Investment Opportunity Using Fundamental Analysis In Oman’s Market

Methodology

Discuss about the Comparative Analysis of Stock Portfolio Construction.

The overall assessment mainly focuses on identifying the significance of fundamental analysis and how out could allow investors to detect investment opportunity, which could increase return from investment. In addition, the assessment structure mainly comprises of methodology, fundamental analysis, and conclusion, which could help in detecting the overall stock that could be used for investment. The overall date collection process and period of the study is also depicted to identify viability of the research, which is conducted on the stock for deriving its financial viability in the long-run. Moreover, financial performance of the company is identified, which could help in understanding the level of returns that might be provided from investment. Furthermore, the overall fundamental valuation also helps in understanding the level of progress that could be generated form investment.

The main objective of the report is to identify the investment opportunity based on fundamental analysis, which could help in understanding the level of return that could be generated the investment. In addition, the risk and return concept of investors are also conducted to identify investment opportunity, which could be generated from investment. Furthermore, the investment scope detected with the help of fundamental analysis mainly helps in understanding the level of profits that could be generated form investment. Moreover, relevant country, company and industry analysis is conducted to identify the level of returns, which could be generated form investment.

There is only one stock exchange market in Oman, known as the Muscat Securities Market, which was established in 1988 for developing the financial sector of the country (Msm.gov.om 2018). The overall security exchange market in Oman allowed the international organisation to set up their operations in Oman and participate effectively to strengthen the sultanate. In addition, the creation of the market allowed companies in Oman to participate in the capital market growth, while obtaining the level of funds to conduct their operations. The MSM-Index was relatively formed in 1992 with the 30 most highly traded stock in the market. The combination of the stocks relevantly helped in understanding the level of returns, which could be generated from investment in the Omani security market. The MSM index comprises of companies who are old and are not government controlled, while their shares are most liquid in the market. Moreover, the Muscat Securities Market has been awarded ISO 9001:2008 certificate for trading securities and ISO 27001:2005 certificate for information security management system.

Data Collection

The data collection conducted for the assessment is secondary in nature, as the data is collected from the website of Muscat Securities Market. The data was collected it the excel sheet, which helped in completing the overall requirement of the calculation conducted on the assessment. In addition, the data for the ratios was collected from the annual report of the companies used in the assessment for calculation purposes. Lastly, the data used in the assessment for analysis performance of the organisation is from the annual report of the company, which is presented in both the website of the company and in Muscat Securities Market welfare (Tradingeconomics.com 2018).

The overall period that was taken for the calculation purposes is one year, which could help in understanding the level of return, which could improve the investment. In addition, the data from 2017 to 2018 is relevantly taken into consideration for completing the assessment and analyse the performance of selected companies. Furthermore, the share price movement of the companies are also taken from historical price movement between April 2017 to April 2018. This helped in detecting the level of returns, which could be generated from investment (Tradingeconomics.com 2018).

The above figure mainly helps in understanding the level of GDP that is achieved by Oman over the period. In addition, the GDP growth rate has relevantly increased from 2010, which mainly indicates the positive economic condition of the country over the period. In addition, the GDP position of the company has been declining from the overall 2014 to 2016. On the other hand, the GDP value has increased in 2017, which anticipates the positive incremental value of GDP. The incremental values of GDP directly indicate a positive attribute of the Omani economic condition, which could be feasible for the investor to generate high rate of returns from investment. The GDP directly states the positive increment in the overall economic position of the country and the incremental value of Omani GDP indicates the high probability of positive economic position of the country. In this context, Akimova, Stein and Prokhorova (2015) stated that with the measurement of GDP the investment opportunity in the country is anticipated by the investors.

The overall interest rate of Oman ha relevantly increased from the level of 1 to 2.4% in 2018, which indicates the positive attributes in conducting investment in the country. The overall rising interest rate directly indicates the positive attributes of the economic growth of the country. The interest rate in Oman was relatively at the level of 1%t ill 2016 after which increment in interest rate was seen increased due to the policies adopted by the country in easing their currency and creating demand for their product in the intentional market. In this context, Krupa (2016) stated that with the investment in overall interest rates citizens are interested in depositing more into the bank, which is used for other economy development process by the government. However, the condition of financial sector will deteriorate, as more interest payment will be provided to the depositors reducing their interest income.

