omaNi cemeNt sector - GulfBase.com

November 24, 2010

nbkcapi ta l .com

omaNi cemeNt sectorPricing Pressure to continue

Valuation

Price * Fair Value Upside / Market Cap.

(RO) (RO) Downside Million RO

Oman Cement 0.636 0.700 10.1% Accumulate 210Raysut Cement 1.265 0.986 -22.1% Under Review 253

Recommendation

*As of November 23, 2010. Sources: Reuters and NBK Capital

rebased Performance

80

90

100

110

120

Nov-09 Jan-10 Feb-10 Apr-10 May-10 Jul-10 Aug-10 Oct-10 Nov-10

Oman cement sector MSCI Oman

Sources: Reuters and NBK Capital

Forecasts

Revenue EBITDA

Growth Growth

Oman Cement 12.4 9.6 -9.9% -9.5% 47.7% 5.7%Raysut Cement 15.6 10.5 -6.6% -11.4% 39.2% -

2011 F

P/E EV/EBITDA EBITDA Margin Dividend Yield

Sources: Company financial statements, Reuters, and NBK Capital

Key Figures

Revenue Revenue Revenue

Growth Growth Growth

Oman Cement 7.50% 39.5% -23.0% 46.4% -24.1% 47.5%Raysut Cement 0.30% 36.1% -32.7% 41.6% -30.3% 41.3%

EBITDA Margin

Dec-2009 9M2010 2010F

EBITDA Margin EBITDA Margin

Sources: Company financial statements and NBK Capital

Highlights

• We have downgraded both Oman Cement and RaysutCementduetoanticipateddropsindomesticcementprices: We believe cement prices in Oman will be affected by import parity pricing, and hence, we expect domestic prices to decline by around 12% to 13% from the current levels in the near-term and eventually follow the landed price of cement from the United Arab Emirates (UAE). Accordingly, we have lowered our forecasts and downgraded both stocks. We have reduced our fair value for Oman Cement by 20.4% to RO 0.700 per share, which results in an upside of 10%. Thus, we now recommend “Accumulate” for the stock. A 2010 dividend yield of 6.5% only makes the investment case stronger. We have also lowered the fair value for Raysut Cement by 31.5% to RO 0.986 per share, which is 22% lower than the current price. Following disappointing 3Q2010 results, we had put Raysut Cement “Under Review” (refer to the analyst comment dated October 21, 2010). In the meantime, the company announced its acquisition of UAE-based Pioneer Cement. We continue to keep the stock “Under Review” since the acquisition is likely to have material impact on our consolidated fair value. We are waiting for further information to assess the likely implications. The fair value of RO 0.986 per share is only for Raysut Cement’s existing, pre-acquisition business.

• Oman Cement – negatives priced in; we remain morepositive compared to Raysut Cement: We expect Oman Cement to benefit substantially from the new clinker plant [1.2 million tons per annum (mtpa)] which we now expect to be operational by the end of 1Q2011. By relinquishing clinker imports going forward, Oman Cement should generate healthy EBITDA margins and cash flows, albeit lower than our earlier forecast. We now expect a five-year average EBITDA margin of 45% for Oman Cement compared to our earlier forecast of 51% for the period between 2011 and 2015.

• RaysutCement–locationdisadvantageislikelytoweighonmargins:Raysut Cement’s location in Salalah (the southern part of Oman) results in additional distribution costs for selling cement in the construction-intensive northern part of Oman (mainly in and around Muscat). This results in lower EBITDA margins compared to those of Oman Cement. We now expect Raysut Cement to generate a five-year average (2011–2015) EBITDA margin of 39% compared to our earlier forecast of 48%, mainly due to our expectation of lower cement prices. We expect Raysut Cement’s five-year (2011–2015) average cost of production per ton to be RO 14.4, 23.3% higher than that of Oman Cement (which we forecast at RO 11.7).

analyst

Rajat Bagchi

T. +965 2259 5115E. [email protected]

http://nbkcapital.com

http://www.nbkcapital.com

mailto:rajat.bagchi%40nbkcapital.com?subject=

OmanCementSector-OmanCement&RaysutCementNovember24,2010

nbkcapi ta l .com | 2

coNteNts

sector HigHligHts .............................................................................. 3

Demand Outlook Positive but Further Price Cut Imminent ..................................... 3

Valuation .............................................................................................................. 6

3Q2010 Results Review ...................................................................................... 7

Revised Forecasts ................................................................................................ 9

omaN cemeNt co. ............................................................................... 14

raysut cemeNt co. ........................................................................... 14

FiNaNcial statemeNts – omaN cemeNt ....................................... 15

FiNaNcial statemeNts – raysut cemeNt ................................... 16




sector HigHligHts

Demand outlook Positive but Further Price cut imminent

We believe cement prices in Oman will be affected by import parity pricing, and hence, should decline from the current levels in the near-term and eventually follow the landed price of cement from the UAE. Accordingly, we have revised our outlook on the Omani cement sector and now expect current bulk ordinary Portland cement (OPC) prices in Oman to decline from RO 26–27 per ton (USD 68–70 per ton) to the prevailing landed price of UAE cement (RO 23–24 per ton/USD 60–61 per ton). We expect this price cut to occur towards the end of 2011, which should result in volumes growth for the two Omani cement companies mainly from 2012 onwards. Anecdotal evidence suggests that imports from the UAE have intensified during the course of the year and are in the range of 1.2–1.3 million tons of cement (around 26% of the total cement consumption in Oman) in 2010.

3Q2010trendincementsalesvolumes–10%pricecutnotenough: A 10% cut in domestic OPC bulk prices during 3Q2010 could not counter the significant drop in domestic cement volumes for both companies. Domestic cement volumes for Raysut Cement decreased by almost 35% year-over-year (YoY) to 336 thousand tons while, Oman Cement reported a 24% YoY decline in domestic sales volume to 416 thousand tons. Domestic cement volumes for both Omani cement companies showed a consistent decline during the first three quarters of 2010, a clear indication of shrinking market share due to the cheap imports from UAE. The 3Q2010 domestic sales volume was the lowest quarterly figure for both companies in the last five years.

DifferentialbetweenOmaniandUAEcementpricesunsustainable;expectnear-termcorrectionindomesticprices: Blended cement prices for Raysut Cement and Oman Cement dropped by 14.5% and 10% YoY to RO 27.8 per ton and RO 28.3 per ton, respectively, during 3Q2010. We believe that Oman Cement’s new clinker plant holds the key to the domestic pricing strategy for the company going forward. The company’s current clinker capacity of 1.2 mtpa results in 1.27 million tons of cement production, and hence, does not provide the required volumes for the company to engage in a price war with UAE cement players. To push cement volumes and use the excess grinding capacity (1.27 mtpa), the company has to rely on imported clinker, which is margin dilutive. Thus, the current strategy of maintaining cement prices at the expense of market share is understandable. However, the operation of the new clinker plant will eventually force the company to sell its increased volumes by reducing prices. Accordingly, we expect the company to cut domestic cement prices to RO 23–24 per ton by the end of next year compared to our earlier assumption of RO 27.5 per ton. We expect Raysut Cement to follow suit as well.

