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 (March 2016)
66 slides from Kuwait Projects Company Holding (K.S.C.P.)'s investor presentation, March 2016
Slide 1: Growing in Strength
Growing in Strength Investor Presentation | March 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 USD31.6bn# 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%) 6% (4%) (9%) NA Exchange MSCI Emerging Markets (15%) (18%) (21%) 69% 46% S&P 500 1% 53% 81% 163% 102% MSCI Frontier (18%) (9%) (8%) 47% NA EM Index KIPCO (14%) 82% 101% 120% 157% KIPCO Ran
Slide 8: Attractive returns
Attractive returns Total Shareholders’ Return Growth 294 274 103 83 131 191 191 39 1996 2015 2005 2015 Share Price (US cents)^ Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Book Value Per Share Growth (in US cents) 233 217 48 27 1996 2015 2005 2015 Note: Assuming no dividend
Slide 9: Continuous dividends
Continuous dividends KIPCO: USD1.5bn in cash dividends 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 2015P* Cents Per share Dividend Yield 13 years of co
Slide 10: Net asset value
Net asset value NAV Computation (USD per Share) 600 540 399 0.05 0.05 fils fils fils 0.21 0.20 (0.2) 0.10 0.12 0.43 0.62 0.64 0.63 1.35 1.80 0.32 1.33 0.64 Burgan OSN United Gulf United United Net other Net Debt NAV KIPCO Reported Bank Gulf Bank Insurance Real Industries Assets Share Book Company Es
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 64.8% 60.5% 96.7% 83.3%3 45.8% 71.1% 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 2,319 Unlisted 849 84 417 332 S&P: S&P: Credit BBB+/A2 A- (GIRI)^; Moody’s: Unrated CI*: BBB Unrated CI*: BB
Slide 14: Active management
Active management Key businesses – progress indicators Businesses Parameters Then* Now Active Management – KIPCO Support & Action 1995 2015** Net Transformed from a local player to regional player Interest 1.3% Hired new management in 2010/11 to execute regional strategy Margin 2.3% Focused on
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 144% 175% 184% 184% 76% 123% 131% 120% 14.5 13.0 13.2 5.6% 11.1 15.3 15.5 12.8 12.8 3.9% 3.4% 3.2% 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 NPA to Gross C
Slide 17: Burgan Bank: Regional operations
Burgan Bank: Regional operations* Loan Growth Deposit Growth Net Profit^ USDbn USDbn USDmn -12% 5% 1% -14% 4% -4% 83 4.3 65 4.3 5.1 4.9 3.1 46 2.9 33 2.2 2.2 20 18 1.1 1.0 1.5 1.3 1.2 1.1 10 9 8 0.3 0.3 4 0.2 0.2 0.0 0.0 AGB BOB TIB BBT Total AGB BOB TIB BBT Total AGB BoB TIB BBT Total 2014 2015 Gro
Slide 18: Burgan Bank: Regional operations
Burgan Bank: Regional operations* Loan Growth Deposit Growth Net Profit^ USDbn USDbn USDmn -12% 5% 1% -14% 4% -4% 83 4.3 4.3 5.1 4.9 57 3.1 46 2.9 2.2 2.2 27 20 1.1 1.0 1.5 1.3 1.2 1.1 14 9 9 0.3 8 8 0.2 0.2 0.0 0.0 0.3 AGB BOB TIB BBT Total AGB BOB TIB BBT Total AGB BoB TIB BBT Total 2014 2015 Grow
Slide 19: Burgan Bank: NPA cyclical & not structural
Burgan Bank: NPA cyclical & not structural NPA Trend NPA (USDmn) As on Dec’15, the combined NPA Ratio (Percentage) coverage of non performing 1,034 787 1,193 881 623 642 699 246 assets (NPA) is 184% 199 185 166 164 116 117 102 NPA Ratio is 3.9% as on 11.0% 11.8% 86 9.5% 10.5% 6.3% 6.0% 6.1% 4.1%
Slide 20: OSN: Overview
OSN : Overview MENA Pay TV Potential MENA Region1 Latin America UK India US Population (Mn) 335 596 65 1,260 319 Pay TV (Mn; Est.) 5 30 14 139 101 TV Households (Mn) 69 55 27 168 120 TV Households / Households (%) 96% NA 96% 61% 85% Pay TV/ TV Households (%) ~8% 55% 54% 82% 86% Low Pay TV penetratio
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 Showtime and Orbit in 2009 Tunisia Lebanon Iraq Iran Morocco Palestine Jordan Kuwait Licensed to operate in 24 countries in MENA with Algeria Lybia Bahrain focus
Slide 22: Operating and financial performance
Operating and financial performance Subscribers Net Adds Thousand Thousand Effect of Pehla Acquisition 1,153 1,074 995 99 734 170 161 80 79 2012 2013 2014 2015 2012 2013 2014 2015 Churn Diversified subscriber base (2015) Percentage Subscribers: 1,153K Others 8% 25% Qatar KSA 20% 24% 15% 17% 16% Egyp
