MSX closes week lower led by services index

MUSCAT: The MSX30 Index ended the week down by 1.53 per cent week-on-week. All sub-sectors ended in the red territory. The Services Index ended the lowest and was down by 1.96 per cent week-on-week. The Financial Index and the Industrial Index were lower by 1.62 per cent and 1.46 per cent week-on-week, respectively. The MSX Shariah Index also fell by 0.89 per cent week-on-week. Omanis and GCC investors absorbed most of the selling pressure from foreigners. Foreigners sold a net value of $1.7m worth of stocks on the MSX this week.

During the week, many companies announced their Board of Directors’ resolutions on the MSX website, where many companies’ boards have proposed dividends. While the dividend proposals are subject to shareholder and regulatory approval, we have analyzed the numbers and seen that: RO 125.m worth of dividends have been proposed so far, up by 31 per cent YoY, largely led by banking and leasing stocks that have announced.

News came during the week that Oman has formally launched an electricity spot market, the first in the Middle East, to increase the efficiency of power procurement, the state news agency said on Wednesday. Oman has also extended the timeframe of a planned redirecting of electricity subsidies for residential consumers to 10 years from 5 years, and capped power tariffs for the same category throughout 2022 at December 2021 levels.

Fitch Ratings has revised Mazoon Electricity Company SAOC's (Mazoon) outlook to stable from negative, while affirming the company's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-'. The action follows a recent similar action on Oman's outlook.

Mazoon's ratings are constrained by the sovereign ratings, reflecting Fitch’s view of their strong links. The company's credit profile reflects Mazoon's stable profitability, with a significant share of EBITDA from regulated electricity distribution, as well as expected negative free cash flow (FCF) over the next four years, due to significant capex and higher dividends. Fitch forecasts metrics to remain commensurate with the ratings.

Oman’s daily average production of crude oil and condensates exceeded 1m barrels per day (bpd) mark in December 2021, up by 4 per cent in comparison to daily average output recorded for the full year 2021. Oil output during December increased to 1.01m bpd compared with 998,300 bpd in the previous month and 971,200 bpd during the full year 2021, the data released by National Centre for Statistics and Information (NCSI) showed.

As per the latest CBO quarterly bulletin (Sept 2021), gross non-performing assets (NPAs) of the leasing sector reached RO 169.6m or 17.1 per cent of gross finance assets of the sector. NPAs had been rising until 4Q20 but are down since then, during 9M21, likely on account of improved macroeconomic indicators of Oman.

Provision cover has also improved, which had previously fallen to the lowest level of 0.58x at end-FY20. It now stands at 0.74x of NPAs at end-9M21. As per the initial disclosures on MSX by the leasing companies, combined net profit of the listed leasing companies of Oman is up 95 per cent YoY to RO 17m. Combined quarterly net profit stood at RO 6.245mn, up 104 per cent YoY and 51 per cent QoQ on account of lower provision expense for expected credit losses, as the post-pandemic economic recovery continues. Total gross finance assets stood at RO 987.6m at end-9M21, roughly flat since end-FY20. [Courtesy: U-Capital]