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 2014)
66 slides from Kuwait Projects Company Holding (K.S.C.P.)'s investor presentation, September 2014
Slide 1: Building Momentum
Building Momentum E Investor Presentation | September 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 Kuwa
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: Core Holdings
Core Holdings KIPCO: 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 #2 listed real estate Leading industrial company In
Slide 7: 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 (7%) 24% 1% (20%) N.A Exchange MSCI Emerging 15% (0.1%) 58% 20% 220% Markets S&P 500 25% 58% 137% 52% 111% MSCI Frontier 26% 33% 72% N.A N.A EM Index KIPCO 51% 152% 113% 70% 792% KIPCO Rank vs.
Slide 8: Attractive returns
Attractive returns Total Shareholders’ Return Growth 351 342 102 93 248 248 42 64 1996 H1'14 2003 H1'14 Share Price (US cents)^ Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Book Value Per Share Growth (in US cents) 240 231 29 39 1996 H1'14 2003 H1'14 Note: Assuming no divide
Slide 9: Continuous dividends
Continuous dividends KIPCO: USD1.4bn in cash dividends paid by KIPCO since 2002 10.1% 32 8.7% 10.3% 7.9% 8.2% 5.9% 6.6% 18 4.5% 5.2% 5.1% 14 4.6% 3.2% 9 9 6 7 7 7 5 7 4 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Cents Per share Dividend Yield 12 years of continuous dividend payments
Slide 10: Net asset value
Net asset value NAV Computation (USD per Share) 639 710 393 fils fils fils 0.0 0.0 0.1 0.2 0.1 (0.1) 0.1 0.1 0.3 (0.6) 0.8 0.6 2.5 0.5 1.5 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 Company Estate Company Price
Slide 11: Index: Strategy
Index Strategy 11
Slide 12: 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 13: Controlling or majority stakes
Controlling or majority stakes Main Entities KIPCO Effective 57.6% 60.5% 96.3% 82.7%3 45.3% 65.4% 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 3,265 Unlisted 522 112 358 455 S&P: S&P: A- Credit BBB+/A2 Moody’s: Unrated CI*: BBB CI*: BBB- AM Best: CI*:
Slide 14: Active management
Active management Key businesses – progress indicators Businesses Parameters Then Now Active Management – KIPCO Support & Action 1995 H1’14 Net Transformed from a local player to regional player Hired new management in 2010/11 to execute regional Interest 1.3% strategy Margin 2.6% Focused on g
Slide 15: Index: Performance Update
Index Performance Update 15
Slide 16: 2013: Operating performance continued to be strong
2013: Operating performance continued 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 17: 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% 114% 14.0 14.6 10.5% 12.0 12.1 16.5 16.1 13.8 14.6 8.0 5.6% 9.9 3.4% 3.8% 2011 2012 2013 H1'14 2011 2012 2013 H1'13 H1'14 2011 2012 2013 H1'
Slide 18: Burgan Bank: Regional operations
Burgan Bank: Regional operations Loan Growth Deposit Growth Net Profit^ USDbn USDbn USDmn 44% 29% 22% 37% 28% 17% 5.9 7.0 70 6.0 61 4.8 35 2.5 24 2.0 2.2 2.4 18 20 1.2 1.8 1.9 1.3 1.5 8 11 0.9 1.4 1.0 0.3 1.4 0.03 1.1 5 0.2 0.2 0.02 0.3 4 8 (3) AGB JKB BOB TIB BBT Total AGB JKB BOB TIB BBT Total AGB
Slide 19: Burgan Bank: NPA cyclical & not structural
Burgan Bank: NPA cyclical & not structural NPA Trend NPA (USDmn) As on Jun’14, the combined NPA Ratio (Percentage) coverage of non performing 1,113 847 1,284 948 670 793 256 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 20: 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 21: OSN: Overview…cont'd
OSN: Overview…cont’d Overview Pan Arab reach Largest premium Pay TV operator in MENA region (HQ in Dubai), created by the merger of Syria Tunisia Showtime and Orbit in 2009 Lebanon Palestine Iraq Iran Morocco Jordan Kuwait Licensed to operate in 24 countries in MENA Algeria Lybia Bahrain Western wit
