The Group Securities: Weekly Report on QSE Performance, 23-27 July 2017

Over the last week, nine companies released their financials for the second quarter of this year. Most of the result reveal a decline of profit compared to that of the same period last year. Average daily trading stood at the level of QR200 million, thus pushing the General Index up by 21 points to the level of QR 9563 points; while four sectoral indices increased and three others declined. Qatar portfolios exclusively dominated net buy transactions. Individual investors, namely Qataris, exclusively carried out net sale transactions.  As result, total capitalization of the market stood at the level of QR 517.3 billion, slightly up. The Group reviews QSE performance in this week with illustrative charts combined with corporate business news, and a list of the affecting economic factors.

Corporate News:

1-- Qatar Industrial Manufacturing Company Sales in the first half of the year shrank by 60.8%, accordingly the total revenue from the company's sales decreased by 37.1% to QR 50.8 million. In contrast Sales cost and general expenses rose by 29.5% to QR 34.2 million and the operating income decreased by 41.2% to QR 23.9 million. However, the company's share in the profits of its associates quadrupled to QR 89 million. The net profit for the period increased 16% to QR 113.4 million. However, with fair value losses, the comprehensive income decreased to QR 90.7 million.

2-- The company's total revenue in the first half of the year declined by 3.5%, despite the stable revenues of vessels at QR 1.52 billion as the company's share of profits in joint venture companies decreased by 23.1% to QR 185.6 million. Total expenses increased by 2.1% to QR 1.37 billion, of which QR 339.9 million were operating expenses, QR 582.1 million financing costs, QR 381.6 million equipment depreciation and QR 67.8 million general and administrative expenses. Net profit for the period decreased by 18.4% to QR 408.9 million. There was a positive change in fair value raising the comprehensive income to QR 427.3 million.

3-- Operating income in the first half of the year decreased by 5% to QR 556.7 million and the operating cost increased by 10.8% to QR 386.5 million. Accordingly, the total operating profit decreased by 28% to QR 170.3 million. Total general, administrative and distribution expenses increased by 40.4% to QR 23.3 million. After adding other income, the profit for the period decreased by 33.2% to QR 168.1 million. There was a decline in the fair value of investments amounting to QR 33.9 million decreasing the comprehensive income to QR 134.1 million compared to QR 246.4 million in the corresponding period last year.

4-- QIIB total income in the first half of 2017 increased by 11.4% to QR 910 million, of which QR 820.9 million was profit from financing and investment activities. Total expenses increased by 16% to QR 236.9 million, of which QR 75.7 million were for staff, QR 81 million for financing cost and QR 70.3 million other costs. The share of holders of unrestricted deposits increased 20.9% to QR 205.3 million. Net profit increased 5% to QR 465.3 million.

5-- Ooredoo disclosed its reviewed financial statements for the period ended on June 30, 2017. The statements show that the net profit is QR 1,097 million Compared to net profit amounting to QR 1,462 million for the same period of the previous year. The Earnings per Share (EPS) amounted to QR 3.42 For the period ended June 30, 2017 to EPS amounted to QR 4.56 for the same period of the previous year.

6-- Qatar Insurance Company's total income dropped by 8.6% to QR 858.8 million in the second quarter of 2017, including QR262.8 million as net income from insurance, and QR 563 million net investment income. Total administrative and operational expenses increased by 2.5% to QR 331 million. As result, net profit attributable to shareholders increased by 16.2% to QR 504.9 million. The company incurred loss as result of negative change in the fair value of investments worth QR 223.9 million, which reduced the comprehensive income attributable to shareholders by QR 47.2% to 298.4 million.

7-- Barwa Real Estate's total income dropped by QR20.3 million to QR 497.6 million in the second quarter of this year. This decline is attributed to a decline in leasing revenues by QR82.8 million to QR 30.6 million, coupled with rise in the rentals worth QR63.5 million to QR 467 million. The company's share from associate companies increased to QR54.9 million, while public and administrative expenses fell marginally to QR 108.8 million. Net financing cost increased by 20% to QR40.1 million. The important actor that affected the result was the net profit posted from the positive change in the real value of real estate investments, which amounted to QR 469 million, compared to 630.2 million in the same period last year. As result, net profit dropped by 24.2% to QR 917.9 million. Comprehensive income amounted to QR 903 million.

8-- Vodafone's total revenue increased by 3.1% to QR 515.8 million and its total expenses decreased by 5.8% to QR 377.1 million, including QR 182.3 million interconnection expenses,  QR 136.2 network and rental expenses and QR 58.6 million operating expenses. Depreciation and amortization provisions decreased by 30% to QR 128.3 million. After deducting QR 7.4 million in financing costs, net loss decreased by 42.7% to QR 57.1 million compared to QR 99.6 million in the corresponding period last year.

9-- Dalal's net operational income increased by 78.75 to QR29.1 million in the second quarter of 2017, including QR20.3 million net income from commissions and brokerage. Total expenses increased by 18.65 to QR15.3 million. As result, net profit jumped to QR13.96 million, compared to 1.25 million in the same period last year. The company incurred a great loss as result of a negative change in the fair value of investments worth 26.36 million. Net profit turned into a comprehensive loss worth 12.65 million.

10-- Total operating revenues of the company decreased by 5.8% to QR 660.5 million in the first half. Total general and administrative expenses increased by 7.2% to QR 99.7 million. After adding a share in the profits of sister companies worth QR 286.6 million (compared to QR 185.8 million in the corresponding period last year) and deducting the cost of financing which increased by 10.8% to QR 89 million, the net profit for the period increased by 2.4% to QR 810.6 million. There was a decline in the fair value of investments amounting to QR 168.8 million compared to a decrease of QR 86.6 million in the corresponding period in 2016. The comprehensive income decreased by 9% to QR 641.7 million compared to QR 704.7 million in the corresponding period last year.

Economic Developments

1-- Banks consolidated balance sheet for June has been released and data shows a rise in total assets by about 7.7 billion to around QR1305.8 billion.  The total domestic public debt, including bonds, decreased by about QR 15.1 billion to QR 442.6 billion, while the total domestic private sector deposits increased by QR 6.9 billion to the level of QR 448.5 billion.

2-- Last week, OPEC oil prices recouped 1.40 dollar, closing at $ 48.88 per barrel on Thursday.

3-- Last week, Dow Jones index lost 58 points to reach the level of 21580 points. US Dollar exchange rate decreased to the level of 111.16 yen, and $ 1.17 per Euro. Gold price increased by 27 dollars to the level of $ 1255 per ounce.