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Equity Research
Eiji Aono
e.aono@ncbc.com
Farouk Miah
f.miah@ncbc.com
Ahmed Al-Qahtani
ah.alqahtani@ncbc.com
Tariq Al-Alaiwat
t.alalaiwat@ncbc.com
Faisal Al Azmeh
f.alazmeh@ncbc.com
Economic Research
Dr Jarmo T Kotilaine
j.kotilaine@ncbc.com
Production
Martin K Arokiaraj
m.raj@ncbc.com
NCBC RECOMMENDATIONS 4
APPENDIX 222
A Strong Economy…
The Saudi Arabian economy remains one of the strongest in the region, and indeed
globally, at a time when macroeconomic concerns still abound on the pace and
sustainability of the recovery after the financial crisis of 2008-2009. Oil prices and
production levels are still major drivers of the Saudi economy. However, years of
proactive measures by the government to diversify the economy, along with
government stimulus efforts, resulted in 2009 real GDP growth remaining positive
at 0.6%. This at a time when most major economies globally faced declining GDP
levels.
Growth in 2010 looks assured, despite new areas of concern in the global economy
coming to the forefront: Greece/the Euro zone budgetary sustainability, US
financial reform, the health of China’s recovery, etc. While oil prices have remained
volatile, we expect the average for the year to remain in the USD75-76 range, up
from the USD62 average in 2009, which should result in a return to a fiscal surplus
and should support growth in the economy. However, higher oil prices alone are not
driving the rebound in the economy. We expect non-oil GDP to grow 3.8% in
2010e, similar to our overall expectations for the economy.
We note that apart from the Petrochemical Sector, which accounts for about 27% of
the weighting in the TASI and which is very globally exposed, most other sectors
are much more domestically focused. These sectors are benefitting from the
continued growth in the economy, as well as the strong demographic trends such
as a young, growing, and increasingly affluent population. Here we highlight the
Agriculture/Food and Retail sectors, which are amongst the top performing sectors
as of mid-2010, up about 10% each.
Southern Cement Underweight 60.0 Well positioned for Jizan Economic City in the South. New facility near
(3050.SE) Makkah also helps. However competition is fierce and new capacities
will take some time to complete.
Yanbu Cement Neutral 39.4 Western region fundamentals remain mixed, volatility in project
(3060.SE) progress leads to top-line risk in the near term. Increase in the pace
of implementation of planned projects to prove near term catalyst
Eastern Cement Neutral 44.3 Shifting focus to domestic market due to export ban, with limitation
(3080.SE) on exports remaining a key downside. Still focused on Eastern region
for sales, however lack of major projects limits demand upside.
Source: NCBC Research
Exhibit 2: Real GDP growth CAGR (08 – 12E) Exhibit 3: Annual % change in real GDP
(%) (%)
12 6
4
10
2
8
0
6
-2
4
-4
2
-6
2008 2009 2010 2011
0
Japan UK Russia US KSA Brazil India China World Output US Japan UK KSA
We expect real GDP growth of 3.8% for the Saudi economy in 2010e, which is down
slightly from our projections from the beginning of 2010 (of 4.0%). This reflects the
tentative nature of the private sector recovery in the face of global risks caused by
the sovereign debt crisis in the Euro-zone. In addition, although the oil market
remains subject to strong conflicting pressures, the increased uncertainty about
demand can expected to contain the average price for the year to around USD75-
76 per barrel. We further expect only marginal production growth of 1.2% to 8.4
mn bpd in 2010, due to increasing demand from emerging Asian economies, over
the previous year’s 8.3 mn bpd when production contracted by an estimated
10.0%. These developments will likely result in oil sector growth of around 3.7%
for 2010e. We expect the non-oil sector to record real growth of around 3.8%,
driven largely by strong government spending and increasing private consumption.
The Saudi government’s commitment to economic diversification, as reflected in its
2010 budget, will likely support strong non-oil growth, which should further benefit
from a gradual increase in bank lending. We expect non-oil real GDP to grow by
3.8% in 2010e. This will likely increase Saudi Arabia’s nominal GDP growth to
10.1% in 2010e from a 21.1% contraction in 2009.
180 40
160 35
140 30
120 25
100
20
80
(%)
15
60
10
40
20 5
0 0
-20 -5
-40 -10
2008 2009 2010 2011 2012
Budget balance mil SAR Public debt mil SAR
Budget balance (% of GDP, RHS) Public debt (% of GDP, RHS)
Source: EIU
The KSA banking sector retains considerable growth potential by global standards.
Its loan-to-GDP ratio of 53.2% and deposit-to-GDP ratio of 67.8% indicate a
tremendous room for convergence-type growth.
120
100
80
60
40
20
0
UAE Kuwait Oman Qatar KSA Bahrain
Even as the financial crisis wreaked havoc across the global banking sector, but
banks in the Kingdom have not been as negatively affected, given their minimal
exposure to US sub-prime mortgages and SAMA’s conservative approach. Saudi
Arabia’s performance in this regard compares favorably even to the rest of the Gulf
region where a number of governments provided large-scale support to the
financial sector.
Exhibit 7: Oil and non-oil GDP contribution Exhibit 8: Real non-oil GDP breakup
(%) (%)
120 100%
90%
100 80%
70%
80 60%
50%
60 40%
30%
40 20%
10%
20 0%
2005 2006 2007 2008 (P) 2009 (F)
0
Agriculture Electricity, Gas & Water
2005 2006 2007 2008 2009
Construction Manufacturing (non-oil)
Oil Non-oil
Private Services Government Services
To keep the Kingdom on its trend growth path, the government unveiled a budget
for 2010 that boosted capital expenditure in the infrastructure, healthcare and
education sectors. As a result, the budget proposed a deficit of USD18.7bn for
2010, for only the second time since 2002.
Liberalization of the The government has also implemented various liberalization policies to increase
economy has led to a spurt investor confidence in the economy and boost foreign direct investment (FDI).
in FDI in KSA, making it the
According to the 2009 World Investment Report, Saudi Arabia experienced an
highest FDI recipient in
inward flow of approximately USD38bn of FDI, the highest in the United Nations
2008 in the ESCWA region
Economic and Social Commission for the Western Asia (ESCWA) region. FDI is likely
to further increase with the development of new economic cities and special
economic zones in the country.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2000 2002 2005 2008 2009
Oil revenues Other revenues
This heavy dependence on oil leaves the economy vulnerable to oil price volatility.
Average crude oil prices have ranged from some USD35 to around USD145 from
2005 onwards. This extreme volatility has been reflected in sharp variations in
government revenues, which are still largely derived from oil exports. A sharp
decline in oil prices from the current levels could dent market sentiment and
negatively impact the economic recovery. Also, since oil exports account for almost
90% of the Kingdom’s total exports, any fall in oil prices will sharply affect KSA’s
trade balance.
Also Kuwait’s banking and investment company sectors have been hit by the global
economic crisis, given their exposures to overleveraged property ventures and the
regional stock markets. Even though the fundamentals in Saudi Arabia look healthy
800
700
600
500
400
300
200
100
0
1Q-08 2Q-08 3Q-08 4Q-08 1Q-09 2Q-09 3Q-09 4Q-09
Private Sector Public Sector
The pace of private sector recovery remains one of the main near-term challenges
facing the Saudi economy. New bank lending to the private sector has been highly
volatile in recent months, with a positive trend yet to emerge, partly because of the
apparent preference of many lenders for government projects. Banks are still
cautious in the face of regional corporate scandals and, moreover, the low interest
rate environment creates attractive low-risk investment opportunities in the form of
placing current deposits in government securities. The low probability of a near-
term interest rate hike in the US constitutes a risk in this regard.
25
20
15
10
0
Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10
-5
General Index Food Housing
Although food inflation fell to 5.0% in May 2010 but is still 5.4% Y-o-Y. Since KSA
imports 65-70% of its total food requirement, the significant rise in global food
prices has also impacted food prices in the Kingdom. The housing/rent index rose
10.7% in May 2010. Increases in food prices coupled with increasing housing costs
is likely to continue to put upward pressure on Saudi inflation. Rising housing
demand due to an acute shortage of houses in the Saudi region will likely continue
to push the index higher as the global economy bounces back. The Dollar peg,
combined with the prospect of low interest rates in the US for the foreseeable
future, will make it difficult for the authorities to contain the mounting inflationary
expectations. The constraints on their room for maneuver became very evident
during the inflationary bout of 2007-2008.
The government has also been aggressively pushing major real estate projects to
ensure steady growth in the residential market and bring down the spiraling rent
costs to sustainable levels. The much-awaited mortgage law, finally expected to be
implemented by the end of 2010, is a step in the right direction and will enable
individuals to finance at least 80% of their property through loans. The new law
should help in easing the acute housing shortage and fulfill the current requirement
of 1.5 million new homes by 2015
So far in 2010 (to June), the market is just above flat for the year, however
volatility has remained high. The TASI had risen 13% by the end of April, but gave
up all of these gains in the following month as global concerns on Greece/the Euro,
a slowdown in China, US bank reform, and general fears on the pace of global
economic recovery impacted most markets globally.
28-Feb-10
31-Dec-08
30-Apr-09
31-Dec-09
30-Apr-10
31-Jan-09
31-Mar-09
31-May-09
30-Jun-09
31-Jul-09
31-Aug-09
30-Sep-09
31-Oct-09
30-Nov-09
31-Jan-10
31-Mar-10
31-May-10
Source: Zawya, Reuters, NCBC Research
So far in 2010, the TASI is one of the few markets showing positive performance
both regionally and globally, as most markets have fallen into the red (as of end-
June) due to ongoing fears on the health of the global recovery. In comparison,
Dubai’s DFM has fallen 16% YTD in 2010, as investors grow increasingly worried on
the outlook for the market and the impact the Dubai World debt restructuring will
have on the local economy.
Exhibit 14: 2009 GCC Market Performance Exhibit 15: 2010 YTD GCC Market Performance
2009 performance of GCC markets 2010 YTD performance of GCC markets
30% 5%
20%
0%
10%
-5%
0%
-10%
-10%
-15%
-20%
-30% -20%
Bahrain Kuwait Qatar Dubai Abu Oman TASI Dubai Abu Kuwait Oman Bahrain Qatar TASI
Dhabi Dhabi
Source: Zawya, Reuters, NCBC Research Source: Zawya, Reuters, NCBC Research
2010 YTD to 28 June
Exhibit 16: 2009 performance vs Global Peers Exhibit 17: 2010 YTD performance vs Global Peers
2009 global market performance 2010 global market performance
90% 5%
80%
0%
70%
-5%
60%
50% -10%
40% -15%
30%
-20%
20%
-25%
10%
0% -30%
Brazil
Nikkei 225
Shanghai
Hang Seng
TASI
Nasdaq
EuroTop
Dow Jones
Brazil
Nikkei 225
Shanghai
TASI
Dow Jones
EuroTop
Nasdaq
Hang Seng
100
100
Source: Zawya, Reuters, NCBC Research Source: Zawya, Reuters, NCBC Research; 2010 YTD to 28 June
sectors did witness a bottoming in earnings in early 2009 and have been showing a
recovery since. However, due to their domestic focus, these companies are
relatively resilient to ongoing global economic issues and are showing steady
earnings progressions, which is supporting their stock levels.
Exhibit 18: TASI strength driven by Banks, Retail, Utilities, Food sectors
Units as stated
Index No. of Avg dly T/O Mkt cap Free float Change Valuation (%)
Index value companies (SR mn) (SR mn) Wt (%) YTD (%) P/BV P/E TTM
TASI 6,318 142 3,516 1,241,416 100.0 3.2 2.0 18.9
Banking/Financial 16,567 11 507 351,444 34.8 5.7 2.2 16.6
Petrochemicals 5,605 14 1,284 429,389 26.8 3.9 2.4 23.4
Cement 3,966 8 47 42,654 5.6 1.3 2.5 11.8
Retail 4,865 9 87 15,659 2.2 10.9 3.5 16.0
Energy/Utilities 4,865 2 56 57,749 2.1 15.5 1.2 46.2
Agri/Food 5,525 14 184 50,223 5.7 10.3 2.8 19.0
Telecom/IT 1,787 4 163 125,515 7.8 (0.2) 2.0 12.0
Insurance 888 31 427 20,118 1.7 (17.7) 2.7 37.7
Multi-investment 2,240 7 156 34,860 1.0 (8.3) 1.1 62.3
Industrial Inv 4,681 13 239 34,687 3.1 (0.6) 1.3 21.0
Construction 3,492 13 154 20,481 2.7 (6.9) 1.8 16.7
Real Estate 3,187 7 144 45,568 4.8 (2.3) 1.1 20.4
Transport 3,426 4 43 8,221 1.1 0.9 1.2 17.7
Media/Publishing 1,391 3 8 2,614 0.3 (26.5) 1.2 69.7
Hotels/Tourism 5,231 2 18 2,234 0.3 (11.3) 1.3 5.9
Source: Zawya, Reuters, NCBC Research
Prices as of 27 June 2010
We note that YTD in 2010, the strongest performing sectors are Agriculture/Food
and Retail, both of which are highly defensive and largely focused on domestic
consumer demand. The strongest sector in the TASI in 2010 to date is the
Energy/Utilities sector, however this is due to the performance of Saudi Electricity,
which comprises nearly 2% of the TASI free-float weighted market capitalization,
and which has risen 20%. Most of this performance was realized since early June
after the company announced an upward revision in its customer tariff structure,
which we believe will result in a large increase in earnings over the coming years
(we have an Overweight rating on Saudi Electricity).
Exhibit 19: 2009 Sector Performance Exhibit 20: 2010 YTD Sector Performance
2009 sector performance in % 2010 sector performance in %
70% 20%
60% 15%
10%
50%
5%
40% 0%
30% -5%
20% -10%
-15%
10%
-20%
0% -25%
-10% -30%
Energy/Utilities
Banking/Financial
Media/Publishing
Multi-investment
Hotels/Tourism
Petrochemicals
Industrial Inv
Retail
Construction
Agri/Food
Telecom/IT
TASI
Real Estate
Media/Publishing
Banking/Financial
Cement
Energy/Utilities
Transport
Insurance
Multi-investment
Hotels/Tourism
Petrochemicals
Retail
Industrial Inv
Agri/Food
Construction
Real Estate
Telecom/IT
TASI
Transport
Cement
Insurance
Source: Zawya, Reuters, NCBC Research Zawya, Reuters, NCBC Research; 2010 YTD to 28 June
The major decliners during this period have been Dubai and Kuwait, due to market
specific issues in both countries.
x In Dubai, the impact of the economic downturn on the real estate market and
subsequently on Dubai World has hit the DFM particularly hard given the large
exposure of real estate, construction, and banking in the index. The DFM’s
market capitalization has fallen from 10% of the GCC in early 2008 to 5% more
recently.
x In Kuwait, the large exposure of many of the banks and investment companies
to real estate and the markets has negatively impacted the overall market.
Kuwait comprised about 20% of the GCC market capitalization in 2008 but has
fallen to 15% more recently.
Exhibit 21: Saudi accounts for half the regions mkt cap Exhibit 22: Turnover seems to have bottomed
Market capitalization of regional markets in USDbn Daily turnover in USDmn from each of the GCC markets
1,200 7,000
6,000
1,000
5,000
800
4,000
600
3,000
400 2,000
1,000
200
-
Feb-07
May-07
Aug-07
Feb-08
May-08
Aug-08
Feb-09
May-09
Aug-09
Feb-10
May-10
Nov-07
Nov-08
Nov-09
-
Jul-07
Jul-08
Jul-09
Jan-07
Jan-08
Jan-09
Jan-10
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Saudi Dubai Abu Dhabi Kuwait Qatar Oman Bahrain Saudi Kuwait Abu Dhabi Dubai Qatar Oman Bahrain
Source: Zawya, Reuters, NCBC Research Source: Zawya, Reuters, NCBC Research
While volumes on the Saudi market have declined, its relative size in turnover
within the GCC has increased since 2008, as other markets (mainly Dubai/Abu
Dhabi and Kuwait) have seen an even more pronounced drop-off in trading
turnover. This has been partly due to the reduction in market size, but also due to
some increase in investor aversion to exposure to the equity markets following the
impact of Dubai World and other market specific issues.
As of the 2Q2010, the Saudi market accounts for about 75% of trading turnover in
the GCC and in June 2010, the percentage was actually closer to 80%. This
compares to about 60% in 2008 and 66% in 2009. The large decliners during this
time are:
x Dubai, which was near 10% in 2008 and has fallen below 6% by mid 2010.
x Abu Dhabi, which has fallen from around 7% of turnover in 2008 to just 2% by
mid 2010.
When comparing yearly turnover to market capitalization ratios, the TASI has
declined the most over time, but is still one of the most liquid markets in the
region. The table below shows that the Saudi market has about a 69% turnover
ratio in 2010 to date compared to 49% for Kuwait, 13% for Abu Dhabi, and 19%
for Qatar. Dubai at 74% looks relatively robust, but given that it accounts for just
5% of the region’s market capitalization, the overall volumes are still minimal.
Another way of analyzing the depth as well as breadth of liquidity in the regional
markets is to see the number of companies in each market which trade above a
certain level on a daily basis. Our analysis, below, shows the number of companies
in each market which trade more than USD1mn, USD2mn and USD5mn on a daily
basis (2010 YTD). Interestingly, in the Saudi market, fully 127 companies trade
more than USD1mn per day, out of 142 listed companies (about 90% of the
companies). Even at the higher trading volume level, above USD5mn per day, the
TASI has 38 companies which consistently trade at these levels, more than twice
the total for the rest of the region.
For the other regional markets, the numbers of companies which have higher
trading volumes levels can be counted in the single digits, which demonstrates the
narrowness of these markets. We believe that this as well has ultimately deterred
investors from these other markets and is a risk going forward, especially in
attracting institutional investors to continue investing in these markets.
Exhibit 25: The Saudi Market has the largest depth and breadth of liquidity
# of stocks in each market with average daily trading turnover above threshold levels
Saudi Kuwait Abu Dhabi Dubai Qatar
Over USD1mn 127 32 7 11 20
Over USD2mn 97 25 4 6 13
Over USD5mn 38 7 2 3 3
Source: Zawya, Reuters, NCBC Research
Exhibit 26: The Saudi Market is trading slightly below its long-run average
TASI level (LHS), P/E (RHS)
25,000 60
50
20,000
40
15,000
30
10,000
20
5,000
10
- 0
Jan-94 Feb-95 M ar-96 M ar-97 A pr-98 M ay-99 M ay-00 Jun-01 Jul-02 Jul-03 A ug-04 A ug-05 Sep-06 Oct-07 Oct-08 No v-09
On this basis, we can see that most of the markets in the region are trading below
their recent historical averages. This is not surprising given the economic downturn
and contraction in valuation levels over the past two years. While the Saudi market
is not as discounted to its historic average compared to some of the other regional
markets, we are comfortable with current levels due to the underlying strength and
diversity of the economy and earnings growth potential of the companies in the
market.
So far in 2010, first quarter earnings for the market grew 69% YoY, mainly driven
by the rebound in earnings in the Petrochemical sector which recorded a SR7.3bn
profit versus a loss of SR0.5bn in 1Q09.
Our expectations are for overall market earnings to increase by at least 20% in
2010e versus 2009. This should mainly be driven by the Petrochemical sector which
saw 2009 earnings decline over 60% and which could see a strong rebound from
this low level. For the 7 companies in the Petrochemical Sector in our coverage
universe, we expect 2010e earnings to increase by 250% over 2009.
Exhibit 28: 1Q10 market earnings rebounded 69% Exhibit 29: 2010e mkt earnings could growth 20%+
SR bn SR bn
29 90
SAR7.3bn
80 20%+
24
70
19 69% 60
-SAR0.5bn
14 50
40
9
30
4 20
10
(1)
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08*
1Q09
2Q09
3Q09
4Q09
1Q10
-
2006 2007 2008* 2009 2010e
Banks Petrochems Telecoms Other Banks Petrochems Telecoms Other
x In 2009, there were 11 IPOs which raised SR3.9bn (USD1bn) in the Saudi
market versus 4 IPOs for the rest of the GCC which raised USD900mn.
x So far in 2010, there have been 8 IPOs, which raised SR3.3bn (USD900mn) in
the Saudi market versus 2 IPOs for the rest of the GCC which raised a
negligible amount.
The outlook for the rest of 2010 seems very strong with 46 more IPOs planned for
the Saudi market versus 34 for the rest of the GCC. While the pipeline seems very
strong, we believe the actual completions will be just a fraction of this, especially
given the continued uncertainty and volatility in the markets.
Exhibit 30: Number of Saudi vs. GCC IPOs Exhibit 31: Amounts raised during Saudi vs. GCC IPOs
Number of IPOs In SR bn
50 40
45 35
40
30
35
25
30
25 20
20 15
15 10
10
5
5
-
0
2008 2009 2010 YTD
2008 2009 2010 YTD 2010e
Saudi IPOs GCC IPOs Saudi GCC
Trading by foreigners has been limited, but the market is slowly opening and
volumes have been marginally increasing by foreigners. Some of the key changes
in the market allowing trading and investments by non-Saudi citizens are as
follows:
x GCC nationals have been able to invest in the Saudi market on a completely
open basis since September 2007. Before this, they were generally able to
trade equivalent to Saudi nationals, however with some restrictions on certain
stocks. Participations here has been limited as these investors have tended to
focus on their own domestic markets. GCC citizens currently account for
between 1-2% of trading volumes on the market.
x Foreign investors have historically been allowed to invest into the country
through mutual funds, although in practical terms, this has been limited in
absolute amounts.
x Foreign and non-GCC Arab investors having residency in the country were
allowed to invest in the market directly since March 2006. This group currently
accounts for about 2% of trading volumes on the market.
x In August 2008, the CMA announced the approval for the use of swap
agreements with authorized persons whereby foreign firms could purchase the
underlying shares, although voting rights would be held by the local authorized
person (bank/brokerage). Material trading using swaps did not begin until early
in 2009 as firms finalized the logistics and approvals for this product. Currently,
swap trades comprise about 1.5% of the overall trading volumes on the
market.
x In March 2010, the CMA approved the first ETF for the Saudi market. The ETF
holds a basket of 30 stocks which allows it to closely track the performance of
the overall market.
Despite the moves outlined above, overall trading by foreigners has remained low,
about 5% of overall trading volumes for all foreigners (including GCC residents),
and about 3-3.5% or foreign and non-GCC entities. In absolute terms, the overall
trading by foreigners on a monthly basis since the beginning of 2010 has been
around SAR7.6bn/USD2bn (combined buy and sell) versus about
SAR150bn/USD40bn for the overall market (combined buy and sell).
Exhibit 32: Swap Trading Slowly Taking Hold Exhibit 33: Foreign Trading Only About 5.5% of Total
Units as stated %
3,500 2.5% 7%
3,000 6%
2.0%
2,500 5%
2,000 1.5% 4%
1,500 3%
1.0%
1,000 2%
0.5%
500 1%
- 0.0% 0%
Jul-08
Jul-09
Mar-08
May-08
Mar-09
Jan-08
May-09
Sep-08
Nov-08
Mar-10
Jan-09
May-10
Sep-09
Nov-09
Jan-10
Jul-09
Dec-09
Mar-09
Apr-09
May-09
Sep-09
Feb-10
Jun-09
Aug-09
Nov-09
Apr-10
Oct-09
Jan-10
Mar-10
The new market provides many services, including listing of Sukuks & Bonds, order
submission, trades execution, clearing & settlement, and price information
dissemination. Trading is conducted through licensed brokerage firms and by using
the same investment portfolio for trading in stocks. The market enables investors to
diversify their investments and provides information about listed Sukuks and Bonds
on the Tadawul website and real time price information through licensed data
vendors.
A total of 55 Sukuk transactions had been logged from the time electronic trading
commenced on 13th June 2009 until the end of the year. The value of bonds traded
during the same period was SAR 27,423,510. Tradable Sukuks and Bonds include:
SABIC 2, Saudi Electricity 2, Saudi Electricity, SABIC 1, and SABIC 3.
Investors can trade in Sukuks/Bonds through licensed brokerage firms and by using
the same portfolio that is used for trading securities. Sukuk/Bond price (%)
includes 3 decimal places, e.g. 101.501%. The tick size is 0.001%. Price change
limit is open (no maximum or minimum limit applies). The trading days are from
Saturday to Wednesday from 11:30 am to 03:00 pm. Saudi Stock Exchange
holidays are applicable to the Sukuk market as well. The settlement cycle is T+2 (2
business days). The maximum commission brokers collect for trading Sukuks/Bonds
in the market is (0.001) of the executed trade value (sakk/bond percentage
price*nominal amount). The minimum commission is SAR500.
Petrochemicals 43
Cement 62
Retail 75
Telecom 109
Transportation 170
Insurance 188
1060 SABB 36
At the end of 2009, the KSA banking sector comprised 12 domestic and 8 foreign
banks that together operated a network of 1,519 branches and 9,950 ATMs.
Exhibit 34: Key financials of Saudi banks (2009); network of branches and ATMs
SR mn, unless otherwise stated
Bank Muscat 1 4
Foreign Banks
BNP Paribas 1
J.P. Morgan Chase N.A. 1
Total 1,519 9,950 1,370,258 766,486 979,066 25,873
Source: SAMA, Tadawul, Company data, NCBC Research
Note: Financial statements of the banks are consolidated and include financial statements of its subsidiaries, including those located outside KSA. * Four
international banks namely, Gulf International Bank, Deutsche Bank BNP Paribas, and J.P. Morgan Chase operate 12 ATMs across KSA. ^ Al Rajhi’s loans include net
loans as well as investments.
Conservative lending policy In 2009, KSA’s total banking assets increased 5.2% YoY to SR1,370.2bn. The top
depressed loan growth, four banks’—National Commercial Bank, Samba Financial Group, Riyad Bank, and Al
while liquidity remained
Rajhi Bank—combined market share increased to 57.7% in 2009 from 55.7% in
healthy
2008. Gloomy macroeconomic conditions, together with the conservative lending
approach of the 12 commercial banks, led to a 0.7% YoY decline in their total credit
off-take to SR766.5bn, while the customer deposit base increased 6.2% YoY to
SR979.1bn in 2009. Going forward, the ongoing economic recovery is likely to
accelerate the demand for corporate loans. Furthermore, the expected introduction
of a mortgage law is likely to provide impetus to personal lending. We expect banks
to increase lending as default fears decrease and the economy recovers.
The Saudi banking sector is the largest in the GCC in terms of market
capitalization. In terms of total operating income of listed banks, the Saudi
banking sector is second the largest after UAE’s banking sector. Strong
fundamentals and better asset qualities translate into higher ROE. However, Saudi
banks trade at higher P/E of 16.3x compared to UAE banks which trade at 8.7x.
Exhibit 35: Total operating income of GCC banks, Exhibit 36: Comparison of RoE and P/E of GCC banks,
2007–09 2009
USD mn (%)
15,000 25%
12,500
20%
10,000
15%
ROE (%)
7,500
10%
5,000
5%
2,500
P/E (x)
0%
0
0 20 40 60
2007 2008 2009
KSA Kuwait Qatar UAE Bahrain Oman
KSA Kuwait Qatar Oman UAE Bahrain
Source: Reuters, NCBC Research; The companies list is not exhaustive Source: Reuters, NCBC Research; Size of the bubble represents market cap. as
on 31 March 2010
Net interest margins of As on 31 December 2009, Al Rajhi had the largest market capitalization among the
Saudi banks declined 11 listed banks constituting the index. Though NCB is one of KSA’s leading banks, it
marginally in the range of
is not mentioned in the table as it is a privately held entity.
0 to 30bps over 2008
The following exhibits depict the performance of Saudi banks in terms of net
interest income and net interest margin during 2007 – 2009. In 2009, banks
maintained a conservative lending stance, but focused on maintaining net interest
margins by placing excess funds in low risk investments. The banks’ margins
declined in the range of 0 to 30bps versus 2008. Consequently, total net interest
income of listed banks grew 6.8% YoY in 2009 compared to 12.1% YoY in 2008,
which was supported by an expanded loan portfolio. RIBL and Al Rajhi’s net interest
incomes increased 10.1% YoY to SR4.3bn and 8.7% YoY to SR9.2bn, respectively,
while SIBC and Albilad reported declines of 1.2% YoY and 5.2% YoY in 2009.
Exhibit 38: Net Interest Income of Banks, 2007–09 Exhibit 39: Net Interest Margin of Banks, 2007–09
SRmn (%)
35,000 8.0
28,000 6.0
21,000 4.0
14,000 2.0
7,000
0.0
2007 2008 2009
0
Al Rajhi SAMBA SABB
Al Rajhi
2007 SAMBA2008 SABB 2009
RIBL Saudi Fransi Arab National RIBL Saudi Fransi Arab National
SIBC Saudi Hollandi BJAZ SIBC Saudi Hollandi BJAZ
Albilad Alinma Albilad Alinma
Most banks saw their ROEs decline in 2009; SHB’s ROE declined sharply from
23.9% in 2008 to 1.5% in 2009. On a P/B multiple, Al Rajhi continued to command
the highest P/B, backed by the bank’s ability to maintain profitability in ROE terms.
Exhibit 40: Comparison of P/B and RoE, 2008 Exhibit 41: Comparison of P/B and RoE, 2009
(%) (%)
35 Saudi 30
Hollandi
SABB Arab SAMBA
30 Arab 25
SAMBA National
National
25
20
Al Rajhi
ROE (%)
ROE (%)
20 Al Rajhi
15 RIBL SABB
15 Saudi Fransi
RIBL Saudi Fransi
10
10
SIBC BJAZ
SIBC
5
5 Alinma
Albilad Saudi
BJAZ Hollandi
0 0
0.5 1.0 1.5 2.0 2.5 3.0 3.5 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
P/B (x) P/B (x)
Source: Bloomberg, Tadawul, NCBC Research; Size of the bubble represents Source: Source: Bloomberg, Tadawul, NCBC Research; Size of the bubble
market cap. as on 31 Dec 2008 represents market cap. as on 31 Dec 2009; Bank Albilad is been excluded due
to losses in 2009
Alinma Bank was the most active bank during 2009 in terms of average daily value
traded, while SHB’s stock had the lowest average daily traded value . During Jan
2009 – March 2010, Al Rajhi’s share priced increased 63.8%, while Albilad was the
only bank that saw its share price fall (24.1%).
Exhibit 42: Avg. daily turnover of stocks Exhibit 43: Share price movement of Saudi banks,
Jan 2009–Mar2010 Jan 2009 – Mar 2010
SR‘000s (SR)
119,202
381,329
140,000 450,000 100
90
120,000 400,000
80
350,000 70
100,000 60
300,000
50
80,000 250,000 40
60,000 200,000 30
22,280
20
150,000
14,917
14,153
12,549
40,000 10
6,675
6,086
5,214
100,000
4,173
0
2,668
20,000
Jul-09
May-09
Aug-09
Sep-09
Feb-10
Jan-09
Feb-09
Apr-09
Jun-09
Oct-09
Dec-09
Jan-10
Mar-10
Mar-09
Nov-09
50,000
0 0
Saudi Hollandi
Albilad
Arab National
Al Rajhi
Saudi Fransi
Alinma
RIBL
SABB
SAMBA
BJAZ
SIBC
Cut in benchmark rates Interest rates in KSA remained stable in 2H-09, after declining from its peak of
reduced interbank rates 4.67% (on 12 October 2008). This was mainly due to declining inflationary pressure
from 2.47% at the
which enabled the Saudi government to cut key benchmark rates. The government
beginning of the year to
reduced its repo rate from 2.5% to 2%, and reverse repo rate from 1.5% to 0.25%
0.76% at the end of the
during the year. Consequently, SAIBOR rates declined from 2.47% at the beginning
year
of the year to 0.76% at the end of the year. These measures helped the financial
sector to stabilize while boosting liquidity.
Exhibit 44: Movement in Interbank Interest Rates Exhibit 45: Movement in Repo & Reverse Repo rates
Units as stated Units in %
5.0 1,000 12
4.5
800 10
4.0
3.5
600
8
3.0
2.5 400
6
2.0
200
1.5 4
1.0
0
0.5 2
0.0 -200
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 0
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10
Spreads bps (RHS) SA IB OR (%, LHS)
LIB OR (%, LHS) Repo R repo Inflation
Heavy provisioning and stagnant loan books affected Saudi banks’ 2009
performance. However, it is expected that the Saudi Government’s focus on
economic growth, expansionary budget policy and increased spending on the
infrastructure sector will help the banking sector to grow. In addition, expected
introduction of the mortgage law is likely to provide an impetus to personal lending.
It is also expected that the provision levels will begin declining YoY from the 2H
2010, providing room for net income growth. Hence, we have a positive outlook for
Saudi banks in 2010 and beyond.
Current Price (SR) 28.0 Riyad Bank (RIBL), established in 1957, is Saudi Arabia’s third largest
Pricing / Valuation as on 13 June 2010 listed bank in terms of asset size, with a market share of about 13.2%.
The bank has 225 branches and 2,511 ATMs in KSA; a branch in London;
Stock details an agency in Houston; and a representative office in Singapore.
52-week range H/L (SR) 31.2/22.5
x Business brief: RIBL performs core-banking activities through four
Market cap ($mn) 11,197.2
Shares outstanding (mn) 1,500.0
divisions: Personal banking, Corporate banking, Treasury services and
Price perf. (%) 1M 3M 12M International banking. The bank offers a range of conventional and Islamic
Absolute (3) (1) 19 banking products to its customers. RIBL provides asset management, wealth
Market (6) (5) 3 management, corporate finance, and brokerage services through its wholly
Sector (3) (2) 2
owned investment banking subsidiary Riyad Capital.
Avg daily turn.(mn) SR US$
3M 17.4 4.6 x Financials: RIBL’s financial performance in 1Q10 remained strong as
12M 13.9 3.7 compared to other Saudi banks. During the quarter, the bank’s loan portfolio
Raw Beta 6m 3yr
and total deposit base grew 6.1% and 3.4% YoY, respectively. However, due
0.91 0.91
to decreased net interest margins, the bank’s net interest income declined
Reuters code 1010.SE
Bloomberg code RIBL AB 9% YoY to SR1,012mn. Nonetheless, RIBL’s investment portfolio, which
Website www.riyadbank.com recorded losses in 1Q09, turned positive in 1Q10, enabling the bank to
marginally grow its total operating income to SR1,469mn. Furthermore, the
Weighting & free float (%)
bank’s loan-loss provisions declined to SR193.9mn compared to SR467.7mn
TASI (free float weight) 4.11
Free float 48.71 in 1Q09. Consequently, RIBL’s net income increased 55.2% YoY to SR684mn
in 1Q10.
Valuation multiples
08 09 TTM x Recent developments: In March 2010, RIBL announced the distribution of a
P/E (x) 15.9 13.9 12.8 cash dividend of SR0.7 per share for the six-month period ended 31
P/B (x) 1.6 1.5 1.5 December 2009. In September 2009, Fitch affirmed long-term IDR at ‘A+’
P/Sales (x) 8.0 7.0 7.0 with a stable outlook and short-term IDR of ‘F1’. The $500mn senior
Div yield* (%) 5.2 4.6 N/A
unsecured notes were affirmed at ‘A+’ and Individual rating of 'B/C'.
Source: NCBC Research
Current Price (SR) 17.0 Bank Aljazira (BJAZ) specializes in Islamic banking and investment
Pricing / Valuation as on June 13, 2010 products in Saudi Arabia. The bank was established in 1975, following
the takeover of the Saudi Arabian branches of National Bank of Pakistan.
Stock details The bank is headquartered in Jeddah and operates a network of 48
52-week range H/L (SR) 23.3/16.0 branches and 300 ATMs across KSA.
Market cap ($mn) 1,359.7
Shares outstanding (mn) 300.0 x Business brief: BJAZ offers Shariah-compliant retail banking, corporate
Price perf. (%) 1M 3M 12M banking and treasury services. The bank conducts investment banking
Absolute (2) (7) (26) business through its subsidiary AlJazira Capital (AJC). The insurance
Market (6) (5) 3
business is managed by ATATC, which is the first financial institution to
Sector (3) (2) 2
launch an authorized Islamic life insurance program in Saudi Arabia.
Avg daily turn.(mn) SR US$
3M 15.4 4.1 x Financials: The bank’s net special commission income declined 2.4% YoY in
12M 14.5 3.9
1Q10 despite a 6.7% YoY increase in loans, mainly due to contraction in net
Raw Beta 6m 3yr
interest margins. The bank’s fee income also fell 29.5% YoY; this resulted in
0.44 1.04
Reuters code 1020.SE decreased share in the total operating income from 34.7% in 1Q09 to 22.2%
Bloomberg code BJAZ AB in 1Q10. However, due to robust growth in income from investments, its
Website www.baj.com.sa total operating income increased 10.3% YoY to SR305mn in 1Q10. In 1Q10,
Weighting & free float (%) the bank posted provisions for credit losses amounting SR110mn, which led
TASI (free float weight) 0.69 to a decline in net income by 87.7% YoY to SR13mn.
Free float 67.80
x Recent developments: In April 2010, the bank announced a joint venture
Valuation multiples to establish Al Jazira Cooperative Takaful, wherein the bank would own a
08 09 TTM 30% stake, other investors would own 40%, and the remaining 30% would
P/E (x) 22.9 N/M N/A be offered to the public. In March 2010, Fitch affirmed the bank’s long-term
P/B (x) 1.1 1.1 1.1
IDR at ‘A-‘ with a stable outlook, short-term IDR as ‘F2’ and the Individual
P/Sales (x) 4.5 4.4 4.3
rating as ‘C/D’.
Div yield* (%) 2.9 N/A N/A
Source: NCBC Research
Company financials
Share price performance YoY CAGR (%)
2007 2008 2009 1Q10 (%) (07-09)
7,000 25
6,500 23 Net Sp. Com Income SRmn 595 631 668 168 (2.4) 5.9
21
6,000 Operating Income SRmn 1,447 1,137 1,171 305 10.3 (10.0)
19
5,500 17 Net Income SRmn 805 222 28 13 (87.7) (81.5)
5,000 15
Jun-09 Oct-09 Feb-10 Jun-10
Assets SRmn 21,564 27,520 29,977 27,791 2.7 17.9
Current Price (SR) 19.7 The Saudi Investment Bank (SAIB), established in 1976 in Riyadh,
Pricing / Valuation as on June 13, 2010 operates a network of 44 branches and 300 ATMs in KSA. The bank
provides banking and other related services through two subsidiaries
Stock details and four joint venture associate companies.
52-week range H/L (SR) 21.2/16.7
Market cap ($mn) 2,363.7
x Business brief: SAIB provides personal, corporate, investment and Islamic
Shares outstanding (mn) 450.0 banking along with treasury services in KSA. The bank offers varied financial
Price perf. (%) 1M 3M 12M services through its two subsidiaries, Alistithmar Capital which offers
Absolute 3 7 9 brokerage and investment banking services, and BNP Paribas Asset
Market (6) (5) 3
Management Co; and four joint venture associate companies: AMEX (Saudi
Sector (3) (2) 2
Arabia) Ltd, Saudi Orix Leasing Company, Medgulf KSA, and Amlak
Avg daily turn.(mn) SR US$
3M 4.1 1.1 International.
12M 3.6 1.0
x Financials: In 1Q10, the bank’s net interest income grew by 29.5% YoY
Raw Beta 6m 3yr
mainly due to liability re-pricing, which resulted in a 67% YoY decline in
0.48 0.94
Reuters code 1030.SE interest expense relative to the 26% YoY drop in interest income. The net
Bloomberg code SIBC AB interest margin improved 70 basis points over 1Q09. This coupled with
Website www.saib.com.sa improved fee and investment income led to 42.1% YoY growth in total
Weighting & free float (%) operating income. However, a significant increase in provisions from SR5mn
TASI (free float weight) 0.95 in 1Q09 to SR293mn in 1Q10 resulted in drastic fall in net income from
Free float 53.67 SR241mn in 1Q09 to SR21mn in 1Q10.
Valuation multiples x Recent developments: In May 2010, Standard & Poor's upgraded the
08 09 TTM ratings of SAIB from negative to stable and affirmed its long-term and short-
P/E (x) 17.3 17.0 29.4 term counterparty credit ratings at ‘A-/A-2’. In March 2010, the Board
P/B (x) 1.3 1.2 1.2
appointed Dr.Abdulaziz Al Abdullah Al Ohali as Chairman of the BOD. The
P/Sales (x) 4.6 5.8 5.4
bank is one of the 10 major shareholders involved in establishing the world’s
Div yield (%) N/A N/A N/A
largest Islamic bank in Bahrain in the next 6–12 months as announced in its
Source: NCBC Research
February 2010 news release.
Share price performance
Company financials
7,000 23
6,500 21 YoY CAGR (%)
6,000 19 2007 2008 2009 1Q10 (%) (07-09)
5,500 17
Net Sp. Com Income SRmn 1,056 1,026 1,014 312 29.5 (2.0)
5,000 15
Jun-09 Oct-09 Feb-10 Jun-10 Operating Income SRmn 1,635 1,938 1,517 451 42.1 (3.7)
TASI SIBC (RHS) Net Income SRmn 822 513 522 21 (91.3) (20.3)
Assets SRmn 46,542 53,596 50,148 49,492 (1.6) 3.8
Source: Bloomberg Equity SRmn 6,770 6,609 7,428 7,658 10.8 4.8
Advances SRmn 23,129 29,556 29,785 30,654 1.8 13.5
Top 5 shareholders (%)
Total Deposits SRmn 37,280 45,911 41,459 40,689 (4.2) 5.5
General Organization for 21.5
Social Insurance (GOSI) Net Interest Margin % 2.5 2.1 2.1 2.7 - -
Public Pension Authority (PPA) 17.3 Cost/Income % 30 21 36 30 - -
Current Price (SR) 34.0 Saudi Hollandi Bank (SHB), headquartered in Riyadh, was established in
Pricing / Valuation as on June 13, 2010 1977 by the conversion of ABN into a joint venture bank. Currently, a
consortium led by RBS holds a 40% stake in SHB. The bank offers both
Stock details conventional and Islamic products through a network of 44 branches
52-week range H/L (SR) 39.6/29.2 and 225 ATMs across KSA.
Market cap ($mn) 2,998.1
Shares outstanding (mn) 330.8 x Business brief: SHB’s core banking activities include retail banking,
Price perf. (%) 1M 3M 12M corporate banking and treasury services. The bank offers Van Gogh preferred
Absolute 3 3 (13) banking services, such as domestic and international share trading services
Market (6) (5) 3
and mutual fund portfolios, to high net-worth individuals (HNIs) under its
Sector (3) (2) 2
wealth management segment. In September 2007, SHB established a wholly
Avg daily turn.(mn) SR US$
3M 3.0 0.8 owned subsidiary, Saudi Hollandi Capital Company, to offer investment
12M 2.6 0.7 banking solutions.
Raw Beta 6m 3yr
x Financials: The bank’s total operating income declined 16.9% YoY to
0.44 0.99
Reuters code 1040.SE SR467mn in 1Q10. This was mainly ascribed to lower net special commission
Bloomberg code AAAL AB income, which fell 26.7% YoY to SR309mn. However, on a YoY basis, the
Website www.shb.com.sa bank’s fee income and exchange income rose 13.7% and 21.9%,
Weighting & free float (%) respectively. Alinma increased its provisions for credit losses by 120% YoY to
TASI (free float weight) 0.66 SR42.8mn, but reduced provisions for impaired investments by 95% to
Free float 29.3 SR2.7mn in 1Q10. Consequently, SHB’s net income fell 19.1% YoY to
SR230mn during the same period.
Valuation multiples
08 09 TTM x Recent developments: In March 2010, Fitch affirmed its ratings for the
P/E (x) 9.2 130.9 N/M bank’s long-term IDR as ‘A-’, with a stable outlook; short-term IDR as ‘F2’
P/B (x) 2.0 2.0 1.9
and individual rating as ‘C’. In January 2010, SHB appointed a representative
P/Sales (x) 5.3 5.2 5.5
of ABN AMRO Bank, Mr. Saymon Pini, to the Board to replace Mr. Mino Di
Div yield* (%) 2.1 N/A N/A
Yajer.
Source: NCBC Research
Top 5 shareholders (%) Total Deposits SRmn 43,763 52,298 50,584 50,980 (19.8) 7.5
RBS, Fortis Group and Banco 39.9 Net Interest Margin % 2.5 2.7 2.7 2.1 - -
Santander SA (ABN AMRO) Cost/Income % 47 38 38 41 - -
Al Olayan Saudi Investment 20.8 ROE % 10.0 23.9 1.5 16.0 - -
Co.
ROA % 0.9 2.2 0.1 1.5 - -
General Organization for 9.6
Social Insurance (GOSI) Div Payout* % 48.5 19.1 N/A N/A - -
EPS SR 1.3 3.7 0.3 0.7 (18.6) N/A
BVPS SR 13.7 17.3 17.0 17.7 1.2 N/A
Source: Tadawul, Zawya, Company, NCBC Research
Source: Tadawul, NCBC Research * Gross dividend is used in div yield calculations for Saudi banking sector
Current Price (SR) 45.2 Banque Saudi Fransi (BSF), an affiliate of Calyon of France, commenced
Pricing / Valuation as on June 13, 2010 operations in December 1977 by taking over the branches of Banque
Indosuez. The bank offers conventional and Islamic banking products
Stock details through a network of 78 branches and 338 ATMs in Saudi Arabia.
52-week range H/L (SR) 48.5/38.0
Market cap ($mn) 8,714.9
x Business brief: The bank’s core banking activities include retail as well as
Shares outstanding (mn) 723.2 corporate banking, and treasury services. BSF’s investment banking
Price perf. (%) 1M 3M 12M activities are conducted by CAAM Saudi Fransi (60.0% stake), Fransi
Absolute (4) (3) 4 Tadawul (99.0% stake), and Calyon Saudi Fransi (45.0% stake). The bank
Market (6) (5) 3
also has an insurance JV with Allianz Group under the name Allianz Saudi
Sector (3) (2) 2
Fransi Co. (32.5% stake). Sofinco Saudi Fransi manages BSF’s consumer
Avg daily turn.(mn) SR US$
3M 5.4 1.4 finance activities. Furthermore, the bank has 27% stake in Syria-based
12M 4.6 1.2 Banque BEMO Saudi Fransi.
Raw Beta 6m 3yr
x Financials: BSF reported a 2.1% decline in the loan portfolio and 4.1% drop
1.13 1.08
Reuters code 1050.SE in total deposits, on a YoY basis, in 1Q10. However, its investments grew
Bloomberg code BSFR AB 22.6% YoY. The bank’s net interest income fell 5.8% YoY to SR723mn due to
Website www.alfransi.com.sa a 10 basis point decline in net interest margins from that in 1Q09 and
Weighting & free float (%) reduced loan books. Furthermore, due to strong fee and trading income, its
TASI (free float weight) 3.56 total operating income decreased just 0.6% in 1Q10. However, a rise in
Free float 54.66 provisions from SR46mn in 1Q09 to SR54mn in 1Q10 lowered the bank’s net
income 3.7% YoY to SR714mn.
Valuation multiples
08 09 TTM x Recent developments: In June 2010, BSF announced that it would finance
P/E (x) 11.7 13.2 13.4 a SR1.8bn project of Saudi Tabreed Cooling Co. and Saudi Aramco to build a
P/B (x) 2.3 2.1 2.1
central district cooling unit. In March 2010, Fitch affirmed the bank’s long-
P/Sales (x) 7.4 7.6 7.6
term IDR at ‘A’, with a stable outlook, short-term IDR at ‘F1’ and Individual
Div yield* (%) 2.4 3.0 N/A
rating at B/C. In December 2009, BSF appointed Mr. Ibrahim Abdulaziz Al
Source: NCBC Research
Touq as Chairman of the Board, effective 1 January 2010.
Share price performance
TASI Saudi Fransi (RHS) Net Income SRmn 2,711 2,806 2,471 714 (3.7) (4.5)
Assets SRmn 99,808 125,865 120,572 121,246 (2.1) 9.9
Source: Bloomberg Equity SRmn 11,241 14,069 15,752 15,787 5.4 18.4
Advances SRmn 59,850 80,866 78,315 79,578 (2.1) 14.4
Top 5 shareholders (%)
Total Deposits SRmn 82,130 101,193 96,069 93,656 (4.1) 8.2
Calyon Bank 31.1
Net Interest Margin % 2.7 2.6 2.6 2.5 - -
General Organization for 12.8
Social Insurance (GOSI) Cost/Income % 26 25 27 28 - -
Also known as
Not Covered SABB The Saudi British
Bank
Current Price (SR) 43.3 SABB (formerly The Saudi British Bank) is an affiliate of HSBC Group.
Pricing / Valuation as on June 13, 2010 The bank commenced operations in 1978, offering conventional and
Islamic products under the brand name SABB AMANAH. SABB operates
Stock details 75 branches, 479 ATMs and 2 separate subsidiaries for investment
52-week range H/L (SR) 56.3/40.0 banking; it also offers insurance services.
Market cap ($mn) 8,657.8
Shares outstanding (mn) 750.0 x Business brief: SABB offers personal, corporate, private and Islamic
Price perf. (%) 1M 3M 12M banking as well as treasury and trade services. The bank also provides
Absolute (7) (11) (15) investment banking solutions through HSBC Saudi Arabia Ltd. (40% stake),
Market (6) (5) 3
which specializes in asset management, corporate finance services, and debt
Sector (3) (2) 2
finance and advisory services. SABB provides brokerage and securities
Avg daily turn.(mn) SR US$
3M 3.9 1.0 services through SABB Securities (100% stake) and Shariah-compliant
12M 5.3 1.4 insurance products through SABB Takaful (32.5% stake).
Raw Beta 6m 3yr
x Financials: SABB reported a 4.6% YoY decline in loans and an 8.6% YoY
0.84 1.00
Reuters code 1060.SE drop in deposits in 1Q10. Due to this and a decline in net interest margins,
Bloomberg code SABB AB the bank’s net special commission income decreased by 12.6% YoY in 1Q10
Website www.sabb.com to SR770mn. Consequently, the total operating income fell 6.3% YoY to
Weighting & free float (%) SR1,205mn. Furthermore, a 52% YoY increase in provision for credit losses
TASI (free float weight) 2.14 to SR176.5mn resulted in an 18.3% YoY decline in net income for the
Free float 32.87 quarter to SR621mn.
