MUSCAT: Major Omani firms that constitute MSM 30 Index are expected to post a marginal fall in net earnings in the first quarter of 2016, while a growth could be witnessed in total revenue, as compared to the same period of 2015.
Net earnings of MSM 30 companies for the first quarter were estimated at OMR158.22 million, showing a marginal year-on-year fall of 0.3 per cent and an increase of 741.5 per cent when compared on quarter-on-quarter basis, the Gulf Baader Capital Markets reported in a research note on Tuesday.
“The increase in corporate tax rate in Oman to 15 per cent from 12 per cent levels to impact the overall first quarter performance,” the note said. The combined revenue of MSM 30 Index companies is estimated at OMR955.16 million, increase of 6.9 per cent year-on-year and a decline of 2.7 per cent on quarter-on-quarter basis.
However, the report noted that the combined revenue of MSM 30 companies, excluding investment holding firms, is projected to increase by 3.3 per cent on year-on-year basis and a fall of 3.7 per cent on quarter-on-quarter basis to OMR893.76 million. This is on the back of continued stable performance from financial sector companies. “While we do expect early signs of demand slowdown along with the prevailing macro uncertainties to impact, we believe the non-cyclical sectors to reveal higher growth.”
The net earnings of MSM 30 firms, excluding investment holding companies, for the first quarter is projected at OMR147.19 million, registering a decline of 2.1 per cent on year-on-year and a significant increase of 741 per cent on sequential basis. The earnings growth for the index firms is predominantly driven by the financial and investment holding firms.
The banking sector revenues are estimated to show growth on year-on-year basis during the first quarter, despite tightened market liquidity, increase in funding costs and on incremental provisioning levels. Banking sector earnings for the first quarter is estimated to increase by 1.6 per cent on year-on-year and decline of 1.5 per cent on quarter-on-quarter to OMR84.64 million. “We still believe few of the local banks continued to have stronger liquidity to cater to the credit demand,” added the report.
The overall incremental credit growth of banking sector is expected to grow by 2 per cent or OMR400 million for the first quarter of 2016 on a quarter-on-quarter basis. In 2015, Oman’s banking sector credit (of both conventional and Islamic banks) grew by OMR2.15 billion, registering a growth of 12 per cent on year-on-year on the back of continued government project draw downs and growth in retail credit.
The earnings of investment holding companies for the first quarter of 2016 is estimated at OMR11.03 million, an increase of 33.1 per cent on year-on-year basis and 749.6 per cent on quarter-on-quarter (on low base) on the back relatively improved equity market performance in Oman and the Gulf Cooperation Council (GCC) region in March 2016, coupled with the dividends season.
For the first quarter, the total revenue of industrial sector is expected to decline by 9.2 per cent on year-on-year and a fall of 16.2 per cent on quarter-on-quarter basis amid challenging market conditions along with the prevailing low commodity prices. The earnings of the construction, commodity and building materials sector companies to reveal a mixed trend during the quarter.
Services sector revenue is estimated to grow 7.5 per cent on year-on-year and 2.3 per cent on quarter-on-quarter owing to strong performance of oil marketing sector companies and Ooredoo Oman.
