Quarterly result season helps buoy market activity

The market witnessed robust activity during this week on speculative trades on small cap stocks amidst the first quarter initial results. Although many companies have announced their results, there are yet many left (some of them were announced after last day trading hours), which has limited investor moves in general as they await further details on the performance of some of the leading companies.

The MSM30 ended the week down by 0.47 per cent at 4776.55. Both the Industrial and Services indices closed down on weekly basis by 2.46 per cent and 1.1 per cent respectively while the Financial Index ended the week on stable basis as it closed up by only 0.02 per cent. The Shariah Index closed down by 0.58 per cent.

Some special deals took place during the previous week with total value of RO 31.5 million, i.e. 55.8 per cent of the total special deals so far this year, as per the available data. Until now this year, the total value of special deals stood at RO 56.5 million which is 245 per cent higher than the same period in 2017.

Al Anwar Holdings SAOG said that it is in the process of entering into a binding Share Purchase and Sale Agreement (SSPA) with a potential buyer for sale of 289,197 shares (28.92 per cent stake) of National Biscuits Ind. Ltd. SAOG (NABIL) held by AAH, @ RO 5.632 per share. This will result in total cash consideration value of RO 1.629 million. The execution of this transaction is subject to receiving the relevant approval from the Capital Market Authority (CMA) and other regulatory approvals. The company expects positive impact on its Profit and Loss Account for FY2018-19 of around RO 144 thousands, and the sale proceeds from this transaction to be utilised towards partial debt repayment and making opportune investments going forward as per the statement.

Oman National Engineering and Investment Company SAOG (ONEIC) said that Muscat Electricity Distribution Company SAOC has awarded the company the contract for Recovery and Defaulters Management Services at zone 2 at Muscat Governorate for the sum of RO 940,755 for the period of 3 years commencing on 16/4/2018. Including this contract, the total value of the awarded contracts in this year so far stand at RO 2.14 million as per the disclosures on the MSM website.

In the weekly technical analysis, as mentioned in our previous report, that this channel is leaning close to the vertical direction this means that this rise will be not continue and even any moment we can see a profit taken and this what happen. The MSM index dropped to reach 4,785 points, which is a strong support for the index, will lead to reach 4,760 points again.

Total announced Q1’18 initial net earnings so far, as per MSM, for the companies whose first quarter ends on March showed an increase of 26.9 per cent on yearly basis to RO 85.3 million.

This mainly due to lack of deferred tax expense impact in some companies especially power sector arising from change of tax law in addition to good performance by the banks, the insurance companies and Renaissance Services.

Sector wise, best results were posted by the Service Sector as its net profit stood at RO 11.76 million versus a net loss of RO 10.5 million in Q1’17 on better performance by Renaissance Services. The Industrial Sector total net earnings declined by 25.1 per cent on annual basis to RO 10.1 million mainly pressurized by Raysut Cement, Voltamp Energy and Oman Cables Industry Co.

The Financial Sector net earnings registered a decline of 1.3 per cent on yearly basis RO 63.45 million mainly due to Dhofar International Development & Investment Holding Co. SAOG early implementation of IFRS-09 resulting in adjusting Q1’17 results. Removing this adjustment, the Financial Sector total net earnings would register a yearly increase of 15.4 per cent.

Compiled data from U Capital and Bloomberg with regard to GCC financial markets multiples revealed that MSM30 remains attractive. The MSM30 P/E and P/BV is lower than GCC averages of 12.76x and 1.21x respectively while its current dividend yield of 5.04 per cent is among top four GCC financial markets.

Locally, the ministry of finance has issued a decision to add a new classification of the revenue section of the public budget, “Local Taxes and Charges on Goods and Services”, which includes two types of tax revenues i.e. the Value Added Tax (VAT) and Selective Tax. Last year the Ministry of Finance postponed the start of the “value added” tax until 2019 waiting for the completion of the needed technical procedures and equipment. However, the selective tax, which will be mainly on goods that are harmful to public health and environment, will start by mid-year.

Another key update in supporting future revenues especially Gas revenues, BP announced that, together with its partner the Oman Oil Company Exploration and Production, it has approved the development of Ghazeer, the second phase of the giant Khazzan gas field. The second phase is expected to come on stream in 2021 and deliver an additional 0.5 billion cubic feet of gas a day and over 15,000 barrels per day of condensate production.

The field is now producing at design capacity of around 1bn cubic feet of gas a day and around 35,000 barrels a day of condensate

(Courtesy: U-capital)