UAE cement sector – cement prices close to the bottom, but significant excess supply rulesoutanypotentialrecoveryinprices: We believe the current OPC bulk prices of AED 170–180 per ton (USD 47–48 per ton) in the UAE are close to the bottom. The financial performances of the UAE cement companies during 9M2010/3Q2010 reveal that most of the companies are barely positive at the EBITDA level, implying that current cement prices are almost close to the cash cost of production. However, we believe the significant excess supply in the UAE cement industry rules out any potential recovery in cement prices. To put things into perspective, even if the cement demand in the UAE returns to the historic high levels of 20.8 million tons in 2008, there would still be an excess supply of around 3–4 million tons. These figures are based on effective production capacity, which considers only the current clinker capacity of 23.3 mtpa. The situation further worsens if we were to consider the excess grinding capacity of 16–17 mtpa. With no signs of the domestic demand–supply equation improving, the UAE cement players have entered survival mode and would tap any potential export market with a focus on breaking even. Hence, we believe cement prices in the UAE will be a key factor influencing cement prices in other countries within the region.




Impressive pipeline of infrastructure projects should propel cement demand in Oman in themedium-term: We are optimistic regarding the focused infrastructure spending by the government and expect the recently announced airport projects (an extension of the Muscat airport and modernization of the Salalah airport) to act as a trigger for the Omani cement sector over the next three to four years. Considering the location of the two companies, we expect Oman Cement to be the main beneficiary of the Muscat airport project (a total project value of RO 706 million; the project is expected to be completed over the next three years), while Raysut Cement stands to gain from the Salalah airport project (RO 300 million with a three-year execution period as well). According to the management of both companies, the government-backed nature of the projects is likely to ensure that the two domestic cement players will get preferential treatment over other competitors. If we assume that even 5% of the total project value (RO 1 billion) for the two airports is allocated toward cement purchases, this will result in around RO 16–17 million of combined annual revenue for the two companies for the next three years. This is roughly 14–15% of the expected total revenue for the two companies in 2010. We expect execution delays of at least a year for both projects and expect cement volumes for the two companies to materially pick up from 2012 instead of 2011. In addition, comparatively lower cement prices should result in an increase in market share for both companies.

Figure 1 Pipeline for Selected Infrastructure Projects in Oman

Contract Value

USD million

Airpo r tsOman MOTC - Muscat International Airport Expansion - Phase 1 1,836Oman MOTC - Salalah Airport 780Oman MOTC - Al Duqm Airport - Package 2 111Oman MOTC - Al Duqm Airport - Package 1 75

Po r tsOman MOTC - Duqm Port - Marine Works 1,356Oma MOTC - Salalah Port Expantion - Berths 7, 8, 9 525Oman MNE - Duqm Port - Ship Repair Yard and Dry Dock Complex 442Oman MOTC - Muscat Sultan Qaboos Port Expansion 400Sohar Industrial Port Company - Deepwater Bulk Jetty 250Oma MOTC - Salalah Port Expansion - General Cargo and Liquid Terminal 120

RoadsandB r idgesOman MNE - Masirah Island Causeway 2,500Muscat Municipality - Muscat Expressway 330Oman Supreme Committee for Town Planning - Batinah Coastal Road 260Muscat Municipality - Al Amerat to Qurayyat Road 179Oman MTC - Hasik to Shuwaymiah Highway 178Muscat Municipality - Wadi Adai Al Amerat Road 147Oma MOTC - Salalah to Thumrait Road Dualisation 130Muscat Municipality - Al Amerat to Bawshar Road 65

Sources: Zawya projects and NBK Capital

We expect the growth momentum in the Omani construction sector to remain intact going forward, and expect the positives in the construction sector to act as the major driver for the Omani cement sector. According to forecasts from Business Monitor International (BMI) and the International Monetary Fund (IMF), the construction sector in Oman is expected to grow at an impressive six-year compounded annual growth rate (CAGR) of 10.7% compared to the country’s expected nominal gross domestic product (GDP) growth rate of 9.4% during the same period.

Oman boasts an impressive

pipeline of infrastructure

projects




Figure 2 Contribution of the Construction Sector in Nominal GDP

0%

1%

2%

3%

4%

5%

6%

7%

8%

0

5

10

15

20

25

30

35

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

f

2011

f

2012

f

2013

f

2014

f

2015

f

Nominal GDP (RO billion) Construction as a % of nominal GDP

Sources: BMI, IMF and NBK Capital

We expect the cement demand in Oman to almost mimic the country’s real GDP growth rate in the medium-term, and forecast that cement demand will grow at a five-year CAGR of 4.5% to reach 5.85 million tons by 2015. We feel this forecast is conservative considering that historically cement consumption in Oman grew at an impressive 10-year CAGR of 12.7%, more than double the country’s real GDP growth rate of 4.8% during the same period. On the supply side, we do not expect any capacity additions in Oman in the medium-term with the exception of the upcoming clinker capacity of Oman Cement. Since we expect Raysut Cement to continue to export cement to Yemen and to some African countries, these exports would result in lowering the domestic supply. Thus, we expect some cement imports to meet the local cement demand going forward.

Figure 3 Omani Cement Sector – Key Metric

2008 2009 2010f 2011f 2012f 2013f 2014f 2015f

Effective year end cement capacity - Oman cement (million tons) 1.32 1.32 1.32 2.55 2.55 2.55 2.55 2.55

Effective year end cement capacity - Raysut cement (million tons) 2.77 2.77 2.86 2.86 2.86 2.86 2.86 2.86

To ta le f fec t ive cement capac it y(milliontons) 4.09 4.09 4.18 5.41 5.41 5.41 5.41 5.41

To ta lcement consumpt ion(milliontons) 4.46 4.60 4.70 4.90 5.13 5.36 5.60 5.85

YoY growth 3.1% 2.2% 4.4% 4.5% 4.5% 4.5% 4.5%

To ta le xcesscapac it y(milliontons) -0.37 -0.51 -0.52 0.51 0.29 0.06 -0.18 -0.44

Domestic cement sales volume - Oman cement (million tons) 2.07 2.15 1.72 1.83 2.13 2.30 2.39 2.45

YoY growth 4.0% -20.2% 6.4% 16.4% 8.0% 3.9% 2.5%

Domestic cement sales volume - Raysut cement (million tons) 1.99 2.14 1.42 1.56 1.79 1.97 1.99 2.02

YoY growth 7.8% -33.7% 9.9% 14.8% 10.0% 1.0% 1.5%

Combineddomest ic cement sa le svo lume (milliontons) 4.06 4.30 3.14 3.39 3.92 4.27 4.38 4.47

YoY growth 5.8% -26.9% 8.0% 15.7% 8.9% 2.6% 2.1%

Sources: Oman Cement and NBK Capital

Construction activity in Oman

is expected to grow at a brisk

pace going forward

We expect cement demand in

Oman to mimic the real GDP

growth rate in the medium-

term




Valuation

OmanCement

We have reduced our fair value for Oman Cement by 20.4% to RO 0.700 per share, which results in an upside of 10% from the last close. Thus, we have downgraded the stock to “Accumulate” compared to our earlier “Buy” recommendation. Our new fair value has been negatively impacted by lower cement price assumptions, which have resulted in significantly lower EBITDA margins and hence lower EBITDA. We believe the 12% decline in the stock price since our last update (dated April 7, 2010) presents an opportunity considering Oman Cement’s strong fundamentals and our positive outlook on the company, in addition to the company’s forward dividend yield of 6.5%.

