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 (June 2015)
63 slides from Kuwait Projects Company Holding (K.S.C.P.)'s investor presentation, June 2015
Slide 1: Growing in Strength
Growing in Strength Investor Presentation | June 2015 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 USD40.0bn# Geography Middle East and North Africa (MENA) Sectors Primarily financial services & media Track record 23 years of continuous profitability, 13 years of continuous dividends Valua
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 (2014) Kuwait ● ● ● ● ● ● ● 40% UAE ● ● ● ● 7% Bahrain ● ● ● ● 4% KSA ● ● ● 7% Jordan ● ● ● ● 11% Algeria ● ● ● 5% Tunisia ● ● ● 1% Egypt ● ● ● ● 8% 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 1 3 5 7 10 Total return* year year year year year Kuwait Stock (14%) 13% (2%) (45%) NA Exchange MSCI Emerging Markets 1% 2% 11% 7% 133% S&P 500 13% 56% 96% 82% 116% MSCI Frontier (3%) 18% 27% NA NA EM Index KIPCO 1% 156% 108% 12% 497% KIPCO Rank vs. 2 1 1 2
Slide 8: Attractive returns
Attractive returns Total Shareholders’ Return Growth 317 299 98 86 219 213 41 50 1996 Q1'15 2004 Q1'15 Share Price (US cents)^ Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Book Value Per Share Growth (in US cents) 227 215 39 28 1996 Q1'15 2004 Q1'15 Note: Assuming no dividen
Slide 9: Continuous dividends
Continuous dividends KIPCO: USD1.4bn in cash dividends paid by KIPCO since 2002 10.1% 10.3% 8.7% 31 7.9% 8.2% 5.9% 6.6% 4.5% 17 5.2% 5.1% 14 3.2% 3.6% 4.6% 9 9 9 6 7 7 7 5 7 3 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Cents Per share Dividend Yield 13 years of continuous divid
Slide 10: Net asset value
Net asset value NAV Computation (USD per Share) 0.04 729 630 409 0.05 0.05 fils fils fils 0.2 0.3 (0.2) 0.1 0.1 0.5 (0.7) 0.8 0.6 0.4 2.1 1.4 1.2 0.8 Burgan OSN United Gulf United United Net other Net Debt NAV KIPCO Reported Bank Gulf Bank Insurance Real Industries Assets Share Book Company Estate C
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 63.1% 60.5% 97.0% 83.5%3 45.7% 69.8% 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 2,952 Unlisted 845 92 396 378 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 Q1’15 Net Transformed from a local player to regional player Hired new management in 2010/11 to execute regional Interest 1.3% strategy Margin 2.7% Focused on g
Slide 15: Index: Performance Update
Index Performance Update 15
Slide 16: 2014: Operating performance continued to be strong
2014: Operating performance continued to be strong Growth % are over 2013 3.4% 175% 2013 2013 9% 3x 3.2% 184% 8% 24% 16% 23% Growth in Growth in NPA Aggregate Growth in Growth in Growth in EBITDA operating net profit provision subscriber revenue EBITDA margin income coverage base 2.6x 7.3x 11% 15% 1
Slide 17: Burgan Bank
Burgan Bank Loan Growth Deposit Growth Asset Quality USDbn USDbn NPA Coverage with collateral^ NPA Coverage without collateral 144% 175% 184% 188% 76% 123% 131% 142% 15.0 13.5 13.3 14.5 5.6% 11.5 15.8 16.1 16.0 15.5 13.3 3.4% 3.2% 3.1% 2012 2013 2014 Q1'14 Q1'15 2012 2013 2014 Q1'14 Q1'15 2012 2013
Slide 18: Burgan Bank: Regional operations
Burgan Bank: Regional operations Loan Growth Deposit Growth Net Profit^ USDbn USDbn USDmn 9% 31% 17% -4% 34% 14% 7.4 32 6.0 6.5 5.2 19 2.9 12 15 2.2 2.6 11 1.7 1.8 2.3 2.1 1.2 1.6 7 5 1.0 1.1 0.02 1.3 1.2 1.1 3 3 0.2 0.3 0.3 (1) (0) (4) 0.2 0.03 AGB JKB BOB TIB BBT Total AGB JKB BOB TIB BBT Total AG
Slide 19: Burgan Bank: NPA cyclical & not structural
Burgan Bank: NPA cyclical & not structural NPA Trend NPA (USDmn) As on Mar’15, the combined NPA Ratio (Percentage) coverage of non performing 1,072 816 1,237 913 646 665 626 246 assets (NPA) is 188% 199 185 166 164 116 117 106 NPA Ratio is 3.1% 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) 237 596 65 1,260 319 Pay TV (Mn; Est.) 5 30 14 139 101 TV Households (Mn) 49 55 27 168 120 TV Households / Households (%) 96% NA 96% 61% 85% Pay TV/ TV Households (%) 11% 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 Algeria Lybia Bahrain with focus
