Pressures weigh on market performance

The market was under pressure especially from foreign institutional investors either for profit gain or desire to shift among regional markets which also witnessed news regarding companies’ results and dividends. Trades have improved in the previous week getting support from disclosures by key listed companies regarding dividends or news in addition to large deals on selective shares. The MSM30 index ended the week down by 0.89 per cent at 4,972.01.
The Industrial sub Index was the only gainer as it closed up by 0.35 per cent while both the Financial and the Services indices closed down by 1.46 per cent and 0.58 per cent respectively. The MSM Shariah Index closed down by 0.4 per cent.
Oman Cables Industry board of directors’ report for 2017 stated that the increase in copper prices by 19 per cent YoY has helped the sales value. However, sales in terms of volumes were down on yearly basis due to weaker demand and general market conditions. The report added that lower oil prices have resulted in shelving of new projects thus affecting the results of 2H’17 in addition to competition and pressures on margins.
Pressures were not limited to those factors only as Oman Aluminium Processing Industries LLC (the subsidiary) has reported loss due to the un-remunerative aluminium rod premiums and effect of disruption suffered due to Force Majeure declared by its main supplier (Sohar Aluminium) of input aluminium. Considering all of this, the profit attributable to the parent company felt by 55 per cent on yearly basis. It is worth noting that Sohar Aluminium has managed — later — to return its full operations at normal levels.
Omantel announced its results for 2017 (the first after the acquisition of a controlling stake in Mobile Telecommunications Company — Zain group). Group revenue stood at RO 751.7 million for 2017 up by 44.7 per cent including Zain contribution of RO 219.6 million. Omantel standalone basis revenue went up by 2.4 per cent on annual basis. The group results include Zain Group results for the period from 15 November 2017 to 31 December 2017.
Omantel group achieved an after tax profit of RO 106.8 million of which RO 79.7 million belongs to equity holders of the parent. This represents a drop of about 40 per cent mainly on higher royalties, taxes, depreciation and cost of funding. The company board of directors has proposed to distribute cash dividends of 50 per cent to shareholders. This is in addition to the interim dividend of 20 per cent paid to shareholders in August 2017. Accordingly, the total aggregated distribution amounts to 70 per cent of the company paid up capital for 2017 compared to 110 per cent for 2016. Dividend payout stood at 66 per cent versus 70.7 per cent for 2016.
As per the company disclosure on the MSM website, its board has decided to invite the Company’s shareholders to an Extra-Ordinary General Meeting to be held along with the Annual General Meeting to discuss and approve issuing a guarantee for the issuance of a dominated bonds not exceeding $2 billion in the international capital markets by a subsidiary of Omantel. The proceeds of these bonds will be used to repay the loan facilities obtained by Omantel to acquire a controlling stake of 21.9 per cent in Zain Kuwait.
In the weekly technical analysis, the index crossed down the level of 5,000 points. Technically for the market index using moving averages, we find that the index crossed in downward of the inter averages market (50 and 100 days), and the relative strength index currently stands below 40 degrees, and corresponds to horizontal level with MSM30 index is a good technical signal.
Till date, the total proposed cash dividend for the year 2017 is RO 364.6 million, down by 5 per cent YoY. The financial sector contributes 50 per cent to the total proposed amount, followed by services at 40 per cent and Industrial sector at 10 per cent.
The total market proposed cash payout stands at 61 per cent of total earnings of 2017 for the companies that have proposed cash with yield of 4.7 per cent. The industrial sector’s cash payout tops with 143 per cent of earnings proposed to be paid out as cash, followed by the Services sector at 88 per cent and Financial sector at 50 per cent. The services sector leads in dividend yield on proposed dividends at 5 per cent, followed by the Financial Sector at 4.38 per cent and Services at 3.5 per cent. The total stock dividend proposed for 2017 on MSM stands at RO 67.9 million, higher by 30.5 per cent YoY. The total market payout on proposed cash as well as stock dividend is 72.3 per cent as compared to 61.1 per cent in 2016.
Oman Public Finance for 2017 showed total provisional revenues of RO 7.97 billion, an annual increase of 4.8 per cent compared to actual 2016 figures but 8.3 per cent below 2017 budgeted data as per the CBO monthly bulletin of December 2017. Net oil revenue out of total revenue stood at 56.7 per cent in 2017 compared to 48 per cent in 2016 mainly on better oil prices as average price was $51.3/BBL versus $40.1/BBL, an increase of 27.9 per cent. On the other hand, total expenditures dropped by 11.1 per cent on annual basis in 2017 to RO 11.5 billion largely due to lower current expenditure. The latter formed 70.4 per cent of total spending in 2017 compared with 72.2 per cent in 2016. It is worth stating that the actual (provisional) spending for 2017 was about 1.9 per cent lower than the budgeted one. The actual deficit for 2017 came at RO 3.5 billion, down by 34 per cent YoY but remained higher that the budgeted one of RO 3 billion because of maintaining expenditure at same levels despite drop in revenues. There are provisional figures.
(Courtesy: U-Capital)