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 2013)
65 slides from Kuwait Projects Company Holding (K.S.C.P.)'s investor presentation, May 2013
Slide 1: Going for Growth Investor Presentation
Going for Investor Growth Presentation May, 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 We are Operating holding company with an AuM of US$31 bn# Geography Middle East and North Africa Sectors Primarily financial services and media Track record 21 years of continuous profitability, 11 years of continuous dividends Valuation*
Slide 5: Our presence by geographies & sectors
Our presence by geographies & sectors Major Sectors Geography Asset Commercial management Revenues1 Media Insurance Real Estate Industrial Others banking & investment (2012) banking Kuwait ● ● ● ● ● ● ● 49% UAE ● ● ● ● 4% Bahrain ● ● ● ● 6% KSA ● ● ● 5% Jordan ● ● ● ● 13% Algeria ● ● 6% Tunisia ● ●
Slide 6: Track record of generating attractive returns
Track record of generating attractive returns Total Shareholders’ Return (Share Price Return and Dividend Yield) Growth Last 15 years Last 10 years 206 199 96 91 69 139 139 35 1997 2012 2002 2012 Adjusted Share Price (US cents) Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Bo
Slide 7: Net asset value
Net asset value Attractive valuation for investors NAV Computation (US$ per Share) 0.0 0.1 0.1 (0.1) 667 455 405 0.1 0.1 fils fils fils 0.1 0.1 0.3 (0.6) 0.8 47% 0.7 0.5 1.6 1.6 1.4 1.0 Burgan OSN United Gulf Gulf United Real United Net other Net Debt NAV KIPCO BVPS (US$) Bank Bank Insurance Estate
Slide 8: Q1 2013 Snapshot
Q1 2013 Snapshot Revenues Growth (YoY) (US$ m) Burgan Bank 197 31% OSN 110 27% GIC 85 11% URC 47 48%* SADAFCO^ 98 19% KAMCO# 8 (10)% Overall growth is in line with Shafafiyah forum guidance *Calculated excluding non recurring income on sale of Vardun resulting in gain of US$74 mn in Q1’12 ^ Represen
Slide 9: Index: Strategy
Index Strategy 9
Slide 10: Strategic roadmap
Strategic roadmap Building Businesses Regional Thought Outlook leadership Investing Strong in engines managerial Being first Diversified MENA of growth revenue expertise in the streams region Target Team Approach ROE: 20% Balanced Portfolio Investment in companies with sustainable and predictable ca
Slide 11: Controlling or majority stakes
Controlling or majority stakes Business Commercial Asset Management & Media Insurance Real Estate Segments Banking Investment Banking (AMIB) Main Entities KIPCO Effective 60.2% 60.4% 96.1% 82.5%3 44.8% 64.8% Stakes1 Board 6 of 9 2 of 75 6 of 6 6 of 6 4 of 104 4 of 7 Representation Market Cap 3,347 U
Slide 12: Active management
Active management Key businesses – progress indicators Active Management – KIPCO Support & Action Business Then Now 1995 Q1’13 Net Net Transformed from a local player to regional player Interest Interest Hired new management in 2010/11 to execute on regional strategy Margin Margin Focused on g
Slide 13: Index: Performance Update
Index Performance Update 13
Slide 14: Q1 2013: Operating performance continues to be strong
Q1 2013: Operating performance continues to be strong 31% growth in operating income; 10% growth in pre tax profits NPA reduced to 5.6% (2012: 7%) Aggregate provision coverage increased to 141% ( 2012: 117%) 27% growth in revenues; 30% growth in subscriber base EBITDA margin reached 25%
Slide 15: Burgan Bank
Burgan Bank Loan Growth Deposit Growth Asset Quality US$ billion % NPA coverage (aggregate of collateral) US$ billion 21% 6% 32% 40% 14% 3% 41% 31% 111% 108% 117% 141% 19% 11.8 16% 73% Ex BBT 13.9 72% Ex BBT 58% 8.4 10.7 7.2 49% 8.1 6.0 7.1 10.5% 1.8 1.8 7.3% 7.0% 5.6% 1.7 0.9 0.0 2.1 2.2 1.0 0.9 1.
