Imara African Cement Report Africa, the last cement frontier Angola ...

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Increasing diversification into non-oil sectors Abnormal profits in the boom years of the mid 2000s accelerated Sonangol‟s efforts to diversify its exposure to the non-oil segments of the economy. According to the audited financial statements for 2009, the total portfolio of non-oil interests amounts to some US$ 5.2bn, with specific exposures to the following sectors: Insurance: AAA Seguros – Monopoly insurer to the petroleum sector with a total market share of about 45% in the non-oil insurance sector with annual gross premiums in the region of some US$ 250m according to players in the industry. Banking: Sonangol has direct and indirect shareholdings in the large bulk of Angola‟s banking sector. Direct shareholdings include the following: • Banco Áfricano de Investimentos (BAI) (17.5% shareholding) – Angola‟s largest bank with a 21% market share of total assets in 2010 (US$ 8.3bn). • Banco de Fomento de Angola (indirect stake of 12.5% held via Unitel‟s 49.9% shareholding in the former) – Angola‟s second largest bank with total assets of US$ 6.4bn in 2010 representing a market share of 16%; • Millennium BCP Portugal (10% shareholding) – Quoted on Euronext (BCP:PL) with a current market capitalisation of € 1.2bn (at 28 th October 2011); • Banco Privado Atlantico (9.5% shareholding) – Now the second largest bank with total assets of US$ 7.9bn at the end of 2009; • Millennium Angola (49.9% shareholding) – Total assets of US$ 1bn at the end of 2009; • Banco de Comércio e Indústria – 8th largest bank with total assets of US$ 771m. Telecommunications: Sonangol owns 25% of the country‟s largest mobile phone operator, Unitel. With the highest Average Revenues Per User (ARPU) in Africa of around US$21/month and EBITDA margins of 58%. Unitel is as profitable as it is cash generative and with 6m subscribers we conservatively value the company at US$ 1.4bn, and Sonangol‟s shareholding at circa US$ 342m. Overview of financial Results for FY2010 • Group turnover increased from US$13.1bn to US$22.1bn, driven by a 27% price recovery after crashing by 35% in FY2009. We have used the ytd 2011 OPEC basket price to estimate our 2011 forecasts. • EBITDA ended the year at US$3.3bn for a 15% EBITDA margin compared to EBITDA margins of 25% and 26% for Petrobras and ENI respectively. • Net profits after tax of US$3.0bn were reported, 8% lower than the prior year largely owing to a drop in financial income and a significant spike in the effective tax rate from 13% to 31%. RoAE was constant at 21% compared to ENI at 13% and Petrobras at 11%. • Net debt levels ended the year at US$7.5bn, which translates into a debt to equity ratio of 57%. Compared to the net debt figure for FY2009, this corresponds to a decrease of some 5% y-o-y. • The gross debt figure of US$11bn consists of facilities from Standard Chartered bank which make up about $7bn of the total sum with the balance being owed to China Development Bank, China Investment Bank and Industrial and commercial bank of China. These loans are secured against future oil revenues. • We estimate annual capital and interest repayments in the region of US$1.7bn, and net gearing levels of 57% at the end of FY2010. • Should oil prices remain above US$100/barrel for the rest of 2011, we anticipate FY2011 turnover to grow by 36% to at least US$30bn. Table 6: Sonangol Relative Valuation and Financials Equivalent Market Cap. using peer ave PER (US$m) 42,998 Equivalent Market Cap. using peer ave PBV (US$m) 25,904 Sole shareholder Website www.sonangol.co.ao FINANCIAL SUMMARY 2009 2010 2011F Income Statement (US$m) Government of Angola Turnover 13,086.8 22,118.6 30,097.2 Gross Profit 4,067.9 5,356.8 7,289.2 EBITDA 2,514.4 3,305.7 6,019.4 Operating profits 2,121.8 2,846.6 5,514.4 Finacing costs 597.3 350.2 385.2 Profit before tax 3,721.4 3,621.4 6,270.2 Attributable earnings 3,249.6 3,000.0 4,355.9 Balance Sheet (US$m) 2009 2010 2011F Cash 3,138.0 3,621.8 5,096.0 Investments in subsidiaries 5,507.2 4,796.8 4,796.8 Investments in Mining assets 2,569.5 2,675.1 2,942.6 Other non current investments 6,653.6 9,285.5 9,285.5 Fixed assets 1,416.3 1,189.9 1,308.9 Other assets 4,232.3 4,026.1 5,272.2 Total Assets 23,516.9 25,595.2 28,701.9 Short term debt 5,191.6 5,275.0 4,747.5 Long term debt 5,868.9 5,856.7 5,153.9 Other liabilities 952.6 1,350.3 1,921.2 Shareholders' equity 11,503.8 13,113.1 16,879.3 Total liabilities & Equity 23,516.9 25,595.2 28,701.9 RATIOS 2009 2010 2011F Net debt/shareholders' equity 68.9% 57.3% 28.5% Turnover growth -51.1% 69.0% 36.1% Operating profit growth -69.2% 34.2% 93.7% Interest costs/Op profits -28.1% -12.3% -7.0% Effective tax rate 12.7% 30.5% 30.5% RoAE 20.9% 20.9% 24.9% 19
