Transcript Slide 1

Investor Presentation
3Q 2010
About PADICO Holding
Who We Are
•
PADICO HOLDING is a limited, public shareholding
company which was established in 1993, through an
initiative by distinguished Palestinian and other Arab
businessmen in Diaspora.
•
The Company's paid in capital is 250 million
shares/USD.
•
The Company’s core mission is to develop and
strengthen the Palestinian economy through investing
in vital economic sectors.
•
This mission is being fulfilled through a well
structured, focused and resourceful
group of
subsidiaries and associates operating in a wide array of
sectors including real estate, telecommunications,
tourism, industry and financial services
•
The Company has been listed on the Palestine
Exchange (PEX) since 1997. PADICO HOLDING’s
shareholder profile is diverse and includes major
investors from Palestine as well as international
markets, exceeding 11,000 shareholders.
The PADICO Advantage
1.
The Board of Directors enjoys vast international experience in a broad range of sectors.
This makes the board composition strong with a balanced blend of skills and
experience, allowing it to offer all guidance required to achieve the Company’s goals.
2.
PADICO Holding has played a pioneer role in developing the Palestinian economy
through establishing a number of innovative projects including founding the first
securities exchange, establishing the first telecommunications company, building the
first industrial zone in the Gaza strip, and introducing 5 star hospitality services to
Palestine through founding the Intercontinental Jaser Palace in Bethlehem, and the
Movenpick hotels in Ramallah and Gaza.
3.
PADICO HOLDING has a 16 year track record of leading a consistently superior
financial performance despite regional political and economic instability. This makes
PADICO a true model for investment in Palestine.
4.
PADICO HOLDING has been listed on Palestine Exchange (PEX) since 1997, which
guarantees high levels of transparency.
5.
The Company’s flexible and highly diversified investment strategy which focuses on
executing investments in various economic sectors as well as geographical locations, has
enabled the company to witness continuous growth in its profits.
Our Investment Strategy
Effective
CSR
Pioneer CSR strategy and Socially
Responsible Investments (SRI)
Risk Management
PADICO HOLDING manages risk
associated with the political and
economic environment through:
Sector diversification, with the
concentration being in defensive
sectors such as infrastructure, real
estate and telecommunications.
Separating the Company’s
financial portfolio from its main
operations, and assigning it to
Rawan International Investment
Co., a PADICO HOLDING
subsidiary.
PADICO HOLDING’s Investments by sector
Finance
2.62%
Real Estate &
Industrial Zones
17.13%
Manufacturing &
Agriculture
6.8%
Telecoms‫ا‬
Tourism
6.41%
66.99 %
Services
0.06%
Telecoms
Services
Tourism
Manufacturing & Agriculture
Real Estate & Industrial Zones
Finance
Our Investment Outlook (1)
• FIRST: Concluding The Restructuring Process
The future plan focuses on concluding the restructuring
process which involves merging investments in the real
estate, hospitality, manufacturing and financial sectors
under the umbrella of specialized holding companies, in
addition to divestiture of underperforming investments or
others in which PADICO HOLDING does not own a
controlling stake.
Real Estate & Hospitality Sectors Restructuring Plan
Merging 14 subsidiaries operating in the real estate and hospitality
sectors into a single Holding through a share swap transaction with a
paid in capital of more than $ 150 Million.
PADICO HOLDING will own a controlling stake in the new holding.
Due diligence of the companies has already been conducted, and
Ernst and Young is finalizing the update of their valuation.
International Consultancy firms have already been contacted in order
to submit their proposals for preparing a 5 year business plan for the
newly created holding.
Recent Developments
During the first nine months of 2010, Palestine Tourism Investment
Company (PTIC) and PIEDCO Gaza have successfully completed their
capital restructuring plans, and have become ready for the merger
process.
PADICO Increased its stake in PIEDCO Holding from 55.32% to
77.87% through the purchase of PIF and Arab Bank’s Shares.
Al Mashtal for Tourism Investments has successfully raised its paidin capital to USD33million, and is currently in the preparation phase
for starting operations at Al Mashtal Hotel in Gaza, during the first
quarter of 2011 .
Industrial Sector Restructuring Plan
Consolidating 5 industrial companies under the umbrella of Palestine
Industrial Investment Company (PIIC).
PADICO HOLDING will own a controlling stake in the Holding.
The new Holding has already acquired PADICO’s shares in NCI, in
addition to PADICO and PIEDCO’s shares in GMC. Best Buy has been
divested and Akarat is currently available to be merged with PRICO
Holding.
