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 (November 2013)
66 slides from Kuwait Projects Company Holding (K.S.C.P.)'s investor presentation, November 2013
Slide 1: Going for Growth Investor Presentation
Going for Investor Growth Presentation November, 2013 E 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 US$31 bn Middle East and North Africa (MENA) Primarily financial services and media 21 years of continuous profitability, 11 years of continuous dividends P/BV of 1.5x; attractive NAV potential A tr
Slide 5: Our presence by geographies & sectors
Our presence by geographies & sectors Major Sectors Asset Geography Commercial management Revenues1 Media Insurance Real Estate Industrial Others banking & investment (2012) banking Kuwait ● ● ● ● ● ● ● 49% UAE ● ● ● ● 4% Bahrain ● ● ● ● 6% KSA ● ● ● 5% Jordan ● ● ● ● 13% Algeria ● ● 6% Tunisia ● ●
Slide 6: KIPCO Best in Class: Performance vs. Key Indices
KIPCO Best in Class: Performance vs. Key Indices Absolute Share Price Return 1 year 3 year 5 year 7 year 10 year Kuwait Stock 30% 11% (37)% (24)% 77% Exchange Dow Jones 12% 6% (17)% (25)% N.A MENA MSCI Emerging (2)% (9)% 47% 27% 151% Markets S&P Frontier 16% 1% (15)% (23)% N.A BMI Index FTSE Frontie
Slide 7: Track record of generating attractive returns
Track record of generating attractive returns Total Shareholders’ Return Growth 303 298 98 93 65 205 205 33 1997 Sept'13 2002 Sept'13 Share Price (US cents)^ Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Book Value Per Share Growth (in US cents) 240 235 36 34 1997 Sept'13 200
Slide 8: Net asset value
Net asset value NAV Computation (US$ per Share) 680 610 405 fils fils fils 0.1 0.1 0.1 0.0 0.1 0.1 0.1 0.1 0.3 (0.6) 0.8 0.7 0.5 2.2 1.6 1.4 0.9 Burgan OSN United Gulf United United Net other Net Debt NAV KIPCO BVPS Bank Gulf Bank Insurance Real Industries Assets Share (US$) Company Estate Company P
Slide 9: Index: Strategy
Index Strategy 9
Slide 10: Strategic roadmap: Building Businesses
Strategic roadmap Regional MENA Outlook Investing in Target engines of ROE: growth 20% Diversified Revenue streams Balanced Building Portfolio Businesses Strong managerial Team expertise Thought Approach leadership Being first in the region Investment in companies with sustainable and predictable ca
Slide 11: Controlling or majority stakes
Controlling or majority stakes Main Entities KIPCO Effective 60.3% 60.4% 96.7% 83.0%3 44.8% 65.8% Stakes1 Board Representation 6 of 9 2 of 75 6 of 6 6 of 6 4 of 104 4 of 7 Market Cap (US$ mn)2 3,151 Unlisted 469 125 363 495 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 9M’13 Net Transformed from a local player to regional player Hired new management in 2010/11 to execute on regional Interest 1.3% strategy Margin 2.8% Focused o
Slide 13: Index: Performance Update
Index Performance Update 13
Slide 14: 9M 2013: Operating performance continues to be strong
9M 2013: Operating performance continues to be strong Growth % are over 9M 2012: 117% 7% 2012 2012 35% 21% 4.7% 161% 24% 22% 25% growth in growth in NPA Aggregate growth in growth in EBITDA operating operating provision revenues subscriber margin income profits coverage base Interest Operating expen
Slide 15: Burgan Bank
Burgan Bank Loan Growth Deposit Growth Asset Quality US$ billion US$ billion NPA Coverage with collateral NPA Coverage without collateral 27% 6% 21% 16% 111% 108% 117% 161% 72% 49% 58% 101% 12.0 12.6 10.5% 9.8 15.2 13.8 7.3% 7.0% 7.6 8.0 11.8 9.1 9.9 4.7% 2010 2011 2012 9M'13 2010 2011 2012 9M'12 9M
Slide 16: Burgan Bank: Quarterly Trends
Burgan Bank: Quarterly Trends Loan Growth Deposit Growth Asset Quality US$ billion US$ billion NPA Coverage with collateral NPA Coverage without collateral 12.6 15.2 117% 141% 159% 161% 11.9 11.9 12.0 14.0 14.5 13.8 13.7 58% 73% 104% 101% 12.6 12.9 10.1 10.1 10.1 10.5 12.0 7.0% 5.8% 4.7% 4.2% Q4'12
