DOHA: Increase in foreign ownership limit (FOL) worked well for the price and trade volumes of Industries Qatar’s (IQ) stocks. After raising its foreign ownership cap to 12.25 percent from 7.5 percent in October 2012, IQ’s stock price fell immediately, but picked up later.
The stock price picked up and gathered almost 17 percent before the announcement of the full year 2012 results. Average daily share trade volume of the 90 days before the announcement were 115.175 while for the same number of days after the announcement were 228.125, an increase of almost cent percent.
An update of the Global Research Investment by Global Investment House (GIH) on the equity of Qatar’s petrochemical sector noted IQ’s Q1, 2013 profit rose by eight percent on Quarter-over-Quarter and 33.6 percent Year-on-Year. The GRI has upgraded its fair value of IQ stock to QR183/share as compared to QR175.6/share earlier.
The IQ’s new Algerian steel venture is set to go for commercial production in 2017. Qatar International, a joint venture by Qatar Steel-wholly owned subsidiary of IQ- and Qatar Mining, secured a deal to build, own and operate a $2bn steel plant in Algeria. The planned steel company will have a total production capacity of four million tonnes per annum (mtpa), with phase one of the projects having a capacity of 1.5mtpa of re-bar and 0.5mtpa of wire rod to meet the requirement of the Algerian market.
The construction of the plant, in the Jijel province in eastern Algeria, is due to start in 2013. Currently there is only one steel plant in Algeria which is owned by Arcellor Mittal and has a capacity to produce around one million tonnes of flat and long steel, much less than domestic demand, forcing Algeria to spend about $10bn on steel imports. With the new plant, Qatar Steel and Qatar Mining are all set to benefit as they would be covering their gap rather than adding on further capacity. Since the production would start in 2017, the research note has not yet incorporated this venture in its model.
Although no material benefit can be calculated by the establishment of Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat) to IQ as of now, however, in the long run with expectation of proper marketing and distribution, the products of IQ can get greater visibility which will help increase it sales and with economies of scale it might result in a decline in operating expenses for the company. Muntajat would be establishing 36 offices around the globe as well as strategically located logistics hubs and warehouses to support the marketing and distribution activities, the GIH noted.
The Peninsula