Valuation multiples x Recent developments: In May 2010, SABB signed a one-year MoU with
08 09 TTM Adeem Investment and Wealth Management Company with an aim to create
P/E (x) 11.1 16.0 17.2 and manage a number of multi-purpose real estate funds. In the same
P/B (x) 2.8 2.5 2.4
month, the bank also announced that Mr. David Dew had assumed duties as
P/Sales (x) 6.6 6.3 6.4
SABB’s new MD.
Div yield* (%) 2.0 2.0 NA
Source: NCBC Research
Company financials
Share price performance YoY CAGR (%)
2007 2008 2009 1Q10 (%) (07-09)
7,000 55
6,500
Net Sp. Com Income SRmn 3,059 3,207 3,437 770 (12.6) 6.0
50
6,000 Operating Income SRmn 4,374 4,912 5,160 1,205 (6.3) 8.6
45
5,500
Net Income SRmn 2,607 2,920 2,032 621 (18.3) (11.7)
5,000 40
Jun-09 Oct-09 Feb-10 Jun-10 Assets SRmn 98,213 131,661 126,838 120,531 (9.1) 13.6
TASI SABB (RHS) Equity SRmn 10,425 11,634 13,045 13,732 10.0 11.9
Advances SRmn 62,001 80,237 76,382 75,699 (4.6) 11.0
Source: Bloomberg Total Deposits SRmn 79,893 108,747 102,793 98,469 (8.6) 13.4
Net Interest Margin % 3.6 2.9 2.7 2.6 - -
Top 5 shareholders (%)
Cost/Income % 33 33 33 34 - -
HSBC Holdings Co. 40.0
ROE % 26.3 26.5 16.5 18.5 - -
Al Olayan Saudi Investment 16.9
Co. ROA % 3.0 2.5 1.6 2.0 - -
General Organization for 9.5 Div Payout* % 57.5 22.6 32.5 - - -
Social Insurance (GOSI) EPS SR 3.5 3.9 2.7 0.8 (17.8) N/A
BVPS SR 13.9 15.5 17.4 18.3 10.0 N/A
Source: Tadawul, Zawya, Company, NCBC Research
* Gross dividend is used in div yield calculations for Saudi banking sector
Source: Tadawul, NCBC Research
Curent Price (SR) 41.7 Arab National Bank (ANB) commenced operations in KSA in 1980 after
Pricing / Valuation as on June 13, 2010 the takeover of Arab Bank PLC. The bank has a network of 140 branches
and 910 ATMs, and operates one branch in London. ANB holds a 100%
Stock details stake in Arab National Investment Co. and a 20% stake in Saudi
52-week range H/L (SR) 49.1/35.9 Travellers Cheque Co.
Market cap ($mn) 7,226.2
Shares outstanding (mn) 650.0 x Business brief: ANB offers personal banking, corporate banking, treasury
Price perf. (%) 1M 3M 12M services and syndications and corporate finance services to its customers.
Absolute (7) (5) (7) Besides core banking activities, ANB also offers investment banking, housing
Market (6) (5) 3
finance and heavy equipment leasing services through its subsidiaries. ANB
Sector (3) (2) 2
Invest handles investment banking operations, while Saudi Home Loans
Avg daily turn.(mn) SR US$
3M 5.3 1.4 Company deals with housing finance. ANB has also formed joint ventures
12M 5.3 1.4 with Ejara and a Dubai-based company for leasing equipment.
Raw Beta 6m 3yr
x Financials: ANB recorded a 10% YoY decline in its loan book in 1Q10 and a
0.98 1.22
Reuters code 1080.SE 5.2% YoY decline in total deposits. The bank's net interest income declined
Bloomberg code ARNB AB 12% YoY mainly due to a YoY decline in the loan book. The net interest
Website www.anb.com.sa margin declined 23bps in 1Q10 compared to the previous year. Non-interest
Weighting & free float (%) income grew a significant 32% YoY mainly due to higher investment income.
TASI (free float weight) 2.71 Consequently, total operating income declined a marginal 2.8%. ANB’s
Free float 49.10 provisions for loan losses increased 60% YoY to SR97mn, dragging the net
income down 8.8% to SR634mn for the 1Q10.
Valuation multiples
08 09 TTM x Recent developments: In March 2010, ANB announced it would distribute
P/E (x) 10.9 11.4 11.7 a cash dividend of SR1 per share for the year ended 31 December 2009.
P/B (x) 2.1 1.9 1.9
P/Sales (x) 6.6 6.0 6.1 Company financials
Div yield* (%) 2.7 2.6 NA YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Sp. Com Income SRmn 2,904 3,354 3,456 803 (12.0) 9.1
Share price performance
Operating Income SRmn 3,956 4,135 4,493 1,125 (2.8) 6.6
7,000 50 Net Income SRmn 2,461 2,486 2,370 634 (8.8) (1.9)
6,500
45 Assets SRmn 94,468 121,307 110,297 110,057 (2.1) 8.1
6,000
5,500
40 Equity SRmn 10,525 12,671 14,369 14,484 15.8 16.8
5,000 35 Advances SRmn 61,122 74,662 66,811 65,444 (10.1) 4.6
Jun-09 Oct-09 Feb-10 Jun-10 Total Deposits SRmn 78,139 103,253 91,394 89,679 (5.2) 8.1
TASI Arab National (RHS) Net Interest Margin % 3.5 3.2 3.1 3.0 - -
Cost/Income % 36 38 36 35 - -
Source: Bloomberg
ROE % 26.6 21.4 17.5 17.6 - -
General Organization for 10.8 EPS SR 3.8 3.8 3.7 1.0 (9.3) NA
Social Insurance (GOSI) BVPS SR 16.2 19.5 22.1 22.3 15.8 NA
Rashid Al Abdul Rahman Al 9.9 Source: Tadawul, Zawya, Company, NCBC Research
Rashid & Sons * Gross dividend is used in div yield calculations for Saudi banking sector
Al Jaber Commercial Co. 5.6
Current Price (SR) 59.0 Samba Financial Group (Samba), the second largest bank in Saudi Arabia
Pricing / Valuation as on June 13, 2010 in terms of total assets, was incorporated in 1980 through the takeover
of Citigroup’s branches in the Kingdom. SAMBA operates 67 branches
Stock details and 497 ATMs. The bank also operates in the UK, Pakistan and the UAE
52-week range H/L (SR) 64.0/39.7 through its subsidiaries.
Market cap ($mn) 14,156.5
Shares outstanding (mn) 900.0 x Business brief: Samba’s core banking activities include retail as well as
Price perf. (%) 1M 3M 12M corporate banking and treasury services. The bank also offers trade, Islamic
Absolute 1 (1) 20 banking and corporate investment services. Samba Capital & Investment
Market (6) (5) 3
Management Co, the investment banking division, handles asset
Sector (3) (2) 2
management and brokerage services.
Avg daily turn.(mn) SR US$
3M 17.4 4.6 x Financials: In 1Q10, Samba’s loan portfolio declined 5.4% YoY, whereas its
12M 15.8 4.2
total deposits grew 10.1% YoY. Consequently, its investments increased
Raw Beta 6m 3yr
33.5% in 1Q10 over that in 1Q09. A decline in high yield loans and rise in
1.64 0.96
Reuters code 1090.SE cost bearing deposits reduced net interest margins by 58 basis points to
Bloomberg code SAMBA AB 2.6%; as a result, net interest income fell 10.5% YoY. However, Samba’s
Website www.samba.com provisions for credit losses decreased from SR203mn in 1Q09 to SR160mn in
Weighting & free float (%) 1Q10, enabling the bank to post a lower decline in net income (4.8% YoY)
TASI (free float weight) 5.31 relative to that in net special commission income. The bank reported net
Free float 50.59 income of SR1,210.6mn in 1Q10.
Valuation multiples x Recent developments: In April 2010, Samba opened a branch in Doha,
08 09 TTM Qatar. In the same month, the bank also announced entering into a
P/E (x) 11.9 11.6 11.8 cooperation agreement with Sejel to introduce an automated payments
P/B (x) 2.7 2.4 2.3
solution for the Haj Umrah sector. In January 2010, Samba announced that
P/Sales (x) 7.6 7.5 7.6
Mr. Issa Mohammed Al Issa had been appointed Chairman of its Board of
Div yield* (%) 3.0 3.0 NA
Directors.
Source: NCBC Research
Current Price (SR) 79.0 Al Rajhi Bank (Al Rajhi), the fourth largest bank in Saudi Arabia in terms
Pricing / Valuation as on June 13, 2010 of total assets, was established in 1976. A full-fledged Islamic bank, Al
Rajhi offers Shariah-compliant banking and investment products to its
Stock details customers through a network of 443 branches and 2,514 ATMs. The
52-week range H/L (SR) 86.5/59.5 bank operates 19 branches in Malaysia and has wholly owned
Market cap ($mn) 31,592.1
subsidiaries in the UK, British Virgin Islands and Jersey.
Shares outstanding (mn) 1,500.0
Price perf. (%) 1M 3M 12M x Business brief: Al Rajhi offers Shariah-compliant retail as well as corporate
Absolute (3) 2 18 banking and treasury services to its customers. The bank’s investment
Market (6) (5) 3
banking, asset management and brokerage businesses are managed by its
Sector (3) (2) 2
subsidiary Al Rajhi Capital. Al Rajhi has obtained regulatory approvals to
Avg daily turn.(mn) SR US$
3M 127.5 34.0 open a branch in Kuwait and launch banking operations in Jordan.
12M 116.4 31.0
x Financials: Al Rajhi recorded a 7% YoY increase in its investment portfolio
Raw Beta 6m 3yr
and 7.6% YoY growth in total deposits during 1Q10. An enhanced
1.04 1.19
Reuters code 1120.SE investment base along with expanding net interest margins enabled the bank
Bloomberg code RJHI AB to post 9.8% YoY growth in net special commission income. Due to its large
Website www.alrajhibank.com.sa pool of non-interest bearing deposits and focus on high yield consumer
Weighting & free float (%) loans, the bank’s net interest margin increased by 20 basis points YoY to
TASI (free float weight) 11.76 5.3%. Consequently, operating income grew 3.4% YoY to SR2.8bn. Al Rajhi’s
Free float 49.43 provisions for loan losses increased 55% YoY to SR359mn in 1Q10, resulting
in a 2.7% YoY decline in net income to SR1.7bn.
Valuation multiples
08 09 TTM x Recent developments: In May 2010, Al Rajhi announced that it will launch
P/E (x) 18.2 17.5 17.6 Shariah-compliant sukuk in June 2010 for investors in Gulf Cooperation
P/B (x) 4.4 4.1 4.3
Council (GCC) countries, the European Union, Singapore, Malaysia, Brunei,
P/Sales (x) 11.2 10.3 10.2
East Asia and North America. In February 2010, the bank announced plans
Div yield** (%) 4.3 3.5 NA
to start 90 new branches and expand its network of branches to 546 by
Source: NCBC Research
2012-end.
Share price performance
Sulaiman Abdul Aziz Saleh Al 24.9 Total Deposits SRmn 95,349 128,199 128,964 135,831 7.6 16.3
Rajhi Net Interest Margin % 7.0% 6.1% 6.2% 5.3% - -
Saleh Abdul Aziz Saleh Al 14.2 Cost/Income % 26% 26% 26% 28% - -
Rajhi
ROE % 29.5% 25.8% 24.3% 23.8% - -
General Organization for 9.9
Social Insurance (GOSI) ROA % 5.6% 4.5% 4.0% 3.9% - -
Abdullah Abdul Aziz Saleh Al 5.9 Div Payout** % 50.4 77.5 61.0 - - -
Rajhi EPS SR 4.3 4.4 4.5 1.1 (2.6) N/A
BVPS SR 15.7 18.0 19.2 18.6 8.9 N/A
Source: Tadawul, NCBC Research Source: Tadawul, Zawya, Company, NCBC Research
* Includes investments
** Gross dividend is used in div yield calculations for Saudi banking sector
Current Price (SR) 20.2 Bank AlBilad (AlBilad), headquartered in Riyadh, was established in
Pricing / Valuation as on June 13, 2010 2004 through the merger of eight money-exchange organizations. The
bank operates 69 branches and 458 ATMs. AlBilad’s wholly owned
Stock details subsidiaries are AlBilad Brokerage & Securities Management Co., AlBilad
52-week range H/L (SR) 25.9/17.9 Investment Co., and AlBilad Real Estate Co.
Market cap ($mn) 1,615.6
Shares outstanding (mn) 300.0 x Business brief: AlBilad’s consumer services segment offers AlBilad Net,
Price perf. (%) 1M 3M 12M AlBilad Tadawul, AlBilad 24, auto financing, personal financing, real estate
Absolute (0) 0 (16) financing, local share investment services and credit cards. The corporate
Market (6) (5) 3
services segment provides a range of finance solutions such as Murabaha,
Sector (3) (2) 2
Musharaka, Istisna’a and securitization finance. The investment services
Avg daily turn.(mn) SR US$
3M 8.4 2.3 segment offers investment avenues in mutual funds, including Akar, Amwal,
12M 11.0 2.9 Asayel, Al-Murabih and Al-Seef.
Raw Beta 6m 3yr
x Financials: AlBilad’s loan portfolio increased 23% YoY in 1Q10. The bank’s
0.35 0.79
Reuters code 1140.SE deposits also grew 15.3% YoY in the quarter. Expansion in loan portfolio
Bloomberg code ALBI AB enabled the bank to increase its net special commission income by 5.7% YoY
Website www.bankalbilad.com.sa despite a decline in net interest margins. In addition, strong fee and
Weighting & free float (%) exchange income helped AlBilad post a 27% YoY rise in total operating
TASI (free float weight) 0.94 income to SR276mn. Due to these factors, its net income surged 135% YoY
Free float 77.18 to SR52.6mn in 1Q10. AlBilad recorded an 84.3% YoY increase in provisions
for credit losses to SR43.5mn in 1Q10.
Valuation multiples
08 09 TTM x Recent developments: In April 2010, AlBilad announced the appointment
P/E (x) 48.5 N/M N/M of Mr. Musaed Bin Mohammed Al Snani as Chairman of the Board of
P/B (x) 1.9 2.0 2.0
Directors. The bank also announced its intent to focus on retail banking.
P/Sales (x) 6.8 6.7 6.3
Div yield (%) NA NA NA Company financials
Source: NCBC Research
YoY CAGR (%)
Current Price (SR) 11.2 In March 2006, Alinma Bank (Alinma) was established in accordance
Pricing / Valuation as on June 13, 2010 with a Royal Decree with a share capital of SR15bn. The bank operates
through a network of 14 branches and 110 ATMs. Alinma offers retail
Stock details and corporate banking services as per Shariah-compliant principles and
52-week range H/L (SR) 14.3/10.7 commenced full-fledged operations in 2009.
Market cap ($mn) 4,478.9
Shares outstanding (mn) 1,500.0 x Business brief: Alinma, an Islamic bank, provides retail and corporate
Price perf. (%) 1M 3M 12M products banking. The bank aims to offer asset management and investment
Absolute (5) (13) (21) banking services through Alinma Investment Company and insurance
Market (6) (5) 3
products through a joint venture insurance company. With this, the bank
Sector (3) (2) 2
intends to capitalize on the vast untapped retail market for Shariah-
Avg daily turn.(mn) SR US$
3M 306.4 81.7 compliant insurance options.
12M 318.4 84.9
x Financials: Alinma’s loan portfolio increased 10x YoY in 1Q10, primarily due
Raw Beta 6m 3yr
to a lower base in 1Q09. The bank’s deposits grew 411% YoY. Alinma’s
0.59 NA
Reuters code 1150.SE return on investments fell 62% YoY mainly due to a reduction in yields on
Bloomberg code ALINMA AB earning assets and net interest margins. Alinma incurred a loss of SR75mn in
Website www.alinma.com 1Q10 mainly due to lower return on investments and increasing operating
Weighting & free float (%) costs owing to the launch of its retail banking operations.
TASI (free float weight) 2.36 x Recent developments: In June 2010, Alinma entered into agreements
Free float 69.93
with: (i) Dar Al Tamleek Company to provide Shariah-compliant home
Valuation multiples financing; and (ii) Saudi Basic Industries to offer a SR3,750mn credit facility
08 09 TTM to finance the latter’s projects. In May 2010, Alinma signed a financing
P/E (x) 43.1 78.0 N/M agreement with Al-Rajhi Steel Industries to provide Shariah-compliant
P/B (x) 1.1 1.1 1.1
financing and banking facilities (worth SR737mn). In April 2010, Alinma
P/Sales (x) 49.6 27.3 32.3
formed a joint venture with Tokio Marine & Nichido Fire Insurance Company
Div yield (%) NA NA NA
(a subsidiary of Tokio Marine Holding and Sabic Industrial Investments
Source: NCBC Research
Company) to establish a SR200mn cooperative insurance company. In
Share price performance
January 2010, Alinma Investment Company received approval from the
7,000 15 Capital Market Authority to commence operations in the Kingdom.
6,500 14
13
6,000
12 Company financials
5,500 11
5,000 10 YoY CAGR (%)
Jun-09 Oct-09 Feb-10 Jun-10 2007 2008 2009 1Q10 (%) (07-09)
TASI Alinma (RHS) Net Sp. Com Income SRmn - 339 607 67 (62.2) 339
Operating Income SRmn - 339 615 82 (53.8) 339
Source: Bloomberg
Net Income SRmn - 390 215 (75) (168.7) 390
Top 5 shareholders (%) Assets SRmn - 15,556 17,306 18,833 16.3 15,556
Public Investment Fund 10.0 Equity SRmn - 15,390 15,605 15,530 0.2 15,390
2010 SABIC 49
2020 SAFCO 50
2060 Tasnee 51
2290 YANSAB 56
2310 Sipchem 57
Access to low cost feedstock and proximity to growing Asian market are key
positives for the Saudi Petrochemical sector. At present, ethane, a key
petrochemical feedstock produced in KSA, is priced at USD0.75 per mmbtu, much
lower than the global price of USD4-5 per mmbtu. As a result, the ethylene
production cost of Saudi plants based on ethane feed is close to USD160/mt, versus
USD380/mt for producers using naphtha-feed crackers. Based on our discussions
with industry players, we believe that the natural gas price of USD0.75/mmbtu will
double to USD1.5/mmbtu in the Kingdom by 2012E. However, even at these
revised levels, the price is well below what is paid by global peers. Petrochemical
companies in KSA also enjoy a dual pricing system under the country’s agreement
with the WTO. This has helped KSA petrochemical companies to secure superior
prices for their products in the international market, thus lifting overall profitability.
Petrochemical sector Historically, robust demand for petrochemical products has helped the sector to
underwent difficult times sustain growth. However, the last 18 months have been particularly difficult for the
over the past 18 months,
global petrochemical sector as the world economy slowed down post the credit
due to slowdown caused by
crisis, the ripple effects of which were also felt by the KSA petrochemical sector.
global credit crisis
During 1H-09, the KSA petrochemical sector faced severe margin pressures
negatively impacted by falling prices of petrochemical products and muted demand
from both developed and developing nations. As a result, utilization remained
largely depressed. Moreover, a number of projects were put on hold as banks
tightened lending norms. Despite the difficult situations, their feedstock advantage
and proximity to Asian markets provided a floor to their earnings and Saudi firms
collectively reported net income of SR8bn in 2H 2009 compared to net income of
SR0.7bn in 1H 2009. Given the current situation, we believe the Saudi
petrochemical sector is on firmer ground than its global peers.
With revival of global In the GCC region, KSA operates from a position of significant strength in the
economic conditions, petrochemical industry, accounting for the majority of the region’s petrochemical
petrochemical demand and
production. By 2010-end, KSA, which holds close to 21% of the world’s
prices are recovering at a
proven oil reserves, is expected to meet around 13% of the global demand
moderate pace
for petrochemical products, increasing from 8% in 2006. KSA also possesses
gas reserves of 253 trillion cubic feet and ranks fourth in the world after Russia,
Iran and Qatar.
In 2009, the KSA petrochemical sector’s combined revenue (all the 14 companies)
decreased 15.9% YoY, negatively impacted by the fall in prices of petrochemical
products and the overall suppressed demand for petrochemical products globally.
SABIC, KSA’s largest petrochemical company which constituted 67.6% of the total
petrochemical sector revenue in 2009, reported a 32.1% YoY fall in revenues for
the same period. The average net profit margin of KSA petrochemical companies
declined to 10.5% in 2009 from 12.4% in 2008. Petro Rabigh, Nama Chemicals,
Alujain, Saudi Kayan, Yansab and Petrochemical reported losses in 2009 as many of
them are still in start-up phase.
shown signs of petrochemical prices. The revenue rebound led to a sharp increase in profits as the
improvement petrochemical sector reported net profit of SR5.1bn in 4Q-09 versus a net loss of
SR272mn in 4Q-08.
Exhibit 47: Revenues of companies, 2007–09 Exhibit 48: Profitability of companies, 2007-09
(SR mn) (%)
180,000 100
160,000 80
140,000 60
120,000 40
100,000 20
80,000 0
60,000 -20
40,000 -40
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
SABIC SAFCO SIIG Sahara
SABIC SAFCO SIIG
Nama Sipchem NIC Alujain Sahara Nama Sipchem
APPC Rabigh Chemanol NIC Chemanol APPC
Source: Zawya, Tadawul, NCBC Research Source: Zawya, Tadawul, NCBC Research
In 2008, multiples fell significantly, as stock markets crashed globally, and continued
to tread downwards, through 1H-09. However, during 2H-09, multiples started to
improve as the market showed signs of reviving. Of the key stock in the sector,
SABIC traded at P/E and P/BV multiples of 27.3x and 2.3x at end 2009, respectively,
versus 7.0x and 1.5x at end 2008, respectively. More recently, SABIC has been
trading at P/E and P/BV multiples of 17.3x and 2.3x, respectively (31 May 2010).
Exhibit 49: Comparison of P/B and ROE, 2008 Exhibit 50: Comparison of P/B and ROE, 2009
(%) (%)
70 30
60 SAFCO
SAFCO 20
50
SABIC
40
10
ROE (%)
ROE (%)
NIC APC
30
SABIC Sipchem
20 SPC P/B (x)
Sipchem Kayan SIIG Yanbu
0
10 NIC APC
Nama Chemanol Petrochem
P/B (x)
Kayan Yanbu Alujain
0 -10
SIIG SPC
-10
Rabigh
Rabigh
-20 -20
0.5 1.5 2.5 0 1 2 3 4 5
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
Exhibit 51: Average daily turnover, Jan09 – Mar10 Exhibit 52: Share price movement, Jan09 – Mar10
(SR mn) Prices rebased to 100 on 1st Jan-09
497.0
500 290
450
250
400
350 210
300
170
250
144.5
200 130
91.7
150 90
55.2
45.9
45.5
41.8
38.7
37.0
100
25.8
24.7
23.7
17.7
14.4
50 50
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10
0
Alujain
Sipchem
Chemanol
Petro Rabigh
Petrochem
Yansab
Sahara
Kayan
Nama
SIIG
SABIC
SAFCO
APPC
NIC
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
The Petrochemical sector has shown a strong rebound from the lows reached in
March 2009, with the sector up 76.3% since then to the end of 2009. So far in
2010, the sector had reached an increase of 22.9% by the beginning of May, but
since then has given up most of its YTD gains (by mid-year). The increase in global
risk aversion due to fears on the Euro, a potential slowdown in China, and a slower
rebound in the U.S. has impacted stock markets, and has impacted the
Petrochemical sector particularly hard.
Our outlook for the KSA petrochemical sector remains largely positive in
Though the oversupply
situation could further
the medium to long term. Sustained demand and price recovery, as seen in 4Q-
depress margins, the low 09 and early 2010, strengthens our outlook for the Saudi Petrochemical sector in
cost structure remains a 2010. Moreover, we expect the sector's feedstock advantage and proximity to the
strong positive high-growth Asian and Middle Eastern markets to continue to offer support, going
forward. However, we believe challenges in terms of overcapacity situation and
depressing utilization rates, post 2012, are likely to result in the KSA petrochemical
sector growing at a more modest pace in the medium to long term.
Current Price (SR) 14.2 Methanol Chemicals Company (Chemanol), established in 1989, is a
Pricing / Valuation as on June 13, 2010 manufacturer of formaldehyde, methanol and derivatives, hexamine,
resins and super plasticizers. The company exports about 83% of its
Stock details products to more than 50 countries including the UK, France, Germany,
52-week range H/L (SR) 18.8/12.8 South Africa, USA, Canada, and Japan.
Market cap ($mn) 456.6
Shares outstanding (mn) 120.6 x Business brief: Chemanol produces and supplies methanol formaldehyde
Price perf. (%) 1M 3M 12M and its derivatives for use across different industries such as agricultural,
Absolute (11) (11) (21) pharmaceutical, paper manufacturing and construction. The company had its
Market (6) (5) 3
Initial Public Offering (IPO) on the Saudi Stock Exchange in August 2008 in
Sector (13) (6) 12
order to finance an expansion plan involving investment of approximately
Avg daily turn.(mn) SR US$
3M 44.7 11.9 SR2bn. In 2010, Chemanol expects to have total installed capacity of
12M 38.1 10.1 914,000 tons.
Raw Beta 6m 2yr
x Financials: Chemanol revenues grew by 5.6% YoY to SR111.8mn in 1Q10,
1.06 1.12
Reuters code 2001.SE while net income rose 80% YoY to SR9.1mn. The company’s net margin has
Bloomberg code CHEMANOL AB shown improvement of 330 basis points YoY and stood at 8.1% in 1Q10. The
Website www.chemanol.com company had a cash balance of SR236mn in 1Q10.
Weighting & free float (%) x Recent developments: In October 2009, Chemanol started trial operations
TASI (free float weight) 0.17 at its methanol plant at Jubail with production capacity of 231,000 metric
Free float 50.0
tons and secured a loan of SR326mn from local and Gulf banks to fund its
Valuation multiples projects. In January 2010, Chemanol’s managing director Mazen Khalifa Al
08 09 TTM Laheeq Al Nuaimi resigned.
P/E (x) 44.8 77.6 65.7
P/B (x) 1.2 1.2 1.2 Company financials
P/Sales (x) 3.0 4.3 4.2 YoY CAGR (%)
Div yield (%) N/A N/A N/A 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Revenues SRmn 461 571 402 112 5.6 (6.6)
EBITDA SRmn 61 73 59 20 38.1 (1.8)
Share price performance
Net Income SRmn 25 38 22 9 79.9 (5.5)
7,000 22 Assets SRmn 1,301 2,640 3,033 3,073 12.6 52.7
6,500
18 Equity SRmn 678 1,390 1,411 1,419 1.7 44.2
6,000
14 Total Debt SRmn 546 1,148 1,448 1,448 26.3 62.8
5,500
5,000 10 Cash & Equiv SRmn 13 375 270 236 (2.5) 359.6
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
EBITDA Mgn % 13.2 12.8 14.6 17.5 - -
TA SI Chemano l (RHS)
Net Mgn % 5.4 6.7 5.5 8.1 - -
ROE % 3.7 3.7 1.6 2.6 - -
Source: Bloomberg
ROA % 2.2 1.9 0.8 1.2 - -
Top 5 shareholders (%) Div Payout % - - - - - -
Abdullah A. Kanoo Co. 11.2 EPS SR 0.41 0.48 0.25 0.08 100.0 (21.9)
Zamil Group Holding Co. 11.2 BVPS SR 11.3 11.5 11.7 11.8 1.7 2.0
Mazen Khalifa Al Ahiq Al 7.5 Source: Tadawul, Zawya, Company, NCBC Research
Nuaimi & Sons
Mohammed Jalal & Sons Co. 5.0
Also known as
Underweight National Petrochem Saudi Petrochem,
Petrochem
Target Price (SR) 15.8 National Petrochemical Company (Petrochem) was established in 2008.
It is mainly involved in investing in the petrochemical industry through
Price (SR) 15.6
its 65% owned company, Saudi Polymers Company.
Pricing / Valuation as on June 13, 2010
x Business brief: Saudi Polymers Company is a petrochemical project being
Stock details built in Jubail Industrial City. The company targets the project to be
52-week range H/L (SR) 19.7/12.8 completed by the end of 2011, we expect revenues to begin from 2Q12.
Market cap ($mn) 1,996.3 Once operational, the project will have annual production capacity of 3.4mn
Shares outstanding (mn) 480
mtpa, including ethylene, propylene, HDPE, LDPE, polypropylene,
Price perf. (%) 1M 3M 12M
polystyrene, and hexane. Petrochem is 47.7% owned by Saudi Industrial
Absolute (12) 2 N/A
Market (6) (5) 3
Investment Group (SIIG).
Sector (13) (6) 12 x Financials: We do not expect the company to report revenues until 2012e.
Avg daily turn.(mn) SR US$
Until then, the company will likely remain in losses, mainly due to interest
3M 60.5 16.1
12M N/A N/A
expenses. The estimated cost of the project is over SR20.8bn, financed
Raw Beta 6m 2yr through equity and debt funding. Total debt of SR13.5bn was raised from
0.92 N/A commercial banks, PIF, and SIDF. The equity contribution of SR7.4bn was
Reuters code 2002.SE arranged through the IPO and partner contributions.
Bloomberg code PETROCH AB
Website www.petrochem.com.sa x Recent developments: Petrochem raised SR2.6bn in its IPO in July 2009 by
offering 240mn shares to the public and 20mn shares to SIIG.
Weighting & free float (%)
TASI (free float weight) 0.26 Company financials
Free float 17.5
YoY CAGR (%)
2008 2009 2010E 2011E (%) (08-11E)
Valuation multiples
Net Revenues SRmn - - - - N/M N/M
08 09 10E
EBITDA SRmn (2) (9) (15) (17) 401.1 (0.5)
P/E (x) 420.6 NM NM
Net Income SRmn 18 (61) (127) (236) (440.4) (1.4)
P/B (x) 3.4 1.6 1.6
Assets SRmn 3,773 14,581 19,228 21,284 286.5 (0.4)
P/Sales (x) N/A N/A N/A
Equity SRmn 2,218 4,757 4,630 4,394 114.5 (0.2)
Div yield (%) N/A N/A N/A
Total Debt SRmn 1,219 8,712 9,967 12,259 614.5 (0.5)
Source: NCBC Research estimates
Cash & Equiv SRmn 1,513 3,272 689 337 116.3 0.6
Share price performance EBITDA Mgn % - - - - - -
Net Mgn % - - - - - -
7,000 20
6,500 18 ROE % 0.8 (1.3) (2.8) (5.4) - -
6,000 16 ROA % 0.5 (0.4) (0.7) (1.1) - -
5,500 14
Div Payout % - - - - - -
5,000 12
A ug-09 No v-09 M ar-10 Jun-10 EPS SR 0.1 (0.1) (0.3) (0.5) (262.5) (1.5)
TA SI P etro chem (RHS) BVPS SR 10.1 9.9 9.7 9.2 (1.7) 0.0
Source: Tadawul, Zawya, Company, NCBC Research estimates
Source: Bloomberg
Price perf. (%) 1M 3M 12M x Business brief: SABIC has presence across the globe through its
Absolute (14) (3) 23 subsidiaries and associates. It operates through its six interlinked divisions –
Market (6) (5) 3
Basic Chemicals, Intermediates, Polymers, Specialty Products, Fertilizers,
Sector (13) (6) 12
and Metals. The company is targeting an annual total production capacity of
Avg daily turn.(mn) SR US$
3M 484.8 129.2 130mn metric tons by 2020.
12M 418.9 111.7
x Financials: 2009 was a tough year for SABIC as the global slowdown
Raw Beta 6m 2yr
severely impacted its financial performance. Revenues declined 31% and net
1.46 1.27
Reuters code 2010.SE income an even more dramatic 59% in 2009. However, with the rebound in
Bloomberg code SABIC AB petrochemical prices, earnings have shown strong growth since 4Q09. In
Website www.sabic.com 1Q10, SABIC posted 72.2% YoY revenue growth to reach SR34.1bn and net
Weighting & free float (%) income grew to SR5.4bn compared to loss of SR0.97bn in 1Q09.
TASI (free float weight) 12.32 x Recent developments: In May 2010, SABIC and Sinopec Corp’s joint
Free float 22.57
venture petrochemicals complex began commercial operations with annual
Valuation multiples production capacity of 3mn metric tons. In April 2010, the SABIC and
08 09 TTM Mitsubishi joint venture, Sharq, started commercial operations with annual
P/E (x) 12.1 29.4 17.2 production of 5mn metric tons.of petrochemicals. In the same month, SABIC
P/B (x) 2.6 2.5 2.3
signed a $400mn deal with Celanese to establish a polyacetal factory with
P/Sales (x) 1.8 2.6 2.3
capacity of 50,000 metric tons. Also, SABIC announced its plans to build a
Div yield (%) 3.4 1.7 N/A
new iron and steel plant in Jubail Industrial city by 2012.
DPS 3.00 1.50 N/A
Source: NCBC Research
Company financials
Share price performance YoY CAGR (%)
7,000 110
2007 2008 2009 1Q10 (%) (07-09)
6,500 Net Revenues SRmn 126,204 150,810 103,062 34,126 72 (10)
90
6,000 EBITDA SRmn 48,653 48,142 29,577 11,906 194 (22)
70
5,500
Net Income SRmn 27,022 22,030 9,074 5,432 N/M (42)
5,000 50
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Assets SRmn 253,731 271,760 296,861 303,186 12 8
TA SI SA BIC (RHS) Equity SRmn 91,154 102,932 108,255 113,687 12 9
Total Debt SRmn 80,109 92,656 107,015 105,091 29 16
Source: Bloomberg
Cash & Equiv SRmn 45,877 51,028 56,377 51,525 (1) 11
Source: Tadawul, NCBC Research Source: Tadawul, Zawya, Company, NCBC Research
Neutral SAFCO
Target Price (SR) 127 Saudi Arabian Fertilizer Company (SAFCO), established in 1965,
produces ammonia and urea nitrogen based fertilizers. The company
Price (SR) 125.5
markets its products in Asia, America, Australia, Africa and Middle East
Pricing / Valuation as on June 13, 2010
countries. Saudi Basic Industries Corp. (SABIC) holds a 42.9% stake in
SAFCO.
Stock details
52-week range H/L (SR) 149.5/110.5 • Business brief: SAFCO has a urea production capacity over 2.27mn tons
Market cap ($mn) 8,364.6
per annum (tpa), the majority of which is exported. Urea is a key nitrogen-
Shares outstanding (mn) 250
based fertilizer across the globe. The company also manufactures 2.1mn tpa
Price perf. (%) 1M 3M 12M
of ammonia, most of it used as an intermediate raw material for producing
Absolute (8) (11) 16
Market (6) (5) 3 urea.
Sector (13) (6) 12
• Financials: Revenues in 2009 declined 48% and net income 57% as
Avg daily turn.(mn) SR US$
fertilizer pricing declined following peaks reached in 2008 due to the impact
3M 34.2 9.1
12M 31.7 8.4 of the global financial crisis. We expect the financial performance to rebound
Raw Beta 6m 2yr in 2010 and have seen strong growth in 1Q10 in revenues (16.8% YoY
0.78 1.09 growth to SR864mn) and net income (40.1% YoY growth to SR698mn). The
Reuters code 2020.SE
company’s net income margin showed YoY improvement of over 13
Bloomberg code SAFCO AB
percentage points and stood at 80.8% in 1Q10.
Website www.safco.com.sa
• Recent developments: In April 2010, SAFCO announced that it expects to
Weighting & free float (%)
book a one off gain of SR263.4mn from sale of land in Dammam. In
TASI (free float weight) 2.31
Free float 36.88 February 2010, SAFCO announced its plans to cut costs and enter new
markets to boost profit for 2010.
Valuation multiples
08 09 TTM Company financials
P/E (x) 7.3 17.4 10.9
YoY CAGR (%)
P/B (x) 3.9 4.5 4.5 2008 2009 2010E 2011E (%) (08-11E)
P/Sales (x) 6.0 11.4 9.4 Net Revenues SRmn 5,243 2,741 3,354 3,674 (47.7) (11.2)
Div yield (%) 10.4 9.6 8.0 EBITDA SRmn 4,594 1,889 2,676 2,690 (58.9) (16.3)
DPS 13.0 12.0 10.0 Net Income SRmn 4,280 1,804 2,883 2,645 (57.8) (14.8)
Source: NCBC Research Assets SRmn 9,850 8,808 8,236 8,436 (10.6) (5.0)
Equity SRmn 8,034 7,015 6,897 7,042 (12.7) (4.3)
Share price performance
Total Debt SRmn 826 590 353 116 (28.7) (48.0)
7,000 160
Cash & Equiv SRmn 3,918 2,964 2,235 2,247 (24.3) (16.9)
6,500 140
6,000 120 EBITDA Mgn % 87.6 68.9 79.8 73.2 - -
5,500 100 Net Mgn % 81.6 65.8 86.0 72.0 - -
5,000 80
ROE % 60.9 24.0 41.4 38.0 - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Target Price (SR) 36.2 National Industrialization Company (Tasnee) was established in Riyadh
in 1985 to support the Kingdom’s industrial development. In 2007,
Price (SR) 26.0
Tasnee acquired LyondellBasell’s worldwide titanium dioxide business
Pricing / Valuation as on June 13, 2010
and in 2008, it purchased Australia's Bemax Resources Ltd. and
International Titanium Powder (ITP).
Stock details
52-week range H/L (SR) 32.5/16.4 x Business brief: Tasnee’s main businesses are in petrochemicals and
Market cap ($mn) 3,512.6
Titanium Dioxide. The company also has smaller business lines in automotive
Shares outstanding (mn) 506.7
batteries, carton packaging, and related services. In 2006, Tasnee, in a JV
Price perf. (%) 1M 3M 12M
with Sahara Olefins and Basell, formed Saudi Ethylene and Polyethylene Co.
Absolute (11) 3 33
Market (6) (5) 3 (SEPC) with a capacity of 1mn mtpa ethylene cracker, and 400,000 tpa of
Sector (13) (6) 12 low and high density polyethylene each.
Avg daily turn.(mn) SR US$
x Financials: We expect 2010e financial performance to show strong growth
3M 53.3 14.2
12M 34.5 9.2 as the company benefits from the full year impact of SEPC (which started in
Raw Beta 6m 2yr June 2009). Revenues are expected to growth 58% to SR17.1bn and net
1.75 1.35 income 195% to SR1.5bn in 2010e. Performance in the first quarter of 2010
Reuters code 2060.SE
indicates the company is on track for strong growth as revenues grew
Bloomberg code NIC AB
162.2% YoY to SR4bn and net income grew to SR336.2mn in 1Q10
Website www.tasnee.com
compared to a net loss of SR25.7mn in 1Q09.
Weighting & free float (%)
x Recent developments: In May 2010, Tasnee announced its plans to raise
TASI (free float weight) 2.12
Free float 80.52 $1.7bn for its petrochemical complex project in Jubail. In April 2010, Tasnee
and its joint Venture Saudi Arabia’s Sahara Petrochemical signed a deal with
Valuation multiples
Germany’s Evonik Industries AG for USD266.7mn to construct an 80,000
08 09 TTM
metric tons a year polymers plant.
P/E (x) 21.9 25.4 8.6
P/B (x) 1.8 1.7 1.5
Company financials
P/Sales (x) 1.3 1.2 0.8
YoY CAGR (%)
Div yield (%) 3.8 2.9 3.8
2008 2009 2010E 2011E (%) (08-11E)
DPS 1.0 0.8 1.0
Net Revenues SRmn 10,037 10,863 17,123 17,506 8.2 20.4
Source: NCBC Research
EBITDA SRmn 1,748 2,493 4,963 4,764 42.6 39.7
Share price performance Net Income SRmn 601 519 1,530 1,418 (13.5) 33.1
Assets SRmn 30,419 33,168 36,739 38,089 9.0 7.8
7,000 35
6,500 30 Equity SRmn 7,350 7,790 8,859 9,816 6.0 10.1
25
6,000 Total Debt SRmn 15,197 15,316 16,703 15,806 0.8 1.3
20
5,500 15
5,000 10
Cash & Equiv SRmn 3,613 3,585 4,484 6,233 (0.8) 19.9
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 17.4 22.9 29.0 27.2 - -
TA SI NIC (RHS) Net Mgn % 6.0 4.8 8.9 8.1 - -
ROE % 9.0 6.9 18.4 15.2 - -
Source: Bloomberg ROA % 2.2 1.6 4.4 3.8 - -
Current Price (SR) 13.1 Alujain Corporation (Alujain), an industrial investment firm, was
Pricing / Valuation as on June 13, 2010 established in 1991 and promoted by Xenel Industries (one of the oldest
conglomerates in the Kingdom). The company’s investments include a
Stock details 57.4% stake in National Petrochemical Co. (NatPet) and a 93.1% stake
52-week range H/L (SR) 23.5/11.7 in Arab Pesticide Co. (MOBEED).
Market cap ($mn) 240.8
Shares outstanding (mn) 69.2 x Business brief: Alujain predominantly invests in the Saudi petrochemical,
Price perf. (%) 1M 3M 12M energy, mining and metals sectors. The company transferred its Alfasel
Absolute (16) (24) (42) propylene production facility to the Teldene Polypropylene project, promoted
Market (6) (5) 3
by associate NatPet, in May 2006. NatPet owns a SR2.3bn propylene and
Sector (13) (6) 12
polypropylene plant, with 400,000 tons per annum capacity. The company
Avg daily turn.(mn) SR US$
3M 16.3 4.3 also signed contracts with SABIC and Noble Group for the offtake of
12M 11.5 3.1 production.
Raw Beta 6m 2yr
x Financials: Alujain does not have its own operating units, instead generates
1.52 1.18
Reuters code 2170.SE its income from investments and its affiliates, therefore, the company does
Bloomberg code ALCO AB not report sales revenues. The company has been in losses since 2006 with
Website www.alujaincorporation.com 2009 recording a loss of SR26mn. Losses continued in 1Q10 with a reported
Weighting & free float (%) a loss of SR6.7mn compared to a loss of SR10.8m in 1Q09.
TASI (free float weight) 1.16 x Recent developments: In April 2009, the polypropylene plant owned by
Free float 85.09
NatPet started operations. In February 2009, Alujain increased its stake in
Valuation multiples MOBEED to 93.1% from 25% earlier. The company also signed an
08 09 TTM agreement with Safra Co. to maintain and operate MOBEED's facilities.
P/E (x) NM NM NM
P/B (x) 1.8 1.7 1.8 Company financials
P/Sales (x) NM NM NM YoY CAGR (%)
Div yield (%) N/A N/A N/A 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Revenues SRmn - - - - - -
EBITDA SRmn (57) (59) (63) (11) NM NM
Share price performance
Net Income SRmn (40) (65) (27) (7) NM NM
7,000 25 Assets SRmn 2,747 3,229 3,406 3,476 7.5 11.4
6,500
20 Equity SRmn 651 515 519 507 (1.1) (10.8)
6,000
15 Total Debt SRmn 1,612 2,123 2,066 2,207 3.9 13.2
5,500
5,000 10 Cash & Equiv SRmn 201 113 52 64 21.8 (49.1)
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
EBITDA Mgn % N/M N/M N/M N/M - -
TA SI A LCO (RHS)
Net Mgn % N/M N/M N/M N/M - -
ROE % (5.9) (11.2) (5.3) (5.2) - -
Source: Bloomberg
ROA % (2.3) (2.2) (0.8) (0.8) - -
Top 5 shareholders (%) Div Payout % - - - - - -
Safra Company 14.9 EPS SR (0.6) (0.9) (0.4) (0.1) NM NM
Khalid Abdul Rahman Saleh Al 9.9 BVPS SR 9.4 7.5 7.5 7.3 (1.1) (10.7)
Rajhi
Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 9.7 Nama Chemicals Company (NAMA) was established in 1992. The
Pricing / Valuation as on June 13, 2010 company develops, owns, and operates industrial projects within the
chemical and petrochemical sectors. NAMA functions via its affiliates -
Stock details Arabian Alkali Company (55,000mta capacity) and Jubail Chemical
52-week range H/L (SR) 13.5/9.4 Industries Company (60,000mta capacity).
Market cap ($mn) 332.4
Shares outstanding (mn) 128.5 x Business brief: Arabian Alkali is one of the largest caustic soda producers in
Price perf. (%) 1M 3M 12M the Middle East. JANA produces epoxy resins and markets them under the
Absolute (13) (5) (26) brand names of RAZEEN and ARALDITE. NAMA is currently setting up the
Market (6) (5) 3
Hassad Petrochemicals Company that will manufacture different types of
Sector (13) (6) 12
chemicals to supply both the subsidiaries.
Avg daily turn.(mn) SR US$
3M 33.6 9.0 x Financials: In 1Q10, the company’s revenues grew by 27.6% YoY to
12M 23.1 6.2
SR130mn. The company reported net income of SR2.1mn in 1Q10 compared
Raw Beta 6m 2yr
to a loss of SR32.4mn in 1Q09. EBITDA margin for the quarter stood at
0.47 1.03
Reuters code 2210.SE 5.3% compared to loss during the same period last year.
Bloomberg code NAMA AB
x Recent developments: In January 2010, NAMA’s subsidiary, JANA received
Website www.nama.com.sa
a SR210mn loan from the Saudi Industrial Development Fund. The loan
Weighting & free float (%) amount will be used for the expansion of the epoxy factory in order to double
TASI (free float weight) 0.25 its production capacity to 120,000 tons per annum by end of 2011. In June
Free float 100.0
2009, NAMA Chemicals Board appointed Mr. Saud Abdulaziz Al-Gosaibi as
Valuation multiples the Chairman of the Board.
08 09 TTM
P/E (x) N/M N/M N/M Company financials
P/B (x) 0.8 0.8 0.8 YoY CAGR (%)
P/Sales (x) 2.0 3.1 2.9 2007 2008 2009 1Q10 (%) (07-09)
Div yield (%) Net Revenues SRmn 513 622 398 130 27.6 (12.0)
N/A N/A N/A
EBITDA SRmn 50 27 (28) 7 N/M N/M
DPS NA NA
Net Income SRmn 34 (68) (50) 2 N/M N/M
Source: NCBC Research estimates
Assets SRmn 1,751 2,545 2,396 2,437 (1.1) 17.0
Share price performance Equity SRmn 921 1,557 1,565 1,581 3.1 30.3
7,000 14 Total Debt SRmn 696 800 702 721 (11.7) 0.5
6,500 Cash & Equiv SRmn 81 487 325 327 (17.2) 99.7
12
6,000
10 EBITDA Mgn % 9.7 4.3 (7.0) 5.3 - -
5,500
5,000 8 Net Mgn % 6.6 (10.9) (12.5) 1.6 - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
ROE % 4.0 (5.5) (3.2) 0.1 - -
TA SI NA M A (RHS)
ROA % 2.4 (3.2) (2.0) 0.1 - -
Div Payout % - - - - - -
Source: Bloomberg
EPS SR 0.5 (0.7) (0.4) 0.2 N/M N/A
Top 5 shareholders (%) BVPS SR 12.1 12.1 12.2 12.3 3.1 N/A
Ahmed Hamad Al Gosaibi Co. 7.4 Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 18.8 Saudi Industrial Investment Group (SIIG) was established in 1996 in
Pricing / Valuation as on June 13, 2010 Riyadh. The company primarily focuses on investment opportunities in
the Kingdom’s petrochemical sector. It operates through two
Stock details subsidiaries – Saudi Chevron Phillips and Jubail Chevron Phillips.
52-week range H/L (SR) 26.4/17.0
Market cap ($mn) 2,249.4
x Business brief: Saudi Chevron Phillips has an installed capacity of 1.2mn
Shares outstanding (mn) 450.0 mtpa); it produces benzene, cyclohexane and motor gas. Jubail Chevron
Price perf. (%) 1M 3M 12M Phillips commenced operations in 2H08. The facility produces styrene,
Absolute (17) (12) (1) propylene and motor gas. In 2007, SIIG entered into a third joint venture
Market (6) (5) 3
with National Chevron Phillips (Chevron) to manufacture adipic acid and
Sector (13) (6) 12
nylon. Under this JV, both companies are setting up a SR18bn petrochemical
Avg daily turn.(mn) SR US$
3M 23.7 6.3 complex, which is scheduled to commence operations by 2011.
12M 18.2 4.9
x Financials: In 1Q10, the revenues of SIIG grew by 203.1% y-o-y to
Raw Beta 6m 2yr
SR1,332mn from SR440mn in 1Q09. The company reported net income of
1.14 1.15
Reuters code 2250.SE SR142mn in 1Q10 compared to a net loss of SR50mn in 1Q09 as higher
Bloomberg code SIIG AB selling prices drove the stronger revenue and net income figures.
Website www.siig.com.sa
x Recent developments: In December 2009, SIIG announced that Petchem
Weighting & free float (%) (a joint venture between SIIG and Chevron Phillips Chemical Company) is
TASI (free float weight) 1.50 scheduled to start operations by 2011. The construction of the project is
Free float 88.53
65% complete. The project includes a cracker that will produce 40% ethane
Valuation multiples and 60% propane. SIIG owns 32.5% and Chevron Philips Chemical owns
08 09 TTM 35% in the project.