Slide 17: Burgan Bank: Regional operations
Burgan Bank: Regional operations Loan Growth Deposit Growth Net Profit US$ billion US$ billion US$ million 26% 10% 33% 11% 24% 3.0 126 4.9 2.7 2.1 4.0 1.8 1.8 2.3 48 53 59 2.1 34 0.9 1.5 21 1.1 19 0.7 1.1 0.3 7 0.9 0.7 5 6 0.1 0.2 0.0 0.2 0 AGB JKB BoB TIB Total BBT^ AGB JKB BOB TIB Total BBT^ AGB J
Slide 18: Burgan Bank: NPA- cyclical & not structural
Burgan Bank: NPA- cyclical & not structural NPA Trend NPA (US$ million) f As on Sep’13, the combined NPA Ratio (Percentage) coverage of non performing 1,116 850 1,287 1,193 256 assets (NPA) is 161% 208 836 193 173 171 121 122 110 f NPA Ratio declined from 7.0% 11.0% 11.8% 90 9.5% 10.5% 6.3% 6.0% 6.1
Slide 19: OSN: Overview
OSN : Overview MENA Pay TV Potential MENA Region1 Latin America UK India US 2 Population (Mn) 258 586 64 1,243 317 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 20: 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 21: OSN
OSN Subscribers Net Adds Thousand Thousand 48 858 734 782 818 40 702 36 30 32 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Churn Subscribers by country (September 2013) Others 10% 17% 17% 17% 17% 16% Qatar KSA 15% 25% Egypt 10% Bahrain UAE 3% Kuwait 28% Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 9
Slide 22: United Gulf Bank
United Gulf Bank Revenue Fees & commission Income US$ million US$ million 163 30 109 21 93 17 75 16 13 45 2010 2011 2012 9M'12 9M'13 2010 2011 2012 9M'12 9M'13 Net Profit & Provisions AUM & Capitalisation US$ million US$ billion 68 19.5% 18.2% 23.2% 19.0% 29 9.7 8.0 7.5 8.0 26 25 39 17 13 24 12 11 5
Slide 23: Gulf Insurance Group
Gulf Insurance Group Gross & Net Premium Written Net Investment Income US$ million US$ million 517 23 23 476 19 426 435 400 14 239 262 236 211 202 10 2010 2011 2012 9M'12 9M'13 2010 2011 2012 9M'12 9M'13 Net Premium Written Gross Premium Written Combined Ratio Net Profit US$ million 89% 89% 92% 92%
Slide 24: United Real Estate Company (URC)
United Real Estate Company (URC) Total Revenue Operating Profit US$ million US$ million 197 179 114 138 75 29 124 70 87 65 85 109 75 104 29 35 37 12 2010 2011 2012 9M'12 9M'13 2010 2011 2012 9M'12 9M'13 Net Profit Total Assets & Return on Equity US$ million US$ million 80 2.9% 5.1% 10.7% 7.5% 62 1,9
Slide 25: URC: Balance Sheet (Break-up) as of September 2013
URC: Balance Sheet (Break-up) as of September 30 2013 Total Assets Investment Properties Total Assets US$ 1,608 million Total: US$ 486 million Marina World - Kuwait 1% Investment properties 3% 7% Land for development 2% Salalah Mall - Oman 4% 13% 31% Projects under 6% Salalah Residences - constructi
Slide 26: KIPCO Consolidated: Financial performance
KIPCO Consolidated: Financial performance Revenues Net Income Consolidated Assets US$ million US$ million EPS (Cents) US$ billion 13.5 8.5 8.6 6.2^ 6.8 1,620 1,576 1,451 160 28.6 1,326 1,249 25.6 20.8 111 20.1 107 92 84 2010 2011 2012 9M'12 9M'13 2010 2011 2012 9M'12 9M'13 2010 2011 2012 Sep'13 26 ^
Slide 27: KIPCO Parent debt profile
KIPCO Parent debt profile: As at 30 Sep 2013 Debt Type Debt Maturity Total Debt: US$ 1.4 billion Total Debt: US$ 1.4 billion Average debt maturity is International 4.3 years Bonds Local 70% Bonds 20% 0% 55% 45% 10% Term <2 Years 2-4 Years >4 Years Loan Liquidity KIPCO has cash & bank balance of US$5
Slide 28: Index: Why KIPCO
Index Why KIPCO 28
Slide 29: Why KIPCO? Pan MENA Player
Why KIPCO? Compelling Experienced strategy management team Pan MENA Player Supportive Outstanding track record Pan MENA primary shareholder Player Transparent Strong liquidity Well positioned to deliver 20% return in medium term 29
Slide 30: Slide 30
Slide 31: Annexure 1: Portfolio Companies