Slide 22: Operating and financial performance
Operating and financial performance Subscribers Net Adds Thousand Thousand 260 1,080 995 818 170 99 734 132 564 161 84 85 2011 2012 2013 H1'13 H1'14 2011 2012 2013 H1'13 H1'14 Churn Diversified subscriber base (June 2014) Percentage Subscribers: 1,080K Others 22% 9% 19% Qatar KSA 17% 16% 17% 14% 26%
Slide 23: United Gulf Bank
United Gulf Bank Revenue Fees & Commission Income USDmn USDmn 109 93 21 20 87 17 17 64 9 38 2011 2012 2013 H1'13 H1'14 2011 2012 2013 H1'13 H1'14 Net Profit & Provisions AUM & Capitalisation USDmn USDbn 18.2% 23.2% 17.5% 15.8% 12.0 29 9.7 26 25 7.5 8.1 9 13 13 8 24 11 5 10 16 1 3 2011 2012 2013 0 H1
Slide 24: Gulf Insurance Group
Gulf Insurance Group Gross & Net Premium Written Net Investment Income USDmn USDmn 557 515 36 475 32 26 295 295 261 259 17 238 173 152 8 2011 2012 2013 H1'13 H1'14 2011 2012 2013 H1'13 H1'14 Net Premium Written Gross Premium Written Combined Ratio Net Profit USDmn 89% 92% 93% 96% 97% 10.4% 13.3% 13.
Slide 25: United Real Estate Company (URC)
United Real Estate Company (URC) Total Revenue1 Operating Profit2 USDmn USDmn 244 114 184 76 145 70 88 95 35 32 2011 2012 2013 H1'13 H1'14 2011 2012 2013 H1'13 H1'14 Net Profit Total Assets & Return on Equity USDmn USDmn 80 5.2% 11.2% 5.6% 3.7% 1,953 1,849 1,678 1,743 40 36 21 12 2011 2012 2013 H1'1
Slide 26: URC: Balance Sheet (Break-up) as of June 2014
URC: Balance Sheet (Break-up) as of 30 June 2014 Total Assets Investment Properties Total Assets USD1,743mn Total: USD425mn Marina World - Kuwait Investment properties 2% 2% 10% Land for development 3% 2% Salalah Mall - Oman 24% 5% Projects under Marina Plaza - Kuwait 13% construction* 8% Fixed asse
Slide 27: KIPCO Consolidated: Financial performance
KIPCO Consolidated: Financial performance Revenue Net Income Consolidated Assets USDmn USDmn EPS (Cents) USDbn 8.6 8.3 10.4 4.5 5.4 32.2 30.6 1,961 142 25.5 112 1,468 106 20.7 1,245 1,024 77 866 64 2011 2012 2013 H1'13 H1'14 2011 2012 2013 H1'13 H1'14 2011 2012 2013 H1'14 27
Slide 28: KIPCO Parent debt profile: As at June 2014
KIPCO Parent debt profile: As at 30 June 2014 Debt Type Debt Maturity Total Debt: USD1.9bn Total Debt: USD1.9bn Average debt maturity is International 3.9 years Bonds Local 78% Bonds 15% 15% 33% 52% 7% Term <2 Years 2-4 Years >4 Years Loan Liquidity KIPCO has cash & bank balance of USD1,066mn with n
Slide 29: Index: Why KIPCO
Index Why KIPCO 29
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 20% return in medium term 30
Slide 31: Thank you
hank you
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 nine countries 2nd largest conventional bank in Kuwait in terms of assets (Total Assets of USD26.6bn as of 30 June 2014) Offers a wide range of corporate, retail & treasury products through a network of 234 br
Slide 34: 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 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 USD522mn as of 18 September 2014 Credit rating of BBB from Capital
Slide 36: 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 37: 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 38: 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 39: 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 USD190mn as of 18 September 2014 KIPCO Group holds 72.6% consol
Slide 40: United Industries Company: Financial performance
United Industries Company: Financial performance Income from Associates Total Revenue* USDmn USDmn 26 162 21 18 12 14 140 55 42 29 41 25 24 14 22 19 2011 2012 2013 H1'13 H1'14 2011 2012* 2013* H1'13* H1'14 Profit from discontinued operation (SADFCO) Net Profit* Total Asset USDmn USDmn 100 770 767 63
