MENA-1 THURSDAY MORNING ROUND-UP

UAE
Depa 1H2011 results: revenues In line, bottom line ahead on provision reversal; maintain Buy Ghobash replaces Tayer as Chairman of CBD Etisalat appoints new Group CEO Sheikh Mohammed grants DIFC independence, appoints Vice President Nakheel plans to deliver 7,982 homes in 12 months through December 2012

Kuwait
Kuwait to build highways stretching 550 km over the next three and a half years Opposition MPs demand resignations on money laundering report

Qatar
Local companies to file tax returns

EFG Hermes Research

Jazeera Airways - Upgrade FV on Lower Risk Profile; Maintain Neutral Rating on Balance Sheet Concerns - Company Note - 24 August 2011

Agenda
Qatar Sun 28 August >> Salam International press conference

UAE News
Depa 1H2011 results: revenues In line, bottom line ahead on provision reversal; maintain Buy Depa (DEPA.DI) reported its interim 1H2011 results, showing revenues of AED749 million, in line with our expectations (4% below the consensus), and net income of AED48 million, coming in above our AED40 million estimate (45% above the consensus). The better bottom line was bolstered by margins of 20%, higher than our estimated 18% margins, due to a provision reversal (16.4% ex-reversal). We note that while we forecast FY2011 margins of 18.3% factoring in margin compression, this is slightly offset by Depas higher margin Design Studio business. Depas 1H2011 backlog stood at AED2.3 billion (up 7% Y-o-Y and 5% YTD). Following contract awards in August, Depas backlog reached AED2.7 billion (up 24% YTD), taking Depas total awards YTD to AED1.47 billion. The geographical makeup of Depas backlog showed: 21% UAE, 30% MENA, and 49% rest of the world (namely Asia). Another positive development in Depas backlog is an increase in the share of infrastructure/government-funded projects to 20%, up from 8% as at FY2010. Depa added sizable contracts in Saudi Arabia (AED222 million), Azerbaijan (AED180 million), and India (AED113 million). We view the aforementioned developments in Depas backlog positively. While these developments have decreased our earlier highlighted concerns on Depas short-term outlook, FY2011 results risk being affected by further delays in execution, in our view. Overall, we remain cautious over Depas short-term growth profile in 2011, highlighting, however, improvements in Depas backlog, in addition to continued operating cash flow growth. We maintain our Buy rating on the stock following this set of results. (Company Disclosure, Jad Abbas) Depa: USD0.48, Rating: Buy, FV: USD0.98, MCap: USD292 million, DEPA DU / DEPA.DI Ghobash replaces Tayer as Chairman of CBD Sheikh Mohammed Bin Rashid Al-Maktoum, Dubais Ruler, appointed Saeed Ghobash as Chairman of Commercial Bank of Dubai (CBD) [CBD.DU], replacing Ahmed Al Tayer, the Dubai governments Media Office said. (Bloomberg) Commercial Bank of Dubai: AED3.02, Rating: Neutral, FV: AED3.30, MCap: USD1,597 million, CBD UH / CBD.DU

Etisalat appoints new Group CEO Etisalat (ETEL.AD) has announced the appointment of a new Group CEO, Ahmad Abdulkarim Julfar, by the companys board of directors. We believe this move comes as part of the group restructuring exercise that Etisalat is currently undergoing. (Company Disclosure, Omar Maher) Etisalat: AED10.20, Rating: Neutral, FV: AED12.54, MCap: USD21,973 million, ETISALAT UH / ETEL.AD Sheikh Mohammed grants DIFC independence, appoints Vice President Sheikh Mohammed Bin Rashid Al-Maktoum, Dubais Ruler, amended the law governing the Dubai International Financial Centre (DIFC), granting it financial and managerial independence, WAM reported. The amendment establishes a supreme board of directors that is headed by DIFC President Maktoum Bin Mohammed Bin Rashid Al Maktoum, the announcement said. In a separate decree, Sheikh Mohammed appointed Mashreqbanks CEO Abdul Aziz Al-Ghurair as DIFC Vice President. Other members of the board of directors are Hussain Al Qemzi, Abdulfattah Sharaf, Essa Kazim, Abdullah Saeed Ghobash and David Eldon, the announcement said. (Bloomberg) Nakheel plans to deliver 7,982 homes in 12 months through December 2012 Nakheel plans to deliver 7,982 homes in nine developments across Dubai in the 12 months ending December 2012, the company said in a statement on 24 August 2011. The developments include Jumeirah Islands, Al Furjan, as well as Badrah and Veneto in the Waterfront project. (Bloomberg)

