Kuwait Projects Company Holding (K.S.C.P.) · KSE:KPROJ
Kuwait Projects Company Holding (K.S.C.P.) — Kuwait Projects Company Holding (KIPCO) — Investor Presentation (May 2014)
65 slides from Kuwait Projects Company Holding (K.S.C.P.)'s investor presentation, May 2014
Slide 1: Building Momentum
Building Momentum E Investor Presentation | May 2014 1
Slide 2: Disclaimer
Disclaimer This presentation is not an offer or invitation to subscribe to or purchase any securities. No warranty is given as to the accuracy or completeness of the information in this presentation. You must make your own independent investigation and appraisal of the business and financial conditi
Slide 3: Index: Executive Summary
Index Executive Summary Bloomberg Ticker: KPROJ KK Reuters Ticker: KPRO.KW 3
Slide 4: A diversified company with deep regional expertise and roots
A diversified company with deep regional expertise and roots Operating holding company with an AuM of USD38bn Middle East and North Africa (MENA) Primarily financial services and media 22 years of continuous profitability, 12 years of continuous dividends Attractive NAV A transparent Listed on Kuwai
Slide 5: Our presence by geographies & sectors
Our presence by geographies & sectors Major Sectors Geography Commercial Revenue1 Media AMIB Insurance Real Estate Industrial Others banking (2013) Kuwait ● ● ● ● ● ● ● 42% UAE ● ● ● ● 6% Bahrain ● ● ● ● 2% KSA ● ● ● 6% Jordan ● ● ● ● 12% Algeria ● ● 6% Tunisia ● ● ● 2% Egypt ● ● ● ● 7% Lebanon ● ●
Slide 6: Best in Class: Performance vs. Key Indices
Best in Class: Performance vs. Key Indices Total return* 1 year 3 year 5 year 7 year 10 year Kuwait Stock 17% 32% 30% (0.4%) N.A Exchange MSCI Emerging (2%) (6%) 93% 26% 159% Markets S&P 500 20% 53% 151% 49% 95% MSCI Frontier 6% 22% 99% N.A N.A EM Index KIPCO 72% 142% 202% 83% 674% KIPCO Rank vs. 1
Slide 7: Track record of generating attractive returns
Track record of generating attractive returns Total Shareholders’ Return Growth 354 345 102 93 252 252 42 64 1996 Q1'14 2003 Q1'14 Share Price (US cents)^ Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Book Value Per Share Growth (in US cents) 247 237 41 30 1996 Q1'14 2003 Q1'
Slide 8: Net asset value
Net asset value NAV Computation (USD per Share) 670 740 397 fils fils fils 0.1 0.1 0.1 0.1 (0.0) 0.2 0.1 0.1 0.3 (0.6) 0.8 0.7 2.6 0.5 1.6 1.4 1.0 Burgan OSN United Gulf United United Net other Net Debt NAV KIPCO BVPS Bank Gulf Bank Insurance Real Industries Assets Share Company Estate Company Price
Slide 9: Strategy
Index Strategy 9
Slide 10: Strategic roadmap: Building Businesses
Strategic roadmap Regional MENA Outlook Investing in Target engines of ROE: growth 20% Diversified Revenue streams Balanced Building Portfolio Businesses Strong managerial Team expertise Thought Approach leadership Being first in the region Investment in companies with sustainable and predictable ca
Slide 11: Controlling or majority stakes
Controlling or majority stakes Main Entities KIPCO Effective 60.4% 60.4% 96.7% 83.0%3 45.3% 65.8% Stakes1 Board Representation 6 of 9 2 of 75 6 of 6 6 of 6 4 of 104 4 of 7 Market Cap (USDmn)2 3,454 Unlisted 550 103 366 473 S&P: S&P: A- Credit BBB+/A2 Moody’s: Unrated CI*: BBB CI*: BBB- AM Best: CI*:
