Full spectrum dominance
The stranglehold of the industry, services and banking sector companies continues on the Top 20 charts

A sector analysis of the OER Top 20 companies throws up some interesting trends. Industry (manufacturing), services and the banking sectors continue to dominate the Sultanate’s economy. The industrial sector strengthens its presence on the charts, with eight companies making it to the list in 2007, compared to five in 2006. Services matches the industrial sector, with its own set of eight companies. The four major banks hold aloft the banking and finance flag.

Infrastructure led growth
Manufacturing companies rode the infrastructure boom in the economy to come out trumps. With the average price of exported oil touching US$67.80 per barrel in 2007, the government’s outlay on capacity building grew substantially. Roads, ports and bridges seemed to be the order of the day and the biggest beneficiaries were infrastructure related companies such as Galfar, Oman Cables, Raysut Cement, Oman Cement, Al Jazeera Tube Products and AES Barka. “The economic prospects of the economy are being reflected by these infrastructure led companies,” says Sankar Kailasam, vice-president – asset management, Gulf Baader Capital markets. A number of them added capacities to cash in on the emerging opportunities. This is reflected in the turnover figures of these companies. Galfar Engineering’s topline grew by 61.68 per cent, Oman Cables Industry’s by over 73 per cent while Raysut Cement’s was up by more than 45 per cent. As domestic demand strengthens and companies start servicing more markets in the GCC region, this secular trend can only intensify. The presence of Areej Vegetable Oil and Oman Refreshment Company, two companies from the FMCG field, reflect the growing consumerism of an increasingly well off middle-class in Oman.

Demand drives services
The service sector mirrors an increase in a similar trend. Growing affluence is creating a demand for more value-added services, helping companies like Omantel, Shell, Al Maha and Oman Oil Marketing. Says Hari Kumar Varma, Vice-President, Research, Vision Securities, “Services is dominated by oil marketing companies and companies offering services to the oil and gas industry.” This comes as no surprise as it underlines the prevailing economic trends in the region. Companies related to the oil and gas industry, like Renaissance Services and OHI, occupy pride of place on the list as the volume of work has increased exponentially. Renaissance Services stands out for a number of reasons. Says V Gowribalan, Vice President, asset management, Fincorp, “Renaissance gives an investor international exposure as it is the only company in Oman which can rightly claim to be a transnational company.” A number of these service-led companies score high on profitability. Al Anwar’s profits have jumped by 200 per cent (albeit on a small base), OHI sees a 87.49 per cent jump, while Al Maha records a 67.89 per cent growth.

Financial gains
As expected, the four major banks in the Sultanate – BankMuscat, National Bank of Oman, Oman International Bank and Bank Dhofar – make it to the Top 20 chart. In any boom cycle, the first sector where money flows in is the banking and financial sector and that is what is happening in the Sultanate. Says Gowribalan, “These are bellwether stocks in any economy and as the economy is forecast to do well, the banking and financial sector reflect this anticipated growth.” The four banks dominate the charts when it comes to profit as a percentage of revenues. NBO’s profits as a percentage of revenue is as high as 44.17 per cent, BankMuscat’s is 31.68 per cent, OIB is at 41.29 per cent while Bank Dhofar is at over 36 per cent. This shows the efficiency and high profit margins of the banking business in Oman.

If one were to do some crystal gazing, it could be confidently stated that these three sectors are sure to continue their dominance in the Top 20 list for some time to come but a few other sectors have the potential to spring a few surprises. The foremost amongst them being tourism. The government’s thrust on tourism, coupled with the entry of a number of large private players, makes it a good bet for the future. The real estate sector is another one which has the potential to break into the big league. It is time that the base of the economy grows from a handful of sectors to multiple sectors.
 

Top^