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Growth in companies’ profits and competitive yields

2016-02-25

Sahem Weekly Trading Report (21-25)-02-2016

Within a trading level that is not different than its corresponding in the prior weeks, Al-Quds Index continued trading in narrow price range with resistance and support limits that have been formed since the beginning of the year on one hand and the routine disclosure season and cash distribution proposals on another hand. While the total balanced performance of the leading stocks majorly supported the cohesion of Al-Quds Index. Whereby, after the listed companies’ financial and operating data disclosures, which were distinguished for this year, the trading in Palestine Stock Exchange PEX  takes a new anticipation nature for the next period. Despite the sequence in the anticipation stages, the liquidity still drags the attention of all the traders’ categories as for what this dilemma can affect. Technically, the financial markets worldwide need acceptable liquidity levels to achieve the known objectives between the investor and issuer. While, to create this liquidity, the market needs attractive operational and financial indicators from the issuing companies that are listed. Here, all parties of the securities market in Palestine stand in front of this dilemma; where is the liquidity as long as the Palestinian companies have high and international competitive advantage in financial indicators.

After the annual financial data disclosure of 48 out of 49 listed companies in the PEX, the results showed an increase of 19.50% in the net income attributable to the shareholders of the parent company of the companies that disclosed its data for the year 2015 compared to 2014. This followed a growth in the total net income of the companies listed in the banking and financial services, investment, industry and services’ sectors versus a decrease in the total net income of the companies listed in the insurance sector. The total achieved net income approximated to $265 million in 2015, whereby the net income of the companies listed in the services’ sector constituted around 46.30%. The net income of the companies listed in banking and financial services’ sector followed by 28.50, and then came the net income of the companies listed in the investment sector by 13.70, and the industry sector by 9.30% and finally the insurance sector by 2.20%. Accordingly, the PEX recorded average PE of 12.50x and average P/BV of 1.15x based on the disclosed financial data and market capitalizations for the end of January 2016. The average PE for the PEX’s sectors range between 11.5x and 18.6x, and the average P/BV range between 0.68x and 1.40x.

As a result of the distinguishing in the companies’ profits, 11 companies announced, till this moment, its intention to distribute dividends for the year 2015. Some distributed the same dividends percentage as the last year, while, others followed a new policy to diversify between cash dividends and stocks dividends. During the week, the board of directors of the Arab Palestinian Investment company APIC proposed distributing 5% cash dividends, to record dividends yield of 4.24%, and 5% stocks dividends, to raise the paid-up capital to $63 million. According to the companies that proposed distributing dividends, the cash dividends proposals ranged between 5% and 50% with dividends yield that ranges between 3.55% and 11.11%.