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 (September 2016)
65 slides from Kuwait Projects Company Holding (K.S.C.P.)'s investor presentation, September 2016
Slide 1: KIPCO Still Continues to Grow – Investor Presentation September 2016
..KIPCO Still Continues to Grow.. Investor Presentation | September 2016 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 Bloom berg 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 We are Operating holding company with total assets of USD33.2bn# Geography Middle East and North Africa (MENA) Sectors Primarily financial services & media Track record 24 years of continuous profitability, 14 years of continuous dividends
Slide 5: Our presence by geographies & sectors
Our presence by geographies & sectors Major Sectors Geography Commercial Revenue Media Insurance Real Estate AMIB Industrial Others banking (2015) 1 Kuwait ● ● ● ● ● ● ● 46% KSA ● ● ● 8% UAE ● ● ● ● 7% Bahrain ● ● ● ● 4% Turkey ● 11% Jordan ● ● ● ● 8% Egypt ● ● ● ● 7% Algeria ● ● ● 3% Iraq ● ● ● 2%
Slide 6: Core holdings
Core holdings All core holdings are market leaders in their space #2 conventional bank #1 Digital satellite premium #1 Insurer in Kuwait3, Bahrain4 , in Kuwait1 Pay TV operator2 in MENA Jordan4 & Egypt5 region #1 Asset Manager in Kuwait with #3 listed real estate Leading industrial company In Kuwait
Slide 7: Best in class: Performance vs. key indices
Best in class: Performance vs. key indices 1 3 5 7 10 Total return* year year year year year Kuwait Stock (10%) (22)% 4% (15%) NA Exchange MSCI Emerging Markets (12%) (4%) (16%) 33% 46% S&P 500 4% 39% 77% 164% 105% MSCI Frontier (8%) 1% 7% 38% NA EM Index KIPCO (17%) 17% 95% 65% 199% KIPCO Rank vs.
Slide 8: Attractive returns
Attractive returns Total Shareholders’ Return Growth 278 261 112 95 166 166 132 40 1996 H1'16 2005 H1'16 Share Price (US cents)^ Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Book Value Per Share Growth (in US cents) 242 231 48 27 1996 H1'16 2005 H1'16 8 Note: Assuming no div
Slide 9: Continuous dividends
Continuous dividends KIPCO: USD1.5bn in cash dividend paid by KIPCO since 2002 10.1% 10.3% 8.7% 30 7.9% 8.2% 5.9% 6.6% 4.5% 16 5.2% 5.1% 4.3% 13 3.2% 3.6% 4.6% 8 8 8 8 6 7 7 7 5 7 3 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Cents Per share Dividend Yield 14 years of conti
Slide 10: Net asset value
Net asset value NAV Computation (USD per Share) 595 540 398 fils fils fils 0.07 0.06 0.19 0.13 ( 0.34 ) 0.25 0.11 0.50 ( 0.57 ) 0.69 0.63 1.79 0.31 1.29 1.32 0.63 Burgan OSN United Gulf United United Net other Net Debt NAV KIPCO Reported Bank Gulf Bank Insurance Real Industries Assets Share Book Com
Slide 11: Index: Strategy
Index Strategy 11
Slide 12: Building Businesses
Strategic roadmap Regional MENA outlook Investing in Target engines of ROE: growth 15%+ Diversified revenue streams Balanced Building Portfolio Businesses Strong managerial Team expertise Thought Approach leadership Being first in the region Invest in companies with sustainable and predictable cashf
Slide 13: Controlling or majority stakes
Controlling or majority stakes Main Entities KIPCO Effective 64.6% 60.5% 96.3% 83.0% 3 45.6% 72.0% Stakes1 Board Representation 6 of 9 2 of 75 4 of 7 5 of 5 4 of 104 4 of 7 Market Cap (USDmn)2 2,177 Unlisted 840 101 404 363 S&P: S&P: Credit BBB+/A2 A- (GIRI); Moody’s: Unrated CI: BBB Unrated CI: BBB
Slide 14: Active management
Active management Key businesses – progress indicators Businesses Parameters Then* Now Active Management – KIPCO Support & Action 1995 H1’16 Net 2.3% ▪ Transformed from a local player to regional player Interest 1.3% ▪ Hired new management in 2010/11 to execute regional strategy ▪ Focused on growth
Slide 15: Index: Performance Update
Index Performance Update 15
Slide 16: Burgan Bank
Burgan Bank Loan Growth Deposit Growth Asset Quality USDbn USDbn NPA coverage with collateral^ NPA coverage without collateral 175% 184% 184% 197% 123% 131% 120% 125% 14.5 14.3 15.5 3.9% 15.3 3.4% 3.5% 12.8 13.5 3.2% 13.2 13.0 2013 2014 2015# H1'16 2013 2014 2015# H1'16 2013 2014 2015# H1'16 NPA to