Palestine Exchange (PEX) Restructuring Plan
Transform PEX from a private shareholding company to a
public shareholding company.
Separate the Depositary and Clearance Center from trading
activities.
PADICO HOLDING will reduce its holdings in PEX from 78%
to around 51%, initially through private placement and then
through an IPO that is expected to be accomplished during 2011.
Our Investment Outlook (2)
Second: Issuing Corporate Eurobonds
Issuing the first Corporate Eurobonds in Palestine
•PADICO Holding is in the process of issuing the first corporate
bonds in Palestine in the amount of USD70 million with 5 year
maturity in January 2011.
•The bond proceeds will be used to re-pay outstanding high cost
bank borrowings, in addition to financing future investment
projects across a number of sectors.
•PADICO Holding has hired two highly respectful regional
investment Banks to act as co- leaders and advisors on the issue.
A Highlight Of Our Key Investments
Capital*
185.65
Capital
68.51
Capital
16.9
Capital
25.7
% **
31.24
%
70.9
%
62.7
%
42
Capital
26.45
Capital
10.00
Capital
26.5
%
60.1
%
78.0
%
77.8
*Authorized capital in USD millions
** % owned by PADICO
***Holding as of 30-9-2010
PADICO HOLDING’s
Financial Statements
Consolidated Income Statement Summary
Amount USD thousand
3Q 2009
3Q 2010
Change %
Operating Revenue
21,801
39,455
81%
Share of Associates’ results of
Operations
31,802
28,937
(9)%
919
1,614
76%
Total Revenues
54,893
72,348
32%
Operating Expenses
14,431
25,254
75%
General & Admin. Expenses
9,225
10,795
17%
Finance cost
4,731
4,799
1.4%
Other Revenue (Expenses)
7,105
662
(91)%
Total Expenses
30,008
43,066
44%
Net Profit
31,688
28,888
(9)%
Gain From Financial Assets Portfolio
Consolidated Income Statement Summary
When compared to 3Q 2009, 3Q 2010 has witnessed:
81% growth in Operating Income accredited to the restructuring plan currently being implemented, and
the enhanced operational efficiency at subsidiaries’ level.
9% decrease in Share of Associates’ Results of Operations due to a decrease in PALTEL Group’s net profit
from JOD72 million in Q3 2009 to JOD 65.1 million in Q3 2010.
32% growth in Total Revenues.
6% decrease in Income Before Tax which amounted to USD 29.94 million in Q3 2010. This decrease
resulted from the absence of Gain From Business Combination of Subsidiaries which is a non recurring
item that amounted to USD 6.14 million, and was incorporated in Q3 2009 revenues. When excluding this
item for comparative purposes only, income generated from the Company’s main and continuing activities
has actually witnessed an increase of 16% when comparing Q3 2010 to Q3 2009.
 In Q3 2010, Comprehensive Income amounted to USD 32.04 million, resulting from an increase in Fair
Value of Financial Assets which totaled USD 2.43 million, in addition to USD 0.72 million of Foreign
Currency Translation.
Revenue Sources
Revenue Sources/ USD Million
3Q
2009
%
3Q
2010
%
Change
%
Operating Revenue
21.8
39%
39.46
55%
17.66
81%
Share of Associates’ Results of
Operations
31.8
58%
28.94
40%
(2.86)
(9)%
Gain From Financial Assets
Portfolio
0.92
2%
1.61
2%
0.69
75%
Other Revenue
0.37
1%
2.34
3%
1.97
532%
Total Revenue
54.89
100%
72.35
100%
17.46
32%
Consolidated Balance Sheet Summary
Amount / USD thousand
2009
3Q 2010
Total Assets
Change
%
Cash & Financial
Investments
95,425
90,430
(5)%
Investment in Associates
308,120
324,611
5%
Investment in Properties
69,431
64,392
(7)%
Accounts Receivable &
Loans
35,609
43,444
22%
Other Assets
111,610
114,050
2%
Total assets
620,197
636,920
3%
Loans & Credit Facilities
165,803
154,190
(7)%
Other liabilities
24,689
25,416
3%
Total liabilities
190,492
179,788
(6)%
Total equity
429,705
457,132
6%
Outstanding shares
250,000
250,000
-
Amounts in USD Thousand
700,000
620,197
600,000
500,000
636,920
530,028
455,699
400,000
300,000
Total Assets
200,000
100,000
0
2007
2008
2009
3Q 2010
Time Period
Total liabilities decreased by 6% due to a
decline in loans & credit facilities from
USD165.8 million in 2009 to
USD154.19 million in 3Q 2010,
accredited to the Company’s strategy of
reducing borrowings and debt
obligations.
