Project Report: Security Analysis and Portfolio Management of MSM

This project report conducts a fundamental analysis of the Muscat Securities Market (MSM) in Oman, evaluating the performance of 10 selected stocks. The study employs secondary research, collecting data from the MSM website and company annual reports to assess stock prices, returns, and risks over a one-month period. The report includes an analysis of macroeconomic factors such as interest rates, GDP, and exchange rates, along with an industry analysis focusing on the financial, power, and hospitality sectors in Oman. Furthermore, the project compares the performance of individual stocks against the MSM 30 index to determine their investment potential. The findings suggest that the economical factors of the country are quite impressive and indicates that the country is a good option for investment.

Running Head: Security analysis and portfolio management
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Project Report: Security analysis and portfolio management

Security analysis and portfolio management 2
Introduction:
Fundamental analysis:
Fundamental analysis is a crucial process to evaluate the security of an organization in
order to measure the intrinsic value of the stock on the basis of economic, qualitative,
quantitative and financial factors of the organization. Fundamental analysis includes all the
studies which affect the stock value of an organization. This process determines the health
and the company’s performance on the basis of the financial health and performance of the
company on the basis of the stock performance and the economical indicators (Schumaker
and Chen, 2009).
The process of fundamental analysis is way better than the technical analysis to
predict the stock performance of an organization. As the fundamental analysis evaluates the
economic, qualitative, quantitative and financial factors to evaluate the stock prices and it
expands the study to all the factors which could affect the stock price of an organization in
any way.
Objectives:
In the report, fundamental analysis study has been conducted on 10 stocks to measure
the performance of the stocks and their performance in the market. The main objectives of
this report are to understand the concept of fundamental analysis and evaluate that how could
these factor affect the performance of the company.
Muscat stock exchange:
In Oman, there is only one security exchange, Muscat securities market. This stock
exchange has been founded in Oman. The stock exchange has been established by the Royal
Decree to control and regulate the Oman Securities market and for effectively participate
with other companies to set up the infrastructure of sultanate’s financial sector. MSM 30 is
the index of the stock exchange. MSM 30 is the capitalization weighted index of top 30 most
highly capitalized, profitable and liquid companies which are listed on Muscat Securities
market.
Methodology:
This report part explains about the research methodology part which has been used to
carry the report part and evaluate the data of the company. The secondary research has been

Security analysis and portfolio management 3
done to evaluate the data of the Muscat securities exchange. The secondary data has been
used because the stock price of an organization could not be evaluated on the basis of primary
data. The investigation over the security market exchange has been done in such a manner
that the data of the top 10 stocks could be found.
Data collection:
Data collection is a systematic approach which is used by the researchers to gather
and measure the information from various sources to accomplish the clear picture of interest
area. Data collection process enables the organization to answer relevant questions, make
predictions and evaluate outcomes about the future trend and probabilities. There are two
methods on the basis of which, data of a research could be calculated. One is primary
research data collection methods and other one is secondary research data collection methods.
The data collection for the report has been done on the basis of secondary data.
Secondary data explains the data which has been collected by someone already and used for
the study other than the user. Secondary data analysis saves the time of the analyst.
Secondary data could be published data or unpublished data. Before using the secondary data,
an analyst is required to check the reliability, suitability, adequacy etc of the data so that the
better report could be prepared.
In the given report, secondary data of stock has been taken. The secondary
data has been taken from the MSM website (MSM, 2018). The reliability, suitability,
adequacy etc of the data has been evaluated and it has been found that the MSM, 2018 is the
most reliable website for the stock price of an organization. The secondary data (stock price)
of 10 Muscat companies have been identified which are AL BATINAH DEV INV
HOLDING, AL MADINA TAKAFUL, FINANCIAL SERVICES, GULF STONES,
VOLTAMP ENERGY, SALALAH MILLS, OMAN OIL MARKETING PREF SHARES,
AL KAMIL POWER, SMN POWER HOLDING and SAHARA HOSPITALITY.
In the report, the stock prices of the above companies have been identified and on the
basis of that returns of each stock has been calculated. Further, the risk and the return of
securities have also been calculated and compared with the index of the stock exchange to
measure the performance of every company. The other data has been calculated from the
annual reports of the company about the earnings and the economical data has been taken
from the published newspapers.
Period of study:

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It has been evaluated that the sample size is quite crucial for a research. The better the
sampling size and the period of time of a study would be, the better the outcome of the study
would be. It has been found that an analyst must be very focused about the sample size and
total period of time. Time of the study must be sufficient to evaluate and identify the data of
the research.
There is negative outcome of lesser time period as the analyst didn’t get the enough
time to analyze and evaluate all the data of the research (Samaras, Matsatsinis and
Zopounidis, 2008). The period of the study of this research is 1 month. This time has been
used for collecting the data evaluating the data and reach over a conclusion about the Muscat
stock exchange.
While conducting this research, confidentiality has been managed and the data and the
conclusion have not been shared with any other group. The research has been done in an
ethical way and in a way that no body and no companies could be harmed on the basis of it.
The help for the research has been taken from the various financial analysis articles,
fundamental analysis books, syllabus and the tutor notes.
Application of fundamental analysis:
Fundamental analysis is crucial analysis study for the investors to evaluate the
performance of a particular security. The stock price of AL BATINAH DEV INV
HOLDING, AL MADINA TAKAFUL, FINANCIAL SERVICES, GULF STONES,
VOLTAMP ENERGY, SALALAH MILLS, OMAN OIL MARKETING PREF SHARES,
AL KAMIL POWER, SMN POWER HOLDING and SAHARA HOSPITALITY has been
calculated and it has been compared with the stock exchange index MSM 30. Firstly, the
macro economical factor of the company has been evaluated (AMSA, 2018). Further, the
study has been done on the industry and lastly, the companies have been evaluated. The
application of the macro economical factors and the stock prices are as follows:
Country analysis:
Country analysis is a process which involves the interpretation and examination over
the economical, social and political environment of a business. Country analysis is useful for
the investors of the financial market, companies which are intending to set up a subsidiary
business, companies which are wishing to enter into the new market and people who are
wishing for the country reside. In the research, the country analysis is useful to evaluate the

Security analysis and portfolio management 5
stock market of the country for the foreign investors. In the analysis, Oman’s interest rate,
GDP and the exchange rates have been evaluated.
Oman’s interest rate:
Interest rate of Oman has been evaluates firstly to identify the performance of the
country and the economical changes in the country. From 2008 to 2018, the average interest
arte of the country is 1.52% (I Economics, 2018). Current interest rate of the country is 2.41.
In last 3 years, the interest rate of the country has been enhanced by a great level (Trading
economics, 2018). It evaluates that the performance of the country is quite good and the
economical factors indicate that investment into the Muscat stock exchange would be
beneficial for the foreign investors.
Oman’s GDP:
Gross domestic product rate of Oman has been analyzed further to identify the
performance of the country and the economical changes in the country. Statista (2018)
express that the GDP growth of the country is -0.1% in 2017. Current GDP rate of the
country is 15.7. However, the future prediction explains about the better performance of the
company (The economist, 2018). It evaluates that the performance of the country is quite
good and the economical factors indicate that investment into the Muscat stock exchange
would be beneficial for the foreign investors.
Oman’s exchange rate:
Lastly, the exchange rate of Oman has been evaluated to measure the performance of
the country and the changes into the country. From last few years, the various changes have
taken place into the exchange rate of the country. The current exchange rate of the Oman
currency is 1 OMR = USD 2.600 (XE, 2018). It explains that the performance of the country
is quite good and the economical factors indicate that investment into the Muscat stock
exchange would be beneficial for the foreign investors.
On the basis of the country analysis, it has been evaluated that the economical factors
of the company are quite impressive and explains about the better performance of the
country. In terms of investment, it has been evaluated that the country is a good option for the
investment. The economical factors would not impact much on the stock of the country.
Industry analysis:

Security analysis and portfolio management 6
Industry analysis is a process which involves the interpretation and examination over
the economical, social and political environment of a business. Industry analysis is useful for
the investors of the financial market, companies which are wishing to enter into the new
industry and people who are wishing for the industry reside. In the research, the industry
analysis is useful to evaluate the stock market of the country for the foreign investors. In the
analysis, current trends of the industry have been evaluated to analyze the performance of the
company.
The financial industry, power industry and the hospitality industry has been taken into
the concern. Financial sector of Oman explains that incremental changes into the market.
From last few years, the graph of financial sector of the country s continually enhancing and
explains about the better position of the industry (CBFS, 2018). Currently, the financial
analyst report explains that the investment into the financial sector of Oman would offer huge
return to the investors as the economical position of the country is better as well as the
industry is also growing rapidly (World finance bank. 2018).
Further, the hospitality sector of Oman explains that the country has changed the
tourism policies and due to which the tourism of the country has been enhanced. It has
directly impacted on the hospitality industry of the country positively. The current growth
rate of hospitality industry is around 5.3%. On the basis of times of Oman (2018), the
hospitality market of the country is $ 1 billion in 2020. From last few years, the graph of
hospitality sector of the country is continually enhancing and explains about the better
position of the industry (Hotel news, 2018). Currently, analyst report of hospitality sector of
Oman would offer huge return to the investors as the economical position of the country is
better as well as the industry growth rate is also higher.
Further, the power and energy sector of Oman explains that the country has made
various changes into the energy sector from 1960 to 2018. The current demand of the oil and
power sector of the country has been enhanced by 9%. The current growth rate of power and
energy sector industry is around 13%. On the basis of times of Oman (2018), the power and
energy of the country is $ 1 billion in 2020. From last few years, the graph of power and
energy sector of the country is continually enhancing and explains about the better position of
the industry (export.gov, 2018).
Company analysis:

Security analysis and portfolio management 7
Lastly, the company’s of Muscat stock exchange has been evaluated to identify the
performance of the Muscat stock exchange. On the basis of the below table, it has been
evaluated that the MSM index’s total return is -0.25 whereas the total risk of the index is
0.43. The other stock has been evaluated on the basis of the index and it has been recognized
that the return of AL BATINAH DEV. INV. HOLDING, GULF STONES, OMAN OIL
MARKETING PREF SHARES, SMN POWER HOLDING and SAHARA HOSPITALITY
is lower than the market index. On the other hand, the risk of the stock has also been
evaluated on the basis of risk of the stock and it has been found that the risk involved with all
the stocks are higher than the risk of MSM index (Elleuch and Trabelsi, 2009).
SNO. NAME OF THE COMPANY RETURNS RISK
1 MSM INDEX -0.05 0.43
2 AL BATINAH DEV. INV.
HOLDING
-0.0854 1.0893
3 AL MADINA TAKAFUL 0.02879 1.2689
4 FINANCIAL SERVICES 0.02354 1.3987
5 GULF STONES -0.1362 1.9634
6 VOLTAMP ENERGY -0.1687 0.9517
7 SALALAH MILLS 0.0864 1.7586
8 OMAN OIL MARKETING PREF
SHARES
-0.1579 1.8964
9 AL KAMIL POWER -0.05874 1.4348
10 SMN POWER HOLDING -0.9867 2.0357
11 SAHARA HOSPITALITY -0.0143 0.9621
Further, the EPS, DPS, PE ratio, Profitability ratios of each stock has been calculated
to measure the stock performance. On the basis of the below table, it has been calculated that
the EPS of Sahara hospitality is higher in the below stocks, Further, the DPS and ROI
evaluation has been done and it has been found that the highest DPS and ROI is of SAHARA
HOSPITALITY. It further explains that the P/E ratio of VOLTAMP ENERGY is highest and
NPR of AL BATINAH DEV. INV. HOLDING is highest.
S.NO NAME OF THE
COMPANY
EPS DPS ROI P/E NPR
1 AL BATINAH DEV. INV.
HOLDING
0.054 0.013 10% 7.1111 56%
2 AL MADINA TAKAFUL 0.069 0.056 11% 2.6812 35%
3 FINANCIAL SERVICES 0.012 0.005 8% 8.6667 34%

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4 GULF STONES 0.003 0.003 9% 38.6667 11%
5 VOLTAMP ENERGY 0.056 0.048 5% 6.4286 22%
6 SALALAH MILLS 0.003 0.001 7% 62 6%
7 OMAN OIL MARKETING
PREF SHARES
0.019 0.007 13% 8.4737 20%
8 AL KAMIL POWER 0.062 0.057 14% 7.7419 13%
9 SMN POWER HOLDING 0.03 0.031 9% 9.4 7%
10 SAHARA HOSPITALITY 0.087 0.068 15% 9.6552 16%
This evaluation as whole explains that the average of each company is better.
However, the performance of AL BATINAH DEV. INV. HOLDING and SAHARA
HOSPITALITY is better in the market. It leads to a conclusion that investment of each
company is better (Cong et al, 2008).
S.NO NAME OF THE
COMPANY
RANK COMMENT
1 AL BATINAH DEV.
INV. HOLDING
2 Financial performance is quite good as
well as the industry position is also
better.
2 AL MADINA
TAKAFUL
4 Financial performance is quite good as
well as the industry position is also
better.
3 FINANCIAL
SERVICES
6 Financial performance is quite
average.
4 GULF STONES 10 Financial performance is quite
average.
5 VOLTAMP ENERGY 3 Financial performance is quite good as
well as the industry position is also
better.
6 SALALAH MILLS 7 Financial performance is quite
average.