Slide 16: Burgan Bank: Regional operations
Burgan Bank: Regional operations Total Assets Operating Profit Net Profit US$ billion US$ million US$ million 61 49 6.3 25 5.4 17 17 27 25 23 11 3.2 3.3 2.6 20 6 1.4 1.1 3 2 3 4 7 3 1 1.1 0.7 0.5 0.5 1 2 (1) (3) AGB JKB BoB TIB Total BBT^ AGB JKB BoB TIB Total BBT^ AGB JKB BoB TIB Total BBT^ Q1'12 Q
Slide 17: Burgan Bank: NPA- cyclical & not structural
Burgan Bank: NPA- cyclical & not structural NPA Trend As at end of Q1’13, the NPA (US$ million) combined coverage of non NPA Ratio (Percentage) performing assets (NPA) is 1,116 850 1,287 1,193 971 256 141% 208 193 173 171 121 122 90 110 NPA Ratio declined from 7.0% 11.0% 11.8% 9.5% 10.5% 6.3% 6.
Slide 18: OSN
OSN MENA1 TV Overview Million MENA Region Latin America UK India US 419 579 63 1,223 314 Population 63 NA 26 225 132 Households 54 120 25 135 116 TV Households 2 37 14 112 102 Pay TV 85% NA 94% 60% 88% TV HHs /HHs (%) 4% 30% 54% 83% 88% Pay TV/ TV HHs (%) Low Pay TV penetration in MENA region indica
Slide 19: OSN (Cont'd)
OSN (Cont’d) Subscribers Net Adds Thousand Thousand 48 782 37 672 702 734 601 33 33 30 Q1'12 Q2'12* Q3'12 Q4'12 Q1'13 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Churn Subscribers by country (March 2013) 17% 17% 17% Others KSA 17% 16% 21% 25% Egypt 9% Bahrain 4% UAE 31% Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Kuwait 10% Qu
Slide 20: United Gulf Bank
United Gulf Bank Revenue Investment Income US$ million US$ million 163 109 109 93 54 29 32 22 4 3 2010 2011 2012 Q1'12 Q1'13 2010 2011 2012 Q1'12 Q1'13 Net Profit & Provisions AUM & Capitalisation US$ million US$ billion 68 19.5% 18.2% 23.2% 23.9% 8.0 8.0 8.1 29 7.5 26 25 39 13 24 12 7 2 11 9 1 1 6
Slide 21: Gulf Insurance Company
Gulf Insurance Company Gross & Net Premium Written Net Underwriting Income US$ million US$ million 517 35 476 30 31 426 140 150 9 6 239 262 211 86 97 2010 2011 2012 Q1'12 Q1'13 2010 2011 2012 Q1'12 Q1'13 Net Premium Written Gross Premium Written Combined Ratio Net Profit US$ million 89% 89% 92% 90%
Slide 22: United Real Estate Company (URC)
United Real Estate Company (URC) Total Revenue Operating Profit US$ million US$ million 197 114 124 105 70 63 85 74 35 74 47 32 16 (11) 2010 2011 2012 Q1'12 Q1'13 2010 2011 2012 Q1'12 Q1'13 Net Profit Total Assets & Return on Equity US$ million US$ million 80 2.9% 5.1% 10.7% 3.8% 53 1,855 1,959 1,95
Slide 23: URC: Balance Sheet (Break-up) as of March 2013
URC: Balance Sheet (Break-up) as of March 31 2013 Total Assets Investment Properties Total Assets US$ 1,954 million 1 Total : US$ 935 million 2% Investment properties 2% KIPCO Tower - Kuwait 5% 3% 8% 0% 7% 1 Land for development 3% Marina World - Kuwait Fairmount - Egypt Projects under 4% 33% constr
Slide 24: KIPCO Consolidated: Financial performance
KIPCO Consolidated: Financial performance Revenues Net Income Consolidated Assets US$ million US$ million US$ billion 1,576 25.6 25.7 1,451 160 20.8 1,249 20.1 107 111 510 431 30 30 2010 2011 2012 Q1'12 Q1'13 2010 2011 2012 Q1'12 Q1'13 2010 2011 2012 Q1'13 24
Slide 25: KIPCO Parent debt profile
KIPCO Parent debt profile: As at 31 March 2013 Debt Type Debt Maturity Total Debt: US$ 1.4 billion Total Debt: US$ 1.4 billion Term Loan 10% Bonds > 4 years, 20% 45.0% MTN 2-4 years, 70% 55.0% Enhanced Debt Maturity Profile Liquidity KIPCO has cash & bank balance of US$616 mn 4.8 yrs with no debt ma
Slide 26: Index: Conclusion
Index Conclusion 26
Slide 27: Why KIPCO?
