OER-Gulf Baader Capital Markets present a survey of the Top 10 stocks which have given the highest shareholder returns over the last three years

If you purchased Oman Cables Industry shares worth RO100 in June 2005, the investment would have been worth over RO1,200 in June 2008. Surprised, well the stock has given a return of 1279.2 per cent during this period. Oman Cables is not alone in creating phenomenal amounts of wealth for shareholders. Al Maha Petroleum, Shell Oman Marketing, Oman Oil Marketing, Renaissance Services (see table) are some of the other companies which have given returns in excess of the average returns on the MSM. That’s saying a lot as the local bourse has been one of the best performing indices in the region.

Upward incline
The MSM-30 index closed 2007 with a year-on-year gain of 61.9 per cent. In 2006 it reported a gain of 14.5 per cent, the highest return in the GCC. This came on the back of a 44.5 per cent return in 2005. Abdul Kader Askalan, CEO, Oman Arab Bank, states in the bank’s Investment Guide for MSM 30 companies, “We expect the market to continue to remain in the positive zone driven by factors such as strong oil prices, high cash liquidity in the system, positive currency dynamics and strong interest from regional and foreign investors.”

There is no disputing the fact that MSM has been riding high on the overall economic growth in the Sultanate. Oman’s nominal GDP grew by about 8.3 per cent to $38.6bn in 2007. Says Ajeev Gopinathan, Senior Research Analyst, Gulf Baader Capital Markets, “The last three years has seen rapid economic growth and positive macro-economic factors due to high crude oil prices. The fiscal surplus has led to government spending on infrastructure. This coupled with capacity addition by industry and better corporate earnings have translated into shareholder value creation”

A sectoral analysis of the top ten stocks reflects these assumptions. For example manufacturing companies like Oman Cables and Raysut Cement saw enhanced demand and capacity additions leading to volume growth and better earnings. Oil marketing companies like Shell, Al Maha and Oman Oil Marketing rode the crest of rising personal incomes and an increase in fuel demand. Renaissance Services +reaped the benefits of servicing the global hydrocarbon industry. While a Port Services Corporation serviced a larger number of shipments. Banking and investment companies like ONIC, National Bank of Oman and Bank Dhofar benefited from greater liquidity in the economy.

Strong foundations
A number of other factors have helped generate shareholder interest on the local bourse. The growing number of initial public offerings (IPO) have attracted a number of new investors to the market. Omantel’s IPO in June 2005 evinced interest from 160,000 investors. Bank Sohar and Galfar Engineering IPO’s in 2007 were oversubscribed by six and 14 times respectively, raising over RO82mn between them. The Capital Market Authority’s efforts to put in a sound market infrastructure has created a transparent and fair environment. The introduction of online trading last year is expected to attract more retail investors. If you are ruing a missed opportunity, maybe it is time to place some bets now, who knows three years down you may be laughing all the way to the bank.

How We Did It

1. The final rankings were arrived at by adding the capital appreciation and the dividend yield given by a company’s share.

2. Companies with a market capitalisation of RO100mn and above as on June 30, 2008 were used for the survey.

3. The survey used data for the period June 30, 2005 – June 30, 2008.

4. Any company which has not been traded for the last three years was not included in the ranking. For example a Galfar Engineering and Contracting has given a return of 251.8 per cent but it was excluded from the survey as it has been trading for less than a year.

5. The data was compiled and anlaysed by Gulf Baader Capital Markets.

A clear leader
Oman Cables Industry has enriched shareholders way beyond their expectations

If wealth creation is a major objective for companies then Oman Cables Industry (OCI) is its best exponent. Having given a phenomenal 1279.2 per cent stock return over the last three years, it is way head of its contemporaries. The growth of the company from 2004-07 is reflected in its top line and bottomline. Revenues grew by 502 per cent while profits were up by 1006 per cent. The company gave a 2:1 stock bonus in late 2006, this was followed by a stock split. These two factors further helped shareholder returns. The significant growth seen by the company has translated into a growing PE (price earnings) ratio. Thus in 2004, the company was trading at a PE multiple of 10.9 which jumped to 15.4 times in 2008. OCI is one of the top five cable makers in the GCC. OCI has a strong local market with over 70 per cent market share. The company exports to markets like Japan, France, Germany, US and South Korea. OCI has constantly upgraded capacity over the years.

