TIDMQIF
RNS Number : 6298D
Qatar Investment Fund PLC
28 October 2015
28 October 2015
Qatar Investment Fund plc ("QIF" or the "Company")
Q3 2015 Investment Report
Qatar Investment Fund plc (LSE: QIF), today issues its Q3 2015
Investment Report for the period 1 July 2015 to 30 September 2015,
a pdf copy of which can be obtained from QIF's website at:
www.qatarinvestmentfund.com.
QIF was established to capitalize on the investment
opportunities in Qatar and the Gulf Cooperation Council ("GCC")
region, arising from the economic growth being experienced in the
area. The Company invests in quoted Qatari equities listed on the
Qatar Exchange ("QE") in addition to companies soon to be listed,
with a possible allocation of up to 15% in other listed companies
elsewhere in the GCC region. The Investment Adviser invests using a
top-down screening process combined with fundamental industry and
company analysis
QIF Quarterly Report - Q3 2015
3 months ended 30 September 2015
Highlights
Ø Qatar Investment Fund Plc's ("QIF") net asset value (NAV) per
share fell 4.6% during the first nine months of 2015, while the
Qatar Exchange (QE) index fell 6.7%.
Ø Qatari economy continues to diversify and grow:
Ø GDP is expected to grow 4.7% in 2015 and 6.4% in 2016 and
2017.
Ø Non-hydrocarbon sector grew by 9.1% while hydrocarbon sector
was flat, expanding by 0.9% in Q2 2015.
Ø Profits of Qatari listed companies up 12.5% in H1 2015.
Ø Credit growth was 9.9% between December 2014 and August 2015,
led by the private sector (up 16.7%).
Ø Qatari economy is well positioned to weather lower oil prices,
as macroeconomic fundamentals remain strong.
Performance and Portfolio Structure
Please refer to the report on the Company's website
www.qatarinvestmentfund.com/publications/quarterly-reports/ for a
chart depicting the NAV per share compared to the QIF share
price.
Global markets, led by emerging equities and currencies, saw
substantial falls during the quarter over Chinese and emerging
market growth worries, the surprise devaluation of the yuan, and
lower crude oil prices. All Gulf Cooperation Council ("GCC")
markets fell in the quarter. QIF's NAV declined 6.6% during the
quarter as holdings such as Industries Qatar (-14.6%), Gulf
International Services (-18.8%) and Masraf Al Rayan (-7.5%)
impacted portfolio performance.
As at 30 September 2015, the QIF share price was at a 12.7%
discount to NAV per share.
Historic Performance against the QE Index
2007 2008 2009 2010 2011 2012 2013 2014 2015
5M 9M
----------- ------ ------- ------ ------ ------ ------ ------ ------ ------
QIF NAV* 13.9% -36.4% 10.4% 29.9% 1.3% -4.7% 24.2% 20.6% -4.6%
----------- ------ ------- ------ ------ ------ ------ ------ ------ ------
QE Index 27.0% -28.8% 1.1% 24.8% 1.1% -4.8% 24.2% 18.4% -6.7%
----------- ------ ------- ------ ------ ------ ------ ------ ------ ------
QIF Share
Price 15.5% -67.5% 97.3% 23.0% -2.3% 2.4% 26.4% 17.4% -7.4%
----------- ------ ------- ------ ------ ------ ------ ------ ------ ------
*Net of dividends paid
Source: Bloomberg, Qatar Insurance Company
Portfolio Structure
Top 10 Holdings
Company Name Sector % Share of
NAV
--------------------- ------------------- -----------
Qatar National Banks & Financial
Bank Services 18.8%
--------------------- ------------------- -----------
Industries Qatar Industry 13.2%
--------------------- ------------------- -----------
Banks & Financial
Masraf Al Rayan Services 11.9%
--------------------- ------------------- -----------
Banks & Financial
Qatar Islamic Bank Services 8.5%
--------------------- ------------------- -----------
Commercial Bank Banks & Financial
of Qatar Services 7.9%
--------------------- ------------------- -----------
Qatar Electricity
& Water Co Industry 6.5%
--------------------- ------------------- -----------
Gulf International
Services Industry 4.9%
--------------------- ------------------- -----------
Banks & Financial
Doha Bank Services 4.6%
--------------------- ------------------- -----------
Qatar Gas Transport Transportation 4.1%
--------------------- ------------------- -----------
Barwa Real Estate Real Estate 3.5%
--------------------- ------------------- -----------
During the quarter, Qatar Gas Transport (Nakilat) replaced Qatar
Navigation (Milaha) in QIF's top 10 holdings. The Investment
Adviser took profits on Milaha as the company began to look
overvalued.
