Equity Weekly 130707

download Equity Weekly 130707

of 22

  • date post

    03-Apr-2018
  • Category

    Documents

  • view

    214
  • download

    0

Embed Size (px)

Transcript of Equity Weekly 130707

  • 7/28/2019 Equity Weekly 130707

    1/22

    Weekly7 July 2013

    Irfan Ellam

    Head of MENA Equity Research

    +971 4 230 7807

    mohammedie@emiratesnbd.com

    Aditya Pugalia

    Analyst

    +971 4 230 7802

    adityap@emiratesnbd.com

    Equity WeeklyGlobal EquitiesThe MSCI World index rose +1.1% 5d, as US payrolls data came in higher thanexpected, and in Europe, both the European Central Bank and Bank of Englandsignaled that interest rates will continue to remain low in the Eurozone for an extended

    period of time. Risk measures declined in the US and Asia, with the VIX SPX -11.7% 5dto 15 and the VHSI +12.9% 5d to 23, but increased in Europe with the VSTOXX +3.6%5d to 23. The MSCI G7 index, +1.3% 5d, led gains for the MSCI market indices,followed by the MSCI Frontiers Markets index, +1.1% 5d whilst the MSCI EmergingMarket index declined -2.4% 5d.

    Investors are expected to focus on Q2 2013 earnings releases over the coming weeks,and more importantly management guidance, to help gauge the impact of the expectedreduction in US quantitative easing on sales and earnings for H2 2013. For emergingmarkets higher yields in the US could see an outflow of funds, resulting in weakeremerging markets currencies, which in turn could be positive for exporters. Fordomestically focused emerging market companies there is a potential risk of inflation tocontend with.

    MENA MarketsThe S&P Pan Arab Composite index rose +1.9% 5d. Egypt had the best performingregional market last week, with the EGX 30 index gaining +14.9% 5d, driven by localbuying, as the military removed former President Mursi from power and appointed AdlyMansour (the former head of the constitutional Court) as Interim President. WhilstEgyptian markets have cheered the move, the country economic fundamentals have notchanged and the economy remains weak, with foreign exchange reserves underpressure. The appointment of an interim president could see the resumption of talkswith the IMF for the USD 4.8bn loan, but any IMF loan would come with conditionsattached, relating to the removal/reduction of subsidies for food and fuel. These factors,together with civil unrest, gives ample reason for equity investors to remain cautious.The EGX index is currently trading on 7.6x BEst PE 2014E, with a 9.7% BEst ROE2014E, a -17 % discount in PE terms and -24% lower ROE relative to the MSCIEmerging markets index. Morocco had the worst performing regional market with theMadex Free Float index -1.3% 5d.

    Based on Bloomberg data and our MENA coverage universe, the Industrials sector(+7.8% 5d) was the best performing sector, led by Egyptian industrials with Elswedy+17.9% 5d, El Ezz +10.0% 5d and Oriental Weavers +9.3% 5d. The Petrochemicalssector had the smallest gains +1.9% 5d, as APPC (-1.2% 5d) and SAFC) (-0.5% 5d)declined.

    Our MENA equity coverage universe shows the Financial Services sector (23.5x BEstPE 2014, BEst ROE 2014 of 3.7%) as having the most upside of +25.8%, based onBEst consensus target prices. The Food and Retail sector (14.1x BEst PE 2014 andBEst ROE 2014 of 28.0%) continues to have the least upside of -1.8%.

    Developed MarketsThe S&P 500 index gained +1.2% 5d, as US payrolls increased by 195,000, above

    consensus estimates of 165,000 and hourly earnings increased. Financial, industrialand health care companies led the gains in 9 out of 10 of the S&P 500 industry groups.The S&P homebuilders index fell-3.4% on concerns over the impact of higher treasuryyields on mortgage costs and hence housing demand. Dell lost -2.1% as Michael Delland Silver Lake said that they would not increase their offer, as they bid to take thecompany private.