Slide 22: Operating and financial performance
Operating and financial performance Subscribers Net Adds Thousand Thousand 80 1,080 1,097 1,074 1,100 1,066 60 43 25 30 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Churn Diversified subscriber base (Mar - 2015) Percentage Subscribers: 1,100K Others 20% 20% 9% 19% Qatar KSA 15% 25% 19
Slide 23: United Gulf Bank
United Gulf Bank Revenue Fees & Commission Income USDmn USDmn 169 38 93 21 64 17 41 35 9 8 2012 2013 2014 Q1'14 Q1'15 2012 2013 2014 Q1'14 Q1'15 Net Profit & Provisions AUM & Capitalisation USDmn USDbn 23.2% 17.5% 15.2% 14.0% 13.2% 59 11.6 11.4 9.7 10.4 41 8.1 25 8 10 13 5 5 0 11 3 19 10 3 2 2012 20
Slide 24: Gulf Insurance Group
Gulf Insurance Group Gross & Net Premium Written Net Investment Income USDmn USDmn 593 536 38 496 27 285 311 22 252 179 181 12 118 109 9 2012 2013 2014 Q1'14 Q1'15 2012 2013 2014 Q1'14 Q1'15 Net Premium Written Gross Premium Written Combined Ratio Net Profit USDmn 92% 93% 94% 98% 88% 13.3% 13.5% 15.
Slide 25: United Real Estate Company (URC)
United Real Estate Company (URC) Total Revenue1 Operating Profit2 USDmn USDmn 235 109 201 177 73 66 39 49 16 11 2012 2013 2014 Q1'14 Q1'15 2012 2013 2014 Q1'14 Q1'15 Net Profit Total Assets & Return on Equity USDmn USDmn 77 4.2% 11.2% 5.6% 4.0% 1882 1779 1780 1616 38 27 7 2 2012 2013 2014 Q1'15 2012
Slide 26: URC: Balance Sheet (Break-up) as of March 2015
URC: Balance Sheet (Break-up) as of 31 March 2015 Total Assets Investment Properties Total Assets USD1,780mn Total: USD383mn 1% Investment properties Marina World - Kuwait 3% 11% Land for development 3% 22% 12% Projects under Salalah Mall - Oman construction* 14% Fixed Assets (PPE) Marina Plaza - Ku
Slide 27: KIPCO Consolidated: Financial performance
KIPCO Consolidated: Financial performance Revenue Net Income Consolidated Assets USDmn USDmn EPS (Cents) USDbn 8.0 9.5 11.3 2.4 2.1 31.9 31.4 2,042 29.5 157 1,756* 24.6 137 1,414 108 40 457 467 34 2012 2013 2014 Q1'14 Q1'15 2012 2013 2014 Q1'14 Q1'15 2012 2013 2014 Q1'15 27 *Revenue excluding income
Slide 28: KIPCO Parent debt profile: As at March 2015
KIPCO Parent debt profile: As at 31 March 2015 Debt Type Debt Maturity Total Debt: USD1.9bn Total Debt: USD1.9bn Average debt maturity is International 3.1 years Bonds Local 79% Bonds 14% 40% 33% 26% 7% Term <2 Years 2-4 Years >4 Years Loan Liquidity KIPCO has cash & bank balance of USD929mn − The c
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
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 USD25.9bn as of 31 March 2015) Offers a wide range of corporate, retail & treasury products through a network of 241 b
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 USD846mn as of 19 May 2015 Credit rating of BBB from Capital Intell
Slide 35: 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 36: 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 37: 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 38: 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 82.0% consolidated stake, while KIPCO directly holds 79.5% (as on 31 March 2015) Key highlights of Q1’1
Slide 39: United Industries Company: Financial performance
United Industries Company: Financial performance Income from Associates Total Revenue* USDmn USDmn 36 162 18 19 19 140 12 55 41 45 14 22 19 19 2012 2013 2014 Q1'14 Q1'15 2012* 2013* 2014 Q1'14 Q1'15 * Profit from discontinued operation (SADAFCO) Net Profit* Total Asset USDmn USDmn 100 770 763 669 60
Slide 40: 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 41: Qurain Petrochemicals Industries Co: Financial performance
Qurain Petrochemicals Industries Co: Financial performance Share of Income from Associates Net Profit USDmn USDmn 31 110 104 91 20 74 9 5 2011/12 2012/13 2013/14 2014/15 2011/12 2012/13 2013/14 2014/15 Total Asset Total Shareholder’s Equity USDmn USDmn 1,758 1,084 1,006 945 1,213 842 996 878 2011/12