Service Orientation
Constant capacity enhancements by Al Maha Petroleum Products has translated into higher returns

The growth in the economy over the last couple of years has led to an increasing number of vehicles on the roads. This in turn, has led to an enhanced demand for fuel in the retail and commercial segments. Al Maha’s retail sales grew by 34 per cent in 2007, contributing to good revenue numbers. Al Maha’s thrust on retail expansion has paid good dividends. The company had 110 filing stations in 2004, which went upto 151 stations in 2008. This makes it the number two fuel retailing company in the sultanate after Shell Oman Marketing. The company’s revenue has gone up by 125 per cent from 2004-2007. Its profits over the period are up by 166 per cent. The growth in the economy is increasing the fuel demand in the commercial segment. This led to an 87 per cent growth in the sale of bulk fuels during 2007. The aviation sector has been another contributor to its growth. The company has also been introducing value added services in the market like Al Maha fuel cards. These factors together have enabled the company to give a 310.9 per cent return to shareholders over the last three years.

Good going
The returns on Shell Oman Marketing stock is a reflection of its market position

Shell Oman Marketing Company remains the unequivocal market leader amongst the three oil marketing companies in Oman. It has a 50 per cent market share. The company has seen an overall growth in all its business segments -- retail, commercial, aviation and lubricants over the last three years. Along with growth the company constantly emphasises on an efficient supply chain with a focus on margins. All these factors are reflected in the 254.3 per cent return that the stock has given from June 2005 – June 2008. The company has also given a good dividend yield of 8.7 per cent (2005), 6.5 per cent (2006) and 6.9 per cent (2007) to shareholders. The company enjoys a high return on equity and assets. This shows how effective the management has been in using its assets to generate earnings. Over the last couple of years, it has broken the one billion litre mark in terms of retail volumes. The average throughput of bulk fuels per site grew by eight per cent in 2007 to 9.3 milion litres per annum.

A promising performance
Oman Oil Marketing has benefited from RISING fuel demand from retail, commercial and aviation segment

Oman Oil Marketing Company (OOMCO) has given a stock return of 244.1 per cent returns over the last three years. The returns are in line with the growth that the company has seen from 2004-2007. For instance its revenue has increased by 115.6 per cent, while its net profit is up by 144 per cent over the period. Financial year 2007 saw the company setting new benchmarks – OOMCO recorded its best financial performance in the company’s history. It achieved a best loss-time injury free record in 15 years. It recorded the highest Omanisation rate of 85 per cent and the best collection of debts for the year. The oil marketing company also completed a business re-engineering process. OOMCO is an Omani joint stock company engaged in the marketing and distribution of petroleum products. It has a trademark license agreement with Oman Oil Company for the right to use the trademark Oman Oil. Growth of the economy and an increase in the number of vehicles on the road bodes well for the stock.

Core competence
Consistent growth has helped Renaissance Services to give its shareholders steady returns over the years

Over the last five years Renaissance Services has grown at a compounded annual growth rate of 44.2 per cent in revenue and 33.8 per cent in operating profits. This growth finds a reflection in its shares which have given a return of over 222 per cent from July 2005- July 2008. A strategic shift from a diversified business model to a focus on its oil and gas business has led to a large scale capacity build up. The company has announced an RO195.5mn investment programme for the year 2007-09. In 2007 it invested more than RO44.6mn towards this programme. The investment strategy focuses on three core initiatives – increasing the size and reducing the age profile of the offshore support vessel fleet; developing additional capacity in the oil and gas fabrication and ship repair business and expanding the capacity and geographical spread of the company’s permanent accommodation for contractors (PAC) facilities. The investment strategy and its focus on its core oil and gas business promises good shareholder returns in future.

Capacity build-up
A first mover advantage in building capacity and an increase in realisation has helped Raysut Cement to post good earnings growth


Raysut Cement carried out two major expansion projects since 2004 and with infrastructure and industrial projects worth US$25bn in the pipeline it is sitting pretty. The firming up of cement prices and with domestic demand increasing by a healthy 19 per cent the company reaped a virtual windfall. The company carried out a four year expansion programme from 2004-07 which increased its production capacity from one million tonnes per annum to three million tonnes.