Assets
2009
%
3Q
2010
Cash and Financial Investments
95,425
15%
90,430
14%
(4,994)
(5)%
Investment in Properties
69,431
11%
64,392
10%
(5,039)
(7)%
Investment in Associates
308,120
50%
324,611
51%
16,491
5%
Accounts Receivable & Loans
35,609
6%
43,444
7%
7,835
22%
Property, Plant & Equipment,
and Intangible Assets and
Projects in Progress and
106,770
17%
108,450
17%
1,680
2%
4,842
1%
5,609
1%
767
16%
620,197
100%
636,936
100%
16,739
3%
Assets USD Thousand
Inventories & Read for Sale
Properties
Total
%
Change
%
Key Subsidiaries and Affiliates
Paltel Group
•
•
•
•
Established in 1995 as the first Palestinian
telecommunication company. The Group’s services
cover all aspects of the communication spectrum.
PALTEL is currently undergoing a process of
internal corporate restructuring aiming to reach an
optimal firm size and enhance overall efficiency.
Number of subscribers has increased by 26% in 3Q
2010 when compared to 3Q 2009 to reach 2.643
million.
The decline in PALTEL Group’s net income
resulted from an increase in losses registered by
associates which rose from JOD 4.96 million in Q3
2009 to JOD 6.99 million in Q3 2010. This loss is
mainly attributed to the share of VTEL Holdings in
the results of operations. Moreover, PALTEL’s net
income has also decreased due to an increase in the
“other expenses” item which amounted to JOD 7.74
million in Q3 2010 compared to JOD 5.63 million
in Q3 2009. The increase in “other expenses”
resulted from the final payment that was made out
to the Palestinian Authority as part of the licensing
agreement which was recently signed between the
two parties.
Income Statement
(Amounts in JOD
thousand)
3Q
2009
3Q
2010
Change
Operating Revenue
231,913
252,420
9%
Gross Profit
179,177
192,579
7%
Operating Income
74,010
85,700
16%
Net Income
72,022
65,099
(10)%
2009
3Q
2010
Change
%
Total Assets
531,270
548,160
3%
Total Liabilities
180,085
177,803
(1)%
Total Equity
351,185
370,357
5%
Balance Sheet
(Amounts in JOD
thousand)
%
Palestine Real Estate investment Company (PRICO)
•
•
•
PRICO is considered PADICO HOLDING’s arm
in the real estate and construction sector.
When compared to 3Q2009, 3Q 2010 has
witnessed:
- 362% increase in operating revenues.
- 486% increase in gross profit.
- 263% increase in net income.
PRICO’s new projects include:
- Rabiyet Al Quds residential complex- Beit Safafa/
Total cost $34 million.
- Al Ghadeer Residential Complex- Jifna/ Total cost
$24 million.
- Prico House Two - Ramallah/ Total cost $11
million.
Income Statement
(Amounts in JOD
thousand)
3Q
2009
3Q
2010
Change
Operating Revenues
2,930
13,548
362%
Gross Profit
674
3,952
486%
Net Income
(1,409)
2,299
263%
Change
2009
3Q
2010
Total Assets
81,079
86,698
7%
Total Liabilities
18,121
21,548
19%
Total Equity
62,959
65,151
3%
Balance Sheet
(Amounts in JOD
thousand)
%
%
Palestine Exchange (PEX)
• PEX represents one of PADICO
HOLDING’s avant-garde
accomplishments in the financial
sector.
• The Exchange currently has 40 listed
companies.
• PEX’s total market cap as of
30-9-10 amounted to USD
2,501,637,169.
Income Statement
(Amounts in USD
Thousand)
3Q
2009
3Q
2010
Change
%
Operating Revenues
2,256
2,101
(7)%
457
(32)
(105)%
2009
3Q
2010
Change
%
12,494
12,601
0.86%
822
910
11%
11,672
11,691
0.16%
Net Income
Balance Sheet
(Amounts in USD
thousand)
Total Assets
• Applicable regulations at PEX are
compatible with best international
practice.
Total Liabilities
Total Equity
Palestine Industrial Investment Company (PIIC)
• PIIC was established in 1994 as a
holding company with investments in
PPC and PPIC.