Slide 17: Burgan Bank: Regional operations
Burgan Bank: Regional operations* Loan Growth Deposit Growth Net Profit^ USDbn USDbn USDmn -4% 14% 8% -15% 11% 1% 47 4 .6 4 .3 3 .5 4 .9 5 .0 21 3 .1 16 11 12 9 8 2 .2 2 .5 3 (9 ) 1 1 .0 0 .9 1 .3 1 .2 1 .1 0 .9 0 .3 0 .3 AG B BoB TIB BBT Total 0 .2 0 .2 0 .0 0 .0 AG B BO B TIB BBT Total AG B BO B T
Slide 18: Burgan Bank: NPA & provisioning trend
Burgan Bank: NPA* & provisioning trend NPA Trend NPA (USDmn) At end of Jun 2016, combined NPA Ratio (Percentage) coverage of non performing 1,034 787 1,193 881 623 642 699 677 246 assets (NPA) was 197% 199 166 185 164 116 117 102 NPA Ratio was 3.5% as on 30 1 1 .0 %1 1 .8 % 86 9 .5 % 1 0 .5 % 6
Slide 19: Gulf Insurance Group
Gulf Insurance Group Gross & Net Premium Written Net Investment Income USDmn USDmn 613 39 572 37 517 26 324 326 300 286 19 275 17 159 184 2013 2014 2015 H1'15 H1'16 2013 2014 2015 H1'15 H1'16 Net Premium Written Gross Premium Written Combined Ratio Net Profit & ROE USDmn 93% 95% 94% 90% 89% 13.5% 14
Slide 20: OSN: Overview
OSN: Overview MENA Pay TV Potential MENA Region1 Latin America UK India US Population (Mn) 338 616 66 1,310 324 Pay TV (Mn; Est.) 5.6 32 15 148 99 TV Households (Mn) 70 56 26 183 118 TV Households / Households (%) 96% NA 95% 74% 85% Pay TV/ TV Households (%) ~8% 57% 57% 81% 84% Low Pay TV penetratio
Slide 21: OSN: Overview…cont'd
OSN: Overview…cont’d Overview Pan Arab reach Syria Largest premium Pay TV operator in MENA Tunisia Lebanon Iraq Iran region (HQ in Dubai), created by the merger of Morocco Palestine Jordan Showtime and Orbit in 2009 Kuwait A lgeria Lybia Bahrain Western Egypt Qatar Sahara Licensed to operate in 26 c
Slide 22: United Gulf Bank
United Gulf Bank Revenue Fee & Commission Income USDmn USDmn 169 38 145 32 75 20 72 17 64 15 2013 2014 2015 H1'15 H1'16 2013 2014 2015 H1'15 H1'16 Net Profit & Provisions AuM & Capitalisation USDmn USDmn 15.1% 11.6 59 10.7 41 10.5 9.7 17 12 9 8 6 19 7 5 5 11 5 4 3 2013 2014 2015 H1'15 H1'16 2013 201
Slide 23: United Real Estate Company (URC)
United Real Estate Company (URC) Total Revenue 1 Operating Profit2 USDmn USDmn 76 216 70 194 63 171 102 109 31 29 2013 2014 2015 H1'15 H1'16 2013 2014 2015 H1'15 H1'16 Net Profit Total Assets & ROE USDmn USDmn 5.6% 4.0% 4.2% 2.9% 37 1,887 1,825 28 1,717 26 1,559 12 10 2013 2014 2015 H1'15 H1'16 2013
Slide 24: URC: Balance Sheet (Break-up) as of June 2016
URC: Balance Sheet (Break-up) as of 30 June 2016 Total Asset Investment Properties Total: USD1,887m n Total: USD374m n 3% 1% 2% Investm ent properties 9% 20% Land for development 13% Marina World - Kuwait 14% Projects under Salalah Mall - Oman construction* Fixed Assets (PPE) 11% 47% Marina Plaza -
Slide 25: KIPCO consolidated: Financial performance
KIPCO consolidated: Financial performance Revenue Net Income Consolidated Assets USDmn USDmn EPS (Cents) USDbn 9.2 10.9 11.2 5.4 6.1 33.2 175 2,047 1,970 152 * 31.6 1,694 132 30.7 93 1,088 84 1,007 28.5 2013 2014 2015 H1'15 H1'16 2013 2014 2015 H1'15 H1'16 2013 2014 2015 H1'16 25 *Revenue excluding
Slide 26: KIPCO parent debt profile: As at June 2016
KIPCO parent debt profile: As at 30 June 2016 Debt Type* Debt Maturity* Total Debt: USD2.0bn Total Debt: USD2.0bn Average debt maturity is International 3.4 years Bonds 100% 25% 23% - 25% 50% <1 Year 1-2 Years 2-4 Years >4 Years * As 30 of June 2016 Liquidity KIPCO has cash & bank balance of USD1,17
Slide 27: Index: Why KIPCO
Index Why KIPCO 27
Slide 28: KIPCO Best in Class: Last 10 years
KIPCO Best in Class: Last 10 years Operating Parameters CAGR Revenue Growth 21% Operating Income Growth 20% Asset Growth 25% Data Source: Bloomberg 28 Notes: Kuwait includes all KSE listed companies with a market cap of >USD500mn. Global Peers includes Investor AB, Lundbergs AB, Industrivarden, Bouy
Slide 29: KIPCO Best in Class: Last 10 years
