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Qatari telecoms in MSCI contention [National, The (United Arab Emirates)](National, The (United Arab Emirates) Via Acquire Media NewsEdge) The UAE's telecoms providers are likely to miss out on inclusion in the MSCI Emerging Markets Index, although Vodafone Qatar and Ooredoo are likely to make the cut. And despite investor enthusiasm for Arabian Gulf airlines, trackers of the index will not gain exposure to Air Arabia, the UAE's sole publicly-listed airline. Ooredoo meets all the criteria for inclusion in the index. With a market cap of US$12.11 billion, it is Qatar's third-largest listed company. Its shares have no foreign ownership limit, are sufficiently liquid and are traded frequently. It is trading at a price-to-earnings ratio of 18.33, considerably above the average of 11.78 for the index as a whole. The company is trading at a price-to-book ratio of 1.9. Its stock price has performed well over the past six quarters, climbing from 104 Qatari riyals to 137.7 riyals, a gain of 32.4 per cent. Following a 12.5 per cent fall in profits, from $809.3 million in 2012 to $708.2m last year, the company is predicted by JP Morgan to record profits of $650.8m this year before climbing to $787.3m next year. "While operational performance remains healthy in the domestic and Algerian markets ... Ooredoo is likely to face near-term difficulties in some of its [other] key markets," wrote Christian Kern, the head of Middle East and North Africa equity research at JPMorgan. He pointed to cost pressures in Indonesia and Kuwait, alongside low growth rates in Tunisia, as factors likely "to weigh on [Ooredoo's] revenue potential". Vodafone Qatar, which does not have a foreign ownership limit, has market capitalisation of $3.76bn, and satisfies MSCI's liquidity and volume-traded criteria. Vodafone Qatar is trading at a price-to-book ratio of 2.3 and recorded negative profit margins of minus 26.25 per cent last year and minus 39.78 per cent in 2012, according to Bloomberg. JPMorgan estimates the company will have a margin of minus 13.5 per cent this year. It is predicted to have an earnings-before-deductions margin of 24.7 per cent this year, which is expected to increase to 27.9 per cent next year. "Supported by an expanding customer base with an improving customer mix ... Vodafone Qatar is likely to see a strong growth profile in the near-term," wrote Mr Kern. The UAE telecoms companies Etisalat and du are unlikely to be included in the MSCI Emerging Markets Index. Etisalat, which is traded on the Abu Dhabi Securities Exchange, does not allow foreign ownership, while annual traded values of du shares do not meet MSCI's threshold, meaning that the company's shares are insufficiently liquid. Despite the global prominence of Arabian Gulf airlines, investors will not get the chance to buy into Etihad, Emirates, or Qatar Airways, none of which are listed. Air Arabia trades on the Abu Dhabi Securities Exchange, but its market capitalisation, at $1.83bn, is below the $2.15bn cut-off point that MSCI requires of UAE stocks. [email protected] (c) 2014 s Abu Dhabi Media Company, All rights reserved. Provided by Syndigate.info, an Albawaba.com company |