P/E (x) 173.1 27.6 16.9
P/B (x) 1.6 1.5 1.5 Company financials
P/Sales (x) 3.9 2.2 6.3 YoY CAGR (%)
Div yield (%) N/A 2.7 N/A 2007 2008 2009 1Q10 (%) (07-09)
DPS N/A 0.50 N/A Net Revenues SRmn 1,459 2,139 3,760 1,332 203.1 60.5
Source: NCBC Research EBITDA SRmn 474 168 572 230 2,176.3 9.8
Net Income SRmn 437 49 306 142 N/M (16.4)
Share price performance
Assets SRmn 4,964 8,649 19,699 20,849 122.2 99.2
7,000 30 Equity SRmn 3,126 5,197 5,503 5,645 9.7 32.7
6,500 25
Total Debt SRmn 1,372 2,731 10,174 11,004 218.9 172.3
6,000 20
5,500 15 Cash & Equiv SRmn 749 2,703 4,586 4,354 44.6 147.4
5,000 10 EBITDA Mgn % 32.5 7.9 15.2 17.3 - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Net Mgn % 30.0 2.3 8.1 10.7 - -
TA SI SIIG (RHS)
ROE % 14.5 1.2 5.7 10.2 - -
ROA % 9.3 0.7 2.2 2.8 - -
Source: Bloomberg
Div Payout % 25.8 - 73.5 - - -
Top 5 shareholders (%) EPS SR 1.9 0.1 0.7 0.3 N/M N/A
Public Pension Authority 10.6 BVPS SR 13.9 11.6 12.2 12.6 9.7 N/A
Ali Abdullah Ibrahim Al Jufalli 6.3 Source: Tadawul, Zawya, Company, NCBC Research
Target Price (SR) 27.2 Sahara Petrochemical Company (Sahara) was established in 2004 by the
Al Zamil Group. The company develops, owns and operates production
Price (SR) 21.0
facilities through joint ventures with other companies in the
Pricing / Valuation as on June 13, 2010
petrochemical sector. SPC has four subsidiaries: Al Waha Petrochemical,
Tasnee and Sahara Olefins (TSOC), Saudi Acrylic Acid and Arabian Chlor
Stock details
Vinyl Company (ACVC).
52-week range H/L (SR) 28.0/13.9
Market cap ($mn) 1,637.8
x Business brief: Al Waha has a production capacity of 467k tons per annum
Shares outstanding (mn) 292.5
(tpa) of propylene, which is used as an input for production of 450k tpa of
Price perf. (%) 1M 3M 12M
polypropylene. Trial operations started in May 2009 and commercial
Absolute (17) (6) 8
Market (6) (5) 3 production is expected to commence in 2Q10. Saudi Ethylene and
Sector (13) (6) 12 Polyethylene Co. (SEPC) has a production capacity of 1mn tpa ethylene and
Avg daily turn.(mn) SR US$ 800k tpa of polyethylene.
3M 69.0 18.4
12M 39.7 10.6 x Financials: Once the Al Waha plant begins commercial production (expected
Raw Beta 6m 2yr 2Q10), Sahara will begin reporting revenues as income in 2009 was mainly
1.45 1.15 due to income from associates from SEPC (24% owned by Sahara). In 1Q10,
Reuters code 2260.SE
Sahara reported net income of SR116mn compared to a net loss of
Bloomberg code SPC AB
SR14.1mn in 1Q09 (SEPC began contributing to income from 3Q09). We
Website www.saharapcc.com
expect revenues and earnings to ramp up quickly in 2010/2011 as the full
Weighting & free float (%) year impact of SEPC benefits 2010 figures and Al Waha adds from the 2Q10
TASI (free float weight) 1.12
and for the full year 2011.
Free float 90.0
x Recent developments: In April 2010, Sahara Petrochemical and its joint
Valuation multiples
venture National Industrial Corporation signed a deal worth USD266.7mn
08 09 TTM
with Germany’s Evonik Industries AG to construct an 80,000 metric tons a
P/E (x) NM 80.3 10.2
P/B (x) 3.5 2.1 1.7 year polymers plant in Jubail Industrial City. During the same month, SPCO
P/Sales (x) N/A N/A 4.9 announced plans to raise capital for funding its three new projects. The
Div yield (%) N/A N/A N/A projects include a caustic soda joint venture with Saudi Arabian Mining Co.,
DPS N/A N/A N/A and its acrylic acid and butanol ventures.
Source: NCBC Research
Company financials
Share price performance
YoY CAGR (%)
7,000 30
2008 2009 2010E 2011E (%) (08-11E)
6,500 25
6,000 20 Net Revenues SRmn - - 1,242 2,358 N/M N/M
5,500 15 EBITDA SRmn (39) (74) 474 887 N/M N/M
5,000 10
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Income SRmn (41) 76 601 723 N/M N/M
TA SI SP C (RHS) Assets SRmn 4,721 5,956 7,396 8,451 26.2 21.4
Equity SRmn 1,769 2,938 3,539 4,263 66.1 34.1
Source: Bloomberg Total Debt SRmn 2,222 2,260 2,860 2,631 1.7 5.8
Cash & Equiv SRmn 453 556 965 1,005 22.7 30.4
Top 5 shareholders (%)
EBITDA Mgn % N/M N/M 38.2 37.6 - -
Al Zamil Group Holding 7.90
Net Mgn % N/M N/M 48.4 30.7 - -
Company
ROE % (2.2) 3.2 18.6 18.5 - -
ROA % (1.1) 1.4 9.0 9.1 - -
Div Payout % - - - - - -
EPS SR (0.2) 0.4 2.1 2.5 N/M N/M
Source: Tadawul, NCBC Research BVPS SR 9.4 10.0 15.1 14.5 2.1 15.4
Source: Tadawul, Zawya, Company, NCBC Research estimates
Neutral Yansab
Target Price (SR) 50.7 Yanbu National Petrochemicals Company (YANSAB) was established in
2006 to set up a 4mn tons per annum petrochemical complex in the
Price (SR) 39.4
Yanbu Industrial City. Saudi Basic Industries Corporation holds a
Pricing / Valuation as on June 13, 2010
majority stake (55%) in Yansab.
Stock details x Business brief: Once fully operational, the approximately SR18bn complex
52-week range H/L (SR) 50.0/24.8 is expected to produce ethylene (1.3mn mtpa), Propylene (400k tpa),
Market cap ($mn) 5,908.5
Polypropylene (40.4mn mtpa), Polyethylene—low-density and high-density—
Shares outstanding (mn) 562.5
(400k tpa each), Mono, Di and Tri Ethylene Glycol (770k tpa total), Benzene
Price perf. (%) 1M 3M 12M
(170k tpa), Butene -1 (65k tpa), Butene -2 (50k tpa), Methyl Tertiary Butyl
Absolute (14) 1 33
Market (6) (5) 3 Ether (20k tpa) and Benzene Toluene Xylene (70k tpa).
Sector (13) (6) 12
x Financials: After the commencement of commercial operations in 1Q10,
Avg daily turn.(mn) SR US$
Yansab posted revenues of SR688.6mn and net income of SR259.4mn in
3M 160.3 42.7
12M 89.7 23.9 1Q10 compared to the net loss of SR8.2mn recorded in 1Q09. Given that
Raw Beta 6m 2yr 1Q10 only had one month of contribution from the start of operations, we
1.90 1.24 expect a rapid rise in revenues and earnings through the year and into
Reuters code 2290.SE
2011e. For 2010e, we expect revenues of SR7.5bn from zero in 2009 and
Bloomberg code YANSAB AB
net income of SR2.9bn from a slight loss in 2009.
Website www.yansab.com.sa
x Recent developments: Yansab commenced commercial production in
Weighting & free float (%)
March 2010.
TASI (free float weight) 1.79
Free float 39.72
Company financials
Valuation multiples YoY CAGR (%)
08 09 TTM 2008 2009 2010E 2011E (%) (08-11E)
P/E (x) N/A N/A 7.7 Net Revenues SRmn - - 7,485 9,771 N/A N/A
P/B (x) 3.9 3.9 2.6 EBITDA SRmn (26) (29) 3,902 4,294 N/A N/A
P/Sales (x) N/A N/A 3.0 Net Income SRmn (26) (29) 2,874 2,902 N/A N/A
Div yield (%) N/A N/A N/A Assets SRmn 18,677 21,124 23,719 25,487 13.1 10.9
DPS N/A N/A N/A Equity SRmn 5,697 5,668 8,542 10,882 (0.5) 24.1
Total Debt SRmn 11,797 14,611 13,696 12,748 23.9 2.6
Source: NCBC Research
Cash & Equiv SRmn 1,033 606 2,339 4,037 (41.4) 57.5
Share price performance EBITDA Mgn % - - 52.1 43.9 - -
7,000 60 Net Mgn % - - 38.4 29.7 - -
6,500 50
ROE % (0.4) (0.5) 40.5 29.9 - -
6,000 40
5,500 30
ROA % (0.2) (0.1) 12.8 11.8 - -
5,000 20 Div Payout % - - - 19.4 - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
EPS SR (0.1) (0.1) 5.1 5.2 N/A N/A
TA SI YA NSA B (RHS)
BVPS SR 10.1 10.1 15.2 19.3 (0.5) 24.0
Source: Tadawul, Zawya, Company, NCBC Research estimates
Source: Bloomberg
Overweight Sipchem
Target Price (SR) 29.7 Saudi International Petrochemical Company (Sipchem), established in
1999, was the first company to set up methanol and butanediol plants in
Price (SR) 21.7
KSA. Sipchem invests in petrochemical and chemical businesses and
Pricing / Valuation as on June 13, 2010
currently operates through its two affiliates, International Methanol Co.
(IMC) and International Diol Co. (IDC).
Stock details
52-week range H/L (SR) 27.1/17.5 x Business brief: IMC produces close to 1mn tpa of methanol, while IDC
Market cap ($mn) 1,924.0
manufactures 75,000 tpa of butanediol. The vinyl acetate monomer plant in
Shares outstanding (mn) 333.3
Jubail, post completion, is expected to have an annual production capacity of
Price perf. (%) 1M 3M 12M
450,000 tons of acetic acid, 330,000 tons of vinyl acetate monomer and
Absolute (12) (4) 3
Market (6) (5) 3 345,000 tons of carbon monoxide. Moreover, Sipchem aims to establish a
Sector (13) (6) 12 fully integrated Olefins Derivatives Complex in New Jubail-II by 2013.
Avg daily turn.(mn) SR US$
x Financials: We expect a strong ramp in revenues and earnings for Sipchem
3M 38.4 10.2
12M 26.3 7.0 in 2010e as the commercial start of its phase II expansion is expected to
Raw Beta 6m 2yr begin during 2Q10. Earnings from this Acetyl complex will likely boost 2010e
1.18 1.12 net income by over 6x to SR870mn. In 1Q10, Sipchem’s revenue grew
Reuters code 2310.SE
91.3% YoY to SR305.6mn from SR160mn in 1Q09. Net income increased
Bloomberg code SIPCHEM AB
175.5% to SR81.2mn in 1Q10 from SR29.2mn in 1Q09. The growth can be
Website www.sipchem.com
ascribed to higher petrochemical prices and profit margins.
Weighting & free float (%)
x Recent developments: In June 2010, Sipchem commenced commercial
TASI (free float weight) 1.20
Free float 82.14 operations at its carbon monoxide and acetic acid plants at its acetyl
complex in Jubail industrial City.
Valuation multiples
08 09 10E Company financials
P/E (x) 13.4 51.2 8.3
YoY CAGR (%)
P/B (x) 1.5 1.5 1.3 2008 2009 2010E 2011E (%) (08-11E)
P/Sales (x) 4.2 8.7 2.6 Net Revenues SRmn 1,709 830 2,817 3,741 (51.4) 29.9
Div yield (%) 4.6 4.6 4.6 EBITDA SRmn 1,151 340 1,721 2,269 (70.4) 25.4
DPS 1.0 1.0 1.0 Net Income SRmn 537 141 870 1,171 (73.8) 29.7
Source: NCBC Research estimates Assets SRmn 10,833 11,818 12,377 12,852 9.1 5.9
Equity SRmn 4,965 4,922 5,457 6,292 (0.9) 8.2
Share price performance
Total Debt SRmn 3,106 4,241 4,241 3,541 36.5 (2.9)
7,000 30
Cash & Equiv SRmn 2,581 1,831 1,724 1,743 (29.1) (12.3)
6,500
25
EBITDA Mgn % 67.4 41.0 61.1 60.7 - -
6,000
20 Net Mgn % 31.4 17.0 30.9 31.3 - -
5,500
5,000 15 ROE % 13.5 2.8 16.8 19.9 - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
ROA % 5.8 1.2 7.2 9.3 - -
TA SI Sipchem (RHS)
Div Payout % 60 238 38 28 - -
Current Price (SR) 20.5 Advanced Petrochemical Company (APPC), based in Dammam, was
Pricing / Valuation as on June 13, 2010 established in 2005 to develop a SR3bn integrated propane
dehydrogenation and polypropylene complex in Jubail Industrial City. The
Stock details facility has an annual production capacity of 450,000 tons of
52-week range H/L (SR) 29.0/17.2 polypropylene. It commenced commercial operations in 2008.
Market cap ($mn) 772.7
Shares outstanding (mn) 141.4 x Business brief: APPC has an annual production capacity of 450,000 tons of
Price perf. (%) 1M 3M 12M polypropylene, which is used in several applications such as for
Absolute (11) (8) (25) manufacturing fabrics, moldings, pipes and furniture. The company
Market (6) (5) 3
appointed Vinmar International (Houston), Mitsubishi Corp. and Domo
Sector (13) (6) 12
(Belgium) to offtake the output from this complex. Most of the production
Avg daily turn.(mn) SR US$
3M 41.5 11.1 will be shipped through the ports of Dammam, Jeddah and Jubail.
12M 33.4 8.9
x Financials: In 1Q10, APPC’s revenue grew 25.7% YoY to SR464.5mn from
Raw Beta 6m 2yr
SR369.5m in 1Q09. The net income increased 22.6% YoY to SR52.6mn
1.19 1.12
Reuters code 2330.SE during the same period, largely due to a rise in the prices of APPC’s
Bloomberg code APPC AB products.
Website www.advancedpetrochem.
com x Recent developments: In April 2010, APPC announced the completion of
maintenance of its propylene and polypropylene units, which restarted
Weighting & free float (%)
TASI (free float weight) 0.56 operations on 31 March 2010. APPC was fined SR50,000 by Saudi Arabia’s
Free float 95.72 Capital Market Authority for violating disclosure rules after it delayed the
announcement of its maintenance work at its propylene and polypropylene
Valuation multiples
08 09 TTM
units.
Weighting & free float (%) x Recent developments: In May 2010, Petro Rabigh announced plans to shut
TASI (free float weight) 0.83 all units at its complex for 45 days during 2Q11 for regular tests and
Free float 17.42
inspection. Earlier, in April, Petro Rabigh had announced its expansion plans
Valuation multiples and welcomed bids for construction of the second phase of the giant
08 09 TTM complex. Petro Rabigh intends to add 17 new products through the
P/E (x) N/A N/A N/A expansion, which is estimated to cost the company approximately SR25bn.
P/B (x) 2.6 3.0 2.9
P/Sales (x) 3.6 0.8 0.7 Company financials
Div yield (%) N/A N/A N/A YoY CAGR (%)
DPS N/A N/A N/A 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Revenues SRmn - 6,543 29,423 10,676 89.7 N/M
EBITDA SRmn (423) (1,029) (144) 447 257.0 N/M
Share price performance
Net Income SRmn (443) (1,256) (1,433) 272 N/M N/M
7,000 40
Assets SRmn 26,961 47,911 52,146 48,246 (1.7) 39.1
6,500 35
6,000 30
Equity SRmn 5,953 9,264 7,831 8,102 (12.3) 14.7
5,500 25 Total Debt SRmn 19,444 31,569 33,995 28,708 (13.3) 32.2
5,000 20
Cash & Equiv SRmn 186 1,534 1,306 1,882 75.2 165.0
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Source: Bloomberg
ROE % (10.5) (16.5) (16.8) 13.6 - -
ROA % (2.3) (3.4) (2.9) 2.2 - -
Top 5 shareholders (%)
Div Payout % - - - - - -
Aramco 37.5 EPS SR (0.7) (1.5) (1.6) 0.3 N/M N/A
Sumitomo Chemical Company 37.5 BVPS SR 9.1 10.6 8.9 9.3 (12.2) (0.7)
Source: Tadawul, Zawya, Company, NCBC Research
Expansion by new players However, we believe capacity in the Saudi cement sector will continue to exceed
coupled with export ban demand. This concern is exacerbated by the ongoing conditional export ban which
resulting in oversupply
we believe is unlikely to be completely lifted in the short-term. In the scenario that
the ban is completely lifted, we believe the demand base in the GCC region is
significantly lower than a few years ago when much of the current capacity
expansion projects were initiated. Thus, simply allowing exports will not completely
change the outlook for the sector.
We expect the ongoing excess supply situation to lead to lower pricing and
ultimately to margin pressure for the incumbent cement companies. We forecast
average gross margins for these companies to decline to 48% in 2015e from the
54% in 2009. In addition, we expect pressure from new companies to continue. The
incumbent’s lost 20% market share through 2008 and 2009 as new companies
entered the market and we expect this to continue.
Exhibit 54: Revenues of GCC cement companies, Exhibit 55: Comparison of ROE and P/E of GCC
2007–09 companies, 2009
(USD mn) (%)
2,500 30
25
2,000
20
ROE (%)
1,500
15
1,000
10
500 5
P/E (x)
0
0 5 10 15 20 25
2007 2008 2009
KSA UAE Kuwait Oman Qatar
KSA UAE Kuwait Oman Qatar
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
The sector fares well on ROE, with attractive P/E multiples. Of the twelve cement
producers operating in KSA, eight are listed on the Tadawul.
Cement production by the twelve companies in KSA grew 8.6% YoY to 32.9mt,
whereas their total domestic sales volumes grew 11.4% YoY to 29.9mt during
2008. Sales volumes in 2009 increased 16% to 37.9 mn tons, driven by increased
construction activities in the region. Yamama Cement reported the highest increase
in sales volumes, while Yanbu Cement’s sales volumes declined the most in 2009.
Exhibit 57: Revenues of companies, 2007–09 Exhibit 58: Profitability of companies, 2007-09
(SR mn) (%)
9,000 75
7,500
65
6,000
4,500 55
3,000
45
1,500
0 35
2007 2008 2009 2007 2008 2009
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
SR253 per ton in 2008. Thus, revenue generated by the eight listed players
declined 0.9% to SR7.5 bn. Qassim Cement reported the highest increase in
revenue of 20.3%, while Arabian Cement’s revenue declined the most in 2009, by
19.6%. Furthermore, adjusted net profits declined 6.7% to SR3.68 bn in 2009. On
a net income basis, Qassim Cement reported the highest increase at 1.7%, while
Tabuk Cement’s net profits declined the most in 2009, by 19.9%.
Exhibit 59: Comparison of P/B and ROE, 2008 Exhibit 60: Comparison of P/B and ROE, 2009
(%) (%)
36
37
33 Southern
34 Qassim
Qassim Province
Cement 30
31 Cement
Yanbu
28 Cement 27
Saudi
RoE (%)
Southern
RoE (%)
25 24 Yanbu
Province Cement
Cement
22 Saudi 21
Yamamah
Cement
19 18 Yamamah
Eastern
Cement Arabian
16 15
Cement Eastern
Tabuk
13 12 Cement
Arabian Cement P/B (x) Tabuk P/B (x)
10 Cement
9 Cement
1 2 3 1 2 3 4 5
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
Average daily turnover for the sector stood at SR48mn per day in 2009 and has
averaged SR51mn per day to date. Qassim Cement had the highest average daily
turnover at SR13mn in 2009.
Exhibit 61: Avg. daily turnover, Jan09 – Mar10 Exhibit 62: Share price movement, Jan09 – Mar10
(SR mn) Rebased to 100 on 1st Jan-09
15
190
13
12 170
150
9 8 8
130
5
6 5 5 110
4 4
3 90
70
0
Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10
Qassim
Saudi
Arabian
Tabuk
Yamama
Eastern
Yanbu
Southern
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
Current Price (SR) 36.0 Arabian Cement Company (ACC) was the first company to start cement
Pricing / Valuation as on June 13, 2010 production in Saudi Arabia (1958). ACC mainly produces portland
cement, portland pozzolan cement, sulfate-resistant cement and ready-
Stock details mix concrete. As of 2009, ACC had capacity of 3.5mn tons of cement and
52-week range H/L (SR) 50.0/32.4
3.3mn tons of clinker per year.
Market cap ($mn) 767.8
Shares outstanding (mn) 80.0
x Business brief: ACC, the oldest cement company in the Kingdom, produced
Price perf. (%) 1M 3M 12M
3.0mn tons of cement and clinker in 2009. Its market share dipped from
Absolute (6) (17) (23)
Market (6) (5) 3
9.3% in 2007 to 7.9% in 2009, mainly due increased competition following
Sector (6) (10) 2 the entry of four new players in the market.
Avg daily turn.(mn) SR US$
x Financials: ACC’s financial performance suffered in 2009 due to a series of
3M 6.0 1.6
12M 4.0 1.1
write-downs during 4Q09 of approximately SR150mn, which led to a near
Raw Beta 6m 2yr halving of net income for the year. For the 1Q10, ACC’s revenues decreased
1.07 0.77 1.0% YoY to SR201.7mn. However, its EBITDA margin declined considerably
Reuters code 3010.SE to 56.0% in 1Q10 from 60.3% in 1Q09. ACC’s net margin also declined
Bloomberg code ARCCO AB
considerably to 40.5% in 1Q10 from 50.9% in 1Q09, leading to its net
Website www.arabiancement.com
income declining 21.2% YoY to SR 81.7mn in 1Q10.
Weighting & free float (%)
x Recent developments: In April 2010, ACC obtained a 20-year license to
TASI (free float weight) 0.41
operate a quarry in the Thaalaba Mountains in Mecca. Also, ACC’s 1.5mn
Free float 71.89
tons per annum cement plant in Hadramout, which had been under
Valuation multiples
construction for the past three years, commenced operations in early April
08 09 TTM
2010. On 10 February 2010, ACC announced a cash dividend of SR1.25 per
P/E (x) 8.9 16.7 19.2
P/B (x)
share for the year 2009.
1.3 1.3 1.2
P/Sales (x) 4.0 3.9 3.9
Company financials
Div yield (%) 8.3 3.5 NA
YoY CAGR (%)
DPS 3.0 1.3 NA
2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research
Net Revenues SRmn 722 721 737 202 (0.9) 1.0
Share price performance EBITDA SRmn 436 389 451 113 (8.1) 1.7
Net Income SRmn 392 324 172 82 (21.2) (33.8)
7,000 50
6,500 45 Assets SRmn 2,366 3,518 3,830 3,972 10.3 27.2
6,000 40 Equity SRmn 1,841 2,244 2,222 2,312 4.6 9.9
5,500 35 Total Debt SRmn 282 1,017 1,296 1,393 20.3 114.3
5,000 30
Jun-09 Oct-09 Feb-10 Jun-10
Cash & Equiv SRmn 117 451 52 152 (24.7) (33.5)
TA SI A rab Cement (RHS) EBITDA Mgn % 60.4 53.9 61.2 55.9 - -
Net Mgn % 54.3 44.9 23.3 40.5 - -
Source: Bloomberg ROE % 22.5 15.9 7.7 14.4 - -
Target Price (SR) 58.0 Yamama Saudi Cement Company (YSCC) was founded in Riyadh in 1961
when it commenced production with a limited capacity of 0.9mn tons per
Price (SR) 48.3
year. As of 2009, YSCC’s annual cement and clinker production
Pricing / Valuation as on June 13, 2010
capacities have increased to 6.3mn tons and 6.0mn tons, respectively.
Stock details
Yamama is well located to take advantage of the increased momentum
52-week range H/L (SR) 54.5/37.4 of the construction sector in 2010, particularly in the Central region. A
Market cap ($mn) 1,739.0 low cost base and self integrated plant remain key positives for the
Shares outstanding (mn) 135.0 stock.
Price perf. (%) 1M 3M 12M
Absolute (5) (8) 24 x Business brief: Yamama is one of the few established cement companies in
Market (6) (5) 3
the Kingdom which is successfully competing in the face of the industry
Sector (6) (10) 2
excess supply. This is mainly due to its strategic location in Riyadh, where it
Avg daily turn.(mn) SR US$
3M 10.0 2.7 is close to most of the major construction projects currently ongoing in the
12M 7.5 2.0 Kingdom. In 2009, its market share of cement deliveries increased to 14.1%
Raw Beta 6m 2yr from 13.6% in 2008. So far in 2010, its share of local cement deliveries
0.62 0.79
increased to 12.8% in 1Q10 compared to 12.6% in 1Q09.
Reuters code 3020.SE
Bloomberg code YACCO AB x Financials: Despite industry revenues falling in 2009, Yamama increased
Website www.yamamacement.com sales by 3.6% and we expect a further 12% increase in 2010e. Net income
was under pressure in 2009 due to pricing pressure, however we believe the
Weighting & free float (%)
TASI (free float weight) 1.15 company will be able to maintain cost control in order to return to earnings
Free float 87.35 growth in 2010e. In 1Q10, the company’s sales increased a healthy 34.9%
YoY to SR349.0mn. YSCC’s EBITDA margin contracted to 62.4% during the
Valuation multiples
08 09 10E
quarter compared to 69.0% in 1Q09, however net income rose 31% YoY due
Target Price (SR) 41.2 Saudi Cement Company (SCC) was established in 1955. It currently
specializes in the production of ordinary Portland cement, sulphate
Price (SR) 44.3
resisting cement and oil well cement. SCC runs two plants, at Hofuf and
Pricing / Valuation as on June 13, 2010
Ain Dar, with an annual installed capacity of 7.0mn tons of cement and
6.6 mn tones of clinker in 2009. SCC has been able to leverage on its
Stock details
high stock levels by meeting demand easily. However, this has not been
52-week range H/L (SR) 53.0/33.0
Market cap ($mn) 1,807.0 met by similar profitability growth due to lower margins from its high
Shares outstanding (mn) 153.0 transport costs/low cement prices.
Price perf. (%) 1M 3M 12M
x Business brief: SCC has been losing ground in the domestic market mainly
Absolute (14) (7) 17
Market (6) (5) 3 due to competition from new entrants. It currently has a market share of
Sector (6) (10) 2 14.6%, which has been steadily declining over the past 3 years. SCC also
Avg daily turn.(mn) SR US$ has a 36% equity stake in United Cement Company, Bahrain, and another
3M 11.1 3.0
33.3% stake in Cement Product Industry Co. Ltd., which meets the cement
12M 8.2 2.2
packaging requirements of SCC and its partner companies.
Raw Beta 6m 2yr
1.06 1.07 x Financials: SCC’s 2009 revenues grew 6.8%, however net income fell 6.2%
Reuters code 3030.SE
as the company suffered from a margin squeeze due to continued pricing
Bloomberg code SACCO AB
pressure. SCC has one of the lowest selling prices in the industry and one of
Website www.saudicement.com.sa
the highest cost bases, which leads to the lowest relative margins in the
Weighting & free float (%) sector amongst the listed companies (2009 gross and net margins of 51%
TASI (free float weight) 1.17
and 43.7% respectively). So far in 2010, the company is showing a decent
Free float 86.42
rebound with 1Q10 revenues rising 17.2% YoY to SR410.9mn and net
Valuation multiples income rising 16.2% YoY to SR165mn.
08 09 10E
x Recent developments: In May 2010, SCC increased its capital by issuing
P/E (x) 10.9 11.6 10.4
P/B (x) 2.4 2.2 2.0 one bonus share for every two shares held. The bonus issue has led to a
P/Sales (x) 5.4 5.0 4.3 50% increase in capital to SR1.53bn made up of 153 million shares with a
Div yield (%) 7.9 7.9 5.2 par value of SR10.
DPS 3.5 3.5 2.3
Company financials
Source: NCBC Research estimates
YoY CAGR (%)
Share price performance 2008 2009 2010E 2011E (%) (08-11E)
7,000 55 Net Revenues SRmn 1,260 1,346 1,587 1,506 6.8 6.1
Target Price (SR) 71.3 Qassim Cement Company (QCC) was founded in 1976 in Buraydah, which
lies in the central region of KSA, 330 km northwest of Riyadh.
Price (SR) 69.0
Commercial production started in 1981 with the opening of a 2,000 tons
Pricing / Valuation as on June 13, 2010
per day clinker facility. As of December 2009, QCC had a total production
capacity of 4.1mn tons of cement and 3.5mn tons of clinker.
Stock details
52-week range H/L (SR) 79.0/55.0 x Business brief: QCC has held a steady share in the domestic cement
Market cap ($mn) 1,655.6
market for many years. In 2009, the company accounted for 11.2% of the
Shares outstanding (mn) 90.0
total cement market in the Kingdom after dropping down to 9.8% in 2008, in
Price perf. (%) 1M 3M 12M
spite of increased competition in the form of new entrants. QCC is one of the
Absolute (3) (6) 26
Market (6) (5) (3) most efficient cement companies in the sector, however, as it is producing at
Sector (6) (10) 2 near capacity and has very low levels of inventory, we believe continued
Avg daily turn.(mn) SR US$ volume expansion will be limited.
3M 8.2 2.2
12M 12.7 3.4 x Financials: 2009 was a decent year for QCC as sales volumes increased
Raw Beta 6m 2yr 33%, leading to a 20% increase in revenues. Despite continued pricing and
0.54 0.75 margin pressure, the company was still able to increase net income, even
Reuters code 3040.SE
when adjusting for a SR82mn non-recurring item. In 1Q10, the company’s
Bloomberg code QACCO AB
sales increased 12.3% YoY to SR272.5mn as QCC benefitted from increased
Website www.qcc.com.sa
sales in the Central region. However, net income declined 4% YoY in 1Q10
Weighting & free float (%) as net margins declined to 52.2% during the quarter versus 61% in 1Q09.
TASI (free float weight) 0.65
Free float 51.31 x Recent developments: At an extraordinary general meeting held on 15
November 2009, shareholders approved an increase in capital from
Valuation multiples
SR450mn to SR900mn, executed in the form of a 1:1 bonus issue. Retained
08 09 10E
earning and legal reserves were used to finance the capital hike, after which
P/E (x) 12.0 10.2 11.6
P/B (x) 3.6 3.4 3.4 the company's capital increased to 90mn shares with a par value of SR10.
P/Sales (x) 7.6 6.3 6.1
Company financials
Div yield (%) 11.6 8.7 7.2
DPS YoY CAGR (%)
8.0 6.0 5.0
2008 2009 2010E 2011E (%) (08-11E)
Source: NCBC Research estimates
Net Revenues SRmn 820 987 1,011 994 20.4 6.6
Share price performance EBITDA SRmn 597 629 622 617 5.4 1.1
7,000 80 Net Income SRmn 517 608 534 527 17.6 0.6
6,500 70 Assets SRmn 2,270 2,244 2,195 2,228 (1.1) (0.6)
6,000 60 Equity SRmn 1,724 1,829 1,827 1,903 6.1 3.3
5,500 50
Total Debt SRmn 547 419 368 326 (23.4) (15.8)
5,000 40
Jun-09 Oct-09 Feb-10 Jun-10 Cash & Equiv SRmn 336 16 2 93 (95.2) (34.8)
TA SI Qassim Cement (RHS)
EBITDA Mgn % 72.8 63.7 61.5 62.1 - -
Net Mgn % 63.0 61.6 52.8 53.0 - -
Source: Bloomberg
ROE % 31.8 34.2 29.2 28.3 - -
Top 5 shareholders (%) ROA % 23.9 26.9 24.1 23.8 - -
Public Investment Fund 23.3 Div Payout % 69.6 89.6 84.3 85.3 - -
General Organization for 19.9 EPS SR 11.5 6.7 5.9 5.9 (41.7) (20.1)
Social Insurance (GOSI) BVPS SR 38.3 20.3 20.3 21.1 (47.0) (18.0)
Public Pension Authority (PPA) 5.2 Source: Tadawul, Zawya, Company, NCBC Research estimates
Target Price (SR) 60.0 Southern Province Cement Company (SPCC) is the largest cement
producer in Saudi Arabia in terms of market capitalization and the third
Price (SR) 68.0
largest in terms of capacity. Established in 1978, the company operates
Pricing / Valuation as on June 13, 2010
three production facilities in Jazan, Bisha and Tuhama, the bulk of the
Stock details
production occurring in the first two facilities. In 2009, the company
52-week range H/L (SR) 81.0/59.0 produced 5.2mn tons of cement and 5.8mn tons of clinker. Increased
Market cap ($mn) 2,538.0 competition, particularly from its local private peer Najran Cement, is a
Shares outstanding (mn) 140.0 key concern for Southern Cement
Price perf. (%) 1M 3M 12M
Absolute (1) (5) 19 x Business brief: In 2009, SPCC’s share in the domestic market stood at
Market (6) (5) 3
13.6%, a decline from the 15.2% it held in 2007. The fall has mainly been
Sector (6) (10) 2
due to the entry of several new players in the industry, especially in 2008. In
Avg daily turn.(mn) SR US$
3M 3.5 0.9 September 2009, General Organization for Social Insurance (GOSI)
12M 3.0 0.8 increased its stake in SPCC to 14.8%.
Raw Beta 6m 2yr
x Financials: SPCC was able to increase revenues slightly in 2009 to
0.23 0.60
Reuters code 3050.SE
SR1.32bn, however pricing pressure which impacted gross margins led to a
Bloomberg code SOCCO AB 7% decline in net income to SR734mn. We believe 2010e will remain difficult
Website www.spcc.com.sa for the company and expect continued declines in earnings. In 1Q10, SPCC
recorded a 2.5% YoY decline in revenues to SR353.2mn with both EBITDA
Weighting & free float (%)
TASI (free float weight) 0.83 and net margins marginally declining to 64.0% and 53.7%, respectively.
Free float 43.81 x Recent developments: In March 2010, SPCC announced a cash dividend
Valuation multiples of SR2.5 per share for 2H09. On 30 December 2009, SPCC and China's
08 09 10E Sinoma International Engineering Company signed a USD147mn contract for
P/E (x) 12.0 13.0 13.6 the construction of a second 5,000 ton per day cement clinker at its third
P/B (x) 4.0 3.9 3.9
plant, which is expected to be completed within two years.
P/Sales (x) 7.3 7.2 7.3
Div yield (%) 7.4 7.4 7.4 Company financials
DPS 5.0 5.0 5.0 YoY CAGR (%)
Source: NCBC Research estimates 2008 2009 2010E 2011E (%) (08-11E)
Net Revenues SRmn 1,298 1,318 1,301 1,347 1.5 1.2
Share price performance
EBITDA SRmn 864 859 850 851 (0.6) (0.5)
7,000 80
75 Net Income SRmn 791 734 698 690 (7.2) (4.5)
6,500
70
6,000 65 Assets SRmn 2,749 2,802 2,810 2,837 1.9 1.1
60
5,500
55 Equity SRmn 2,360 2,462 2,458 2,447 4.3 1.2
5,000 50
Total Debt SRmn 389 340 351 391 (12.6) -
Jun-09 Oct-09 Feb-10 Jun-10
TA SI So uthern Cement (RHS) Cash & Equiv SRmn 575 607 555 454 5.6 (7.6)
EBITDA Mgn % 66.6 65.2 65.3 63.2 - -
Target Price (SR) 39.4 Jeddah-based Yanbu Cement Company (YCC) was established in March
1976 through a plant with an initial production capacity of 3,000 tons of
Price (SR) 42.4
clinker per day at Ras Baridi near Yanbu on the west coast of Saudi
Pricing / Valuation as on June 13, 2010
Arabia. Currently, YCC has a total cement production capacity of 4.8
mtpa. We believe Yanbu continues to suffer from its old lines and the
Stock details
slow pace of demand momentum in the Western region
52-week range H/L (SR) 56.8/40.0
Market cap ($mn) 1,187.4
x Business brief: YCC was the largest seller of cement in the Saudi market in
Shares outstanding (mn) 105.0
2003/2004, but has been losing market share due to rising competition. The
Price perf. (%) 1M 3M 12M
company’s market share (in terms of sales volumes), in the domestic market
Absolute (3) (11) (9)
Market (6) (5) 3 has drastically slid to 10.4% in 2009 from 15.3% in 2007. YCC also has a
Sector (6) (10) 2 subsidiary (Yanbu Al Shuaiba Paper Products) that produces paper bags for
Avg daily turn.(mn) SR US$ the retail sales of cement.
3M 5.2 1.4
12M 4.4 1.2 x Financials: Increasing competition leading to market share pressure has
Raw Beta 6m 2yr been reducing pricing and market share for YCC. 2009 saw a 13.8% decline
0.45 0.67 in revenues and 13.9% decline in earnings and we believe 2010e will show a
Reuters code 3060.SE
similar trend. For the 1Q10, revenues fell 13.7% YoY to SR239.5mn. Gross
Bloomberg code YNCCO AB
margin in 1Q10 was 53.3%, comparatively lower than the 57.6% in 1Q09,
Website www.yanbucement.com
leading to earnings falling 19% YoY for the quarter. We expect this pressure
Weighting & free float (%) to remain for the rest of 2010e with full year earnings expected to decline
TASI (free float weight) 0.47
18.8%.
Free float 52.51
x Recent developments: In February 2010, YCC announced that it would pay
Valuation multiples
a SR3.0 dividend for 2009. In January 2010, YCC secured a SR300mn loan
08 09 10E
from the Saudi Industrial Development Fund to finance its expansion project,
P/E (x) 8.0 9.2 10.4
P/B (x) 1.9 1.8 1.8 which includes adding a fifth cement line for approximately SR2.2bn.
P/Sales (x) 4.1 4.7 5.2
Company financials
Div yield (%) 9.4 7.1 7.1
DPS YoY CAGR (%)
4.0 3.0 3.0
2008 2009 2010E 2011E (%) (08-11E)
Source: NCBC Research estimates
Net Revenues SRmn 1,094 943 863 965 (13.8) (4.1)
Share price performance EBITDA SRmn 680 586 547 594 (13.8) (4.4)
7,000 55 Net Income SRmn 560 482 428 441 (13.9) (7.7)
6,500
50 Assets SRmn 2,600 2,831 2,954 3,609 8.9 11.6
6,000
45 Equity SRmn 2,356 2,416 2,527 2,650 2.5 4.0
5,500
5,000 40 Total Debt SRmn 227 396 406 934 (74.4) 60.2
Jun-09 Oct-09 Feb-10 Jun-10
Cash & Equiv SRmn 521 295 (364) (506) (43.4) (199.0)
TA SI Yanbu Cement (RHS)
EBITDA Mgn % 62.2 62.1 63.4 61.6 - -
Net Mgn % 51.2 51.1 49.6 45.7 - -
Source: Bloomberg
ROE % 23.9 20.2 17.3 17.0 - -
Top 5 shareholders (%) ROA % 21.7 17.7 14.8 13.4 - -
Sulaiman Abdul Aziz Saleh Al 23.7 Div Payout % 75.5 65.2 73.5 71.4 - -
Rajhi EPS SR 5.3 4.6 4.1 4.2 (13.2) (7.5)
General Organization for 11.8 BVPS SR 22.4 23.0 24.1 25.2 2.7 4.0
Social Insurance (GOSI)
Source: Tadawul, Zawya, Company, NCBC Research estimates
Public Investment Fund 10.0
Target Price (SR) 44.3 Eastern Cement Co. (EPCC) was established in 1982 with a capacity of
7,000 tons of clinker per day at Khursaniyah (Dammam). Since then,
Price (SR) 42.3
EPCC has expanded its plant capacity to the current 3.5mn tons and
Pricing / Valuation as on June 13, 2010
3.45mn tons per year for cement and clinker respectively. Until 2008,
EPCC was a regular exporter of cement to neighboring countries.
Stock details
52-week range H/L (SR) 53.5/40.0 x Business brief: In 2009, EPCC’s market share stood at 8.5%, a decline
Market cap ($mn) 969.8
from the 9.5% and 11.5% in 2008 and 2007, respectively. It produced
Shares outstanding (mn) 86.0
3.20mn tons of cement and 2.98mn tons of clinker in 2009. EPCC owns a
Price perf. (%) 1M 3M 12M
30% stake in Arabian Yemeni Cement Company, Yemen, a 5.4% stake in
Absolute (3) (15) (4)
Market (6) (5) 3 Industrialization and Energy Services Company and 1.2% stake in Saudi
Sector (6) (10) 2 Industrial Investment Group.
Avg daily turn.(mn) SR US$
x Financials: 2009 was a difficult year for EPCC as the full year impact of the
3M 3.8 1.0
12M 3.7 2.0 export ban affected its performance. While revenues declined just 2.5%, net
Raw Beta 6m 2yr income declined by 19% as it shifted its focus back towards sales in the
0.45 0.58 domestic market. We expect the company’s financial performance to stabilize
Reuters code 3080.SE
in 2010 and so far it is on track. In 1Q10, EPCC was one of the few
Bloomberg code EACCO AB
companies to record positive revenue growth, registering an 8.8% YoY
Website www.eastern-cement.com.sa
growth in revenue to SR210.2mn. While the EBITDA margin was maintained
Weighting & free float (%) at 57.8% compared to 1Q09, the net margin dropped from 50.2% in 1Q09
TASI (free float weight) 0.50
to 43.9% in 1Q10, leading to a 4.9% decline in net income for the quarter.
Free float 68.06
x Recent developments: On 30 March 2010, EPCC announced a cash
Valuation multiples
dividend of SR3.0 per share for the year 2009. In December 2009, EPCC
08 09 10E
announced that Saudi Yemeni Cement Co Ltd., in which it holds 30% stake,
P/E (x) 8.4 10.4 9.3
P/B (x) 1.9 1.8 1.7 began trial operations at its Mukalla plant in southern Yemen. The plant has
P/Sales (x) 4.6 4.7 4.2 a daily capacity to produce 5,200 tons of cement and 400 tons of clinker.
Div yield (%) 7.1 7.1 7.1
DPS 3.0 3.0 3.0 Company financials
General Organization for Social 10.0 EPS SR 5.0 4.1 4.5 4.3 (18.0) (4.9)
Insurance (GOSI) BVPS SR 21.8 23.6 25.1 26.4 8.3 6.6
Source: Tadawul, Zawya, Company, NCBC Research estimates
Current Price (SR) 17.6 Founded in 1994, Tabuk Cement Company (TCC) is the smallest cement
Pricing / Valuation as on June 13, 2010 company in KSA in terms of market capitalization. In 2009, the company
produced 3.9mn tons of cement and 3.6mn tons of clinker at its plant
Stock details located in the north-west region of the country. TCC’s strategic location
52-week range H/L (SR) 22.0/17.0
enables it to cater to the demand for cement in the northern regions.
Market cap ($mn) 421.3
Shares outstanding (mn) 90.0 x Business brief: TCC held 3.4% market share of the domestic cement
Price perf. (%) 1M 3M 12M market in 2009, a decrease from 4.5% in 2007. The company has a 3.37%
Absolute (4) (6) (14)
stake in Industrialization & Energy Services Company, a support services and
Market (6) (5) 3
product manufacturing company catering to the energy sector. It also holds
Sector (6) (10) 2
Avg daily turn.(mn) SR US$ a marginal stake in the Saudi Cement Co.
3M 1.9 0.5
x Financials: Revenues in 1Q10 increased 8.7% YoY to SR77.1mn, driven by
12M 2.6 0.7
increased domestic demand. However, the EBITDA margin declined to 63.7%
Raw Beta 6m 2yr
0.28 0.70
in 1Q10 compared to 65.2% in 1Q09. Net margins also registered a decline
Reuters code 3090.SE in 1Q10 to 44.1% compared to 47.2% in 1Q09.
Bloomberg code TACCO AB
x Recent developments: In April 2010, TCC shareholders approved a SR1.25
Website www.tcc-sa.com
per share dividend for 2009.
Weighting & free float (%)
TASI (free float weight) 0.30 Company financials
Source: Bloomberg
4001 Al-Othaim 77
4002 Mouwasat 78
4240 AlHokair 84
Despite the global economic downturn, the Saudi retail sector remained in good
shape in 2009, generating revenues of SR9.9bn compared SR9.4bn in 2008. The
rising mall culture has led to retailers expanding their operations in the Kingdom by
opening new stores and launching aggressive advertising and promotional
campaigns. Apart from local demand, the KSA retail sector also benefits from
religious tourism; the holy cities of Makkah and Medina are visited by more than 12
million visitors each year.
In 2009, the combined revenue of the eight companies grew 5.9% over the
previous year. The sector’s earnings increased 12.1% in 2009 to SR825.1mn
compared to the 11.1% rise in 2008. Jarir Marketing posted a net profit of
SR374mn in 2009, up 12.4% from 2008, whereas Al-Hokair’s net profit for the year
ended March 2010 stood at SR231.5mn, an increase of 14% over 2008. Jarir
Marketing and Al-Hokair posted net margins of 14.6% and 11.2%, respectively,
higher than the industry average of 7.5%.
Exhibit 64: Revenue of companies, 2007–2009 Exhibit 65: Profitability of companies, 2007–2009
(SR mn) (%)
10,000 20
8,000
6,000
10
4,000
2,000
0 0
Source: Bloomberg, NCBC Research; Al-Hokair’s FY ended Mar 31, 2010 Source: Tadawul, Bloomberg, NCBC Research
As of 31 December 2009, the average P/B multiple of Saudi retail companies rose
to 3.6x in 2009 from 2.5x in 2008. However, the average reported return on equity
declined slightly from 22.0% in 2008 to 21.1% in 2009. As of 31 May 2010, the
average P/B for the sector was 3.4x.
Exhibit 66: Comparison of P/B and ROE, 2008 Exhibit 67: Comparison of P/B and ROE, 2009
(%) (%)
60 70
50 Jarir 60
40 50
ROE (%)
AlHokair
30 40
ROE (%)
Jarir
Alkhaleej
20 30
SASCO Aldrees
Alkhaleej
10 20
P/B (x) Aldrees
Fitahi Group SASCO
0 10 Al Othaim
P/B (x)
-2 0 2 4 6 8 10 Fitahi Group
-10 0
0 1 2 3 4 5 6 7 8 9
-20 National Agri -10 AlHokair
National Agri
-30 -20
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
Overweight Al-Othaim
Target Price (SR) 79.0 Abdullah Al-Othaim Markets Company (Al-Othaim), established in 1980,
is a subsidiary of Saudi Arabia based Al-Othaim Holding Company. Al-
Price (SR) 75.8
Othaim is a retailer and wholesaler of food and consumer products. The
Pricing / Valuation as on June 13, 2010
company also holds a 13.7% stake in AlOthaim Real Estate Investment
and Development Company.
Stock details
52-week range H/L (SR) 78.8/43.5 • Business brief: Al-Othaim primarily operates through four business models:
Market cap ($mn) 454.4
hypermarkets, supermarkets, convenience stores, and wholesale stores. It
Shares outstanding (mn) 22.5
owns and operates a chain of over 80 stores spread across the Riyadh region
Price perf. (%) 1M 3M 12M
and Aseer.
Absolute 1 39 63
Market (6) (5) 3 • Financials: Al-Othaim has witnessed steady growth in revenues and
Sector (3) 5 10
earnings, despite the global economic slowdown, as it is mainly exposed to
Avg daily turn.(mn) SR US$
the domestic retail market. The company is expanding by increasing its store
3M 15.4 4.1
12M 23.1 6.2 count, which drove revenues to increase 7.7% in 2009 and net income
Raw Beta 6m 2yr 15.7%. Margins have expanded as the company is benefitting from
0.51 0.91 economies of scale as it is now the second largest retail supermarket chain in
Reuters code 4001.SE
the country. We expect continued growth in 2010e and forecast revenues to
Bloomberg code AOTHAIM AB
increase 11% and net income to increase 24% for the year.
Website www.othaimmarkets.com
• Recent developments: In April 2010, the company acquired an 115k
Weighting & free float (%)
square-meter parcel of land in Al Madinah for SR98.28mn to develop a
TASI (free float weight) 0.18
Free float 51.00 commercial complex. Effective 11 May 2010, Mr. Abdulaziz Bin Saleh Al
Othaim was appointed the company’s Chief Executive, replacing Mr.
Valuation multiples
Mohammed Adel.
08 09 10E
P/E (x) 27.5 21.9 17.6
Company financials
P/B (x) 5.7 5.0 4.2
YoY CAGR (%)
P/Sales (x) 0.6 0.5 0.5
2008 2009 2010E 2011E (%) (08-11E)
Div yield (%) 2.0 3.3 2.0
Net Revenues SRmn 2,915 3,139 3,493 4,018 7.7 11.3
Source: NCBC Research estimates
EBITDA SRmn 107 134 149 159 25.2 14.1
5,500 50 Cash & Equiv SRmn 27 107 189 280 297.3 118.1
5,000 40 EBITDA Mgn % 3.7 4.3 4.3 4.0 - -
Jun-09 Oct-09 Feb-10 Jun-10
Net Mgn % 2.1 2.5 2.8 2.4 - -
TASI A. Othaim M arkets (RHS)
ROE % 23.1 24.3 25.9 21.9 - -
Valuation multiples
Company financials
08 09 TTM
YoY CAGR (%)
P/E (x) 16.9 15.3 14.5
2007 2008 2009 1Q10 (%) (07-09)
P/B (x) 4.0 3.4 3.2
Net Revenues SRmn 401 455 518 143.8 15.4 13.7
P/Sales (x) 3.6 3.2 3.1
EBITDA SRmn 125 140 156 40 4.9 11.5
Div yield (%) NA NA NA
Net Income SRmn 89 97 107 32.4 21.9 9.8
Source: NCBC Research
Assets SRmn 557 622 720 809 20.1 13.7
Share price performance Equity SRmn 354 409 480 512 17.6 16.3
Total Debt SRmn 123 113 116 164 23.8 (2.7)
7,000 70
6,500 65 Cash & Equiv SRmn 15 29 48 136 91.1 77.8
6,000 60 EBITDA Mgn % 31.2 30.8 30.1 27.7 - -
5,500 55
Net Mgn % 22.2 21.4 20.7 22.5 - -
5,000 50
Sep-09 Jan-10 M ay-10 ROE % 25.0 23.7 22.3 25.3 - -
Current Price (SR) 12.3 Saudi Automotive Services Company (SASCO) is headquartered in
Pricing / Valuation as on June 13, 2010 Riyadh. Established in 1982, the company provides a variety of services
and utilities for cars, motorists and travelers. SASCO owns specialized
Stock details maintenance workshops in Saudi Arabia. It also owns and manages
52-week range H/L (SR) 17.7/11.5 supermarkets, rest areas and restaurants for travelers.
Market cap ($mn) 147.0
Shares outstanding (mn) 45.0 x Business brief: SASCO offers services such as car maintenance and repair,
Price perf. (%) 1M 3M 12M
spare parts, car rescue, first aid, issuance of car test certificates, and
Absolute (3) (7) (24)
international driving licenses. The company also operates a network of
Market (6) (5) 3
Sector (3) 5 10 supermarkets, petrol pumps, housing facilities, rest areas, restaurants and
Avg daily turn.(mn) SR US$ other facilities across Saudi Arabia to service motorists and travelers.