    The Euro Stoxx 600 index rose +1.2% 5d, as both the European Central Bank and Bankof England stated that Eurozone interest rates will continue to remain low for anextended period of time, meaning, according to the ECB, more than 6 to 12 months.Nokia gained +9.1% after it agreed to buy Siemens 50% share in their Nokia SiemensNetworks joint venture for Euro 1.7bn, lower than expected. However the acquisitionresulted in S&P cutting Nokias credit rating to B+, citing the impact the acquisition willhave on the companys net cash position. National benchmark indices rose in 15 of the

    18 western European markets.

    Emerging and Frontier MarketsFrontier markets gains were led by the MSCI FM Africa index +2.3% 5d, whilst theMSCI FM excluding the GCC index rose +1.2% 5d. Emerging markets declinescontinued to be led by the MSCI EM Latin America index falling -4.3% 5d, followed theMSCI EM Asia -1.7% 5d, whilst the MSCI EM Eastern Europe index was effectively flat-0.5% 5d.

  • 7/28/2019 Equity Weekly 130707

    2/22

    Research from Emirates NBD

    Major Equity Markets

    MENA Sector PE/ROE 2013E

    MENA Equity Indices PE/ROE 2013E

    Developed Market Indices PE/ROE 2013E

    Source: Bloomberg, Emirates NBD Research, BEst Bloomberg

    Estimates

    MENA Sector PB/ROA 2012

    MENA Equity Indices PB/ROA 2012

    Developed Market Indices PB/ROA 2012

    y = 2.2197x - 10.996R = 0.6041

    0.0

    5.0

    10.0

    15.0

    20.0

    25.0

    30.0

    4.0 12.0 20.0

    BEstROE

    2013

    BEst PE 2013

    Real Estate

    Banks

    Industrials

    Food & Retail

    Telecom

    Petchem & Fert

    Transport & Logistics

    Energy & Utilities

    Construction

    y = 2.0655x - 5.8027R = 0.3341

    0.0

    8.0

    16.0

    24.0

    32.0

    7.0 9.0 11.0 13.0

    BEstROE

    2013

    BEst PE 2013

    DSMDFMGI

    ADSMI

    MADEX

    MSM

    Tadawul

    ISE 100

    EGX 30

    y = 0.8101x + 3.6977R = 0.1884

    0.0

    5.0

    10.0

    15.0

    20.0

    25.0

    8.0 10.0 12.0 14.0 16.0 18.0

    BEstROE

    2013

    BEst PE 2013

    Nasdaq

    AS51 Index

    FTSE100

    Dow

    Jones

    SMI

    NikkeiS&P500

    Cac Dax

    Stoxx600

    y = 4.7166x - 2.7764R = 0.84

    -4.0

    0.0

    4.0

    8.0

    12.0

    16.0

    0.0 1.0 2.0 3.0 4.0

    ROA

    2012

    PB 2012

    Real Estate

    Banks

    Industrials

    Food & Retail

    Telecom

    FinancialServices

    Petchem &Fert

    Transport &Logistics

    Energy &Utilities

    Construction

    y = 1.1815x + 0.9742R = 0.4142

    0.00

    0.501.00

    1.50

    2.00

    2.50

    3.00

    3.50

    4.00

    0.00 0.50 1.00 1.50 2.00

    ROA2012

    PB 2012

    DFMGI

    ADSMI

    Tadawul

    XU100

    MSM

    DSM

    EGX 30

    y = 3.637x - 3.926R = 0.4946

    0.00

    2.00

    4.00

    6.00

    8.00

    10.00

    12.00

    0.50 1.00 1.50 2.00 2.50 3.00