Why KIPCO? Experienced Compelling management strategy team Outstanding Pan MENA Supportive Player primary track record shareholder Strong Transparent liquidity Well positioned to deliver 20% return in medium term 27
Slide 28: Thank You
Thank You
Slide 29: Annexure: Portfolio Companies
Index Annexure 1 : Portfolio Companies 29
Slide 30: Burgan Bank (BB): Overview
Burgan Bank (BB): Overview Overview > Kuwait based commercial bank with a regional presence in nine countries > 2nd largest conventional bank in Kuwait in terms of assets (total assets of US$21.4 bn as of March 31, 2013) > Offers a wide range of corporate, retail and treasury products through a netw
Slide 31: OSN: Overview
OSN: Overview > Largest digital satellite premium Pay TV operator in MENA region > Market leading technology includes integrated DVR & subscription VOD > Showtime and Orbit merged w.e.f . Aug 1, 2009 to form Panther Media Group Limited (PMGL) > Licensed to operate across 24 countries in MENA includi
Slide 32: United Gulf Bank (UGB): Overview
United Gulf Bank (UGB): Overview > Asset management and investment banking (AMIB) business > Offers asset management, investment banking, brokerage and advisory services > Listed on the Bahrain Stock Exchanges with a market cap of US$418 mn as of May 15, 2013 > Credit rating of BBB from Capital Inte
Slide 33: Gulf Insurance Company (GIC): Overview
Gulf Insurance Company (GIC): Overview Overview > Multi-line insurance provider with presence across the 9 MENA countries through subsidiaries > Provides coverage in the areas of marine, aviation, property, engineering, casualty, life and health insurance, with a wide range of conventional and takaf
Slide 34: United Real Estate Company (URC): Overview
United Real Estate Company (URC): Overview Overview > Leading integrated real estate company with presence in Kuwait & MENA > Sizeable portfolio of good quality properties; Large unencumbered asset base > Stable rental income; Rental income growth prospects supported by newly completed KIPCO Tower a
Slide 35: Major Real Estate Properties Developed & Operated by URC
Major Real Estate Properties Developed & Operated by URC 1979: Acquired 1994: Developed 1997: Developed 1999: Developed Fairmont Hotel, Al Khour Resort, Saleh Shehab, Al Shaheed Tower, Egypt Kuwait as BOT Kuwait as BOT Kuwait 1999: Developed 2001: Acquired 2003: Acquired 2003: Acquired Marina Hotel,
Slide 36: United Industries Company (UIC): Overview
United Industries Company (UIC): Overview Overview > Established in 1979, UIC invests in the industrial sector in Kuwait and the region > Major investments are Saudia Dairy and Foodstuff Company (SADAFCO) and Al Qurain Petrochemical Industries Company (QPIC) > Listed on the Kuwait Stock Exchange in
Slide 37: United Industries Company: Financial performance
United Industries Company: Financial performance Income from Associates Total Income US$ million US$ million 29 109 26 93 18 12 10 34 32 29 2010 2011 2012 Q1'12 Q1'13 2010 2011 2012 Q1'12 Q1'13 Net Profit Total Assets US$ million US$ million 830 14 13 633 632 599 12 9 4 2010 2011 2012 Q1'13 2010 201
Slide 38: Saudi Dairy & Foodstuff Company (SADAFCO): Overview
Saudi Dairy & Foodstuff Company (SADAFCO): Overview Overview > Established in 1976 as a pioneering venture in dairy sector, with commencement of production in UHT Milk plant in Jeddah in 1977 > Leading dairy and foodstuff company having operations across the MENA region > Highest market share in UHT
Slide 39: SADAFCO: Financial performance
Saudi Dairy & Foodstuff Company: Financial performance^ Total Revenue Net Profit US$ million US$ million % of Net Sales 20% 11% 11% 11% 413 54 356 302 44 273 40 34 2009/10 2010/11 2011/12 2012/13 2009/10* 2010/11 2011/12 2012/13 Total Assets Total Shareholder’s Equity US$ million US$ million 226 194
Slide 40: Qurain Petrochemicals Industries Co. (QPIC): Overview
Qurain Petrochemicals Industries Co. (QPIC): Overview Overview > Established as a holding company focusing on investment opportunities in petrochemicals, oil & gas and energy related sectors From the time of establishment, QPIC’s capital was committed to four petrochemical investments in > Kuwait i.