3M 4.1 1.1
x Financials: SASCO recorded 2.7% YoY growth in revenues to SR45.4mn in
12M 8.3 2.2
Raw Beta 6m 2yr 1Q10. However, the EBITDA margins of the company fell 470 basis points in
0.24 0.89 1Q10 due to higher operating expenses. The company’s net income plunged
Reuters code 4050.SE 68.0% YoY to SR2.1mn in 1Q10 from SR6.6mn in 1Q09, mainly due to lower
Bloomberg code SACO AB
investment income.
Website www.sasco.com.sa
x Recent developments: In June 2010, the company announced plans to
Weighting & free float (%)
expand its operations by establishing 20 new sites within KSA before the end
TASI (free float weight) 0.11
of 2011 and to renovate its existing sites.
Free float 100.0
P/B (x) 1.3 1.1 1.1 Net Revenues SRmn 192 214 191 45 2.7 (0.4)
6,500
45 Net Mgn % 2.1 (7.0) (7.8) (6.0) - -
40
6,000 35 ROE % 2.9 (11.9) (13.7) (8.8) - -
30 ROA % 2.2 (8.7) (9.6) (6.4) - -
5,500
25
5,000 20 Div Payout % - - - - - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
EPS SR 0.3 (1.0) (1.0) (0.6) NM NM
TA SI Thim'ar (RHS)
BVPS SR 9.1 8.1 7.0 6.7 (14.1) (12.2)
Current Price (SR) 12.7 Fitaihi Group Holding Company, established in 1992, is engaged in the
Pricing / Valuation as on June 13, 2010 design, manufacture and wholesale & retail distribution of gems, jewelry
and precious stones. The company has two marketing subsidiaries,
Stock details Marina B Creation Vados and Marina B Geneve, which market its
52-week range H/L (SR) 22.3/12.0 products worldwide.
Market cap ($mn) 169.3
Shares outstanding (mn) 50.0 x Business brief: Fitaihi’s product portfolio includes precious stones, jewelry,
Price perf. (%) 1M 3M 12M consumer products, beauty products, kitchenware, leather products and
Absolute (10) (7) (37) clothing, accessories, perfumes, medical equipment, industrial parts, etc.
Market (6) (5) 3
The company has presence in the hospital industry through its 19.3%
Sector (3) 5 10
investment in International Medical Center and 5.7% stake in Dar Al Fouad
Avg daily turn.(mn) SR US$
3M 11.8 3.2 Hospital. Fitaihi also has a 20% stake in Fitaihi Junior. The company owns
12M 22.7 6.0 two premium department stores under the brand name FITAIHI in Jeddah
Raw Beta 6m 3yr and Riyadh, in addition to other outlets.
0.66 0.86
Reuters code 4180.SE x Financials: Fitaihi’s revenues declined 1.9% YoY to SR36mn in 1Q10. The
Bloomberg code AHFCO AB company’s EBITDA margins also fell from 18% in 1Q09 to 16% in 1Q10,
Website www.fitaihi-group.com primarily due to increase in SG&A expenses. Net income almost doubled
Weighting & free float (%) from SR6.4mn in 1Q09 to SR12.7mn in 1Q10 due to higher investment
6,000
18 Net Income SRmn 1 19 10 13 99.8 252.5
16
5,500 14 Assets SRmn 765 720 731 750 2.0 (2.2)
12
5,000 10 Equity SRmn 637 560 616 652 11.8 (1.7)
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
TA SI Fitaihi (RHS)
Total Debt SRmn 87 71 55 34 (45.7) (20.5)
Cash & Equiv SRmn 15 14 10 3 (79.3) (19.7)
Source: Bloomberg EBITDA Mgn % 10.8 17.5 15.0 16.0 - -
Net Mgn % 0.7 9.9 6.7 35.2 - -
Top 5 shareholders (%)
ROE % 0.1 3.2 1.8 8.0 - -
Ahmed Hassan Ahmed Fitaihi 22.3
ROA % 0.1 2.6 1.4 6.9 - -
Div Payout % - - - - - -
EPS SR 0.0 0.4 0.2 0.3 92.3 224.0
BVPS SR 12.7 11.2 12.3 13.0 11.8 (1.5)
Source: Tadawul, Zawya, Company, NCBC Research
Target Price (SR) 170.0 Jarir Marketing Company (Jarir) was established in Riyadh in 1979. The
company is engaged in the retail and wholesale trading of office &
Price (SR) 153.5
school supplies, computers and computer supplies, books, among others.
Pricing / Valuation as on June 13, 2010
x Product profile: Jarir’s business activities are divided into four broad
Stock details segments: School Supplies, Office Supplies, Computer Accessories and
52-week range H/L (SR) 164.3/126.0 Entertainment Products, and Books. The company’s wholly-owned
Market cap ($mn) 1,636.9
subsidiaries include Jarir Egypt Financial Leasing Co., United Bookstore
Shares outstanding (mn) 40.0
(UAE), Jarir Trading Co. (UAE), United Company for Office Supplies and
Price perf. (%) 1M 3M 12M
Stationeries (Qatar), and Jarir Bookstore (Kuwait).
Absolute (6) 9 23
Market (6) (5) 3 x Financials: Sales grew just 1% in 2009 due to a higher proportion of lower
Sector (3) 5 10
priced netbooks, however net income grew 12% as margins expanded
Avg daily turn.(mn) SR US$
140bps due to lower cost of merchandise and an increasing proportion of
3M 7.0 1.9
12M 5.7 1.5 sales coming from high margin school supplies and computer accessories.
Raw Beta 6m 2yr We expcect sales growth to resume in 2010e and for earnings to continue
0.31 0.51 expanding at a reasonable pace as the company continues opening new
Reuters code 4190.SE
stores (we forecast 3 new stores in 2010e).
Bloomberg code JARIR AB
Website www.jarirbookstore.com x Recent developments: In March 2010, the company announced that it has
opened a new Jarir Bookstore at Panorama Mall in Riyadh. Furthermore, it
Weighting & free float (%)
has plans to open two more stores (in Mecca and Kuwait) later during the
TASI (free float weight) 1.07
Free float 87.92 year. In May 2009, the company increased its capital from SR300mn to
SR400mn through the issue of four bonus shares for every three shares
Valuation multiples
held.
08 09 10E
P/E (x) 18.4 16.4 15.3
Company financials
P/B (x) 8.9 8.5 7.7
YoY CAGR (%)
P/Sales (x) 2.4 2.4 2.1
2008 2009 2010E 2011E (%) (08-11E)
Div yield (%) 5.2 4.8 5.3
Net Revenues SRmn 2,520 2,555 2,883 3,182 1.4 8.1
Source: NCBC Research estimates
EBITDA SRmn 368 408 430 462 10.8 7.9
Share price performance Net Income SRmn 333 374 402 433 12.3 9.1
Assets SRmn 1,163 1,250 1,409 1,528 7.5 9.5
7,000 170
160 Equity SRmn 687 723 802 882 5.2 8.7
6,500
150
Total Debt SRmn 192 137 158 133 (28.6) (11.5)
6,000 140
5,500
130 Cash & Equiv SRmn 24 40 84 100 65.3 60.9
120
5,000 110
EBITDA Mgn % 14.6 16.0 14.9 14.5 - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Net Mgn % 13.2 14.6 13.9 13.6 - -
TA SI Jarir (RHS)
ROE % 51.4 53.1 52.7 51.4 - -
Source: Bloomberg ROA % 29.8 31.0 30.2 29.5 - -
Div Payout % 72.1 79.1 80.7 81.3 - -
Top 5 shareholders (%)
EPS SR 11.1 9.4 10.0 10.8 (15.8) (0.8)
Jarir Commercial Investment 12.0
BVPS SR 22.9 18.1 20.0 22.1 (21.1) (1.2)
Mohd Abdul Rahman Nasser 9.0
Al Aqeel Source: Tadawul, Zawya, Company, NCBC Research estimates
Current Price (SR) 38.0 Aldrees Petroleum and Transport Services Co. (Aldrees) has three main
Pricing / Valuation as on June 13, 2010 operations –petroleum, transport and Super 2 division (manages coffee,
pastry and car-washing centers). The company has a 98% stake in
Stock details Aldrees Sudan, engaged in marine, land and air transportation.
52-week range H/L (SR) 47.0/27.3
Market cap ($mn) 253.3
x Business brief: The Aldrees Petroleum division mainly runs a network of
Shares outstanding (mn) 25.0 346 gas stations under the brand Petrol. It also services contracts for fuel
Price perf. (%) 1M 3M 12M supply to government and private companies. The Aldrees Transportation
Absolute (3) 2 27 division operates and maintains a fleet of 1,032 tractor heads with 1,376
Market (6) (5) 3
cargo carriers, ranging from chemical/lubricant tankers, trailers, and bulkers
Sector (3) 5 10
to flat beds. The Super 2 division manages coffee and cake stores under the
Avg daily turn.(mn) SR US$
3M 7.8 2.1 brand Super Café and car wash & car detailing under the brand Super Wash
12M 13.1 3.5 located in the company’s gas station network.
Raw Beta 6m 2yr
x Financials: Aldrees recorded 10.5% YoY growth in revenues during 1Q10 to
0.99 0.77
Reuters code 4200.SE SR343mn. The company’s EBITDA margins also increased 144 basis points
Bloomberg code ALDREES AB YoY to 9.5%, primarily due to an increase in prices of petroleum products.
Website www.aldrees.com Net income grew 44.4% from SR13.8mn in 1Q09 to SR19.9mn in 1Q10.
Weighting & free float (%) x Recent developments: Aldrees announced a cash dividend of SR1.50 per
TASI (free float weight) 0.19 share for the year 2009.
Free float 100.00
Company financials
Valuation multiples
YoY CAGR (%)
08 09 TTM
2007 2008 2009 1Q10 (%) (07-09)
P/E (x) 17.9 13.8 12.7
Net Revenues SRmn 866 1,134 1,310 343 10.5 23.0
P/B (x) 3.0 2.7 2.9
EBITDA SRmn 74 93 118 33 30.2 26.3
P/Sales (x) 0.8 0.7 0.7
Net Income SRmn 50 53 69 20 44.4 17.4
Div yield (%) 3.9 3.9 NA
Assets SRmn 531 664 734 719 (0.9) 17.5
Source: NCBC Research
Equity SRmn 296 317 347 327 12.3 8.2
Share price performance Total Debt SRmn 76 122 155 134 (37.5) 42.8
Cash & Equiv SRmn 41 38 70 25 (53.5) 31.4
7,000 50
45 EBITDA Mgn % 8.5 8.2 9.0 9.5 - -
6,500
40 Net Mgn % 5.8 4.7 5.3 5.8 - -
6,000 35
30
ROE % 18.5 17.3 20.8 23.6 - -
5,500
25 ROA % 10.6 8.9 9.9 10.9 - -
5,000 20
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Div Payout % 59.5 70.8 54.3 - - -
Neutral AlHokair
Target Price (SR) 46.5 Fawaz Abdulaziz AlHokair Company (AlHokair), established in 1990, is
the largest fashion retail franchise player in the Saudi market,
Price (SR) 43.7
accounting for roughly half of the mid-market fashion retail business in
Pricing / Valuation as on June 13, 2010
the country through its 70 plus brands.
Stock details x Business brief: AlHokair operates more than 700 fashion stores and is the
52-week range H/L (SR) 44.8/25.0 retail franchise for over 70 global brands. The company’s product offerings
Market cap ($mn) 815.5
include adult apparel, kids & teen fashion, footwear, eyewear, and
Shares outstanding (mn) 70.0
accessories. Major brands include Zara, Banana Republic, GAP, Monsoon,
Price perf. (%) 1M 3M 12M
Marks & Spencers, etc. AlHokair has three subsidiaries – Al Waheeda
Absolute 10 22 48
Market (6) (5) 3 Equipment Co. (95% stake), Haifa Badai Al Kalam and Partners International
Sector (3) 5 10 Co. for Trading (95% stake) and Saudi Retail Company.
Avg daily turn.(mn) SR US$
x Financials: AlHokair’s revenues increased 9.9% YoY to SR2.1bn in FY2010
3M 6.8 1.8
12M 10.3 2.7 (ending 31 March), mainly due to the acquisition of Wahba and the opening
Raw Beta 6m 2yr of new stores. Net income grew an even faster 14.6% to SR232mn during
0.66 0.95 the year as margins expanded following the restructuring efforts of the past
Reuters code 4240.SE
few years. We expect continued expansion in revenues and net income in the
Bloomberg code ALHOKAIR AB
coming years as store counts increase and further efficiencies are
Website www.alhokair.com.sa
recognized. For FY2011e, we expect 15% revenue growth to SR2,388mn and
Weighting & free float (%) 26% net income growth to SR293mn.
TASI (free float weight) 0.31
Free float 51.00 x Recent developments: On March 13, 2010, AlHokair announced plans to
open 112 stores in 2010–11, with half of the stores in MENA countries and
Valuation multiples
the remaining in emerging markets. On March 27, 2010, the company signed
08 09 10E
a memorandum of understanding with three retail firms – Retail Group Gulf,
P/E (x) 15.1 13.2 10.4
P/B (x) 3.5 2.8 2.4 Retail Group Egypt and Retail Group Jordon – to acquire a stake in each of
P/Sales (x) 1.6 1.5 1.3 the companies.
Div yield (%) 4.0 4.1 4.1
Source: NCBC Research estimates
Company financials
YoY CAGR (%)
Share price performance
2009 2010 2011E 2012E (%) (09-12E)
7,000 50 Net Revenues SRmn 1,899 2,074 2,388 2,698 9.2 12.4
45
6,500 EBITDA SRmn 260 318 376 421 22.1 17.4
40
6,000 35
30
Net Income SRmn 202 232 293 319 14.6 16.5
5,500
25
Assets SRmn 1,590 1,897 2,203 2,406 19.3 14.8
5,000 20
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Equity SRmn 863 1,094 1,264 1,461 26.8 19.2
TASI AlHokair (RHS) Total Debt SRmn 370 370 372 324 - -
Cash & Equiv SRmn 24 76 122 130 216.7 75.6
Source: Bloomberg
EBITDA Mgn % 13.7 15.3 15.7 15.6 - -
Top 5 shareholders (%) Net Mgn % 10.6 11.2 12.3 11.8 - -
Fawaz Alhokair Group 49.0 ROE % 22.8 23.7 24.8 23.4 - -
Fawaz Abdul Aziz Fahd Al ROA % 14.3 13.3 14.3 13.8 - -
7.0
Hokair Div Payout % 60.3 54.4 42.9 39.1 - -
Dr Abdulmajeed Abdulaziz 7.0 EPS SR 2.9 3.3 4.2 4.6 14.1 16.6
Fahed Alhokair
BVPS SR 12.3 15.6 18.1 20.9 27.1 19.3
Dr Salman Abdulaziz Fahed 7.0
Alhokair Source: Tadawul, Zawya, Company, NCBC Research estimates
Current Price (SR) 36.9 Alkhaleej Training and Education Company (Alkhaleej), established in
Pricing / Valuation as on June 13, 2010 1992, conducts training programs in the fields of IT, electronics, English
language, and administrative and financial services. The company has
Stock details more than 81 branches in Saudi Arabia and in more than 17 locations in
52-week range H/L (SR) 55.0/34.0 the Middle East.
Market cap ($mn) 147.6
Shares outstanding (mn) 15.0 x Business brief: Alkhaleej implements its training programs through its
Price perf. (%) 1M 3M 12M various divisions, including New Horizons Computer Learning Centers (the
Absolute (7) (11) (29) largest independent IT training company), Direct English Centers, Platinum
Market (6) (5) 3
Center for Advanced Training Solutions (provides advanced computer
Sector (3) 5 10
courses); Takniat for Training, Business & Professional Development
Avg daily turn.(mn) SR US$
3M 4.8 1.3 (specializes in management training); Kawader (employs the graduates of its
12M 9.5 2.5 programs) and E-Learning (provides more than 2000 courses online).
Raw Beta 6m 2yr
x Financials: Alkhaleej has reported continued revenue and net income
0.83 0.95
Reuters code 4290.SE growth through 2009 as it proved resilient to the economic downturn. This
Bloomberg code ALKHLEEJ AB has continued in the 1Q10 as revenues increased 5.5% YoY to SR93.3mn
Website www.alkhaleej.com.sa and net income increased 15% from SR10.2mn in 1Q09 to SR11.8mn in
TASI (free float weight) 0.05 x Recent developments: In February 2010, the company announced that it
Free float 44.6
had signed two five-year Murabaha contracts with Amlak International
Valuation multiples Finance for a total value of SR32.3mn to fund its expansion projects.
08 09 TTM Alkhaleej announced a cash dividend of SR0.50 per share for the year 2009.
P/E (x) 13.5 13.2 12.7
P/B (x) 2.8 2.4 2.3 Company financials
P/Sales (x) 1.6 1.6 1.6 YoY CAGR (%)
Div yield (%) 2.0 1.4 NA 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Revenues SRmn 301 346 350 93 5.5 7.8
EBITDA SRmn 60 70 70 18 18.1 7.6
Share price performance
Net Income SRmn 38 41 42 12 15.0 5.2
7,000 55 Assets SRmn 302 357 425 444 22.6 18.6
6,500 50
45
Equity SRmn 154 195 228 239 17.9 21.6
6,000
40 Total Debt SRmn 45 89 111 118 34.3 57.4
5,500 35
Cash & Equiv SRmn 26 34 31 20 (30.4) 8.5
5,000 30
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 19.9 20.2 19.9 19.2 - -
TA SI A lkhaleej Trng (RHS)
Net Mgn % 12.6 11.8 12.0 12.6 - -
ROE % 28.3 23.5 19.9 20.2 - -
Source: Bloomberg
ROA % 14.1 12.4 10.8 10.8 - -
Top 5 shareholders (%) Div Payout % - 18.3 17.9 - - -
Abdul Aziz Rashid Abdul 20.3 EPS SR 4.7 4.1 2.8 0.8 14.7 (22.8)
Rahman Al Rashid
BVPS SR 19.3 19.5 15.2 16.0 (21.4) (11.2)
Ahmed Ali Ahmed Al Shedwy 13.3
Source: Tadawul, Zawya, Company, NCBC Research
AlWaleed Abdul Razzaq Saleh 11.8
Al Duraian
Abdul-Aziz Hammad Nasser Al 10.0
Buleihid
Ahmed Mohammed Salem Al 6.3
Sirry
Source: Tadawul, NCBC Research
2270 SADAFCO 91
Exhibit 69: Revenue of GCC agri. companies, 2007–09 Exhibit 70: Comparison of ROE & P/E of GCC cos, 2009
(USD mn) (%)
500 8,000 30
7,000 25
400
6,000 20
5,000
ROE (%)
300 15
4,000
10
200 3,000
5
2,000
100 0
1,000 P/E (x)
-5
0 0
0 5 10 15 20 25
2007 2008 2009
Oman Qatar UAE Kuwait KSA* UAE Oman Kuwait Qatar Saudi
Source: Tadawul, Bloomberg, NCBC Research; * Plotted on secondary axis Source: Tadawul, Bloomberg, NCBC Research
In 2009, the combined revenue of the 13 companies (excluding Bishah and Hail
Agriculture) grew at 22% over the previous year. Core earnings grew 24% in 2009
after declining by 36% in 2008. Savola posted revenue growth of 30% and core-
earnings growth of 102% during the year, while Almarai’s revenues grew 17% and
earnings grew 20.5%.
Exhibit 71: Revenue of companies, 2007–2009 Exhibit 72: Profitability of companies, 2007–2009
(USD mn) (%)
30,000 24
24,000
12
18,000
12,000
0
6,000 2007 2008 2009
0
2007 2008 2009 (12)
Source: Tadawul, Bloomberg, NCBC Research; * Plotted on secondary axis Source: Tadawul, Bloomberg, NCBC Research
Target Price (SR) 34.4 Savola Group Company is a leading retailer of foods in the Middle East
region, with operations extending as far as North Africa and Central
Price (SR) 35.0
Asia. The group’s business interests are divided into four segments:
Pricing / Valuation as on June 13, 2010
Savola Foods (edible oils, sugar and foods), Savola Retail (Panda and
Hyper Panda), Real Estate (Kinan International) and Savola Plastic.
Stock details
52-week range H/L (SR) 38.3/21.4 • Business brief: Savola enjoys a leading position in edible oils and sugar,
Market cap ($mn) 4,665.5 and retailing through its 113 outlets across the Kingdom. Savola has major
Shares outstanding (mn) 500
investments in Almarai Dairy Company (30%), Herfy Foods Company (47%),
Price perf. (%) 1M 3M 12M
Jordanian Tameer Company (5%), besides being one of the founding
Absolute 3 (3) 47
Market (6) (5) 3
shareholders of Knowledge Economic City in Madinah and a founding
Sector 0 (2) 23 shareholder of King Abdullah Economic City in Rabigh, Saudi Arabia.
Avg daily turn.(mn) SR US$
• Financials: We expect Savola to continue reporting steady revenue and
3M 17.4 4.6
12M 18.2 4.9
underlying net income growth over 2010e and 2011e, mainly driven by its
Raw Beta 6m 3yr Food and Retail businesses (adjusting for the SR196mn capital gain from the
1.05 1.06 IPO of Herfy in 1Q10). In 1Q10, Savola’s revenues grew 31% YoY to SR4.8bn.
Reuters code 2050.SE Net income rose by 104.6% YoY to SR394mn in 1Q10 from SR193mn in 1Q09,
Bloomberg code SAVOLA AB
including the SR196mn capital gain in 1Q10. For 2010, the company has guided
Website www.savola.com
for an adjusted net income level of SR920mn (before one-off itmes), which we
Weighting & free float (%) believe is conservative.
TASI (free float weight) 2.55
• Recent developments: In April 2010, Savola said its current CEO Sami
Free float 73.52
Baroum will step down by the end of June and Abdu-Raouf Manaa, the
Valuation multiples
current head of its edible oil firm Afia, will take over. In December 2009,
08 09 10E
Savola pulled out of the bidding process for six sugar mills being sold by the
P/E (x) 86.5 18.4 14.4
Turkish government, citing that country’s sugar pricing policy. The company
P/B (x) 2.7 2.5 2.3
P/Sales (x) 1.3 1.0 0.8 has indicated it is looking for acquisition opportunities in Sudan and Egypt.
Div yield (%) 2.9 2.9 3.7
Company financials
DPS 1.0 1.0 1.3
YoY CAGR (%)
Source: NCBC Research estimates
2008 2009 2010E 2011E (%) (08-11E)
Share price performance Net Revenues SRmn 13,821 17,917 21,425 23,172 29.6 18.8
Also known as
Not Covered Warfa Food Wafra, Food
Products Company
Current Price (SR) 17.3 Riyadh-based Food Products Company was established in 1989 to
Pricing / Valuation as on June 13, 2010 provide Saudi families with high quality food products. It is one of the
country’s leading food manufacturing companies, concentrating on the
Stock details processing, marketing, distribution, and export of value added
52-week range H/L (SR) 25.0/16.3 foodstuffs. The company’s target markets include Asia and the Middle
Market cap ($mn) 92.2
East.
Shares outstanding (mn) 20
Price perf. (%) 1M 3M 12M x Business brief: The Company operates under the brand name WAFRA and
Absolute (10) (15) (28) has a 10% stake in Jannat Agricultural Investment Co. The company
Market (6) (5) 3 classifies its operations under four business segments: meat factory (offers
Sector 0 (2) 23
beef and chicken burgers, kebabs, frankfurters), vegetable factory (offers
Avg daily turn.(mn) SR US$
3M 13.0 3.5 frozen French fries, potato wedges, and a variety of peanuts), pasta factory
12M 18.6 5.0 (produces a wide range of pasta under its various brands), and breakfast
Raw Beta 6m 3yr cereals (supplies corn flakes, frosted flakes, and rice crispies).
0.41 1.01
x Financials: The Company’s net revenues increased 7.5% YoY to SR19mn in
Reuters code 2100.SE
Bloomberg code FPCO AB 1Q10 compared to SR17.9mn in 1Q09. Gross margin improved by 515 basis
Website www.wafrah.com points to 42% in 1Q10, due to a decline in the cost of goods sold. As of 31
March 2010, the company had zero debt and cash & cash equivalents of
Weighting & free float (%)
TASI (free float weight) 0.07
SR7.3mn.
Free float 100.00 x Recent developments: In April 2010, Jamal Bin Trad Al Saadoun, general
7,000 26
Total Debt SRmn 3 0 0 0 - -
6,500 24 Cash & Equiv SRmn 7 5 5 7 103.1 (13.5)
22
6,000
20 EBITDA Mgn % 29.2 23.7 19.5 26.0 - -
5,500 18
5,000 16
Net Mgn % 12.3 18.4 8.1 15.8 - -
Jun-09 Oct-09 Feb-10 Jun-10 ROE % 5.2 8.5 3.3 6.8 - -
TA SI Fo o d (RHS) ROA % 4.5 7.6 3.0 6.1 - -
Div Payout % 0.0 0.0 0.0 - - -
Source: Bloomberg
EPS SR 0.4 0.7 0.3 0.2 7.1 (14.9)
Top 5 shareholders (%) BVPS SR 7.9 8.5 8.8 9.0 4.1 5.7
Source: Tadawul, Zawya, Company, NCBC Research
Pricing / Valuation as on June 13, 2010 commenced operations in 1977 and focuses on dairy products. The
company later diversified its product line by entering into joint ventures
Stock details with other food companies. SADAFCO’s portfolio comprises more than
52-week range H/L (SR) 55.3/30.4 100 products sold under the SAUDIA brand.
Market cap ($mn) 392.5
x Business brief: The company operates through five main segments—milk,
Shares outstanding (mn) 32.5
juices, snacks, ice cream, and other foodstuffs. Under the milk segment,
Price perf. (%) 1M 3M 12M
Absolute 2 1 39 SADAFCO offers customers a wide range of milk packs and milk shakes. The
Market (6) (5) 3 ice cream segment sells a number of ice cream flavors. The other foodstuffs
Sector 0 (2) 23 segment produces tomato paste and hummus.
Avg daily turn.(mn) SR US$
3M 12.2 3.3 x Financials: SADAFCO‘s revenue grew 10.9% YoY to SAR1,023mn in 2010
12M 12.7 3.4 compared to SR922mn in 2009. Both gross and operating margin expanded
Raw Beta 6m 3yr by 500 basis points to 35.7% and 12.4%, respectively. The company’s net
0.71 0.90
income grew by 610.6% YoY to SR204mn in 2010 compared to SR29m in
Reuters code 2270.SE
2009. Net income growth was driven mainly by investment income of
Bloomberg code SADAFCO AB
Website www.sadafco.com SR119mn in 2010 compared to an investment loss of SR26mn in 2009.
Weighting & free float (%) x Recent developments: In December 2009, SADAFCO sold its 51% stake in
TASI (free float weight) 0.17 Saudi New Zealand Milk products to Fonterra of New Zealand for
Free float 58.21 SR135.2mn. For the fiscal year 2010, SADAFCO has paid an annual dividend
of SR3.00 per share.
Valuation multiples
08 09 10
Company financials*
P/E (x) 25.2 52.0 7.2
YoY CAGR (%)
P/B (x) 2.9 2.9 2.2
2007 2008 2009 2010 (%) (07-10)
P/Sales (x) 1.7 1.6 1.4
Net Revenues SRmn 769 878 922 1,023 10.9 10.0
Div yield (%) 2.2 0.0 6.6
EBITDA SRmn 93 104 103 163 57.7 20.6
DPS 1.0 0.0 3.0
Net Income SRmn 33 58 28 203 617.8 83.2
Source: NCBC Research
Assets SRmn 732 764 719 964 34.0 9.6
Share price performance Equity SRmn 488 515 502 667 32.8 11.0
Total Debt SRmn 22 6 1 0 - -
7,000 55
6,500 Cash & Equiv SRmn 104 83 50 323 546.5 45.7
45
6,000 EBITDA Mgn % 12.1 11.8 11.2 15.9 - -
35
5,500
Net Mgn % 4.3 6.7 3.1 19.9 - -
5,000 25
Jun-09 Oct-09 Feb-10 Jun-10 ROE % 7.0 11.7 5.6 139.1 - -
TA SI SA DA FCO (RHS) ROA % 4.4 7.8 3.8 96.6 - -
Div Payout % 0.0 55.6 0.0 - - -
Source: Bloomberg EPS SR 1.0 1.8 0.9 6.3 594.4 83.0
BVPS SR 15.0 15.8 15.5 20.5 32.3 11.0
Top 5 shareholders (%)
Source: Tadawul, Zawya, Company, NCBC Research
United Industries Company 30.1 * Financial Year End March
Al Samih Trading Company 11.6
Target Price (SR) 193 Almarai Company, based in Riyadh, is the leading milk and dairy
products company in the region and is also expanding into the related
Price (SR) 190.5
juices and food markets. Almarai is regarded as one of the best
Pricing / Valuation as on June 13, 2010
companies in the region in terms of investor openness and disclosure
levels.
Stock details
52-week range H/L (SR) 202.3/145 x Business brief: Almarai’s portfolio includes fresh and long-life dairy
Market cap ($mn) 5,840.5 products (such as milk, natural and fruit yoghurts, cream and evaporated
Shares outstanding (mn) 115.0 milk), several fruit juice flavors, cheese and butter, bakery products, and
Price perf. (%) 1M 3M 12M other items such as tomato paste and jams. The company is also expanding
Absolute (3) 8 31
into the chicken market through HADCO, which it purchased in Oct. 2009 for
Market (6) (5) 3
Sector 0 (2) 23
SR950mn. In addition, the company is targeting the infant milk market
Avg daily turn.(mn) SR US$ through its recently formed JV with Mead Johnson.
3M 30.8 8.2
x Financials: Almarai has recorded steady revenue and earnings growth over
12M 23.4 6.2
Raw Beta 6m 3yr
the years as it has expanded its product offering and due to the demographic
0.69 0.70 growth in its end markets. We expect earnings to continue growing by about
Reuters code 2280.SE 20% annually in 2010e and 2011e. In 1Q10, Almarai’s revenue grew 17.6%
Bloomberg code ALMARAI AB YoY to SR1.6bn. Net profit grew 18.6% YoY to SR234mn. Gross margin were
Website www.almarai.com
weak in the quarter due to investments in some of its new business areas,
Weighting & free float (%) although this was offset by lower bank charges and G&A expenses
TASI (free float weight) 1.82
x Recent developments: In March 2010, Almarai entered into a 50:50 joint
Free float 41.35
venture with Mead Johnson Nutrition Co. to produce, market and distribute
Valuation multiples infant nutrition products in the GCC. In January 2010, Almarai announced
08 09 10E
the transfer of its 100% stake in International Company for Agro Industrial
P/E (x) 24.1 20.0 16.5
Projects (Beyti) to International Dairy and Juice Limited (IDJ). IDJ is a joint
P/B (x) 6.1 4.1 3.5
venture between Pepsi Co. and Almarai holds a 48% stake in IDJ.
P/Sales (x) 4.4 3.7 3.2
Div yield (%) 1.8 2.1 2.4
Company financials
DPS 3.5 4.0 4.5
YoY CAGR (%)
Source: NCBC Research estimates
2008 2009 2010E 2011E (%) (08-11E)
Share price performance Net Revenues SRmn 5,030 5,869 6,867 7,873 16.7 16.1
EBITDA SRmn 1,440 1,642 1,942 2,256 14.0 16.1
7,000 210
6,500 190 Net Income SRmn 910 1,097 1,330 1,580 20.5 20.2
6,000 170 Assets SRmn 8,181 10,987 12,318 13,402 34.3 17.9
5,500 150
Equity SRmn 3,617 5,383 6,253 7,315 48.8 26.5
5,000 130
Jun-09 Oct-09 Feb-10 Jun-10 Total Debt SRmn 3,644 4,377 4,345 4,254 20.1 5.3
TASI Almarai (RHS) Cash & Equiv SRmn 247 508 433 302 105.9 7.0
EBITDA Mgn % 28.6 28.0 28.3 28.7 - -
Source: Bloomberg Net Mgn % 18.1 18.7 19.4 20.1 - -
Current Price (SR) 44.2 Anaam International, headquartered in Jeddah, Saudi Arabia, was
Current Price (SR) 39.7 Halwani Brothers Company (HB), headquartered in Jeddah, Saudi
Pricing / Valuation as on June 13, 2010 Arabia, was established in 1952. The company is engaged in the
production, marketing and distribution of food products within and
Stock details outside Saudi Arabia. HB has over 26 brands and 15 factories and plants
52-week range H/L (SR) 41.0/30.1 in Saudi Arabia and Egypt.
Market cap ($mn) 302.4
x Business brief: HB is engaged in the production of cheese, ice-cream,
Shares outstanding (mn) 28.6
frozen and processed meat, jams, grains, juices, dates and halawa and
Price perf. (%) 1M 3M 12M
Absolute 11 28 10 manufacture of tissues. It has the capacity to produce 12,200 tons of Tahina,
Market (6) (5) 3 20,100 tons of Halwa, 22,950 tons of meat, 3,000 tons of cheese, 3,348 tons
Sector 0 (2) 23 of Arabic sweets, 4,500 tons of dairy products, and 9,996 tons of jam per
Avg daily turn.(mn) SR US$
year.
3M 22.0 5.9
12M 21.4 5.7 x Financials: In 1Q10, HB’s revenues grew 2.9% YoY to SR173mn compared
Raw Beta 6m 2yr to SR168mn in 1Q09. The company’s total expenses declined 3.3% YoY to
0.43 1.08
SR147mn in 1Q10. The increase in revenues and lower costs led to HB’s net
Reuters code 6001.SE
income growing 68% YoY to SR21mn in 1Q10 compared to SR12.4mn in
Bloomberg code HB AB
Website www.halwani.com.sa 1Q09.
Weighting & free float (%) x Recent developments: In February 2010, HB declared a dividend of SR1
TASI (free float weight) 0.10 per share for 2009. In December 2009, HB obtained a SR165mn loan from
Free float 44.49 Saudi Industrial Development Fund in order to finance half its SAR330mn
production plant in Jeddah, which will bring all production units, including the
Valuation multiples
08 09 TTM confectionaries, meat, dairy production and packaging plants, under one
P/E (x) 19.4 26.6 22.2 roof.
P/B (x) 2.3 2.4 2.3
P/Sales (x) 1.7 1.8 1.8
Company financials
Current Price (SR) 74.0 Herfy Food Services Company (Herfy), established in 1981, has a chain
Weighting & free float (%) each in Ras-Tanura, Panorama Mall (Riyadh) and Darren Mall (Dammam), which
TASI (free float weight) 0.12 boosted its top line. The company raised SR413mn in capital in an IPO that
Free float 30.0 took place on 2 February 2010.
Also known
Current Price (SR) 26.1 National Agriculture Development Company (NADEC) commenced
operations in 1981 with a 20% government stake. The company focuses
Pricing / Valuation as on June 13, 2010
on agricultural production, food processing and distribution. NADEC
Stock details operates in three business segments – agricultural, dairy and juice
52-week range H/L (SR) 42.9/24.0 products – all sold under the NADEC brand.
Market cap ($mn) 417.5
x Business brief: The company offers a wide range of products under each of
Shares outstanding (mn) 60
its operating segments. Under its agricultural segment, NADEC offers
Price perf. (%) 1M 3M 12M
Absolute (7) (12) (34) manufactured products such as tomato paste, grains, vegetables, fruits,
Market (6) (5) 3 fodder, olives and honey. The dairy products segment offers long-life
Sector 0 (2) 23 products (including cheese and milk), desserts and special products. The
Avg daily turn.(mn) SR US$
juice segment offers a range of fresh and long-life juices in containers of
3M 4.7 1.2
various sizes. NADEC has the capacity to annually produce 120,000 tons of
12M 3.9 1.0
Raw Beta 6m 3yr potatoes, 150,000 tons of wheat, 20,000 tons of wheat seeds, 30,000 liters
0.59 0.80 of olive oil, 300,000 tons of alfalfa, 40,000 tons of onion, 5,402 tons of
Reuters code 6010.SE dates, 60,000 tons of maize, 300,000 liters of dairy products, 9 tons of
Bloomberg code NADEC AB
honey and 3,000 tons of grain maize.
Website www.nadec.com.sa
x Financials: In 1Q10, NADEC’s revenues grew 14.4% YoY to SR319.7mn
Weighting & free float (%)
compared with SR279.4mn in 1Q09. NADEC’s operating profit increased
TASI (free float weight) 0.15
112.3% YoY due to robust revenue growth and lower operating expenses.
Free float 48.81
Consequently, the company’s net income grew to SR3.8mn in 1Q10
Valuation multiples compared to the net loss of SR4.3mn recorded in 1Q09.
08 09 TTM
P/E (x) 22.8 (40.8) (51.8) x Recent developments: In February 2010, a court ordered ARAMCO to
P/B (x) 1.5 1.6 1.6 vacate the land that it was using to lay pipes and conduct excavations, as it
P/Sales (x) 1.2 1.2 1.1 belonged to NADEC. The latter demanded a compensation of SR3.5bn from
Div yield (%) 2.9 0.0 0.0 ARAMCO for occupying its land for years.
DPS 0.8 0.0 0.0
Source: NCBC Research Company financials
TA SI NA DEC (RHS)
Equity SRmn 990 1,059 975 979 (3.0) (0.7)
Total Debt SRmn 448 922 1,103 1,046 5.7 56.9
Current Price (SR) 8.6 Qassim Agriculture Co. (GACO), established in 1985, is headquartered in
Weighting & free float (%) properties in Medina, realizing a profit of SR4mn. In April 2010, the company
TASI (free float weight) 0.09 announced the appointment of MR. Abdulaziz Bin Mohammed Al Talas as the
Free float 100.0 company’s General Manager.
Current Price (SR) 21.1 Tabuk Agriculture Development Company (TADCO), established in 1983
Pricing / Valuation as on June 13, 2010 and headquartered in Tabuk, is an agricultural company. TADCO’s
products include fruits, vegetables, forage products, grains and seeds,
Stock details and processed products, such as olive oil and honey.
52-week range H/L (SR) 31.2/20.9
x Business brief: TADCO produces 20,000 MT of onions, 150,000 MT of table
Market cap ($mn) 112.2
potatoes, 58,000 MT of wheat and more than 1mn MT of alfalfa each year.
Shares outstanding (mn) 20.0
The company also grows 7,000 MT of grapes, peaches, apricots, pears and
Price perf. (%) 1M 3M 12M
Absolute (14) (16) (28) plums annually. TADCO is actively involved in environment protection and
Market (6) (5) 3 water resource management.
Sector 0 (2) 23
x Financials: In 1Q10, TADCO’s revenues fell by 81% YoY to SR9.8mn
Avg daily turn.(mn) SR US$
3M 12.2 3.3 compared to SR51.8mn in 1Q09. TADCO posted a net loss of SR2.5mn in
12M 16.3 4.3 1Q10 compared to SR10.2mn of net profit in 1Q09. The company suffered a
Raw Beta 6m 3yr loss mainly due to the large reduction in revenues and its fixed cost base.
0.21 0.91
Reuters code 6040.SE x Recent developments: In April 2010, TADCO announced that its Chairman,
Bloomberg code TAACO AB Abdullah Abdulaziz Saleh Al Rajhi, resigned for personal reasons and will be
Website www.tadco-agri.com replaced by Mohammed Abdullah Al Rajhi. In June 2009, TADCO signed a
Weighting & free float (%) memorandum of understanding (MoU) with the Food Products Company to
Curent Price (SR) 47.0 Saudi Fisheries Company, based in Dammam, commenced operations in
Current Price (SR) 34.1 Ash-Sharqiyah Development Company (Ash-Sharqiyah) was established
Pricing / Valuation as on June 13, 2010 in 1986. The company provides meat and agricultural products. It also
undertakes agricultural projects, rehabilitation of land and irrigation
Stock details works. Ash-Sharqiyah owns stakes in Al Hassa Food Industries, United
52-week range H/L (SR) 60.3/32.7 Dairy Farms and Pure Breed Poultry.
Market cap ($mn) 68.2
Shares outstanding (mn) 7.5 x Business brief: Ash-Sharqiyah is involved in the production and marketing
Price perf. (%) 1M 3M 12M of wheat, barley, fodder crops such as alfalfa and Rhodes grass, wheat and
Absolute (6) 1 (31) barley straw, and potatoes. It has annual production capacity of 14.5 million
Market (6) (5) 3 tones of milk, 14,000 tones of wheat and 550 kilograms of honey. Other
Sector 0 (2) 23
projects undertaken by the company include calf and sheep breeding, and
Avg daily turn.(mn) SR US$
3M 13.1 3.5 production of bio-fertilizers and honey.
12M 18.8 5.0
x Financials: Ash-Sharqiyah’s revenue fell by 3.6% YoY to SR8.6mn in 1Q10
Raw Beta 6m 3yr
compared to SR8.9mn in 1Q09. Furthermore, the company recorded a net
0.23 1.00
loss of SR3.0mn in 1Q10 compared to a net profit of SR0.4mn in 1Q09.
Reuters code 6060.SE
Bloomberg code ASACO AB
Company financials
Website www.asharqiyah.com.sa
YoY CAGR (%)
Weighting & free float (%) 2007 2008 2009 1Q10 (%) (07-09)
TASI (free float weight) 0.05 Net Revenues SRmn 53 51 32 9 (3.6) (22.4)
Free float 99.98 EBITDA SRmn 17 21 7 0 (261.2) (35.3)
Net Income SRmn 3 (12) (5) (3) (708.0) N/M
Valuation multiples Assets SRmn 144 133 115 114 (13.1) (10.6)
08 09 TTM
Equity SRmn 117 104 85 82 (21.6) (14.9)
P/E (x) (21.3) (53.2) (30.7) Total Debt SRmn 10 11 8 7 N/M N/M
P/B (x) 2.5 3.0 3.1 Cash & Equiv SRmn 1 1 0 0 (86.5) (56.7)
P/S (x) 5.0 7.9 8.0 EBITDA Mgn % 31.8 41.2 22.0 4.5 - -
Div yield (%) NA NA NA Net Mgn % 6.4 (23.5) (14.9) (35.1) - -
DPS NA NA NA ROE % 3.0 (10.9) (5.1) (14.5) - -
Source: NCBC Research ROA % 2.4 (8.7) (3.9) (10.6) - -
Div Payout % 0.0 0.0 0.0 - - -
Share price performance
EPS SR 0.5 (1.7) (0.6) (0.4) N/M N/M
7,000 70
60
BVPS SR 15.7 13.8 11.3 10.9 (21.7) (15.2)
6,500
50
6,000 Source: Tadawul, Zawya, Company, NCBC Research
40
5,500 30
5,000 20
Jun-09 Oct-09 Feb-10 Jun-10
Source: Bloomberg
Current Price (SR) 28.2 Al-Jouf Agriculture Development Co. (Al Jouf) was established in 1988.
Pricing / Valuation as on June 13, 2010 The company, headquartered in Al Jouf, is engaged in the processing and
selling of agricultural as well as livestock products. Al Jouf sells its
Stock details products across Saudi Arabia and in the neighboring states through its
52-week range H/L (SR) 39.6/26.7 network and marketing outlets.
Market cap ($mn) 150.4
Shares outstanding (mn) 20 x Business brief: Al Jouf’s core activities include processing and marketing of
Price perf. (%) 1M 3M 12M agricultural and animal products. The company’s product portfolio includes
Absolute (1) (20) 0 potatoes (table and manufacturing) and potato seeds, onion and onion
Market (6) (5) 3 seeds, and fruits such as peaches, plums, apples and almonds. Its offering
Sector 0 (2) 23
also includes products such as olive oil, bee honey, wheat and barley, and
Avg daily turn.(mn) SR US$
3M 5.6 1.5 alfalfa fodder for livestock and fodder dealers. Al Jouf’s other projects include
12M 7.5 2.0 milk production and processing (under the brand AL-SAFWA DAIRIES), and
Raw Beta 6m 3yr sheep breeding & fattening.
0.40 0.83
x Financials: In 1Q10, Al Jouf’s revenues fell by 35% YoY to SR33.8mn
Reuters code 6070.SE
Bloomberg code JADCO AB compared to SR51.9mn in 1Q09. Net income dropped by 48.2% YoY to
Website www.aljouf.com.sa SR7.1mn in 1Q10 compared to SR13.8mn in 1Q09.
Weighting & free float (%) x Recent developments: In March 2010 the company approved a cash
TASI (free float weight) 0.11 dividend of SR2 per share for the financial year 2009.
Free float 95.20
Company financials
Valuation multiples
YoY CAGR (%)
08 09 TTM
2007 2008 2009 1Q10 (%) (07-09)
P/E (x) 10.4 9.0 10.0
Net Revenues SRmn 189 213 266 34 (34.9) 18.6
P/B (x) 1.2 1.1 1.1
EBITDA SRmn 95 96 107 16 (51.7) 6.1
P/S(x) 2.6 2.1 2.3
Net Income SRmn 50 54 63 7 (48.2) 12.6
Div yield (%) 1.8 7.1 0.0 Assets SRmn 507 545 578 546 (1.6) 6.7
DPS 0.5 2.0 0.0 Equity SRmn 430 472 535 499 2.8 11.5
Source: NCBC Research Total Debt SRmn 1 6 1 1 (88.1) (18.3)
TA SI Jo uff A griculture (RHS) EPS SR 2.5 2.7 3.2 0.4 (47.8) 12.2
BVPS SR 21.5 23.6 26.8 25.0 2.8 11.6
Source: Bloomberg Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 13.8 Jazan Development Co. (JAZADCO), headquartered in Jazan, was
Share price performance Equity SRmn 769 675 649 650 0.7 (8.1)
Total Debt SRmn - 20 20 18 (10.0) N/M
7,000 16
6,500
Cash & Equiv SRmn 110 83 42 19 (82.6) (38.2)
14
6,000 EBITDA Mgn % 14.8 1.0 26.4 30.4 - -
12
5,500
Net Mgn % 51.9 47.6 (69.0) 13.3 - -
5,000 10
Jun-09 Oct-09 Feb-10 Jun-10 ROE % 1.8 2.8 (4.4) 1.9 - -
TA SI Jazan Develo pment (RHS) ROA % 1.7 2.6 (4.0) 1.7 - -
Div Payout % 166.7 125.0 0.0 - - -
Source: Bloomberg EPS SR 0.3 0.4 (0.6) 0.1 N/M N/M
BVPS SR 15.4 13.5 13.0 13.0 0.7 (8.2)
Top 5 shareholders (%)
Source: Tadawul, Zawya, Company, NCBC Research
Suleiman Saleh Suleiman 5.0
Omary
GCC countries are expected To step up to the rising demand, the Saudi Government has planned over 24
to spend almost USD217 bn power projects ranging from 20-30MW and a massive expansion programme of five
on electricity projects, of
independent power projects (IPPs) with investments of around USD20bn, which is
which almost 80% will be
expected to be completed by 2019. In its 2010 budget, Saudi Arabia boosted the
by KSA and the UAE
allocation for water and infrastructure sectors by 30% to SAR 46 billion, or 8.5% of
the total budget.
Exhibit 74: Revenue of GCC Energy & Utilities Exhibit 75: Comparison of RoE and P/E of GCC
companies, 2007–2009 companies, 2009
(USD mn) (%)
8,000 30
7,000 20
6,000 10
5,000 0
ROE (%)
4,000 0 5 10 15 20 25 30 35 40 45 50
-10
3,000
-20
P/E (x)
2,000
-30
1,000
-40
0
2007 2008 2009 -50
KSA Kuwait Qatar UAE
KSA Kuwait Qatar UAE
KSA will need to increase The Energy and Utilities sector currently constitutes two listed companies — Saudi
its power generating Electricity Company (SEC) and National Gas and Industrialization Co. (NGIC). Saudi
capacity from 38 GW in
Electricity is one of the heavyweights in the overall market, SEC comprises 2% of
2009 to 60 GW in 2023,
free float.
according to ECRA
SEC enjoys a near monopoly in the electricity sector by controlling over 89% of
generation capacity and 100% of the transmission and distribution network in the
Kingdom; its revenue increased 7% YoY to SR23.85bn in 2009.
Exhibit 77: Revenues of companies, 2007-09 Exhibit 78: Profitability of companies, 2007-2009
(SR mn) (%)
11%
1,500
24,000
8%
1,400
22,000 5%
1,300
2%
20,000
1,200 -1%
-4%
18,000 1,100
2007 2008 2009
2007 2008 2009
SECO NGIC (RHS) SECO NGIC
The expectation of strong demand growth in the coming decade is likely to see the
Saudi government increasing its focus on securing water and power supplies, as
well as on upgrading existing infrastructure. ERCA recently (June 2010) announced
the new tariff structure industrial, commercial and government customers effective
from 01 July 2010 which would add significantly to the revenues of power firms as
well as boost their profitability.
Free float 68.19 x Recent developments: On 31 January 2010, GASCO announced that it had
Valuation multiples signed contracts worth SR149mn, which would raise production by 10% at
08 09 TTM its seven plants. These contracts have a term of three years.
P/E (x) 10.1 N/M N/M
P/B (x) 1.6 1.5 1.5 Company financials
P/Sales (x) 1.0 1.0 1.0 YoY CAGR (%)
Div yield (%) 7.5 2.5 N/M 2007 2008 2009 1Q10 (%) (07-09)
DPS 1.5 0.5 N/M Net Revenues SRmn 1,392 1,471 1,546 406 4.2 5.4
EBITDA SRmn 151 115 136 28.5 (12.8) (5.2)
Source: NCBC Research
Net Income SRmn 139 149 -59 16 29.6 N/M
Share price performance Assets SRmn 1,494 1,297 1,344 1,401 1.7 (5.1)
7,000 25 Equity SRmn 1,101 941 991 1,030 19.3 (5.1)
23
6,500 Total Debt SRmn - - - - N/M N/M
21
6,000 Cash & Equiv SRmn 19 133 262 262 (0.7) 268.3
19
5,500
17 EBITDA Mgn % 10.8 7.8 8.8 7.0 - -
5,000 15 Net Mgn % 10.0 10.1 (3.8) 4.0 - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
ROE % 13.3 14.6 (6.1) 6.4 - -
TA SI Gas&Industrializatio n (RHS)
ROA % 10.0 10.7 (4.5) 4.7 - -
Source: Bloomberg Div Payout % 83.3 75.4 N/M - -
Top 5 shareholders (%) EPS SR 1.8 2.0 (0.8) 0.2 29.4 N/M
BVPS SR 14.6 12.6 13.2 13.7 19.3 (4.8)
Saeed Ali Ghadran Al Ghamdi 11.9
Source: Tadawul, Zawya, Company, NCBC Research
Public Investment Fund 10.9
Target Price (SR) 18.5 Saudi Electricity Company (Saudi Electricity) is the largest power
generator in Saudi Arabia. Established in 2000, the company is engaged
Price (SR) 13.1
in the generation, transmission and distribution of electric power across
Pricing / Valuation as on June 13, 2010
the Kingdom. Saudi Electricity was formed through the consolidation of
10 regional electricity companies.