Kuwait News
Kuwait to build highways stretching 550 km over the next three and a half years Kuwait plans to build highways with a total length of 550 kilometres (km) at a cost of KWD1.7 billion. The highways will be tendered in the coming three and a half years, according Fadhel Safar, Minister of Public Works. (Bloomberg) Opposition MPs demand resignations on money laundering report Ahmad Al Saadoun and Mussallam Al Barrak, prominent opposition MPs, have demanded resignations from the prime minister and governor of the central bank in light of a report by Al-Qabas newspaper, which stated that two MPs have received transfers and cash worth KWD25 million, likely for political purposes. The opposition MPs have demanded that the government expose the names of these MPs and those who deposited the funds. Opposition MPs are expected to demand an emergency session to discuss this issue after the Eid Al-Fitr holidays, probably in the second week of September. (Kuwait Times)

Qatar News
Local companies to file tax returns Hundred percent Qatari-owned companies with either over QAR2 million share capital or an annual turnover of more than QAR10 million must a file tax return, according to a circular issued by the Ministry of Economy and Finance. This marks the first time that such companies have to file a tax return, an official from an audit firm explained, adding that these companies will not have to pay taxes. (The Peninsula Qatar, Zawya Dow Jones)

EFG Hermes Research

Jazeera Airways - Upgrade FV on Lower Risk Profile; Maintain Neutral Rating on Balance Sheet Concerns - Company Note - 24 August 2011 Raising FV to KWD0.264/Share on Lower Risk; Reiterate Neutral: We increase our fair value (FV) for Jazeera Airways to KWD0.264/share from KWD0.183/share as a result of: i) upgrades to our aviation business 2011 and beyond EBITDA estimates on higher average fare assumptions, and ii) reduction by 250 basis points to 10% of our equity risk premium for the aviation segment, as we believe some of the associated risks have largely dissipated, given the business robust performance over the last four quarters, despite challenging market conditions (regional political events, high fuel prices). Jazeeras strong performance since 3Q2010 proves the success of its turnaround plan and reflects the synergies created from the acquisition of Sahaab Leasing in 1Q2010. Nevertheless, we remain Neutral on the stock, given the companys stretched balance sheet, and we believe the success of the carriers planned KWD20 million rights issue (still awaiting an Emiri decree) could act as a positive catalyst. Higher Average Fare Assumptions Drive FY2011 Forecasts Upgrades: We increase our FY2011 revenue estimate by 4% to KWD56.8 million, owing to upgrades to our average fare assumptions. The carriers average yield continued to improve in 2Q2011, rising 12% Q-o-Q, and demonstrated: i) Jazeeras success in passing on additional fuel costs to its passengers through fuel surcharges, and ii) the carriers focus on high-yielding routes, such as the Cairo route launched in May 2011. We also adjust

our FY2011 estimates to include KWD1.4 million in forex gain booked by the company in 1H2011. As a result, our FY2011 net income forecast increases to KWD7.9 million from KWD4.6 million. Subsequent forecasts are adjusted upwards accordingly. 2Q2011 Earnings beat Our Estimate, Boosted by Forex Gain: Jazeera Airways reported 2Q2011 revenues of KWD13.9 million (up 63% Y-o-Y and 23% Q-o-Q), ahead of our KWD12.8 million forecast due to stronger-than-expected yields. Cost of sales of KWD8.8 million was slightly ahead of our KWD8.2 million estimate, owing to the stronger top line. Nevertheless, net income of KWD2.1 million beat our KW0.95 million estimate, owing to the stronger top line and a forex gain of KWD0.7 million, which we did not have in our 2Q2011 forecasts. (Abid Riaz, Nadine Hassouna)
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