Index Annexure 1: Portfolio Companies 31
Slide 32: Burgan Bank (BB): Overview
Burgan Bank (BB): Overview 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 US$23.0 bn as of Sep 30, 2013) Offers a wide range of corporate, retail & treasury products through a network
Slide 33: 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 34: United Gulf Bank (UGB): Overview
United Gulf Bank (UGB): Overview 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 US$452 mn as of November 14, 2013 Credit rating of BBB fro
Slide 35: Gulf Insurance Group (GIG): Overview
Gulf Insurance Group (GIG): Overview 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 acr
Slide 36: United Real Estate Company (URC): Overview
United Real Estate Company (URC): Overview 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
Slide 37: 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 Acquired A
Slide 38: United Industries Company (UIC): Overview
United Industries Company (UIC): Overview 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 US$284 mn as of November 14, 2013 KIPCO Group holds 72
Slide 39: United Industries Company: Financial performance
United Industries Company: Financial performance Income from Associates Total Revenue^ US$ million US$ million 312 29 289 26 18 17 10 34 29 32 2010 2011 2012 9M'12 9M'13 2010 2011 2012 9M'12 9M'13 Net Profit Total Asset US$ million US$ million 23 772 806 14 12 633 632 10 4 2010 2011 2012 9M'12 9M'13
Slide 40: Saudi Dairy & Foodstuff Company (SADAFCO): Overview
Saudi Dairy & Foodstuff Company (SADAFCO): Overview 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 prese
Slide 41: SADAFCO: Financial performance
Saudi Dairy & Foodstuff Company: Financial performance^ Total Revenue Net Profit US$ million US$ million 11% 11% 11% 10% 10% 413 356 44 40 302 34 213 215 21 21 2010/11 2011/12 2012/13 H1'12/13 H1'13/14 2010/11 2011/12 2012/13 H1'12/13 H1'13/14 Net profit Net profit margin Total Asset Total Sharehold
Slide 42: Qurain Petrochemicals Industries Co. (QPIC): Overview
Qurain Petrochemicals Industries Co. (QPIC): Overview 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
Slide 43: QPIC: Financial performance
Qurain Petrochemicals Industries Co: Financial performance Share of Income from Associates Net Profit US$ million US$ million 28 19 117 6 80 1 29 1 (32) (7) 2010 2011/12 2012/13 H1'12/13 H1'13/14 2010 2011/12 2012/13 H1'12/13 H1'13/14 Total Asset Total Shareholder’s Equity US$ million US$ million 1,
Slide 44: Annexure 2: Executive Management
Index Annexure 2: Executive Management 44
Slide 45: KIPCO: Executive management
KIPCO: Executive management f Joined KIPCO Board in 1990 f Joined KIPCO in 1990; Board and committee f Recipient of Arab Bankers Association of North member of American University of Kuwait, MIT Faisal Hamad Al America Achievement Award (2005) Samer Subhi f BSc from MIT and MBA from Harvard Universi
Slide 46: Annexure 3: Key Companies
Index Annexure 3: UGM Key Companies 46
Slide 47: 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 48: 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 49: Annexure 4: Per Share Return
Index Annexure 4: Per Share Return 49
Slide 50: KIPCO: Per share return
KIPCO: Per share return EPS Book Value Cents per share Cents per share 14 169 165 161 12 9 9 147 2009 2010 2011 2012 2009 2010 2011 2012 DPS ROE Cents per share 8.0% 6.6% 6.7% 5.2% 5.1% 5.7% 4.6% 5.2% 9 7 7 7 2009^ 2010^ 2011^ 2012^ 2009 2010 2011 2012 DPS Dividend Yield ^ An additional 5% stock div
Slide 51: Annexure 5: Trends
Index Annexure 5: Trends 51
Slide 52: 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 3 Asset Avg. Growth 29% ROE 22% Total Shareholders Return (TSR) Dividend Yield Global Global Kuwait Kuwait Peers Peers Rank 2 1 Rank 1 3 Avg. Div TSR 22% Yield 13% Data Sour
