Alpen Capital's GCC Retail Industry report highlights the growth potential of the GCC retail sector

Alpen Capital launched its Equity Research services at the beginning of this year to complement its existing Corporate Advisory services, including Capital Markets, Debt Syndication, Mergers & Acquisitions and Project Advisory.

Regulated by the Dubai Financial Services Authority and based at the DIFC, Alpen Capital is the associate and investment banking arm of Bank Sarasin-Alpen (ME) Ltd, a subsidiary of the Swiss private bank Sarasin & Co Ltd.

The GCC Retail Industry report is the second report published by Alpen Capital. It produced a GCC Cement Industry report earlier this year.

Growth potential of the GCC retail markets

According to the report, opposing forces are currently at work in the GCC retail market. A growing population, rising tourism and huge investments into new retail destinations will encourage increased consumption, while falling equity and real estate prices, slower economic growth and reduction in consumer credit work in the opposite direction.

The report forecasts that the GCC retail market will continue to grow at a nominal CAGR of about 6.6% in 2009 to 2011, a lower pace than that over the past five years. Rising income levels contribute about two-thirds of the growth while population growth accounts for the balance.

GCC retail players are trading at a lower average valuation multiple than our emerging and developed market peer groups. Furthermore, GCC retailers boast a dividend yield of 8.5%, significantly higher than both emerging and developed market peers.

According to the report, it is expected that budget retailers focused on non-discretionary products would outperform in the short to medium term as consumers tighten their budgets in view of job uncertainties and weak sentiment. Retailers focused on discretionary luxury goods will face more challenging trading conditions in the short to medium term. Consequently, it suggest investors with a short term investment horizon focus on the non-discretionary consumer goods segments, while foreseeing interesting long term investment opportunities emerging in the next two years in the more cyclical discretionary luxury goods segments.

Good quality research on relevant topics

"Our aim is to provide high quality, independent research on various sectors of the GCC market. The Equity Research service was launched by Alpen Capital to give investors a detailed perspective on the various GCC sectors. We believe that the research will be of great interest to our clients, particularly at this time of great opportunity in the GCC equity markets," says Sanjay Vig, Managing Director at Alpen Capital.

"We forecast that the GCC retail market will continue to grow at a nominal CAGR of about 6.6% in 2009 to 2011, a lower pace than that over the past five years, but higher than that of most developed markets. GCC retailers are trading at a lower average valuation multiple than both our emerging and developed market peer groups," says Tommy Trask, Executive Director and Head of Equity Research services at Alpen Capital.

"Furthermore, the GCC retailers boast a dividend yield of about 8.5%, significantly higher than both their emerging and developed market peers. The report identifies interesting investment opportunities in the GCC retail industry for both short and long term investors with varying degree of risk appetite," he added.