The capacity upgradation and better realisations has helped the company give a return of 219.7 per cent. Raysut increased the capacity of its on-shore receiving terminals in the port of Mukalla and Aden in Yemen to reach 27,000 tonnes to cater to this emerging market. A timely increase in the number of specialised cement carriers which carry its products to various destinations through long term charters helped the company offset the increase in freight costs in 2007.

Locational advantage
A buoyant economy and enhanced trade activity has helped Port Services Corporation to generate value


Port Services Corporation (PSC) shares have appreciated by 155.2 per cent from June 2005 to June 2008. Add the dividend yields given by the company and the total returns jump to 170.8 per cent. The company has had a good dividend history giving a dividend yield of 7.4 per cent in 2005, 5.1 per cent in 2006 and 3.2 per cent in 2007. As the Sultanate’s GDP has grown there has been enhanced demand for industrial cargo helping PSC post good numbers. Ever since its inception in 1976, PSC, the governing body of Port Sultan Qaboos has adopted a progressive approach in managing, maintaining and monitoring the entire activities of the port. Port Sultan Qaboos, Oman’s premier gateway, enjoys a prime location. Situated in a natural harbour 250 kms south of the Strait of Hormuz on the Indian Ocean coast of the Arabian Peninsula. Port Sultan Qaboos’ location makes it an ideal location not only for the Arabian Gulf but also the Indian Sub Continent and markets in the East and South Africa.

Placing the right bets
ONIC Holding has created a good portfolio of investments and the results are here for everyone to see

ONIC Holding has given a return of 140.8 per cent. Its turnover has increased from RO17.60mn in 2004 to RO35.49 mn in 2007 an increase of 101.65 per cent. In May 2008, ONIC took a 25 per cent stake in Sama Holding Company. Sama Holding operates in the high growth aircraft leasing business. In March 2007, ONIC made a strategic acquisition of 20 per cent of the shares of FrontierAlt. The latter is a vertically integrated financial services company in Canada. The company offers a choice of opportunities in restructured products, alternative investments and speciality investments. Sensing ONICs growth potential a number of regional investments firms have kept a keen eye on the company. For example Shuaa Capital took a 35 per cent stake in ONIC in September, 2005. Shuaa sold its stake to Dubai Financial, the investment arm of Dubai Holding for Dhs52.5mn (RO5.25mn) in April 2007. ONIC sold its 35 per cent stak in Alliance Housing Bank to Ahli United Bank in June 2007 for RO50.88mn. Thus ONIC has been on a roll in the last three years and its share price mirrors this.

Strong comeback
Following its restructuring NBO has emerged as the second largest Bank in Oman in terms of size of its loan book


Favourable operating conditions and a benign credit environment helped NBO strengthen is asset quality and profitability in 2007. The bank’s growth strategy is to be in the forefront of new product development and offerings and to invest in its distribution channels to make them more accessible, user friendly and customer service oriented. Diversification of revenue streams continued to improve with the ratio of other operating income to total income improving from 33 per cent in 2006 to 40 per cent in 2007. The bank experienced a positive cost of credit in 2007 through collection of non-performing loans. NBO was successful in further diversifying its sources of funding by procuring a $325mn five year syndicated loan facility from international banks at a competitive pricing before to the general increase in market pricing experienced in the latter half of 2007. It was conferred with the “Best in Corporate Social Responsibility in Oman for 2007”, by the World Finance Magazine, UK.

Robust model
A healthy growth in credit demand augmented by the economic cycle has helped Bank Dhofar shares during this period

Bank Dhofar had a good year with its performance improving on almost all financial parameters like total assets, net loans and advances, shareholdrrs equity, profits and customer deposits in 2007. The bank was infused with a new energy and dynamism. The bank secured a new long term borrowing for US$100mn for five years and one month and a new medium term borrowing of US$75mn for three years. The first of these will strengthen the capital of the bank and help its net worth and accelerate the bank’s asset growth. The facility was jointly underwritten by ABN Amro bank and Emirates Bank International.

Bank Dhofar introduced Oman’s first chip credit card. The chip facility offers Bank Dhofar’s card users complete security and greatly enhances the procedures of fraud detection at terminals that are chip enabled. The bank was awarded the second place in the corporate governance award that was organised by the Hawkamah Institute for Corporate Governance and the Union of Arab Banks in association with MasterCard worldwide.

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