Slide 53: 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 3 1 2 2 Asset Avg. Growth 31% ROE 24% Total Shareholders Return (TSR) Dividend Yield Global Global Kuwait Kuwait Peers Peers Rank 3 3 Rank 1 2 Avg. Div TSR 14% Yield 12% Data Sourc
Slide 54: KIPCO: Net asset value (NAV)
KIPCO: Net asset value (NAV) NAV/Share Position* 4 200% 149% 147% 135% 150% 126% 128% 128% 3 110% 101% 100% 78% 79% 68% 72% 51% 46% 51% 40% 40% 42% 2 6% 36% 34% 50% US$ 15% 27% 23% 20% 13% 11% 3% (7%) (10%) (18%) 0% (30%) 1 (50)% - (100)% Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q
Slide 55: Ownership
Ownership Shareholding Profile: September 2013 Treasury Shares 2.1% Retail Investors 6.2% Primary Shareholder (AFH*) 63.3% 2.6% HNIs Investment Companies 19.9% 5.8% Investment Funds They hold their ownership interest in KIPCO Major shareholders of KIPCO are members of through an investment vehicle A
Slide 56: KIPCO Group: Market data
KIPCO Group: Market data P/B P/E Market Cap (US$ mn)1 Entity 2012 Current2 2012 Current2 2012 Current2 0.9 1.5 17.3 26.5 1,841 3,023 1.7 1.8 14.7 17.1 2,892 3,151 0.9 1.0 NM 55.9 504 452 1.3 1.4 11.1 10.7 344 363 0.5 0.8 16.0 13.0 172 284 0.7 0.7 6.9 11.6 504 495 Notes: 1. Market Cap for 2012 and th
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 (2013E-18E) Tunisia Lebanon Iraq Morocco Israel Jordan 7.7% Kuwait Algeria Libya Bahrain 3.3% Egypt Qatar Saudi 1.7% 1.2% UAE 1.3% Arabia MENA China Japan Russia EU Brazil US UK India Oman -1.6% GCC Non GCC -3
Slide 59: GCC Region: Well Positioned to Deliver Growth
GCC Region: Well Positioned to Deliver Growth US$ billion ….One of the highest 342 per capita income, of world’s proven oil reserves along with robust and growing non-oil sector activity … 385 52,839 GDP / Capita, PPP (2013E) 43,964 (In US$) Accumulated 37,299 37,135 343 31,948 current 18,083 accoun
Slide 60: Kuwait: Oil Wealth to Fuel Non Oil Growth
Kuwait: Oil Wealth to Fuel Non Oil Growth Strong Current Government GDP Growth Account Spending (%) Balance % of Nominal GDP (US$ Bn) % of Nominal GDP (US$ Bn) Real GDP (US$ billion) 26.7% 28 42.2% 45 2009 3.3% 30.8% 37 43.1% 52 2010 74 87 2013 2018 41.8% 67 60 2011 37.5% GDP per capita (US$’000) 43
Slide 61: Kuwait development plan update
Kuwait development plan update What has happened so far? Development Plan (In US$ Bn) KD31 bn (US$108 bn) 4 year plan starting FY 2010/11 The government recently announced that US$5.4 bn will FY2010/11 FY2011/12 FY2012/13 be allocated for development spending under the Kuwait Development Plan 2013-1
Slide 62: Kuwait development plan overview
Kuwait development plan overview f Purpose: f Overview − Upgrade infrastructure − US$108 bn 4 year plan − Diversify non oil revenue − FY 2010/11 – Approved US$18 bn comprising 884 projects − Create employment − FY 2011/12 – Approved US$18.7 bn comprising 1,240* projects − Develop private sector − FY
Slide 63: Annexure 7: Market opportunity
Index Annexure 7: Market opportunity 63
Slide 64: 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 65: OSN: Market Opportunity
OSN: Market Opportunity Movement in Pay TV Penetration Source: PWC Entertainment Outlook, Ofcom European Report, Screen Digest, Litsearch, Bain Analysis) f Pay TV market in the MENA region has witnessed a penetration increase of 0.4% p.a. since its launch, compared to other developed markets (US~ 1.
Slide 66: Gulf Insurance Group: Market Opportunity
Gulf Insurance Group: Market Opportunity 337 Kuwait 1% f MENA region is characterized by 22 low insurance density and GIG Presence Egypt 1% significant under penetration 450 f Rapid insurance market growth Bahrain 2% in MENA with all countries witnessing double digit growth 103 Jordan 2% over past f
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