Slide 12: Active management
Active management Key businesses – progress indicators Businesses Parameters Then Now Active Management – KIPCO Support & Action 1995 Q1’14 Net Transformed from a local player to regional player Hired new management in 2010/11 to execute regional Interest 1.3% strategy Margin 2.4% Focused on g
Slide 13: Performance Update
Index Performance Update 13
Slide 14: 2013: Operating performance continues to be strong
2013: Operating performance continues to be strong Growth % are over 2012 144% 2012 5.6% 2012 33% 175% 25% 35% 29% 81% 18% 3.4% Growth in Growth in NPA Aggregate Growth in Growth in Growth in EBITDA operating operating provision subscriber revenue EBITDA margin income profits coverage base Interest
Slide 15: Burgan Bank
Burgan Bank Loan Growth Deposit Growth Asset Quality USDbn USDbn NPA Coverage with collateral^ NPA Coverage without collateral 108% 144% 175% 165% 49% 76% 123% 112% 14.0 14.2 10.5% 12.0 11.9 16.5 16.5 13.8 14.1 8.0 5.6% 9.9 3.4% 3.8% 2011 2012 2013 Q1'14 2011 2012 2013 Q1'13 Q1'14 2011 2012 2013 Q1'
Slide 16: Burgan Bank: Regional operations
Burgan Bank: Regional operations Loan Growth Deposit Growth Net Profit^ USDbn USDbn USDmn 22% 32% 17% 35% 28% 17% 5.5 6.9 22 4.7 5.9 18 20 12 2.4 6 7 5 3 1.9 1.8 1.8 2.2 2.5 1.6 1.7 (4) (4) 0.91.1 1.4 1.2 (1) 1.0 0.9 0.3 (1) 0.1 0.2 0.0 0.0 0.3 AGB JKB BoB TIB BBT Total AGB JKB BOB TIB BBT Total AGB
Slide 17: Burgan Bank: NPA- cyclical & not structural
Burgan Bank: NPA- cyclical & not structural NPA Trend NPA (USDmn) As on Mar’14, the combined NPA Ratio (Percentage) coverage of non performing 1,113 847 1,284 948 670 769 256 assets (NPA) is 165% 207 192 172 170 121 122 110 NPA Ratio increased from 11.0% 11.8% 90 9.5% 10.5% 6.3% 6.0% 6.1% 4.1% 3
Slide 18: OSN: Overview
OSN : Overview MENA Pay TV Potential MENA Region1 Latin America UK India US 2 Population (Mn) 267 593 65 1,260 319 Pay TV (Mn; Est.) 4 37 14 133 102 2 TV Households (Mn) 53 NA 26 155 116 TV Households / Households (%) 85% NA 94% 61% 88% Pay TV/ TV Households (%) 9% 30% 53% 86% 88% Low Pay TV penetra
Slide 19: OSN: Overview…cont'd
OSN: Overview…cont’d Highlights Largest digital satellite premium Pay TV operator in MENA region Licensed to operate in 24 countries in MENA (Focused on KSA, UAE, Kuwait, Egypt, Bahrain, Qatar & Jordan) Consolidated Pay TV industry through merger of Orbit & Showtime in 2009 Active Piracy Management,
Slide 20: OSN
OSN Subscribers* Net Adds Thousand Thousand 137 1,066 995 818 858 782 71 48 36 40 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Churn Subscribers by country (March 2014) Others 17% 17% 17% 9% 17% 16% Qatar KSA 15% 26% Egypt 8% Bahrain 3% UAE Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Kuwait 31% 8%
Slide 21: United Gulf Bank
United Gulf Bank Revenue Fees & Commission Income USDmn USDmn 163 30 109 21 93 17 17 64 41 9 22 5 2010 2011 2012 2013 Q1'13 Q1'14 2010 2011 2012 2013 Q1'13 Q1'14 Net Profit & Provisions AUM & Capitalisation USDmn USDbn 68 19.5% 18.2% 23.2% 17.7% 14.0% 11.4 29 9.7 8.0 7.5 8.1 26 25 39 13 8 7 10 24 5
Slide 22: Gulf Insurance Group
Gulf Insurance Group Gross & Net Premium Written Net Investment Income USDmn USDmn 557 515 36 475 32 261 295 238 191 14 151 126 8 8 98 2011 2012 2013 Q1'13 Q1'14 2011 2012 2013 Q1'13 Q1'14 Net Premium Written Gross Premium Written Combined Ratio Net Profit USDmn 89% 92% 93% 95% 98% 10.4% 13.3% 13.5%