Income
Statement
(Amounts in JOD
Thousand)
• As part of PADICO HOLDING’s
restructuring process, 5 industrial
companies are currently being
consolidated under the umbrella of
PIIC.
• When comparing 3Q 2010 to 3Q
2009:
- Sales grew by 41%.
- Gross profit advanced by 100%.
- Net income increased by 71%.
3Q
2009
3Q
2010
Change
%
Sales
10,321
14,537
41%
Gross Profit
2,343
4,681
100%
Net Income
1,772
3,037
71%
2009
3Q
2010
Change
%
Total Assets
34,920
39,429
13%
Total Liabilities
8,414
9,332
11%
Total Equity
26,506
30,097
14%
Balance Sheet
(Amounts in JOD
thousand)
Palestine Poultry Company (PPC)
•
When comparing 3Q 2010 to 3Q 2009:
- Net income advanced by 65%.
- Gross profit increased by 96%.
Income Statement
(Amounts in JOD
Thousand)
3Q
2009
3Q
2010
Change
%
•
PPC’s stock has witnessed significant
performance with the share price
increasing by 124% during 3Q 2010
closing at 2.89 JOD as of 30-9-2010.
Operating Revenues
9,377
13,360
42%
Gross Profit
2,389
4,686
96%
Net Income
1,914
3,150
65%
2009
3Q
2010
%
Total Assets
23,237
27,019
16%
Total Liabilities
7,561
8,282
10%
Total Equity
15,676
18,737
20%
•
•
PPC’s future plans focus on completing
the Company’s production cycle through
establishing a slaughter house, which will
start operations by the end of 2010. The
new facility will initially produce 3,000
birds per hour, which will be gradually
increased to reach 6,000 birds per hour.
The company also plans to establish
additional chicken farms in the first
quarter of 2011.
Balance Sheet
(Amounts in JOD
thousand)
PADICO HOLDING’s Stock
Stock Chart
(www.reuters.com)
Stock Performance
• As of 30-9-2010, PADICO HOLDING’s
share alone constituted 27 % of PEX’s
total trading volume, and 19% of PEX’s
total trading value, which is a strong
implication of the stock’s high liquidity
and demand levels!
• As of 30-9-2010, PADICO HOLDING’s
share contributed 14% of PEX’s total
market cap.
• PADICO HOLDING’s share price has
witnessed an increase during the first
nine months of 2010 where it opened at
1.21$ on 1/1/10 and closed up by 12% at
1.36$ as of 30-9-2010.
2008
2009
1Q
2010
Closing Share Price
(USD)
1.21
1.19
1.31
1.39
1.36
BV/ Share (USD)
1.38
1.45
1.5
1.53
1.58
EPS (USD)
0.09
0.17
0.04
0.075
0.109
P/E (x)
13.44
8.18
9.27
9.36
P/BV (x)
0.87
0.82
0.87
0.91
0.86
Market
Capitalization (USD
Million)
303
298
328
347.5
340
7.00
1H
2010
3Q
2010
Future Projects 2010-2013
Future Projects
• PADICO HOLDING’s future strategy focuses its
investments in the infrastructure and real estate sectors.
• The 3 year future strategy allocates a budget of
$ 100 Million: 30% for long term projects, and 70% for
short and medium term projects.
A. Power Generation Project
• In partnership with local and regional
investors, PADICO HOLDING will
establish the first power generation plant
located in Jenin, northern West Bank.
• The plant will operate at total capacity of
400 MW, in two phases.
• Total investment cost amounts to $ 300
Million.
• The plant is expected to start operations by
late 2014.
B. Solid Waste Recycling Project
• PADICO HOLDING has established
The Palestinian Recycling Company
“TADWEER”, the first company to
offer specialized recycling services in
Palestine.
• The new Company’s pilot projects
involve building, managing, and
operating a recycling and composting
facility in Nablus and Jenin.
• The projects’ total cost amounts to $ 5
Million, and operations will start in
January 2011
C. Wastewater Treatment Project
• PADICO HOLDING is the first private
company to invest in wastewater in
Palestine.
• An MOU has been signed with Jenin
Municipality to upgrade the existing
wastewater treatment plant, and build a
tertiary treatment unit which will
produce water suitable for irrigation
purposes.
• The project’s estimated cost is around
$ 2 Million, and will start operations in
the beginning of 2011.
.
Contact Information
PADICO HOLDING
Ramallah – Palestine
Tel: + 970 2 240 3336
Fax: + 970 2 240 3363
P.O.Box: 1708 Ramallah – Palestine
Email: [email protected]