Arqaam Capital

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​Established in 2007, Arqaam Capital is a specialist emerging markets investment bank, bringing regional and international product offerings to the emerging markets. Arqaam Capital combines international best practice with expertise in the markets in which we operate. Our primary role is to provide financial intermediation and create investment opportunities for frontier and emerging markets investors looking to invest in their own markets and abroad, as well as international investors seeking opportunities in target frontier and emerging markets. Arqaam Capital is headquartered in the Dubai International Financial Centre (DIFC), with additional offices in Libya, Lebanon, Egypt, and South Africa. 

Arqaam Capital's research platform provides the largest coverage footprint of MENA equities and one of the largest on the African continent with a total of 300 stocks under coverage. Arqaam Capital is ranked as one of the leading research providers in the region - a reflection of its broad coverage universe, its in-depth and high quality research, as well the compelling investment ideas that the team generates. The analysts closely analyze their sectors and issue in-depth company and sector research while the strategy team connects the micro with the macro, focusing on index analysis, macroeconomics and strategy research. 

Mohammad Kamal
  • Mohammad Kamal
EUR 35.36
4240 Fawaz Abdulaziz...

Arqaam Capital - Fawaz Alhokair Q1 18A prelim results

Domestic LFL sales decline y/y on weak overall consumer spending – Ramadan period sales fall short of expectations Rent and other cost savings support gross margins which expanded 60bps y/y Finance cost weigh down on EPS as adjusted net income decline 14% y/y. We tweak our FY 18/19e assumptions and update our WACC parameters. This produces a new TP of SAR 48 in line with CMP. Downgrade to Hold   

4240 FAWAZ ABDULAZIZ ALHOKAIR & C
08/17/17 August 17, 2017 5 EN
Jaap Meijer
  • Jaap Meijer
EUR 445.40

Kuwaiti Banks – Improved outlook as liquidity pressures ease

We have increased our forecasts for NBK by 2% and Burgan by 8-12% post stronger than expected Q2 results, driven by better margin trend and robust credit demand. We have lowered our estimates for KIB by 7-10% as asset yields reset slower than we expected and increased costs of strategic initiatives. Meanwhile, we have cut our estimates sharply for Kipco on persistent losses in pay TV and disappointing performance of other associates. NIM evolution of conventional banks outperformed the Isl...

08/13/17 August 13, 2017 63 EN
Jaap Meijer
  • Jaap Meijer
EUR 57.00

MENA Core Portfolio Update - Churning our portfolio – selective oppo...

We increase RAKBANK (RoE expansion to 13%+) and include DIB (best growth story in the UAE) but make room by removing FAB (FY 17e to be a transitional year).Remain OW on the Saudi banking sector and double Al Rajhi’s weight to 5.0% (best play on NIMs and credit growth) while also adding Riyad Bank at 2.5% (deep value).Include the laggards within the Egyptian banking space, namely ADIB-E, NBKE, and SAUD while halving our position in HDBK to 2.5% and removing CIEB (fully valued) and EFG.Core Buys...

08/10/17 August 10, 2017 5 EN
Sarah Shabayek
  • Sarah Shabayek
EUR 84.84

MEA Telecoms Q2 17e earnings preview

    ï‚· In the GCC, we pick STC as sentiment turns positive on i) the reinstatement of public sector benefits and ii) the potential MSCI inclusion. We avoid ORDS QD in the short-term following the political spat, in spite of expecting strong earnings growth. ï‚· In Africa, we expect top-line growth on operator specific factors, but not for Maroc Tel, which is facing a setback domestically.  

07/11/17 July 11, 2017 12 EN
Jaap Meijer
  • Jaap Meijer
EUR 7.08

MENA banks Outlook

We are updating our models for the expected impact of IFRS 9. We use a 3 stage model ─ 12 month expected losses, assume that >30 days past due 50% will migrate to NPLs and use blended LGD for existing NPLs. Most Egyptian, Kuwaiti (except BURG) and KSA banks (except SIBC) hold more balance sheet provisions than required under IFRS 9. However, the picture is mixed for Qatar and the UAE (ENBD, DIB are well positioned, most negatively affected should be RAKBANK). NIMs should start to improve ...

07/06/17 July 6, 2017 34 EN
Jaap Meijer
  • Jaap Meijer
EUR 57.00

MENA Core Portfolio Update - Churning our portfolio – selective oppo...

We increase RAKBANK (RoE expansion to 13%+) and include DIB (best growth story in the UAE) but make room by removing FAB (FY 17e to be a transitional year).Remain OW on the Saudi banking sector and double Al Rajhi’s weight to 5.0% (best play on NIMs and credit growth) while also adding Riyad Bank at 2.5% (deep value).Include the laggards within the Egyptian banking space, namely ADIB-E, NBKE, and SAUD while halving our position in HDBK to 2.5% and removing CIEB (fully valued) and EFG.Core Buys...