Slide 23: United Real Estate Company (URC)
United Real Estate Company (URC) Total Revenue1 Operating Profit2 USDmn USDmn 244 114 184 76 145 70 40 42 16 11 2011 2012 2013 Q1'13 Q1'14 2011 2012 2013 Q1'13 Q1'14 Net Profit Total Assets & Return on Equity USDmn USDmn 80 5.2% 11.2% 5.6% 1.3% 1,953 1,849 1,746 1,678 40 36 7 2 2011 2012 2013 Q1'14
Slide 24: URC: Balance Sheet (Break-up) as of March 2014
URC: Balance Sheet (Break-up) as of 31 March 2014 Total Assets Investment Properties Total Assets USD1,746mn Total: USD420mn Marina World - Kuwait Investment properties 2% 3% 10% Land for development 3% 2% Salalah Mall - Oman 24% 5% Projects under Marina Plaza - Kuwait construction* 8% 13% Fixed ass
Slide 25: KIPCO Consolidated: Financial performance
KIPCO Consolidated: Financial performance Revenue Net Income Consolidated Assets USDmn USDmn EPS (Cents) USDbn 8.6 8.3 10.4 2.1 2.5 32.0 30.6 1,961 142 25.5 112 1,468 106 20.7 1,245 487 37 423 30 2011 2012 2013 Q1'13 Q1'14 2011 2012 2013 Q1'13 Q1'14 2011 2012 2013 Q1'14 25
Slide 26: KIPCO Parent debt profile
KIPCO Parent debt profile: As at 31 March 2014 Debt Type Debt Maturity Total Debt: USD1.9bn Total Debt: USD1.9bn Average debt maturity is International 4.1 years Bonds Local 78% Bonds 15% 0% 41% 59% 7% Term <2 Years 2-4 Years >4 Years Loan Liquidity KIPCO has cash & bank balance of USD1,032mn with n
Slide 27: Why KIPCO
Index Why KIPCO 27
Slide 28: Why KIPCO? Pan MENA Player
Why KIPCO? Compelling Experienced strategy management team Pan MENA Player Supportive Outstanding track record Pan MENA primary shareholders Player Transparent Strong liquidity Well positioned to deliver 20% return in medium term 28
Slide 29: Thank you
hank you
Slide 30: Annexure 1: Portfolio Companies
Index Annexure 1: Portfolio Companies 30
Slide 31: Burgan Bank (BB): Overview
Burgan Bank (BB): Overview Overview Kuwait based commercial bank with regional presence in nine countries 2nd largest conventional bank in Kuwait in terms of assets (Total Assets of USD26.3bn as of 31 March 2014) Offers a wide range of corporate, retail & treasury products through a network of 217 b
Slide 32: OSN: Acquisition of Pehla
OSN: Acquisition of Pehla Continued consolidation of MENA Pay TV 2009 2011 2013 + OSN acquired exclusive Orbit & Showtime rights from ART for select OSN acquired merged to form OSN General Entertainment Pehla channels Pehla acquisition presents a huge opportunity Deeper and bigger base: Total South
Slide 33: United Gulf Bank (UGB): Overview
United Gulf Bank (UGB): Overview Overview Asset management and investment banking (AMIB) business Offers asset management, investment banking, brokerage and advisory services Listed on the Bahrain Stock Exchange with a market cap of USD550mn as of 15 May 2014 Credit rating of BBB from Capital Intell
Slide 34: Gulf Insurance Group (GIG): Overview
Gulf Insurance Group (GIG): Overview Overview Multi-line insurance provider with presence across 9 MENA countries through subsidiaries Provides marine, aviation, property, engineering, casualty, life & health insurance, & micro finance insurance Operates through a network of 50 branches across the r
