

Buy 15% < x <25%

Accumulate 5%< x <15%

Hold -5% < x < 5%

Reduce -15% < x < -5%

Sell -25% < x < -15%

Strong Sell x < -25%

Investment Grade Explanation

Growth 3 Yr. Earnings CAGR > 20% Value Equity Positioned Within Maturity Stage of Cycle

Income Upcoming Dividend Yield > Average LCY IBOR

Speculative Quality Earnings Reflect Above Normal Risk Factor

Prime Research 16 Dubai Investments October 12, 2009

Initiation of Coverage UAE

PRIME EGYPT SALES TEAM Moataz El Demerdash Managing Director +202 3300 5688 [email protected] Yasmine Guindy Director, Head of Institutional Sales +202 3300 5611 [email protected] Osama Mahmoud SRM, Institutioanal Sales +202 3300 5623 [email protected] Ramy El Agamy SRM, Foreign Institutions +202 3300 5620 [email protected] Amr Alaa, CFTe SRM, Local Institutions +202 3300 5609 [email protected] Amr El Sebaee Manager, High Networth +202 3300 5672 [email protected] Ali Nassef Manager, Heliopolis Branch +202 3300 5110 [email protected]

PRIME UAE SALES TEAM Sherif Nabih Managing Director +971-2-6910758 [email protected] Shawkat Raslan Head of Sales +971-2-6910713 [email protected] Sara Shaheed Head of International Sales +971-4-4070115 [email protected] Ahmad Hamdi SRM, Institutional Desk +971-2-6910701 [email protected] Mohamed Kamal RM, International +971-4-4070108 [email protected] Mohamed Khaled Hafez RM, International +971-4-4070102 [email protected]

PRIME EGYPT RESEARCH Mohamed Seddiek Senior Analyst, Acting Head +202 3300 5720 [email protected] Rehab Taha, CFA Senior Analyst +202 3300 5724 [email protected] Monette Doss Senior Analyst +202 3300 5726 [email protected] Ahmed Hindawy Analyst +202 3300 5719 [email protected] Karim Osman Analyst +202 3300 5716 [email protected] Radwa Abulnaga Analyst +202 3300 5718 [email protected] Hind Panicker Junior Analyst +202 3300 5727 [email protected] Sherif M. Zaazaa Junior Analyst +202 3300 5723 [email protected] Heba Monir Junior Analyst +202 3300 5722 [email protected] Nihal Zaki, CFTe Senior Technical Analyst +202 3300 5725 [email protected]

PRIME UAE RESEARCH Angad Rajpal Senior Analyst +971-4-407 0119 [email protected] Mostafa Maghraby Junior Analyst +971-4-407 0116 [email protected] Dheeraj Lakhwani Junior Analyst +971-4-407 0117 [email protected] Sleiman Aboulhosn Junior Analyst +971-4-407 0118 [email protected]

HEAD OFFICE PRIME EMIRATES LLC. (UAE) PRIME SECURITIES S.A.E. Members of the ADX and DFM Regulated by CMA license no. 179 Shiekh Zayed 1st Street, Khaldiyah, Members of the Cairo Stock Exchange Abu Dhabi, UAE, PO Box 60355 2 Wadi El Nil St., Liberty Tower, Tel: +971 2 6910800 Fax: +971 2 6670907 7th-8th Floor, Mohandessin, Giza, Egypt Email: [email protected] Tel: +202 33005700/770/650/649 Fax: +202 3760 7543

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Prime Research 17