KIPCO Best in Class: Last 10 years Return Parameters CAGR* Dividend Yield 10% Return on Equity (ROE) 19% Total Shareholders Return (TSR) 203% * Except TSR Data Source: Bloomberg Notes: Kuwait includes all KSE listed companies with a market cap of >USD500mn. Global peers includes Investor AB, Lundber
Slide 30: 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 15%+ return in medium term 30
Slide 31: Slide 31
Slide 32: Annexure 1: Portfolio Companies
Index Annexure 1: Portfolio Companies 32
Slide 33: Burgan Bank (BB): Overview
Burgan Bank (BB): Overview Overview Kuwait based commercial bank with regional presence in seven countries 2 nd largest conventional bank in Kuwait in terms of assets (Total assets of USD23.8bn as of 30 June 2016) Offers a wide range of corporate, retail & treasury products through a network of 184
Slide 34: Gulf Insurance Group (GIG): Overview
Gulf Insurance Group (GIG): Overview Overview Multi-line insurance provider with presence across 10 MENA countries through subsidiaries Provides marine, aviation, property, engineering, casualty, life & health insurance, & micro finance insurance Operates through a network of more than 50 branches a
Slide 35: 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 USD840mn as of 30 August 2016 Credit rating of BBB from Capital Int
Slide 36: 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 Abdali mall Listed on the Kuwait stoc
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 2013 Acqui
Slide 38: 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 QPIC (31%) & ATC (29%) KIPCO group holds 80.5% consolidated stake, while KIPCO directly holds 60.2% (as on 30 June 2016) Key highlights of H1’16
Slide 39: United Industries Company: Financial performance
United Industries Company: Financial performance Income from Associates Total Revenue* USDmn USDmn 151 35 33 32 24 16 130 44 34 48 21 25 2013 2014 2015 H1'15 H1'16 2013* 2014 2015 H1'15 H1'16# * Profit from discontinued operation (SADAFCO) Net Profit^ Total Asset USDmn USDmn 93 751 759 646 561 31 38
Slide 40: Qurain Petrochemicals Industries Co. (QPIC): Overview
Qurain Petrochemicals Industries Co. (QPIC): Overview Overview Holding company focusing on investment opportunities in food, 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 ca
Slide 41: Qurain Petrochemicals Industries Co: Financial performance
Qurain Petrochemicals Industries Co: Financial performance Share of Income from Associates Net Profit USDmn USDmn 35 31 104 91 82 12 12 9 14 17 2013/14 2014/15^ 2015/16 Q1'15/16 Q1'16/17 2013/14 2014/15* 2015/16 Q1'15/16 Q1'16/17 Total Asset Total Shareholder’s Equity USDmn USDmn 1,749 1,728 1,730 1
Slide 42: Jordan Kuwait Bank (JKB): Overview
Jordan Kuwait Bank (JKB): Overview Overview Jordan based commercial bank with operations in Jordan, Palestine and Cyprus 4th largest conventional bank in Jordan in terms of asset (Total asset of USD3.9bn as of 30 June 2016) Offers a wide range of corporate, retail & treasury products through a netwo
Slide 43: Jordan Kuwait Bank
Jordan Kuwait Bank Loan Growth Deposit Growth USDbn USDbn 1.9 1.8 1.9 1.9 2.7 2.6 2.3 2.4 2013 2014 2015 H1'16 2013 2014 2015 H1'16 Operating Income & NIM Net Profit & Cost to Income USDmn USDmn 175 67 66 39.7% 174 175 54 3.6% 32.4% 3.4% 4.0% 35.7% 3.7% 3.4% 90 84 33.7% 30.0% 29 22 2013 2014 2015 H1
Slide 44: Annexure 2: Executive Management
Index Annexure 2: Executive Management 44
Slide 45: 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 A l America Achievement Award (2005) Samer Subhi BSc from MIT and MBA from Harvard Univers
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 28 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 C ompany (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
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 11 11 134 9 118 116 108 6 5 2013 2014 2015 H1'15 H1'16 2013 2014 2015 H1'16 DPS ROE Cents per share 11.9% 10.4% 10.5% 8.9% 3.6% 4.3% 5.1% 7.1% 3.2% 7 7 8 8 2012^ 2013^ 2014 2015 2013 2014 2015 H1'15 H1'16 DPS Dividend Yield 50 ^
Slide 51: Annexure 5: Trends
Index Annexure 5: Trends 51
Slide 52: KIPCO: Net asset value (NAV)