08/10/17 August 10, 2017 5 EN
Jaap Meijer
  • Jaap Meijer
EUR 44.50

MENA Core Portfolio Update - Tactical changes following FTSE rebalance

​We turn negative on Qatar with only ORDS in our Core Buys, while we add QIBK, QIIK, MARK, and VFQS to our Core Sells.We add SABB and KIB from the banking sector to our Core Buy portfolio, while we cut our weights in COMI, BLOM, and AUDI.In the consumer space, we add ALHOKAIR to our Core Buy Portfolio and remove DOMTY from the Core Sells.Core Buys have returned 5.9% YtD vs. 0.6% for the market.

03/19/17 March 19, 2017 6 EN
Jaap Meijer
  • Jaap Meijer
EUR 91.20

South Africa Strategy Outlook - Selective opportunities

​Valuations still not compelling as earning yields remain well below domestic bond yields and yields in the wider Emerging Markets space.EPS growth in real terms has been disappointing as the bulk of nominal growth has been eroded by high inflation.Real GDP growth expected to remain tepid in 2017 at 1.2% with risks tilted more the downside.Fiscal deficit reduction plan mainly hinges on tax increases, due to lack of spending prioritization, with additional tax hikes expected next year.

02/28/17 February 28, 2017 106 EN
Jaap Meijer
  • Jaap Meijer
EUR 118.56

Lebanon IMF Article IV report – Upfront fiscal reforms essential

​Fiscal reform of 3ppt of GDP is needed to contain the growth of the country’s rapidly increasing debt/GDP ratio.Framework for oil and gas exploration already underway with the potential of having a transformative impact on the economy (impact underestimated in the IMF report, in our view).We remain strongly OW on the Lebanese banking system on an unprecedented wealth transfer from the BdL.

01/26/17 January 26, 2017 13 EN
EUR 284.86

Lebanese economy more resilient

Internationalization driving growth, while BdL has provided a compelling wealth transfer.Foreign assets and commercial banks’ returns both bolstered simultaneously with the BdL’s recent financial operation. Bank Audi’s underlying CET1 has increased from 8.7% to 12.9%. Improving investor confidence in the economy following the election of a new president and the appointment of a prime minister. Economic indicators have already started to improve as Lebanon continues to be able to rely on st...

11/21/16 November 21, 2016 39 EN
Jaap Meijer
  • Jaap Meijer
EUR 445.40

Kuwaiti Banks – Improved outlook as liquidity pressures ease

We have increased our forecasts for NBK by 2% and Burgan by 8-12% post stronger than expected Q2 results, driven by better margin trend and robust credit demand. We have lowered our estimates for KIB by 7-10% as asset yields reset slower than we expected and increased costs of strategic initiatives. Meanwhile, we have cut our estimates sharply for Kipco on persistent losses in pay TV and disappointing performance of other associates. NIM evolution of conventional banks outperformed the Isl...

08/13/17 August 13, 2017 63 EN
Sarah Shabayek
  • Sarah Shabayek
EUR 84.84

MEA Telecoms Q2 17e earnings preview

    ï‚· In the GCC, we pick STC as sentiment turns positive on i) the reinstatement of public sector benefits and ii) the potential MSCI inclusion. We avoid ORDS QD in the short-term following the political spat, in spite of expecting strong earnings growth. ï‚· In Africa, we expect top-line growth on operator specific factors, but not for Maroc Tel, which is facing a setback domestically.  

07/11/17 July 11, 2017 12 EN
Jaap Meijer
  • Jaap Meijer
EUR 7.08

MENA banks Outlook

We are updating our models for the expected impact of IFRS 9. We use a 3 stage model ─ 12 month expected losses, assume that >30 days past due 50% will migrate to NPLs and use blended LGD for existing NPLs. Most Egyptian, Kuwaiti (except BURG) and KSA banks (except SIBC) hold more balance sheet provisions than required under IFRS 9. However, the picture is mixed for Qatar and the UAE (ENBD, DIB are well positioned, most negatively affected should be RAKBANK). NIMs should start to improve ...

07/06/17 July 6, 2017 34 EN
Mohammad Kamal
  • Mohammad Kamal
EUR 0.92

MENA Contractors and Industrials 2017: Calling a spade a spade

​Is the end of cash flow pressure in sight for KSA contractors? Not yet.Structural cost growth is here to stay across KSA industrials- and this exposes the truly competitive from subsidy-reliant producersExport licenses do not move the needle for KSA cementIndustrials in Egypt offer up several compelling Buy candidatesBut Egyptian cement names should suffer on FX-linked cost growth, and government ‘crowding out’

05/03/17 May 3, 2017 155 EN
Mohammad Kamal
  • Mohammad Kamal
EUR 29.66

Egypt- Building Materials: Assessing the impact of further energy pric...

