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 2014)
64 slides from Kuwait Projects Company Holding (K.S.C.P.)'s investor presentation, November 2014
Slide 1: Building Momentum
Building Momentum E Investor Presentation | November 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 #3 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 (2%) 31% (3%) (41%) 28% Exchange MSCI Emerging 2% 14% 10% (17%) 117% Markets S&P 500 17% 74% 87% 29% 77% MSCI Frontier 18% 37% 27% (24%) 86% EM Index KIPCO 34% 203% 153% 75% 797% KIPCO Rank vs.
Slide 8: Attractive returns
Attractive returns Total Shareholders’ Return Growth 350 341 100 91 250 250 42 63 1996 9M'14 2003 9M'14 Share Price (US cents)^ Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Book Value Per Share Growth (in US cents) 234 226 28 39 1996 9M'14 2003 9M'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) 630 690 392 fils fils fils 0.04 0.05 0.05 0.2 0.1 (0.1) 0.1 0.1 0.3 (0.6) 0.6 0.8 2.4 0.5 1.4 1.3 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 Pr
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 58.6% 60.5% 96.8% 83.2%3 45.6% 65.3% 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 3,165 Unlisted 524 98 360 405 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 9M’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% 164% 49% 76% 123% 118% 14.0 14.9 10.5% 12.0 12.3 16.1 16.2 14.9 13.8 8.0 5.6% 9.9 3.4% 3.8% 2011 2012 2013 9M'14 2011 2012 2013 9M'13 9M'14 2011 2012 2013 9M'
Slide 18: Burgan Bank: Regional operations
Burgan Bank: Regional operations Loan Growth Deposit Growth Net Profit^ USDbn USDbn USDmn 34% 38% 24% 35% 35% 19% 6.2 7.5 130 6.3 5.0 111 2.8 2.1 2.3 2.5 47 52 51 1.2 1.8 1.9 2.0 34 0.9 1.5 1.2 1.5 0.03 1.1 1.1 0.3 20 16 0.2 0.2 0.03 0.3 5 9 6 AGB JKB BOB TIB BBT Total AGB JKB BOB TIB BBT Total 1 AG
Slide 19: Burgan Bank: NPA cyclical & not structural
Burgan Bank: NPA cyclical & not structural NPA Trend NPA (USDmn) As on Sep’14, the combined NPA Ratio (Percentage) coverage of non performing 1,113 847 1,284 948 670 792 256 assets (NPA) is 164% 207 192 172 170 121 122 110 NPA Ratio is 3.8% as on 11.0% 11.8% 90 9.5% 10.5% 6.3% 6.0% 6.1% 4.1% 3.5
Slide 20: OSN: Overview
OSN : Overview MENA Pay TV Potential MENA Region1 Latin America UK India US 2 Population (Mn) 273 595 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 1,097 995 858 170 99 734 132 124 564 161 103 2011 2012 2013 9M'13 9M'14 2011 2012 2013 9M'13 9M'14 Churn Diversified subscriber base (Sep - 2014) Percentage Subscribers: 1,080K Others 22% 9% 20% Qatar KSA 17% 16% 17% 15%
Slide 23: United Gulf Bank
United Gulf Bank Revenue Fees & Commission Income USDmn USDmn 118 30 109 93 21 64 17 17 13 45 2011 2012 2013 9M'13 9M'14 2011 2012 2013 9M'13 9M'14 Net Profit & Provisions AUM & Capitalisation USDmn USDbn 18.2% 23.2% 17.5% 14.6% 43 12.0 9.7 26 25 27 7.5 8.1 13 8 24 2 11 5 16 1 3 2 2011 2012 2013 9M'
Slide 24: Gulf Insurance Group
Gulf Insurance Group Gross & Net Premium Written Net Investment Income USDmn USDmn 557 515 36 475 475 32 33 427 29 261 295 259 238 232 8 2011 2012 2013 9M'13 9M'14 2011 2012 2013 9M'13 9M'14 Net Premium Written Gross Premium Written Combined Ratio Net Profit USDmn 89% 92% 93% 94% 95% 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 70 136 136 64 45 2011 2012 2013 9M'13 9M'14 2011 2012 2013 9M'13 9M'14 Net Profit Total Assets & Return on Equity USDmn USDmn 80 5.2% 11.2% 5.6% 3.1% 1,953 1,849 1,748 1,678 40 39 36 15 2011 2012 2013 9M
Slide 26: URC: Balance Sheet (Break-up) as of 30 September 2014
URC: Balance Sheet (Break-up) as of 30 September 2014 Total Assets Investment Properties Total Assets USD1,748mn Total: USD420mn Marina World - Kuwait Investment properties 1% 2% 10% Land for development 3% 2% Salalah Mall - Oman 24% 5% Projects under Marina Plaza - Kuwait 13% construction* 8% Fixed
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 6.3 7.9 31.6 30.6 1,961 142 25.5 1,522 112 1,468 106 110 20.7 1,319 1,245 91 2011 2012 2013 9M'13 9M'14 2011 2012 2013 9M'13 9M'14 2011 2012 2013 9M'14 27
Slide 28: KIPCO Parent debt profile
KIPCO Parent debt profile: As at 30 September 2014 Debt Type Debt Maturity Total Debt: USD1.9bn Total Debt: USD1.9bn Average debt maturity is International 3.6 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 USD1,052mn w
