Kuwait Projects Company Holding (K.S.C.P.) · KSE:KPROJ
Kuwait Projects Company Holding (K.S.C.P.) — KIPCO (Kuwait Projects Company Holding) — Investor Presentation (November 2016)
63 slides from Kuwait Projects Company Holding (K.S.C.P.)'s investor presentation, November 2016
Slide 1: KIPCO Still Continues to Grow - Investor Presentation November 2016
..KIPCO Still Continues to Grow.. Investor Presentation | November 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 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 total assets of USD33.0bn# 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 #2 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 (1%) (21)% 12% (12%) NA Exchange MSCI Emerging Markets 17% (1%) 18% 20% 52% S&P 500 15% 37% 113% 138% 101% MSCI Frontier 7% (2%) 22% 21% NA EM Index KIPCO (3%) 11% 149% 109% 175% KIPCO Rank vs.
Slide 8: Attractive returns
Attractive returns Total Shareholders’ Return Growth 295 278 112 96 183 183 132 40 1996 9M'16 2005 9M'16 Share Price (US cents)^ Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Book Value Per Share Growth (in US cents) 245 233 48 27 1996 9M'16 2005 9M'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: Index: Strategy
Index Strategy 10
Slide 11: 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 12: Controlling or majority stakes
Controlling or majority stakes Main Entities KIPCO Effective 64.8% 60.5% 96.3% 83.0%3 45.6% 72.2% 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 2,089 Unlisted 822 87 364 335 S&P: S&P: Credit BBB+/A2 A- (GIRI); Moody’s: Unrated CI: BBB Unrated CI: BBB R
Slide 13: Active management
Active management Key businesses – progress indicators Businesses Parameters Then* Now Active Management – KIPCO Support & Action 1995 9M’16 Net 2.4% ▪ 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 14: Index: Performance Update
Index Performance Update 14
Slide 15: Burgan Bank
Burgan Bank Loan Growth Deposit Growth Asset Quality USDbn USDbn NPA coverage with collateral^ NPA coverage without collateral 175% 184% 184% 181% 123% 131% 120% 109% 14.5 14.1 3.9% 4.1% 15.3 15.5 3.4% 3.2% 12.8 12.8 13.2 13.0 2013 2014 2015# 9M'16 2013 2014 2015# 9M'16 2013 2014 2015# 9M'16 NPA to
Slide 16: Burgan Bank: Regional operations
Burgan Bank: Regional operations* Loan Growth Deposit Growth Net Profit^ USDbn USDbn USDmn 9% 6% -16% -6% 62 4.5 4.3 4.9 4.6 3.4 3.1 32 26 23 17 14 2.2 2.2 12 6 (6) 1 1.0 1.0 1.3 1.2 1.1 0.9 0.3 0.3 0.2 0.2 0.0 0.0 AGB BoB TIB BBT Total AGB BOB TIB BBT Total AGB BOB TIB BBT Total 2015 9M'16 Growth i
Slide 17: Burgan Bank: NPA & provisioning trend
Burgan Bank: NPA* & provisioning trend NPA Trend NPA (USDmn) At end of Sep 2016, combined NPA Ratio (Percentage) coverage of non performing 1,034 787 1,193 881 623 642 699 802 246 assets (NPA) was 181% 199 185 166 164 116 117 102 NPA Ratio was 4.1% as on 30 11.0% 11.8% 86 9.5% 10.5% 6.3% 6.0% 6.