Slide 41: QPIC: Financial performance
Qurain Petrochemicals Industries Co: Financial performance Total Income Net Profit US$ million US$ million 130 116 91 79 30 25 (3) (7) 2009 2010 2011/12 2012/13 2009 2010 2011/12 2012/13 Total Assets Total Shareholder’s Equity US$ million US$ million 997 1,021 887 899 628 672 672 678 2009 2010 2011/
Slide 42: Annexure: Executive Management
Index Annexure 2 : Executive Management 42
Slide 43: 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 America Achievement Award (2005) BSc from MIT and MBA from Harvard University Faisal Hamad Al Ayyar Sam
Slide 44: Annexure: Key Companies
Index Annexure 3 : Key Companies 44
Slide 45: 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 46: 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 47: Annexure: Per Share Return
Index Annexure 4 : Per Share Return 47
Slide 48: KIPCO: Per share return
KIPCO: Per share return EPS Book Value Cents per share Cents per share 14 12 169 165 161 9 9 147 2008 2009 2010 2012 2009 2010 2011 2012 DPS ROE Cents per share Per cent 8.0% 6.6% 5.2% 5.1% 6.7% 4.6% 5.2% 5.7% 9 7 7 7 2009^ 2010^ 2011^ 2012^ 2009 2010 2011 2012 DPS Dividend Yield * An additional 10%
Slide 49: Annexure: Trends
Index Annexure 5 : Trends 49
Slide 50: KIPCO: Net asset value (NAV)
KIPCO: Net asset value (NAV) NAV/Share Position* 4 200% 150% 147% 136% 150% 126% 128% 129% 3 111% 101% 86% 82% 100% 78% 79% 69% 72% 51% 51% US$ 40% 46% 40% 2 27% 36% 34% 50% (5%) 23% 13% 15% 13% 11% 6% 3% (7%) (10%) 0% 1 (50)% - (100)% Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-1
Slide 51: Ownership
Ownership Shareholding Profile: March 2013 Retail Treasury Major shareholders of KIPCO are Investors Shares 2.5% members of ruling family of Kuwait 4.3% HNIs 3.2% They hold their ownership interest in Investment KIPCO through an investment vehicle Al Companies Futtooh Holding Company K.S.C. (AFH
Slide 52: KIPCO Group: Market data
KIPCO Group: Market data Entity P/B P/E Market Cap (US$ mn)1 2012 Current2 2012 Current2 2012 Current2 KIPCO 0.9 1.1 17.3 20.4 1,823 2,233 Burgan Bank 1.7 2.0 14.7 17.2 2,863 3,347 UGB 0.9 0.9 NM 37.9 504 418 GIC 1.3 1.4 11.1 11.3 340 366 UIC 0.5 0.6 16.9 18.4 170 215 URC 0.7 0.7 6.9 6.2 499 490 Not
Slide 53: Annexure 6: About the region
Index Annexure 6: About the region 53
Slide 54: MENA Region: Poised for strong economic growth
MENA Region: Poised for strong economic growth Syria 4th Largest Population in the World (2012E) Tunisia Iraq Morocco Population (million) Lebanon #1 #2 #3 #4 #5 #7 #11 #12 #25 Jordan 1,354 Kuwait 1,223 Algeria Bahrain Libya Egypt Qatar UAE 503 Saudi 419 314 Arabia 198 142 128 Oman 63 GCC Yemen Chin
Slide 55: GCC Region: Well positioned to deliver growth
GCC Region: Well positioned to deliver growth Current Account Surplus US$ billion Accumulated current account surplus of over 1.1 trillion US Dollars since 2008 331 355 258 154 68 2008 2009 2010 2011 2012E GDP / Capita, PPP (2012E) (In US$) 49,922 46,716 ….One of the highest per capita income, 36,94