We believe the company’s strong balance sheet lends further support to the investment case. At the end of September 2010, the company had a net cash balance (after debt) of RO 25.7 million (12% of the current market cap). In addition, the company also has an investment portfolio of RO 21 million, which is mainly composed of quoted equity investments. Having made adjustments for these, the company currently trades at a price-to-earnings ratio (PER) of 9.6x on 2011 net profit.

Figure 4 Fair Value per Share

Weight Value (RO) Weight Value (RO)

Discounted cash flow 80% 0.885 80% 0.718 -18.9%

Peer comparison 20% 0.855 20% 0.628 -26.6%

Weighteda ve rage fa ir va lue 100% 0.879 100% 0.700 -20.4%

Valuation MethodOld New

Change

Source: NBK Capital

RaysutCement

We have lowered the fair value for Raysut Cement by 31.5% to RO 0.986 per share, which implies a 22% downside potential from the current levels. However, we continue to keep the stock “Under Review” until further information is released on the company’s potential acquisition. The lower cement price assumption has mainly led to lower EBITDA margins compared to our earlier assumptions and hence the decline in fair value. On a conservative basis, we do not expect Raysut Cement to pay any dividends for the next 2 to 3 years as a result of funding the acquisition.

Figure 5 Fair Value per Share

Weight Value (RO) Weight Value (RO)

Discounted cash flow 85% 1.465 85% 1.001 -31.7%

Peer comparison 15% 1.290 15% 0.900 -30.2%

Weighteda ve rage fa ir va lue 100% 1.439 100% 0.986 -31.5%

Valuation MethodOld New

Change

Source: NBK Capital

SensitivityAnalysis

We did a sensitivity analysis for the Omani cement companies to analyze the impact of the change in cement prices on their respective fair values as shown below in Figure 6. We wanted to see whether it would be prudent for the Omani cement companies to maintain domestic cement prices at current levels at the expense of losing market share or reduce cement prices as we expect to happen. We feel the Omani cement companies would be better off reducing cement prices, which is likely to result in healthy volumes growth. To arrive at our conclusion, we made the following assumptions:

Our new 12-month fair value

for Oman Cement is RO 0.700

per share, which represents an

upside of 10%

Our new 12-month fair value

for Raysut Cement is

RO 0.986 per share, which is

22% lower than the current

price and does not account for

potential acquisition




• If both companies maintain domestic cement prices at RO 26–27 per ton, this would result in no growth in sales volumes over the forecast horizon compared to the forecasted sales volume for 2010. Hence, we assume Raysut Cement and Oman Cement will clock an annual sales volume of 2.03 million tons and 1.76 million tons, respectively (our 2010 forecasts for sales volumes for the two companies), over the entire forecast period until 2015. We reason out that as long as there is a differential between the domestic cement prices and the landed price of cement from the UAE, any annual incremental demand will be met by imported cement from the UAE.

• For Raysut Cement in particular, we maintain our assumptions for annual clinker sales volume and export sales volume exactly equal to our 2010 forecasts. Accordingly, we assume that the company will annually sell 425 thousand tons of clinker at RO 16 per ton and maintain the annual export sales volume at 610 thousand tons over the forecast period. Price assumptions for the cement exported (mainly to Yemen) are exactly the same as we forecast for our base case (RO 22–23 per ton).

• As mentioned earlier, our base case scenario assumes domestic cement prices will drop to RO 23–24 per ton, and accordingly, we expect growth in cement volumes for both companies.

• The cost assumptions remain the same irrespective of changes in cement prices.

Figure 6 Sensitivity Analysis

Base case 26 27

Oman Cement - Fair value per share (RO) 0.700 0.646 0.695

Raysut - Fair value per share (RO) 0.986 0.893 0.957

Domestic cement prices (RO per ton)

Source: NBK Capital

3Q2010 results review – similar trend of Drop in revenue Followed by eBitDa margin expansion

OmanCement

• Imports from the UAE hurt volumes; one of weakest quarters historically: Oman Cement reported a 31.3% decline in net revenue to RO 11.8 million in 3Q2010 compared to the same period last year, which is 14.4% below our forecast of RO 13.5 million. As mentioned earlier, cheap imports from the UAE were mainly responsible for the drop in domestic sales volume. During 9M2010, net revenue was down 23% to RO 40.6 million compared to the same period last year, and was 4.4% below our forecast of RO 42.5 million.

• Drop in domestic cement prices does not fuel volumes: Domestic cement prices for the company were RO 28.3 per ton during the quarter, almost 10% below prices in 3Q2009 (RO 31.4 per ton during 1H2010).

• EBITDAmarginexpansion–ourmainrationalefallinginline: Amid anticipated volume and pricing pressure, we expected the company to report healthy EBITDA margin during the year, which is materializing. Though EBITDA declined by 29% to RO 5.1 million (12% below our forecasts), the EBITDA margin expanded to 43.7% during 3Q2010 compared to 42.2% in 3Q2009. The company benefited from lower volumes of imported clinker (down 51.7% YoY to 135 thousand tons) as well as cheaper prices for the same. According to the company’s management, clinker prices were down almost 30% to USD 45 per ton (average for 9M2010) compared to the same period last year. The EBITDA for the quarter would have been higher but for a major breakdown in one of the cement mills that led to around 30 thousand tons of cement imports amounting to RO 0.67 million. The mill has been fixed, and we do not expect any further cement imports going forward. Accordingly, we expect a higher EBITDA margin for 4Q2010 at 51.4%, which should push overall margins for 2010 to 47.5%. The 9M2010 EBITDA was 4.8% below our forecasts at RO 18.8 million, down 6.3% YoY.