Financial Performance

The change in crude oil prices is relevantly detected form the above figure, which has improved effectively over the period of 1 year. In addition, the increment in overall oil prices can be seen from the above figure, which indicates the overall revenue that will be generated by the Omani government. The main income source of the Omani government is selling oil in the international market, which could help in boosting the economic position of the country. The crude oil price in the international market has relevantly increased over time, which indicates the high level of income generated by the government. This could be used in infrastructure and capital expenditure, which is being conducted by the country. This positive trend in the oil market relevantly indicates the uptrend in the oil market, which could allow the Omani government to maximise their profit from operations. Therefore, the positive attributes of the Omani economy can be anticipated from the overall evaluation of the oil prices, interest rates and GDP of the country (Sullivan and Mackenzie 2017).

The above figure mainly indicates the overall decline in the financial index of Oman over the period of one fiscal year. The decline in overall financial index of Oman has mainly conducted due to the increment in overall interest rate, which reduced the overall profits of the financial sector. However, the positive trend from the overall evaluation of the above figure could be anticipated, where the financial index of Oman has mainly declined over the period. Koo (2017) stated the continuous decline in share price of the organisation mainly indicates a downtrend in the market, which will have negative impact on financial revenue generation capability of the investors. Moreover, the financial sector index of the country has directly shown the possibility of stagnation in the market, while no further decline in prices is seen. This indicates the positive attribute of the financial sector, which could allow investor in maximining profits from investment.

The industrial index of Oman has relevantly shown the signs of down trend where the index is achieving new lows. In addition, these new lows are directly reflecting the risk of investment in the industrial sector of Oman. This decline was due to the oil prices of the country, which has negatively impacted the sector and its companies. The industrial sector and its companies has been affected by the oil prices, which has shown no remorse over the period of time. In addition, the financial performance of Omani industrial sector is not adequate, which is not providing the level of returns that could be generated from investments, due to the continuous decline in the share price. Therefore, the investors should ignore the investment scope in companies that are listed in the industrial sector of Oman. Altuntas and Dereli (2015) stated that investor by using trend analysis is able to identify the viability of the sector and estimate its overall progress in future.

Fundamental Valuation

The overall Service sector of Oman has relevantly shown progress, where the service index has obtained new highs over the period of the analysis. This relevantly indicates the overall progress, which has been obtained by the service sector. In addition, this also indicates the positive attributes of investing in the service sector, which could help in improving the level of profits that could be generated form investment. The slight upward movement from Aug 2017 is seen in the above figure, which indicates a positive attribute for the investors aims to maximise profits from their investments (Najeeb Bacha and Masih 2015).

NAME OF THE COMPANY	EPS	DPS	ROI	NPR	Dividend yield	P/E
VISION INSURANCE	0.0780	0.0460	16.0%	39.00%	30.87%	1.4872
THE FINANCIAL CORPORATION	0.0640	0.0290	9.0%	29.00%	29.59%	2.8906
OMAN PACKAGING	0.0310	0.0240	7.0%	8.00%	8.57%	6.0000
SALALAH MILLS	0.0470	0.0290	15.0%	24.00%	2.18%	7.6596
ALIZZ ISLAMIC BANK	0.0470	0.0340	10.0%	41.00%	43.59%	8.1702
OMAN EDU. & TRIN. INV.	0.0890	0.0580	18.0%	26.00%	33.14%	9.4382
OMAN FISHERIES	0.0160	0.0120	8.0%	22.00%	9.84%	10.0625
ALMAHA PETROLEUM PRODUCTS MAR	0.0250	0.0130	11.0%	17.00%	1.59%	11.2800
GULF INV. SER. PREF SHARES	0.0050	0.0050	7.0%	9.00%	4.76%	20.8000
HOTELS MANAGEMENT CO. INT.	0.0120	0.0030	16.0%	19.00%	0.24%	40.0000

Table 1: Showing the fundamental calculation of the selected companies

(Source: As created by the author)

The above table mainly helps in identifying the fundamental calculation of the above companies, which represents the financial progress that could be generated from investment. In addition, the calculation of EPS, DPS, ROI, NPR, Divined yield, and P/E ratio is mainly valuated in the above figure, which could help in understand the financial performance of the organisation. Furthermore, it could be identified that all the companies have provided a positive dividend yield, NPR, and ROI, which could help in generating high level of returns. This relevantly indicates the positive attributes of the companies chosen for investing in Oman, which could help in generating high level of returns from investment. In this context, Boyd, Epanchin-Niell and Siikamaki (2015) stated that investors using fundamental analysis are able to identify the investment opportunity, which could help in generating high level of returns from investment. On the other hand, Al-Smadi (2018) criticise that fundamental analysis is not able to comprehend the short-term trend of the stock, while raising the level of risk from investment. Therefore, from the overall evaluation financial viability of the investment could be identified.