Slide 41: 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 42: SADAFCO: Financial performance
Saudi Dairy & Foodstuff Company: Financial performance^ Total Revenue Net Profit USDmn USDmn 11% 11% 11% 8% 7% 413 414 356 44 46 40 114 124 9 9 2011/12 2012/13 2013/14 Q1'13/14 Q1'14/15 2011/12 2012/13 2013/14 Q1'13/14 Q1'14/15 Net profit Net profit margin Total Asset Total Shareholder’s Equity USDm
Slide 43: 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 44: Qurain Petrochemicals Industries Co: Financial performance
Qurain Petrochemicals Industries Co: Financial performance Share of Income from Associates Net Profit USDmn USDmn 33 117 97 21 79 13 6 3 15 3 2011/12 2012/13 2013/14 Q1'13/14 Q1'14/15 2011/12 2012/13 2013/14 Q1'13/14 Q1'14/15 Total Asset Total Shareholder’s Equity USDmn USDmn 1,293 1,273 1,062 1,007
Slide 45: Annexure 2: Executive Management
Index Annexure 2: Executive Management 45
Slide 46: 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 47: Annexure 3: Key Companies
Index Annexure 3: UGM Key Companies 47
Slide 48: 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 49: 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 50: Annexure 4: Per Share Return
Index Annexure 4: Per Share Return 50
Slide 51: KIPCO: Per share return
KIPCO: Per share return EPS Book Value Cents per share Cents per share 10 9 161 8 145 144 5 127 4 2011 2012 2013 H1'13 H1'14 2011 2012 2013 H1'14 DPS ROE Cents per share 8.4% 6.6% 7.1% 6.5% 5.1% 5.2% 5.8% 4.6% 3.2% 7 7 7 7 2010^ 2011^ 2012^ 2013^ 2011 2012 2013 H1'13 H1'14 DPS Dividend Yield ^ An ad
Slide 52: Annexure 5: Trends
Index Annexure 5: Trends 52
Slide 53: 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 3 TSR Avg. Div Absolute 792% Yield 7% Da
Slide 54: KIPCO: Net asset value (NAV)
KIPCO: Net asset value (NAV) NAV/Share Position* 4 200% 150% 148% 136% 150% 126% 129% 129% 3 111% 102% 51% 82% 100% 79% 72% 51% 46% 36% 40% 43% 34% USD 2 23% 50% 27% 21% 15% 13% 9% 9% 3% (4%) (6%) (10%) (18%) 0% (30%) (34%) 1 (44%) (41%) (50)% - (100)% Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12
Slide 55: Ownership
Ownership Shareholding Profile 1.7% Treasury Shares 44.7% Primary Shareholder (AFH*) 7.6% HNIs & Retail Investors 8.0% Investment Funds 38.0% Investment companies & other Institutions They hold their ownership interest in KIPCO Major shareholders of KIPCO are members of through an investment vehicle
Slide 56: 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 1.9 25.8 25.0 3,031 3,644 1.9 2.0 33.3 43.4 3,108 3,265 1.2 1.1 66.5 NM 543 522 1.4 1.3 10.7 9.4 358 358 0.7 0.4 10.8 1.8 266 190 0.7 0.7 8.7 13.1 488 455 Notes: 1. Market Cap for 2013 and the c
Slide 57: KIPCO: Average Daily Traded Value
KIPCO: Average Daily Traded Value Avg. Daily Traded Value (USD'000) 7,416 6,112 3,612 3,414 2,372 2,153 1,538 1,568 1,409 1,407 1,258 1,054 728 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 KIPCO stock has maintained an average daily traded value of USD2.
Slide 58: Annexure 6: About the region
Index Annexure 6: About the region 58
Slide 59: 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 60: 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 61: 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 62: 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 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: 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 66: 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
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