Oil Majors in Angola´s Petroleum Sector – The scramble intensifies The start of a new wave of oil driven prosperity Figure 15: New Oil blocs licensed In January 2011 Sonangol, Angola´s oil concessionary, auctioned 11 new blocks in Angola´s deep Atlantic waters. Crude production has declined to about 1.65 mbpd in 2011 due primarily to a drop in production in block 18, one of the most prolific blocks, held by BP. Angola´s new oil blocs are said to be geologically similar to the pre-salt deposits that have been found off the cost of Brazil, in the Santo, Campos and Espirito Santos basins which have increased Brazil´s proven reserves by in the region of 100bn barrels of oil and gas reserves. It is widely anticipated that Angola´s deep water blocks will prove to be as prolific and medium term expectations are that Angola´s production will increase to 2.5 - 3m bpd by about 2015. Angola´s proven oil reserves increased from 4bn barrels in 1998 to 13.5bn barrels in 2010. At current prices these reserves would be valued in the region of US$ 1.35tn, which translates to about 18 years of future production at 2m bpd. Due to new fields coming on stream as well as ongoing exploration activities, this remains a moving target. Chevron Corporation Bloomberg ticker: CVX:US Market Cap: US$ 210bn PER: 7.9x Figure 16: Chevron 1 yr price chart vs MXEF:IND Chevron is ranked among Angola's top petroleum producers. In 2010, Chevron's operations in Angola had a total daily production of 580,000 barrels of liquids (152,000 net barrels). Chevron has an interest in four concessions: Block 0 (39.2%) off the coast of Cabinda province. The block is divided into Areas A and B. Together they contain 21 fields whose total production in 2010 was 365,000 barrels of liquids per day (116,000 net). Drilling within Block 0 remains a priority. Major infrastructure projects are expected to help eliminate routine flaring of natural gas, handle increasing production and renew older facilities. Block 14 farther west in deep water, Block 2 offshore northwest Angola and the onshore block Fina Sonangol Texaco. Some of the most important investments include the following: • Benguela Belize–Lobito Tomboco project • US$ 3.8bn Tombua-Landana project • The first phase of the Mafumeira Norte project completed development drilling and reached maximum total daily production of 57k bpd in the fourth quarter of 2010. First oil was announced in 2009. • 5.2 mmTPA LNG plant in Soyo (36% interest). • Chevron has interests in four concessions in Angola, two of which they operate employing over 3,100 Angolans. Source: Bloomberg 20
Page 1 and 2: Angola Imara African Country Cement
Page 3 and 4: Angola Country Map 11a 1 9a a 8 5 2
Page 5 and 6: Executive Summary Comeback post 201
Page 7 and 8: Table 1: Timeline for major policy
Page 9 and 10: Table 3: 2011 Budget and Q1 income/
Page 11 and 12: Constraints to the growth story Ang
Page 13 and 14: US$ Millions US$ per barrel over 10
Page 15 and 16: Chevron also holds a 38.1% interest
Page 17 and 18: Italy Although Italy‟s oil intere
Page 19: SONANGOL: Angola’s de facto Sover
Page 23 and 24: In January 2011, Eni was awarded ri
Page 25 and 26: BAI BFA BESA BPC Banco BIC BESA Ban
Page 27 and 28: Table 9: Regional Banking Comparati
Page 29 and 30: Arguments for and against the devel
Page 31 and 32: Orascom Mobinil TNM Safaricom Econe
Page 33 and 34: Telephonic listings of Angola (ELTA
Page 35 and 36: Millions of Hectolitres NB Delta Cu
Page 37 and 38: Hotels, Tourism and Construction Ov
Page 39 and 40: • Kinaxixi Shopping Center and Of
Page 41: Capital Securities Botswana Ground

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