DUBAI: Shares in Zain Iraq surged on their Baghdad bourse debut on Tuesday, in thin trading of the stock, theoretically giving the country’s biggest telecoms operator a bigger market value than its majority owner.
Zain Iraq’s share price rose by around 50 percent from the opening price to close at 5.99 dinars after 31 million shares – less than 0.002 percent of the company – changed hands. This gave the entire firm a market value of about 10.96 trillion Iraqi dinars ($9.4 billion).
Kuwait’s Zain, majority shareholder in Zain Iraq, has a market capitalisation of $6.1 billion.
“The people who bought today will soon realise they bought a subsidiary worth more than the parent and the price will steadily go down,” said Hassan Aldahan, chairman of Baghdad investment company Bain Alnahrain.
In 2011, Nomura estimated Zain Iraq’s enterprise value – the value of its equity and debt combined – at $4.9 billion.
Since then, the company’s earnings and network have deteriorated due to stiffening competition and Islamic State’s seizure of much of the country. Its annual net profit was $348 million in 2011 versus $256 million last year.
Aldahan said the seemingly inflated valuation was partly because Zain Iraq had not released audited financial statements which investors could use to judge its “actual worth”.
Investors could obtain its revenue and profit from parent Zain’s earnings statement, while broker Rabee Securities published a note on Zain Iraq this week.