Stock details
52-week range H/L (SR) 13.9/9.3 • Business brief: Saudi Electricity retains a monopoly on the transmission
Market cap ($mn) 14,496.1 and distribution of electricity in the Kingdom and a near monopoly on
Shares outstanding (mn) 4,166.6
generation. The company also exports and imports energy, and invests in
Price perf. (%) 1M 3M 12M
various Saudi power projects. Saudi Electricity had a total available capacity
Absolute 18 12 39
Market (6) (5) 3
of 43,500 MW at the end of 2009.
Sector 15 4 24 • Financials: Due to rising demand for electricity, the company’s revenues
Avg daily turn.(mn) SR US$
increased by 11.7% YoY to SR4.6bn and EBITDA grew by 20.2% YoY to
3M 51.5 13.7
12M 31.5 8.4
SR1,046mn in 1Q10. However, the company reported a net loss of SR782mn
Raw Beta 6m 2yr in 1Q10 compared to a loss of SR771 in 1Q09. The larger loss was mainly
0.24 0.49 due to an increase in the cost of purchased of power from independent
Reuters code 5110.SE producers.
Bloomberg code SECO AB
Website www.se.com.sa • Recent developments: In June 2010, Saudi Electricity received approval
for a change in power tariffs for the government, commercial and industrial
Weighting & free float (%)
sectors, which will be implemented from 1 July 2010. The increase in tariff
TASI (free float weight) 1.9
structure could result in additional revenues of SR3.2bn, according to the
Free float 17.18
company. NCB Capital expects most of the incremental revenues to flow
Valuation multiples
straight to the bottom line, resulting in an increase in net income to SR4.2bn
08 09 10E
in 2011e, from SR2.3bn in 2010e (which will include 6 months of the
P/E (x) 49.2 46.5 23.6
P/B (x)
adjusted tariffs) and SR1.2bn in 2009.
1.1 1.1 1.1
P/Sales (x) 2.4 2.3 2.1
Company financials
Div yield (%) 5.4 5.4 5.4
YoY CAGR (%)
DPS 0.7 0.7 0.7
2008 2009 2010E 2011E (%) (08-11E)
Source: NCBC Research estimates
Net Revenues SRmn 22,289 23,851 26,486 29,811 7.0 10.2
Share price performance EBITDA SRmn 7,625 8,327 10,107 12,846 9.2 19.0
7,000 14
Net Income SRmn 1,104 1,170 2,300 4,205 5.9 56.1
6,500
13
Assets SRmn 145,382 166,091 185,409 208,895 14.2 12.8
12
6,000 11 Equity SRmn 48,553 49,175 50,927 54,585 1.3 4.0
10
5,500
9
Total Debt SRmn 10,204 19,340 30,517 47,449 89.5 66.9
5,000 8 Cash & Equiv SRmn 1,232 3,883 2,119 2,385 215.2 24.6
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Despite being the largest market for mobile services in the GCC, KSA’s penetration
rate of 177% in 2009 is lower than the UAE’s 228%, Qatar’s 203% and Bahrain’s
190%. Going forward, BMI expects mobile penetration in KSA to increase to 205%
by 2013. Internet penetration reached 42% in 2009, while broadband was at a
mere 8%, but is expected to be a catalyst for growth in the telecom sector in the
long term. BMI expects the number of broadband connections to reach 4.4mn by
2013 from an estimated 2mn in 2009.
With mobile penetration rates already touching new highs, further growth is likely
to be at a diminishing rate, implying limited room for mobile subscriber additions.
However, the advent of non-voice services (mainly value-added features), newer
technologies, and introduction of smart phones could add new subscribers as well
as limit the fall in ARPUs.
Saudi Arabia’s large young KSA’s fixed line penetration has stagnated around 16-17% as more users migrated
and growing population to mobiles and corporate demand has remain subdued due to the global economic
base is a key driver for the
downturn. Fixed line subscribers grew a meager 1% to an estimated 4.2mn in
Telecom sector
2009, and BMI expects growth to remain low going forward. However, fixed line
services could witness some competition-led growth with the launch of Atheeb;
data and broadband in particular should help revenue growth. In addition,
decreasing household size, a rising population and an uptick in the demand from
businesses are expected to drive fixed-line growth over the long term.
Exhibit 80: Fixed-line and mobile penetration rate Exhibit 81: Broadband & internet penetration rate
(%) (%)
160% 40%
16%
6%
120% 30%
16%
80% 20%
7 3%
16% 10%
40%
15% 0% 0% 0%
2003 2004 2005 2006 2007 2008 2009 2003 2004 2005 2006 2007 2008 2009
KSA telecom companies also are diversifying geographically, selectively targeting low
mobile penetration markets. STC has holdings in a number of foreign subsidiaries
including in the Indian and Indonesian markets. Mobily also has plans to invest
INR700mn (approximately USD15.5mn) in India, where it already has operations, to
capture the country’s growing telecommunication sector. The rapid growth in KSA’s
telecom sector positions it as the largest in the GCC in revenue terms in 2009.
However, in terms of return on equity it occupied 2nd position behind Oman and is
trading at a P/E multiple of 9.1x, a touch above the GCC average of 8.9x.
Exhibit 82: GCC telco’s revenues, 2007–09 Exhibit 83: GCC Telcos RoE and P/E comparison, 2009
(USD mn) (%)
16,000 40
14,000
32
12,000
10,000 24
ROE (%)
8,000
16
6,000
4,000
8
2,000 P/E (x)
0 0
2007 2008 2009 6 8 10 12
Oman Bahrain UAE KSA Kuwait Qatar KSA Qatar UAE Kuwait Oman Bahrain
STC is the largest company in KSA’s telecommunication sector with a market cap of
SR88.2bn as of 31 December 2009. Zain’s initial public offering came in 2008 and
the company launched commercial services in August 2008. Atheeb listed in March
2009 and has recently launched commercial services.
Mobily continued to perform well despite the downturn and intensifying competition in
KSA, with revenues up 21% in 2009 due largely to its aggressive focus on the mobile
and wireless internet markets. Margins improved significantly as a result of the
increasing percentage of high-margin data revenue, and higher efficiency. STC’s top-
line increased 7% in 2009, mainly led by its expansion in Turkey, Kuwait, India and
Indonesia. However, its margins suffered on account of these overseas investments
as well as higher inter-connection charges to other networks. Consequently, net profit
declined 2% in 2009. Although Zain continued to sink deeper into the red, its revenue
jumped 495% in 2009, led by the significant expansion in subscriber base brought
about by aggressive promotional and marketing strategies.
Exhibit 85: Revenue of companies, 2005-2008 Exhibit 86: Profitability of companies, 2005-2008
(SR mn) (%)
72,000 42
60,000 35
48,000 28
36,000 21
24,000 14
12,000 7
0 0
2007 2008 2009 2007 2008 2009
STC Mobily Zain KSA STC Mobily
As of 31 Dec-09, the P/B multiples of STC and Mobily were 2.1x and 2.5x, respectively,
while that of Zain stood at 2.1x. However, the ROEs of STC and Mobily were similar at
around 27.4%. With Zain continuing to report losses, its ROE remains negative.
Exhibit 87: Comparison of P/B and RoE, 2008 Exhibit 88: Comparison of P/B and RoE, 2009
(%) (%)
40 40
36 36
Mobily
32 32
ROE (%)
ROE (%)
STC
28 28
STC
24 Mobily 24
Zain is the most active stock in the telecom sector with turnover of SR137mn per
day in 2009 followed by Atheeb’s SR110mn per day despite operations only now
just starting. On YTD 2010 basis, Mobily remained the most active stock with
turnover of SR57mn per day with Zain coming second at SR47mn per day.
Exhibit 89: Avg. daily turnover, Jan09 – Mar10 Exhibit 90: Share price movement, Jan09 – Mar10
(SR mn) Rebased to 100 on 1st Jan-09
125 200
100 150
75 100
50 50
25
0
Jan-09 Jun-09 Oct-09 Mar-10
0
STC Mobily Zain Atheeb STC Mobily Zain Atheeb
Current Price (SR) 38.0 Saudi Telecom (STC) was established in 1998 as Saudi Arabia’s then sole
Pricing / Valuation as on June 13, 2010 telecom operator and is a leading national telecom service provider in
the Kingdom. STC mainly provides landline, mobile, and data services.
Stock details Apart from Saudi Arabia, the group operates in Kuwait, Indonesia, the
52-week range H/L (SR) 57.3/34.0 UAE, and Malaysia. STC also holds stakes in telecom operators in Turkey,
Market cap ($mn) 20,261.6
South Africa, India and Bahrain.
Shares outstanding (mn) 2,000.0
Price perf. (%) 1M 3M 12M x Business brief: STC classifies its operating segments in terms of the
Absolute (6) (12) (26) service offerings, i.e., GSM, PSTN, and DATA. The GSM segment includes
Market (6) (5) 3
mobile, 3G, prepaid cards, international roaming and messaging services,
Sector (3) (5) (5)
while PSTN services comprise fixed line, card telephones, interconnect and
Avg daily turn.(mn) SR US$
3M 50.2 13.4 international call services. DATA services consist of leased data
12M 40.2 10.7 transmissions, DSL and Internet services.
Raw Beta 6m 3yr
x Financials: STC has shown continued revenue growth through 2009,
1.05 0.79
Reuters code 7010.SE however increasing competition in the Kingdom has led to margin pressure
Bloomberg code STC AB with net income falling nearly 5% from 2007 to 2009. The weakness has
Website www.stc.com.sa continued in 1Q10 as EBITDA margins contracted 685 basis points from
Weighting & free float (%) 46.2% in 1Q09 to 39.4% in 1Q10 due to a decline in international call prices,
TASI (free float weight) 2.48 rise in fees related to external networks and expenses owing to capital
Free float 16.29 investments.
Valuation multiples x Recent developments: In April 2010, Mr. Ghassan Hasbani, CEO,
08 09 TTM announced plans for a series of acquisitions in Africa, India and other Asian
P/E (x) 6.9 7.0 7.5 countries as part of the group’s international expansion drive. In May 2010,
P/B (x) 2.0 1.8 1.8
STC appointed Cisco Technology Solutions to introduce managed data center
P/Sales (x) 1.6 1.5 1.5
services in the Saudi market.
Div yield (%) 9.9 7.9 7.9
Source: NCBC Research
Company financials
Share price performance YoY CAGR (%)
2007 2008 2009 1Q10 (%) (07-09)
7,000 60
Net Revenues SRmn 34,458 47,469 50,780 12,520 3.1 21.4
6,500 50
6,000 40 EBITDA SRmn 16,716 21,743 20,612 4,927 (12.2) 11.0
5,500 30 Net Income SRmn 12,022 11,038 10,863 1,772 (28.8) (4.9)
5,000 20 Assets SRmn 68,811 99,762 109,587 111,116 9.2 26.2
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
TASI STC (RHS) Equity SRmn 35,876 37,638 42,035 42,503 13.7 8.2
Total Debt SRmn 13,580 31,986 31,290 29,829 (3.1) 51.8
Source: Bloomberg Cash & Equiv SRmn 7,618 8,061 7,710 7,257 (19.5) 0.6
EBITDA Mgn % 48.5 45.8 40.6 39.4 - -
Top 5 shareholders (%)
Net Mgn % 34.9 23.3 21.4 14.2 - -
Public Investment Fund 70.0
ROE % 34.3 30.0 27.3 16.8 - -
General Organization for 7.0
Social Insurance - Saudi ROA % 20.9 13.1 10.4 6.4 - -
Arabia
Div Payout % 83.2 67.9 55.2 84.6 - -
Public Pension Authority 6.6
EPS SR 6.0 5.5 5.4 0.9 (28.8) (4.9)
BVPS SR 17.9 18.8 21.0 21.3 13.7 8.2
Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 49.8 UAE based Emirates Telecommunications Corporation (Etisalat)
Pricing / Valuation as on June 13, 2010 established Etihad Etisalat Company (Mobily), the second largest mobile
operator in Saudi Arabia, in 2004. Mobily commenced operations in
Stock details 2005, providing public wireless telecommunication services.
52-week range H/L (SR) 53.3/33.1
Market cap ($mn) 9,293.7
x Business brief: Mobily offers mobile telephony services in the Kingdom
Shares outstanding (mn) 700.0 using GSM, 3/3.5G and Wimax technologies. Mobily markets its products
Price perf. (%) 1M 3M 12M through four functional lines – channel distribution, corporate & VIP sales,
Absolute (1) 7 46 flagship stores, and commercial support. As of December 2009, the
Market (6) (5) 3
company’s mobile subscriber base stood at 18.2mn.
Sector (3) (5) (5)
Avg daily turn.(mn) SR US$ x Financials: Mobily has shown very strong growth since its operational start
3M 51.8 13.8 in 2005, with 2009 revenues increasing to SR13bn from SR8.4bn in 2007
12M 47.1 12.6
(24.4% annual growth). Net income has risen at an even faster pace,
Raw Beta 6m 3yr
increasing to SR3bn in 2009 from SR1.4bn in 2007 as the company was able
0.77 0.81
Reuters code 7020.SE to leverage its growing customer base and built out its mobile network.
Bloomberg code EEC AB Growth in 1Q10 has remained strong with revenues increasing 27.4% YoY to
Website www.mobily.com.sa SR3.6bn and net margins expanded from 17.1% in 1Q09 to 19.9% in 1Q10.
Weighting & free float (%) x Recent developments: In June 2010, Mobily announced its plans to spend
TASI (free float weight) 4.07 SR2.5bn in 2010 on capex with an aim to execute expansion plans and
Free float 58.48
capture higher market share. The company also announced a new 5-year
Valuation multiples strategy aimed at strengthening its leadership position in broadband services
08 09 TTM applications across the Middle East and North Africa. On 18 January 2010,
P/E (x) 16.7 11.6 10.7 Mobily announced a cash dividend of SR1.25 per share for 2009.
P/B (x) 3.6 2.8 2.9
P/Sales (x) 3.2 2.7 2.5 Company financials
Div yield (%) 1.5 2.5 NA YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn 8,440 10,795 13,058 3,581 27.4 24.4
Share price performance
EBITDA SRmn 3,239 3,794 4,837 1,180 29.9 22.2
7,000 55 Net Income SRmn 1,380 2,092 3,014 714 48.7 47.8
6,500
45 Assets SRmn 19,881 27,192 30,926 33,358 18.4 24.7
6,000
5,500
35 Equity SRmn 5,913 9,754 12,243 12,082 24.4 43.9
5,000 25 Total Debt SRmn 8,923 9,790 8,595 9,121 (7.5) (1.9)
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Cash & Equiv SRmn 703 1,264 933 2,139 228.6 15.2
TA SI M o bily (RHS)
EBITDA Mgn % 38.4 35.1 37.0 32.9 - -
Current Price (SR) 9.0 Mobile Telecommunications Company Saudi Arabia (ZAIN KSA), a
Pricing / Valuation as on June 13, 2010 member of Mobile Telecommunications Group (Zain), Kuwait, was
established in 2007 in Saudi Arabia to provide wireless
Stock details telecommunications services.
52-week range H/L (SR) 13.3/8.5
Market cap ($mn) 3,340.5
x Business brief: ZAIN KSA is the third mobile operator in KSA, offering both
Shares outstanding (mn) 1,400..0 voice and data services. The company launched commercial services in
Price perf. (%) 1M 3M 12M August 2008 and had 6mn active subscribers by the end of 2009. The
Absolute 3 (8) (32) company is targeting to reach 7.5mn subscribers by the end of 2010. ZAIN
Market (6) (5) 3
KSA plans to build its own network by 2010 and has targeted a positive
Sector (3) (5) (5)
EBITDA for the year.
Avg daily turn.(mn) SR US$
3M 67.6 18.0 x Financials: ZAIN KSA first recorded revenues in 2008 and has quickly
12M 60.8 16.2
expanded, reaching SR3bn in 2009. However, high D&A expenses due to the
Raw Beta 6m 3yr
cost of its telecom license (SR22.9bn) and for its large network build-out
0.25 0.81
Reuters code 7030.SE have kept the company in net losses, reaching SR3.1bn in 2009. For 1Q10,
Bloomberg code EEC AB the company recorded revenues of SR1.1bn, however, incurred a loss of
Website www.sa.zain.com SR70.3mn and SR662.4mn at the EBITDA and net-income levels,
TASI (free float weight) 1.12 x Recent developments: In June 2010, the company announced that it will
Free float 44.99
be reducing its capital to cover some or all of its accumulated losses which
Valuation multiples reached nearly SR6bn by 1Q10. We believe this will ultimately allow the
08 09 TTM company to reduce its share count while maintaining par value, with the aim
P/E (x) NM NM NM of eventually raising further capital.
P/B (x) 1.1 1.5 1.6
P/Sales (x) 24.8 4.2 3.6 Company financials
Div yield (%) NA NA NA YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn - 505 3,004 1,094 88.1 -
Share price performance
EBITDA SRmn - (1,265) (990) (70) N/M -
7,000 15 Net Income SRmn - (2,278) (3,099) (662) N/M -
6,500 13
11 Assets SRmn - 26,665 27,830 27,661 1.7 -
6,000
9
5,500 7
Equity SRmn - 11,722 8,622 7,960 (27.3) -
5,000 5 Total Debt SRmn - 13,176 14,560 14,596 7.4 -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Cash & Equiv SRmn - 583 506 474 62.7 -
TASI Zain (RHS)
EBITDA Mgn % - N/M (33.0) (6.4) - -
Current Price (SR) 15.8 Etihad Atheeb Telecommunications Company (ATHEEB) was established
Pricing / Valuation as on June 13, 2010 in 2008 to provide fixed and wireless telecommunications services in
KSA. The company is a joint venture between KSA-based Atheeb Trading
Stock details Co., Al-Nahla Trading Co. and Traco Group and Bahrain Telecom.
52-week range H/L (SR) 20.5/14.4
Market cap ($mn) 419.9
x Business brief: ATHEEB was set up to build, operate and maintain the
Shares outstanding (mn) 100.0 second fixed line telecommunication network in Saudi Arabia. The company
Price perf. (%) 1M 3M 12M aims to provide innovative and high technology solutions, such as video
Absolute (5) (9) (17) services, Internet telephony, and broadband Internet, apart from voice
Market (6) (5) 3
telephone communications and data services. ATHEEB obtained a fixed
Sector (3) (5) (5)
telephony license for SR5mn and a 3.5GHz mobile frequency spectrum for
Avg daily turn.(mn) SR US$
3M 12.2 3.3 SR520mn.
12M 31.9 8.5
x Financials: In 1Q 2010, the company generated SR35.4mn in revenues.
Raw Beta 6m 3yr
However, high operational costs resulted in a negative EBITDA of SR309mn
0.841 N/A
Reuters code 7040.SE and a net loss of SR379mn. As the company has just launched operations,
Bloomberg code EAT AB profitability is likely to suffer as revenues ramp up and the company
Website www.go.com.sa establishes its network and customer base.
Weighting & free float (%) x Recent developments: On 14 June 2010, ATHEEB announced that it’s CEO,
TASI (free float weight) 0.11 Raed Kayyal had resigned after it accumulated losses approximately equal to
Free float 35.0
40% of its capital, in its first year of business. The outgoing CEO will be
Valuation multiples replaced by Ahmad Abbas Sindi. On 23 January 2010, ATHEEB officially
08 09 2010 expanded its 4G network in the Eastern region to include Al Hafouf City and
P/E (x) N/A N/A NM Al Qatif City. It had earlier launched its nomadic 4G network in the Kingdom
P/B (x) N/A N/A 2.5
in November 2009.
P/Sales (x) N/A N/A 44.4
Div yield (%) N/A N/A - Company financials*
Source: NCBC Research
YoY CAGR (%)
At the listed company level, KSA has a diversified Industrial Investment sector with
strong revenue growth historically, although top lines have suffered in the current
crisis. ROE has been on par with GCC peers with P/E averaging around 12.7x.
Exhibit 91: Revenue of GCC industrial investment Exhibit 92: Comparison of ROE and P/E of GCC
companies, 2007–09 companies, 2009
(USD mn) (%)
7,000 60
6,000
50
5,000
40
ROE (%)
4,000
3,000 30
2,000
20
1,000 P/E (x)
10
0
0 4 8 12 16 20
2007 2008 2009
Source: Tadawul, Bloomberg, NCBC Research Source: Tadawul, Bloomberg, NCBC Research
The industrial investment sector has a large number of private players, with 12
listed companies.
lower base), while Saudi Industrial Export Co. reported the steepest decline. Net
profits for the sector grew to SR1.5bn in 2009 from SR1.2bn in 2008, however was
boosted by a SR300mn one off gain at Maaden
Exhibit 94: Revenue of companies, 2007–2009 Exhibit 95: Profitability of companies, 2007–2009
(SR mn) (%)
7,500 50
30
6,000
10
4,500 -10
2007 2008 2009
-30
3,000 -50
-70
1,500
-90
0 -110
2007 2008 2009
SPIMACO SCCO SPM ALABDUL
SPIMACO SCCO SPM ALABDUL
ASTRA MAADEN Others ASTRA MAADEN Others
As of 31 December 2009, the sector’s P/E and P/BV multiples stood at 12.7x and
2.3x, respectively, compared with 17.5x and 2.0x, respectively, in 2008. As of 31
May 2010, the sector P/E and P/BV multiples were 19.8x and 1.2x, respectively.
Exhibit 96: Comparison of P/B and ROE, 2008 Exhibit 97: Comparison of P/B and RoE, 2009
(%) (%)
30 40
25
30
ROE (%)
20
ROE (%)
20
15
10 10
5 P/B (x)
P/B (x) 0
0 0 2 4 6
-2 0 2 4 6 -10
-5
Current Price (SR) 29.9 Basic Chemical Industries (BCI), incorporated in 1973, is engaged in the
Pricing / Valuation as on June 13, 2010 production and sale of chemicals through its subsidiaries, which include
Saudi Water Treatment; Arabian Polyol; National Adhesive; Basic
Stock details Chemicals National; and Chemical Marketing and Distribution.
52-week range H/L (SR) 33.9/25.2
Market cap ($mn) 219.2
x Business brief: BCI produces a variety of chemicals such as liquefied
Shares outstanding (mn) 27.5 chlorine gas, hydrochloric acid, caustic soda, polyurethane (polyol),
Price perf. (%) 1M 3M 12M adhesives, calcium chloride, water treatment chemicals, laundry and
Absolute 0 (2) 7 janitorial products. The company’s plant, located in the First Industrial Zone
Market (6) (5) 3
in Dammam city, has an annual production capacity of 71,560 tons of gases
Sector (9) (8) (4)
per year.
Avg daily turn.(mn) SR US$
3M 8.4 2.2 x Financials: BCI’s revenues grew 3.6% YoY to SR135mn in 1Q10. The
12M 15.2 4.1
EBITDA margin expanded to 20.8% in 1Q10 versus 18.6% in 1Q09. In
Raw Beta 6m 3yr
absolute terms, EBITDA grew 15.9% YoY to SR28mn this quarter. In
0.67 1.09
Reuters code 1210.SE addition, net income increased 22.9% YoY to SR16mn.
Bloomberg code BCI AB
x Recent developments: In April 2010, BCI’s shareholders approved a cash
Website www.bci.com.sa
dividend of SR1.5 per share for the year 2009. In August 2009, the
Weighting & free float (%) shareholders approved a 25% increase of its capital from SR220mn to
TASI (free float weight) 0.13 SR275mn by issuing one bonus share for every four shares held.
Free float 78.6
Company financials
Valuation multiples
YoY CAGR (%)
08 09 TTM
2007 2008 2009 1Q10 (%) (07-09)
P/E (x) 20.7 13.1 12.5
Net Revenues SRmn 424 494 509 135 3.6 9.5
P/B (x) 2.7 2.3 2.2
EBITDA SRmn 92 95 112 28 15.9 10.6
P/Sales (x) 1.7 1.6 1.6
Net Income SRmn 48 40 63 16 22.9 13.7
Div yield (%) 1.7 3.3 N/A
Assets SRmn 516 531 570 614 10.7 5.1
Source: NCBC Research
Equity SRmn 285 305 354 370 16.6 11.5
6,500
EBITDA Mgn % 21.6 19.3 22.0 20.8 - -
30
6,000 Net Mgn % 11.4 8.0 12.3 11.8 - -
25
5,500 ROE % 17.8 13.4 19.0 17.6 - -
5,000 20 ROA % 9.7 7.6 11.4 10.7 - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Div Payout % 0.0 0.0 65.8 0.0 - -
TA SI B CI (RHS)
EPS SR 1.8 1.4 2.3 0.6 22.9 1.8
Source: Bloomberg BVPS SR 10.4 11.1 12.9 13.5 16.6 (0.3)
Source: Tadawul, Zawya, Company, NCBC Research
Top 5 shareholders (%)
Ali Al Abdullah Al Tamimi Co. 22.0
Abdul Aziz Muhana Abdul Aziz 9.1
Almoaibed
Abdullah Muhana Abdul Aziz 8.4
Almoaibed
Mohammed & Abdul Rahman 7.0
Al Saad Al Buwardi Co.
Nour Mehanna Abdulaziz 5.0
Almaibd
Source: Tadawul, NCBC Research
Target Price (SR) 15.3 Saudi Arabian Mining Company (Ma’aden), established in 1997, is
engaged in the exploration and production of metal and non-metal ores.
Price (SR) 17.5
The company owns five operating precious metal extraction mines and a
Pricing / Valuation as on June 13, 2010
number of new projects. In July 2008, Ma’aden went public and raised
SR9.2bn, reducing the government’s holding from 100% to 55%.
Stock details
52-week range H/L (SR) 21.8/13.9 • Business brief: Ma’aden currently has 2 business lines, gold mining and
Market cap ($mn) 4,303.3
Maaden Phosphate Company (MPC), which is a SR17bn project to set up a
Shares outstanding (mn) 925.0
diammonium phosphate (DAP) producer (scheduled to begin trial production
Price perf. (%) 1M 3M 12M
in 4Q10 and commercial in 2Q11). The company is also in the process of
Absolute (12) (3) (4)
Market (6) (5) 3 setting up a SR40bn integrated aluminum plant in a JV with Alcoa.
Sector (9) (8) (4)
• Financials: In 1Q10, Ma’aden’s revenues declined 4.2% YoY to SR153.5mn.
Avg daily turn.(mn) SR US$
153.1 40.8
However, due to the decrease in COGS and increase in prices of commodities
3M
12M 113.4 30.2 in the quarter, the company posted 7.5% growth in EBITDA to SR44.1mn
Raw Beta 6m 3yr over that in 1Q09. Net income grew 11.8% YoY to SR20.6mn. 2009 net
1.49 NA income showed strong growth to SR395mn versus SR203mn in 2008, but we
Reuters code 1211.SE
note that SR300mn of this was due to a non-recurring payment from Alcoa
Bloomberg code MAADEN AB
for setting up the aluminum project.
Website www.maaden.com.sa
• Recent developments: In June 2010, Ma’aden and US-based Alcoa
Weighting & free float (%)
initiated work on construction of the world’s largest fully integrated
TASI (free float weight) 1.18
Free float 36.09 aluminum complex. The complex will include a bauxite mine at Ba’aitha and
an alumina refinery, aluminum smelter and rolling mill at Ras Al-Zour. The
Valuation multiples
smelter and rolling mill are scheduled to commence operations in 2013,
08 09 10E
while the mine and refinery are planned to go live in 2014. In April 2010,
P/E (x) 79.4 40.9 32.8
P/B (x) 1.0 1.0 0.9 Ma’aden increased its share in the joint venture from 60.0% to 74.9%, the
P/Sales (x) 35.1 25.4 17.8 rest being held by Alcoa.
Div yield (%) - - -
Source: NCBC Research estimates
Company financials
08-09 CAGR (%)
Share price performance
2008 2009 2010E 2011E (%YoY) (08-11)
7,000 25 Net Revenues SRmn 460 634 906 2,795 37.9 82.5
6,500
20 EBITDA SRmn 1 153 476 1,307 12,363.8 921.3
6,000
Net Income SRmn 203 395 492 223 94.1 3.1
15
5,500
Assets SRmn 21,358 29,230 32,579 33,923 36.9 16.7
5,000 10
Jun-09 Oct-09 Feb-10 Jun-10 Equity SRmn 16,188 16,582 17,442 17,726 2.4 3.1
TA SI M A 'A DEN (RHS) Total Debt SRmn 820 8,783 13,413 14,458 971.1 160.3
Cash & Equiv SRmn 4,145 3,371 3,125 3,424 (18.7) (6.2)
Source: Bloomberg
EBITDA Mgn % 0.3 24.1 52.5 46.8 - -
Top 5 shareholders (%) Net Mgn % 44.2 62.2 54.3 8.0 - -
Current Price (SR) 39.4 Astra Industrial Group (Astra) operates in the healthcare, chemical,
Pricing / Valuation as on June 13, 2010 engineering, agricultural and home furnishing industries. Its subsidiaries
are Tabuk Pharmaceutical Manufacturing Co., Astra Polymer
Stock details Compounding, Astra Industrial Complex Co, International Building
52-week range H/L (SR) 43.0/30.7 Systems Factory Co, and Arabian Co. for Comforts & Pillows.
Market cap ($mn) 778.5
Shares outstanding (mn) 74.1 x Business brief: Astra’s broad product portfolio includes a range of generic
Price perf. (%) 1M 3M 12M and under-licensed pharmaceutical products; additives and compounds used
Absolute 10 (5) 22 in the production of plastic products; fertilizers, agricultural pesticides,
Market (6) (5) 3
insecticides and fungicides; pillows, bed sheets, and mattress pads. The
Sector (9) (8) (4)
group also constructs metal-based pre-engineered industrial buildings and
Avg daily turn.(mn) SR US$
3M 11.5 3.1 steel structures.
12M 11.7 3.1
x Financials: In 1Q10, Astra’s revenues grew 18.6% YoY to SR292mn. The
Raw Beta 6m 1yr
company’s EBITDA grew a modest 3.2% YoY to SR55mn, a margin of 18.9%.
0.97 0.83
Reuters code 1212.SE The company’s net income, however, grew 17.6% YoY to SR58mn. The
Bloomberg code ASTRA AB strong recovery can be ascribed to growth in other income to SR10.6mn in
Website www.astraindustrial.com.sa 1Q10 from SR2.8mn in 1Q09.
Weighting & free float (%) x Recent developments: In March 2010, Astra’s shareholders approved a
TASI (free float weight) 0.18 cash dividend of SR1.25 per share for the year 2009. In November 2009,
Free float 31.11
Astra completed legal proceedings to buy a 51% stake in Al Maseera
Valuation multiples International Co's Jordan-based steel unit for SR225mn. The unit is expected
08 09 TTM to commence operations in 2010 and contribute to Astra’s financial earnings
P/E (x) 15.8 14.3 13.7 in 2011.
P/B (x) 2.0 1.9 1.9
P/Sales (x) 2.9 2.8 2.7 Company financials
Div yield (%) 1.3 3.2 - YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn 850 991 1042 292 18.6 10.7
Share price performance
EBITDA SRmn 216 199 197 55 3.2 (4.4)
7,000 45
Net Income SRmn 197 184 205 58 17.6 2.0
6,500 40
Assets SRmn 1,120 1,743 2,076 2,601 50.5 36.1
6,000 35
5,500 30
Equity SRmn 828 1,437 1,570 1,526 3.1 37.7
5,000 25 Total Debt SRmn 44 2 0 480 N/M (100.0)
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Cash & Equiv SRmn 43 525 462 50 (91.2) 229.2
TA SI A stra Indust (RHS)
EBITDA Mgn % 25.4 20.0 19.0 18.9 - -
Current Price (SR) 26.1 Al Sorayai Trading Industrial Group (Al Soroyai), established in 1985, is
Pricing / Valuation as on June 13, 2010 engaged in the wholesale and retail trading of carpets, rugs, floorings,
furnitures, blankets, curtain fabrics and related materials. The company
Stock details exports products to almost 65 countries, including USA, China, India,
52-week range H/L (SR) 36.5/24.8 Iraq, Russia, and Poland.
Market cap ($mn) 208.7
Shares outstanding (mn) 30 x Business brief: The company, a Saudi joint stock company, was formerly
Price perf. (%) 1M 3M 12M known as AlSorayai Carpet Factory Company Ltd. AlSorayai opened its first
Absolute (9) (17) N/A carpet rugs factory in 1986. The company manufactures carpets, rugs,
Market (6) (5) 3 curtains and accessories for both the domestic and export markets. It has
Sector (9) (8) (4)
the capacity to produce 86mn sq mtr per annum. AlSorayai derives around
Avg daily turn.(mn) SR US$
3M 22.7 6.1 75% of its total revenue from the Saudi market and the rest from exports to
12M N/A N/A over 65 countries across the world. In February 2010, AlSorayai divested
Raw Beta 6m 2yr 30% of its stake (or 9mn shares) through an IPO and raised SR243mn.
N/A N/A
x Financials: AlSorayai’s revenue declined 5.3% YoY to SR199mn in 1Q10.
Reuters code 1213.SE
Bloomberg code ALSORAYA AB EBITDA fell 36% during the same period. This was mainly due to increased
Website www.al-sorayai.com operating expenses due to the IPO in 1Q10. However, due to lower interest
expenses and higher other income, the net margin improved 33bps YoY to
Weighting & free float (%)
TASI (free float weight) 0.05
6.6% in 1Q10. As such, the net income fell just 0.4% YoY to SR13.1mn
Valuation multiples x Recent developments: AlSorayai went public through an IPO in February 2010
08 09 TTM raising SR243mn. In May 2010, the company participated in and sponsored
P/E (x) 10.6 9.8 9.8 DOMOTEX Middle East 2010, the region’s largest trade fair for carpets and floor
P/B (x) 2.4 2.1 2.1 coverings.
P/Sales (x) 0.8 0.8 0.8
Div yield (%) NA NA NA Company financials
Source: NCBC Research YoY CAGR (%)
2007 2008 2009 1Q10 (%) (07-09)
Share price performance
Net Revenues SRmn 841 937 943 199 (5.3) 5.9
8,000 35
EBITDA SRmn 127 128 136 12 (35.6) 3.8
7,000 30
Net Income SRmn 84 74 80 13 (0.4) (2.5)
6,000 25
Assets SRmn 811 883 945 982 4.5 8.0
5,000 20
Equity SRmn 302 332 373 381 380.7 11.0
Feb-10 M ar-10 M ay-10 Jun-10
TA SI A lso ro yai (RHS)
Total Debt SRmn 365 348 342 205 (33.0) (3.1)
Cash & Equiv SRmn 19 10 19 21 (30.2) 0.4
Current Price (SR) 57.8 Al Hassan Ghazi Ibrahim Shaker Company (Shaker Group), established
Pricing / Valuation as on June 13, 2010 in 1994, was converted into a joint stock company on August 18, 2008.
The company is parent of the Shaker Group, which is engaged in the
Stock details import and wholesale of air conditioning products and home appliances.
52-week range H/L (SR) 60.5/48.4
The Shaker Group, which comprises the parent company and three
Market cap ($mn) 538.9
subsidiaries, is one of the leading companies in its sector in the
Shares outstanding (mn) 35
Kingdom.
Price perf. (%) 1M 3M 12M
Absolute N/A N/A N/A x Business brief: Shaker is involved in the wholesale and retail trade of air
Market (6) (5) 3
conditioners and home appliances. Its business also includes repairing and
Sector (9) (8) (4)
maintenance of electric & electronic home appliances and air conditioners.
Avg daily turn.(mn) SR US$
3M N/A N/A The company’s product portfolio comprises more than eight brands with
12M N/A N/A nationwide presence and strong market hold. The company also sells OEM
Raw Beta 6m 2yr products under its label. With exclusive sales outlets, service and display
N/A N/A
centers, warehousing facilities and training academies, Shaker has expanded
Reuters code 1214.SE
its presence throughout the Kingdom.
Bloomberg code SHAKER AB
Website www.shaker.com.sa x Financials: Shaker’s net revenue grew 8.7% YoY to SR998mn in 2009. The
Weighting & free float (%) company’s operating expenses increased 4.6% YoY to SR845mn in 2009,
TASI (free float weight) 0.12 primarily due to the 23.8% YoY increase in selling and distribution expenses.
Free float 30.0 Shaker’s net income grew 28.6% YoY to SR132mn in 2009.
Valuation multiples x Recent developments: Shaker launched an initial public offering (IPO) on
08 09 TTM May 17, 2010, offering 30% of its shares to raise SR514.5mn. The IPO was
P/E (x) 19.6 15.3 N/A oversubscribed 2.71 times. The company has a monopoly for LG air
P/B (x) 5.5 5.3 N/A
conditioners in the Saudi market and has announced the addition of a new
P/Sales (%) 2.2 2.0 N/A
range of air conditioners named Titan II in the Kingdom. Shaker also
Div yield (%) N/A N/A N/A
announced plans to purchase 29,000 sq mt of land (two plots) to be used for
Source: NCBC Research
future expansion.
Share price performance
Company financials
6,700 60
6,500 57 YoY CAGR (%)
6,300 54
6,100 51 2007 2008 2009 1Q10 (%) (07-09)
5,900 48
5,700 45
Net Revenues SRmn 750 918 998 - - 15.3
M ay-10 M ay-10 Jun-10 EBITDA SRmn 88 118 163 - - 36.2
TA SI Shaker (RHS) Net Income SRmn 78 103 132 - - 30.2
Assets SRmn 524 739 658 - - 12.1
Source: Bloomberg Equity SRmn 231 368 383 - - 28.8
Also known
Not Covered Saudi Pharmaceutical as
SPIMACO
Current Price (SR) 30.9 Saudi Pharmaceutical Industries & Medical Appliances Corporation
Pricing / Valuation as on June 13, 2010 (SPIMACO) manufactures medicines and medical appliances for local
and international markets. Since its establishment in 1986, SPIMACO
Stock details has expanded its annual production capacity to include 3mn liters of
52-week range H/L (SR) 37.6/27.6 liquid medicines, 550mn tablets, and 12mn tubes of cream and ointment,
Market cap ($mn) 646.2
aseptic drops and penicillin.
Shares outstanding (mn) 78.4
Price perf. (%) 1M 3M 12M x Business brief: SPIMACO commenced production in 1990 with six products.
Absolute (8) (4) 3 The company’s products include Zimax, Formit, Proton, Famocid 10,
Market (6) (5) 3
Cortimax, Sapofen Plus and Glaze. At the end of 1Q10, the company had the
Sector (9) (8) (4)
largest market share among private players in terms of own products as well
Avg daily turn.(mn) SR US$
3M 6.4 1.7 as licensors’ products in the country.
12M 6.3 1.7
x Financials: SPIMACO’s revenues in 1Q10 grew 6.4% YoY to SR274mn
Raw Beta 6m 3yr
driven by demand for its major brands in the owned and licensed product
0.82 1.01
Reuters code 2070.SE segments. The EBITDA margin grew 12.6% YoY to SR60mn, while net
Bloomberg code SPIMACO AB income grew 6.1% YoY to SR45mn.
Website www.spimaco.com.sa
x Recent developments: In April 2010, SPIMACO approved a cash dividend
Weighting & free float (%) of SR1.50 per share for 2009. On 27 January 2010, the company made a
TASI (free float weight) 0.32 cash bid to purchase all or a part of the shares of an unidentified Egyptian
Free float 65.00
peer, subject to legal, financial, technical and commercial audits. In
Valuation multiples December 2009, SPIMACO entered into a joint venture with Dishman
08 09 TTM Pharmaceuticals and Chemicals, Arab Company for Drug Industries & Medical
P/E (x) 18.9 15.7 15.4 Appliances (ACDIMA), and Capital Advisory Group, Inc. to manufacture
P/B (x) 1.7 1.1 1.0
active pharmaceutical ingredients (API) in Saudi Arabia. SPIMACO holds a
P/Sales (x) 2.8 2.5 2.5
20% stake in the newly formed company.
Div yield (%) 4.9 4.9 -
Source: NCBC Research
Company financials
Share price performance YoY CAGR (%)
2007 2008 2009 1Q10 (%) (07-09)
7,000 40
6,500 35
Net Revenues SRmn 798 872 951 274 6.4 9.2
JUNE 2010 SAUDI PHARMACEUTICAL INDUSTRIES & MEDICAL APPLIANCES CORPORATION 125
INDUSTRIAL INVESTMENT
Also known
Not Covered National Co. for Glass as
ZOUJAJ
Current Price (SR) 20.3 National Company for Glass Industries (Zoujaj) owns two glass
Pricing / Valuation as on June 13, 2010 container factories, one each in Riyadh and Dammam. Zoujaj has stakes
(45% each) in Saudi Guardian International Float Glass and Guardian
Stock details RAK; and a joint venture with Guardian Industries. These facilities
52-week range H/L (SR) 29.9/19.3 manufacture float glass for automotive and construction applications.
Market cap ($mn) 162.0
Zoujaj also has a 50% share in Saudi National Lamps & Electrical Co.,
Shares outstanding (mn) 30.0
which manufactures lighting products.
Price perf. (%) 1M 3M 12M
Absolute (19) (21) (28) x Business brief: Zoujaj’s plants in Riyadh and Dammam, with production
Market (6) (5) 3
capacity of 92,000 metric tons per year, manufacture glass containers for
Sector (9) (8) (4)
the food and beverage industry. Saudi Guardian International Float Glass Co
Avg daily turn.(mn) SR US$
3M 9.5 2.5 has a float glass production capacity of 220,000 tons per year, while
12M 10.9 2.9 Guardian RAK has a capacity of 700 tons per day. In addition, Guardian RAK
Raw Beta 6m 3yr has implemented a hi-tech glass coating technology to expand its float glass
0.77 0.90
offerings to regional customers.
Reuters code 2150.SE
Bloomberg code ZOUJAJ AB x Financials: In 1Q10, Zoujaj’s revenues declined 16.3% YoY to SR30mn.
Website www.zoujaj.com EBITDA margin contracted from to 47% in 1Q10 from 57% in 1Q09, mainly
Weighting & free float (%) due to an increase in the cost of production. Zoujaj recorded an EBITDA of
TASI (free float weight) 0.09 SR14mn in 1Q10, 30.0% lower than that in 1Q09. Although the company’s
Free float 72.60 net margin recovered 61 basis points YoY to 57.7% in 1Q10, due to the drop
in revenues, its net income fell 15.4% YoY to SR17.4mn.
Valuation multiples
08 09 TTM x Recent developments: In May 2010, Zoujaj’s shareholders approved a
P/E (x) 9.0 13.3 14.3 20% capital increase to SR300mn by offering one bonus share for every five
P/B (x) 1.4 1.3 1.3
shares held. In the same month, a cash dividend of SR0.5 per share was
P/Sales (x) 5.6 5.0 5.2
also approved for 2009.
Div yield (%) 7.4 2.5 -
Source: NCBC Research
Company financials
Share price performance YoY CAGR (%)
2007 2008 2009 1Q10 (%) (07-09)
7,000 30
6,500 25
Net Revenues SRmn 106 109 122 30 (16.3) 7.3
Also
Not Covered Filling and Packaging known as
FIPCO
Current Price (SR) 27.5 Filling and Packing Materials Manufacturing Company (FIPCO) is
Pricing / Valuation as on June 13, 2010 engaged in the production of bags and other woven polypropylene
packaging products for industrial and agricultural use. The company’s
Stock details production facilities located in Riyadh cover an area of 75,000 square
52-week range H/L (SR) 45.7/25.0 meters. FIPCO manufactures over two million jumbo bags annually.
Market cap ($mn) 84.3
Shares outstanding (mn) 11.5 x Business brief: FIPCO’s products include jumbo bags with capacities
Price perf. (%) 1M 3M 12M ranging from 500 to 2,000 kilograms; container liners used in dry cargo
Absolute (13) (24) (20) shipping; and sling bags in different sizes. The company also produces leno
Market (6) (5) 3
bags for packing fresh vegetables and fruits; cable fillers for electric cable
Sector (9) (8) (4)
manufacturers; fabrics for fire retardants; tents and lumber protection;
Avg daily turn.(mn) SR US$
3M 7.7 2.0 strapping bands used for boxes; agriculture and baler twines for green
12M 15.0 4.0 houses and grass baling use.
Raw Beta 6m 3yr
x Financials: In 1Q10, FIPCO’s revenues grew 25.3% YoY to SR43mn. The
0.84 0.81
Reuters code 2180.SE EBITDA margin declined to 19.5% in the same period compared to 21.1% in
Bloomberg code FIPCO AB 1Q09. However, net margin sharply declined 644 basis points in 1Q10 to
Website www.fipco.com.sa 14.6% due to a drop in other income. In absolute terms, net income dropped
Weighting & free float (%) 13% YoY to SR6.3mn in the quarter.
TASI (free float weight) 0.05 x Recent developments: In December 2009, FIPCO’s shareholders approved
Free float 85.33
a 67.3% capital increase from SR68.75mn to SR115mn by issuing one bonus
Valuation multiples share for every 1.4864 shares held.
08 09 TTM
P/E (x) 18.0 16.0 16.8 Company financials
P/B (x) 3.3 2.5 2.4 YoY CAGR (%)
P/Sales (x) 1.8 2.3 2.2 2007 2008 2009 1Q10 (%) (07-09)
Div yield (%) - - - Net Revenues SRmn 145 178 138 43 25.3 (2.4)
EBITDA SRmn 22 25 26 8 16.1 9.9
Source: NCBC Research
Net Income SRmn 15 18 20 6 (13.0) 16.8
Share price performance Assets SRmn 121 139 167 170 15.2 17.2
7,000 50 Equity SRmn 90 96 126 132 15.5 18.4
45
6,500
40
Total Debt SRmn 6 11 17 16 44.0 75.4
6,000 35 Cash & Equiv SRmn 3 18 13 1 (88.6) 126.2
30
5,500
25 EBITDA Mgn % 14.9 13.9 18.8 19.5 - -
5,000 20
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 10.0 9.9 14.3 14.6 - -
TA SI FIP CO (RHS) ROE % 17.1 18.8 17.8 19.5 - -
ROA % 12.0 13.5 12.9 14.9 - -
Source: Bloomberg
Div Payout % 23.7 - - - - -
Top 5 shareholders (%) EPS SR 2.1 2.6 2.9 0.6 (47.6) 16.8
Falcom Financial Services Co. 14.6 BVPS SR 13.1 14.0 18.4 11.4 (30.9) 18.4
Source: Tadawul, Zawya, Company, NCBC Research
Also known as
Not Covered National Metal NATMETAL,
MAADANIYAH
Current Price (SR) 20.1 National Metal Mfg & Casting (Maadaniyah) is the largest manufacturer
Pricing / Valuation as on June 13, 2010 of steel wire and other wire products in Saudi Arabia. The company’s
plants are equipped with modern machinery for wire drawing, stranding,
Stock details galvanizing, and the manufacture of fasteners. The plant also hosts
52-week range H/L (SR) 32.4/18.3 modern testing facilities for chemical, mechanical, and spectrometric
Market cap ($mn) 136.6
analyses.
Shares outstanding (mn) 25.6
Price perf. (%) 1M 3M 12M x Business brief: Maadaniyah has the capacity to produce 22,000 tons of
Absolute (10) (12) (34) castings, 12,000 units of axles, and 80,000 tons of steel wires each year.
Market (6) (5) 3
The company specializes in the manufacture of low relaxation PC strands,
Sector (9) (8) (4)
high/low- galvanized steel, carbon wires & strands, mattress spring wires,
Avg daily turn.(mn) SR US$
3M 8.2 2.2 fasteners, welding wires, and steel nails. These products find use in various
12M 14.4 3.9 sectors, including construction, appliances, electrical cable, building systems,
Raw Beta 6m 3yr and steel fabrication.
0.93 0.96
Reuters code 2220.SE x Financials: Maadaniyah’s revenues grew 17.7% YoY to SR92.2mn in 1Q10.
Bloomberg code NMMCC AB EBITDA increased 121.4% YoY to SR13.8mn—the EBITDA margin expanded
Website www.natmetalco.com to 14.9% compared to 7.9% in 1Q09 due to lower cost of production during
Weighting & free float (%) the quarter. The net income also increased 686.1% YoY to SR8.2mn in
Div yield (%) 2.5 2.5 - Net Revenues SRmn 369 500 319 92 17.7 (7.0)
EBITDA SRmn 58 64 38 14 121.4 (18.9)
Source: NCBC Research
Net Income SRmn 21 40 16 8 686.1 (13.3)
Share price performance Assets SRmn 452 544 483 511 0.4 3.4
7,000 35 Equity SRmn 317 340 345 353 3.4 4.3
30
6,500 Total Debt SRmn 66 44 73 63 69.2 5.4
25
6,000
20 Cash & Equiv SRmn 12 13 35 44 59.0 71.0
5,500 15 EBITDA Mgn % 15.6 12.9 11.9 14.9 - -
5,000 10
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 5.6 8.0 4.9 8.8 - -
TA SI M aadaniyah (RHS) ROE % 6.8 12.2 4.5 9.4 - -
ROA % 4.6 8.1 3.0 6.6 - -
Source: Bloomberg
Div Payout % 79.4 25.4 82.0 - - -
Top 5 shareholders (%) EPS SR 1.3 2.0 0.6 0.3 540.0 (30.4)
National Manufacturing 35.4 BVPS SR 19.4 16.6 13.5 13.8 (17.3) (16.6)
Company
Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 41.8 Saudi Chemical Company (SCC) is engaged in blasting services and the
Pricing / Valuation as on June 13, 2010 production and sale of explosives and detonators for civil and military
use. In 2004, SCC entered the seismic explosives market serving the oil
Stock details and gas exploration sector. Its subsidiary Sitcopharma supplies medical
52-week range H/L (SR) 46.6/26.9 and surgical equipment to hospitals and medical centers.