Slide 23: United Gulf Bank
United Gulf Bank Revenue Fees & Commission Income USDmn USDmn 169 38 145 32 93 21 64 17 2012 2013 2014 2015 2012 2013 2014 2015 Net Profit & Provisions AuM & Capitalisation USDmn USDbn 14.7% 59 11.6 10.7 9.7 8.1 41 25 17 13 8 5 6 11 3 19 11 2012 2013 2014 2015 2012 2013 2014 2015 Provisions Charge t
Slide 24: Gulf Insurance Group
Gulf Insurance Group Gross & Net Premium Written Net Investment Income USDmn USDmn 613 39 572 37 517 479 26 300 324 21 243 275 2012 2013 2014 2015 2012 2013 2014 2015 Net Premium Written Gross Premium Written Combined Ratio Net Profit & ROE USDmn 92% 16.2% 93% 95% 94% 13.3% 13.5% 14.8% 46 40 17% 17%
Slide 25: United Real Estate Company (URC)
United Real Estate Company (URC) Total Revenue1 Operating Profit2 USDmn USDmn 227 106 216 194 171 76 70 63 2012 2013 2014 2015 2012 2013 2014 2015 Net Profit Total Assets & ROE USDmn USDmn 74 11.2% 5.6% 4.0% 4.2% 1,815 1,825 1,717 37 26 28 1,559 2012 2013 2014 2015 2012 2013 2014 2015 Total Assets R
Slide 26: URC: Balance Sheet (Break-up) as of 31 December 2015
URC: Balance Sheet (Break-up) as of 31 December 2015 Total Assets Investment Properties Total Assets USD1,825mn Total: USD373mn 3% 1% 7% Investment properties 3% 20% Marina World - Kuwait Land for development 13% 14% Projects under Salalah Mall - Oman construction* Fixed Assets (PPE) 47% Marina Plaz
Slide 27: KIPCO Consolidated: Financial performance
KIPCO Consolidated: Financial performance Revenue Net Income Consolidated Assets USDmn USDmn EPS (Cents) USDbn 7.7 9.2 10.9 11.2 31.6 175 30.7 2,047 28.5 1,970 152 1,694* 132 23.7 1,364 104 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 27 *Revenue excluding income from discontinued ope
Slide 28: KIPCO Parent debt profile
KIPCO Parent debt profile: As at 31 December 2015 Debt Type* Debt Maturity* Total Debt: USD1.9bn Total Debt: USD1.9bn International Average debt Local Bonds maturity is Bonds 2.4 years 79% 14% 7% Term 40% 0% 34% 26% Loan <1 Year 1-2 Years 2-4 Years >4 Years * As 31 of December 2015 Liquidity KIPCO h
Slide 29: Index: Why KIPCO
Index Why KIPCO 29
Slide 30: KIPCO Best in Class: Last 10 Years
KIPCO Best in Class: Last 10 Years Rank Global Kuwait CAGR Peers Asset Growth 3 1 28% Return on Equity (ROE) 1 3 20% Total Shareholders Return (TSR) 4 3 161% Dividend Yield 1 2 6% Data Source: Bloomberg Notes: Kuwait includes all KSE listed companies with a market cap of >USD500mn. Global Peers incl
Slide 31: 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 31
Slide 32: Slide 32
Slide 33: Annexure 1: Portfolio Companies
Index Annexure 1: Portfolio Companies 33
Slide 34: Burgan Bank (BB): Overview
Burgan Bank (BB): Overview Overview Kuwait based commercial bank with regional presence in eight countries 2nd largest conventional bank in Kuwait in terms of assets (Total Assets of USD23bn as of 31 December 2015) Offers a wide range of corporate, retail & treasury products through a network of 185
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 USD849mn as of 02 March 2016 Credit rating of BBB from Capital Inte
Slide 36: 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 50 branches across the
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 (31%) & ATC (29%) KIPCO Group holds 80.6% consolidated stake, while KIPCO directly holds 60.2% (as on 31 December 2015) Key highlights of 2
Slide 40: United Industries Company: Financial performance
United Industries Company: Financial performance Income from Associates Total Revenue* USDmn USDmn 35 151 30 16 130 51 11 38 44 21 31 13 2012 2013 2014 2015 2012* 2013* 2014 2015 * Profit from discontinued operation (SADAFCO) Net Profit^ Total Asset USDmn USDmn 93 715 748 646 561 31 15 11 2012 2013
Slide 41: 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 42: Qurain Petrochemicals Industries Co: Financial performance
