Kuwait in Focus

Kuwait in Focus January 2010 CONTENTS Kuwait Economic Brief ........................................................................................2 Oil Market and Budget Developments ..............................................................3 Monetary Developments November 2009 ........................................................6 Real Estate Activity .......................................................................................11 Kuwait Research Coverage ..............................................................................16 Agility ........................................................................................................................ 17 Jazeera Airways ...................................................................................................... 22 The Sultan Center ................................................................................................... 24 Wataniya Telecom ................................................................................................... 25 Companies in Focus ..........................................................................................27 Al Ahli Bank of Kuwait (ABK) .......................................................................28 Aviation Lease and Finance Company (ALAFCO) ..........................................31 Bank of Kuwait and the Middle East (BKME) .................................................34 Boubyan Petrochemical .................................................................................37 Burgan Bank (Burgan) ...................................................................................40 Burgan Co. for Well Drilling, Trading and Maintenance (Burgan Well Drilling) ....43 Commercial Real Estate Company (Altijaria) ...................................................46 Gulf Cable and Electrical Industries Company (Gulf Cable) .............................49 Gulf Insurance Company (GIC) .......................................................................52 Haj & Umrah Services Consortium Co. (Mashaer) .........................................56 Injazzat Real Estate Development Company (Injazzat) ...................................60 Kuwait Cement Company ..............................................................................64 Kuwait Finance House (KFH) ........................................................................67 Kuwait Financial Center (Markaz) ...................................................................71 Kuwait Food Group (Americana) ....................................................................75 Kuwait and Gulf Link Transport Company (KGL) ...........................................78 Kuwait National Cinema Company (KNCC) ....................................................81 Kuwait Projects (KIPCO) ...............................................................................84 Mabanee Company .......................................................................................89 Mobile Telecommunications Company (Zain) ..................................................92 National Industries Group Holding (NIG) .........................................................98 National Investment Company (NIC) ............................................................101 National Real Estate Company (NREC) ........................................................104 Oula Fuel Marketing Company (Oula) ...........................................................107 Tamdeen Investment Company (Tamdeen) ..................................................110 Tamdeen Group ..........................................................................................113 The Transport and Warehousing Group (TWG) .............................................117 United Real Estate Company (Real Estate Company) ..................................120 YIACO Medical Company (YIACO) ..............................................................123 Kuwait Market Statistics .................................................................................126 1 | nbkcapital.com Kuwait Economic Brief • Oil Market and Budget Developments • Monetary Developments November 2009 • Real Estate Activity National Bank of Kuwait NBK Economic Research T. +965 2259 5500 F. +965 2224 6973 E. [email protected] DISCLAIMER AND COPYRIGHT While every care has been taken in preparing this publication, National Bank of Kuwait accepts no liability whatsoever for any direct or consequential losses arising from its use. The Economic Brief is distributed on a complimentary and discretionary basis to NBK clients and associates. This report and previous issues can be found in the “Reports” section of the National Bank of Kuwait’s web site. © Copyright Notice: NBK Economic Brief is a publication of National Bank of Kuwait. No part of this publication may be reproduced or duplicated without the prior consent of NBK. 2 | nbkcapital.com Kuwait Economic Brief Kuwait in Focus - January 2010 OIL MARKET AND BUDGET DEVELOPMENTS Crude prices renew upward march after early December pullback... Kuwait’s budget outlook remains strong… After a relatively stable November, crude prices saw considerable volatility throughout December. The price of Kuwait Export Crude (KEC) dropped $8 per barrel (pb) to $71 pb in the first half of December, before rallying back to $77 by the end of the month and to nearly $80 by January 7th—a new post-recovery high. The initial fall may have been driven by a strengthening of the US dollar, which appreciated by 4% in trade-weighted terms between December 1st and 17th. But crude prices began rising again after this burst of support for the dollar abated. Later in the month, crude prices also drew support from more fundamental factors, notably the continued decline in oil and oil product inventory levels in the US (though admittedly from still high levels), as well as relatively upbeat signals from macro indicators around the world, particularly purchasing manager indices of industrial activity. These data provided backing for the more bullish analysts who expect crude prices to be well supported by supply and demand dynamics through 2010. Kuwait Export Crude * 90 85 80 75 70 65 $ per barrelper $ 60 55 50 45 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 *Note: Future price projections correspond to NBK’s price scenarios Source: NBK Economic Research Department Global benchmarks climb to The prices of global benchmark crudes also resumed their upward march in the second half of post-crisis highs… December. The price of West Texas Intermediate (WTI) crude, for example—which had traded at a discount to other crudes in early December as a result of storage constraints in the US—had recovered to more than $83 pb by January 6th, its highest since October 2009. On average, the price of WTI stood at $62 in 2009, down 38% on its average for 2008, but ending the year more than double the low of $34 pb recorded in mid-February. For some analysts, the sharp recovery in prices through 2009 was not only a result of dollar weakness but also evidence that demand growth in emerging markets—which was surprisingly robust last year—has become more influential in determining the price of oil than conditions in traditionally important markets, especially the US. nbkcapital.com | 3 Kuwait Economic Brief Kuwait in Focus - January 2010 Further upgrades for global oil In light of growing confidence about the outlook for world economic growth, some of the more demand forecasts for 2010… pessimistic forecasts for global oil demand in 2010 have gradually been upgraded. The Centre for Global Energy Studies (CGES), for example—which has long held downbeat views on the prospects for 2010—has revised up its forecast for incremental oil demand this year to 1.0 million barrels per day (mbpd, 1.2%) from 0.7 mbpd a month earlier. The CGES expects virtually all of the growth to come from outside the OECD. On the other hand, the US-based International Energy Agency (IEA) has consistently been at the bullish end of the spectrum, and has nudged up its forecast for 2010 oil demand growth by 0.1 mbpd to nearly 1.5 mbpd (1.7%). Although the IEA expects no growth from within the OECD, the agency believes that the prospects for the region have improved. Despite these upgrades, it should be noted that, given the sharp drop expected to have been registered in 2009 (perhaps 1.5 mbpd) the forecast increases for 2010 are still not that strong. Kuwait Export Crude Price Scenarios Scenario $/barrel Low Base High 4Q09f 74.4 74.4 74.4 2009f 60.4 60.4 60.4 1Q10f 66.8 69.1 72.7 FY09/10f 66.7 67.3 68.2 2Q10f 61.8 66.2 74.5 3Q10f 56.5 64.3 77.0 4Q10f 53.2 62.4 80.5 2010f 59.6 65.5 76.2 1Q11f 52.3 62.4 84.4 FY10/11f 55.9 63.8 79.1 Source: NBK Economic Research Department OPEC leaves output Crude output of the OPEC-11 (i.e., excluding Iraq) continued to creep up through November, unchanged… cautious about rising by 41,000 bpd to stand at 26.611 mbpd. This was the eighth successive monthly increase, global recovery… leaving output nearly 900,000 bpd (3%) off its March floor and around 7% above the official quota levels. At the meeting on December 22nd, OPEC members appeared to sidestep the issue of ‘official’ versus ‘actual’ production levels by declaring that, although output would be left unchanged, members remain committed to their individual quota allocations—a seemingly contradictory stance. Yet with crude prices now at levels that the organization is comfortable with, members are having to tread carefully to avoid upsetting the market balance. The

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