KUWAIT in FOCUS Contents

April 2011 KUWAIT IN FOCUS CONTENTS Kuwait Economic Brief ........................................................................................2 Oil Market and Budget Developments ..............................................................3 Monetary Developments February 2011 ..........................................................7 Real Estate Activity .......................................................................................11 Public Finance ...............................................................................................15 Companies in Focus ..........................................................................................18 Ahli United Bank (Almutahed) ........................................................................19 Al Ahli Bank of Kuwait (ABK) .......................................................................22 Aviation Lease and Finance Company (ALAFCO) ..........................................25 Boubyan Petrochemical .................................................................................28 Burgan Bank (Burgan) ...................................................................................31 Burgan Co. for Well Drilling, Trading and Maintenance (Burgan Well Drilling) ....34 City Group ....................................................................................................37 Commercial Real Estate Company (Altijaria) ...................................................40 Gulf Cable and Electrical Industries Company (Gulf Cable) .............................43 Gulf Insurance Company (GIC) .......................................................................46 Injazzat Real Estate Development Company (Injazzat) ...................................50 Kuwait Cement Company ..............................................................................54 Kuwait Finance House (KFH) ........................................................................57 Kuwait Financial Center (Markaz) ...................................................................61 Kuwait Food Group (Americana) ....................................................................64 Kuwait and Gulf Link Transport Company (KGL) ...........................................67 Kuwait National Cinema Company (KNCC) ....................................................70 Kuwait Projects (KIPCO) ...............................................................................73 Kuwait Real Estate Company (KREC) ............................................................77 Mashaer Holding Company (Mashaer) ............................................................80 Mobile Telecommunications Company (Zain) ..................................................83 National Industries Group Holding (NIG) .........................................................87 National Investment Company (NIC) ..............................................................91 National Real Estate Company (NREC) ..........................................................94 Oula Fuel Marketing Company (Oula) .............................................................97 Tamdeen Group ..........................................................................................100 Tamdeen Investment Company (Tamdeen) ..................................................104 United Real Estate Company (United Real Estate) .......................................107 YIACO Medical Company (YIACO) ..............................................................110 Economic Statistics ........................................................................................113 Kuwait Market Statistics .................................................................................117 1 | nbkcapital.com Kuwait Economic Brief • Oil Market and Budget Developments • Monetary Developments February 2011 • Real Estate Activity • Public Finance 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 - April 2011 OIL MARKET AND BUDGET DEVELOPMENTS The price of KEC climbed to USD 117 in early April on concerns over Libyan output and weakness in the US dollar. Demand growth is expected to slow to 1.4 mbpd (1.6%) in 2011, following last year’s demand ‘shock’. But OPEC may still have to lift production this year to avoid a drawdown in global stocks. An average oil price of USD 94-121 pb in FY2011/12 could yield a budget surplus of KD 9.2 bn for Kuwait’s government, following a KD 4-5 bn surplus in FY2010/11. Oil prices Oil prices took yet another leg up in early April. The price of Kuwait Export Crude (KEC) jumped to USD 117 per barrel (pb) on April 8th, up from USD 108 at the end of last month and a similar average for March as a whole. Other major benchmark crude prices also rose. The price of Brent crude – the main European blend – breached the USD 120 mark for the first time since August 2008. The price of West Texas Intermediate (WTI) rose by USD 8 from late March to USD 112, but continues to trade at a discount to other crudes because of oversupply issues at its US delivery point. Two key factors are responsible for the latest price rise. First, fierce fighting between government and opposition forces has strengthened perceptions that Libyan oil will be shut-in for an extended period. Although a rebel-controlled oil company was set to make its first oil export shipment of some 1 million barrels in early April, the military superiority of the government forces has led some analysts to speculate about the possible targeting of the country’s oil infrastructure in order to choke-off rebel funding. African output was also disrupted by a strike by oil workers in Gabon, which normally produces some 240,000 barrels per day (bpd). The second key factor has been the growing expectation – subsequently realized on April 7th – of a rise in official interest rates in the Euro area. By widening the spread between Euro and US rates, the US dollar tends to be weakened, which typically boosts the price of dollar- denominated commodities. Something like this occurred in mid-2008, when a surprise hike in Euroland interest rates generated a USD 16 pb jump in crude prices in the space of just two days. Kuwait Export Crude (USD/barrel) 130 120 110 100 90 80 National Bank of Kuwait NBK Economic Research 70 4Q10 1Q11 2Q11F 3Q11F 4Q11F 1Q12F T. +965 2259 5500 F. +965 2224 6973 E. [email protected] Future projections correspond to NBK’s price scenarios. Source: NBK Economic Research Department nbkcapital.com | 3 Kuwait Economic Brief Kuwait in Focus - April 2011 Oil demand outlook After last year’s huge rise of 2.9 million bpd (3.4%) – the second largest increase in 25 years –global oil demand growth is set to moderate in 2011. This is largely the result of reduced economic growth prospects as both monetary and fiscal policy are tightened. But in addition, high oil prices are themselves expected to provide a drag on demand, particularly in the slow- growth OECD region. The disaster in Japan is expected to reduce oil demand there in the very short-term. But this may be partially offset for 2011 as a whole by stronger oil demand as lost nuclear power generation capacity is replaced by conventional facilities. Japan accounts for around 5% of global oil demand. The Centre for Global Energy Studies (CGES) and the International Energy Agency (IEA) both expect oil demand growth of 1.4 mbpd (1.6%) in 2011, bsed on flat-to-falling demand in the OECD region and growth of 3.3 to 3.7% in non-OECD countries. Within this overall figure, however, growth is expected to slow considerably in the second half of the year as the impact of policy tightening begins to feed through. Kuwait Export Crude Price Scenarios Scenario $/barrel Low Base High 2010 76.2 76.2 76.2 1Q11 99.4 99.4 99.4 FY10/11 82.5 82.5 82.5 2Q11f 101.1 105.8 109.3 3Q11f 97.1 107.7 118.1 4Q11f 89.5 106.7 127.5 2011f 96.8 104.9 113.6 1Q12f 89.5 106.7 127.5 FY11/12f 94.3 106.7 120.6 Source: NBK Economic Research Department Oil supply outlook Output of the OPEC-11 countries (excluding Iraq) rose by 132,000 bpd (0.5%) in February. This was its third big consecutive month-on-month increase and leaves output 0.7 mbpd above the level in November 2010. These figures do not include the full impact of the crisis in Libya on production levels, which should materialise in March’s data. Libyan output dropped 0.23 mbpd to 1.4 mbpd in February, but is anticipated have dropped to 0.2-0.3 mbpd since. February’s drop in Libyan output was more than offset by a strong 280,000 bpd rise in Saudi Arabian output to 8.9 mbpd. It is likely to have risen further in March. Other countries, such as Venezuela, the UAE, and Kuwait have also seen significant increases in output in recent months. Analysts’ expectations of the rise in non-OPEC oil supply that likely this year range between 0.5 and 1.3 mbpd, which includes around 0.5 mbpd of OPEC natural

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