Maintaining cement prices

at the current levels may not

necessarily have a positive

impact on the fair values




Figure 7 3Q2010 Financial Performance

Income Statement (RO Million) 9M2010 9M2009 YoY Growth 3Q2010 3Q2009 YoY Growth

Domestic revenue 40.1 52.3 -23.3% 12.0 17.0 -29.8%

Export revenue 1.1 0.7 54.5% 0.3 0.2 50.7%

Net revenue 40.6 52.7 -23.0% 11.8 17.2 -31.3%

Cost of sales 19.9 30.9 -35.6% 6.0 9.4 -35.9%

Gross profit 20.7 21.8 -5.0% 5.8 7.8 -25.7%

EBITDA 18.8 20.1 -6.3% 5.1 7.3 -29.0%

Profit before taxes 25.7 19.1 34.7% 5.0 6.5 -22.9%

Taxation 2.9 2.2 32.8% 0.5 0.8 -36.4%

Net profit after tax 22.8 16.9 34.9% 4.5 5.7 -21.0%

Margins (%) 9M2010 9M2009 3Q2010 3Q2009

Gross profit margin 50.9% 41.3% 48.8% 45.2%

EBITDA margin 46.4% 38.2% 43.7% 42.2%

Operating Highlight 9M2010 9M2009 YoY Growth 3Q2010 3Q2009 YoY Growth

Cement sales volume (million tons) 1.335 1.679 -20.5% 0.416 0.546 -23.8%

Cement prices (RO per ton) 30.4 31.4 -3.1% 28.3 31.5 -9.9%


RaysutCement

• Larger-than-expected drop in domestic volumes leads to disappointing 3Q2010 numbers: Raysut Cement reported a 37.8% decline in total revenue to RO 13.9 million in 3Q2010 compared to the same period last year, which is almost 16% below our forecast of RO 16.5 million. This was mainly due to a 44% drop in domestic revenues as a result of a nearly 35% decline in domestic sales volume. During 9M2010, total revenue was down 32.7% to RO 48.3 million compared to the same period last year, 3% lower than our forecasts.

• Pricingpressure:The decline in domestic revenue was further aggravated by a 14.5% drop in domestic prices to RO 27.8 per ton. We believe the company offered volume discounts in northern Oman (around 70–80% of Raysut Cement’s domestic sales), resulting in lower effective prices. Domestic prices, similar to domestic sales volume, also showed a declining trend in the first three quarters of 2010 (RO 30.1 per ton in 1Q2010, RO 29.3 per ton in 2Q2010, and RO 27.8 per ton in 3Q2010).

• Exportsaddto thewoes: Export revenue continues to be negatively impacted due to weak cement prices. The company’s average cement prices in the export markets decreased significantly by 37% to RO 22.4 per ton, resulting in a 37.7% YoY drop in export revenue to RO 3.5 million. Though volumes were almost flat at 156 thousand tons during the quarter, clinker sales (65 thousand tons), which positively impacted volumes in the previous quarters, were the lowest during the year.

• Absenceofcementimportsleadstomarginexpansion: Raysut Cement reported an EBITDA of RO 5.29 million in 3Q2010, down 30.2% YoY and well below our forecast of RO 7.25 million. However, following the trend in 1H2010, the EBITDA margins expanded to 38.1% in 3Q2010 compared to 33.9% in 3Q2009, mainly due to a notable drop in cement imports. The company imported cement worth RO 5.45 million during 3Q2009, while cement imports were absent in 3Q2010. We would like to highlight that lower volumes and weak pricing during the year have resulted in the EBITDA margins consistently contracting from 47.2% in 1Q2010 to the current levels. During 9M2010, EBITDA was down 23% to RO 20.1 million compared to the same period last year; this was 10.6% lower than our forecasts. However, the EBITDA margin expanded to 41.6% in 9M2010 compared to 36.3% in 9M2009. Profit before tax (PBT) for the company was down 21.7% to RO 5.4 million in 3Q2010 compared to RO 6.9 million in 3Q2009.

Lower clinker imports led to

margin expansion during the

quarter




Figure 8 3Q2010 Financial Performance

Income Statement (RO Million) 9M2010 9M2009 YoY Growth 3Q2010 3Q2009 YoY Growth

Domestic revenue 31.5 55.0 -42.7% 9.3 16.7 -44.1%

Export revenue 11.7 16.8 -30.5% 3.5 5.6 -37.7%

Clinker revenue 5.1 0.0 - 1.0 0.0 -

Total revenue 48.3 71.8 -32.7% 13.9 22.3 -37.8%

Cost of sales 27.9 45.5 -38.5% 8.5 14.5 -41.3%

Gross profit 20.3 26.4 -22.8% 5.3 7.8 -31.3%

EBITDA 20.1 26.0 -22.9% 5.29 7.6 -30.2%

Profit before taxes 19.0 24.2 -21.3% 5.4 6.9 -21.7%

Margins (%) 9M2010 9M2009 3Q2010 3Q2009

Gross profit margin 42.1% 36.7% 38.5% 34.9%

EBITDA margin 41.6% 36.3% 38.1% 33.9%

Operating Highlight 9M2010 9M2009 YoY Growth 3Q2010 3Q2009 YoY Growth

Domestic sales volume (million tons) 1.080 1.711 -36.9% 0.336 0.514 -34.6%

Export sales volume (million tons) 0.477 0.511 -6.7% 0.156 0.158 -1.2%

Total sales volume (million tons) 1.557 2.222 -29.9% 0.492 0.671 -26.8%

Clinker sales volume (million tons) 0.319 0.045 613.5% 0.065 0.045 44.6%

Domestic cement prices (RO per ton) 29.1 32.1 -9.3% 27.8 32.5 -14.5%

Export cement prices (RO per ton) 24.5 32.9 -25.5% 22.4 35.5 -36.9%


revised Forecasts

OmanCement

Management now expects the new clinker line to be ready for commercial production by the end of 1Q2010, resulting in a delay of around 9 to 10 months compared to earlier plans. Accordingly, we now expect the new clinker line to be operational for nine months during 2011 and assume it will operate at 70% utilization. This would result in an average utilization of 73.8% for a total clinker capacity of 2.4 mtpa. This forecast compares to our earlier assumption of a full year of operations during 2011 at similar utilization rates. In line with our expectation of growth in cement volumes from 2012, we now expect the company to gradually scale up its clinker utilization rate and operate at 97.5% by 2015.

Figure 9 Oman Cement – Old vs. New Forecasts

New Forecast Old Forecast New Forecast Old Forecast

4Q2010 4Q2010 2011 2011

Clinker imports (million tons) 0.047 0.122 - -

Total cement sales volume (million tons) 0.426 0.461 1.85 2.19

Domestic cement price (RO per ton) 27.6 27.7 25.4 27.5

Total revenue (after sales discount) (RO million) 11.2 13.3 46.7 60.0

Source: NBK Capital

We now forecast the sales volume will increase at a five-year CAGR of 7.1% (earlier assumption of 5.6%) from our forecast of 1.76 million tons in 2010 to 2.47 million tons in 2015. However, we now forecast total revenue growth will be comparatively subdued at a five-year CAGR of 2.5% (earlier assumption of 4.4%) over our forecast period (RO 51.8 million in 2010 to RO 58.7 million in 2015) mainly due to the anticipated drop in prices.

Absence of cement imports led

to margin expansion during the

quarter

The expected drop in cement

prices will lead to lower

revenue for 2011




Figure 10 Oman Cement – Trends in Sales Volume

2.15 2.18

1.761.85

2.16

2.312.41

2008 2009 2010f 2011f 2012f 2013f 2014f

Cement sales volume (million tons)


Net profit growth for 2010 is a bit exaggerated considering it includes a one-time government reimbursement of RO 7.34 million for earlier cement imports (the excess of cost over sales price of cement imported during 2007 and 2008). Adjusting for this, our forecasted net profit for 2010 would have been lower than that for 2009.

