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 2014)
65 slides from Kuwait Projects Company Holding (K.S.C.P.)'s investor presentation, March 2014
Slide 1: Going for Growth Investor Presentation March 2014
Going for Investor Growth Presentation March 2014 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 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 Kuwai
Slide 5: Our presence by geographies & sectors
Our presence by geographies & sectors Major Sectors Geography Commercial Revenues1 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: 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 31% 19% 13% 3% N.A Exchange MSCI Emerging (2)% (5)% 101% 34% 197% Markets S&P 500 32% 56% 126% 51% 103% MSCI Frontier 26% 11% 52% N.A N.A Market Index KIPCO 72% 90% 102% 171% 597% KIPCO Rank vs.
Slide 7: Track record of generating attractive returns
Track record of generating attractive returns Total Shareholders’ Return Growth 318 311 98 91 220 220 45 68 1996 2013 2003 2013 Share Price (US cents)^ Cumulative Dividend (US cents) Note: Data adjusted for stock dividend Book Value Per Share Growth (in US cents) 243 234 41 30 1996 2013 2003 2013 No
Slide 8: Net asset value
Net asset value NAV Computation (USD per Share) 685 670 407 fils fils fils 0.1 0.1 0.1 0.0 0.2 0.1 0.1 0.1 0.3 (0.7) 0.8 0.7 0.5 2.4 1.6 1.4 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 Price C
Slide 9: Index: Strategy
Index Strategy 9
Slide 10: 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 11: Controlling or majority stakes
Controlling or majority stakes Main Entities KIPCO Effective 60.3% 60.4% 96.7% 83.0%3 44.8% 65.8% 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 3,172 Unlisted 547 112 359 515 S&P: S&P: A- Credit BBB+/A2 Moody’s: Unrated CI*: BBB CI*: BBB- AM Best: CI*:
Slide 12: Active management
Active management Key businesses – progress indicators Businesses Parameters Then Now Active Management – KIPCO Support & Action 1995 2013 Net Transformed from a local player to regional player Hired new management in 2010/11 to execute on regional Interest 1.3% strategy Margin 2.7% Focused on
Slide 13: Index: Performance Update
Index Performance Update 13
Slide 14: 2013: Operating Performance continues to be strong
2013: Operating Performance continues to be strong Growth % are over 2012 144% 2012 5.6% 2012 33% 175% 25% 35% 29% 78% 18% 3.4% growth in growth in NPA Aggregate growth in growth in Growth in EBITDA operating operating provision subscriber revenues EBITDA margin income profits coverage base Interest
Slide 15: Burgan Bank
Burgan Bank Loan Growth Deposit Growth Asset Quality USDbn USDbn NPA Coverage with collateral^ NPA Coverage without collateral 111% 108% 144% 175% 72% 49% 76% 123% 14.0 10.5% 12.0 16.5 13.8 7.3% 7.6 8.0 5.6% 9.1 9.9 3.4% 2010 2011 2012 2013 2010 2011 2012 2013 2010 2011 2012 2013 NPA to Gross Credit
Slide 16: Burgan Bank: Regional operations
Burgan Bank: Regional operations Loan Growth Deposit Growth Net Profit^ USDbn USDbn USDmn 26% 32% 16% 39% 53% 14% 5.5 6.8 165 5.9 89 2.4 65 67 2.0 1.9 1.8 2.4 44 2.1 1.8 1.5 28 1.0 1.2 24 1.3 0.3 9 0.8 0.1 0.2 0.0 1.0 0.8 10 9 0.3 -1 (2) AGB JKB BOB TIB BBT Total AGB JKB BOB TIB BBT Total AGB JKB Bo
Slide 17: Burgan Bank: NPA - cyclical & not structural
Burgan Bank: NPA- cyclical & not structural NPA Trend NPA (USDmn) f As on Dec’13, the combined NPA Ratio (Percentage) coverage of non performing 1,113 847 1,284 948 256 670 assets (NPA) is 175% 207 192 172 170 121 122 110 f NPA Ratio declined from 5.6% 11.0% 11.8% 90 9.5% 10.5% 6.3% 6.0% 6.1% 4.1% 3