From float to price hikes- Egypt targets another round of fuel subsidy restructuring, in an effort to reduce fiscal expendituresWe run sensitivity tests to assess the impact of further fuel price hikes (35-40%) on our industrials coverage spaceCement producers are most vulnerable to increases in fuel prices as c.9% of COGS are impacted, while the earnings of industrials (ElSewedy Electric and Ezz Steel) remain shielded, thanks to cost-reflective pricing

03/08/17 March 8, 2017 5 EN
Jaap Meijer
  • Jaap Meijer
EUR 115.26

What’s next – (4Dec– 10 Dec 2016) Commercial International Bank

 Though a P/tNAV16e of 3.7x may look expensive, we still see30%+ upside, on underestimated NIM and CoR flex. CIB’s balance sheet is underleveraged and increasingT-bills/bonds and reducing cash balances (now at 25.9% ofassets, up 8.7 ppt YtD) could lift NIMs by over 100bps, while itis also a beneficiary of the 300bps MPR hike, boosting NIMsby a further 30bps.​

11/30/16 November 30, 2016 22 EN
Mohammad Kamal
  • Mohammad Kamal
EUR 421.66

MENA Property sector update

​We play high-end developers in a floating currency environment

11/30/16 November 30, 2016 60 EN
Jaap Meijer
  • Jaap Meijer
EUR 365.46

Nigerian Banks - The long road to recovery

​ Capital positions should weaken further as translation gains areoutweighed by higher RWAs on further devaluation. Higher MPR (200bps July) is good news, but further rate hikesand another 50% devaluation are required to bring back a fullyfunctioning FX market. Provisioning absorbs 77.6% of operating profits excluding oneoffFX gains even though banks are not biting the bullet. Weakest links are Skye, Unity, Sterling and FBNH. We continueto play only Zenith (ALM, strong absorption c...

11/30/16 November 30, 2016 52 EN
Victor Dima
  • Victor Dima
EUR 9.36

Edcon Q2 17A flash note

​ Edcon’s retail sales decreased by 6.8% y/y (LfL: -8.2% y/y) toZAR 6.18bn in Q2 17A, mainly driven by an 18.1% y/y decline in creditsales (35.4% of total sales). This was due to the changes in the creditaffordability regulations. Cash sales (64.6% of total sales) only increasedby 0.8% y/y. The group’s gross profit margin contracted by 360bps y/y to 31.8% in Q217A, on the back of increased inventory clearance activity throughaggressive discounting (c.ZAR 600m of Edcon’s inventory)....

11/22/16 November 22, 2016 6 EN
Jaap Meijer
  • Jaap Meijer
EUR 639.54

KSA Insurance

ï‚· We reduce our GWP growth forecasts for health after two quarters of market contraction, with a reduction in the enforcement gap driving growth in GWPs over the next 3-5 years (CAGR of 7.9%).ï‚· Underwriting margins may have peaked - with most insurance companies having repriced policies - due to increasing rivalry from Tawuniya, which is attempting to recapture lost market share.ï‚· We see better fundamentals for motor insurance with a larger enforcement gap (55% vs. 25% in health), though w...

11/22/16 November 22, 2016 91 EN
Jaap Meijer
  • Jaap Meijer
EUR 9.36

MENA Core Portfolio Update

 We add SHIELD and ARCCI from the KSA insurance space on verystrong fundamentals at attractive valuations. We become bullish on the Lebanese banking sector following theBdL’s recent financial operation and given a more resilient thanexpected economy. We play AUDI (biggest beneficiary, c.38% ofmarket cap) and BLOM (best RoE/FCF/yield). Core Buys have returned 37% YtD in a flat market, while our CoreSells have produced 15% YtD alpha.​

11/22/16 November 22, 2016 7 EN
Mohammad Kamal
  • Mohammad Kamal
EUR 7.40

Extra Q4 16A results: Positive first read: Inventory issues appear to ...

​ Positive first read: Inventory issues appear to be resolved, as gross margins recover 150bps y/y, producing a 2.5x y/y growth in operating income ·Q4 16A’s mega-sale event drives high single digit y/y growth, mostly on volumes·Margins recovered c.150bps y/y, as inventory issues are dealt with·Extra closes the year having reversed the losses of previous periods, thanks to a strong Q4

01/18/17 January 18, 2017 4 EN
Mohammad Kamal
  • Mohammad Kamal

Jarir Marketing (Hold, SAR 135) Q4 16A results: Revenues produce a pos...

Smartphone sales round out FY 16A with a positive surprise in Q4 16A revenues Margins compress by c.100 bps y/y, largely on sales mix and competitive pricing pressureWe maintain our Hold rating in place going into 2017. Weak electronics demand and subdued consumer spending are here to stay in the next 12M. We revisit on value

01/10/17 January 10, 2017 2 EN

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