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 USD26.0bn as of 30 September 2014) Offers a wide range of corporate, retail & treasury products through a network of 2
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 USD524mn as of 12 November 2014 Credit rating of BBB from Capital I
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 QPIC & ATC Listed on the Kuwait Stock Exchange in 1997, it has market cap of USD194mn as of 12 November 2014 KIPCO Group holds 73.5% consolidate
Slide 40: United Industries Company: Financial performance
United Industries Company: Financial performance Income from Associates Total Revenue* USDmn USDmn 36 162 26 18 17 140 12 55 58 45 29 41 37 14 22 21 2011 2012 2013 9M'13 9M'14 2011 2012* 2013* 9M'13* 9M'14 Profit from discontinued operation (SADFCO) Net Profit* Total Asset USDmn USDmn 100 770 630 60
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: Qurain Petrochemicals Industries Co: Financial performance
Qurain Petrochemicals Industries Co: Financial performance Share of Income from Associates Net Profit USDmn USDmn 33 28 117 21 97 79 9 51 6 28 2011/12 2012/13 2013/14 H1'13/14 H1'14/15 2011/12 2012/13 2013/14 H1'13/14 H1'14/15* Total Asset Total Shareholder’s Equity USDmn USDmn 1,713 1,007 1,048 1,0
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 8 145 6 144 123 2011 2012 2013 9M'13 9M'14 2011 2012 2013 9M'14 DPS ROE Cents per share 8.3% 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 9M'13 9M'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 3 TSR Avg. Div Absolute 797% Yield 7% Da
Slide 52: KIPCO: Net asset value (NAV)
KIPCO: Net asset value (NAV) NAV/Share Position* 4 200% 151% 148% 129% 130% 150% 127% 3 112% 102% 79% 82% 100% 73% 46% 51% 43% 36% 34% 41% 2 3% 50% 27% 23% 21% USD 15% 13% 9% 9% (4%) (6%) (10%) (11%) 0% (18%) (30%) (34%) 1 (44%) (41%) (46%) (50)% - (100)% Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2
Slide 53: Ownership
Ownership Shareholding Profile 1.8% Treasury Shares 44.7% Primary Shareholder (AFH*) 7.6% HNIs & Retail Investors 8.0% Investment Funds 37.9% 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 2013 Current2 2013 Current2 2013 Current2 1.6 1.8 25.8 23.3 2,994 3,498 1.9 1.7 33.3 36.0 3,070 3,165 1.2 1.1 66.5 NM 550 524 1.4 1.1 10.7 9.2 354 360 0.7 0.4 10.8 2.0 263 194 0.7 0.6 8.7 13.5 482 405 Notes: 1. Market Cap for 2013 and the c
Slide 55: KIPCO: Average Daily Traded Value
KIPCO: Average Daily Traded Value Avg. Daily Traded Value (USD'000) 7,255 5,979 3,534 3,340 2,106 1,504 1,534 1,377 1,231 1,031 1,088 975 833 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 KIPCO stock has maintained an average daily traded value of USD2.4m
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 Syria Current Account Balance as a % of GDP (2014E-19E) Tunisia Lebanon Iraq Morocco Israel 4.8% Jordan Kuwait 2.7% 2.4% Algeria Libya Bahrain 1.5% Egypt 1.2% Qatar Saudi UAE Arabia MENA Russia China EU Japan India US UK Brazil Oman -2.4% -2.7% -2.9% GC
Slide 58: GCC Region: Well Positioned to Deliver Growth
GCC Region: Well Positioned to Deliver Growth USDbn ….One of the highest 305 per capita income, of world’s proven oil reserves along with robust and growing non-oil sector activity … 343 GDP / Capita, PPP (2014E) (In USD) Accumulated 387 54,678 current 37,744 37,683 35,849 24,764 account 15,153 12,8
Slide 59: 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) 32.0% 37 44.8% 52 2010 2.7% 43.6% 67 39.1% 60 2011 147 168 2014E 2019E 45.5% 79 67 201
Slide 60: 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 61: Annexure 7: Market opportunity
Index Annexure 7: Market opportunity 61
Slide 62: 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 63: Gulf Insurance Group: Market Opportunity
Gulf Insurance Group: Market Opportunity 323 Kuwait 1% MENA region is characterized by 23 low insurance density and GIG Presence Egypt 1% significant under penetration 557 Rapid insurance market growth Bahrain 2% in MENA with all countries witnessing double digit growth 105 Jordan 2% over past f
Slide 64: 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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