NAME OF THE COMPANY	RETURNS	RISK
OMAN PACKAGING	4.72%	63.97%
GULF INV. SER. PREF SHARES	1.82%	124.90%
THE FINANCIAL CORPORATION	1.47%	174.10%
MSM INDEX	-5.00%	43.00%
HOTELS MANAGEMENT CO. INT.	-6.84%	149.73%
OMAN FISHERIES	-9.14%	195.31%
ALMAHA PETROLEUM PRODUCTS MAR	-9.87%	295.17%
OMAN EDU. & TRIN. INV.	-40.69%	104.12%
VISION INSURANCE	-48.90%	195.10%
SALALAH MILLS	-69.71%	16.97%
ALIZZ ISLAMIC BANK	-78.60%	136.40%

Table 2: Showing the risk and return calculation of the selected companies

(Source: As created by the author)

The above table 2 relevantly represents the overall risk and return calculation of the selected companies, which is essential in identifying the financial viability of the investment.  from the valuation it could be identified that only three companies have provided a positive return from historical calculations of one year. This relevantly reduced the investment scope, which could be used by the investors in making adequate investment options. Moreover, the risk from investment is relevantly high for other 7 stocks, which directly affect return generation capability of the investors.

Country, Company and Industry Analysis

Amiram and Frank (2015) stated that with the help of risk and return calculations investors are able to identity stocks, which could maximise their profits while imposing the least risk from investment. On the other hand, Gerlach and Yook (2016) criticises that this risk and return evaluation will not provide the adequate level of insight in the actual progress that could be generated from an investment over the period of time. The MSM INDEX itself has provided negative return over the period of 1 years, which indicates the low possibility of the companies to generate maximum profits from investments. However, the Oman Packaging, The Financial Corporation and Gulf Inv. Ser. Pref Shares are mainly identified the stocks, which has the highest return over the period of one year. In addition, these stocks could be used as an adequate investment option by investors to maximise the return, while reducing the risk from their portfolio.

S.NO	NAME OF THE COMPANY	RANK	COMMENT
1	ALIZZ ISLAMIC BANK	5	P/E ratio
2	THE FINANCIAL CORPORATION	2	Low P/E ratio, High returns, and Low risk
3	GULF INV. SER. PREF SHARES	3	Low P/E ratio and High returns
4	VISION INSURANCE	9	P/E ratio
5	SALALAH MILLS	4	P/E ratio
6	OMAN PACKAGING	1	Low P/E ratio, High returns, and Low risk
7	OMAN FISHERIES	7	P/E ratio
8	HOTELS MANAGEMENT CO. INT.	10	P/E ratio
9	ALMAHA PETROLEUM PRODUCTS MAR	8	P/E ratio
10	OMAN EDU. & TRIN. INV.	6	P/E ratio

Table 3: Showing the ranking of the selected companies

(Source: As created by the author)

The above table relevantly represents the overall ranking of the selected tock on the basis of risk, return, and P/E ratio of the companies. This has mainly heled in identifying the stock, which could provide the maximum returns from investment. The overall comment listed in the above table indicates that Oman Packaging, The Financial Corporation and Gulf Inv. Ser. Pref Shares are inly selected, due to the presence of Low P/E ratio, High returns, and Low risk from investment. The above-mentioned stock could eventually help in maximizing the level of returns from investment, while reducing any kind of risk posed from the volatile capital market (Guerard Jr, Markowitz and Xu 2015). On the other hand, the stock high eth high risk and lowest return are only ranked by P/E ratio and the overall progress it could provide in near future. The stock ranked with the help of P/E ratio are mainly able to maximise the level of returns, which could be generated from investment in future. Mansini, Ogryczak and Speranza (2015) argued that selection of stock on the basis of P/E ratio is not able to evaluate the substantial growth and risk hindering progress of the organisation is not anticipated by the calculation.

Conclusion:

The overall assessment focuses on identifying the viability of fundamental analysis, which could be used by investors in maximising their profits in the long-run. In addition, the assessment evaluates the overall stocks of Oman and detects its viability to generate high rate of return from investment with the help of fundamental analysis. Furthermore, from the calculation Oman Packaging company is identified to have the most viable investment options with the low P/E ratio and highest return in one year. This directly indicates the positive attributes of conducting investments in Oman with the help of fundamental analysis. This could help the investors to maximise their profits by identifying the viable investment opportunity presented in the Oman index.

GDP Analysis

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