KIPCO: Net asset value (NAV) NAV/Share Position* 3 40% 42% 50% 20% 16% 8% 11% 8% (10%) 4% 5% 3% 2% (5%) (7%) 2 (11%) 0% (18%) (20%) (30%) (28%) (26%) USD (34%) (36%) (36%) (44%) (41%) (43%) (41%) (46%) 1 (50)% - (100)% Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-
Slide 53: Ownership
Ownership Shareholding Profile 1.8% Treasury Shares 44.7% Primary Shareholder (AFH) 6.5% HNIs & Retail Investors 7.1% Investment Funds 39.9% Investment companies & other Institutions They hold their ownership interest in KIPCO Major shareholders of KIPCO are members of through an investment vehicle
Slide 54: KIPCO Group: Market data
KIPCO Group: Market data P/B P/E Market Cap (USDmn)1 Entity 2015 Current2 2015 Current2 2015 Current3 1.8 1.7 16.6 14.3 2,593 2,591 1.2 1.1 10.9 9.5 2,311 2,177 2.1 2.1 75.2 81.6 846 840 1.6 1.5 9.9 9.3 416 404 0.6 0.6 13.6 15.4 331 363 Notes: 1 Market cap for 2015 and the current number converted a
Slide 55: KIPCO: Average Daily Traded Value
KIPCO: Average Daily Traded Value Avg. Daily Traded Value (USD'000) 3,236 2,877 2,348 1,881 1,461 1,484 1,250 1,277 1,150 1,010 918 1,002 971 697 796 629 666 641 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 KIPCO’s stoc
Slide 56: Annexure 6: About the region
Index Annexure 6: About the region 56
Slide 57: MENA Region: Poised for strong economic growth
MENA Region: Poised for strong economic growth Real GDP Growth (2016-21E) Tunisia Lebanon Syria Iraq Morocco Jordan 7.6% India Kuwait Algeria 6.0% China Bahrain Libya Egypt Qatar 3.5% MENA Saudi UAE 2.2% US Arabia Oman 2.2% UK 1.9% EU GCC Non GCC 1.4% Brazil Yemen 1.3% Russia 0.5% Japan MENA region
Slide 58: GCC Region: Well positioned to deliver growth
GCC Region: Well positioned to deliver growth One of the highest per capita income, large sovereign ….All contribute to wealth funds, 30% of world’s proven oil reserves, fundamentals in the GCC…. along with robust and growing non-oil sector activity … Current Account Surplus Government debt as a % o
Slide 59: Kuwait: Protected against oil price decline
Kuwait: Protected against oil price decline Kuwaiti government’s Reserve Fund for Future Generations (RFFG) expected to stand at USD535bn at the end of 2015 25% of total revenue contributed to RFFG during periods of high oil prices and 10% during low oil prices Prudent Oil Oil output to remain above
Slide 60: Kuwait: Stable macro-economic environment
Kuwait: Stable macro-economic environment Average budget surplus of 25% 1 of GDP from 2001 to 2014 Healthy Average budget surplus expected to be 8% 1 from 2016 to 2019 Annual After excluding investment income from RFFG, on average Kuwait, will run single -digit fiscal deficits between Budget fiscal
Slide 61: Kuwait development plan overview
Kuwait development plan overview In February 2010, the Kuwaiti authorities announced a series of five-year plans stretching to 2035 aimed at diversifying the economy and expanding the role of the Purpose private sector while tackling much needed investments in health, education and infrastructure an
Slide 62: Kuwait Development Plan: Projects in action
Kuwait Development Plan: Projects in action Key Projects under the plan Jurassic Non Associated Oil & Gas Khairan City Oil & Gas Projects* Reserves Expansion: Phase 2 140mn m2 residential city, incl 10,000 Awarded: Kuwait oil Company awarded 29 houses, 22,000 apts, other facilities different work re
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 400 % 375% Burgan Presence 300 % Burgan Presence 339% 335% 261% 350 % 250 % 300 % 261% 260% 250 % 200 % 171% 196% 152% 200 % 157% 158%173% 150 % 120% 114% 123% 106% 99% 118% 79% 87% 150 % 92% 99% 10
Slide 65: Gulf Insurance Group: Market opportunity
Gulf Insurance Group: Market opportunity 269 Kuwait 1% Low insurance density in MENA region 23 GIG Presence Egypt 1% On average, high single digit growth in insurance market in 1,102 UAE all MENA countries despite low 2% oil prices 102 Jordan 2% Solid outlook for life insurance, low penetratio
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