    ROA2012

    PB 2012

    FTSE 100

    S&P 500

    Dow JonesSMI

    Nasdaq

    Nikkei

    Dax

    Stoxx 600

    CacAS51 Index

  • 7/28/2019 Equity Weekly 130707

    3/22

    Research from Emirates NBD

    Major Equity Markets

    Emerging Market Indices PE/ROE 2013E

    Source: Bloomberg, Emirates NBD Research, BEst BloombergEstimates

    Emerging Market Indices PB/ROA 2012

    y = 0.3393x + 12.868R = 0.056

    0.0

    5.0

    10.0

    15.0

    20.0

    25.0

    4.0 8.0 12.0 16.0

    BEstROE

    2013

    BEst PE 2013

    Mala sia

    Karachi

    Nifty

    Jakarta Sensex

    Taiwan

    Mexico

    Vietnam

    Bovespa

    HSIShanghai

    Jo'burg

    Micex

    y = 2.1125x + 0.5451R = 0.2463

    0.00

    4.00

    8.00

    12.00

    0.5 1.5 2.5 3.5

    ROA

    2012

    PB 2012

    Malaysia

    Karachi

    Nifty

    Jakarta

    Sensex

    Taiwan

    Mexico

    Vietnam

    BovespaHSI

    Shanghai

    Jo'burg

    Micex

  • 7/28/2019 Equity Weekly 130707

    4/22

    Research from Emirates NBD

    MENA Markets

    MENA Equity Indices (5d% chg) Benchmark Equity Indices

    Index

    BEst

    P/E

    BEst

    P/B

    Div

    Yield

    5d

    chg

    1m

    chgYtd

    MSCI World 14.07 1.82 2.72 1.1% -1.4% 8.3%

    MSCI G7 14.10 1.86 2.51 1.3% -1.1% 10.0%

    MSCI Emerging

    Markets 10.14 1.32 3.06 -2.4% -6.4%

    -

    13.0%

    MSCI Frontier

    Markets 10.34 1.49 4.18 1.1% -5.2% 8.8%

    S&P Pan Arab 12.04 1.55 3.74 2.1% -0.8% 8.5%

    MENA Equity Indices

    Index Last Price 5d chg

    T.Value 5d avg

    (USD mn) BEst P/E BEst P/B Div Yield

    % above 200d

    MA

    DFM 2,264 41.7 60.4 12.8 1.0 3.7 51.6

    ADX 3,563 22.2 72.4 10.0 1.4 4.9 32.8

    Tadawul 7,669 164.2 1,291.4 12.5 1.8 3.6 62.5

    ISE 100 73,112 -3182.7 1,246.4 9.7 1.4 2.5 36.0

    EGX 30 5,335 693.5 41.2 9.8 0.8 5.8 33.3

    KWSE 7,963 49.7 124.9 - - 3.7 49.5

    Bahrain 1,191 2.5 1.3 - - 4.1 17.1

    MSM 6,441 106.9 11.3 10.1 1.5 4.3 93.3

    Qatar Exchange 9,372 73.4 46.7 11.0 1.6 4.9 90.0

    MADEX 7,044 -96.3 2.6 13.0 2.3 4.5 48.2

    TUSISE 4,617 8.3 1.4 - - 1.9 16.1

    DUAE INDEX 2,575 30.1 112.7 - - 3.1 95.0

    DKUW INDEX 3,820 28.6 28.3 - - 3.7 80.0

    DQAT INDEX 5,876 82.9 39.0 - - 4.5 90.0

    DKUS INDEX 2,926 29.6 41.7 - - 4.3 80.0

    DQAS INDEX 7,280 -21.9 - - - - -

    Relative to Benchmark Indices

    Index PE PB Dvd Yld Index PE PB Dvd Yld

    Relative to S&P Pan Arab

    DFM 6.7% -35.5% -1.3% Relative to MSCI Emerging Market Index

    ADX -16.8% -10.1% 30.6% EGX 30 -3.8% -41.4% 91.2%

    Tadawul 3.8% 17.4% -3.0% MADEX 28.2% 77.1% 46.2%

    KWSE - - -1.3% ISE 100 -3.8% 6.6% -18.9%

    Bahrain - - 9.5%

    0.2%

    -1.4%

    -4.2%

    14.9%

    1.7%

    0.2%

    0.6%

    0.8%

    2.2%

    0.6%

    1.9%

    -12% -7% -2% 3% 8% 13% 18%

    TUSISE

    MADEX

    ISE 100

    EGX 30

    MSM

    Bahrain Bour