Slide 56: Kuwait: Oil wealth to fuel non oil growth
Kuwait: Oil wealth to fuel non oil growth Real GDP and GDP per capita forecast to GDP Growth (%) grow at a CAGR of 3.1% and 2.3% Real GDP (US$ billion) GDP per capita (US$’000) respectively over the next 5 years 85 73 45 − Oil revenues along with boost in non oil 40 activity to fuel growth 2012 20
Slide 57: Kuwait development plan update
Kuwait development plan update What has happened so far? Development Plan (In US$ Bn) KD31 bn (US$108 bn) 4 year plan starting FY 2010/11 FY2010/11 FY2011/12 The government recently announced that US$5.4 bn will be allocated for development spending under the Kuwait 8.2 Development Plan 2013-14. 6.6
Slide 58: Kuwait development plan overview
Kuwait development plan overview Purpose: 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$18.7 bn comprising 1,240* projects − Develop private sector Th
Slide 59: Annexure 7: Market opportunity
Index Annexure 7: Market opportunity 59
Slide 60: Market Opportunity: BB & GIC
Market Opportunity: BB & GIC Banking Assets/GDP (%)^ Loans / GDP (%)^ 475 140 421 126 326 101 258 77 76 67 64 182 55 53 126 110 108 45 40 90 86 71 27 67 63 10 Note: As on 31st Dec., 2011 Note: As on 31st Dec., 2011 Insurance Density *(2011) Insurance Penetration** (2011) (In US$) 3,815 8% 7% 7% 1,88
Slide 61: Market Opportunity: GIC & UGB
Market Opportunity: GIC & UGB AMIB MENA Market Size Middle East Wealth and HNI Population US$ billion US$ billion CAGR (2010-15) 7.0 6.5 0.8 14.1% 3 0.3 0.4 0.4 0.4 0.4 0.5 60 % 0.6 1.9 1.7 1.7 1.7 1.5 2 1.4 1.4 45 % 2.1 2.2 17.7% 2 21% 30 % 3.3 1 8% 7% 15 % 0.4 1.5 1.4 14.1% 13% 0% 1 -18% 1.0 0% 0
Slide 62: Annexure 8: 2012 Highlights
Index Annexure 8: 2012 Highlights 62
Slide 63: Key highlights of 2012
Key highlights of 2012 1. Existing businesses performing strongly Commercial banking- Loan growth of 27% (excluding inorganics) Pay TV- Subscriber and revenue growth of 30% Insurance – Net premiums growth of 10% AMIB – Recurring revenue growth of 17% 2. Acquired growth businesses at attracti
Slide 64: Core Companies: 2012 Report card
Core Companies: 2012 Report card 27% loan growth (without Turkey acquisition) 17% growth in operating profits NPAs declined to 7.0% (2011: 10.5%) 33% revenue growth 30% subscriber growth 5x EBITDA growth 10% net premiums growth 30% net profit growth Rating upgraded to A- by S&P 64
Slide 65: Core Companies: 2012 Report card (cont'd)
Core Companies: 2012 Report card..cont’d Reduced balance sheet size from KD498 to KD345 mn Deleveraged by KD113 mn Despite all above net profit higher than 2011 Net profits grew by 123% KIPCO tower completed 81% office space occupancy Sadafco1 – 16% sales growth; 11% net profit growth
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