Market cap ($mn) 704.7
Shares outstanding (mn) 63.2 x Business brief: SCC's products include Prilex, a blasting agent mainly used
Price perf. (%) 1M 3M 12M for fissured sedimentary rocks and underground applications; Kemulex, an
Absolute (2) 3 47 emulsion explosive suitable for worksites with wet holes and underwater
Market (6) (5) 3
blasting; Sanel, a non-electric shock tube designed for bench and trench
Sector (9) (8) (4)
blasting; explosives packing; electric detonators; detonating cords and
Avg daily turn.(mn) SR US$
3M 12.1 3.2 blasting machines.
12M 25.9 6.9
x Financials: SCC’s revenues declined 4.4% YoY to SR404mn in 1Q10.
Raw Beta 6m 3yr
EBITDA and net income, however, improved significantly. EBITDA grew
0.47 0.85
Reuters code 2230.SE 22.3% YoY to SR85.5mn, while the net income grew 10.8% YoY to
Bloomberg code SCCO AB SR74.4mn. Effective cost controls in the manufacturing process enhanced
Website www.saudichemical.com the company’s profitability during the quarter.
Weighting & free float (%) x Recent developments: In May 2010, SCC announced a cash dividend of
TASI (free float weight) 0.51 SR1.5 per share for 4Q09. (Earlier, in December 2009, it had announced a
Free float 96.96
cash dividend of SR2.5 per share for 3Q09). In April 2010, SCC announced
Valuation multiples that its pharmaceutical affiliate had entered into a three-year agreement
08 09 TTM with Germany's Henkel AG & Co to distribute products in Saudi Arabia. SCC’s
P/E (x) 13.2 8.8 8.6 Egypt-based subsidiary Suez International Nitrate Co (SINCO) began
P/B (x) 2.4 2.1 2.0
commercial production of ammonium nitrate in February 2010. Ammonium
P/Sales (x) 1.7 1.6 1.6
nitrate is the primary material used in explosives. SCC said it would secure
Div yield (%) - 9.6 N/A
supplies through SINCO.
Source: NCBC Research
TA SI SCC (RHS)
Assets SRmn 1,658 2,024 2,382 2,278 7.3 19.9
Equity SRmn 896 1,096 1,239 1,314 12.9 17.6
Source: Bloomberg Total Debt SRmn 138 119 50 - N/A (39.8)
Top 5 shareholders (%) Cash & Equiv SRmn 166 166 375 160 (15.3) 50.3
EBITDA Mgn % 13.9 14.7 18.1 21.1 - -
Net Mgn % 9.1 13.0 18.3 18.5 - -
ROE % 12.8 20.1 25.8 23.4 - -
ROA % 7.2 10.9 13.7 12.8 - -
Div Payout % - - 84.0 N/A - -
EPS SR 1.8 3.2 4.8 1.2 10.3 64.0
Source: Tadawul, NCBC Research BVPS SR 14.2 17.3 19.6 20.8 12.9 17.6
Source: Tadawul, Zawya, Company, NCBC Research
Also known as
Current Price (SR) 51.8 Saudi Paper Manufacturing Company (SPM) is one of the few integrated
Pricing / Valuation as on June 13, 2010 paper companies in the MENA region. SPM is engaged in the recycling of
waste paper, production of tissue rolls from recycled paper, and
Stock details conversion of rolls into consumer products such as paper napkins,
52-week range H/L (SR) 62.0/49.7 towels, and facial and toilet paper.
Market cap ($mn) 413.9
Shares outstanding (mn) 30.0 x Business brief: SPM has three paper processing plants with an aggregate
Price perf. (%) 1M 3M 12M capacity of 125,000 tons of tissue paper, 50,000 of converted paper, and
Absolute (9) 4 (7) 65,000 tons of de-inked paper per year. The company’s wholly owned
Market (6) (5) 3
subsidiary Saudi Paper Converting Co. (SPCC) converts tissue rolls into
Sector (9) (8) (4)
branded consumables, which are distributed through wholesale and retail
Avg daily turn.(mn) SR US$
3M 7.6 2.0 channels. Saudi Recycling Co. (SRC) collects waste paper, which serve as
12M 10.2 2.7 feed for SPM’s downstream de-inking plants. Al-Madar Trading Co. was set
Raw Beta 6m 3yr up in the UAE to collect waste paper from international sources.
0.67 0.68
Reuters code 2300.SE x Financials: SPM’s revenues increased 80.5% YoY to SR199mn in 1Q10,
Bloomberg code SPM AB driven mainly by expansion of production capacity at its plant in Jeddah in
Website www.saudipaper.com June 2009. EBITDA grew 65.3% YoY to SR43mn, while net income grew
Weighting & free float (%) 31.8% YoY to SR30mn during 1Q10.
TASI (free float weight) 0.16 x Recent developments: In April 2010, SPM approved a cash dividend of
Free float 49.90
SR1.25 per share for the year 2009. The company had completed the
Valuation multiples acquisition of its 30% stake in Saudi Arabia Global Health Center Company,
08 09 TTM which was approved by the AGM held on 6 April 2010.
P/E (x) 18.4 16.5 15.3
P/B (x) 3.5 3.0 2.9 Company financials
P/Sales (x) 3.1 2.8 2.4 YoY CAGR (%)
Div yield (%) 1.9 2.4 - 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Revenues SRmn 444 506 558 199 80.5 12.1
EBITDA SRmn 117 126 150 43 65.3 13.2
Share price performance
Net Income SRmn 83 84 94 30 31.8 6.7
7,000 65 Assets SRmn 628 1,089 1,374 1,397 8.6 47.9
6,500 60
55
Equity SRmn 382 447 511 540 15.1 15.6
6,000
50 Total Debt SRmn 192 556 760 771 10.1 98.8
5,500 45
Cash & Equiv SRmn 27 21 37 59 (12.3) 16.8
5,000 40
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 26.5 24.9 26.9 21.6 - -
TA SI SP M (RHS) Net Mgn % 18.6 16.7 16.9 15.0 - -
ROE % 23.9 20.4 19.6 22.7 - -
Source: Bloomberg
ROA % 14.3 9.8 7.6 8.6 - -
Top 5 shareholders (%) Div Payout % 21.8 35.6 39.9 - - -
HH Prince Abdullah Bin 50.0 EPS SR 3.4 2.8 3.1 1.0 32.0 (4.6)
Musaed Bin Abdul Aziz Al
Saud BVPS SR 15.9 14.9 17.0 18.0 15.2 3.4
Ra’ed Bin Abdul Rahman Bin 8.4 Source: Tadawul, Zawya, Company, NCBC Research
Abdul Aziz Al Mesha’al
Falcom Financial Services Co. 7.7
Also
Not Covered Al Abdullatif Industrial known as
AIIC
Current Price (SR) 29.2 Al-Abdullatif Industrial Investment Company (Al Abdullatif), established
Pricing / Valuation as on June 13, 2010 in 1981, ranks among the largest carpet manufacturers in the world. The
company has fully integrated operations, from fiber extrusion to
Stock details finishing.
52-week range H/L (SR) 51.0/28.0
Market cap ($mn) 632.5
x Business brief: Al Abdullatif manufactures three kinds of carpets: tufted,
Shares outstanding (mn) 81.3 woven, and non-woven, primarily made from synthetic fibers. The company
Price perf. (%) 1M 3M 12M exports these carpets to more than 25 countries. The color pigment division
Absolute (14) (30) (23) provides the various shades required to make carpets and blankets. The
Market (6) (5) 3
paper tube division provides paper tubes of different sizes and thicknesses
Sector (9) (8) (4)
for the winding of carpets and yarn. The company’s five fully owned affiliates
Avg daily turn.(mn) SR US$
3M 18.9 5.0 provide backward integration support.
12M 14.2 3.8
x Financials: In 1Q10, Al Abdullatif recorded 14.9% YoY growth in revenues
Raw Beta 6m 3yr
to SR266mn, driven by rising domestic and international demand for its
0.72 0.41
Reuters code 2340.SE products. EBITDA grew 37.6% YoY to SR69mn as gross margins improved
Bloomberg code ALABDUL AB during the quarter. Net income increased to SR41.5mn in 1Q10, a growth of
Website www.carpets.com 59.6% over 1Q09.
Weighting & free float (%) x Recent developments: In May 2010, Al Abdullatif announced the
TASI (free float weight) 0.14 commencement of trial operations by Red Sea Cable Co. in which it owns
Free float 30.0
27% stake. Commercial operations are expected to begin in a few months.
Valuation multiples In March 2010, Al Abdullatif’s shareholders approved a SR3.50 per share
08 09 TTM cash dividend for 2009. In January 2010, Al Abdullatif reported in a
P/E (x) 11.8 14.1 12.9 statement on the Saudi stock exchange the appointment of Suleiman Al
P/B (x) 2.0 1.7 1.7
Abdullatif as deputy chairman and managing director of the company.
P/Sales (x) 2.1 2.4 2.3
Div yield (%) N/A 12.0 N/A Company financials
Source: NCBC Research
YoY CAGR (%)
Current Price (SR) 24.0 Saudi Industrial Export Co (SIEC) is a trading company established in
Pricing / Valuation as on June 13, 2010 1990. The company exports, imports and distributes agricultural goods,
industrial products and bulk commodities. SIEC is represented by its
Stock details associates across the globe and has exported over 10 million tons of
52-week range H/L (SR) 46.6/22.9 products to more than 40 markets.
Market cap ($mn) 69.0
Shares outstanding (mn) 10.8 x Business brief: SIEC trades in bulk food products, including rice, maize,
Price perf. (%) 1M 3M 12M sugar and edible oils; fertilizers, minerals, chemicals and petrochemicals;
Absolute (17) (26) (47) iron, steel and other metals; air conditioners, trucks and cables. The
Market (6) (5) 3
company also provides a number of services to its suppliers and customers,
Sector (9) (8) (4)
including guaranteed payments, arms-length marketing, financing, and
Avg daily turn.(mn) SR US$
3M 9.6 2.6 logistics for land and sea transport. SIEC is investing in distribution channels
12M 15.1 4.0 and warehousing facilities to reach more manufacturers and customers.
Raw Beta 6m 3yr
x Financials: SIEC’s net revenues grew 88.5% YoY to SR45mn in 1Q10.
0.90 1.08
Reuters code 4140.SE EBITDA during the quarter was SR1.5mn against a loss of SR1.1mn in 1Q09,
Bloomberg code SIECO AB attributable to the decline in costs during the quarter. The company also
Website www.siec.com.sa earned a profit of SR1mn in 1Q10, while it had lost SR1.4mn in 1Q09.
Weighting & free float (%) x Recent developments: SIEC, in its AGM held on 16 June 2010, approved
TASI (free float weight) 0.05 the election of five directors to its Board for a term of three years. During
Free float 100.0
the AGM, the company also cancelled the acquisition of a 60% stake in Saudi
Valuation multiples Specialized Laboratories Company. The company did not pay any dividend to
08 09 TTM its shareholders for the year 2009.
P/E (x) 18.1 N/M N/M
P/B (x) 2.2 2.5 2.5 Company financials
P/Sales (x) 0.4 2.6 2.1 YoY CAGR (%)
Div yield (%) 4.2 N/M N/M 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Revenues SRmn 220 709 101 45 88.5 (32.1)
EBITDA SRmn 4 22 (3) 2 N/M N/M
Share price performance
Net Income SRmn 7 14 (6) 1 N/M N/M
7,000 50 Assets SRmn 164 147 128 130 (4.1) (11.8)
45
6,500 Equity SRmn 121 119 103 105 0.1 (7.8)
40
6,000 35
Total Debt SRmn 16 - - 0 N/A N/M
30
5,500
25 Cash & Equiv SRmn 80 98 85 73 (24.0) 3.4
5,000 20
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 2.0 3.0 N/M 3.5 - -
TA SI SIECO (RHS) Net Mgn % 3.4 2.0 N/M 2.3 - -
ROE % 6.2 11.9 (5.0) 3.9 - -
Source: Bloomberg
ROA % 4.5 9.2 (4.0) 3.2 - -
Top 5 shareholders (%) Div Payout % - 71.9 - - - -
Ibrahim Oudah Abdullah Al 5.9 EPS SR 0.7 1.4 (0.5) 0.1 N/M N/M
Oudah BVPS SR 11.2 11.0 9.5 9.7 0.1 (7.7)
Source: Tadawul, Zawya, Company, NCBC Research
Exhibit 99: Revenue of GCC multi investment Exhibit 100: Comparison of ROE and P/E of GCC
companies, 2007–09 companies, 2009
(USD mn) (%)
2,500 90
70
2,000
50
ROE (%)
1,500
30
1,000 10
P/E (x)
-10
500
-30
0
2007 2008 2009 -50
-10 0 10 20 30 40 50
(500)
KSA UAE Kuwait Qatar KSA UAE Kuwait Qatar
Source: Bloomberg, Gulf Base, NCBC Research Source: Bloomberg, Gulf Base, NCBC Research
Kingdom Holding is the largest company in the sector, having a nearly 2.5%
weighting in the overall market index.
In 2009, aggregate revenues for companies in the sector declined 20.9% YoY to
SR6.4bn, primarily due to the 26.6% YoY decline in Kingdom’s revenue, negatively
impacted by the hospitality industry’s weak performance. SAIC’s revenue reported
the highest increase of 71.4% (SR39.8 mn). Further, in terms of profitability, the
sector reported net income of SR0.5 bn in 2009 as against a loss of SR30.3 bn in
2008. The 2008 loss was mainly due to a SR30bn write-down at Kingdom Holdings.
Exhibit 102: Revenue of companies, 2007–2009 Exhibit 103: Profitability of companies, 2007–2009
(SR mn) (%)
9,200 1,200
8,700 1,000
8,200
800
7,700
600
7,200
400
6,700
6,200 200
5,700 0
5,200 2007 2008 2009
(200)
4,700
(400)
4,200
(600)
2007 2008 2009
ATTMCO AADC SAIC
KINGDOM ATTMCO AADC SAIC
SARCO SISCO ABDICO SARCO SISCO KINGDOM
As of 31 December 2009, the sector’s P/E and P/BV multiple stood at 38.4x and
1.43x, respectively, compared to 16.2x and 1.4x in 2008. The KSA multi-
investment sector’s average ROE stood at 1.9% in 2009. As of 31 May 2010, the
sector’s P/E and P/BV multiples were 117.1x and 1.3x, respectively.
Exhibit 104: Comparison of P/B and ROE, 2008 Exhibit 105: Comparison of P/B and ROE, 2009
(%) (%)
29 5
SARCO SAIC
4 ATTMCO
19
3
KINGDOM
ROE (%)
ROE(%)
9 2
SAIC KINGDOM
. AADC
AADC P/B 9x) 1 SARCO
-1 ABDICO
P/B (x)
ATTMCO SISCO
0
SISCO
ABDICO
-11 -1
0 1 2 3 4 5 0 1 2 3 4
Current Price (SR) 37.5 Saudi Arabia Refineries Company (SARCO), established in Jeddah in
Pricing / Valuation as on 13 June, 2010 1959, invests in commercial and industrial projects in and outside Saudi
Arabia. The company is principally involved in the purchase, refining,
Stock details transportation, sale, import and export of crude oil and petroleum
52-week range H/L (SR) 61.3/35.1 products. SARCO also carries out subordinate activities in an array of
Market cap ($mn) 150.0
businesses like land reclamation, water projects, marine port and
Shares outstanding (mn) 15.0
transportation services.
Price perf. (%) 1M 3M 12M
Absolute (15) (21) (36) x Business brief: Currently, SARCO owns stakes in Arabian Salfonates
Market (6) (5) 3
Company (34%), Arabian Tankers Company (27%), Jeddah Oil Refinery Co,
Sector (10) (15) (21)
(25%), Saudi Industrial Investment Group (3.33%), Tabuk Cement and
Avg daily turn.(mn) SR US$
3M 10.1 2.7 Riyad Bank. SARCO generates income from: (i) its stakes in the earnings of
12M 17.6 4.7 other companies; and (ii) capital gains on the sale of its investments.
Raw Beta 6m 3yr
x Financials: SARCO reports little to no revenues as most of its income comes
0.45 0.85
Reuters code 2030.SE from its investments in associates. A positive contribution from its associates
Bloomberg code SARCO AB resulted in increased net income for SARCO, registering an 890.8% YoY
Website www.almasafi.com.sa growth to SR0.8mn for 1Q10.
Weighting & free float (%) x Recent developments: In May 2010, SARCO approved a SR0.5 per share
TASI (free float weight) 0.11 dividend for the year 2009. The total dividend amounted to SR7.5mn,
Free float 100.0
representing almost 5.0% of the company’s capital. At the end of 2008, the
Valuation multiples company changed its fiscal year end to Dec. 31 from April 30.
08 09 TTM
P/E (x) 71.3 180.2 148.1 Company financials
P/B (x) 2.7 1.5 1.5 YoY CAGR (%)
P/Sales (x) N/M N/M N/M 2007* 2008 2009 1Q10 (%) (07-09)
Current Price (SR) 12.4 Saudi Advanced Industries Co. (SAIC) participates in, develops and
Pricing / Valuation as on 13 June, 2010 promotes industrial projects under The Economic Offset Program
organized by the Ministry of Defense and Aviation. SAIC encourages
Stock details firms in the U.S, the U.K and France to collaborate with Saudi companies
52-week range H/L (SR) 16.0/11.3 to establish high-tech plants in diversified industries.
Market cap ($mn) 142.2
Shares outstanding (mn) 43.2 x Business brief: SAIC has stakes in Al Obaikan Glass Co. (40.0%), NPS
Price perf. (%) 1M 3M 12M Bahrain for Oil & Gas Services Co. (20.0%), Gulf Salt Co. (11.2%), Al Salam
Absolute (9) (10) (20) Aircraft Co. (10.0%), Industrialization & Energy Services Co. (3.4%),
Market (6) (5) 3
Arabian Industrial Fibers Co. (0.6%), and Yanbu National Petrochemicals Co.
Sector (10) (15) (21)
SAIC also enters into contracts with other firms to develop new technology-
Avg daily turn.(mn) SR US$
3M 11.4 3.0 oriented companies.
12M 13.5 3.6
x Financials: SAIC’s total operating revenue fell 49.0% YoY to SR3.7mn in
Raw Beta 6m 3yr
1Q10 due to a sharp decline in investment income. Net income in 1Q10
0.83 0.93
Reuters code 2120.SE decreased 56.8% YoY to SR2.7mn due to proportionately high operating
Bloomberg code SAIC AB expenses resulting in lower operating profits.
Website www.saic.com.sa
x Recent developments: In February 2010, Tareq Abdulrahman bin Rayes
Weighting & free float (%) resigned as general manager of SAIC. Board member Mansour al-Yahiyan
TASI (free float weight) 0.10 was appointed as acting general manager. SAIC has not declared dividend
Free float 100.0
for the year 2009 to date.
Valuation multiples
Company financials
08 09 TTM
P/E (x) YoY CAGR (%)
29.8 15.3 17.1
2007 2008 2009 1Q10 (%) (07-09)
P/B (x) 0.8 0.7 0.7
Net Revenues SRmn 22 25 40 4 (49.0) 33.8
P/Sales (x) 21.2 13.4 14.7
EBITDA SRmn 16 20 36 3 (56.5) 50.0
Div yield (%) 4.0 - -
Net Income SRmn 16 18 35 3 (56.8) 49.3
Source: NCBC Research
Assets SRmn 822 892 778 799 10.5 (2.7)
Share price performance Equity SRmn 820 702 776 796 10.3 (2.7)
Khalid Saleh Abdul Rahman Al 11.5 Source: Tadawul, Zawya, Company, NCBC Research
Shethry
Also known
Not Covered Al-Ahsa Development as
AADC
Current Price (SR) 10.9 Al-Ahsa Development Company (AADC) was established in 1993 by
Pricing / Valuation as on 13 June, 2010 Royal decree to undertake investment activities in the industrial and
service sectors of Saudi Arabia, particularly in the region of Al-Ahsa.
Stock details AADC has business interests in foods, textiles, and medical services.
52-week range H/L (SR) 15.3/10.0
Market cap ($mn) 142.4
x Business brief: AADC’s affiliate Al-Ahsa Medical Services Co. (30% stake)
Shares outstanding (mn) 49.0 manages a modern 220-bed hospital in the Al-Ahsa region; Al-Ahsa Food
Price perf. (%) 1M 3M 12M Services Co. (50% stake), a JV with Eastern Agriculture Development Co,
Absolute (10) (6) (22) has a capacity to process 5,000 tons of dates and is engaged in the
Market (6) (5) 3
production of date molasses vinegar, dates pest and compressed dates. The
Sector (10) (15) (21)
company’s affiliate Saudi Japanese Textile Co. (100% stake) produces
Avg daily turn.(mn) SR US$
3M 20.9 5.6 synthetic fiber, which is used in the production of dress materials. Currently,
12M 14.5 3.9 AADC is in the process of setting up an aluminum foil factory, a gypsum
Raw Beta 6m 3yr factory and a cement plant.
0.91 0.98
Reuters code 2140.SE x Financials: AADC recorded revenues of SR10.3mn in 1Q10. Net income for
Bloomberg code AADC AB the quarter stood at SR6.3mn compared to a loss during same period last
Website www.ahsa-dev.com.sa year, primarily due to higher investment income.
Weighting & free float (%) x Recent developments: In March 2010, AADC announced that National
TASI (free float weight) 0.11 Handling Services Co., in which it held 5% stake, signed an agreement to
Free float 100.0
merge with Saudi Airlines Ground Services Co. and Attar Ground Services
Valuation multiples Co. to form a new entity providing ground services to all Saudi Arabian
08 09 TTM airports.
P/E (x) - - -
P/B (x) N/M 159.0 33.5 Company financials
P/Sales (x) 1.3 1.3 1.2 YoY CAGR (%)
Div yield (%) N/M 32.8 18.0 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Revenues SRmn 77 (21) 16 10 N/M (54.0)
EBITDA SRmn 53 (27) 12 9.3 N/M (51.6)
Share price performance
Net Income SRmn 34 (56) 3 6.3 N/M (68.8)
7,000 16 Assets SRmn 727 559 571 585 8.2 (11.4)
6,500 14
Equity SRmn 521 397 420 434 11.4 (10.2)
6,000 12
Total Debt SRmn 168 132 126 126 (4.2) (13.5)
5,500 10
Cash & Equiv SRmn 3 6 7 8 52.9 42.6
5,000 8
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 68.9 N/M 76.2 89.6 - -
TA SI A l A hsa fo r Dev. (RHS)
Net Mgn % 44.9 N/M 20.7 61.1 - -
ROE % 7.1 (12.3) 0.8 5.9 - -
Source: Bloomberg
ROA % 4.5 (8.7) 0.6 4.4 - -
Top 5 shareholders (%) Div Payout % - - - - - -
EPS SR 0.8 (1.2) 0.1 0.1 N/M -
BVPS SR 12.1 8.1 8.6 8.9 11.4 -
Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 13.0 Saudi Industrial Services Company (SISCO), established in 1988,
Pricing / Valuation as on 13 June, 2010 undertakes large-scale investments in KSA’s infrastructure sector on a
build-operate-transfer and build-operate-own model. SISCO has
Stock details business interests in water desalination and distribution; development of
52-week range H/L (SR) 16.9/12.0 industrial estates, free zone ports; and support services.
Market cap ($mn) 234.8
Shares outstanding (mn) 68.0 x Business brief: SISCO’s affiliate Support Services Operations Co. (97%
Price perf. (%) 1M 3M 12M owned) provides ancillary services such as building and car maintenance,
Absolute (9) (19) (12) catering, and gas stations in industrial estates. Saudi Trade & Export
Market (6) (5) 3
Development Co. (76% owned) operates a free zone at Jeddah Islamic
Sector (10) (15) (21)
Seaport on a BOT basis. Kindasa Water Services (60% owned) operates a
Avg daily turn.(mn) SR US$
3M 24.3 6.5 14,000 cubic meter/day desalination plant and water distribution network.
12M 23.7 6.3 International Water Distribution Co. (50% owned) is engaged in building and
Raw Beta 6m 3yr operating water distribution networks within the KSA.
0.87 0.91
Reuters code 2190.SE x Financials: SISCO has reported steady revenue growth over the past few
Bloomberg code SISCO AB years, however net income has not responded in kind. However, in 1Q10,
Website www.sisco.com.sa SISCO recorded 57.3% YoY growth in revenues to SR55.2mn and with costs
Weighting & free float (%) kept under control, the company managed to increase net income 202.7%
Top 5 shareholders (%) Cash & Equiv SRmn 54 718 441 355 (44.7) 185.9
Zainal Industries Co., Ltd 14.6 EBITDA Mgn % 34.2 25.4 24.3 37.7 - -
Net Mgn % (4.9) (17.9) 0.9 3.8 - -
ROE % (1.2) (4.2) 0.2 1.1 - -
ROA % (0.8) (1.9) 0.1 0.4 - -
Div Payout % - - - - - -
EPS SR (0.1) (0.5) 0.0 0.0 N/M -
Source: Tadawul, NCBC Research BVPS SR 53.3 10.6 10.7 10.8 1.9 -
Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 13.5 Aseer Trading, Tourism and Manufacturing Company (Aseer),
Pricing / Valuation as on June 13, 2010 established in 1975 and headquartered in Abha (Southwest of Saudi
Arabia), is an investment holding company with interests in five sectors
Stock details – food, petrochemicals, real estate, building materials and construction,
52-week range H/L (SR) 19.0/12.9 and financial services.
Market cap ($mn) 453.2
Shares outstanding (mn) 126.4 x Business brief: Aseer operates in a wide range of businesses and has
Price perf. (%) 1M 3M 12M investments in diverse projects, including agricultural, cement, printing &
Absolute (12) (9) (20) publishing, and energy-related. The company is also engaged in travel and
Market (6) (5) 3
tourism and has stakes in resorts and hotels. Aseer has investments in
Sector (10) (15) (21)
Dallah Industrial Investment Company, Al Ustool Arabia Real Estate
Avg daily turn.(mn) SR US$
3M 16.3 4.3 Development Co. Ltd, Al Khawatem Trading & Contracting Co. Ltd., Al
12M 17.1 4.6 Nasrah International Real Estate Development Co. Ltd., and Al Mawajed
Raw Beta 6m 3yr International Real Estate Development Co. The company has a network of
0.58 1.06
six branches, which are located in Al Madinah, Riyadh, Wadi Dawaser,
Reuters code 4080.SE
Jeddah, Hail and Al Jaouf.
Bloomberg code ATTMCO AB
Website www.aseercorp.com.sa x Financials: In 1Q10, Aseer recorded revenues of SR491.4mn, up 11.7%
Weighting & free float (%) YoY. EBITDA increased 34.8% YoY to SR54.8mn, slightly improving margins
TASI (free float weight) 0.17 from 9.3% in 1Q09 to 11.2% in 1Q10. Net income increased 58.2% YoY to
Free float 50.08 SR20.4mn during the quarter.
Valuation multiples x Recent developments: In May 2010, Aseer approved a per share cash
08 09 TTM dividend of SR0.75 for 2010.
P/E (x) N/M 21.3 19.5
P/B (x) 0.7 0.7 0.7 Company financials
P/Sales (x) 1.0 1.0 1.0 YoY CAGR (%)
Div yield (%) 3.7 5.6 - 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Revenues SRmn 1,482 1,727 1,713 491 11.7 7.5
EBITDA SRmn 134 158 186 55 34.8 18.0
Share price performance
Net Income SRmn 363 (431) 80 20 58.2 (53.1)
7,000 20 Assets SRmn 4,073 3,309 3,565 3,617 9.8 (6.4)
6,500 18
Equity SRmn 3,356 2,313 2,416 2,450 6.0 (15.2)
16
6,000
14 Total Debt SRmn 158 246 196 231 236.6 11.3
5,500 12 Cash & Equiv SRmn 132 251 417 407 (10.0) 77.7
5,000 10
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 9.0 9.1 10.9 11.2 - -
TA SI A seer (RHS)
Net Mgn % 24.5 (25.0) 4.7 4.1 - -
ROE % 14.4 (15.2) 3.4 3.3 - -
Source: Bloomberg
ROA % 10.6 (11.7) 2.3 2.3 - -
Top 5 shareholders (%) Div Payout % 30.9 N/M 119.0 - - -
Dallah Al Baraka Holding Co. 49.9 EPS SR 3.2 (3.0) 0.6 0.2 60.0 -
BVPS SR 26.6 18.3 19.1 19.4 6.1 -
Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 14.7 Al-Baha Investment & Development Co (Al-baha) was established in
Pricing / Valuation as on June 13, 2010 1992 to develop and operate projects in the Al-Baha province. Engaged
in a wide range of industrial, commercial and agricultural activities, the
Stock details company plans to expand beyond the region. Al-baha’s investments
52-week range H/L (SR) 24.4/14.1 include a 95% stake in Al-Baha Marble & Granite Company.
Market cap ($mn) 58.6
Shares outstanding (mn) 15.0 x Business brief: Al-baha is engaged in wholesale & retail trading and
Price perf. (%) 1M 3M 12M industrial projects, including construction. The company also operates
Absolute (12) (14) (38) refrigeration stores as well as repairs and maintenance workshops, and
Market (6) (5) 3
develops animal and agricultural products. In addition, Al-baha owns and
Sector (10) (15) (21)
reclaims agricultural land for use in new projects. Furthermore, the company
Avg daily turn.(mn) SR US$
3M 18.1 4.8 constructs, maintains, and operates public utilities, including tramways, and
12M 33.4 8.9 develops recreational and tourist facilities such as parks and tourist villages.
Raw Beta 6m 3yr
x Financials: In 1Q10, Al-baha did not record any revenues. However, its
0.57 1.00
Reuters code 4130.SE EBITDA losses increased 32.6% YoY due to higher expenses. The company
Bloomberg code ABDICO AB reported a loss of SR3.8mn during the quarter, primarily owing to loss from
Website N/A investment and provisions made during the quarter.
Weighting & free float (%) x Recent developments: Al-baha reported a net loss of SR4.6mn for 2009
TASI (free float weight) 0.04 compared to SR14.9mn for 2008.
Free float 100.0
Company financials
Valuation multiples
YoY CAGR (%)
08 09 TTM
2007 2008 2009 1Q10 (%) (07-09)
P/E (x) N/M N/M N/M
Net Revenues SRmn 1.8 0.2 0.2 0 N/M (63.0)
P/B (x) 2.1 2.2 2.2
EBITDA SRmn (6) (6) (3) (1) 32.6 (29.7)
P/Sales (x) 972.3 908.1 908.1
Net Income SRmn (13) (15) (5) (3.8) N/M (41.8)
Div yield (%) - - -
Assets SRmn 147 119 128 124 5.6 (6.6)
Source: NCBC Research
Equity SRmn 123 105 102 98 (5.1) (8.9)
Current Price (SR) 8.4 Kingdom Holding Company (Kingdom) was established in 1996. Kingdom
Pricing / Valuation as on June 13, 2010 primarily focuses on banking and financial services, real estate, and
hotels & hotel management sectors. Headquartered in Riyadh, it has
Stock details holdings in retail, food & entertainment, healthcare, technology, media &
52-week range H/L (SR) 13.4/7.3 telecommunications, automotive, and other sectors.
Market cap ($mn) 8,249.7
Shares outstanding (mn) 3,705.8 x Business brief: Kingdom, initially engaged in construction, housing
Price perf. (%) 1M 3M 12M development, and educational projects, enhanced its stake across sectors in
Absolute (7) (15) (11) a number of Saudi Arabian, Middle Eastern and international companies. The
Market (6) (5) 3
company’s portfolio consists of premium brands such as Apple, Time Warner,
Sector (10) (15) (21)
Samba, Citigroup, Pepsi, Walt Disney and Hewlett-Packard. Kingdom has
Avg daily turn.(mn) SR US$
3M 25.5 6.8 made investments in the domestic health, education and social services
12M 42.6 11.4 sectors. The company is also a private equity player in Saudi Arabia and in
Raw Beta 6m 2yr developing markets in the Middle East, Africa and Asia.
0.65 0.91
Reuters code 4280.SE x Financials: Kingdom’s operating revenues increased 8.4% YoY to SR994mn
Bloomberg code KINGDOM AB in 1Q10. The company recorded an EBITDA of SR74.2mn in the quarter, a
Website www.kingdom.com.sa decline of 50.9% YoY. Total investment income for 1Q10 grew 30.5% YoY,
Weighting & free float (%) leading to a 49.9% YoY increase in net profit to SR75.2mn.
TASI (free float weight) 0.31 x Recent developments: In May 2010, Kingdom’s USD375mn bid to buy the
Free float 5.00
remaining shares of Kingdom Hotel Investments was accepted. The company
Valuation multiples currently has 56.1% stake in the latter. In April 2010, Kingdom sold its 40%
08 09 TTM stake in Fairmont Raffles Holdings International for SR3.2bn to Qatari Diar
P/E (x) N/M 76.9 72.4 Real Estate Co., a wholly-owned unit of the Qatar Investment Authority.
P/B (x) 1.4 1.3 1.2
P/Sales (x) 6.5 7.7 7.5 Company financials
Div yield (%) - - - YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn 5,001 4,771 4,032 994 8.4 (10.2)
Share price performance
EBITDA SRmn 888 977 927 74 (50.9) 2.1
7,000 15
Net Income SRmn 1,210 (29,911) 403 75 49.9 (42.3)
6,500 13
11 Assets SRmn 78,508 50,715 49,990 51,148 13.3 (20.2)
6,000
9 Equity SRmn 51,221 21,615 24,579 25,825 34.5 (30.7)
5,500 7
5,000 5 Total Debt SRmn 18,131 17,614 14,103 14,042 (5.6) (11.8)
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn 2,309 1,893 2,233 2,028 (24.6) (1.7)
TASI Kingdom (RHS)
EBITDA Mgn % 17.8 20.5 23.0 7.5 - -
At the listed company level, KSA has a large and diversified construction sector with
strong revenue growth historically, although top lines have suffered in the current
crisis. ROE has been on par with GCC peers with P/E averaging around 20x.
Exhibit 106: Revenues of GCC building and Exhibit 107: Comparison of ROE and P/E of GCC
construction companies, 2007–09 companies, 2009
(USD mn) (%)
6000 35
5000 30
4000 25
ROE(%)
3000 20
2000 15
1000 10
P/E (x)
0 5
2007 2008 2009 -20 0 20 40 60 80
KSA UAE Oman Kuwait UAE Oman KSA Kuwait
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
The building and construction sector has a large number of private players with 13
listed companies.
Exhibit 109: Revenues of companies, 2007–09 Exhibit 110: Profitability of companies, 2007-09
(SR mn) (%)
20,500 30
25
16,500
20
12,500
15
8,500
10
4,500 5
500 0
2007 2008 2009 2007 2008 2009
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
As of 31 December 2009, the sector’s P/E and P/BV multiple stood at 16.6x and
2.0x, respectively, compared with P/E and P/BV multiples of 10.0x and 1.9x,
respectively, in 2008. While Saudi Ceramics reported the highest RoE, SIDC’s was
the lowest. As of 31 May 2010, the sector P/E and P/BV multiples were 16.5x and
1.8x, respectively.
Exhibit 111: Comparison of P/B and ROE, 2008 Exhibit 112: Comparison of P/B and ROE, 2009
(SR mn) (%)
40 35
Redsea Al Babtain
35 30
Saudi Zamil Redsea
Gypsum
Saudi Cable Vitrified 25 Saudi Steel
30 Saudi
Co. Pipe Ceramics
20
ROE(%)
25 Zamil Amiantit
ROE(%)
Al Babtain
20 15
Saudi Gypsum Saudi
Amiantit Saudi Cable
15 Ceramics 10 Vitrified
Co.
10 Specialized 5 Arabian
Arabian pipes Specialized
Cables pipes P/B (x)
5 0 Cables
SIDC P/B (x) 0.0 1.0 2.0 3.0 4.0
0 -5
1.0 1.8 2.5 3.3 4.0 Mohamed Al
SIDC
-5 -10 Mojil
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
However, the industry’s prospects look bright in light of the Saudi government
increasing its expenditure on infrastructure development. Revival of the economy
and the improvement in macroeconomic factors are expected to be additional
growth drivers for the KSA building and construction sector.
Current Price (SR) 19.1 Mohammad Al Mojil Group Company (MMG) provides construction
Pricing / Valuation as on June 13, 2010 services in the Gulf region. The company has undertaken projects mainly
in the oil, gas and petrochemical industries. MMG also offers mechanical,
Stock details electrical, civil, structural and maintenance services.
52-week range H/L (SR) 35.7/18.5
Market cap ($mn) 634.8
x Business brief: MMG is engaged in various construction and engineering
Shares outstanding (mn) 125 projects, including onshore services such as civil and structural work, and
Price perf. (%) 1M 3M 12M mechanical and electrical services. It also conducts offshore activities,
Absolute (8) (13) (40) especially in marine projects with the help of various marine vessels. The
Market (6) (5) 3
company owns heavy machinery and equipment services, including testing
Sector (11) (15) (23)
and calibration facilities, and technical and maintenance services for turnkey
Avg daily turn.(mn) SR US$
3M 25.4 6.8 projects. Besides this, it offers services in steel fabrication.
12M 27.4 7.3
x Financials: The company’s revenues declined 57.0% YoY to SR344mn in
Raw Beta 6m 3yr
1Q10, while net income rose 93.9% YoY to SR10mn. However, 2009 was a
0.76 1.16
Reuters code 1310.SE weak year for MMG as the company’s net income significantly declined
Bloomberg code MMG AB compared to previous years, mainly due to higher operating expenses and
Website www.almojilgroup.com provision for doubtful debts in 2009.
Weighting & free float (%) x Recent developments: In May 2010, MMG signed a SR96mn contract with
TASI (free float weight) 0.22 Sepco III Electric Power Construction Corp. to build boilers for the power
Free float 46.16
plant project in Rabigh. In March 2010, the company signed two MoUs. The
Valuation multiples first transaction worth SR75.6mn was with the Bin laden Group to build a
08 09 TTM 388 unit residential compound that would be linked to the King Abdullah
P/E (x) 4.2 59.5 52.9 University for Science and Technology (KAUST). The second deal amounting
P/B (x) 1.3 1.3 1.3
SR69mn was signed with Ma’aden Phosphate to supply labor, equipment and
P/Sales (x) 0.8 1.1 1.4
construction materials. The company won a SR165mn contract for the Jubail
Div yield (%) 5.2 3.9 NM
refinery project in March 2010.
Source: NCBC Research
7,000 35
YoY CAGR (%)
6,500 30 2007 2008* 2009 1Q10 (%) (07-09)
6,000 25
Net Revenues SRmn 1,955 3,345 2,216 344 (57.0) 6.5
5,500 20
5,000 15 EBITDA SRmn 640 850 386 57 (46.2) (22.4)
Jun-09Oct-09Feb-10Jun-10 Net Income SRmn 549 666 40 10 93.9 (72.9)
TASI MMG (RHS) Assets SRmn 2,225 3,669 3,073 2962 (20.7) 17.5
Equity SRmn 1,295 1,902 1,840 1850 (3.0) 19.2
Source: Bloomberg
Total Debt SRmn 0 0 0 440 (2.2) N/M
Mohammad Hamad Abdul 50.0 EBITDA Mgn % 32.7 25.4 17.4 16.4 - -
Karim Al Mojil Net Mgn % 28.1 19.9 1.8 3.0 - -
Adel Mohammed Hamad Al 5.0 ROE % 50.5 41.7 2.2 2.3 - -
Mojil
ROA % 31.2 22.6 1.2 1.4 - -
Al Mojil Holding Co. 5.0
Div Payout % N/M 15.0 234.4 N/M - -
Al Mojil Limited Investment Co. 5.0 EPS SR 5.5 6.7 0.3 0.1 60.0 (75.9)
BVPS SR 13.0 19.0 14.7 14.8 (22.4) 6.6
Source: Tadawul, NCBC Research Source: Tadawul, Zawya, Company, NCBC Research
*2008 Financials are for 14 months
Target Price (SR) 40.5 Saudi Steel Pipe Company (SSP), established in 1980, manufactures
welded steel pipes, galvanized and non galvanized pipes, carbon steel
Price (SR) 27.6
tubes and angular tubes. The company sells products in the domestic
Pricing / Valuation as on June 13, 2010
market and also exports to approximately 20 countries.
Stock details • Business brief: SSP manufactures black and galvanized pipes in the small
52-week range H/L (SR) 36.7/25.5 and medium diameter sizes which serve the construction, real estate, and oil
Market cap ($mn) 375.3
and gas markets. The small diameter production capacity is 80,000 tons per
Shares outstanding (mn) 51
year and the medium diameter is 160,000 tons per year. The company is
Price perf. (%) 1M 3M 12M
Absolute (10) (19) N/A
also expanding into the large diameter pipes market through a 35% stake in
Market (6) (5) 3 a plant in Jubail which is under construction. The plant will have capacity of
Sector (11) (15) (23) 200,000 tons per year and is expected to start production in 2012e.
Avg daily turn.(mn) SR US$
3M 10.0 2.7 • Financials: SSP’s revenues declined 1.5% YoY to 153mn in 1Q10 mainly
12M N/A N/A due to lower selling prices partially offset by higher volumes during the
Raw Beta 6m 2yr quarter. However, its net income declined 40.4% YoY to SR20.0mn due to
0.75 N/A less than proportionate decline in COGS as well as higher operating expenses
Reuters code 1320.SE
in 1Q10. We expect financial performance at SSP to strengthen through the
Bloomberg code SSP AB
end of 2010e and into 2011e as the medium diameter pipe business grows.
Website www.sspipe.com
Current Price (SR) 116 Saudi Ceramic Company, established in 1977 in Riyadh, has five offices
Pricing / Valuation as on 13 June, 2010 in Saudi Arabia and one in Dubai. The company manufactures and
markets ceramic walls and floor tiles, ceramic road markers, sanitary
Stock details ware, and electric water heaters.
52-week range H/L (SR) 145.0/108.0
Market cap ($mn) 773.1
x Business brief: Saudi Ceramics has continually developed its production
Shares outstanding (mn) 25 capacity to meet the growing demand for ceramics and related products. The
Price perf. (%) 1M 3M 12M company’s factories in Riyadh Industrial City are spread over 450,000 square
Absolute (9) (4) (5) meters. Saudi Ceramics also owns two modern tile factories– one for electric
Market (6) (5) 3
water heaters and the other for sanitary ware. Various products offered by
Sector (11) (15) (23)
the company are porcelain, ceramic and decorated tiles, squaring and
Avg daily turn.(mn) SR US$
3M 8.6 2.3 chamfering units, sanitary ware, electric water heaters, and ceramic road
12M 8.3 2.2 markers.
Raw Beta 6m 3yr
x Financials: Saudi Ceramics reported revenue of SR268mn in 1Q10, a
0.43 0.75
Reuters code 2040.SE growth of 15.8% YoY, primarily due to the increase in production capacity.
Bloomberg code SCERCO AB Net income increased 42% YoY to SR58mn in the same period. The company
Website www.saudiceramics.com has been consistent in the distribution of dividends over last three years, and
Weighting & free float (%) announced SR3/share dividends for the year ended 31 December 2009.
TASI (free float weight) 0.37 x Recent developments: Saudi Ceramics announced it received a loan for
Free float 63.59
SR71mn from the state-owned Saudi Industrial Development Fund on 12
Valuation multiples March 2010 for the expansion of its tile factory. With this expansion, the
08 09 TTM company projects annual production capacity to reach 9mn cubic meters.
P/E (x) 16.3 14.7 13.5 The new plant is expected to start production in the fourth quarter of 2010.
P/B (x) 4.0 3.4 3.4
P/Sales (x) 3.4 3.0 2.9 Company financials
Div yield (%) 2.2 2.6 NM YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn 615 857 958 268 15.8 24.8
Share price performance
EBITDA SRmn 178 264 282 82 27.7 25.8
7,000 150
Net Income SRmn 128 178 197 58 42.0 24.4
6,500 140
6,000
130 Assets SRmn 1,288 1,565 1778 1876 13.9 17.5
120
5,500 110 Equity SRmn 613 724 859 841 19.9 18.4
5,000 100
Total Debt SRmn 479 650 688 739 29.8 19.8
Jun-09 Oct-09 Feb-10 Jun-10
Cash & Equiv SRmn 21 25 36 92 32.4 30.9
TA SI Ceramic (RHS)
EBITDA Mgn % 29.0 30.8 29.5 30.7 - -
Current Price (SR) 31.5 National Gypsum Company was established in 1958 and is
Pricing / Valuation as on June 13, 2010 headquartered in Riyadh. The company specializes in the production of
gypsum plaster, plaster board and laminated gypsum tiles. National
Stock details Gypsum’s manufacturing plants are located in Riyadh and Yanbu, while
52-week range H/L (SR) 49.8/30.1
branches are situated at Jeddah and Dammam. Also, the company
Market cap ($mn) 265.9
exports its products worldwide. National Gypsum holds a 33.3% stake in
Shares outstanding (mn) 31.7
its subsidiary – Qatar Saudi Gypsum Company.
Price perf. (%) 1M 3M 12M
Absolute (11) (19) (30) x Business brief: National Gypsum has an annual production capacity of
Market (6) (5) 3 450,000 tons of gypsum plaster, 12mn square meters of plaster board,
Sector (11) (15) (23)
48,000 tons of spray gypsum and fixing plaster, 0.5mn square meters of
Avg daily turn.(mn) SR US$
3M 3.9 1.1
gypsum ceiling tiles and 30,000 tons of gypsum powder.
12M 5.2 1.4 x Financials: The company’s net income declined 40% YoY to SR17mn in
Raw Beta 6m 3yr
1Q10, while revenues fell 31% YoY. However, cash and equivalents
0.74 0.88
increased 18.7% YoY to SR121mn during the same period.
Reuters code 2090.SE
Bloomberg code NGCO AB x Recent developments: The company announced a cash dividend of SR2.5 per
Website www.gypsco.com.sa
share for the year ended 31 December 2009. Over three consecutive years,
Weighting & free float (%) National Gypsum distributed a cash dividend of SR2.5 per share.
TASI (free float weight) 0.11
Free float 53.95 Company financials
YoY CAGR (%)
Valuation multiples 2007 2008 2009 1Q10 (%) (07-09)
08 09 TTM Net Revenues SRmn 223 260 203 41 (31.3) (4.7)
P/E (x) 8.9 11.3 13.0 EBITDA SRmn 113 133 104 23 (31.8) (4.0)
P/B (x) 1.9 1.8 2.0 Net Income SRmn 95 112 89 17 (40.0) (3.4)
P/Sales (x) 3.8 4.9 5.4 Assets SRmn 597 602 629 643 2.3 2.6
Div yield (%) 7.9 7.9 N/A Equity SRmn 528 539 555 493 1.3 2.5
Source: NCBC Research Total Debt SRmn 39 39 49 45 16.1 11.8
Cash & Equiv SRmn 46 82 106 121 18.7 51.1
Share price performance
EBITDA Mgn % 50.8 51.3 51.5 55.7 - -
7,000 50 Net Mgn % 42.5 43.2 43.7 41.8 - -
6,500 45
40 ROE % 18.7 21.1 16.2 13.2 - -
6,000
35
5,500 30 ROA % 16.6 18.7 14.4 10.9 - -
5,000 25
Div Payout % 83.3 70.4 89.3 N/A - -
Jun-09 Oct-09 Feb-10 Jun-10
EPS SR 3 3.6 2.8 0.6 (39.6) (3.4)
TA SI Gypsum (RHS)
BVPS SR 16.7 17.0 17.5 15.6 1.2 2.5
Current Price (SR) 17.3 Saudi Cable Company, established in 1975, is headquartered in Jeddah,
Pricing / Valuation as on June 13, 2010 Saudi Arabia. The company is primarily engaged in the manufacturing
and marketing of cables and related products. The company along with
Stock details Saudi Arabia also has operations in Lebanon, United States, Turkey and
52-week range H/L (SR) 36.3/16.3 Bahrain.
Market cap ($mn) 350.5
Shares outstanding (mn) 76.0 x Business brief: SCC manufactures and markets low, medium and high
Price perf. (%) 1M 3M 12M voltage wires and cables; building wires; insulated power cables;
Absolute (9) (22) (43) telecommunication cables; various conductors used for transmission and
Market (6) (5) 3
distribution; copper and aluminum rods; and polyvinyl chloride. It also
Sector (11) (15) (23)
provides turnkey project services for power and telecom projects, including
Avg daily turn.(mn) SR US$
3M 29.3 7.8 systems design, installation, engineering and testing.
12M 30.7 8.2
x Financials: SCC reported a YoY decline of 23.6% in its revenues in 1Q10
Raw Beta 6m 3yr
due to intense competition in the company’s major markets. The company’s
0.85 1.18
Reuters code 2110.SE net income fell significantly to SR1.1mn in 1Q10 from SR46.3mn in 1Q09
Bloomberg code SCACO AB due to the order delays in Turkey. Some of the company’s planned projects
Website www.saudicable.com were also delayed.
Weighting & free float (%) x Recent developments: In March 2010, SCC received an order for SR85mn
TASI (free float weight) 0.21 to supply high voltage cables to an eastern European country. In February
Free float 81.23
2010, the company secured a SR70mn contract to supply and install
Valuation multiples underground cables in one of the Middle East countries (not disclosed). SCC
08 09 TTM also won a contract worth SR100mn from Saudi Electricity Co. to supply and
P/E (x) 6.2 12.6 22.2 install high voltage cables for a project in Jeddah.