Slide 18: Gulf Insurance Group
Gulf Insurance Group Gross & Net Premium Written Net Investment Income USDmn USDmn 613 39 572 37 517 507 481 29 26 24 324 275 300 260 253 2013 2014 2015 9M'15 9M'16 2013 2014 2015 9M'15 9M'16 Net Premium Written Gross Premium Written Combined Ratio Net Profit & ROE USDmn 93% 95% 94% 92% 90% 13.5% 14
Slide 19: 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 20: 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 Algeria Lybia Bahrain Western Egypt Qatar Sahara Licensed to operate in 26 co
Slide 21: United Gulf Bank
United Gulf Bank Revenue Fee & Commission Income USDmn USDmn 169 38 145 32 28 105 103 23 64 17 2013 2014 2015 9M'15 9M'16 2013 2014 2015 9M'15 9M'16 Net Profit & Provisions AuM & Capitalisation USDmn USDmn 14.9% 11.6 59 10.7 10.8 41 9.7 17 11 12 8 6 19 5 6 5 11 6 6 3 2013 2014 2015 9M'15 9M'16 2013
Slide 22: United Real Estate Company (URC)
United Real Estate Company (URC) Total Revenue1 Operating Profit2 USDmn USDmn 76 216 70 194 63 171 172 149 42 44 2013 2014 2015 9M'15 9M'16 2013 2014 2015 9M'15 9M'16 Net Profit Total Assets & ROE USDmn USDmn 5.6% 4.0% 4.2% 3.2% 37 1,895 1,825 28 1,717 26 1,559 16 16 2013 2014 2015 9M'15 9M'16 2013
Slide 23: URC: Balance Sheet (Break-up) as of September 2016
URC: Balance Sheet (Break-up) as of 30 September 2016 Total Asset Investment Properties Total: USD1,895mn Total: USD374mn 2% 1% 2% Investment properties 9% 20% Land for development 13% Marina World - Kuwait 14% Projects under Salalah Mall - Oman construction* Fixed Assets (PPE) 11% 48% Marina Plaza
Slide 24: KIPCO consolidated: Financial performance
KIPCO consolidated: Financial performance Revenue Net Income Consolidated Assets USDmn USDmn EPS (Cents) USDbn 9.2 10.9 11.2 7.3 8.2 175 33.0 2,047 1,970 152 31.6 1,694 ^ 132 133 1,617 1,498 123 30.7 28.5 2013 2014 2015 9M'15 9M'16 2013 2014 2015 9M'15 9M'16 2013 2014 2015* 9M'16 24 *2015 consolidat
Slide 25: KIPCO parent debt profile
KIPCO parent debt profile: As at 30 September 2016 Debt Type* Debt Maturity* Total Debt: USD2.1bn Total Debt: USD2.1bn Average debt International maturity is Bonds 3.1 years 4% 96% Term 24% 23% 4% 48% 24% Loan <1 Year 1-2 Years 2-4 Years >4 Years * As 30 of September 2016 Liquidity KIPCO has cash &
Slide 26: Index: Why KIPCO
Index Why KIPCO 26
Slide 27: 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 27 Notes: Kuwait includes all KSE listed companies with a market cap of >USD500mn. Global Peers includes Investor AB, Lundbergs AB, Industrivarden, Bouy
Slide 28: 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) 179% * 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 29: 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 29
Slide 30: Thank you
Slide 31: Annexure 1: Portfolio Companies
Index Annexure 1: Portfolio Companies 31
Slide 32: Burgan Bank (BB): Overview
Burgan Bank (BB): Overview Overview Kuwait based commercial bank with regional presence in seven countries 2nd largest conventional bank in Kuwait in terms of assets (Total assets of USD23.6bn as of 30 September 2016) Offers a wide range of corporate, retail & treasury products through a network of
Slide 33: 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 34: 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 USD822mn as of 28 November 2016 Credit rating of BBB from Capital I
Slide 35: 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 36: Major real estate properties developed & operated by URC
Major real estate properties developed & operated by URC Acquired Developed Developed Saleh Developed Developed Marina Acquired Fairmont Hotel, Al Khour Resort, Shehab, Kuwait as Al Shaheed Tower, Hotel, City Tower, Egypt Kuwait as BOT BOT Kuwait Kuwait as BOT Kuwait 1979 1994 1997 1999 1999 2001 20
Slide 37: 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 September 2016) Key highlights of
Slide 38: United Industries Company: Financial performance