Figure 11 Oman Cement – Old Vs. New Forecasts

Old New Change

Revenue 56.0 51.8 -7.4%

Cost of sales 27.6 24.7 -10.4%

Gross profit 28.4 27.1 -4.5%

Selling and general & admin. expenses 2.5 2.5 0.0%

EBITDA 25.9 24.6 -5.0%

EBITDA margin 46.2% 47.5%

EBIT 21.6 20.7 -4.3%

Reimbursement from govt. 0.0 7.3

Net profit before taxes 23.6 30.8 30.3%

Tax 2.8 3.5 26.8%

Net profit after tax 20.8 27.2 30.8%

Income Statement (RO million)2010 Forecast


RaysutCement

In light of the company’s recent performance in 3Q2010, we now expect subdued cement volumes over the next four quarters. We forecast a recovery in cement volumes during 4Q2011 in anticipation of a drop in domestic cement prices. Needless to say, growth in the domestic cement sales volume will be the main propeller for growth in the total sales volume. We anticipate a 12.5% and 8.5% drop in domestic cement prices in 2011 and 2012, respectively, compared to our earlier assumption of a 4% drop in prices to RO 27.1 per ton in 2011.

We expect the cement sales

volume will grow at a healthy

rate

We now expect slightly better

margins in 2010




Figure 12 Raysut Cement – Old vs. New Forecasts

New Forecast Old Forecast New Forecast Old Forecast

4Q2010 4Q2010 2011 2011

Domestic cement sales volume (million tons) - - 1.56 1.86

Export cement sales volume (million tons) - - 0.67 0.69

Total cement sales volume (million tons) - - 2.23 2.55

Clinker sales volume (million tons) - - 0.25 -

Domestic cement price (RO per ton) 27.4 27.1 25.1 27.1

Export cement price (RO per ton) 22.4 24 22.5 24.6

Average cement price (RO per ton) - - 24.3 26.4

Domestic revenue (RO million) - - 39.1 50.5

Export revenue (RO million) - - 15.0 16.9

Clinker revenue (RO million) - - 4.0 -

Total revenue (RO million) 14.0 14.2 58.1 67.4

Source: NBK Capital

We now forecast the sales volume to increase at a five-year CAGR of 6.5% (earlier assumption of 4.6%) from our forecast of 2.03 million tons in 2010 to 2.78 million tons in 2015. This is mainly due to the 7% growth in domestic sales volume during the same period. We are conservative regarding export sales volume, which we expect will grow at 4.7% during the same period. However, we now forecast total revenue growth to be almost flat compared to our earlier assumption of 3.7% growth over the forecast period.

Figure 13 Raysut Cement – Trends in Sales Volume

0.720.64 0.61

0.670.73 0.75 0.76

1.99

2.14

1.42

1.56

1.79

1.97 1.99

2.712.78

2.04

2.23

2.52

2.72 2.75

2008 2009 2010f 2011f 2012f 2013f 2014f

Export Sales (million tons) Domestic Sales (million tons) Total Sales (million tons)


The 4Q2010 revenues are

nearly unchanged

We expect the domestic

cement sales volume to grow at

a healthy rate




Figure 14 Raysut Cement – Old Vs. New Forecasts

Old New Change

Revenue 64.0 62.3 -2.7%

Cost of sales 34.2 36.1 5.8%

Gross profit 29.8 26.1 -12.4%

Selling and general & admin. expenses 0.4 0.4 -12.1%

EBITDA 29.4 25.7 -12.4%

EBITDA margin (%) 45.9% 41.3%

Depreciation 4.9 4.5 -7.8%

Net profit before taxes 26.2 22.8 -12.8%

Tax 2.7 2.4 -12.8%

Net profit after tax 23.4 20.4 -12.8%

Income Statement (RO million)2010 Forecast

Source: NBK Capital

EBITDAMargin–OmanCementislikelytobelessaffectedduetotheanticipatedpricecut

We expect Oman Cement will generate higher EBITDA margins compared to Raysut Cement over our forecast period. The latter’s location in Salalah results in additional distribution costs (five-year forecasted average of almost 20% of total revenue) for selling cement in the construction-intensive northern part of Oman (mainly in and around Muscat). Oman Cement will also benefit from the absence of clinker imports from 2011 onwards. The company has already imported 428 thousand tons of clinker in the first nine months of 2010, and we forecast an additional 47 thousand during 4Q2010, resulting in total clinker imports of 475 thousand tons during the year. This will result in clinker imports worth RO 8.3 million (considering average prices of RO 17.5 per ton), which would account for more than a third of the total cost of sales and 16% of the total revenue for 2010. In the absence of clinker imports next year, we expect Oman Cement will improve its EBITDA margin to 47.7% in spite of an anticipated drop in prices toward the end of 2011. Since we expect almost no increase in domestic cement prices over our forecast period for both companies, normal escalation in operating expenses will keep the EBITDA margins under pressure for both companies going forward.

Figure 15 Trends in the Cost of Production per Ton

15.6

14.713.8 14.0 14.1

11.7 11.4 11.5 11.8 12.0

2011f 2012f 2013f 2014f 2015f

Raysut Cement - cost of production per ton (RO/ton)

Oman Cement - cost of production per ton (RO/ton)

Source: NBK Capital

We now expect lower margins

in 2010

We expect a lower cost of

production per ton for Oman

Cement in the next five years

compared to Raysut Cement




AcquisitionofPioneerCement

Raysut Cement has announced plans to acquire Ras Al Khaimah-based Pioneer Cement Industries (LLC). Acording to market intelligence, the deal has been mutually agreed upon by both parties and is currently in the due diligence phase. Pioneer Cement is a 51:49 joint venture between RAK Investment Authority and India-based Penna Cement Industries Ltd. We have limited information from official sources about the details of the deal and on Pioneer Cement. According to market sources, Raysut Cement has decided to pay USD 180 million for a 1.6 mtpa integrated capacity, implying an expected value (EV) per ton of USD 112.5, which is lower than the current replacement value. Preliminary information suggests that the deal will be mainly debt financed and the formalities of the acquisition are expected to be completed by year end.

Debt-freestatusshouldcomeinhandy: The acquisition will increase Raysut Cement’s production capacity by almost 58% to 4.37 mtpa, while the company’s clinker capacity will jump to 4.1 mtpa compared to Raysut’s current clinker capacity of 2.6 mtpa. According to the nine-month 2010 financial statements, Raysut Cement is net debt free, with total debt of RO 1.58 million (USD 4.1 million) compared to cash and cash equivalents of RO 13.8 million (USD 35.9 million). With total equity of RO 105.8 million (USD 274.6 million), raising the required debt for funding the acquisition should not be a concern for Raysut Cement.

Themotivebehind theacquisition: Raysut Cement has been exploring acquisitions within the region for some time now as part of the company’s strategy to grow beyond Oman. We believe this acquisition comes as a move to counter pressure in the domestic market, which has been negatively impacted by cheap cement imports from the UAE, resulting in both volumes as well as pricing pressure for the two Omani cement companies. Raysut Cement’s current location in Salalah (southern part of Oman) is also a disadvantage compared to the more lucrative construction market in the north where Oman Cement is located. This further aggravates the situation for Raysut Cement as it has to depend on the comparatively subdued southern market for a significant portion of its sales (average of 20–30% in the last three years).

