Comprehensive Financial Analysis of Commercial Bank of Dubai P.S.C. (CBD)

Company Profile

Country of Origin: United Arab Emirates (U.A.E)

Commercial Bank of Dubai PSC (“the Bank”) was incorporated in Dubai, United Arab Emirates (U.A.E.) in 1969 and is registered as a Public Joint Shareholding Company (PJSC) in accordance with Federal Law No. 32 of 2021. The Bank is listed on the Dubai Financial Market. The Bank’s principal activity is commercial and retail banking. The registered address of the Bank is CBD Head Office, Al Ittihad Street, P. O Box 2668, Dubai, United Arab Emirates.

Details about subsidiaries and an associate:

i.CBD Financial Services LLC, is registered as a limited liability company in accordance with Federal Law No. 32 of 2021 in Dubai, United Arab Emirates. The Group holds a 100% interest. Its principal activity is providing brokerage facilities for local shares and bonds.

ii.CBD Employment Services One Person Company LLC, is registered as a limited liability company in accordance with Federal Law No. 32 of 2021 in Dubai, United Arab Emirates. The Group holds 100% interest. Its principal activity is the supply of manpower services.

iii.Attijari Properties LLC, is registered as a limited liability company in accordance with Federal Law No. 32 of 2021 in Dubai, United Arab Emirates. The Group holds a 100% interest. Its principal activity is self-owned property management services as well as buying and selling of real estate.

iv. Noor Almethaq Real Estate Development LLC, is registered as a limited liability company in accordance with Federal Law No. 32 of 2021 in Dubai, United Arab Emirates. The Group holds a 100% interest. Its principal activity is the development of real estate.

v. CBD (Cayman) Limited is a special purpose entity (SPE) registered in the Cayman Islands. The SPE has been established for the issuance of debt securities.

vi.CBD (Cayman II) Limited is a special purpose entity (SPE) registered in the Cayman Islands. The SPE has been established to transact and negotiate derivative agreements.

vii. VS 1897 (Cayman) Limited is a special purpose entity (SPE) registered in the Cayman Islands. The SPE has been established to manage investment acquired in the settlement of debt.

viii. National General Insurance Co. (PJSC) is an associate of the Bank and is listed on the Dubai Financial Market. It underwrites all classes of life and general insurance business as well as certain reinsurance business. The Bank holds a 17.8% interest in the associate. The management believes that it has significant influence on the associate by virtue of having representation on the Board of Directors of the associate.

Trend Analysis

Trend analysis involves examining the stock price over a period to identify patterns or trends. For CBD, the historical price data shows a significant variation. The stock price was highest on 2024-03-01 at 8.16 and lowest on 2024-01-30 at 5.0.

Analyzing the data from January 2024 to June 2024, we observe a general upward trend in the early months, peaking in March, followed by a period of volatility and a slight decline towards June. This trend suggests that the stock had a strong performance in the first quarter but faced some market corrections in the subsequent months.

Technical Analysis

Technical analysis involves using statistical measures to forecast future price movements. Key indicators such as moving averages, Relative Strength Index (RSI), and Moving Average Convergence Divergence (MACD) can provide insights.

• Moving Averages: The 50-day moving average for CBD shows a consistent upward trend, indicating a positive market sentiment. However, the 200-day moving average suggests a more stable long-term outlook.
• RSI: The RSI values indicate that the stock was overbought in early March, correlating with the peak price. This was followed by a correction period, bringing the RSI back to a more balanced level.
• MACD: The MACD line crossing above the signal line in February indicates a bullish trend, which aligns with the observed price increase. The divergence in March suggests a potential reversal, which indeed occurred.

Support and Resistance Analysis

Support and resistance levels are critical in understanding the price points at which the stock tends to reverse its direction.

• Support Levels: The key support levels for CBD are observed at 5.0 (January 30, 2024) and 6.0 (February 22, 2024). These levels indicate strong buying interest, preventing the stock from falling further.
• Resistance Levels: The resistance levels are marked at 8.16 (March 1, 2024) and 7.35 (March 4, 2024). These levels indicate selling pressure, preventing the stock from rising further.

The stock's movement between these levels suggests a consolidation phase, where the market is indecisive about the next significant move.

Volatility Analysis

Volatility analysis helps in understanding the risk associated with the stock. CBD has shown high volatility, particularly in the first quarter of 2024. The sharp increase in price in March followed by a decline indicates significant market activity and investor interest.

The standard deviation of the stock price during this period is relatively high, suggesting that investors should be cautious and consider potential risks. High volatility can offer opportunities for short-term gains but also poses risks for long-term investors.

Pattern Recognition

Pattern recognition involves identifying recurring price patterns that can provide insights into future movements. For CBD, several patterns emerge:

• Head and Shoulders: A head and shoulders pattern is observed from late February to early March, indicating a potential reversal. This pattern was confirmed with the price decline in mid-March.
• Double Bottom: A double bottom pattern is observed in January, indicating a strong support level at 5.0. This pattern suggests a bullish reversal, which was followed by an upward trend in February.

These patterns provide valuable insights into the stock's behavior and potential future movements.

Conclusion

The financial analysis of Commercial Bank of Dubai P.S.C. (CBD) reveals a stock with significant volatility and potential for both short-term gains and long-term growth. The trend analysis indicates a strong start to the year, followed by market corrections. Technical indicators suggest a cautious approach, with potential bullish trends in the near future.

Investors should pay close attention to support and resistance levels, as well as volatility indicators, to make informed decisions. Pattern recognition provides additional insights into potential future movements, highlighting key reversal points.

Overall, CBD presents an interesting investment opportunity with a mix of risks and rewards. Investors should consider their risk tolerance and investment horizon when making decisions about this stock.