Country Allocation
At 30 September, QIF had 20 holdings: 18 in Qatar and two in
UAE, unchanged from the previous quarter. Cash was 1.1% on NAV (Q2
2015: 2.2%).
Qatar remains the Investment Adviser's preferred market in the
GCC, due to the stable politics, sizeable hydrocarbon reserves,
non-hydrocarbon sector economic growth, combined with attractive
market valuations and high dividend yield.
Sector Allocation
Please refer to the report on the Company's website
www.qatarinvestmentfund.com/publications/quarterly-reports/ for a
chart depicting the overall portfolio allocation by sector as at 30
September 2015.
QIF remains overweight in the Qatari banking sector (including
financial services) at 53.7% (Q2 2015: 51.4%) versus 43.2% for the
QE index. According to Qatar Central Bank data published at the end
of August, the banking sector has grown 5.5% so far in 2015, driven
by loan growth of 9.9%. The banking sector will benefit from the
government's infrastructure development fueling lending growth,
from a rising domestic population and from international
expansion.
QIF's second largest allocation is to the industrial sector at
24.6% (Q2 2015: 25.7%), notably Industries Qatar (13.2% of NAV).
The Investment Adviser reduced exposure to Industries Qatar and
Gulf International Services as crude oil prices remain low, while
increasing its holding in Qatar Electricity and Water.
QIF's real estate weighting reduced to 6.6% from 8.8% in Q2.
Exposure to the telecom sector remained broadly unchanged, while
transportation increased from 5.1% to 8.0%. Exposure to the
consumer and services sector decreased from 3.2% in Q2 to 2.9% at
the end of Q3.
Regional Market Overview
The Bloomberg GCC 200 index fell 11.9% during the period, while
Saudi Arabia was down 18.5%. Dubai fell 12.1%, led by double-digit
declines in the real estate, industrial and investment &
financial services sectors. Markets in Oman, Kuwait and Bahrain
were down 9.9%, 7.7% and 6.7%, respectively.
Qatar fell 6.0% and emerged as the second best performer in the
GCC. All sectors closed lower, led by the industrial (-13.4%) and
telecom (-12.9%) sectors.
Index provider FTSE Russell announced an upgrade of Qatar to its
Secondary Emerging Market index and MSCI increased weightings of
some Qatari stocks in its Emerging Markets index. As a result,
Qatar should see increased foreign fund flows.
In August, the MSCI Emerging Markets index fell 9.2%, although
Qatar fell just 1.9% compared to Dubai's -11.6% and Saudi's
-17.3%.
The Investment Adviser believes that in the current environment
of lower oil prices, the Qatari market is well placed to outperform
its GCC peers, thanks to strong macro-economic fundamentals
including a relatively low fiscal breakeven oil price, the
accumulation of significant cash reserves over many years and low
levels of public debt.
Qatari banking sector growth was the fastest in the GCC
region
Qatar's banking sector grew at a CAGR of 15.3% from 2010-14.
Over the period, banking asset penetration (banking assets as a %
of nominal GDP) in Qatar improved from 125% of GDP to 132%. With
Qatari banking asset growth expected to remain faster than GDP
growth, the asset penetration is likely to continue to
increase.
Please refer to the report on the Company's website
www.qatarinvestmentfund.com/publications/quarterly-reports/ for a
chart depicting GCC Banking Sector Asset Growth (CAGR,
2010-14).
Qatar banking profits remained strong in 2014, with return on
average equity of 16.5% and return on average assets of 2.1%. In
addition, Qatari banks have been successful in maintaining an
efficient cost base and low NPLs (1.7% in 2014).
Banking and financial services sector profit grew 8.2% in the
first half of 2015. Banking sector profits grew 9.6% while the
financial services sector reported losses during the period. Growth
in lending, up 6.5% year to date till June 2015, primarily in the
private sector (+13.5%), helped the rise. Qatar National Bank
reported profits up 10.2%, while Qatar Islamic Bank profits rose
23.4%.
The Qatari banking sector growth is expected to remain healthy,
driven by increased lending due to project financing and higher
demand from a growing population. Despite strong growth in lending,
asset quality is expected to remain good, backed by healthy
economic environment.
Private sector credit growth remained strong
Credit growth in Qatar remains good, with loans by Qatari banks
growing 9.9% in the year to August 2015. Private sector credit
growth rose 16.7% and total deposits grew 4.0%, while public sector
loans declined 1.0% during the same period. The banking sector
loans to deposit ratio stood at 115% at the end of August 2015
compared to 109% at the end of December 2014.