Slide 18: OSN: Overview
OSN : Overview MENA Pay TV Potential MENA Region1 Latin America UK India US 2 Population (Mn) 258 586 64 1,243 317 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 19: OSN: Overview cont'd
OSN: Overview…cont’d Highlights Largest digital satellite premium Pay TV operator in MENA region Licensed to operate in 24 countries in MENA (Focused on KSA, UAE, Kuwait, Egypt, Bahrain, Qatar & Jordan) Consolidated Pay TV industry through merger of Orbit & Showtime in 2009 Active Piracy Management,
Slide 20: OSN
OSN Subscribers* Net Adds Thousand Thousand 137 995 48 98 Acquisition 782 818 858 40 effect 734 36 32 37 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Churn Subscribers by country (December 2013) Others 17% 9% 16% 17% 17% 16% Qatar KSA 15% 25% Egypt 9% Bahrain UAE 3% 31% Q4'12 Q1'13 Q2
Slide 21: United Gulf Bank
United Gulf Bank Revenue Fees & commission Income USDmn USDmn 163 30 109 21 93 17 17 64 2010 2011 2012 2013 2010 2011 2012 2013 Net Profit & Provisions AUM & Capitalisation USDmn USDbn 68 19.5% 18.2% 23.2% 17.7% 29 9.7 8.0 7.5 8.1 26 25 39 13 24 8 11 5 1 3 2010 2011 2012 2013 2010 2011 2012 2013 Pro
Slide 22: Gulf Insurance Group
Gulf Insurance Group Gross & Net Premium Written Net Investment Income USDmn USDmn 557 36 515 475 32 425 295 20 238 261 211 8 2010 2011 2012 2013 2010 2011 2012 2013 Net Premium Written Gross Premium Written Combined Ratio Net Profit USDmn 89% 89% 92% 93% 11.2% 10.4% 13.3% 13.5% 17% 17% 36 19% 21% 3
Slide 23: United Real Estate Company (URC)
United Real Estate Company (URC) Total Revenue1 Operating Profit2 USDmn USDmn 244 114 184 70 76 145 92 35 2010 2011 2012 2013 2010 2011 2012 2013 Net Profit Total Assets & Return on Equity USDmn USDmn 80 3.3% 5.2% 11.2% 5.6% 1,953 1,849 1,678 40 1,290 36 20 2010 2011 2012 2013 2010 2011 2012 2013 To
Slide 24: URC: Balance Sheet (Break-up) as of December 2013
URC: Balance Sheet (Break-up) as of 31 December 2013 Total Assets Investment Properties Total Assets USD1,678mn Total: USD420mn Marina World - Kuwait Investment properties 2% 2% 9% Land for development 3% 2% Salalah Mall - Oman 5% 25% Projects under Marina Plaza - Kuwait 8% 13% construction* Fixed a
Slide 25: KIPCO Consolidated: Financial performance
KIPCO Consolidated: Financial performance Revenues Net Income Consolidated Assets USDmn USDmn EPS (Cents) USDbn 13.6 8.6 8.3 10.4 30.6 1,961 160 142 25.5 1,447 1,468 20.7 112 20.1 1,245 106 2010 2011 2012 2013 2010 2011 2012 2013 2010 2011 2012 2013 25
Slide 26: KIPCO Parent debt profile
KIPCO Parent debt profile: As at 31 December 2013^ Debt Type Debt Maturity Total Debt: USD1.9bn Total Debt: USD1.9bn Average debt maturity is International 4.4 years Bonds Local 78% Bonds 15% 0% 41% 59% 7% Term <2 Years 2-4 Years >4 Years Loan Liquidity KIPCO has cash & bank balance of USD1,008mn wi
Slide 27: Index: Why KIPCO
Index Why KIPCO 27
Slide 28: Why KIPCO? Pan MENA Player
Why KIPCO? Compelling Experienced strategy management team Pan MENA Player Supportive Outstanding track record Pan MENA primary shareholder Player Transparent Strong liquidity Well positioned to deliver 20% return in medium term 28
Slide 29: Thank you
Slide 30: Annexure 1: Portfolio Companies
Index Annexure 1: Portfolio Companies 30
Slide 31: Burgan Bank (BB): Overview
Burgan Bank (BB): Overview 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 USD25.4bn as of 31 December 2013) Offers a wide range of corporate, retail & treasury products through a netw
