Valuation Case

Only available on StudyMode
  • Download(s) : 70
  • Published : May 5, 2013
Open Document
Text Preview
Global Research Kuwait

Global Investment House

Table of Contents

1 2 3 4 5 6 7 8

Investment Summary ............................................................................................................ Industry Overview .......................................................................................................... Peer Group Overview ...........................................................................................................

1 3 9

Company Overview ............................................................................................................... 12 SWOT Analysis ....................................................................................................................... 17 Financial Overview ................................................................................................................ 18 Valuation Methods & Assumptions ................................................................................ 24

Sensitivity Analysis ............................................................................................................... 25

January 2007

Commercial Real Estate Company “Al Tijaria”

1

Global Research Kuwait

Global Investment House

Commercial Real Estate Company “Al Tijaria”
Reuters Code: CRCK.KW Listing Kuwait Stock Exchange Market Price: (December 27, 2006) 285Fils

January 2007

Hold

Investment Summary
• The Commercial Real Estate Company (CRC), also known as "Al Tijaria", is considered to be one of the oldest and experienced players in Kuwait's real estate market. The company was listed on the Kuwaiti stock exchange on 21/12/2004. All financial aspects of CRC are governed by Sharia ( Islamic) laws and regulations. CRC's current portfolio of projects is concentrated in the residential segment considering that it is the most important segment of the real estate market in Kuwait. However, the focus is now shifting to other sectors with an increasing potential for growth such the commercial segment. The company has been also venturing into new vital sectors such as the medical sector and the educational sector. Average occupancy rate is over 90% for most of CRC's properties, which is considered to be one of the highest occupancy rates within Kuwait. During 2002, the company acquired 90% of Kuwait Resorts Company, engaged mainly in managing and operating Kuwait Hilton Resort. However, the company has recently sold a 59.24% stake in Kuwait's Resorts Company decreasing the company's holding to 30.76%, and recognizing a net gain on investments of KD14.13mn. Operating revenues stood at KD37.1mn in FY05, increasing by 51% from RO24.5mn in FY04. Net profit rose by 23% in FY05 to reach KD33.1mn compared to KD26.9mn in FY04. EPS stood at 27.2Fils for FY05 , up from 22.1Fils in FY04. Revenues from sales of land and real estate constituted 55% of operating revenues at the end of FY05, followed by profit from investment properties (27.9%), hotel income (16.9%), and other income (0.2%). Operating revenues witnessed a decline of 2.7% to reach KD14.1mn in 9M06 compared to KD14.5mn in the corresponding period last year mainly on the back of a decline of hotels revenue. Net profit stood at KD27.8mn in 9M06 which is 39% higher than the KD20mn reported in the corresponding period of FY05, and included the KD14.13mn one-off gain of the divestment in Kuwait's Hilton Resort. CRC's assets for the year ended 2005 stood at KD284mn, growing by 22% on a year on year basis. The company's assets are well structured, concentrated more into productive real estate operating assets, and less focused on securities investments. Total assets declined by 3.3% in 9M06 to reach KD274.4mn, owing to deconsolidating the group's financial statements following the divestment of Kuwait Resorts Company. The company is planning to continue ahead with the strategy adopted in 2005 of exploring new markets outside the borders of Kuwait either...
tracking img