Qurain Petrochemicals Industries Co: Financial performance Share of Income from Associates Net Profit USDmn USDmn 31 32 104 91 20 74 49 9 9 37 2012/13 2013/14 2014/15^ 9M'14/15 9M'15/16 2012/13 2013/14 2014/15* 9M'14/15 9M'15/16 Total Asset Total Shareholder’s Equity USDmn USDmn 1,758 1,763 1,084 1,
Slide 43: 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 assets (Total Assets of USD4bn as of 31 December 2015) Offers a wide range of corporate, retail & treasury products through a n
Slide 44: Jordan Kuwait Bank
Jordan Kuwait Bank Loan Growth Deposit Growth USDbn USDbn 2.0 2.8 2.3 2.4 1.9 1.9 1.9 1.8 2012 2013 2014 2015 2012 2013 2014 2015 Operating Income & NIM Net Profit & Cost to Income USDmn USDmn 66 53 65 67 33.7% 4.0% 30.0% 35.7% 4.0% 175 175 27.8% 174 3.7% 166 3.5% 2012 2013 2014 2015 2012 2013 2014
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 11 11 135 134 9 8 118 116 2012 2013 2014 2015 2012 2013 2014 2015 DPS ROE Cents per share 10.4% 8.9% 4.3% 7.1% 5.1% 3.6% 3.2% 5.8% 7 7 8 8 2012^ 2013^ 2014 2015 2012 2013 2014 2015 DPS Dividend Yield ^ An additional 5% stock divi
Slide 52: Annexure 5: Trends
Index Annexure 5: Trends 52
Slide 53: KIPCO: Net asset value (NAV)
KIPCO: Net asset value (NAV) NAV/Share Position* 3 150% 103% 80% 82% 100% 74% 2 36% 40% 42% 34% 50% 20% USD 13% 8% 10% 9% 4% 6% 3% 2% (10%) (5%) (6%) (11%) 0% (18%) (30%) (31%) 1 (34%) (41%) (41%) (36%) (36%) (44%) (46%) (43%) (50)% - (100)% Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-1
Slide 54: Ownership
Ownership Shareholding Profile 1.7% Treasury Shares 44.7% Primary Shareholder (AFH*) 7.1% HNIs & Retail Investors 7.2% Investment Funds 39.3% Investment companies & other Institutions They hold their ownership interest in KIPCO Major shareholders of KIPCO are members of through an investment vehicle
Slide 55: KIPCO Group: Market data
KIPCO Group: Market data P/B P/E Market Cap (USDmn)1 Entity 2015 Current2 2015 Current2 2015 Current2 1.8 1.7 16.6 15.4 2,843 2,602 1.2 1.1 10.9 9.8 2,624 2,319 2.1 2.1 49.1 49.1 871 849 1.6 1.5 9.9 9.2 467 417 0.6 0.6 13.6 13.3 376 332 Notes: 1. Market Cap for 2015 and the current number converted
Slide 56: KIPCO: Average Daily Traded Value
KIPCO: Average Daily Traded Value Avg. Daily Traded Value (USD'000) 3,247 3,217 2,860 2,334 1,744 1,453 1,475 1,242 1,143 1,004 912 996 740 693 792 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 KIPCO stock has maintained an average daily tra
Slide 57: Annexure 6: About the region
Index Annexure 6: About the region 57
Slide 58: MENA Region: Poised for strong economic growth
MENA Region: Poised for strong economic growth Real GDP Growth (2015-20E) Tunisia Lebanon Syria Iraq Israel Morocco Jordan 7.6% India Kuwait Algeria 6.2% China Bahrain Libya Egypt Qatar 3.8% MENA Saudi UAE 2.5% US Arabia Oman 2.2% UK 1.9% EU GCC Non GCC 1.7% Brazil Yemen 1.0% Russia 0.7% Japan MENA
Slide 59: 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 60: 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 61: 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 yea
Slide 62: 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 63: KDP: Projects in action
KDP: Projects in action Key Projects under the plan Khairan City Kuwait Health Assurance Co. Al-Jahra Hospital 140 million m2 residential city, including 10,000 (PPP) Capacity 1,157 beds, parking for 3000 cars houses, 22,000 apartments Three hospitals & 15 clinics Underway: 15% has been completed. P
Slide 64: Annexure 7: Market opportunity
Index Annexure 7: Market opportunity 64
Slide 65: 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 66: Gulf Insurance Group: Market Opportunity
Gulf Insurance Group: Market Opportunity 291 Kuwait 1% 24 GIG Presence Egypt Low insurance density in MENA 1% region 974 Double digit growth in insurance UAE 2% market in all MENA countries 99 Jordan Increased acceptance of Sharia- 2% compliant takaful insurance to 308 further boost the insura
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