Slide 35: United Real Estate Company (URC): Overview
United Real Estate Company (URC): Overview Overview Leading integrated real estate company with presence in Kuwait & MENA Sizeable portfolio of good quality properties; Large unencumbered asset base Stable rental income; growth to be supported by newly completed KIPCO Tower and Salalah Mall Listed o
Slide 36: Major Real Estate Properties Developed & Operated by URC
Major Real Estate Properties Developed & Operated by URC Acquired Developed Developed Developed Saleh Shehab, Developed Marina Hotel, Fairmont Hotel, Al Khour Resort, Al Shaheed Tower, Kuwait as BOT Kuwait as BOT Egypt Kuwait as BOT Kuwait 1979 1994 1997 1999 1999 2001 2003 2003 2005 2012 2013 Acqui
Slide 37: United Industries Company (UIC): Overview
United Industries Company (UIC): Overview Overview Established in 1979, UIC invests in the industrial sector in Kuwait and the region Major investments are SADAFCO & QPIC Listed on the Kuwait Stock Exchange in 1997, it has market cap of USD232mn as of 15 May 2014 KIPCO Group holds 72.7% consolidated
Slide 38: United Industries Company: Financial performance
United Industries Company: Financial performance Income from Associates Total Revenue* USDmn USDmn 26 162 20 18 12 12 55 29 26 20 14 12 2011 2012 2013 Q1'13 Q1'14 2011 2012* 2013* Q1'13 Q1'14 Profit from discontinued operation (SADFCO) Net Profit* Total Asset USDmn USDmn 100 770 630 603 622 12 18 4
Slide 39: Saudi Dairy & Foodstuff Company (SADAFCO): Overview
Saudi Dairy & Foodstuff Company (SADAFCO): Overview Overview Established in 1976 as a pioneering venture in dairy sector Leading dairy and foodstuff company having operations across the MENA region Highest market share in UHT milk, tomato paste, co-market leader in ice cream & growing presence in sn
Slide 40: SADAFCO: Financial performance
Saudi Dairy & Foodstuff Company: Financial performance^ Total Revenue Net Profit USDmn USDmn 11% 11% 11% 11% 413 414 356 44 46 40 302 35 2010/11 2011/12 2012/13 2013/14 2010/11 2011/12 2012/13 2013/14 Net profit Net profit margin Total Asset Total Shareholder’s Equity USDmn USDmn 286 292 294 304 18%
Slide 41: Qurain Petrochemicals Industries Co. (QPIC): Overview
Qurain Petrochemicals Industries Co. (QPIC): Overview Overview Holding company focusing on investment opportunities in petrochemicals, oil, gas & energy related sectors Four petrochemical investments in Kuwait i.e. EQUATE, TKOC, KARO & TKSC Listed on the Kuwait Stock Exchange, with a market cap of U
Slide 42: QPIC: Financial performance
Qurain Petrochemicals Industries Co: Financial performance Share of Income from Associates Net Profit USDmn USDmn 33 21 117 97 6 79 (32) (7) 2010 2011/12 2012/13 2013/14 2010 2011/12 2012/13 2013/14 Total Asset Total Shareholder’s Equity USDmn USDmn 1,293 1,062 1,072 1,007 897 936 680 686 2010 2011/
Slide 43: Annexure 2: Executive Management
Index Annexure 2: Executive Management 43
Slide 44: KIPCO: Executive management
KIPCO: Executive management Joined KIPCO Board in 1990 Joined KIPCO in 1990; Board and committee Recipient of Arab Bankers Association of North member of American University of Kuwait, MIT Faisal Hamad Al America Achievement Award (2005) Samer Subhi BSc from MIT and MBA from Harvard Universi
