Finance & Capital Market

Riyadh Cables posts 7% jump in revenue

Riyadh Cables, which posted another stellar quarterly performance with revenue up 7% and gross profit up 14%, has been upgraded by Al Rajhi Capital Research from neutral to overweight with take-profit (TP) price of SR115 ($30.7) per share. 
 
The 2QFY24 results were impacted by a slowdown in construction activities owing to two Eids in the quarter, which affected the QoQ growth numbers, said Al Rajhi.
 
Despite this, the quantity sold has increased by 2% in 1HFY24 to 112 kilotonnes. “Given the decent backlog of SR5.2 billion (up 64/8% YoY/QoQ; translating to 115 ktons of backlog volume) and the absence of an extended holiday in 2HFY24, we believe that the company will witness a further uptick in volumes for the remainder of the year,” Al Rajhi said. 
 
More importantly, gross profit (GP) margin per tonne swelled up by 18% YoY in 1HFY24, averaging around SR4,778/tonne for 1HFY24. 
 
GP margin/tonne forecast
This has compelled Al Rajhi to revisit its FY24 assumptions, where it had initially forecast GP margin/tonne to clock in at SR4,303/tonne for FY24. Given the impressive margin performance in 1H, Al Rajhi increased its annual GP margin/tonne assumption by 8% to SR4,626/tonne. 
 
“Consequently, we upgrade our FY24/25 EPS by 8/4% to SR4.4/5.0 per share. The company has also revised its guidance for the increase in profitability to 20-30% YoY as against the previous guidance of 10-15%. As a result, we revised our TP upwards by 11% to SR115/sh from the previous SR104/sh. The target price implies an upside of 16.0% to the last closing price. Hence, we upgraded our investment case from neutral to overweight.”--TradeArabia News Service
 

Finance & Capital Market

No plans for income tax says UAE minister

The United Arab Emirates has no plans to start income taxes, though the country has introduced corporate tax, Economy Minister Abdulla bin Touq Al Marri has said.
 
“There’s a lot of speculation on that,” he said in an interview with Bloomberg News at the World Economic Forum in Davos, Switzerland. 
 
“It’s not on the table. It’s not in the rooms of discussions. It’s not being discussed in the meetings. It’s not coming anytime soon,” Al Marri said.
 
Meanwhile, he criticised the European Union for keeping the country on a “black list” of countries with strategic deficiencies in combating illicit money flows.
 
“The question of the EU black list, this is a question for them,” he said. “I do not understand how the UAE is still on the black list.”
 
The UAE is making diplomatic efforts to resolve the situation, he said, without giving any indication of whether the EU’s stance is shifting.
 
The EU regularly assesses third countries’ efforts against money laundering and the financing of international terrorism and has yet to drop the UAE from its black list. That’s despite the Paris-based Financial Action Task Force — a global body — removing the UAE from its “gray list” last year.
 
“The UAE managed to get out of the gray list in record time, based on assessment and based on people who come on site and scrutinize your systems for weeks and months,” said Al Marri.
 
The minister also expressed concerns about an EU directive that will potentially penalise imports from countries that don’t allow for trade unions.
 
“You can’t dictate what other countries do with their labour systems and management,” he said. “What works in the UAE works.”
 
It is “really going to challenge” the oil and natural gas industries, he said.
 
The UAE, an Opec member, ships little of its crude to Europe, according to data compiled by Bloomberg. But it is planning to export more of its liquefied natural gas there.
 
Qatar, one of the world’s biggest LNG producers, has voiced similar criticism about the EU’s climate directives and said they may result in less fuel being sent to the bloc.
 
The EU didn’t immediately respond to a request for comment on both issues. -TradeArabia News Service
 

Finance & Capital Market

Burgan Bank to acquire Bahrain's United Gulf Bank

Burgan Bank, a Kuwait-based conventional bank, has signed of a share purchase agreement (SPA) to acquire 100% stake in United Gulf Bank (UGB), a wholesale bank licensed and headquartered in Bahrain, from United Gulf Holding Company (UGH) for $190 million. 
 
This transaction is in line with the bank’s strategy to diversify its asset portfolio by focusing on stable and less fluctuating markets, particularly Kuwait and the wider GCC region, the bank said. 
 
The agreement follows Burgan Bank’s receipt of all required regulatory approvals in both Kuwait and in Bahrain. The two parties will commence the ownership transfer process, the last step in this transaction, with expectations to be completed within the first quarter of 2025, it said.
 
UGB has a wholesale banking license in Bahrain with an ‘Islamic window’ and is supervised by the Central Bank of Bahrain (CBB). It also owns a 60% stake in Kamco Investment Company (Kamco Invest), an investment company licensed and regulated by the Capital Markets Authority - Kuwait (CMA) and the Central Bank of Kuwait (CBK). 
 
Tony Daher, Group CEO of Burgan Bank, said: “The acquisition marks a significant milestone for our Group and is aligned with the Bank’s strategic pillars of diversifying its assets, enhancing its competitiveness and building new income streams. This acquisition provides Burgan with an opportunity to tap into key high-growth sectors of Islamic financing and investments, while creating significant cross-selling and up-selling opportunities, in addition to various integrational synergies.”
 
Furthermore, the transaction will strengthen the bank’s offerings to its clients, providing them with access to the Kamco Invest platform. Kamco Invest currently offers a comprehensive range of investment solutions covering asset management, investment banking and brokerage. It is considered one of the largest asset managers in the region with AUM of ~$16 billion and has notable presence in key capital markets, including Saudi Arabia, the UAE, and the UK. 
 
“The acquisition will solidify the business relationship between Burgan Bank and Kamco Invest, enabling both entities to deliver a seamless and integrated suite of financial services, leveraging their combined expertise to enhance client experiences and meet their diverse and evolving financial needs effectively,” added Daher.
 
Daher explained that Burgan Bank continues to be driven by its vision to become the most modern and advanced bank in Kuwait in the ambitious steps it takes to achieve sustainable growth and expansion. The Bank’s confident strides are further supported and guided by its focus on strategic priorities – most notably the redistribution of assets – keeping pace with digital transformation, developing human capital, and achieving environmental, social, and governance (ESG) excellence. Together, these efforts aim to provide a distinctive banking experience for Burgan’s customers that lives up to their aspirations and meets their needs. This latest acquisition comes following the sale of the Bank of Baghdad and the partial sale of Burgan Bank Turkey in 2023, which is a testament to Burgan’s commitment to deliver on its strategic pillars. 
 
Daher concluded: “The key priority for Burgan now is to deliver on its envisioned operating model for UGB, which would be focused on generating onshore client revenues and serving clients in Bahrain, as well as supporting the Bank’s existing clientele through enhanced product and services offerings.” – TradeArabia News Service