P/B (x) 1.3 1.0 1.0
P/Sales (x) 0.4 0.5 0.6 Company financials
Div yield (%) 4.3 4.3 N/A YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn 3,143 3,503 2458 493 (23.6) (11.6)
Share price performance
EBITDA SRmn 448 463 243 21 (76.2) (26.4)
7,000 40
Net Income SRmn 283 212 104 1 (97.7) (39.2)
6,500
30
6,000
Assets SRmn 2,700 3,420 3,339 3,375 1.4 11.2
20
5,500 Equity SRmn 965 1,050 1,299 1,282 16.7 16.0
5,000 10
Total Debt SRmn 786 1,546 1,367 1,415 (7.7) 31.9
Jun-09 Oct-09 Feb-10 Jun-10
Cash & Equiv SRmn 69 122 109 147 139.5 25.2
TA SI SCC (RHS)
EBITDA Mgn % 14.3 13.2 9.9 4.3 - -
Current Price (SR) 8.6 Saudi Industrial Development Company (SIDC), established in 1992,
Pricing / Valuation as on June 13, 2010 invests in the industrial sector of KSA. The company is mainly engaged
in the manufacturing and distribution of ceramics, such as bathtubs,
Stock details sanitary wares and tiles, home furnishing and mattresses. Over the
52-week range H/L (SR) 11.9/8.2 years, SIDC has diversified its investments to cover spring mattresses
Market cap ($mn) 91.7
and polyester fibers.
Shares outstanding (mn) 40.0
Price perf. (%) 1M 3M 12M x Business brief: SIDC operates through its affiliates. Saudi Ceramic Plant
Absolute (7) (3) (26) (100% stake) in Yanbu Industrial City produces ceramic sanitary ware
Market (6) (5) 3
(annual capacity of 500,000 units) as well as acrylic bathtubs and shower
Sector (11) (15) (23)
trays (annual capacity of 100,000 units). Arabian Spring and Sponge
Avg daily turn.(mn) SR US$
3M 6.6 1.8 Mattresses Mfg. Co. (50% stake), formerly known as Sleep High, is a leading
12M 7.9 2.1 manufacturer of spring mattresses. SIDC also has a minority stake in
Raw Beta 6m 3yr Arabian Industrial Fibers Co. (1.6%) which produces aromatics (725 kilo tons
0.60 0.10
annually), terephathalic acid (350 KTA), and polyester (150 KTA).
Reuters code 2130.SE
Bloomberg code SIDC AB x Financials: SIDC’s revenues increased 1.5% YoY to SR52.6mn in 1Q10. The
Website www.sidc.com.sa company’s EBITDA margins also turned positive YoY at 9.6% due to a
TASI (free float weight) 0.07 x Recent developments: In June 2010, SIDC announced that it had signed a
Free float 100.0
contract with the Saudi Industrial Development Fund to reschedule and
Valuation multiples settle the SR67.9mn loan balance due on the company's porcelain factory.
08 09 TTM During the same month, the company said that a court ruled in favor of Al-
P/E (x) N/M N/M N/M Birr Organization in a lawsuit filed by Al-Birr challenging SIDC’s ownership of
P/B (x) 1.5 1.2 1.1
800,000 shares in Yanbu National Petrochemicals Company (YANSAB).
P/Sales (x) 1.4 1.5 1.5
Div yield (%) N/A N/A N/A Company financials
Source: NCBC Research
YoY CAGR (%)
TA SI SIDC (RHS) Total Debt SRmn 120 112 105 104 (6.1) (6.3)
Cash & Equiv SRmn 21 23 10 11 (19.9) (31.5)
Source: Bloomberg EBITDA Mgn % 7.4 7.3 6.7 9.6 - -
Net Mgn % 5.1 (2.2) (1.6) 0.3 - -
Top 5 shareholders (%)
ROE % 4.1 (1.9) (1.4) 0.2 - -
ROA % 1.9 (1.0) (0.7) 0.1 - -
Div Payout % - - - - - -
EPS SR 0.3 (0.1) (0.1) 0.0 NM NM
BVPS SR 9.1 5.9 7.3 7.7 25.6 (10.5)
Source: Tadawul, Zawya, Company, NCBC Research
Also known as
Not Covered Amiantit Company Amiantit Group,
SAAC
Current Price (SR) 17.6 Saudi Arabian Amiantit Company (SAAC) was established in 1968 to
Pricing / Valuation as on June 13, 2010 manufacture pipes for the local market. The company’s core business
activities are the manufacture and sale of pipe systems; ownership and
Stock details sale of pipe technologies; water management consultancy and
52-week range H/L (SR) 27.1/16.9 engineering services; and manufacture and supply of polymer products.
Market cap ($mn) 541.9
Shares outstanding (mn) 115.5 x Business brief: SAAC has 30 pipe system manufacturing plants, 6
Price perf. (%) 1M 3M 12M technology companies, 4 materials suppliers and 8 supply and engineering
Absolute (20) (23) (24) subsidiaries. The company serves municipal, civil engineering, industrial,
Market (6) (5) 3
energy and agricultural markets worldwide, supporting global infrastructure
Sector (11) (15) (23)
development through an extensive sales and service network in more than
Avg daily turn.(mn) SR US$
3M 18.2 4.9 70 countries.
12M 19.1 5.1
x Financials: SAAC’s revenues decreased 13.5% YoY in 1Q10 to SR733mn.
Raw Beta 6m 3yr
However, EBITDA margin increased from 22.4% in 1Q09 to 27.4% in 1Q10
1.38 1.24
Reuters code 2160.SE due to a decline in operating expenses. Net income increased by 4.1% YoY
Bloomberg code SAAC AB to SR50mn in 1Q10.
Website www.amiantit.com
x Recent developments: In May 2010, International Water Distribution
Weighting & free float (%) Company, a 50% owned subsidiary of SAAC, signed a SR105mn, 10-year
TASI (free float weight) 0.36 agreement with Saudi Industrial Development Fund. The aim of the deal is to
Free float 87.5
execute distribution projects in Jeddah, Riyadh and Qassim. In April 2010,
Valuation multiples the company finalized to sell its 51% stake in Composite Pipe Industries
08 09 TTM (Oman) for USD4.5mn. In January 2010, SAAC announced plans to set up a
P/E (x) 8.6 10.0 9.9 USD60mn facility to manufacture pipes in Bahrain.
P/B (x) 1.4 1.2 1.2
P/Sales (x) 0.5 0.6 0.6 Company financials
Div yield (%) 2.8 5.7 NA YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn 3,102 4,026 3,293 733 (13.5) 3.0
Share price performance
EBITDA SRmn 498 827 827 201 5.8 28.8
7,000 30
Net Income SRmn 64 235 202 50 4.1 77.7
6,500
25
6,000
Assets SRmn 4,060 4,504 4,056 4,034 (7.3) (0.1)
20
5,500 Equity SRmn 1,320 1,487 1,652 1,685 12.4 11.9
5,000 15
Total Debt SRmn 1,527 1,609 1,072 921 (36.6) (16.2)
Jun-09 Oct-09 Feb-10 Jun-10
Cash & Equiv SRmn 202 329 425 404 23.2 45.3
TA SI A miantit (RHS)
EBITDA Mgn % 16.1 20.5 25.1 27.4 - -
Current Price (SR) 29.1 Arabian Pipes Company (APC) is the largest manufacturer of medium
Pricing / Valuation as on June 13, 2010 range High Frequency Welded (HFW) steel pipes in the Middle East. The
company makes anti-corrosion coating HFW pipes for the oil & gas,
Stock details petrochemical, agricultural and construction industries. APC, established
52-week range H/L (SR) 39.7/27.3 in 1991, has its manufacturing facility in Riyadh. APC exports to most of
Market cap ($mn) 244.4
the regional countries.
Shares outstanding (mn) 31.5
Price perf. (%) 1M 3M 12M x Business brief: APC’s product line includes line-pipe applications (for long
Absolute (6) (14) (24) distance transportation of oil & gas), structural applications (for
Market (6) (5) 3
construction), general purpose applications (industrial water and irrigation),
Sector (11) (15) (23)
standard pressure applications and casting applications. The company's
Avg daily turn.(mn) SR US$
3M 9.4 2.5 products are coated with anti-corrosives. APC’s total production capacity is
12M 14.2 3.8 160,000 tons of steel pipes per year.
Raw Beta 6m 3yr
x Financials: APC’s revenues declined by 57% YoY to SR56mn in 1Q10. The
0.68 1.15
Reuters code 2200.SE company’s EBITDA also fell by 65.8% YoY to SR8.1mn in 1Q10 as EBITDA
Bloomberg code APCO AB margins contracted by 355 basis points to 14.4%. Net income declined from
Website www.arabian-pipes.com SR5.6mn in 1Q09 to SR1.2mn in 1Q10.
Weighting & free float (%) x Recent developments: In June 2010, APC acquired the remaining 50%
TASI (free float weight) 0.16 that it did not own in Arabian Yadong Coating Company from Yadong
Free float 85.82
International. In March 2010, the company received a SR8.3mn contract
Valuation multiples from a local company to supply longitudinal submerged arc welded pipes
08 09 TTM (LSAW) for the Jubail Export Refinery project. In January 2010, the company
P/E (x) 7.8 36.6 44.5 started commercial operations at its new steel pipes production facility in Al
P/B (x) 1.3 1.2 1.2
Jubail Industrial City.
P/Sales (x) 1.1 2.1 2.5
Div yield (%) NA NA NA Company financials
Source: NCBC Research
YoY CAGR (%)
Current Price (SR) 41.8 Zamil Industrial Investment Co. (ZIIC), established in 1998 and
Pricing / Valuation as on June 13, 2010 headquartered in Dammam, is a manufacturing and fabrication group
which supplies the construction industry. The company mainly operates
Stock details in five sectors – steel, HVAC, glass, insulation and concrete.
52-week range H/L (SR) 55.3/39.8
Market cap ($mn) 668.6
x Business brief: ZIIC exports to over 80 markets globally and has
Shares outstanding (mn) 60.0 manufacturing plants and offices in 55 countries. The company offers a
Price perf. (%) 1M 3M 12M range of products—air conditioning, pre-engineered steel buildings, process
Absolute (16) (12) (7) equipment, transmission towers, processed architectural glass, and other
Market (6) (5) 3
solutions—to the global construction industry. ZIIC operates through Zamil
Sector (11) (15) (23)
Air Conditioners (ZAC), Zamil Steel Inds (ZSI), Zamil Glass Industries (ZGI),
Avg daily turn.(mn) SR US$
3M 13.9 3.7 and Arabian Fiberglass Insulation Co. Ltd (AFICO).
12M 11.3 3.0
x Financials: ZIIC reported an 18.8% YoY decline in revenues to SR927mn
Raw Beta 6m 3yr
during 1Q10. However, the company’s EBITDA margin rose by 40 basis
0.75 1.12
Reuters code 2240.SE points to 10.3% in 1Q10. Net income grew from SR52.5mn in 1Q09 to
Bloomberg code ZIIC AB SR55mn in 1Q10 due to reduced interest expense and higher other income.
Website www.ziic.com
x Recent developments: In February 2010, the company announced plans to
Weighting & free float (%) build a SR300mn plant to produce insulation materials, which is expected to
TASI (free float weight) 0.39 commence commercial operations in 2012. In January 2010, the company’s
Free float 75.65
eastern cooling district unit signed a SR206mn financing facility with National
Valuation multiples Commercial Bank (NCB) for thirteen-and-a-half years. During the same
08 09 TTM month, Bank AlJazira signed an agreement with ZIIC to purchase steel pre-
P/E (x) 11.1 10.9 10.8 constructed buildings and air conditioners at a value of SR75mn for Darfur
P/B (x) 2.4 2.1 2.1
Fund for Reconstruction and Development (Sudan).
P/Sales (x) 0.6 0.6 0.6
Div yield (%) 3.6 3.6 NA Company financials
Source: NCBC Research
YoY CAGR (%)
TA SI ZIIC (RHS) Total Debt SRmn 1,975 2,860 2,028 1,962 74.7 1.3
Cash & Equiv SRmn 187 201 354 411 85.3 37.7
Source: Bloomberg EBITDA Mgn % 9.8 10.0 10.5 10.3 - -
Net Mgn % 5.6 4.9 5.5 5.9 - -
Top 5 shareholders (%)
ROE % 25.3 23.4 20.7 18.5 - -
Zamil Group Holding 19.9
Company ROA % 6.0 4.8 4.6 4.7 - -
Al Amanah Saudi Equity Fund 5.0 Div Payout % 32.7 30.0 29.4 - - -
EPS SR 4.6 5.0 5.1 0.9 (21.4) 5.5
BVPS SR 19.8 22.9 26.6 19.8 (11.6) 15.8
Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 37.9 Al-Babtain Power and Telecommunication Company (Al-Babtain)
Pricing / Valuation as on June 13, 2010 provides outdoor lighting, transmission & distribution (T&D), and testing
station services to the power sector. Additionally, it designs,
Stock details manufactures, and installs steel towers for the telecommunications
52-week range H/L (SR) 45.4/33.3 sector. Al-Babtain was established in 1955 in Riyadh.
Market cap ($mn) 409.2
Shares outstanding (mn) 40.5 x Business brief: Al-Babtain’s T&D portfolio comprises transmission towers
Price perf. (%) 1M 3M 12M up to 500 kV, monopoles up to 230 kV, and distribution poles up to 33 kV.
Absolute (7) (3) (6) The company’s subsidiary Al-Babtain LeBLANC Telecommunication (51%
Market (6) (5) 3 stake) is a joint venture with LeBLANC that provides engineering,
Sector (11) (15) 23
manufacturing and installation services for communication towers of various
Avg daily turn.(mn) SR US$
3M 10.2 2.7 types in Saudi Arabia, neighboring Arab countries and North African nations.
12M 13.5 3.6 Al-Babtain operates in the Petrochemicals, Oil & Gas, Cement, Industrial,
Raw Beta 6m 3yr and Commercial segments of structural steel, providing engineering and
1.1 0.98 manufacturing solutions for varied applications. The company has
Reuters code 2320.SE
manufacturing facilities in Riyadh and Cairo.
Bloomberg code ALBABTAI AB
Website www.al-babtain.com.sa x Financials: Al-Babtain’s revenue fell 24.7% YoY to SR230mn in 1Q10. Net
profit declined to SR24mn in 1Q10 compared to SR31mn in 1Q09.
Weighting & free float (%)
TASI (free float weight) 0.31 x Recent developments: In December 2009, Al-Babtain LeBlanc
Free float 100 Telecommunication signed an agreement with CME of Portugal to set up a
Valuation multiples SR2mn venture to design and install wired networks and information
08 09 TTM systems. The company expects the venture to increase sales by SAR19.8mn.
P/E (x) 11.7 14.0 15.0 Al-Babtain announced a dividend of SR1.50 per share for 2009.
P/B (x) 3.1 2.6 2.8
EV/EBITDA (%) 1.5 1.4 1.5 Company financials
Div yield (%) 2.6 4.0 NM YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn 836 1,013 1,123 230 (24.7) 15.9
Share price performance
EBITDA SRmn 149 210 192 38 (26.7) 13.6
7,000 45 Net Income SRmn 96 131 109 24 (22.1) 6.8
6,500
40 Assets SRmn 991 1,416 1,138 1,133 (17.8) 7.2
6,000
35 Equity SRmn 423 499 580 543 8.6 17.1
5,500
5,000 30 Total Debt SRmn 328 602 291 292 (51.0) (5.9)
Jun-09 Oct-09 Feb-10 Jun-10
Cash & Equiv SRmn 20 68 51 58 (10.8) 60.3
TA SI A L B abtain (RHS)
EBITDA Mgn % 17.8 20.7 17.1 16.7 - -
Net Mgn % 11.5 12.9 9.7 10.5 - -
Source: Bloomberg
ROE % 24.6 28.4 20.3 17.2 - -
Top 5 shareholders (%) ROA % 10.4 10.9 8.6 8.5 - -
Div Payout % 55.6 20.8 55.6 - - -
EPS SR 3.6 4.8 2.7 0.6 (22.1) (13.4)
BVPS SR 15.7 18.4 14.3 13.4 8.6 (4.6)
Source: Tadawul, Zawya, Company, NCBC Research
Also known as
Current Price (SR) 64.8 Saudi Vitrified Clay Pipe Company (SVCP), established in 1977 and
Pricing / Valuation as on June 13, 2010 headquartered in Riyadh, manufactures vitrified clay pipes and fittings,
and jacking pipes; its annual production capacity is 100,000 tons. Along
Stock details with the local Saudi market, SVCP has presence in international markets,
52-week range H/L (SR) 66.3/37.5 including Arab countries, the Far East and Europe.
Market cap ($mn) 258.9
Shares outstanding (mn) 15.0 x Business brief: SVCP manufactures vitrified clay pipes (ranging from 100–
Price perf. (%) 1M 3M 12M 1200mm) and jacking pipes (150–1000mm). These pipes are used in the
Absolute 7 31 45 domestic and industrial sewage systems as well as for storm water disposal.
Market (6) (5) 3
The main features of these pipes are their strength, durability, and
Sector (11) (15) (23)
resistance to chemicals contained in sewage and drainage water. The
Avg daily turn.(mn) SR US$
3M 9.4 2.5 company has a state of the art 56,000 square meter facility in Riyadh with
12M 10.2 2.7 an annual production capacity of 100,000 tons.
Raw Beta 6m 3yr
x Financials: SVCP’s revenue increased by 4.4% YoY to SR60mn in 1Q10. The
0.32 0.95
Reuters code 2360.SE EBITDA margin grew to 39.6% in 1Q10 from 22.3% in 1Q09 due to a decline
Bloomberg code SVCP AB in operating expenses. Net income rose to SR19mn in 1Q10 from SR9.2mn
Website www.svcp-sa.com in 1Q09.
Weighting & free float (%) x Recent developments: The company announced the distribution of cash
TASI (free float weight) 0.11 dividend of SR2.25 per share for 2009.
Free float 56.01
Company financials
Valuation multiples
YoY CAGR (%)
08 09 TTM
2007 2008 2009 1Q10 (%) (07-09)
P/E (x) 20.1 22.8 18.4
Net Revenues SRmn 215 258 225 60 4.4 2.4
P/B (x) 4.6 4.5 4.8
EBITDA SRmn 49 53 68 24 85.0 17.6
P/Sales (x) 3.8 4.3 4.3
Net Income SRmn 43 48 43 19 109.5 (0.7)
Div yield (%) 3.5 3.5 N/A
Assets SRmn 333 450 478 480 0.2 19.8
Source: NCBC Research
Equity SRmn 196 211 217 201 8.6 5.2
Share price performance Total Debt SRmn 61 156 206 205 27.6 83.7
Cash & Equiv SRmn 11 15 45 46 135.6 106.7
7,000 70
6,500 60 EBITDA Mgn % 22.8 20.5 30.1 39.6 - -
6,000 50 Net Mgn % 20.1 18.7 18.9 31.9 - -
5,500 40
ROE % 24.6 23.7 19.9 37.0 - -
5,000 30
Jun-09 Oct-09 Feb-10 Jun-10 ROA % 14.7 12.3 9.2 16.1 - -
TA SI SVCP (RHS) Div Payout % 69.4 70.1 79.2 N/A - -
EPS SR 2.9 3.2 2.8 1.3 111.5 (0.7)
Source: Bloomberg BVPS SR 13.1 14.1 14.4 13.4 8.6 5.2
Source: Tadawul, Zawya, Company, NCBC Research
Top 5 shareholders (%)
Abdul Latif Al Essa Co 15.6
HH Prince Faisal Bin Abdul 15.0
Aziz Faisal Al Saud
Saad Saud Ibrahim Al Sayari 13.3
Current Price (SR) 20.9 Middle East Specialized Cables Co. (MESC) began as a local manufacturer
Pricing / Valuation as on June 13, 2010 in 1993 at Riyadh. In 2003, it acquired Jordan New Cable Company
(JNC) and in 2007 entered into a joint venture with Fujikura Company to
Stock details expand its product range to low and medium voltage power cables.
52-week range H/L (SR) 46.8/19.7
Market cap ($mn) 222.3
x Business brief: MESC’s products are categorized into instrumentation and
Shares outstanding (mn) 40.0 process control cables. These are used in indoor, outdoor and control room
Price perf. (%) 1M 3M 12M applications, system cables (data and telephone cables), and power cables
Absolute (10) (34) (45) (used in applications requiring greater electrical or electromagnetic
Market (6) (5) 3
protection). Additionally, MESC markets specialized cables for harsh
Sector (11) (15) (23)
environment applications, such as in the hydrocarbon industry. The
Avg daily turn.(mn) SR US$
3M 19.0 5.1 company’s production capacity is about 10,000 tons of copper annually.
12M 15.1 4.0 Along with its regional operations, MESC has presence in 14 countries.
Raw Beta 6m 3yr
x Financials: The company’s revenues grew by 21.4% YoY to SR289mn in
0.83 0.96
Reuters code 2370.SE 1Q10. However, the EBITDA margin declined to 6.9% in 1Q10 from 17.9% in
Bloomberg code MESC AB 1Q09, mainly due to higher operating expenses. Net income decreased by
Website www.mesc.com.sa 88.0% YoY to SR3mn in 1Q10.
Weighting & free float (%) x Recent developments: In May 2010, MESC announced that it had
TASI (free float weight) 0.08 extended its joint venture with Fujikura Company for a period of five years
Free float 47.98
and increased its stake in MESC Fujikura Cable Co. from 46% to 57.5%. In
Valuation multiples April 2010, the company signed a contract for SR15mn with Switzerland-
08 09 TTM based BUSS AV Company to purchase PVC units. In October 2009, it had
P/E (x) 9.4 16.3 29.3 signed a MoU to acquire United Transformers Electric Co; the acquisition is
P/B (x) 1.6 1.7 1.8
expected to be complete by June 2010.
P/Sales (x) 0.6 0.8 0.8
Div yield (%) 5.7 4.8 N/A Company financials
Source: NCBC Research
YoY CAGR (%)
TA SI M ESC (RHS) Total Debt SRmn 470 836 780 833 1.0 28.8
Cash & Equiv SRmn 85 54 35 36 (74.2) (36.2)
Source: Bloomberg EBITDA Mgn % 21.3 18.7 14.7 6.9 - -
Net Mgn % 13.6 6.8 5.0 1.1 - -
Top 5 shareholders (%)
ROE % 39.6 18.8 10.2 2.6 - -
Abdul Aziz Mohammed 26.6
Sulaiman Al Namlah ROA % 14.4 6.2 3.1 0.7 - -
Mohamad Ali Abdullah Al 15.3 Div Payout % 10.7 54.3 78.1 N/A - -
Suwailem EPS SR 4.7 2.2 1.3 0.1 (87.7) (47.8)
Lama Ismail Fawzi Abu 10.0 BVPS SR 13.6 12.7 12.6 11.7 (3.2) (3.6)
Khadhra
Source: Tadawul, Zawya, Company, NCBC Research
Mansoor Adbul Aziz Mohamad 8.4
Ka’aky
Current Price (SR) 54.5 Red Sea Housing Services Company was established in Jeddah in 1967.
Pricing / Valuation as on June 13, 2010 The objective was to replicate the American manufactured housing
model in Saudi Arabia. The company later diversified into manufacturing
Stock details and property management, setting up its first manufacturing facility in
52-week range H/L (SR) 80.3/53.5 1983. Red Sea Housing manufactures, sells and leases all types of
Market cap ($mn) 435.9
modular buildings.
Shares outstanding (mn) 30.0
Price perf. (%) 1M 3M 12M x Business brief: With three manufacturing facilities, one each in Dubai,
Absolute (6) (5) (18) Jubail, and Accra (Ghana), Red Sea Housing has the capability to
Market (6) (5) 3
manufacture 920 square meters of quality housing a day; this represents an
Sector (11) (15) (23)
annual production capacity of 335,000 square meters. The company serves
Avg daily turn.(mn) SR US$
3M 5.1 1.4 all types of housing requirements – commercial and residential, temporary
12M 14.1 3.8 and permanent. Red Sea Housing offers special services to oil & gas, and
Raw Beta 6m 3yr mining companies. The company’s market area covers Africa, the Middle
0.43 1.05
East, Asia and South America.
Reuters code 4230.SE
Bloomberg code REDSEA AB x Financials: Red Sea’s revenues declined by 52.2% YoY in 1Q10 to
Website www.rsh.com.sa SR147mn. However, the company’s EBITDA margin increased by 250 basis
Weighting & free float (%) points YoY to 26.8% in this period due to reduced operating expenses. The
TASI (free float weight) 0.10 company’s net income fell 58% YoY from SR58mn to SR24mn in 1Q10.
Free float 30.0
x Recent developments: In April 2010, Red Sea Housing received a
Valuation multiples SR480mn contract from Chiyoda-JGC Joint Venture to engineer, manufacture
08 09 TTM and construct a major housing facility for Papua New Guinea’s Liquefied
P/E (x) 7.6 13.2 18.2 Natural Gas Project (PNG LNG). The company announced a cash dividend of
P/B (x) 2.4 2.3 2.3
SR2.0 per share for 2009.
P/Sales (x) 1.4 1.9 2.4
Div yield (%) 6.4 3.7 NA Company financials
Source: NCBC Research
YoY CAGR (%)
7,000 80
EBITDA SRmn 158 279 178 39 (47.4) 6.1
6,500 Net Income SRmn 117 214 124 24 (58.3) 2.6
70
6,000
60
Assets SRmn 772 1,003 921 963 (2.7) 9.2
5,500
Equity SRmn 529 682 701 725 (2.0) 15.2
5,000 50
Jun-09 Oct-09 Feb-10 Jun-10 Total Debt SRmn 36 99 102 118 45.4 68.8
TA SI Red Sea (RHS) Cash & Equiv SRmn 37 120 47 97 (27.8) 12.2
EBITDA Mgn % 23.0 24.5 20.9 26.8 - -
Source: Bloomberg
Net Mgn % 17.0 18.8 14.5 16.4 - -
Top 5 shareholders (%) ROE % 23.8 35.4 17.9 13.5 - -
Al Dabbagh Holding Co. 51.0 ROA % 17.7 24.1 12.8 10.3 - -
Mumtaz Foods Co 5.0 Div Payout % 51.2 49.1 48.5 - - -
The National Scientific 5.0 EPS SR 3.9 7.1 4.1 0.8 (58.5) 2.7
Company LTD BVPS SR 17.6 22.7 23.4 24.2 (2.0) 15.2
Tejariah for Marketing 5.0 Source: Tadawul, Zawya, Company, NCBC Research
Services and Agencies
Source: Tadawul, NCBC Research
Historically, companies in the real estate sector in KSA compare well on revenue
terms with their GCC peers, although UAE has been the leader in the region. ROE
levels of KSA companies are lower than other GCC nations, although they trade at
relatively higher P/Es.
Exhibit 114: Revenue of GCC real estate companies, Exhibit 115: Comparison of ROE and P/E of GCC
2007–09 companies, 2009
(USD mn) (%)
7,500 30
6,750
6,000 20
5,250
10
4,500
ROE (%)
Source: Tadawul, Bloomberg, NCBC Research Source: Tadawul, Bloomberg, NCBC Research
The Real Estate sector has a large number of private players with 7 listed
companies
over 80% of the overall revenues and over 90% of the overall profits of the sector
in 2009.
Exhibit 117: Revenues of companies, 2007–09 Exhibit 118: Profitability of companies, 2007-09
(SR mn) (%)
7,000 100
6,000
80
5,000
60
4,000
3,000 40
2,000 20
1,000
0
0 2007 2008 2009
2007 2008 2009
Saudi Real Est Taiba Makkah
Saudi Real Estate Taiba Makkah Arriyadh Dar alarkan
Arriyadh Dar alarkan
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
As of 31 December 2009, the sector’s P/E and P/BV multiple stood at 19.9.x and
1.14x, respectively, compared with P/E and P/BV multiples of 10.1x and 1.09x,
respectively, in 2008. Arriyadh reported the highest RoE, and Emaar EC the lowest.
As of 31 May 2010, the sector P/E and P/BV multiples were 20.3x and 1.1x,
respectively.
Exhibit 119: Comparison of P/B and ROE, 2008 Exhibit 120: Comparison of P/B and ROE, 2009
(%) (%)
30 35
25 30
25
20 Dar alarkan
20
Dar alarkan
ROE(%)
15 Arriyadh
Taiba 15 Taiba Makkah
ROE(%)
10 Makkah 10 Arriyadh
5 5
Saudi Real P/B (x)
Estate P/B (x) 0
0 Jabal
Jabal
-5 Saudi Real
Emaar Emaar
-5 Estate
-10
-10 -15
-0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
Current Price (SR) 23.6 In 1976, Saudi Real Estate (AKARIA) was established in Riyadh. The
Pricing / Valuation as on June 13, 2010 company specializes in development, management, property investment
and civil contracting for commercial and residential properties. AKARIA also
Stock details engages in the trading, sale and lease of construction materials.
52-week range H/L (SR) 29.9/21.0
Market cap ($mn) 755.0
x Business brief: AKARIA is one of the pioneers in shopping center
Shares outstanding (mn) 120.0 construction in the GCC. The company has constructed a number of shopping
Price perf. (%) 1M 3M 12M centers in Riyadh and Dammam. It also develops housing and office
Absolute (2) (6) (11) complexes, and has executed a number of projects, such as Saudi
Market (6) (5) 3
embassies, in some GCC countries. The company’s principal investment
Sector (3) (3) (13)
holdings include a 25% stake in Saudi Company for Al Muaiqliah Commercial
Avg daily turn.(mn) SR US$
3M 3.6 1.0 Centre, 15% stake in United Glass Company, and 10% stake in Dar Al
12M 7.1 1.9 Tamleek Company.
Raw Beta 6m 3yr
x Financials: 1Q10 sales rose 13.9% YoY to SR50.0mn. The company’s EBIT
0.54 0.99
Reuters code 4020.SE increased 11.5% YoY to SR30.6mn due to higher occupancy rates and the
Bloomberg code SRECO AB launch of a commercial plaza. However, EBIT margins declined one
Website www.al-akaria.com percentage point to 61.1% primarily owing to higher depreciation expenses
Weighting & free float (%) (SR6.1mn) in 1Q10. Net profit contracted 1.1% YoY to SR30.6mn mainly due
TASI (free float weight) 0.17 to lower income from Murabaha payments.
Free float 30.64
x Recent developments: On 12 April 2010, the company’s Board approved the
Valuation multiples distribution of the proposed cash dividend of SR0.75 per share for the year
08 09 TTM ended 31 December 2009.
P/E (x) 20.2 30.6 30.7
P/B (x) 0.9 0.9 0.9 Company financials
P/Sales (x) 12.6 16.5 16.0 YoY CAGR (%)
Div yield (%) 4.2 3.2 N/A 2007 2008 2009 1Q10 (%) (07-09)
DPS 1.0 0.8 N/A Net Revenues SRmn 243 225 171 50 13.9 (16.0)
Source: NCBC Research EBITDA SRmn 153 133 115 37 31.0 (13.2)
Net Income SRmn 173 140 93 31 (1.1) (26.8)
Share price performance
Assets SRmn 3,269 3,235 3,237 3,269 1.7 (0.5)
7,000 30 Equity SRmn 3,120 3,085 3,067 3,106 0.1 (0.9)
6,500 28
26 Total Debt SRmn 0 0 0 0 N/A N/A
6,000
24 Cash & Equiv SRmn 619 61 644 691 634.3 2.0
5,500 22
EBITDA Mgn % 63.1 59.2 67.4 74.1 - -
5,000 20
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 71.2 62.2 54.1 61.3 - -
TASI Real Estate (RHS) ROE % 5.6 4.5 3.0 4.0 - -
ROA % 5.4 4.3 2.9 3.8 - -
Source: Bloomberg
Div Payout % 69.4 105.3 97.4 N/A - -
Top 5 shareholders (%) EPS SR 1.4 1.0 0.8 0.3 0.0 (26.9)
Public Investment Fund 64.5 BVPS SR 26.0 25.7 25.6 25.9 0.2 (0.9)
Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 16.5 Taiba Holding Co (Taiba) owns, manages, and invests in real estate,
Pricing / Valuation as on June 13, 2010 hotels, hospitals, and resorts. The company also constructs, manages,
and markets properties. Taiba undertakes electromechanical,
Stock details agricultural, industrial, architectural and mining projects. The company
52-week range H/L (SR) 18.7/16.0 was established in September 1988 and is headquartered in Medina.
Market cap ($mn) 657.8
Shares outstanding (mn) 150.0 x Business brief: Taiba’s core focus is on the real estate sector and it is a
Price perf. (%) 1M 3M 12M major developer in the central area surrounding the Holy Prophet's mosque.
Absolute 0 0 (2) Taiba’s subsidiaries and associate companies include TACOMA (involved in
Market (6) (5) 3 projects in the central area), ARAC (tourism activities), Al Aqeeq Real Estate
Sector (3) (3) (13)
Dev. Co (AQEEQ), TAWD (property management and marketing), and
Avg daily turn.(mn) SR US$
3M 3.3 0.9 Arabian Resort Areas and Quality Horizons. The company also operates in
12M 6.0 1.6 the agriculture industry through Al Madinah Dates Company, and Taiba
Raw Beta 6m 3yr Agricultural Development Company. As of December 2009, Taiba owns a
0.25 0.82 20% stake in the Knowledge Economic City, Medina.
Reuters code 4090.SE
Bloomberg code TIRECO AB x Financials: The company’s revenues declined at a compounded annual rate
Website www.taiba.com.sa of 33.7% during 2007–09. On a YoY basis, revenues decreased 17.3% to
SR14.3mn in 1Q10. Net profit moved up 3.2% YoY to SR14.3mn in 1Q10 due
Weighting & free float (%)
TASI (free float weight) 0.34
to higher other income and lower Zakat.
Free float 69.0 x Recent developments: On 21 March 2010, Taiba announced a dividend of
Valuation multiples SR0.3 per share for 1Q10; the company paid a dividend of SR1.20 per share
08 09 TTM for full year 2009.
P/E (x) 15.4 35.9 35.7
P/B (x) 0.9 0.9 0.9 Company financials
P/Sales (x) 8.9 11.2 11.6 YoY CAGR (%)
Div yield (%) 9.1 7.3 7.3 2007 2008 2009 1Q10 (%) (07-09)
DPS 1.5 1.2 1.2 Net Revenues SRmn 504 277 221 40 (17.3) (33.7)
EBITDA SRmn 413 164 105 19 (0.6) (49.5)
Source: NCBC Research
Net Income SRmn 393 160 69 14 3.2 (58.2)
Share price performance Assets SRmn 3,632 3,568 3,527 3,574 0.4 (1.5)
Current Price (SR) 29.2 Makkah Construction & Development Co. (MCDC) was established in
Pricing / Valuation as on June 13, 2010 1989 to develop areas around the Holy Mosque in Makkah. The company
is engaged in redevelopment of the Holy Haram Area. MCDC has
Stock details established a residential and commercial complex including the Jabal
52-week range H/L (SR) 34.7/26.0 Omar and Jabal Khandama Project.
Market cap ($mn) 1,283.0
Shares outstanding (mn) 164.8 x Business brief: MCDC is involved in real estate (investment, construction
Price perf. (%) 1M 3M 12M and development), property management, and hotel management. The
Absolute (2) 0 11 company holds 100% stake in Makkah Hilton & Towers (the 1,400-room
Market (6) (5) 3 hotel) and Makkah Shopping Center (a three-storied 451 unit shopping
Sector (3) (3) (13)
center). In 2006, MCDC was a founding member of the Jabal Omar
Avg daily turn.(mn) SR US$
3M 6.5 1.7 Development Company (21% stake) that was established with a capital of
12M 7.1 1.9 SR5bn. The Jabal Omar Project is spread across an area of 230,000 sq m
Raw Beta 6m 3yr and includes hotels, commercial centers and prayer facilities for over
0.36 0.66 200,000 people.
Reuters code 4100.SE
Bloomberg code MCDCO AB x Financials: For the year ended 14 April 2010, the company’s revenues
Website www.mcdc.com.sa declined 4.2% YoY to SR279mn due to lower hotel occupancy rates. MCDC’s
full year operating income fell 4.0% YoY to SR221mn. The company’s full-
Weighting & free float (%)
TASI (free float weight) 0.80
year profit decreased at a relatively lower rate of 3.9% YoY (to SR213mn)
Free float 83.50 primarily due to an investment income of SR2.6mn in fiscal year 2010.
Valuation multiples x Recent developments: On 05 May 2010, MCDC announced a cash dividend
08 09 10 of SR1.5 per share for fiscal year ended 14 April 2010.
P/E (x) 27.2 21.7 22.6
P/B (x) 1.1 1.3 1.3 Company financials*
P/Sales (%) 17.7 16.5 17.3 YoY CAGR (%)
Div yield (%) 4.1 5.1 5.1 2007 2008 2009 2010 (%) (07-10)
DPS 1.2 1.5 1.5 Net Revenues SRmn 274 272 291 279 (4.2) 0.5
EBITDA SRmn 210 237 261 250 (4.5) 6.0
Source: NCBC Research
Net Income SRmn 173 177 222 213 (3.9) 7.3
Share price performance Assets SRmn 3,460 4,618 4,124 4,170 1.1 6.4
Current Price (SR) 14.2 Arriyadh Development Company is engaged in the construction of
Pricing / Valuation as on June 13, 2010 commercial, office and residential buildings and complexes. The
company also develops public parks, tourist compounds and parking
Stock details lots. ARDCO, headquartered in Riyadh, was established in 1994.
52-week range H/L (SR) 14.5/11.6
x Business brief: Arriyadh has been involved in residential projects such as
Market cap ($mn) 377.2
Shares outstanding (mn) 100.0 Sunrise Cities and commercial projects like Attameer Trading Center,
Price perf. (%) 1M 3M 12M Arriyadh Transportation Center, Technical Service City, Riyadh Hills and
Absolute 3 6 9 Riyadh Car Auction (for the sale of used cars). The company has also been
Market (6) (5) 3 engaged in the development of market areas such as Batha Meat &
Sector (3) (3) (13)
Vegetable Market, Riyadh Wholesale & Retail Market and Riyadh Vegetable &
Avg daily turn.(mn) SR US$
3M 15.1 4.0 Fruits Market.
12M 13.2 3.5
x Financials: Arriyadh’s revenues increased 3.0% YoY to SR38.6mn in 1Q10.
Raw Beta 6m 3yr
The company’s operating income grew 7.2% YoY to SR23.2mn during the
0.32 0.96
quarter and net income rose 3.5% YoY to SR22.8mn in 1Q10 from
Reuters code 4150.SE
Bloomberg code ADCO AB SR22.0mn in 1Q09. Net margins improved 30 basis points to 59.1%
Website www.ardco.com.sa compared to the same quarter of the previous year.
Weighting & free float (%) x Recent developments: On 26 May 2010, Arriyadh unveiled an urban
TASI (free float weight) 0.29 redevelopment plan for Riyadh at a cost of SR13bn, to be constructed in nine
Free float 99.94 stages over 15 years. The project is yet to receive approval from the Saudi
Valuation multiples government. The government and investment partners are expected to fund
08 09 TTM a majority of the project expenditure. On 23 February 2010, Arriyadh
P/E (x) 17.7 15.3 15.1 announced a cash dividend of SR0.75 per share for the fiscal year 2009.
P/B (x) 1.0 1.0 1.0
EV/EBITDA (%) 10.1 9.1 9.0 Company financials
Div yield (%) 3.5 5.3 NA YoY CAGR (%)
DPS 0.5 0.75 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Revenues SRmn 127 140 155 39 3.0 10.4
EBITDA SRmn 83 94 110 27 5.8 15.1
Share price performance
Net Income SRmn 71 80 93 23 3.5 14.5
7,000 15 Assets SRmn 1,577 1,593 1,589 1,604 0.5 0.4
6,500 14
Equity SRmn 1,377 1,405 1,422 1,445 5.0 1.6
6,000 13
5,500 12 Total Debt SRmn - - - - N/A N/A
5,000 11
Cash & Equiv SRmn 148 163 8 26 (21.7) (77.1)
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Also known as
Not Covered Emaar Economic City EEC,
Emaar EC
Current Price (SR) 8.6 In September 2006, Emaar the Economic City (Emaar EC) was set up by
Pricing / Valuation as on June 13, 2010 Emaar Properties through a joint venture with Saudi investors to
undertake the development of the SR187.6bn King Abdullah Economic
Stock details City (KAEC). The mega project is part of the government’s initiatives to
52-week range H/L (SR) 12.4/8.3 diversify the economy and establish new economic, educational, and
Market cap ($mn) 1,948.8
technology hubs.
Shares outstanding (mn) 850.0
Price perf. (%) 1M 3M 12M x Business brief: KAEC, the single largest private sector-led project (168mn
Absolute (5) (14) (29) sq m) in the GCC region, has six key components – seaport, industrial zone,
Market (6) (5) 3 residential district, a financial island, an educational zone and a waterside
Sector (3) (3) (13)
resort.
Avg daily turn.(mn) SR US$
3M 40.9 10.9 x Financials: Emaar EC’s revenues declined 45.1% YoY to SR45.2mn in 1Q10.
12M 60.5 16.1
During the same period, the company incurred a net loss of SR53.5mn
Raw Beta 6m 3yr
compared to a net loss of SR62.3mn in 1Q09. Emaar EC continues to post
0.61 1.03
losses as the project is still in development phase and revenue generation
Reuters code 4220.SE
Bloomberg code EMAAR AB through land and property sales has been limited. In 1Q10, the company
Website www.kingabdullahcity.com generated an investment income of SR0.8mn relative to SR7.7mn in 1Q09.
Weighting & free float (%) x Recent developments: On 18 June 2010, Emaar EC entered into a development
TASI (free float weight) 0.44 and license agreement with Al Ahlam Marine Tourism Group to develop a marina
Free float 30.0 and yacht club facility inside KAEC. On 2 June 2010, Saudi Total Lubricants
Valuation multiples Company Ltd signed an agreement with the company to establish a lubricants
08 09 TTM manufacturing facility (with an annual capacity of 25,000 MT of lubricants per
P/E (x) N/M N/M N/M year) on approximately 65,000 sq m of a leased plot in the Industrial Valley of
P/B (x) 0.9 0.9 0.9 KAEC. In addition, on 11 March 2010, Emaar EC signed a deal with
P/Sales (%) 72.0 28.1 32.7
Singapore's Jurong International to develop the second phase of the
Div yield (%) N/A N/A N/A
Industrial Valley at KAEC.
DPS N/A N/A N/A
Source: NCBC Research
Company financials
Share price performance
YoY CAGR (%)
2007 2008 2009 1Q10 (%) (07-09)
7,000 13
Net Revenues SRmn 0 102 261 45 (45.1) N/A
6,500 11
6,000 9 EBITDA SRmn (157) (375) (214) (41) (29.4) 16.7
5,500 7 Net Income SRmn 26 (292) (309) (53) 14.2 N/A
5,000 5
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Assets SRmn 8,747 9,532 9,305 9,297 (3.5) 3.1
TA SI Emaar E .C (RHS) Equity SRmn 8,483 8,191 7,882 7,828 (3.7) (3.6)
Total Debt SRmn 0 0 0 0 N/A N/A
Source: Bloomberg
Cash & Equiv SRmn 640 2,219 864 655 (59.7) 16.2
Top 5 shareholders (%) EBITDA Mgn % N/A N/A (82.1) (91.2) - -
Dayem Modern Company for 20.0 Net Mgn % N/A N/A (118.5) (118.2) - -
Real Estate Management ROE % 0.3 (3.5) (3.8) (2.7) - -
M E Royal Capital Company 9.4 ROA % 0.3 (3.2) (3.3) (2.3) - -
Emaar Middle East 5.8 Div Payout % N/A N/A N/A N/A - -
Also known as
Not Covered Jabal Omar Jabal Omar,
JODC
Current Price (SR) 18.0 Jabal Omar Development Company (Jabal Omar) is engaged in real
Pricing / Valuation as on June 13, 2010 estate development in the Jabal Omar area. In cooperation with local
and international subcontractors, the company buys, builds, develops,
Stock details manages, rents, leases and sells land and properties. Jabal Omar,
52-week range H/L (SR) 21.7/17.3 headquartered in Mecca, was established in October 2006.
Market cap ($mn) 3213.0
Shares outstanding (mn) 671.4 x Business brief: Jabal Omar builds residential towers, hotels, commercial
Price perf. (%) 1M 3M 12M centers as well as roads and parking facilities for pilgrims visiting Mecca. The
Absolute (10) (9) (6) company’s major project, Jabal Omar project (also known as the Western
Market (6) (5) 3 Gate Road Development), is scheduled for completion in 2011. The project is
Sector (3) (3) (13)
a 230,000 square meter mixed-use development located around the Grand
Avg daily turn.(mn) SR US$
3M 32.3 8.6 Mosque of Makkah. Post completion, the project will feature 38 residential
12M 25.8 6.9 towers, hotels, a retail concourse, a prayer area, public parks, a central
Raw Beta 6m 2yr transportation station, a conference hall and other related facilities.
0.50 0.64
x Financials: Jabal Omar’s net loss widened to SR8.9mn in 1Q10 from
Reuters code 4250.SE
Bloomberg code JOMAR AB SR4.1mn a year earlier as its projects are still in the development phase. The
Website www.jabalomar.com.sa company’s SG&A expenses increased 34% YoY to SR8.9mn in 1Q10.
Weighting & free float (%) x Recent developments: In October 2009, Jabal Omar announced plans to
TASI (free float weight) 1.00 finance 14% of its ongoing project in Makkah through a USD447.6mn rights
Free float 41.56 issue.
Valuation multiples
Company financials
08 09 TTM
YoY CAGR (%)
P/E (x) N/M N/M N/M
2007 2008 2009 1Q10 (%) (07-09)
P/B (x) 1.8 1.8 1.8
Net Revenues SRmn - 0 0 0 N/M -
P/Sales (%) N/A N/A N/A
EBITDA SRmn - (93) (26) (8) N/M -
Div yield (%) N/A N/A N/A
Net Income SRmn - (53) (23) (9) N/M -
DPS N/A N/A N/A
Assets SRmn - 6,704 6,879 6,809 1.5 -
Source: NCBC Research
Equity SRmn - 6,661 6,638 6,630 (0.4) -
Share price performance Total Debt SRmn - 0 0 44 N/A -
Cash & Equiv SRmn - 946 27 53 (93.4) -
7,000 23
6,500 21
EBITDA Mgn % - N/A N/A N/A - -
6,000 19 Net Mgn % - N/A N/A N/A - -
5,500 17 ROE % - (0.8) (0.4) (0.5) - -
5,000 15
ROA % - (0.8) (0.3) (0.5) - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Div Payout % - N/A N/A N/A - -
TA SI Jabal Omar (RHS)
EPS SR - (0.1) (0.0) (0.0) (117.5) -
Source: Bloomberg BVPS SR - 9.9 9.9 9.9 (0.4) -
Source: Tadawul, Zawya, Company, NCBC Research
Top 5 shareholders (%)
Founders of Jabal Omar 37.1
Development Co.
Makkah Construction and 9.1
Dev. Co
General Organisation for 9.1
Social Insurance
Current Price (SR) 13.7 Dar Al Arkan Real Estate (Dar Al Arkan) is one of the largest real estate
Pricing / Valuation as on June 13, 2010 developers in the Kingdom. DAAR specializes in residential real estate
property investment, development and management. Headquartered in
Stock details Riyadh, the company was established in December 1994.
52-week range H/L (SR) 19.0/13.1
x Business brief: Dar Al Arkan has constructed more than 2,300 residential
Market cap ($mn) 3,930.2
Shares outstanding (mn) 1,080.0 units and developed 9mn square meters of land since inception. The
Price perf. (%) 1M 3M 12M company is currently developing a number of residential projects such as
Absolute (1) 1 (21) Shams Alriyadh, Al Qasr, and Al-Tilal. Dar Al Arkan also offers pre-sales,
Market (6) (5) 3 after-sales, and funding services to its customers. To complement its core
Sector (3) (3) (13)
business, DAAR established the SR2bn Saudi Home Loans Company in
Avg daily turn.(mn) SR US$
3M 36.0 9.6 December 2007 to provide Shariah-compliant home loans.
12M 54.5 14.5
x Financials: Dar Al Arkan’s top line fell 7.5% YoY to SR1.1bn in 1Q10 from
Raw Beta 6m 2yr
SR1.2bn in 1Q09. Gross margins declined to 41.8% in 1Q10 from 45.9% in
0.25 0.78
4Q09 due to higher contribution of apartment sales at Al Qasr. In 1Q10, net
Reuters code 4300.SE
Bloomberg code ALARKAN AB profit fell 6.1% YoY to SR398.6mn owing to lower profit margins on property
Website www.alarkan.com sales. The decline in net profit was primarily led by the decrease in average
margins on sales in certain geographic locations.
Weighting & free float (%)
TASI (free float weight) 1.80 x Recent developments On 23 June 2010, DAAR entered into a fixed-to-
Free float 61.06 floating rate swap agreement for half the recently issued USD450mn Sukuk.
Valuation multiples On 19 May 2010, the company approved a dividend of SR1 per share for the
08 09 TTM year ended 31 December 2009. In Feb. 2010, DAAR issued a USD450mn
P/E (x) 6.3 6.9 7.0 Sukuk, and in March 2010, the company redeemed its USD600mn Sukuk
P/B (x) 1.3 1.1 1.0 initially launched in March 2007.
P/Sales (x) 2.6 2.7 2.7
Div yield (%) 0.0 7.3 7.3 Company financials
DPS 0.0 1.0 1.0 YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn 4,926 5,611 5,464 1,145 (7.5) 5.3
Share price performance
EBITDA SRmn 2,313 2,694 2,361 445 (7.9) 1.1
7,000 20
Net Income SRmn 2,009 2,356 2,123 399 (6.1) 2.8
6,500 18
6,000
16 Assets SRmn 18,374 20,164 23,597 23,465 14.8 13.3
14
5,500 12 Equity SRmn 11,000 11,736 13,859 14,258 17.2 12.2
5,000 10
Total Debt SRmn 6,400 7,635 8,355 7,799 (6.7) N/A
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Cash & Equiv SRmn 3,347 716 2,223 1,353 596.6 (18.5)
TASI Dar Al Arkan (RHS)
EBITDA Mgn % 46.9 48.0 43.2 38.9 - -
KSA’s transport sector is an emerging one when compared with those of other GCC
countries. The Kingdom’s transport sector RoE stood at 8.5% in 2009, below the
GCC’s average ROE of 9.3% in 2009.