(MORE TO FOLLOW) Dow Jones Newswires
October 28, 2015 03:00 ET (07:00 GMT)
The Investment Adviser believes that credit growth should remain
encouraging, underpinned by infrastructure spending,
non-hydrocarbon sector growth and a growing population.
Qatar: corporate profits up
Profits of Qatari listed companies grew 12.5% during the first
six months of 2015 driven by increases in the banking &
financial, transportation and the real estate sectors. However,
profit growth during the quarter was slower at 3.0% that at the
same period in 2014.
Sector profitability (net profit/loss in US$000s)
Sectors H1 2014 H1 2015 % Change Q2 2014 Q2 2015 % Change
--------------------- ---------- ---------- --------- ---------- ---------- ---------
Banking & Financial 2,631,557 2,848,026 8.2% 1,354,451 1,469,507 8.5%
--------------------- ---------- ---------- --------- ---------- ---------- ---------
Insurance 230,572 226,665 -1.7% 105,953 100,921 -4.7%
--------------------- ---------- ---------- --------- ---------- ---------- ---------
Industrial 1,674,425 1,406,706 -16.0% 853,240 788,387 -7.6%
--------------------- ---------- ---------- --------- ---------- ---------- ---------
Services & Consumer
Goods 255,534 254,198 -0.5% 146,649 137,464 -6.3%
--------------------- ---------- ---------- --------- ---------- ---------- ---------
Real Estate 410,460 1,352,343 229.5% 138,599 235,519 69.9%
--------------------- ---------- ---------- --------- ---------- ---------- ---------
Telecoms* 468,140 275,381 -41.2% 224,557 137,699 -38.7%
--------------------- ---------- ---------- --------- ---------- ---------- ---------
Transportation 283,187 337,591 19.2% 122,531 165,237 34.9%
--------------------- ---------- ---------- --------- ---------- ---------- ---------
Total 5,953,876 6,700,909 12.5% 2,945,979 3,034,733 3.0%
--------------------- ---------- ---------- --------- ---------- ---------- ---------
* Excluding Vodafone Qatar because of 31 March year end
Source: Qatar Exchange
Insurance sector profits declined 1.7% driven by a 9.1% fall in
profits at Qatar Insurance Company. Additionally, Doha Insurance
and Al Kaleej Takaful reported 17.5% and 36.6% falls in net profits
whilst Qatar General Insurance and Reinsurance Company reported a
129% profit rise.
Profits in the Industrials sector declined 16.0% during the
first half of the year. The fall was mainly due to a 14.6% drop in
profit of Industries Qatar (IQ) as a result of petrochemical
product price deflation. Gulf International Services and Mesaieed
Petrochemical Holdings also reported 17.0% and 55.2% falls in their
net profits.
Profits in the services & consumer goods sector declined
marginally by 0.5%, with Qatar Fuel Company reporting a 2.1% growth
in profits.
The real estate sector reported the strongest profit growth, up
threefold compared to the same period last year. Barwa Real Estate
Company profits rose 1451.6%, with income of QAR2.7 billion from
the sale of properties in Q1 2015.
The telecom sector comprises Vodafone Qatar and Ooredoo.
Vodafone Qatar was excluded from this profit comparison, since its
fiscal year ends on 31 March. Ooredoo reported a 41.2% fall in
profit for H1 2015, mainly due to competitive pressure, adverse
currency impact and the challenging economic environment of some of
its operating countries.
Transportation sector profits climbed 19.2%, with all three
companies in the sector reporting higher profits. The largest
contributor, Qatar Navigation, increased profits by 25.6%.
Recent Developments
Changes to QE Index constituents and weightings
Following the semi-annual review of QE indices, from 1 October
2015, Qatari Investors Group has been replaced by Al Meera Consumer
Goods Company. Ahli Bank has been removed from both the QE All
Share Index and QE Banks and Financial Services index. Zad Holding
has been included in QE Al Rayan Islamic index bringing its
constituents to 18.
FTSE upgrades Qatar to secondary emerging market
FTSE Russell has upgraded the Qatari market to Secondary
Emerging Market from the Frontier index, from September 2016. This
upgrade will be implemented in two tranches. The first 50% will be
implemented during the review of FTSE Global Equity Index Series
(GEIS) in September 2016 and the remaining 50% will be included
during the March 2017 review.
The Investment Adviser believes that an upgrade by FTSE should
enhance liquidity in the Qatari market. A similar trend was seen
during past upgrades of the market by MSCI and S&P. By way of
example, following the upgrade by FTSE to Secondary Emerging
Markets status, the Qatari market is estimated to attract US$1
billion of inflows as c.US$70 billion worth of funds currently
passively track the FTSE Emerging Markets Index.
