FINCORP, SAOG
Q1 -2006 Results Review
Background: AES Barka SAOG was incorporated as an Omani Joint Stock Company in the Sultanate of Oman on 19 November 2000 under a trade license issued by the Ministry of Commerce & Industry. It was developed under a Build, Own, Operate scheme (“BOO”). As per the terms of the project founders agreement, the Company in an initial public offering offered 35% of its existing shares to the public and the Company was transformed from a closely held joint stock Company to a public joint stock Company listed on the Muscat Securities Market (MSM). The principal activities of the Company are to develop, finance, design, construct, operate, maintain, insure and own a power generating station and water desalination plant and associated gas interconnection facilities and other relevant infrastructure. Under the power and water purchase agreement with the MHEW (Ministry of Housing, Electricity and Water), the Company has the right to generate electricity and desalinate water in Barka Wilayat for a period of fifteen years commencing from the commercial operations year (2003) based on a tariff structure. Financial Analysis: The Company’s gross profit for the period was RO 5.45 million with a gross profit margin of 58%. Profit after tax for Q-1 was RO 2.32 million, which is lower than the corresponding period for 2005. The total revenue for the quarter was 4% less and this was mainly due to a reallocation of planned outages for the water and power units during the contract period. The operating costs of RO 3.87 million were directly related to the level of generation and the maintenance activities carried out during the period. Among the expenses was an increase in the legal and professional expenses sought in relation to the EPC supplemental agreement and the Shared Facilities Agreement negotiations. The earnings per share annualized works out to be RO 0.29 which has come down from RO 0.32 due to the decline in the profits when compared with the corresponding period in 2005. Technical Analysis: The share underwent a long consolidation in a 10% price band with an average of RO 2 in the entire year of 2005. It took off in a major way on 27th Dec 2005 from a price of RO 2.10 and went up very steeply after that and touched RO 3.25 on 5th April 2006. The medium term charts are not very much positive at this price and we could see a negative divergence on the 12 week ROC charts between the tops on 26th Jan 2006 & 6th April 2006. Hence we can conclude that there is no major strength left in the medium term rally. The share has shown a very clear negative divergence even on the daily ROC chart between the Price & ROC tops on 1st March 2006 & 5th April 2006 at a historic high of RO 3.25. After showing this negative divergence, the price has fallen steeply. Hence the investors should exercise caution at current levels. Recommendation:
30th April 2006
AES BARKA, SAOG
Key Statistics Market Price - 30th April 2006 EPS Book Value P/E P/BV RONW Cash Dividend Yield 2005 2.99 0.29 1.23 10.29 2.43 24% 0.00%
Key Financials RO 000 Q1 2006 Profit and Loss Summary Total Sales/Income Other Income Total Expenditure Tax PAT Balance Sheet Summary Total Assets Total Liabilities Networth Paid up Capital Reserves Total Networth 9,324 40 6,723 317 2,325 159,391 14,220 32,000 7,453 39,453 9,746 13 7,025 328 2,407 158,237 15,770 32,000 5,129 37,129 RO 000 Q1 2005
AES Barka- Daily Price Chart 3.50 3.00 2.50 2.00 1.50 Jan-05 Jul-05 Dec-05 Jun-06
The Q1 results are not impressive. Both top line and bottom line has come down compared to last year. The technical outlook is also weak. Hence extreme caution is advised at the current levels.
FINCORP, SAOG
TOP MANAGEMENT Managing Director & President Chief Executive Officer Munir Makki Haythem Macki E mail : makki@fincorp.org Email: haythem@fincorp.org
CORPORATE FINANCE DIVISION S Kasiraman Exe. Vice President & Head of Corp. Finance Sr. Vice President Sr. Vice President Vice President E mail - kasiraman@fincorp.org
Dasika Krishna Hafidh Al Ghannami Sandeep Menon
E mail - dasika@fincorp.org E mail - alghannamy@fincorp.org E mail – sandeep@fincorp.org E mail- zaigham@fincorp.org E mail- mohdtlal@fincorp.org E mail - nikhil@fincorp.org
ASSET MANAGEMENT DIVISION Zaigham Shah Vice President Mohameed Talal Nikhil Phutane BROKERAGE DIVISION Mohd.Hijazi Exe. Vice President & Head of Brokerage Vice President Vice President Vice President Vice President
E mail –mhijazi@fincorp.org
Moosa Juma Said Hameed RESEARCH TEAM Uppiliappan Nada Al- Kharusi Joyce E Monteiro
DISCLAIMER CLAUSE
Email – moosa@fincorp.org Email – said@fincorp.org
Vice President Analyst Analyst
E mail – uppilliappan@fincorp.org E mail – nada@fincorp.org E mail – joyce@fincorp.org
The Research team of The Financial Corporation, SAOG (hereto referred as FINCORP) on behalf of itself have prepared the information given and expressed their opinions in this report. The information contained has been obtained from sources believed to be reliable and in good faith, but which may not be verified independently. While utmost care has been taken in preparing the above report, FINCORP makes no guarantee, representation or warranty, whether express or implied, and accepts no responsibility or liability as to its accuracy or completeness of the data, being provided. All investment information and opinions are subject to change without notice. Also, not all customers may receive the material at the same time. This document is for private circulation, and information purposes only. It does not and should not be construed as an offer to buy or sell securities mentioned herein. FINCORP will not be liable for any direct or indirect losses arising from the use thereof, and the investors are expected to use the information contained herein at their own risk. FINCORP and its affiliates or their officers, directors and employees may own or have positions in any investment mentioned herein or any investment related thereto and from time to time add to or dispose of any such investment. FINCORP and its affiliates may act as market maker or assume an underwriting position in the securities of banking companies discussed herein (or investments related thereto), and may sell them to or buy them from customers on a principal basis and may also perform or seek to perform investment banking or underwriting services for or relating to those banking companies. Authors or contributors of this report could have direct interest in the capital market or in the securities mentioned herein. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position, and using such independent advisors, as they believe necessary. Income from investments may fluctuate. The price or value of the investments, to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. This document is strictly for the use of recipients only. None of the material provided herein may be reproduced, rewritten, rehashed, published, resold or distributed in any manner whatsoever without the prior and explicit written permission of FINCORP.
The Financial Corporation Co. SAOG (FINCORP); P.O.BOX 782, Postal Code 131, Sultanate of Oman.