Tadawul index drops 1%
DUBAI: The Tadawul All Share Index (TASI) dropped 1 percent on Sunday. All but three of the 14 listed Saudi petrochemical makers fell after Brent crude dropped below $ 50 late last week. Heavyweight Saudi Basic Industries Corporation (SABIC) retreated 1 percent.
Saudi Arabian Mining Co. (Maaden) lost 1 percent, failing to hold onto gains in the day. The company reported a first-quarter net profit of SR275.6 million ($73.5 million), up 41.9 percent from a year ago and beating the average analyst forecast of SR167.9 million.
Shares of Saudi Arabia’s largest telecom operator, Saudi Telecom Co. (STC), rose 1.1 percent after it reported a first-quarter net profit of SR2.53 billion, up 5 percent from a year earlier and above the SR2.21 billion analysts had forecast it would make.
Al-Rajhi Capital said that historically the company’s costs are lowest in the first quarter. It also said that revenues, which fell 3 percent in the first quarter, could improve because of a reversal in civil servant allowances announced last month.
Elsewhere in the region, shares of Dubai builder Drake & Scull (DSI) slumped to a 14-month low in heavy trade on Sunday as investors reacted to the company’s revised capital restructuring plan, while last week’s fall in oil prices knocked down oil-sensitive shares.
Dubai’s stock index fell 1 percent as DSI plummeted 9.9 percent to 0.399 dirham after a shareholder meeting held on Thursday.
“The new news from the meeting is the 722 million dirhams additional write off from potentially unrecoverable receivables, and the market — rightfully so — was reacting to that as it would effectively dilute current shareholder value by up to 75 percent, more than previously anticipated,” said Allen Sandeep, head of equity research at Naeem Brokerage in Cairo.
The capital reduction of up to 722 million dirhams is in addition to a previously planned reduction of 992 million dirhams, it said.
In 2016, the company made a full-year net loss attributable to owners of the parent of 732.9 million dirhams.
DSI also said that shareholders had “unanimously expressed no interest” in a 500 million-dirham capital increase via a new share issue at 1 dirham per share.
Instead, Tabarak Investment, a Dubai-based investment firm which currently does not hold any stock in DSI, agreed to buy the new shares, which will be issued if the securities regulator approved the further capital reduction by DSI, the builder said.
Analysts at Abu Dhabi’s Alramz Capital said the injection of capital by Tabarak could play a significant role because of the builder’s ability to negotiate and to settle outstanding cases with clients and creditors.
“Tabarak have done it before with Gulf Navigation as a very recent example. Some of the favorable scenarios for DSI include settling the Aramco case as well as renegotiating with creditors for better financing terms,” said Talal Touqan, head of research at Alramz Capital.
“And these serve as positive catalysts for DSI’s long-term perspective. But the timeline and when this might happen is still unknown.”
As of December 2016, DSI had an outstanding order variation of 1.7 billion dirhams from contracts in Saudi Arabia, according to Alramz.
In Abu Dhabi, the index dropped 1 percent dragged down by a 4.6 percent fall in the shares of natural gas producer Dana Gas.
In Doha, oil rig provider Gulf International Services ( GIS) dropped 4 percent to QR23.96, a four-year low. Qatar’s index lost 1.1 percent, its fourth straight session of declines.
Egypt’s index edged down 0.1 percent but daily traded volumes rose to their highest in seven weeks with international funds net buyers on Sunday, bourse data showed.