Jordan Times
Sunday, February 25, 2007
weekly analysis: Amman Stock Exchange
AMMAN — Investors on the Amman Stock Exchange
(ASE) enjoyed a calm week of trading, with the General Index closing at 6387.29
points, a slight increase of 0.83 per cent. The AB Invest Market Index (AMI)
closed at 615.66 points declining 0.05 per cent, while the AB Invest Smaller
Market Index (ASMI) gained 0.07 per cent during the week to close at 620.96
points. Meanwhile, the Average Daily Trading Volume (ADTV) came in at $81.23
million, and the advance to decline ratio stood at 0.73.
On the banking front, Capital Bank of Jordan (EXFB) signed an agreement with
Dubai Construction Company (DCC), by which EXFB will finance the purchase of
units in DCC’s VERTEX Tower & Residences and Commerce One establishments in the
Abdali urban regeneration project. This agreement comes in line with the bank’s
strategy to provide potential home and office owners with various financing
solutions. EXFB, which trades on a P/E of 13.87x, closed the week at JD2.50
increasing 2.04 per cent.
In other banking news, a $3 million financing agreement was signed between
Jordan Commercial Bank (JOGB) and the Saudi Fund for Development (SFD) in an
attempt to enhance trade relations between Jordan and Saudi Arabia. According to
the agreement, JOGB will provide loans to Jordanian businesses who wish to
purchase goods and services from the Saudi market.
Worth noting is that JOGB’s FY06 preliminary results revealed a net income of
JD10.64 million compared to JD13.02 million for the previous year. JOGB, which
trades on a P/E multiple of 16.70x, stood its grounds at JD2.62.
In other news, trading resumed on the shares of the Industrial Development Bank
(INDV) on February 19, as negotiations with the potential strategic partner are
expected to take longer than initially predicted. INDV had been suspended from
trading in December 2006, in preparation for the strategic partnership, which
will bring about a capital increase and organisational restructuring. INDV
gained 16.67 per cent during the week to close at JD3.01.
In the insurance sector, the board of directors of Al-Nisr Al-Arabi Insurance (AAIN)
— a 50 per cent owned subsidiary of ARBK — decided to distribute a 30 per cent
cash dividend, corresponding to a dividend yield of 3.51 per cent. The board
also decided to raise the company’s capital from JD5 million to JD10 million
through the distribution of stock dividends. AAIN’s net income reached JD2.01
million according to its preliminary FY06 results, an increase of 38 per cent
compared to FY05. AAIN held on to its previous level of JD8.55.
In the industrial sector, the ASE decided to transfer Jordan Wood Industries
(WOOD) from the first market to the second, as less than 10 per cent of the
company’s free-float shares exchanged hands in FY06. WOOD’s net income for the
year reached JD1.45 million, an increase of 54 per cent compared to the previous
year. The company slipped 3.41 per cent during the week to JD5.10.
In other industrial news, the 8.5 million shares of General Lightweight Concrete
Industries (GLCI) were listed on the ASE’s second market on February 19. GLCI
will mainly specialise in manufacturing cement and concrete products. The
company ended its first week of trading at JD1.69, increasing 69 per cent above
its par value of JD1.
In the services sector, United Arab Investors’ (UAIC) board of directors will
recommend the distribution of a 10 per cent cash dividend in its upcoming AGM,
corresponding to a dividend yield of 3.79 per cent. Furthermore, the board
decided to recommend the repurchase of 5 per cent of its JD147.5 million shares
to hold as treasury stock. UAIC’s FY06 preliminary results showed a net income
of JD33.63 million, compared to JD36.31 million in FY05. UAIC, which trades on a
P/E of 12.70x, declined 1.12 per cent during the week to close at JD2.64, among
high volumes.
On a wider note, according to the Central Bank of Jordan (CBJ) the area of land
permitted for residential construction activity in the country has grown by 59
per cent during the period from 2002 to 2006, while the area permitted for
nonresidential construction activity has increased by 125 per cent during the
same period. This reflects the significance of the real estate boom in Jordan
during the past few years, driven by the country’s improved economic
attractiveness as well as the big increase in its population, due in part to the
influx of Iraqi nationals.