United Industries Company: Financial performance Income from Associates Total Revenue* USDmn USDmn 151 38 35 33 27 16 130 44 34 54 21 28 2013 2014 2015 9M'15 9M'16 2013* 2014 2015 9M'15 9M'16# * Profit from discontinued operation (SADAFCO) Net Profit^ Total Asset USDmn USDmn 93 751 760 646 561 31 40
Slide 39: 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 40: 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 25 19 9 35 22 2013/14 2014/15^ 2015/16 H1'15/16 H1'16/17 2013/14 2014/15* 2015/16 H1'15/16 H1'16/17 Total Asset Total Shareholder’s Equity USDmn USDmn 1,749 1,728 1,765 1
Slide 41: Jordan Kuwait Bank (JKB): Overview
Jordan Kuwait Bank (JKB): Overview Overview Jordan based commercial bank with operations in Jordan, Palestine and Cyprus 3rd largest conventional bank in Jordan in terms of asset (Total asset of USD3.9bn as of 30 September 2016) Offers a wide range of corporate, retail & treasury products through a
Slide 42: Jordan Kuwait Bank
Jordan Kuwait Bank Loan Growth Deposit Growth USDbn USDbn 1.9 2.0 2.7 2.7 1.9 1.8 2.3 2.4 2013 2014 2015 9M'16 2013 2014 2015 9M'16 Operating Income & NIM Net Profit & Cost to Income USDmn USDmn 174 175 67 66 38.4% 175 52 34.1% 127 128 4.0% 35.7% 38 35 3.7% 3.4% 3.5% 33.7% 3.6% 30.0% 2013 2014 2015
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 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 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 11 11 134 9 118 8 115 111 7 2013 2014 2015 9M'15 9M'16 2013 2014 2015* 9M'16 DPS ROE Cents per share 10.5% 11.0% 10.2% 8.9% 3.6% 4.3% 7.1% 5.1% 3.2% 7 7 8 8 2012^ 2013^ 2014 2015 2013 2014 2015* 9M'15 9M'16 DPS Dividend Yield 49
Slide 50: Annexure 5: Trends
Index Annexure 5: Trends 50
Slide 51: 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 52: 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 1.6 16.6 13.5 2,593 2,423 1.2 1.1 10.9 9.2 2,311 2,089 2.1 2.1 75.2 74.9 846 822 1.6 1.3 9.9 8.4 416 364 0.6 0.6 13.6 14.3 331 335 Notes: 1 Market cap for 2015 and the current number converted a
Slide 53: KIPCO: Average Daily Traded Value
KIPCO: Average Daily Traded Value Avg. Daily Traded Value (USD'000) 2,351 1,884 1,486 1,251 1,279 1,151 1,011 919 1,003 973 698 797 730 630 667 642 481 354 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 Jul-16 Aug-16 Sep-16 KIPCO’s stock has
Slide 54: Annexure 6: About the region
Index Annexure 6: About the region 54
Slide 55: 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 7.8% India Kuwait Algeria 6.0% China Bahrain Libya Egypt Qatar 3.5% MENA Saudi UAE 1.9% US Arabia Oman 1.8% EU 1.7% UK GCC Non GCC 1.6% Brazil Yemen 1.4% Russia 0.5% Japan MENA region
Slide 56: 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 57: Kuwait: Protected against oil price decline
Kuwait: Protected against oil price decline Kuwaiti government’s Reserve Fund for Future Generations (RFFG) expected to bet more than USD500bn 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 2.8mn barrels
Slide 58: 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 6.5%1 from 2016 to 2019 Annual After excluding investment income from RFFG, Kuwait had a budget deficit of KD6bn (17% of GDP) in Budget 2015/16 and is expec
Slide 59: 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 60: Kuwait Development Plan: Projects in action
Kuwait Development Plan: Projects in action Key Projects under the plan Al-Khairan Power & Desalination Olefins III project Jurassic Non Associated Oil & Plant (IWPP) Petrochemical plant to be integrated with New Gas Reserves Expansion: Phase 2 Refinery Project (Al Zour Refinery) Production of 120,0
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 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% 100% 75% 81%
Slide 63: 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 Solid outlook for life insurance, 2% low penetratio
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