Slide 32: 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 33: United Gulf Bank (UGB): Overview
United Gulf Bank (UGB): Overview 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 USD547mn as of 3 March 2014 Credit rating of BBB from Capi
Slide 34: Gulf Insurance Group (GIG): Overview
Gulf Insurance Group (GIG): Overview 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 acr
Slide 35: United Real Estate Company (URC): Overview
United Real Estate Company (URC): Overview 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
Slide 36: 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 Acquired A
Slide 37: United Industries Company (UIC): Overview
United Industries Company (UIC): Overview Overview Overview Established in 1979, UIC invests in the industrial sector in Kuwait and the region Major investments are SADAFCO & QPIC Listed on the Kuwait Stock Exchange in 1997, it has market cap of USD285mn as of 3 March 2014 KIPCO Group holds 72.7% co
Slide 38: United Industries Company: Financial performance
United Industries Company: Financial performance Income from Associates Total Revenue* USDmn USDmn 26 162 18 18 12 55 34 29 2010 2011 2012 2013 2010 2011 2012* 2013* Net Profit* Total Asset USDmn USDmn 100 770 633 632 603 14 12 4 2010 2011 2012* 2013* 2010 2011 2012 2013 * Includes profit of USD140m
Slide 39: Saudi Dairy & Foodstuff Company (SADAFCO): Overview
Saudi Dairy & Foodstuff Company (SADAFCO): Overview Overview Overview Established in 1976 as a pioneering venture in dairy sector Leading dairy and foodstuff company having operations across the MENA region Highest market share in UHT milk, tomato paste, co-market leader in ice cream & growing prese
Slide 40: Saudi Dairy & Foodstuff Company: Financial performance
Saudi Dairy & Foodstuff Company: Financial performance^ Total Revenue Net Profit USDmn USDmn 11% 11% 11% 10% 10% 412 355 44 314 310 40 302 34 30 31 2010/11 2011/12 2012/13 9M'12/13 9M'13/14 2010/11 2011/12 2012/13 9M'12/13 9M'13/14 Net profit Net profit margin Total Asset Total Shareholder’s Equity
Slide 41: Qurain Petrochemicals Industries Co. (QPIC): Overview
Qurain Petrochemicals Industries Co. (QPIC): Overview 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
Slide 42: Qurain Petrochemicals Industries Co: Financial performance
Qurain Petrochemicals Industries Co: Financial performance Share of Income from Associates Net Profit USDmn USDmn 34 19 117 6 10 80 32 13 (32) (7) 2010 2011/12 2012/13 9M'12/13 9M'13/14 2010 2011/12 2012/13 9M'12/13 9M'13/14 Total Asset Total Shareholder’s Equity USDmn USDmn 1,191 1,031 1,006 989 90
Slide 43: Annexure 2: Executive Management
Index Annexure 2: Executive Management 43
Slide 44: KIPCO: Executive management
KIPCO: Executive management f Joined KIPCO Board in 1990 f Joined KIPCO in 1990; Board and committee f Recipient of Arab Bankers Association of North member of American University of Kuwait, MIT Faisal Hamad Al America Achievement Award (2005) Samer Subhi f 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 14 164 161 10 9 8 145 142 2010 2011 2012 2013 2010 2011 2012 2013 DPS ROE Cents per share 8.0% 6.6% 7.1% 5.1% 5.2% 5.8% 4.6% 3.2% 7 7 7 7 2010^ 2011^ 2012^ 2013^ 2010 2011 2012 2013 DPS Dividend Yield ^ An additional 5% stock div
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 3 Asset Avg. Growth 29% ROE 22% Total Shareholders Return (TSR) Dividend Yield Global Global Kuwait Kuwait Peers Peers Rank 2 1 Rank 1 3 Avg. Div TSR 21% Yield 13% Data Sour