At the beginning of this year, Raysut Cement bid for another UAE-based player—Star Cement. Compared to Pioneer Cement, Star Cement is significantly bigger with a cement capacity of 3.4 mtpa and clinker capacity of 2.2 mtpa. However, Pioneer Cement is already a fully operational setup compared to the relatively new production facility at Star Cement.

Biggerisnotalwaysbetter: We believe any potential cement acquisition in the UAE will be margin-dilutive for a low-cost cement manufacturer like Raysut Cement. Hence, such an acquisition would result in potentially lower returns on the incremental capital. Currently, UAE cement players are barely breaking even at the EBITDA level compared to the EBITDA margin of 38% generated by Raysut Cement in 3Q2010. It would be a disadvantage for Raysut Cement to sell at lower prices in the UAE. Cement prices (OPC bulk) in the UAE are at historically low levels and are currently in the range of AED 170–180 per ton (USD 47–48 per ton), which is almost 37% lower than the prevailing cement prices in Oman (USD 68–70). We believe the wider regional presence that the company could achieve through the acquisition comes at the expense of continuing to remain a comparatively smaller but significantly profitable company.

DealpricingiscurrentlyinfavorofRaysutCement,buttherevivalintheUAEconstructionsectorholdsthekeytolong-termsuccess: At an implied EV per ton of USD 112.5 per ton, we feel the deal value is in favor of Raysut Cement considering it is lower than the current replacement cost of a new 1 mtpa integrated cement plant in the UAE which is in the range of USD 120–160 (depending on the mix of the equipment supplier). On the valuation front, the listed UAE cement companies currently trade at a significant discount on EV per ton of USD 140 compared to the Gulf Cooperation Council (GCC), excluding the UAE, average of USD 249 per ton, mainly due to their notably lower EBITDA margins compared to their GCC peers. We have a negative outlook on the UAE cement sector, which is supported by the significant excess supply in the local cement market and a floundering construction sector. We believe any potential upswing in the UAE construction sector, if and when it happens, will hold the key for the long-term success of this acquisition. Net-net, we remain cautious and wait for details on the deal.




**Please refer to page 17 for recommendations and risk ratings. **Please refer to page 17 for recommendations and risk ratings.

oman cement co.

Key Data

Fair Value per share (RO) 0.700Closing Price (RO) * 0.63652-week High / Low (RO) 0.762/ 0.612YTD / 12-month return -14.4% / -16%Trailing P/E 7.2Shares Outstanding (000s) 330,870Market Cap (RO Mn) 210.4Free Float 20.64%Reuters / Bloomberg Code OCCO.OM / OCOI OM

*As of November 24, 2010. Sources: Reuters, Muscat Stock Exchange, and NBK Capital

Key metrics

2009A 2010F 2011F 2012F

P/E 8.7 7.7 12.4 12.3EPS 0.073 0.082 0.051 0.052Dividend Yield 5.8% 6.5% 5.7% 6.1%EV/EBITDA 7.9 8.7 9.6 9.5

RoAE 19.1% 19.0% 11.2% 10.9%RoCE 17.1% 13.2% 12.9% 13.1%

EBITDA margin 39.5% 47.5% 47.7% 44.4%Net profit margin 35.5% 52.5% 36.5% 33.9%

Sources: Company financials and NBK Capital

Forecasts

RO'000s 4Q2010F 1Q2011F 2010F 2011F

Revenue 11,228 11,900 51,844 46,698EBITDA 5,773 6,050 24,615 22,286

Source: NBK Capital

reBaseD PerFormaNce

0.5

0.6

0.7

0.8

0.9

Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10

Oman Cement MSCI Oman

Sources: MSCI, Reuters, and NBK Capital

raysut cement co.

Key Data

Fair Value per share (RO) 0.986Closing Price (RO) * 1.26552-week High / Low (RO) 1.777/ 1.184YTD / 12-month return -15.2% / -14.5%Trailing P/E 10.5Shares Outstanding (000s) 200,000Market Cap (RO Mn) 253Free Float 39.44%Reuters / Bloomberg Code RAYC.OM / RCCI OM

*As of November 24, 2010. Sources: Reuters, Muscat Stock Exchange, and NBK Capital

Key metrics

2009A 2010F 2011F 2012F

P/E 8.8 12.4 15.6 16.1EPS 0.143 0.102 0.081 0.079EV/EBITDA 7.4 9.3 10.5 10.7

RoAE 28.0% 19.1% 15.1% 14.3%RoCE 27.2% 19.8% 17.0% 16.5%

EBITDA margin 36.1% 41.3% 39.2% 37.4%Net profit margin 32.1% 32.8% 27.9% 26.2%

Sources: Company financials and NBK Capital

Forecasts

RO'000s 4Q2010F 1Q2011F 2010F 2011F

Revenue 13,996 13,500 62,284 58,143EBITDA 5,668 5,750 25,741 22,818

Source: NBK Capital

reBaseD PerFormaNce

1.0

1.2

1.4

1.6

1.8

2.0

Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10

Raysut Cement MSCI Oman

Sources: MSCI, Reuters, and NBK Capital




FiNaNcial statemeNts - omaN cemeNt

Income Statement (RO Thousands)Fiscal Year Ends December 2008 2009 2010 2011 2012 2013 2014

Total Revenue 63,523 68,284 51,844 46,698 50,390 54,338 56,910

Cost of Revenue 46,086 39,009 24,729 21,724 24,900 26,723 28,562

GrossPro f it 17,437 29,275 27,115 24,974 25,491 27,615 28,348

Selling/General/Admin. Expenses 2,516 2,314 2,501 2,689 3,127 3,470 3,617

Depreciation/Amortization 3,950 3,218 3,942 4,560 4,592 4,625 4,664

Ope ra t ing Income 10,972 23,743 20,673 17,726 17,772 19,519 20,067

Interest Income (Exp), Net Non-Operating (67) (21) (30) (628) (628) (412) (195)

Interest/Invest Income - Non-Operating 3,156 3,639 2,779 2,253 2,272 2,292 2,305

Net Income be fo re Taxes 14,108 27,363 30,761 19,351 19,415 21,399 22,177

Provision for Income Taxes 1,567 3,131 3,538 2,322 2,330 2,568 2,661

Net Income a f te r Taxes 12,541 24,232 27,223 17,029 17,086 18,831 19,516

Historical Forecast

Balance Sheet (RO Thousands)Fiscal Year Ends December 2008 2009 2010 2011 2012 2013 2014

ASSETS

Cash and Short-Term Investments 19,281 4,407 41,200 48,766 53,321 59,081 63,823

Total Receivables, Net 7,109 5,140 5,521 5,137 5,543 5,841 6,260

Total Inventory 15,243 7,687 8,814 7,472 8,062 8,694 9,106

Other Current Assets 435 6,953 4,500 4,500 4,500 4,500 4,500

TotalCurrentAssets 42,069 24,187 60,035 65,874 71,426 78,116 83,689

Property/Plant/Equipment, Total - Net 59,430 91,793 99,837 99,277 95,934 92,559 89,395