Slide 42: Annexure 2: 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 Faisal Hamad Al America Achievement Award (2005) Samer Subhi BSc from MIT and MBA from Harvard Universi
Slide 44: Annexure 3: Key Companies
Index Annexure 3: UGM 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 4: 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 11 10 140 139 8 122 3 110 2 2012 2013 2014 Q1'14 Q1'15 2012 2013 2014 Q1'15 DPS ROE Cents per share 10.1% 8.9% 7.6% 6.6% 7.1% 5.1% 5.8% 3.6% 3.2% 7 7 7 9 2011^ 2012^ 2013^ 2014 2012 2013 2014 Q1'14 Q1'15 DPS Dividend Yield ^ An a
Slide 49: Annexure 5: Trends
Index Annexure 5: Trends 49
Slide 50: 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) 1 1 497% 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 51: KIPCO: Net asset value (NAV)
KIPCO: Net asset value (NAV) NAV/Share Position* 4 200% 153% 151% 131% 132% 150% 3 104% 81% 84% 100% 75% 46% 51% USD 42% 45% 2 27% 36% 34% 50% 23% 22% 10% 9% 13% 9% 4% (3%) (5%) (10%) (10%) (18%) 0% (30%) 1 (34%) (44%) (41%) (46%) (43%) (42%) (50)% - (100)% Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12
Slide 52: Ownership
Ownership Shareholding Profile 2.1% Treasury Shares 44.7% Primary Shareholder (AFH*) 7.2% HNIs & Retail Investors 7.8% Investment Funds 38.1% Investment companies & other Institutions They hold their ownership interest in KIPCO Major shareholders of KIPCO are members of through an investment vehicle
Slide 53: KIPCO Group: Market data
KIPCO Group: Market data P/B P/E Market Cap (USDmn)1 Entity 2014 Current2 2014 Current2 2014 Current2 2.0 1.8 23.6 20.1 3,414 3,075 1.7 1.4 36.7 14.4 3,101 2,952 NM NM NM NM 843 845 1.2 1.4 9.8 10.0 371 396 0.6 0.6 13.6 14.5 393 378 Notes: 1. Market Cap for 2014 and the current number converted at 0
Slide 54: KIPCO: Average Daily Traded Value
KIPCO: Average Daily Traded Value Avg. Daily Traded Value (USD'000) 5,882 3,477 3,366 3,252 2,891 2,072 1,808 1,468 1,070 959 820 767 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 KIPCO stock has maintained an average daily traded value of USD2.3mn in the last 1
Slide 55: Annexure 6: About the region
Index Annexure 6: About the region 55
Slide 56: MENA Region: Poised for Strong Economic Growth
MENA Region: Poised for Strong Economic Growth Syria Current Account Balance as a % of GDP (2015E-20E) Tunisia Lebanon Iraq 5.2% Morocco Israel Jordan Kuwait 3.1% 2.1% 1.9% Algeria Libya Bahrain 0.7% Egypt Qatar Saudi Arabia UAE Russia China Japan EU MENA India US Brazil UK -2.0% -2.5% Oman -3.3% -3
Slide 57: GCC Region: Well Positioned to Deliver Growth
GCC Region: Well Positioned to Deliver Growth USDbn ….One of the highest 40 per capita income, of world’s proven oil reserves along with robust and growing non-oil sector activity … 272 GDP / Capita, PPP (2015E) (In USD) Accumulated 337 70,966 56,421 current 40,676 38,216 37,607 account 24,067 15,94
Slide 58: 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) 42.7% 66 39.1% 60 2011 2.9% 45.2% 79 37.9% 66 2012 143 165 2015E 2020E 39.6% 70 66 201
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: KDP: Projects in pipeline
KDP: Projects in pipeline Key Projects under the plan Kuwait Health Assurance Al-Jahra Hospital Khairan City Co. (PPP) Capacity 1,157 beds, parking 140 million m2 residential city, Three hospitals & 15 clinics for 3000 cars including 10,000 houses, 22,000 Awarded: Board of directors Bidding: Contrac
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 450% Burgan Presence 300% Burgan Presence 393% 267% 400% 348% 350% 324% 250% 300% 269% 259% 200% 173%172% 250% 200% 178% 169% 150% 142% 147% 94% 98% 110% 84% 81% 89% 106% 72% 62% 71% 150% 92% 100% 7
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
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