REAL ESTATE TRADE CENTRE Co. (kscc)

(Marakez)

Valuation Report

Valuation Report

 

Mohamad H. Atyeh
Investment Department

 

شارع أحمد الجابر- برج الزمردة الدور 18 الكويت
تلفون: 22916780 – 965 فاكس: 22916787 – 965
hani@dana-investment.com

Background

Real Estate Trade Centre Company, a limited liability Company was incorporated in January 6, 1999 under the name of International Dashti Sons Group Company- Talal Abdul Hameed Dashti & Partners. The name of the limited liability company was amended to be “Real Estate Trade Centres Company, With Limited Liability Company” in October 6, 2005. The Company legal form has been changed to Kuwaiti Shareholding Company (Closed) in August 9, 2006.

The authorized and paid up capital of the company amounting to KD 10,500,000 divided into 105,000,000 shares of 100 fils each. During 2006, the legal form of the parent company has been transferred from Limited Liability Company to Kuwaiti shareholding company (Closed) with the capital of KD 10,000,000.

During year 2008, the company issued 5% bonus shares to the existing shareholders and the company capital has reached KD 10,500,000.

Marakez Main Objectives

The main objective of the company is to provide the following services:

1. Owning, selling and purchasing of properties and lands and developing them for the Company’s favor inside Kuwait and abroad. Also, property management of third party and Leasing & Marketing properties.

2. Owning, selling and purchasing of shares and bonds of Real Estate companies only for company’s account in and outside Kuwait.

3. Owning and managing resorts, hotels, health and sports clubs, private hospitals and tourist premises.

4. Dealing in various real estate activities particularly the purchase, sale, leasing and renting of land and buildings.

5. Preparation of real estate feasibility studies and providing all kinds of related consultations.

6. Construction of private and public buildings and projects directly or through others and sale of properties in cash or on installments and managing or renting properties in Kuwait and abroad.

7. Sale and purchase of securities of companies carrying on similar activities.

8. Dealing in various real estate activities particularly the purchase, sale, leasing and renting of land and buildings.

9. Construction of private and public buildings and projects directly or through others and sale of properties in cash or on installments and managing or renting properties inside Kuwait and abroad.

10. Carrying out maintenance work on buildings and real estate.

11. Organizing real estate exhibitions & auctions.

12. Owning & managing commercial markets & residential compounds.

13. Laying the infrastructure for residential, commercial, and industrial areas & projects through B.O.T (Build, Operate, and Transfer) scheme for its account or other’s account.

14. Developing and managing Real Estate Lands and owing of buildings and Real Estate Projects for its account or other’s account.

Board of Directors

S.N	Name	Position
1	Abdul Hameed Abbas Dashti	Chairman
2	Shuail Bin Khalifa Al Kawari	Vice Chairman
3	Amina Abbas Al Shati	Board Member and CEO
4	Rashid Ali Al Abdul Jader	Board Member
5	Fadel Abbas Agha Babehani	Board Member
6	Sameer Ghazi Al Omani	Board Member
7	Talal Abdul Hameed Abbas Dashti	Board Member

Valuation

DCF Valuation Method

 The DCF method is an important method to use when conducting an evaluation for a real estate company. The DCF shows the stock’s fair value or the total equity value based on the company’s estimated business plan and future estimated financials for a certain number of years. In our case, the DCF method has generated a value of 495 fls per share as follows:

DCF Method		2010	2011	2012	2013	2014
FCFE		-61,946	3,550,913	3,575,097	4,046,748	3,268,906
Discount Rate		9.90%	9.90%	9.90%	9.90%	9.90%
Discount Factor		-59,090	3,231,040	3,103,067	3,350,508	2,581,714
Terminal value	40339,288
Discounted Cash Flow	52,546,529	-59,090	3,231,040	3,103,068	3,350,509	2,581,714
Equity Value (KD)	51,982,849
Number of Shares	105,000,000
Fair Value per Share (KD)	0.495

  

Multiples Valuation Method

We believe that taking the P/B valuation method into consideration will ad credibility when coming up with the stock’s fair vale and especially in the current time. Regarding the P/E valuation method, we used the estimated average earnings of the years from 2010 to 2014.

P/B Ratio

Forwarded P/B	Discount Rate	9.9 %	Av. P/E Multiple		1.202
Year	2010	2011	2012	2013	2014
Net Book Value	22,673,537	25,765,103	29,055,427	32,800,669	35,705,219
P.V Factor	95%	91%	87%	83%	79%
P.V of Book Value	21,628,203	23,444,134	25,219,166	27,157,345	28,199,244
Average of Book Value	25,129,618

Forwarded P/B	Discount Rate	9.9 %	Av. P/E Multiple		13.28
Year	2010	2011	2012	2013	2014
Net Book Value	1,112,847	3,091,556	3,290,324	3,745,242	2,904,550
P.V Factor	95%	91%	87%	83%	79%
P.V of Book Value	1,061,541	2,813,063	2,855,894	3,100,877	2,293,954
Average of Earning	2,425,066

Fair Value CalculationMethod	Business Value	Weight%	Contribution in KD
Net Asset Value	21,560,690	15%	3,234,104
DCF	51,982,849	50%	25,991,425
Multiples	39,006,670	35%	13,652,335
Weighted Av. Value of Marakez		100%	42,877,863
No. of Shares Outstanding			105,000,000
Value per share (fils)			408