GCC banks applying for licenses to operate within the region
According to reports, at least ten banks from GCC countries have
applied for licenses to the Qatar Central Bank and are expected to
receive approval to operate in Qatar by the end of this year. Key
applicants include First Gulf Bank from the UAE, Bank Muscat from
Oman, in addition to further Saudi and Kuwaiti banks.
Qatar National Bank was recently granted a license to open a
branch in Saudi Arabia.
Double-digit growth in Qatar's real estate transactions
The value of Qatar's real estate transactions grew 32.4% to
QAR45.9 billion during first nine months of 2015 compared to same
period last year. This growth was mainly driven by the government's
investment in infrastructure development. By the end of 2015, the
total value of real estate transactions is expected to reach QAR70
billion, 25% higher than 2014. The Investment Adviser expects that
with continuing commitment from the Qatari government to
infrastructure spending, real estate transactions will see growth
until 2022.
US$220 billion of projects expected over the next 10 years
According to the latest S&P report, Qatar is expected to
award large-scale projects worth US$220 billion over the next 10
years and will prioritize existing development projects as oil
prices remain low. Qatar will focus on investment in
infrastructure, education and health over the next decade with the
majority of projects planned for completion prior to the 2022 FIFA
World Cup in Qatar. Continued infrastructure spending will support
medium to long term economic growth in the country, however,
considering the lower oil price environment there could be a
reduction in fiscal and external balances.
Macroeconomic Update
Qatar's economy continued to grow in Q2 with GDP rising 4.8%,
according to the Ministry of Development Planning and Statistics
(MDPS). Non-hydrocarbon sector GDP grew 9.1%, mainly driven by
double digit expansion in construction, trade, hospitality and
finance sectors. Lower oil prices meant hydrocarbon sector GDP
growth was 0.9%.
The Investment Adviser believes that GDP growth is set to
continue, fueled by the expansion of the non-hydrocarbon sector
with demand for domestic goods and services remaining strong. QNB
Group estimates GDP growth of 4.7% in 2015 rising to 6.4% in 2016
and 2017. The non-hydrocarbon sector is estimated to grow c.10% per
annum between 2015 and 2017. Hydrocarbon GDP is likely to decline
by 0.5% in 2015 as oil fields continue to mature but it is
estimated to expand 2.7% in 2016 and 2.4% in 2017 on account of
increased output from the Barzan project. With a fall in revenue
and increased capital spending, Qatar may experience small fiscal
deficits in 2015-16, before registering a surplus in 2017 when oil
prices are expected to strengthen.
Qatar's population rose 5.0% at the end of September 2015
compared to December 2014. This growth is expected to continue in
the coming years, as project spending related to the FIFA World Cup
continues to attract expatriate workers. The Investment Adviser
believes that this should maintain consumption growth providing
necessary impetus to domestic consumer companies.
Valuation
Market Market Cap. PE (x) PB (x) Dividend Yield
(%)
-------------- ------------ -------------- ------- ---------------
US$ Mn 2015E 2016E 2015E 2015E
-------------- ------------ ------ ------ ------- ---------------
Qatar 140,552 13.1 11.9 1.9 4.6%
-------------- ------------ ------ ------ ------- ---------------
Saudi Arabia 447,436 14.1 11.9 1.7 3.5%
-------------- ------------ ------ ------ ------- ---------------
Dubai 86,711 12.4 10.1 1.5 3.4%
-------------- ------------ ------ ------ ------- ---------------
Abu Dhabi 123,874 10.9 9.9 1.6 5.1%
-------------- ------------ ------ ------ ------- ---------------
Oman 17,118 10.1 9.5 1.3 4.4%
-------------- ------------ ------ ------ ------- ---------------
Source: Bloomberg, Prices as at 5 October 2015
Outlook
The Investment Adviser believes that the Qatari economy is well
positioned to weather lower oil prices as other macroeconomic
fundamentals remain strong. The long term prospects of the economy
are underpinned by government infrastructure spending (US$220
billion forecast to be spent over the next 10 years) and a growing
population. Additionally, accelerating non-hydrocarbon growth
should help offset lower oil and gas revenues, while benefitting
financial services, transport, communications, and real estate
sectors.
(MORE TO FOLLOW) Dow Jones Newswires
October 28, 2015 03:00 ET (07:00 GMT)
Gulf Investment (LSE:GIF)
Historical Stock Chart
From Oct 2024 to Nov 2024
Gulf Investment (LSE:GIF)
Historical Stock Chart
From Nov 2023 to Nov 2024