Long-Term Investments 19,098 15,151 13,000 13,000 13,000 13,000 13,000

TOTALASSETS 132,987 153,480 172,872 178,151 180,360 183,675 186,084

LIABILITIES&EQUITY

Accounts Payable 7,123 4,889 4,925 4,670 5,039 5,434 5,691

Other Liabilities 1,896 3,262 3,538 2,322 2,330 2,568 2,661

TotalCurrentLiabilities 9,320 8,451 8,463 6,992 7,369 8,002 8,352

Long-Term Debt 502 3,721 8,000 11,333 8,000 4,665 1,331

Other Liabilities 1,360 1,579 1,607 1,607 1,607 1,607 1,607

TotalLiabilities 15,056 17,543 21,953 23,815 20,859 18,157 15,173

TotalEquity 117,931 135,938 150,919 154,336 159,501 165,519 170,911

TOTALLIABILITIESANDEQUITY 132,987 153,480 172,872 178,151 180,360 183,675 186,084

Historical Forecast

Cash Flow (RO Thousands)Fiscal Year Ends December 2008 2009 2010 2011 2012 2013 2014

Cash from Operating Activities 20,095 3,538 27,527 20,441 19,639 21,536 21,878

Cash from Investing Activities (7,119) 8,114 22,876 (2,054) 712 729 490

Cash from Financing Activities (11,823) (9,234) (8,289) (10,821) (15,796) (16,505) (17,626)

Net Change in Cash 1,153 2,419 42,114 7,566 4,555 5,760 4,742

Historical Forecast





FiNaNcial statemeNts - raysut cemeNt

Income Statement (RO Thousand)

Fiscal Year Ends December 2008 2009 2010 2011 2012 2013 2014

Total Revenue 89,081 89,346 62,284 58,143 59,980 62,495 63,641Cost of Revenue 52,987 56,548 36,150 34,829 36,987 37,580 38,337GrossProfit 36,094 32,798 26,135 23,313 22,993 24,915 25,304Selling/General/Admin. Expenses 591 583 394 496 561 598 631Depreciation/Amortization 4,502 4,447 4,492 4,717 4,905 5,077 5,229OperatingIncome 31,000 27,768 21,249 18,101 17,526 19,240 19,444Interest Income (Exp), Net Non-Operating 1,949 2,388 (78) (59) (45) (39) (30)Other, Net (1,981) 1,874 1,651 58 90 125 127NetIncomebeforeTaxes 30,968 32,029 22,821 18,101 17,571 19,327 19,541Provision for Income Taxes 3,861 3,347 2,397 1,901 1,846 2,030 2,052NetIncomeafterTaxes 27,107 28,682 20,424 16,199 15,725 17,297 17,488

Historical Forecast

Balance Sheet (RO Thousand)


ASSETS

Cash and Short-Term Investments 16,593 15,821 15,110 17,693 19,178 23,710 28,177 Total Receivables, Net 11,714 8,617 7,163 6,977 7,198 7,656 7,828 Total Inventory 7,817 12,284 11,211 9,884 9,597 9,999 10,342 Prepaid Expenses 3,457 4,530 4,827 4,070 4,049 4,062 4,009 Other Current Assets 2,654 4,527 5,000 5,000 5,000 5,000 5,000 TotalCurrentAssets 42,235 45,779 43,311 43,624 45,021 50,427 55,356

Property/Plant/Equipment, Total - Net 73,434 74,951 76,460 77,814 78,008 77,571 76,458 TOTALASSETS 117,644 123,337 119,771 121,439 123,029 127,998 131,814

LIABILITIES&EQUITY

Accounts Payable 2,579 1,625 1,059 930 960 937 955 Payable/Accrued 3,110 2,607 3,000 2,500 2,000 1,500 1,000 Accrued Expenses 1,976 2,954 1,976 4,983 3,779 3,599 3,437 Short-Term Debt 2,399 1,324 800 500 800 600 500 Other Liabilities 3,895 3,298 2,397 1,901 1,846 2,030 2,052 TotalCurrentLiabilities 13,960 11,808 9,232 10,814 9,384 8,666 7,944

Long-Term Debt 2,397 1,367 800 500 - - - Deffered Income Tax 2,926 3,245 2,397 1,901 1,846 2,030 2,052 Other Liabilities 308 181 181 181 181 181 181 TotalLiabilities 19,590 16,601 12,610 13,397 11,411 10,878 10,178

TotalEquity 98,054 106,736 107,161 108,042 111,618 117,121 121,636

TOTALLIABILITIESANDEQUITY 117,644 123,337 119,771 121,439 123,029 127,998 131,814

Historical Forecast

Cash Flow (RO Thousand)


Cash from Operating Activities 25,935 22,282 22,201 24,572 18,889 21,080 21,559 Cash from Investing Activities (18,588) 3,451 (1,744) (6,012) (5,009) (4,515) (3,989) Cash from Financing Activities (18,061) (22,899) (21,169) (15,977) (12,395) (12,032) (13,103) Net Change in Cash (10,714) 2,834 (711) 2,583 1,485 4,532 4,467

Historical Forecast





risK aND recommeNDatioN guiDe

recommeNDatioN uPsiDe (DoWNsiDe) PoteNtial

BUY MORE THAN 20%

ACCUMULATE BETWEEN 5% AND 20%

HOLD BETWEEN -10% AND 5%

REDUCE BETWEEN -25% AND -10%

SELL LESS THAN -25%

risK leVel

loW risK HigH risK

1 2 3 4 5

Disclaimer

The information, opinions, tools, and materials contained in this report (the “Content”) are not addressed to, or intended for publication, distribution to, or use by, any individual or legal entity who is a citizen or resident of or domiciled in any jurisdiction where such distribution, publication, availability, or use would constitute a breach of the laws or regulations of such jurisdiction or that would require Watani Investment Company KSCC (“NBK Capital”) or its subsidiaries or its affiliates to obtain licenses, approvals, or permissions from the regulatory bodies or authorities of such jurisdiction. The Content, unless expressly mentioned otherwise, is under copyright to NBK Capital. Neither the Content nor any copy of it may be in any way reproduced, amended, transmitted to, copied, or distributed to any other party without the prior express written consent of NBK Capital. All trademarks, service marks, and logos used in this report are trademarks or service marks or registered trademarks or registered service marks of NBK Capital.

The Content is provided to you for information purposes only and is not to be used, construed, or considered as an offer or the solicitation of an offer to sell or to buy or to subscribe for any investment (including but not limited to securities or other financial instruments). No representation or warranty, express or implied, is given by NBK Capital or any of its respective directors, partners, officers, affiliates, employees, advisors, or representatives that the investment referred to in this report is suitable for you or for any particular investor. Receiving this report shall not mean or be interpreted that NBK Capital will treat you as its customer. If you are in doubt about such investment, we recommend that you consult an independent investment advisor since the investment contained or referred to in this report may not be suitable for you and NBK Capital makes no representation or warranty in this respect.