Slide 52: KIPCO Best in Class: Last 7 Years
KIPCO Best in Class: Last 7 Years Asset Growth Return on Equity (ROE) Global Global Kuwait Kuwait Peers Peers Rank Rank 3 1 2 2 Asset Avg. Growth 31% ROE 24% Total Shareholders Return (TSR) Dividend Yield Global Global Kuwait Kuwait Peers Peers Rank 1 3 Rank 1 2 Avg. Div TSR 15% Yield 12% Data Sourc
Slide 53: KIPCO: Net asset value (NAV)
KIPCO: Net asset value (NAV) NAV/Share Position* 4 200% 149% 146% 150% 128% 128% 3 101% 100% 78% 78% 71% 27% 51% 46% 36% 42% 2 40% 50% 34% USD 23% 20% 13% 9% 10% (10%) (18%) 0% (30%) 1 (34%) (50)% - (100)% Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 NAV per share Market P
Slide 54: Ownership
Ownership Shareholding Profile: December 2013 Treasury Shares 1.9% Retail Investors 6.1% Primary Shareholder (AFH*) 66.2% 2.7% HNIs 16.8% Investment Companies 6.2% Investment Funds They hold their ownership interest in KIPCO Major shareholders of KIPCO are members of through an investment vehicle Al
Slide 55: KIPCO Group: Market data
KIPCO Group: Market data P/B P/E Market Cap (USDmn)1 Entity 2012 Current2 2012 Current2 2012 Current2 0.9 1.7 17.3 27.9 1,853 3,343 1.7 1.9 14.7 33.3 2,911 3,172 0.9 1.2 NM 66.5 504 547 1.3 1.3 11.1 10.5 346 359 0.5 0.8 16.0 11.3 173 285 0.7 0.7 6.9 9.0 507 515 Notes: 1. Market Cap for 2012 and the
Slide 56: KIPCO: Average Daily Traded Value
KIPCO: Average Daily Traded Value Avg. Daily Traded Value (USD'000) 7,409 3,140 2,898 2,369 1,578 1,408 1,406 1,257 1,053 659 727 486 543 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 KIPCO stock has maintained an average daily traded value of USD1.9mn in
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 Syria Current Account Balance as a % of GDP (2013E-18E) Tunisia Lebanon Iraq Morocco Israel Jordan 7.7% Kuwait Algeria Libya Bahrain 3.3% Egypt Qatar Saudi 1.7% 1.2% UAE 1.3% Arabia MENA China Japan Russia EU Brazil US UK India Oman -1.6% GCC Non GCC -3
Slide 59: GCC Region: Well Positioned to Deliver Growth
GCC Region: Well Positioned to Deliver Growth USDbn ….One of the highest 342 per capita income, of world’s proven oil reserves along with robust and growing non-oil sector activity … 385 GDP / Capita, PPP (2013E) (In Accumulated USD) 343 52,839 43,964 current 37,299 37,135 31,948 account 18,083 12,1
Slide 60: 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) 26.7% 28 42.2% 45 2009 3.3% 30.8% 37 43.1% 52 2010 74 87 2013E 2018E 41.8% 67 60 2011
Slide 61: Kuwait Development Plan Overview
Kuwait Development Plan Overview f Purpose: Development Budget By Sector − Upgrade infrastructure − Diversify non oil revenue 7% − Create employment 14% Oil & Gas − Develop private sector f Overview Utilities USD125bn − USD125bn 5 year plan Real Estate & Construction 18% 61% − FY 2010/11 – Budgeted
Slide 62: Annexure 7: Market opportunity
Index Annexure 7: Market opportunity 62
Slide 63: 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 64: Gulf Insurance Group: Market Opportunity
Gulf Insurance Group: Market Opportunity 337 Kuwait 1% f MENA region is characterized by 22 low insurance density and GIG Presence Egypt 1% significant under penetration 450 f Rapid insurance market growth Bahrain 2% in MENA with all countries witnessing double digit growth 103 Jordan 2% over past f
Slide 65: 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 9 Attracting 25
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