Security analysis and portfolio management 9
7 OMAN OIL
MARKETING PREF
SHARES
8 Financial performance is quite
average.
8 AL KAMIL POWER 5 Financial performance is quite
average.
9 SMN POWER
HOLDING
9
10 SAHARA
HOSPITALITY
1 Financial performance is quite good as
well as the industry position is also
better.
Conclusion:
To conclude, the economical factor9s of the company explain about the better
performance of the country. In terms of investment, it has been evaluated that the OMAN is a
good option. Further, the industry analysis (hospitality sector, financial sector and power
sector) of Oman would offer huge return to the investors as the economical position of the
country is better as well as the all the industries are enjoying higher growth. Lastly, the
companies have been evaluated and on the basis of the entire study, it has been concluded
that the , AL BATINAH DEV. INV. HOLDING, AL KAMIL POWER and SAHARA
HOSPITALITY are the better option for the purpose of investment as their profitability
position is higher in the market and the risk and return are also balanced.

Security analysis and portfolio management 10
References:
AMSA. 2018. List of companies. (Online). Available at:
http://www.asmainfo.com/Muscat/En/list/CompanyList.aspx (Accessed 11/5/18).
CBFS. 2018. Banking and financial sector. (Online). Available at:
http://cbfs.edu.om/UploadsAll/Annexure%2013%20Edited%20Book%20on%20Banking
%20Sector%20in%20Oman%20-%202017.pdf (Accessed 11/5/18).
Cong, R.G., Wei, Y.M., Jiao, J.L. and Fan, Y., 2008. Relationships between oil price shocks
and stock market: An empirical analysis from China. Energy Policy, 36(9), pp.3544-3553.
Elleuch, J. and Trabelsi, L., 2009. Fundamental analysis strategy and the prediction of stock
returns. International Research Journal of Finance and Economics, 30(1), pp.95-107.
Export. 2018. Oma power and energy. (Online). Available at: https://www.export.gov/article?
id=Oman-Power-and-Energy (Accessed 11/5/18).
Hotel news. 2018. Hospitality sector of Oman. (Online). Available at:
http://www.hotelnewsme.com/interviews-features/focus-new-era-omani-hospitality/
(Accessed 11/5/18).
I Economics. 2018. Interest rate of Oman. (Online). Available at:
https://ieconomics.com/oman-interest-rate (Accessed 11/5/18).
MSM. 2018. Muscat security market. (Online). Available at: https://www.msm2.gov.om/
(Accessed 11/5/18).
Samaras, G.D., Matsatsinis, N.F. and Zopounidis, C., 2008. A multicriteria DSS for stock
evaluation using fundamental analysis. European Journal of Operational Research, 187(3),
pp.1380-1401.
Schumaker, R.P. and Chen, H., 2009. Textual analysis of stock market prediction using
breaking financial news: The AZFin text system. ACM Transactions on Information Systems
(TOIS), 27(2), p.12.
Statista. 2018. Gross domestic product of Oman. (Online). Available at:
https://www.statista.com/statistics/455576/gross-domestic-product-gdp-growth-rate-in-oman/
(Accessed 11/5/18).
The economist. 2018. GDP. (Online). Available at: http://country.eiu.com/oman (Accessed
11/5/18).

Security analysis and portfolio management 11
Times of Oman. 2018. Business. (Online). Available at:
http://timesofoman.com/article/90866 (Accessed 11/5/18).
Trading economics. 2018. Interest rate of Oman. (Online). Available at:
https://tradingeconomics.com/oman/interest-rate (Accessed 11/5/18).
World Finance bank. 2018. Banking and finance sector. (Online). Available at:
https://www.worldfinance.com/banking/investment/growing-opportunities-in-omans-
financial-sector (Accessed 11/5/18).
XE. 2018. Exchange rates. (Online). Available at: https://www.xe.com/currency/omr-omani-
rial (Accessed 11/5/18).