Slide 45: Annexure 3: Key Companies
Index Annexure 3: UGM Key Companies 45
Slide 46: KIPCO Group companies
KIPCO Group companies Burgan Bank is one of Kuwait’s leading commercial United Gulf Bank (UGB) is KIPCO’s investment banking banks. Burgan has 23 branches in Kuwait and one of operation based in Bahrain. Offering a range of the biggest ATM networks in the country. Burgan is one commercial and invest
Slide 47: KIPCO Group companies (cont'd)
KIPCO Group companies (cont’d) The United Industries Company (UIC) is KIPCO’s The Saudi Dairy and Foodstuff Company (SADAFCO) is industrial holding company. UIC has holdings in a one of the most profitable companies in the United variety of industrial sectors including stakes in Industries Company’s
Slide 48: Annexure 4: Per Share Return
Index Annexure 4: Per Share Return 48
Slide 49: KIPCO: Per share return
KIPCO: Per share return EPS Book Value Cents per share Cents per share 10 9 161 8 145 142 139 3 2 2011 2012 2013 Q1'13 Q1'14 2011 2012 2013 Q1'14 DPS ROE Cents per share 7.6% 6.6% 7.1% 6.3% 5.1% 5.2% 5.8% 4.6% 3.2% 7 7 7 7 2010^ 2011^ 2012^ 2013^ 2011 2012 2013 Q1'13 Q1'14 DPS Dividend Yield ^ An ad
Slide 50: Annexure 5: Trends
Index Annexure 5: Trends 50
Slide 51: KIPCO Best in Class: Last 10 Years
KIPCO Best in Class: Last 10 Years Asset Growth Return on Equity (ROE) Global Global Kuwait Kuwait Peers Peers Rank Rank 1 1 2 2 Asset Avg. CAGR 29% ROE 21% Total Shareholders Return (TSR) Dividend Yield Global Global Kuwait Kuwait Peers Peers Rank 1 1 Rank 1 2 TSR Avg. Div Absolute 674% Yield 11% D
Slide 52: KIPCO Best in Class: Last 7 Years
KIPCO Best in Class: Last 7 Years Asset Growth Return on Equity (ROE) Global Global Kuwait Kuwait Peers Peers Rank Rank 2 1 2 2 Asset Avg. CAGR 30% ROE 22% Total Shareholders Return (TSR) Dividend Yield Global Global Kuwait Kuwait Peers Peers Rank 3 4 Rank 1 4 TSR Avg. Div Absolute 83% Yield 9% Data
Slide 53: KIPCO: Net asset value (NAV)
KIPCO: Net asset value (NAV) NAV/Share Position* 4 200% 149% 146% 135% 150% 125% 127% 128% 3 110% 100% 81% 100% 77% 71% 51% 46% 51% 40% 27% 36% 39% 42% 2 34% 50% USD (7%) 23% 20% 15% 13% 9% 10% 3% (10%) (5%) (18%) 0% (30%) 1 (34%) (44%) (50)% - (100)% Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11
Slide 54: Ownership
Ownership Shareholding Profile: March 2014 Treasury Shares 1.9% Investment Funds 7.5% Primary Shareholder (AFH) 44.7% HNIs & retail Investors 8.2% 37.7% Investment Companies & other institutions They hold their ownership interest in KIPCO Major shareholders of KIPCO are members of through an investm
Slide 55: KIPCO Group: Market data
KIPCO Group: Market data P/B P/E Market Cap (USDmn)1 Entity 2013 Current2 2013 Current2 2013 Current2 1.6 2.0 25.8 27.2 3,099 3,874 1.9 2.0 33.3 48.4 3,177 3,454 1.2 1.3 66.5 NM 548 550 1.4 1.1 10.7 10.1 366 366 0.7 0.5 10.8 2.3 272 232 0.7 0.7 8.7 12.5 499 473 Notes: 1. Market Cap for 2013 and the
Slide 56: KIPCO: Average Daily Traded Value
KIPCO: Average Daily Traded Value Avg. Daily Traded Value (USD'000) 7,419 3,416 3,144 2,902 2,373 1,581 1,538 1,569 1,410 1,408 1,259 1,055 728 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 KIPCO stock has maintained an average daily traded value of USD2.
