Trading volumes and values continue to be lacklustre as various outside factors continue to affect market liquidity. The ongoing holy month of Ramadhan and geopolitical tensions have affected the market in terms of reduced liquidity and trading. However, continued interest has been observed in the telecommunication sector.
The MSM30 ended the week up by 0.44 per cent at 3,875.89. Both the Services Index and the Financial Index closed down by 0.26 per cent and 0.02 per cent respectively while the Industrial Index closed up by 1.38 per cent. The MSM Shariah Index closed up by 1.29 per cent w-o-w.
After various news and rumours, Raysut Cement finally announced that it will acquire Sohar Cement for $60m. Raysut will acquire 100 per cent of Sohar Cement, which has a production capacity of Sohar Cement is 1.7 mtpa. Acquisition will take the cement capacity of Raysut to 4.7 mtpa, higher than Oman Cement capacity of 3.6 mtpa. Raysut Cement revealed last December that it was exploring the potential acquisition of ARM Cement of Kenya as part of the company’s aggressive strategy to expand in East and Central Africa. Furthermore, Raysut Cement is exploring opportunities in the Horn of Africa, Uganda and Georgia as well.
On the other hand, Oman Cement announced the following in its directors’ report of 1Q19.
n The company has decided to setup a new integrated plant in Duqm with a capacity of 5000TPD of clinker with an estimated investment of $212m.
n Once the new plant will come online, company’s clinker capacity will rise to 4.2 mtpa from 2.7 mtpa currently.
n Company has hired services of a consultant to study and eliminate the bottlenecks in the existing plant for its efficiency enhancement.
n Company has also tendered for upgradation of power plant for efficiency enhancement.
n In order to utilize waste tyres as alternate fuel, company has carried out a feasibility study through an expert agency.
The leasing sector of Oman is facing a challenging operating environment since the great fall of oil prices that led to implementation of austerity measures in Oman. In Q1’19, the sector’s net profit declined by 19.9 per cent YoY and 45.6 per cent QoQ. As per the company’s Board of Directors’ reports, leasing sector outlook is expected to remain challenging. The economy has witnessed some tightening of liquidity which has resulted in substantial interest rate increase and the medium term challenge would be to maintain pricing while achieving quality asset growth.
The projected lower levels of credit offtake combined with increased interest costs and competition from banks translating into reduced margins will make it challenging to maintain profitability levels.
CMA issued new regulation last week which will stop companies and owners from abusing the market to take over more than 25 per cent of any company in Oman. The regulation aims to limit take over and acquisition processes at not more than 25 per cent of the shares of pubic joint stock companies and controlling percentage in the company to provide protection for shareholders and for fair, transparent and equitable treatment of all the parties and to provide exit in cases of acquisition.
The regulation’s second article states that the regulations affect transactions in three cases:
n In the first case, a person or group of people own less than 25 per cent of a company and want to acquire more than 25 per cent of the company.
n In the second case, if the person or group of people own 25 per cent of the voting shares in the company and want to acquire more than 2 per cent of the company less than 6 months after the last transaction.
n Lastly, if the person or group of people own more than 25 per cent of a company which controls another, and they want to acquire 2 per cent more of voting shares every six months.
Recent data about telecom subscribers revealed that total internet subscribers went up by 4.5 per cent since the start of the year till Apil’19 to 442.5k. Total fixed telephones lines grew by 2.4 per cent to 573.2k as well as total mobile subscribers which increased by 2.4 per cent to 6.59m on higher postpaid and prepaid mobile subscribers. Active mobile broadband subscribers also went up by 0.4 per cent to 4.13m subscribers.
[Courtesy: U-Capital]
Oman Observer is now on the WhatsApp channel. Click here
