Kuwait in Focus

Kuwait in Focus April 2010 CONTENTS Kuwait Economic Brief ........................................................................................2 Oil Market and Budget Developments ..............................................................3 Monetary Developments February 2010 ..........................................................6 Real Estate Activity .......................................................................................12 Companies in Focus ..........................................................................................17 Ahli United Bank (Almutahed) ........................................................................18 Al Ahli Bank of Kuwait (ABK) .......................................................................21 Aviation Lease and Finance Company (ALAFCO) ..........................................24 Boubyan Petrochemical .................................................................................27 Burgan Bank (Burgan) ...................................................................................30 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) .............................44 Gulf Insurance Company (GIC) .......................................................................47 Injazzat Real Estate Development Company (Injazzat) ...................................51 Kuwait Cement Company ..............................................................................55 Kuwait Finance House (KFH) ........................................................................58 Kuwait Financial Center (Markaz) ...................................................................62 Kuwait Food Group (Americana) ....................................................................66 Kuwait and Gulf Link Transport Company (KGL) ...........................................69 Kuwait National Cinema Company (KNCC) ....................................................72 Kuwait Projects (KIPCO) ...............................................................................75 Mabanee Company .......................................................................................80 Mashaer Holding Company (Mashaer) ............................................................83 Mobile Telecommunications Company (Zain) ..................................................87 National Industries Group Holding (NIG) .........................................................93 National Investment Company (NIC) ..............................................................97 National Real Estate Company (NREC) ........................................................100 Oula Fuel Marketing Company (Oula) ...........................................................103 Tamdeen Investment Company (Tamdeen) ..................................................106 Tamdeen Group ..........................................................................................109 United Real Estate Company (United Real Estate) .......................................113 YIACO Medical Company (YIACO) ..............................................................116 Kuwait Market Statistics .................................................................................119 1 | nbkcapital.com Kuwait Economic Brief • Oil Market and Budget Developments • Monetary Developments February 2010 • 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 - April 2010 OIL MARKET AND BUDGET DEVELOPMENTS Crude prices edge higher on global recovery signs... Kuwait should see budget surplus over KD 6 billion in FY2009-2010 Having traded in a narrow range of USD 70-80 per barrel (pb) for most of the past six months, crude oil prices saw a period of even greater stability through much of March. The price of Kuwait Export Crude (KEC) stayed largely within a range of USD 74-76 pb, recording one of the most stable periods of its 15-month recovery phase. This stability came despite further volatility in the US dollar, which appreciated by 3.5% versus the euro mid-month (and 2.2% on a trade-weighted basis) on concerns over the debt outlook within the Euro zone. By raising the foreign currency price of oil, a strengthening dollar would usually be bearish for crude prices in dollar terms. Prices managed to end the month with a flourish, however, edging up to above USD 78 pb on a positive run of macro data and hence positive prospects for oil demand. While signs of recovery appear to offer some near-term momentum for crude prices, further increases risk pushing prices beyond what some market participants—including OPEC—see as their ‘comfort zone.’ Indeed, after deciding to leave official quotas unchanged at a meeting in March, OPEC officials publicly reiterated their commitment to stabilize the market should prices climb much further. This pledge may yet stem crude’s ability to make a sustained transition into the higher USD 80-90 pb range that some analysts have been looking for. Kuwait Export Crude* 90 85 80 75 70 $ per barrelper $ 65 60 55 50 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 *Note: Future price projections correspond to NBK’s price scenarios. Source: NBK Economic Research Department nbkcapital.com | 3 Kuwait Economic Brief Kuwait in Focus - April 2010 Benchmark prices hold on to The prices of all global benchmark crudes were also stable through most of March. The price of late February gains… the OPEC basket of crudes averaged USD 77 pb in the month; Brent averaged USD 79, while the traditionally higher value West Texas Intermediate (WTI) averaged USD 81. These represent increases of up to 7% on the month. Meanwhile, the futures curve continued to flatten. By the end of March, the spread of spot WTI to the December 2012 contract narrowed to less than USD 4, for the first time in 18 months, down from USD15 in December. Rising current prices likely reflect lower inventories. Solid, though unspectacular Improving confidence about the recovery in global economic activity continues to translate growth in oil demand seen in into upward revisions to analysts’ forecasts for incremental global oil demand in 2010, with 2010… some of those analysts previously clinging to the weak end of the forecast spectrum beginning to throw in the towel. The Centre for Global Energy Studies (CGES), for example, made a fourth successive monthly upward revision to its demand outlook, this time by a hefty 0.3 million barrels per day (mbpd). The CGES now sees oil demand growing by 1.6 mbpd (1.9%) this year, thanks not only to the economic recovery but also to the cold winter in the Northern Hemisphere. This rate of expansion is on a par with that seen by the International Energy Agency (IEA), which has maintained its forecast—previously seen as extremely optimistic—at 1.6 mbpd. It is worth noting, however, that these growth rates are slower than those seen in the aftermath of previous periods of global weakness/recession. OPEC crude output rises for Meanwhile, crude supplies also continue to increase. According to OPEC, the organization’s eleventh month in a row… crude output (excluding Iraq) saw its eleventh consecutive monthly increase in February, this time by 112,000 bpd to 26.811 mbpd. OPEC has now returned nearly one-third of the production cuts delivered since September 2009 to the market—and without any change in its official production quotas. While all member countries are producing above their agreed quota levels, four members—Angola, Iran, Nigeria, and Venezuela—together account for three quarters of current ‘overproduction.’ Kuwait Export Crude Price Scenarios Scenario $/barrel Low Base High 2009 60.36 60.36 60.36 1Q10 74.37 74.37 74.37 FY09/10f 68.62 68.62 68.62 2Q10f 72.11 75.46 78.86 3Q10f 65.65 72.86 80.51 4Q10f 57.19 69.70 84.00 2010f 67.33 73.10 79.44 1Q11f 52.25 67.20 85.36 FY10/11f 61.80 71.30 82.18 Source: NBK Economic Research Department Global oil supplies seen The next OPEC meeting is not until October, but the prospect of further ‘unofficial’ production climbing significantly this increases suggests that there could still be a de facto change in policy stance before then, year… particularly if crude prices rise further. Moreover, aside from crude, OPEC expects production of Natural Gas Liquids (NGLs) by its members to rise by 0.5 mbpd (10%) this year and non-OPEC supply to rise by 0.4 mbpd. Therefore, even if OPEC crude production remains unchanged from current levels, total global oil supplies could still rise by 1.5 mbpd this year compared to last. Prices seen flat as supply Such an increase in supplies would roughly offset the more upbeat

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