The Content shall not be considered investment, legal, accounting, or tax advice or a representation that any investment or strategy is suitable or appropriate for your individual circumstances or otherwise constitutes a personal recommendation to you. NBK Capital does not offer advice on the tax consequences of investments, and you are advised to contact an independent tax adviser.

The information and opinions contained in this report have been obtained or derived from sources that NBK Capital believes are reliable without being independently verified as to their accuracy or completeness. NBK Capital believes the information and opinions expressed in this report are accurate and complete; however, NBK Capital gives no representations or warranty, express or implied, as to the accuracy or completeness of the Content. Additional information may be available upon request. NBK Capital accepts no liability for any direct, indirect, or consequential loss arising from the use of the Content. This report is not to be relied upon as a substitution for the exercise of independent judgment. In addition, NBK Capital may have issued, and may in the future issue, other reports that are inconsistent with and reach different conclusions from the information presented in this report. Those reports reflect the different assumptions, views, and analytical methods of the analysts who prepared the reports, and NBK Capital is under no obligation to ensure that such other reports are brought to your attention. NBK Capital may be involved in many businesses that relate to companies mentioned in this report and may engage with them. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information, opinions, and estimates contained in this report reflect a judgment at the report’s original date of publication by NBK Capital and are subject to change without notice.

The value of any investment or income may fall as well as rise, and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price, or income of that investment. In the case of investments for which there is no recognized market, it may be difficult for investors to sell their investments or to obtain reliable information about their value or the extent of the risk to which they are exposed.

NBK Capital has not reviewed the addresses of, the hyperlinks to, or the websites referred to in the report and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to NBK Capital’s own website material) is provided solely for your convenience and information, and the content of the linked site does not in any way form part of this document. Accessing such websites or following such links through this report or NBK Capital’s website shall be at your own risk.

© coPyrigHt Notice

This is a publication of NBK Capital. No part of this publication may be reproduced or duplicated without the prior consent of NBK Capital.




Kuwait

NationalBankofKuwaitSAKAbdullah Al-Ahmed StreetP.O. Box 95, Safat 13001Kuwait City, KuwaitT. +965 2242 2011F. +965 2243 1888Telex: 22043-22451 NATBANK

iNterNatioNal NetWorK

Bahrain

NationalBankofKuwaitSAKBahrainBranchSeef Tower, Al-Seef DistrictP.O. Box 5290, Manama, BahrainT. +973 17 583 333F. +973 17 587 111

SaudiArabia

NationalBankofKuwaitSAKJeddahBranchAl-Andalus Street, Red Sea PlazaP.O. Box 15385Jeddah 21444, Saudi ArabiaT. +966 2 653 8600F. +966 2 653 8653

UnitedArabEmirates

NationalBankofKuwaitSAKDubaiBranchSheikh Rashed Road, Port Saeed Area, ACICO Business ParkP.O. Box 88867, DubaiUnited Arab EmiratesT. +971 4 2929 222F. +971 4 2943 337

Jordan

NationalBankofKuwaitSAKHeadOfficeAl Hajj Mohd Abdul Rahim StreetHijazi Plaza, Building # 70P.O.Box 941297,Amman -11194, JordanT. +962 6 580 0400F. +962 6 580 0441

Lebanon

NationalBankofKuwait(Lebanon)SALSanayeh Head OfficeBAC Building, Justinian StreetP.O. Box 11-5727, Riyad El Solh1107 2200 Beirut, LebanonT. +961 1 759 700F. +961 1 747 866

Iraq

CreditBankofIraqStreet 9, Building 187Sadoon Street, District 102P.O.Box 3420, Baghdad, IraqT. +964 1 7182198/7191944 +964 1 7188406/7171673F. +964 1 7170156

Egypt

AlWatanyBankofEgypt13 Al Themar StreetGameat Al Dowal AlArabiaFouad Mohie El Din SquareMohandessin, Giza, EgyptT. +202 333 888 16/17F. +202 333 79302

UnitedStatesofAmerica

NationalBankofKuwaitSAKNewYorkBranch299 Park Avenue, 17th FloorNew York, NY 10171, USAT. +1 212 303 9800F. +1 212 319 8269

UnitedKingdom

NationalBankofKuwait(Intl.)PlcHeadOffice13 George Street,London W1U 3QJ, UKT. +44 20 7224 2277F. +44 20 7224 2101

NBKInvestmentManagementLimited13 George StreetLondon W1U 3QJ, UKT. +44 20 7224 2288F. +44 20 7224 2102

France

NationalBankofKuwait(Intl.)PlcParisBranch90 Avenue des Champs-Elysees75008 Paris, FranceT. +33 1 5659 8600F. +33 1 5659 8623

Singapore

NationalBankofKuwaitSAKSingaporeBranch9 Raffles Place #51-01/02Republic Plaza, Singapore 048619T. +65 6222 5348F. +65 6224 5438

Vietnam

NationalBankofKuwaitSAKVietnamRepresentativeOfficeRoom 2006, Sun Wah Tower115 Nguyen Hue Blvd, District 1Ho Chi Minh City, VietnamT. +84 8 3827 8008F. +84 8 3827 8009

China

NationalBankofKuwaitSAKShanghaiRepresentativeOfficeSuite 1003, 10th Floor,Azia Center, 1233 Lujiazui Ring Rd.Shanghai 200120, ChinaT. +86 21 6888 1092F. +86 21 5047 1011

associates

Qatar

InternationalBankofQatar(QSC)Suhaim bin Hamad StreetP.O.Box 2001Doha, QatarT. +974 447 3700F. +974 447 3710

Turkey

TurkishBankHeadOfficeValikonagl Avenue No. 1P.O.Box 34371 Nisantasi,Istanbul, TurkeyT. +90 212 373 6373F. +90 212 225 0353

NatioNal BaNK oF KuWait

Kuwait

HeadOffice38th Floor, Arraya IIAl Shuhada Street, Block 6, SharqP.O.Box 4950, Safat 13050KuwaitT. +965 2224 6900F. +965 2224 6905

MENAResearch35th Floor, Arraya IIAl Shuhada Street, Block 6,SharqP.O.Box 4950, Safat 13050, KuwaitT. +965 2224 6663F. +965 2224 6905E. [email protected]

Brokerage37th Floor, Arraya IIAl Shuhada Street, Block 6, SharqP.O.Box 4950, Safat 13050, KuwaitT. +965 2224 6964F. +965 2224 6978E. [email protected]

UnitedArabEmirates

NBKCapitalLimitedPrecinct Building 3, Office 404Dubai International Financial CenterP.O.Box 506506Dubai, UAET. +971 4 365 2800F. +971 4 365 2805

Turkey

NBKCapitalArastima ve Musavirlik AS,Sun Plaza, 30th Floor,Dereboyu Sk. No.24Maslak 34398, Istanbul, TurkeyT. +90 212 276 5400F. +90 212 276 5401

NBK caPital


mailto:menaresearch%40nbkcapital.com.kw%20?subject=

KUWAIT DUBAI ISTANBUL CAIRO

Documents

omaNi cemeNt sector - GulfBase.com