Slide 57: Annexure 6: About the region
Index Annexure 6: About the region 57
Slide 58: MENA Region: Poised for Strong Economic Growth
MENA Region: Poised for Strong Economic Growth Syria Current Account Balance as a % of GDP (2014E-19E) Tunisia Lebanon Iraq Morocco Israel 4.6% Jordan Kuwait 2.7% 2.1% Algeria 1.4% Libya Bahrain 1.3% Egypt Qatar Saudi Arabia UAE MENA China EU Russia Japan UK India US Brazil -1.5% -2.6% -2.7% Oman -3
Slide 59: GCC Region: Well Positioned to Deliver Growth
GCC Region: Well Positioned to Deliver Growth USDbn ….One of the highest 311 per capita income, of world’s proven oil reserves along with robust and growing non-oil sector activity … 332 GDP / Capita, PPP (2014E) (In USD) Accumulated 385 52,839 44,484 current 38,711 38,053 33,084 account 18,408 12,5
Slide 60: Kuwait: Oil Wealth to Fuel Non Oil Growth
Kuwait: Oil Wealth to Fuel Non Oil Growth Kuwait rating: AA (S&P); Aa2 (Moody’s) Strong Current Government GDP Growth Account Spending (%) Balance % of Nominal GDP (USDbn) % of Nominal GDP (USDbn) Real GDP (USDbn) 30.8% 37 43.1% 52 2010 3.5% 41.8% 67 37.5% 60 2011 76 90 2013E 2019E 43.2% 80 66 2012
Slide 61: Kuwait Development Plan Overview
Kuwait Development Plan Overview Purpose: Development Budget By Sector − Upgrade infrastructure − Diversify non oil revenue 7% − Create employment 14% Oil & Gas − Develop private sector Overview Utilities USD125bn − USD125bn 5 year plan Real Estate & Construction 18% 61% − FY 2010/11 – Budgeted
Slide 62: Annexure 7: Market opportunity
Index Annexure 7: Market opportunity 62
Slide 63: Burgan Bank: Banking Sector Opportunity
Burgan Bank: Banking Sector Opportunity Banking Penetration: Assets/GDP Banking Penetration: Loan/GDP 500% 475% Burgan Presence 160% Burgan Presence 140% 450% 405% 140% 126% 400% 350% 326% 120% 101% 100% 90% 300% 250% 250% 80% 71% 68% 69% 67% 177% 55% 200% 151%133% 60% 48% 150% 122% 41% 41% 39% 96%
Slide 64: Gulf Insurance Group: Market Opportunity
Gulf Insurance Group: Market Opportunity 337 Kuwait 1% MENA region is characterized by 22 low insurance density and GIG Presence Egypt 1% significant under penetration 450 Rapid insurance market growth Bahrain 2% in MENA with all countries witnessing double digit growth 103 Jordan 2% over past f
Slide 65: Liability & Funding Cost Optimization
Liability & Funding Cost Optimization On 5th February 2014, KIPCO completed a 5 year EMTN bond issue of USD500mn (KD142mn) Key terms: Maturity: 5 year bullet maturing 5th February 2019 Coupon: Fixed rate @4.80% Mid Swap Yield: 1.656% Financial Covenants: Net Debt / Equity cap of 2.5x Attracting 25
Kuwait Projects Company Holding (KIPCO) — Investor Presentation (May 2014) on 6ix