Exhibit 121: Revenues of GCC transport companies, Exhibit 122: Comparison of ROE and P/E of GCC
2007–09 companies, 2009
(USD mn) (%)
7,000 21
6,000 19
5,000
17
4,000
ROE (%)
15
3,000
13
2,000
11
1,000
9
0 P/E (x)
7
2007 2008 2009
0 9 18 27
KSA UAE Kuwait Oman Qatar
KSA UAE Qatar Kuwait Oman
Source: Bloomberg, Gulf Base, NCBC Research Source: Bloomberg, Gulf Base, NCBC Research
The KSA transport sector has a large number of private players, with only four
listed companies. Amongst listed players, National Shipping Co. of Saudi Arabia has
the highest average traded value in the sector at about SR40mn/day.
Contribution of National In 2009, sector revenue declined 23.6% YoY to SR2.96bn, primarily due to reduced
Shipping Co. to the sector demand in the transportation sector. Revenues for Saudi Land Transport Company,
revenue declined from
the smallest player in the industry, increased the most (6.6% YoY in 2009). On the
67% in 2008 to 56.5% in
other hand, National Shipping Company, which contributes around 56% of the
2009.
sector’s total revenue, reported the steepest decline in revenue (35.6% YoY fall in
2009). On profitability, the sector reported a 43.1% YoY fall in net profits. United
International Transport Company Limited reported the highest increase in net
profits, while Saudi Land Transport Company reported the steepest decline.
Exhibit 124: Revenue of companies, 2007–09 Exhibit 125: Profitability of companies, 2007–09
(SR mn) (%)
4,500 35
4,000 30
3,500
25
3,000
20
2,500
2,000 15
1,500 10
1,000
5
500
0
0
2007 2008 2009
2007 2008 2009
NSCSA SAPTCO SLTCO BUDGET SLTCO BUDGET NSCSA SAPTCO
Source: Bloomberg, Gulf Base, NCBC Research Source: Bloomberg, Gulf Base, NCBC Research
As of 31 December 2009, the sector’s P/E and P/BV multiples stood at 33.9x and
1.73x, respectively, compared to 16.2x and 1.24x in 2008. The KSA transportation
sector’s average ROE stood at 8.5% in 2009. United International Transport
Company Limited reported the highest ROE of 21.1%, while Saudi Public Transport
Company reported the lowest ROE of 2.3% in 2009. As of 31 May 2010, the
sector’s P/E and P/BV were 19.1x and 1.5x, respectively.
Exhibit 126: Comparison of P/B and ROE, 2008 Exhibit 127: Comparison of P/B and ROE, 2009
(%) (%)
36 25
BUDGET
30 20
BUDGET
24 NSCSA
15
ROE (%)
ROE (%)
NSCSA
18
10
12
5
6 SLTCO
SLTCO
SAPTCO SAPTCO P/B(x)
P/B (x) 0
0
0 1 2 3
0 1 2 3
Source: Bloomberg, Gulf Base, NCBC Research Source: Bloomberg, Gulf Base, NCBC Research
We are optimistic about the KSA transportation sector, buoyed by the Kingdom’s
status as the largest oil producer and by expansion projects in the oil and gas
sector that are expected to support local freight industry rates. The KSA
government’s strong emphasis on reforming and improving its transportation sector
is expected to boost revenue growth further. Additionally, the number of
infrastructure projects planned in the country is expected to increase transportation
capacity and facilitate cargo demand.
Current Price (SR) 18.5 National Shipping Company of Saudi Arabia (NSCSA), established in
Pricing / Valuation as on June 13, 2010 1979, provides marine transport services, primarily to the oil & gas and
chemical sectors. Additionally, NSCSA offers liner (general cargo), ship
Stock details management and container storage & repair services.
52-week range H/L (SR) 22.0/16.2
Market cap ($mn) 1,553.6
x Business brief: As of 31 December 2009, NSCSA had a fleet of 34 ships
Shares outstanding (mn) 315 (17 oil tankers, 13 chemical tankers and 4 general cargos). The company is
Price perf. (%) 1M 3M 12M likely to add up to 16 chemical carriers to its existing fleet during 2010–
Absolute (7) 3 1 2011. NSCSA operates its chemical tankers through its 80% subsidiary,
Market (6) (5) 3
National Chemical Carriers (NCC). The company is expected to have a total
Sector (7) (6) (10)
of about 50 VLCCs and chemical tankers by 2011. Along with transportation,
Avg daily turn.(mn) SR US$
3M 20.8 5.5 the company offers ship management services for its own vessels through its
12M 26.2 7.0 wholly owned subsidiary, Mideast Ship Management.
Raw Beta 6m 2yr
x Financials: In 1Q10, NSCSA’s sales increased 9.2% YoY to SR512mn. The
1.15 1.00
Reuters code 4030.SE company’s operating profit rose 21.7% to reach SR114mn, while net income
Bloomberg code NSCSA AB declined 13.7% during the same period. Sales improved due to the addition
Website www.nscsa.com of new fleet during 2009, while net income declined as the 1Q09 profit
TASI (free float weight) 0.78 x Recent developments: Due to the delay in delivery of chemical carriers,
Free float 66.37
NSCSA on 19 May 2010 decided to cancel the construction of two new
Valuation multiples chemical carrier contracts awarded to SLS in 2006. The company has leased
08 09 TTM one of its VLCCs to RWE AG in Germany for a total consideration of
P/E (x) 7.8 15.8 16.7 SAR151mn for a period of three years.
P/B (x) 1.1 1.2 1.1
P/Sales (X) 2.2 3.5 3.4 Company financials
Div yield (%) 8.1 5.4 5.4 YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn 1,703 2,595 1,672 512 9.2 (0.9)
Share price performance
EBITDA SRmn 634 1,188 638 204 9.8 0.3
7,000 23 Net Income SRmn 423 750 369 130 (13.7) (6.5)
6,500 21
Assets SRmn 7,797 9,819 10,339 10,443 1.5 15.2
6,000 19
5,500 17 Equity SRmn 4,660 5,091 4,988 5,119 7.4 3.5
5,000 15 Total Debt SRmn 2,432 4,007 4,763 4,707 8.1 39.9
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Cash & Equiv SRmn 851 1,059 762 797 (31.7) (5.4)
TASI Shipping (RHS)
EBITDA Mgn % 37.2 45.8 38.2 39.8 - -
Net Mgn % 24.8 28.9 22.1 25.4 - -
Source: Bloomberg
ROE % 11.0 15.4 7.3 10.3 - -
Top 5 shareholders (%) ROA % 6.1 8.5 3.7 1.3 - -
Public Investment Fund 28.1 Div Payout % 67.6 63.8 85.5 N/A - -
Abdullah Saad Al-Rahman Al- 5.3 EPS SR 1.5 2.4 1.2 0.4 (14.6) (11.1)
Rashed
BVPS SR 14.8 16.2 15.8 16.3 7.4 3.5
Source: Tadawul, Zawya, Company, NCBC Research
Weighting & free float (%) decreased 5.8% YoY from SR145.4mn in 1Q09 to SR136.9mn in 1Q10.
TASI (free float weight) 0.16 However, the company reported EBITDA of SR27.6mn, registering a YoY
Free float 83.63 increase of 38.7% in 1Q10.
6,000
8 Net Income SRmn 101 30 32 (9) (5.1) (43.7)
7
5,500 Assets SRmn 1,909 1,788 1,816 1,801 1.7 (2.5)
6
5,000 5 Equity SRmn 1,488 1,414 1,387 1,385 (1.2) (3.5)
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Total Debt SRmn 114 63 108 90 61.5 (2.7)
TA SI SA P TCO (RHS)
Cash & Equiv SRmn 668 410 311 261 (30.9) (31.8)
Source: Bloomberg EBITDA Mgn % 25.8 23.5 21.1 20.1 - -
Net Mgn % 13.8 3.9 4.2 (6.2) - -
Top 5 shareholders (%)
ROE % 6.9 2.1 2.3 (2.5) - -
Public Investment Fund 15.7
ROA % 5.5 1.6 1.8 (1.9) - -
Div Payout % 61.7 208.3 N/A N/A - -
EPS SR 0.8 0.2 0.3 (0.1) 14.3 (43.3)
BVPS SR 11.9 11.3 11.1 11.1 (1.2) (3.5)
Source: Tadawul, Zawya, Company, NCBC Research
TASI (free float weight) 0.06 x Recent developments: In May 2010, the company announced the
Free float 100.0
appointment of new board member Badr Al Shuhaili, replacing Yasser Al
Valuation multiples Lehidan.
08 09 TTM
P/E (x) 24.8 53.4 N/M Company financials
P/B (x) 1.7 1.6 1.7 YoY CAGR (%)
P/Sales (X) 5.7 5.3 5.5 2007 2008 2009 1Q10 (%) (07-09)
United International
Also known as
Not Covered BUDGET SAUDI,
UniTrans, UITC
Current Price (SR) 52.5 United International Transportation Co. (Budget Saudi) is the largest car
Pricing / Valuation as on June 13, 2010 rental company in the MENA region. The company, a franchisee of
Budget International, operates more than 14,500 vehicles that include
Stock details luxury, 4x4, full size, intermediate, compact and economy cars.
52-week range H/L (SR) 75.5/49.0
Market cap ($mn) 256.1
x Business brief: Budget Saudi provides various services such as short term
Shares outstanding (mn) 18.3 and long term car rentals; chauffeur driven cars; CorpRate Program (a
Price perf. (%) 1M 3M 12M corporate client-oriented service with preferential rates and value additions
Absolute (7) (15) (7) such as faster reservations and flexible billing); and Budget Express (a
Market (6) (5) 3
loyalty program for members). The company also provides Hajj & Umrah
Sector (7) (6) (10)
services for visitors and pilgrims; Lodge and Drive (accommodation along
Avg daily turn.(mn) SR US$
3M 4.3 1.2 with car rental); Premier Limousine Service (chauffeur driven luxury
12M 7.7 2.1 vehicles); and automotive maintenance (maintenance facilities including
Raw Beta 6m 2yr satellite workshops). Budget Saudi is also engaged in the sales of used cars.
0.38 0.87
Reuters code 4260.SE x Financials: Budget Saudi has displayed consistent performance with
Bloomberg code BUDGET AB revenues and net profit growing at a CAGR of 9.3% and 6.2%, respectively,
Website www.budgetsaudi.com during 2005–2009. In 1Q10, revenues grew 4.6% to SR123.8mn from
Weighting & free float (%) SR118.4mn in 1Q09. Net profit margins were 18.2%; they improved 140
Valuation multiples agreement with Abdul Latif Jameel to purchase 5,000 Toyota cars during the
08 09 TTM financial year 2010. For the fiscal year 2009, the company paid an annual
P/E (x) 11.5 11.2 10.9 dividend of SR2.
P/B (x) 2.7 2.4 2.5
P/Sales (X) 2.0 2.0 2.0 Company financials
Div yield (%) 3.3 3.8 N/A YoY CAGR (%)
Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09)
Net Revenues SRmn 397 473 484 124 4.6 10.5
Share price performance
EBITDA SRmn 251 320 332 84 5.4 15.1
7,000 80 Net Income SRmn 78 84 86 23 13.3 4.7
6,500 70
Assets SRmn 683 729 761 781 6.9 5.5
6,000 60
5,500 50 Equity SRmn 303 356 406 392 14.2 15.8
5,000 40
Total Debt SRmn 241 247 224 229 4.8 (3.5)
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Cash & Equiv SRmn 16 10 28 22 58.6 32.9
TA SI B udget Saudi (RHS)
EBITDA Mgn % 63.2 67.7 68.6 68.1 - -
KSA’s media sector is significantly larger than its GCC peers on the revenue front,
despite declining over 2007-09. The sector traded at a higher P/E multiple despite
lower ROE as compared to its regional peers (Exhibit 2).
Exhibit 128: Revenues of GCC print/media Exhibit 129: Comparison of ROE and P/B of GCC
companies, 2007–09 companies, 2009
(USD mn) (%)
500 20
400
15
ROE (%)
300
10
200
5
100
P/E (x)
0
0 0 15 30 45 60 75
2007 2008 2009
KSA Kuwait Qatar Bahrain
KSA Kuwait Qatar Bahrain
The Saudi media and publishing sector comprises the following three listed
companies. SRMG has the highest weight in the index. The sector overall comprises
less than 0.5% of the TASI.
In 2009, the sector’s overall revenue declined by 26.2% YoY to SR1.4bn. SRMG’s
revenue fell the steepest, contracting 27.8% YoY to SR969mn. This, coupled with
higher expenses, led to the company’s net income declining 79.8% YoY to SR45mn.
The company’s margins fell significantly from 32.9% in 2007 to just 4.7% in 2009.
SPPC and Tihama, also reported steep decline in net income in 2009, resulting in a
71.5% decline in the sector’s net income to SR116mn
Exhibit 131: Revenues of companies, 2007–09 Exhibit 132: Profitability of companies, 2007-09
(SR mn) (%)
2500 40
2000
30
1500
20
1000
10
500
0 0
2007 2008 2009 2007 2008 2009
SRMG SPPC Tihama* SRMG SPPC Tihama*
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
Note: Tihama’s revenues are adjusted for calendar year ending. The company’s Note: Tihama’s margins are adjusted for calendar year ending. The company’s
financial year end is 31 March. financial year end is 31 March.
In 2009, the sector’s average PE and P/BV multiples increased to 30.5x and 1.6x
from 14.6x and 1.4x, respectively, in 2008, mainly due to sharp declines in
profitability. The sector’s ROE declined to 5.0% in 2009 from 17.2% in 2008.
Exhibit 133: Comparison of P/B and ROE, 2008 Exhibit 134: Comparison of P/B and ROE, 2009
(%) (%)
25 12
10
SPPC
20 8
SRMG
SPPC
ROE (%)
ROE (%)
4 SRMG
15
Tihama
2
Tihama
P/B (x)
0
P/B (x)
10 0.5 1.0 1.5 2.0 2.5
0.5 1.0 1.5 2.0
Source: Bloomberg, Tadawul, Reuters, NCBC Research Source: Bloomberg, Tadawul, Reuters, NCBC Research
Size of the bubble represents market cap. as on 31 Dec 2009 Size of the bubble represents market cap. as on 31 Dec 2009
Trading turnover for the sector averaged SR45.6mn per day in 2009 and has so far
averaged only SR6.9mn per day in 2010. Tihama is the most traded stock in the
sector with average daily turnover of SR4.5mn to date in 2010.
Div yield (%) Net Revenues SRmn 1,113 1,342 969 256 (1.5) (6.7)
10.8 2.7 NA
EBITDA SRmn 285 306 109 27 (26.4) (38.1)
Source: NCBC Research
Net Income SRmn 367 224 45 15 (27.8) (64.8)
Share price performance Assets SRmn 2,187 2,259 2,153 2,131 (8.0) (0.8)
6,500 30
Total Debt SRmn 114 210 281 257 (11.4) 56.8
Cash & Equiv SRmn 461 141 66 46 (81.0) (62.0)
6,000 25
EBITDA Mgn % 25.6 22.8 11.3 10.6 - -
5,500 20
Net Mgn % 32.9 16.7 4.7 5.8 - -
5,000 15
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
ROE % 28.2 16.2 3.4 4.7 - -
ROA % 18.5 10.1 2.1 2.8 - -
TASI SRM G (RHS)
Div Payout % 65.5 71.2 87.7 - - -
Weighting & free float (%) x Recent developments: In November 2009, SPCC established Taiba Printing
TASI (free float weight) 0.07 and Publication Company, a state-of-the-art press in Madina.
Free float 47.5
Company financials
Valuation multiples
YoY CAGR (%)
08 09 TTM
2007 2008 2009 1Q10 (%) (07-09)
P/E (x) 5.2 12.1 13.9
Net Revenues SRmn 370 465 357 103 2.2 (1.7)
P/B (x) 1.0 1.0 1.0
EBITDA SRmn 118 126 57 15 (25.9) (30.4)
P/Sales (x) 1.7 2.2 2.2
Net Income SRmn 137 151 65 7 (54.3) (31.2)
Div yield (%) 11.5 NA NA
Assets SRmn 858 1,068 1,021 993 (6.2) 9.1
Source: NCBC Research
Equity SRmn 701 792 765 772 7.6 4.4
Share price performance Total Debt SRmn 35 198 181 148 N/M N/M
Cash & Equiv SRmn 22 16 19 13 153.9 (8.7)
7,000 20
18 EBITDA Mgn % 31.8 27.0 16.0 14.7 - -
6,500
16 Net Mgn % 37.1 32.4 18.2 7.0 - -
6,000
14
5,500 12 ROE % 20.8 20.2 8.4 3.7 - -
5,000 10
ROA % 16.4 15.6 6.2 2.8 - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Div Payout % 43.7 59.8 - - - -
TASI SP PC (RHS)
EPS SR 2.3 2.5 1.1 0.1 (53.8) (31.3)
BVPS SR 11.7 13.2 12.8 12.9 7.6 4.4
Source: Bloomberg
Source: Tadawul, Zawya, Company, NCBC Research
Top 5 shareholders (%)
Saudi Research and Marketing 42.0
Group
Intellectual Holding Company 10.5
for Advertising and Publicity
Saudi Research and 7.0
Publishing Company
Scientific Works Holding 7.0
Company
The sector’s revenue grew a reported 142%, from SR308mn in 2008 to SR746mn
in 2009, however, we note that the increase was driven entirely by real estate
activity at SHARCO, which added SR486mn to revenues in 2009. ROE stood at
24.2% as against the GCC average of 10.9% and the sector traded at a P/E
multiple of 6.7x compared to the GCC’s 9.5x.
Exhibit 135: Revenues of GCC hotel and tourism Exhibit 136: Comparison of ROE and P/B of GCC
companies, 2007–09 companies, 2009
(USD mn) (%)
600 30
500
400 20
ROE (%)
300
10
200
100
P/E (x)
0
0
5 7 9 11 13
2007 2008 2009
UAE KSA Kuwait Bahrain Oman
Kuwait Oman Bahrain UAE KSA
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
The KSA hotel & tourism sector comprises the following two companies. As of 31
Dec 2009, SHARCO, with a market cap of SR2.1bn was the largest company in the
sector.
In 2009, SHARCO’s reported revenue grew 150% YoY to SR733.3mn and net
income 209% YoY to SR380.6mn. However, the core hotel revenue declined 18.7%
YoY to SR211mn as a result of lower tourist inflow and lower RevPAR. The
difference was made up by real estate activity, which added SR485.9mn to
SHARCO’s revenue during the year. TECO’s revenue declined 5.1% YoY to
SR13.9mn and the company reported a loss of SR3.4mn in 2009 as compared to a
profit of SR0.2mn in 2008
Exhibit 138: Revenues of companies, 2007–09 Exhibit 139: Profitability of companies, 2007-09
(SR mn) (%)
800 65
700
600 40
500
400 15
300
200 -10
100
0 -35
2007 2008 2009 2007 2008 2009
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
In 2009, Saudi Hotels’ ROE of 25.6% and P/B multiple of 1.3x compared with
TECO’s negative ROE of 4.8% and a higher P/B multiple of 5.1x. Here as well,
SHARCO’s figures for 2009 are somewhat skewed by its real estate activity in 2009.
Exhibit 140: Comparison of P/B and ROE, 2008 Exhibit 141: Comparison of P/B and ROE, 2009
(%) (%)
16 40
SHARCO 35
SHARCO
12 30
25
ROE (%)
8
ROE (%)
20
15
4
10
TECO PB (x) 5 PB (x)
0
0
(4) -5 0 2 4 6
0 1 2 3 -10 TECO
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
TECO, however, topped the average trading value chart. TECO’s price volatility is
also higher compared to SHARCO.
Exhibit 142: Avg. daily turnover, Jan09 – Mar10 Exhibit 143: Share price movement, Jan09 – Mar10
(SR mn) Prices rebased to 100 on 1st Jan-09
60 300
49 250
50
200
40
150
30
100
20
13 50
10
0
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10
0
TECO SHARCO
SHARCO TECO
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
Current Price (SR) 27.9 Saudi Hotels & Resorts Areas Co. (SHARCO), founded in 1979, is based in
Pricing / Valuation as on June 13, 2010
Riyadh, Saudi Arabia. The company owns and operates many resorts as
well as hotels, independently and through its subsidiaries Al Khaleej
Stock details
Resorts Co. Ltd., Riyadh Hotels Co. Ltd., Makkah Hotels Co. Ltd.,
52-week range H/L (SR) 35.2/26.0
Annakheel Village Resort Co. Ltd., Tabuk Hotels Co. Ltd., and Al Madina
Market cap ($mn) 513.3
Shares outstanding (mn) 69.0 Hotels Co. Ltd.
Price perf. (%) 1M 3M 12M x Business brief: SHARCO engages in activities such as construction,
Absolute (3) (9) (7)
ownership, investment and management of hotels, real estate, resorts and
Market (6) (5) 3
entertainment centers, travel & tourism. The company reports revenues
Sector (6) (13) (19)
Avg daily turn.(mn) SR US$ under the following business lines – hospitality, real estate, resorts, and
3M 2.4 0.6 entertainment.
12M 7.7 2.1
x Financials: In 2Q 2009, the company finalized the sale of land in Gulf
Raw Beta 6m 3yr
0.60 0.81 Village in the Eastern region for SR486mn, recording a gain of nearly
Reuters code 4010.SE SR300mn. So far in 2010, revenue increased 3.7% YoY in 1Q10 and EBITDA
Bloomberg code SHARCO AB margin improved 385 basis points in 1Q10 to 53.5%. Net income grew
Website www.saudi-hotels.com.sa
10.3% to SR31.1mn in 1Q10.
Weighting & free float (%)
x Recent developments: On 12 April 2010, SHARCO announced it had
TASI (free float weight) 0.20
purchased land for SR10.2mn to build a residential complex in Riyadh. In the
Free float 52.68
same month, the company appointed Mr. Bader Bin Abdullah Mohammad Al
Valuation multiples Issa as a member of the Board of Directors. On 22 February 2010, SHARCO
08 09 TTM
announced a cash dividend of SR0.9 for the second half of 2009, taking the
P/E (x) 15.7 5.1 5.0
full-year dividend to SR1.50.
P/B (x) 1.4 1.2 1.2
P/Sales (x) 6.6 2.7 2.6 Company financials
Div yield (%) 4.3 5.4 N/A
YoY CAGR (%)
DPS 1.2 1.5 N/A 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Revenues SRmn 264 294 725 69 3.7 65.7
Share price performance EBITDA SRmn 123 141 398 37 11.8 80.3
Net Income SRmn 78 123 381 31 10.3 121.4
7,000 35
33 Assets SRmn 1,535 1,953 1,839 1,894 (6.8) 9.5
6,500
31
6,000 Equity SRmn 820 1,348 1,625 1,668 29.3 40.7
29
5,500 27 Total Debt SRmn 58 53 50 48 (8.6) (6.9)
5,000 25
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn 39 26 33 115 (14.2) (8.9)
TA SI Ho tels (RHS) EBITDA Mgn % 46.4 48.1 55.0 53.5 - -
Net Mgn % 29.4 41.9 52.5 45.1 - -
Source: Bloomberg ROE % 9.8 11.3 25.6 7.6 - -
ROA % 5.2 7.1 20.1 6.7 - -
Top 5 shareholders (%)
Div Payout % 64.5 67.4 27.2 N/A - -
Mohammed Ibrahim 22.4
Mohammed Al Essa EPS SR 1.6 1.8 5.5 0.5 12.2 88.5
Public Investment fund 16.6 BVPS SR 16.4 19.5 23.5 24.2 29.3 19.8
Source: Tadawul, Zawya, Company, NCBC Research
General Organization for 6.5
Social Insurance
Current Price (SR) 24.9 Tourism Enterprises Co. was established in 1991 to construct and
Pricing / Valuation as on June 13, 2010 manage tourist projects. Headquartered in Dammam, Saudi Arabia,
TECO’s principal activity is ownership and management of the Palm
Stock details Beach Resort®. The company offers visitors sports and recreational
52-week range H/L (SR) 45.9/23.7 facilities, conference facilities, cabanas and suites.
Market cap ($mn) 67.4
Shares outstanding (mn) 10.2 x Business brief: The Palm Beach Resort stretches up to 1,300 meters with
Price perf. (%) 1M 3M 12M 165 chalets, more than 100 suites and cabanas overlooking the Arabian Gulf.
Absolute (14) (20) (40) The sports and the recreational facilities include a ladies sports club with
Market (6) (5) 3 swimming pool; men's sports and fitness center; football, tennis, basketball
Sector (6) (13) (19)
and squash courts; a sauna and steam bath; and catering services such as
Avg daily turn.(mn) SR US$
3M 17.4 4.6 coffee shops, a swimming pool for children, gardens for families, and a 24-
12M 29.2 7.8 hour security service.
Raw Beta 6m 3yr
x Financials: In 1Q10, the company’s revenue declined 35% YoY. The
0.84 0.94
company reported a net profit of SR0.04mn in 1Q10 compared to a profit of
Reuters code 4170.SE
Bloomberg code TECO AB SR0.1mn in 1Q09.
Website www.palmbeach-resort.com
x Recent developments: In November 2009, Shams announced the
Weighting & free float (%) appointment of Dr. Adel Bin Abdulaziz Boudy as the company’s Chairman.
TASI (free float weight) 0.05
Free float 100.0 Company financials
YoY CAGR (%)
Valuation multiples 2007 2008 2009 1Q10 (%) (07-09)
08 09 TTM Net Revenues SRmn 13 15 14 3 (35.0) 2.4
P/E (x) N/M N/M N/M EBITDA SRmn 5 3 1 1 (0.6) (57.0)
P/B (x) 3.5 3.6 3.6 Net Income SRmn 2 0 (3) 0 (64.5) NM
P/Sales (x) 17.2 18.2 20.3 Assets SRmn 79 78 74 75 (3.0) (3.4)
Div yield (%) N/M N/M N/M Equity SRmn 73 73 69 69 (4.8) (2.5)
DPS N/M N/M N/M Total Debt SRmn - - - - - -
Source: NCBC Research Cash & Equiv SRmn 3 4 5 14 298.7 23.2
EBITDA Mgn % 36.0 22.7 6.3 42.3 - -
Share price performance
Net Mgn % 16.0 1.2 (24.5) 1.5 - -
7,000 50
ROE % 2.9 0.2 (4.8) 0.2 - -
6,500
40
6,000
ROA % 2.5 0.2 (4.5) 0.2 - -
30
5,500 Div Payout % - - - - - -
5,000 20
EPS SR 0.2 0.0 (0.3) 0.0 NM NM
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
BVPS SR 7.2 7.2 6.8 6.8 (4.7) (2.5)
TA SI Shams (RHS)
Source: Tadawul, Zawya, Company, NCBC Research
Source: Bloomberg
KSA’s Insurance sector revenues tripled from SR1.8bn in 2008 to SR5.9bn in 2009.
On valuations, KSA trades at a higher P/B multiple of 3.3x compared to the GCC
average of 2.0x, moreover ROE of KSA players is 4.4% compared to the GCC
average of 8.0%, reflecting the largely start-up nature of the sector in the
Kingdom.
Exhibit 144: Revenues of GCC insurance companies, Exhibit 145: Comparison of ROE and P/E of GCC
2007–09 companies, 2009
(USD mn) (%)
1,600 24
1,400
20
1,200
16
ROE (%)
1,000
800 12
600 8
400
4
200 P/B(x)
0
0
0 1 2 3 4
2007 2008 2009
KSA Kuwait Qatar Bahrain UAE Oman KSA Kuwait Qatar Bahrain UAE Oman
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research
The list of companies taken is not exhaustive. Note: P/B multiple is considered as most of the KSA companies posted losses
and P/E ratio was not meaningful to evaluate. The list of companies taken is not
exhaustive. Size of the bubble represents market cap. as on 31 Dec 2009.
The high number of start-ups resulted in the sector recording a loss in 2009.
Tawuniya’s revenue grew 35.9% YoY and its net margin increased to 13.6% versus
losses in 2008. Med Gulf and Bupa Arabia showed high revenue of SR1.3bn and
SR1.2bn respectively in 2009 from no revenue generated in 2008, as the
companies became fully operational.
Exhibit 147: Revenues of companies, 2007–09 Exhibit 148: Profitability of companies, 2007-09
(SR mn) (%)
7,000 24
6,000
19
5,000
14
4,000
9
3,000
2,000 4
1,000 -1
2007 2008 2009
0
-6
2007 2008 2009
Tawuniya Medgulf Bupa Arabia
Tawuniya Medgulf Bupa Arabia Others
Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research; Net margins for Medgulf and
The list of companies is not exhaustive Bupa Arabia are calculated on operating income, since these companies did not
report revenues in 2007 and 2008.; The list of companies is not exhaustive
Source: Bloomberg
Technical Reserves SRmn 2,392 2,783 1,838 1,903 (22.1) (12.3)
Combined Ratio % 101.0 96.0 88.4 89.6 - -
Top 5 shareholders (%)
Net Mgn % 33.6 (3.3) 13.6 15.4 - -
Public Pension Authority 23.7 ROE % 29.1 (3.7) 24.1 30.7 - -
General Organization for 22.8 ROA % 11.0 (1.0) 4.6 5.8 - -
Social Insurance
Div Payout % 95.2 N/M 67.5 - - -
EPS SR 10.5 (1.1) 5.9 2.1 307.7 N/A
BVPS SR 36.9 21.0 28.3 26.8 (5.3) N/A
Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 16.3 Malath Cooperative Insurance and Reinsurance Company (Malath) was
Pricing / Valuation as on June 13, 2010 established in 2007. Headquartered in Riyadh, Malath was the second
insurance company (after Tawuniya) to be listed on the Saudi Stock
Stock details Exchange. Besides general insurance, it provides facultative reinsurance
52-week range H/L (SR) 33.0/15.8 products.
Market cap ($mn) 130.4
x Business brief: Malath is engaged in general insurance, medical care
Shares outstanding (mn) 30
insurance and facultative inward reinsurance activities. The company derives
Price perf. (%) 1M 3M 12M
Absolute (23) (31) (50) its premium income mainly from motor, medical, property, aviation, marine
Market (6) (5) 3 cargo & hull, energy, and engineering.
Sector (16) (18) (18)
x Financials: In 1Q10, Malath’s net insurance premium grew 241.5% YoY to
Avg daily turn.(mn) SR US$
3M 8.8 2.3 SR62mn compared to SR18mn in 1Q09. The company’s reinsurance
12M 16.9 4.5 premium and underwriting income also increased by 69% and 323.4% YoY.
Raw Beta 6m 3yr Consequently, the company’s revenues grew 203.7% YoY to SR78mn in
1.27 0.70
1Q10 compared to SR26mn in 1Q09. This enabled Malath to post net income
Reuters code 8020.SE
growth of 113.5% YoY to SR4.4mn in 1Q10, despite the four-fold increase in
Bloomberg code MALATH AB
Website www.malath.com.sa net claims paid.
Weighting & free float (%) x Recent developments: In May 2010, S&P assigned ‘BBB’ long-term
TASI (free float weight) 0.05 counterparty credit and insurer financial strength ratings to Malath
Free float 47.48 Cooperative, citing strong overall capitalization and risk based capital ratios.
In January 2010, Malath announced its intention to quadruple the number of
Valuation multiples
08 09 TTM branches in the Kingdom by end of 2010.
P/E (x) N/M 67.7 50.9
Company financials
P/B (x) 2.1 1.9 1.9
YoY CAGR (%)
P/S(x) 11.1 3.0 2.2
2007 2008* 2009 1Q10 (%) (07-09)
Div yield (%) NA NA NA
Net Insurance Premium SRmn 2 27 131 62 241.5 708.5
Source: NCBC Research
Total Revenues SRmn 3 44 166 78 203.7 643.2
Share price performance Net Income SRmn (17) (33) 7 4 113.5 NM
7,000 35
Assets SRmn 330 447 697 858 73.1 45.3
6,500 30 Equity SRmn 283 232 252 259 9.7 (5.6)
25
6,000
20 Investments SRmn 275 114 217 224 120.9 (11.2)
5,500 15
5,000 10 Technical Reserves SRmn 12 121 321 444 161.3 407.0
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Combined Ratio % NM 256.0 118.2 116.8 - -
TA SI M alath Insurance (RHS)
Net Mgn % NM NM 4.4 5.7 - -
ROE % (6.1) (15.0) 3.0 7.0 - -
Source: Bloomberg
ROA % (5.2) (19.9) 1.3 2.3 - -
Top 5 shareholders (%) Div Payout % NA NA NA - - -
EPS SR (0.6) (1.9) 0.2 0.2 114.3 N/A
BVPS SR 9.4 7.8 8.4 8.6 9.7 N/A
Source: Tadawul, Zawya, Company, NCBC Research
* Financials of 2008 for 21 Months
Current Price (SR) 22.3 Mediterranean & Gulf Insurance & Reinsurance Co. (MEDGULF) is a
Pricing / Valuation as on June 13, 2010 subsidiary of the Medgulf Group, a leading insurance and reinsurance
company in the Middle East operating in Saudi Arabia, Bahrain, Lebanon,
Stock details Turkey, Jordan, UAE, and UK. Established in 2006, it currently operates
52-week range H/L (SR) 34.5/21.1 through its offices in Riyadh, Jeddah and Khobar.
Market cap ($mn) 474.5
x Business brief: MEDGULF offers various insurance products including
Shares outstanding (mn) 80
Top 5 shareholders (%) EPS SR 0.1 0.1 1.8 0.5 2,200.0 N/A
BVPS SR 10.1 9.9 11.6 12.0 21.8 N/A
Mediterranean and Gulf
Insurance and Reinsurance – 32.0 Source: Tadawul, Zawya, Company, NCBC Research
Bahrain * Financials of 2008 for 18 Months
Price perf. (%) 1M 3M 12M segment, the company provides Shariah compliant insurance products
Absolute (21) (47) (50) including individual financial planning (for education, protection, and
Market (6) (5) 3 retirement), family income protection, life and disability insurance, and
Sector (16) (18) (18)
corporate solutions assurance. The corporate solutions segment offers
Avg daily turn.(mn) SR US$
19.5 5.2
insurance cover against fire, general accident, construction/engineering,
3M
12M 28.6 7.6 marine cargo and employee compensation.
Raw Beta 6m 2yr
x Financials: ALLIANZ SF’s remained in losses in 1Q10. The company’s gross
1.98 1.16
and net insurance premium grew 74% YoY and 40% YoY in 1Q10 to
Reuters code 8040.SE
Bloomberg code ALLIANZ AB
SR113mn and SR43mn, respectively. Consequently, total revenues increased
Website www.allianzsf.com 38.1% YoY to SR46mn. However, total costs and expenses grew 31% mainly
due to the 86% increase in net claims. As a result, ALLIANZ SF recorded a
Weighting & free float (%)
net loss of SR3.6mn in 1Q10. The company’s shareholders’ equity,
TASI (free float weight) 0.03
Free float 31.00
investments and technical reserves also declined significantly.
TA SI A LLIA NZ SF (RHS)
Investments SRmn 100 72 46 46 (43.8) (32.5)
Technical Reserves SRmn NA 58 156 37 (78.1) NA
Combined Ratio % NA 797.2 128.2 111.2 - -
Source: Bloomberg
Net Mgn % NA (862.4) (15.5) (8.0) - -
Top 5 shareholders (%) ROE % (18.8) (44.6) (41.2) (35.6) - -
Banque Saudi Fransi 32.5 ROA % (15.2) (19.5) (6.6) (3.1) - -
AGF International Co. 16.2 Div Payout % NA NA NA - - -
SNI Holding Co. 16.2 EPS SR (1.6) (1.7) (2.2) (0.4) NA N/A
BVPS SR 8.4 6.6 4.3 3.9 (37.3) N/A
Source: Tadawul, Zawya, Company, NCBC Research
* Financials of 2008 for 18 Months
Current Price (SR) 31.0 Saudi IAIC Cooperative Insurance Company (Saudi Salama), established
Pricing / Valuation as on June 13, 2010 in 2006, is a Jeddah-based insurance company which markets its
products under the SALAMA brand. SALAMA, a subsidiary of the UAE-
Stock details based Islamic Arab Insurance Co, provides Shariah compliant general
52-week range H/L (SR) 75.8/28.0 insurance solutions.
Market cap ($mn) 82.6
x Business brief: SALAMA’s products are broadly classified into three
Shares outstanding (mn) 10
Source: Bloomberg
ROE % (15.7) (53.4) 17.2 3.6 - -
ROA % (11.7) (20.9) 4.6 1.1 - -
Top 5 shareholders (%)
Div Payout % NA NA NA - - -
Arab Islamic Insurance 30.0 EPS SR (1.3) (3.8) 1.2 0.1 (56.3) N/A
Company
BVPS SR 8.3 6.1 7.6 7.8 23.1 N/A
Bin Dawood & sons 5.0
Commercial Co. Source: Tadawul, Zawya, Company, NCBC Research
* Financials of 2008 for 19 months
Al Sha'er Trade, Industries 5.0
and Construction
Cooperative Group Company 5.0
for Trade & Construction
Current Price (SR) 17.8 Saudi United Cooperative Insurance Company (Wala’a Insurance),
Pricing / Valuation as on June 13, 2010 established in Al-Khobar in 2006, specializes in business risks and
government agencies. The company markets its products and services
Stock details under the WALAA brand and operates through its branches in Riyadh,
52-week range H/L (SR) 34.3/16.6 Jeddah, Hofouf, and Makah.
Market cap ($mn) 94.9
x Business brief: Wala’a offers its products through four broad categories.
Shares outstanding (mn) 20
The assets & earnings insurance segment covers property & business
Price perf. (%) 1M 3M 12M
Absolute (22) (29) (42) interruption. The liabilities segment covers employers, public, products, &
Market (6) (5) 3 professional risks. Through the employees segment, the company offers life,
Sector (16) (18) (18) personal accident, and healthcare insurance products, while the goods-on-
Avg daily turn.(mn) SR US$
the-move segment covers ocean cargo and inland transit insurance products.
3M 8.3 2.2
12M 10.8 2.9 x Financials: In 1Q10, net insurance premium, which contributes 89% to
Raw Beta 6m 2yr
Walaa’s total revenues, grew by 234.8% YoY to SR19.3mn from SR5.7mn in
0.94 1.35
1Q09. Reinsurance commission increased by 422% YoY to SR2.4mn in 1Q10.
Reuters code 8060.SE
Consequently, the company’s total revenues rose by 247.5% YoY to
Bloomberg code WALAA AB
Website www.walaa.com SR21.8mn in 1Q10 from SR6.2mn in 1Q09. Net claims paid increased by
253.5% YoY in 1Q10, thereby pushing Walaa’s total expenses higher by
Weighting & free float (%)
160.6% YoY in 1Q10. As a result, the company’s net loss widened in 1Q10 to
TASI (free float weight) 0.03
SR4.3mn from SR2.3mn in 1Q09.
Free float 40.00
Pricing / Valuation as on June 13, 2010 headquartered in Riyadh and established in 2007, commenced
operations in January 2008. Arabian Shield is engaged in cooperative
Stock details insurance and reinsurance activities. The company is a subsidiary of
52-week range H/L (SR) 41.3/18.5 Bahrain-based Arabian Shield Insurance Company.
Market cap ($mn) 106.1
x Business brief: Arabian Shield provides a variety of insurance products and
Shares outstanding (mn) 20
services, including general insurance (property, motor, marine, engineering,
Price perf. (%) 1M 3M 12M
Absolute (23) (20) (31) liability, accident, and airplane), medical insurance (for individuals,
Market (6) (5) 3 companies and establishments), and energy insurance.
Sector (16) (18) (18)
Avg daily turn.(mn) SR US$
x Financials: In 1Q10, the company’s net insurance premium grew by
3M 6.7 1.8 118.5% YoY to SR26.2mn compared to SR12mn in 1Q09. Reinsurance
12M 13.8 3.7 commission grew by 33% YoY to SR7.3mn in 1Q10. Consequently, Arabian
Raw Beta 6m 2yr Shield’s total revenues increased by 91.5% YoY to SR33.6mn in 1Q10 from
0.94 0.95
SR17.5mn in 1Q09. Net claims paid in 1Q10 rising by 138.1% YoY to
Reuters code 8070.SE
SR21.7mn resulted in total expenses increasing by 97.2% YoY in 1Q10. The
Bloomberg code SHIELD AB
Website www.arabianshield.com company’s net surplus grew by 55.7% YoY in 1Q10, taking the net income to
SR1.9mn, an increase of 12.7% YoY.
Weighting & free float (%)
TASI (free float weight) 0.03 Company financials
Free float 40.00
YoY CAGR (%)
2007 2008* 2009 1Q10 (%) (07-09)
Valuation multiples
Net Insurance Premium SRmn NA NA 68 26 118.5 NA
08 09 TTM
Total Revenues SRmn NA Na 95 34 91.5 NA
P/E (x) 265 49.2 47.8
Net Income SRmn (5) (4) 8 2 12.7 NM
P/B (x) 2.0 1.9 1.9
Assets SRmn 204 202 448 541 29.5 48.1
P/S(x) NA 4.2 3.6
Equity SRmn 195 196 204 206 4.2 2.4
Div yield (%) N/A N/A N/A
Investments SRmn 204 202 256 286 26.3 12.0
Source: NCBC Research
Technical Reserves SRmn NA NA 125 174 49.1 NM
Share price performance Combined Ratio % NA NA 116.6 113.7 - -
Net Mgn % NA NA 8.5 5.9 - -
7,000 50
6,500 40 ROE % (2.7) (1.9) 4.0 3.9 - -
6,000 30 ROA % (2.6) (1.8) 2.5 1.6 - -
5,500 20
Div Payout % - - - - - -
5,000 10
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EPS SR NA (0.2) 0.4 0.1 400.0 N/A
TA SI A rabian Shield (RHS) BVPS SR NA 9.8 10.2 10.3 5.0 N/A
Source: Tadawul, Zawya, Company, NCBC Research
Source: Bloomberg * Financials of 2008 for 19 months
Also known as
Current Price (SR) 21.0 SABB Takaful was established in 2007 in Riyadh as an associate
Pricing / Valuation as on June 13, 2010 company of SABB and HSBC. SABB Takaful conducts its business through
SABB’s established distribution network (more than 70 branches) and
Stock details direct sales team across Saudi Arabia. All of SABB’s insurance products
52-week range H/L (SR) 73.8/13.7 are Shariah compliant.
Market cap ($mn) 189.9
Shares outstanding (mn) 34.0
x Business brief: SABB Takaful offers family, general, corporate and group
Price perf. (%) 1M 3M 12M Takaful products. Under the Family Takaful segment, the company covers
Absolute (10) (24) (39) education, savings, single contribution, retirement to provide individuals with
Market (6) (5) 3 financial support. General Takaful covers everyday travel, home, and
Sector (16) (18) (18)
personal accident risks. Corporate Takaful provides cover for marine cargo,
Avg daily turn.(mn) SR US$
10.4 2.8
commercial fire protection, and solutions for SMEs.
3M
12M 31.2 8.3 x Financials: In 1Q10, SABB Takaful’s net earned premium, which contributes
Raw Beta 6m 3yr
95% of total revenues, grew 147.6% YoY to SR29mn from SR11.7mn in
1.72 1.04
1Q09. Consequently, total revenues increased 130.5% YoY to SR 30.6mn. As
Reuters code 8080.SE
Bloomberg code SABBT AB a result, the company’s net loss narrowed to SR2.4mn in 1Q10 from
Website www.sabbtakaful.com SR5.6mn in 1Q09, despite total expenses rising by 80.6% YoY to SR30.7mn.
Weighting & free float (%) x Recent developments: In February 2010, SABB was fined SR50,000 by the
TASI (free float weight) 0.05 CMA for violating disclosure rules by failing to disclose management changes. In
Free float 35.0 September 2009, SABB appointed Mr. Philip Head as the company’s new CEO. In
Valuation multiples August 2009, SABB raised SR343.4mn through a rights issue.
08 09 TTM
Company financials
P/E (x) N/M N/M N/M
YoY CAGR (%)
P/B (x) 13.9 2.2 2.2
2007 2008* 2009 1Q10 (%) (07-09)
P/S (x) 14.0 10.2 8.2
Net Insurance Premium SRmn 5 46 63 29 147.6 256.6
Div yield (%) N/A N/A N/A
Total Revenues SRmn 6 51 70 31 130.5 237.4
Source: NCBC Research
Net Income SRmn (45) (48) (16) (2) N/A N/A
Share price performance Assets SRmn 79 209 793 818 272.5 217.7
Equity SRmn 55 51 330 326 618.2 143.9
7,000 70
60
6,500
50
Investments SRmn 59 28 287 313 1,071.3 120.2
6,000 40 Technical Reserves SRmn 6 115 403 443 315.1 727.4
30
5,500
20
5,000 10
Combined Ratio % 352.7 127.8 125.1 106.0 - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % (728.1) (95.0) (23.6) (7.9) - -
TA SI SA B B Takaful (RHS)
ROE % (80.4) (90.5) (8.6) (2.9) - -
ROA % (56.7) (33.5) (3.3) (1.2) - -
Source: Bloomberg
Div Payout % - - - - - -
Top 5 shareholders (%) EPS SR (4.5) (1.4) (0.5) (0.1) N/A N/A
Current Price (SR) 18.2 Sanad Insurance & Reinsurance Cooperative Company (SANAD) was
Pricing / Valuation as on 13-June-2010 established in 2006. The company provides a range of car, general,
health, property, and marine insurance as well as reinsurance services.
Stock details SANAD also plans to expand its product portfolio to cover insurance for
52-week range H/L (SR) 34.8/17.0 agriculture, airlines, ships, petrol and power.
Market cap ($mn) 96.8
x Business brief: SANAD provides fire, travel, medical, motor, property,
Shares outstanding (mn) 20.0
marine, and engineering insurance products. The company also offers
Price perf. (%) 1M 3M 12M
Absolute (25) (27) (43) insurance against general accidents. In addition, SANAD provides life
Market (6) (5) 3 insurance products and reinsurance services.
Sector (16) (18) (18)
x Financials: The company’s net insurance premium grew 483.4% YoY to
Avg daily turn.(mn) SR US$
3M 4.5 1.2 SR51.7mn in 1Q10 from SR8.8mn in 1Q09. SANAD’s reinsurance
12M 11.5 3.1 commissions rose 332% YoY to SR2.6mn. Consequently, total revenues
Raw Beta 6m 2yr increased 470.3% YoY to SR54.4mn in 1Q10 from SR9.5mn in 1Q09. The
1.12 1.02
company reported net claims of SR30.8mn; this coupled with other expenses
Reuters code 8090.SE
raised total expenses to SR64.7mn in 1Q10 compared to SR5.7mn in 1Q09.
Bloomberg code SANAD AB
Website www.sanad.com.sa
SANAD posted a net profit of SR1mn in 1Q10, due to a net surplus of
SR11.1mn, as against a net loss of SR4.7mn in 1Q09.
Weighting & free float (%)
TASI (free float weight) 0.03 x Recent developments: In January 2010, Azmir Firoz Daya, CEO of SANAD
Free float 40.0 Insurance, tendered his resignation.
Current Price (SR) 37.8 Saudi Arabian Cooperative Insurance Company (SAICO), established in
Pricing / Valuation as on June 13, 2010 2007, offers Shariah-compliant insurance services across Saudi Arabia.
SAICO is a subsidiary of Bahrain-based Saudi Arabian Cooperative
Stock details Insurance Company, which holds 30% stake in the company.
52-week range H/L (SR) 98.0/30.8
x Business brief: SAICO provides insurance services in two categories,
Market cap ($mn) 100.8
Shares outstanding (mn) 10.0
business and personal. Under business insurance, the company covers
Price perf. (%) 1M 3M 12M liabilities like fire and property, aviation, marine cargo, engineering, energy,
Absolute (21) (30) (47) life and health, and motor vehicle. Whereas under personal insurance, the
Market (6) (5) 3 company provides insurance for home, car, boat, life and health and
Sector (16) (18) (18)
accidents.
Avg daily turn.(mn) SR US$
3M 9.6 2.6 x Financials: In 1Q10, SAICO earned a net insurance premium of SR27.8mn,
12M 21.8 5.8 or 79% of its total revenues. The reinsurance commission aggregated
Raw Beta 6m 2yr
SR5.6mn, taking total revenues to SR35.2mn in 1Q10. The combination of
1.94 1.47
net claims paid, policy acquisition costs and other expenses lifted total
Reuters code 8100.SE
Bloomberg code SAICO AB expenses to SR32.3mn. However, the net surplus of SR2.6mn in 1Q10
Website www.saico.com.sa helped SAICO post a net profit of SR1.9mn in 1Q10 compared to the net loss
of SR2.2mn recorded in 1Q09.
Weighting & free float (%)
TASI (free float weight) 0.03 x Recent developments: In June 2010, Saudi Arabian Monetary Agency
Free float 40.0 granted SAICO an extended approval for the sale of thirty-four insurance
Valuation multiples products. In June 2010, SAICO announced its intention to buy a stake in
08 09 TTM Najm Company for Insurance Services from Arab Commercial Projects
P/E (x) N/M N/M N/M Company’s.
P/B (x) 4.2 4.6 4.5
P/S (x) N/A 27.2 7.7 Company financials
Div yield (%) N/A N/A N/A YoY CAGR (%)
Source: NCBC Research 2007* 2008** 2009 1Q10 (%) (07-09)
Net Insurance Premium SRmn N/A N/A 12 28 N/A N/A
Share price performance
Total Revenues SRmn 2 N/A 14 35 N/A 187.1
7,000 100 Net Income SRmn (6) (10) (8) 2 N/A 14.7
6,500 80
Assets SRmn N/A 94 204 338 257.8 N/A
6,000 60
5,500 40 Equity SRmn 94 90 82 84 (4.8) (6.7)
5,000 20 Investments SRmn 102 91 69 59 (35.2) (18.0)
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Technical Reserves SRmn N/A N/A 64 158 N/A N/A
TA SI SA ICO (RHS)
Combined Ratio % N/A N/A 149.4 116.3 - -
Net Mgn % N/M N/A (60.3) 5.6 - -
Source: Bloomberg
ROE % (6.8) (11.0) (9.8) 9.6 - -
Top 5 shareholders (%) ROA % N/A (10.7) (5.6) 2.9 - -
Saudi Arabian Insurance Co 30.0 Div Payout % - - - - - -
Al Wa'lan Car Co. 5.0 EPS SR (0.6) (1.0) (0.8) 0.2 N/A N/A
BVPS SR 9.4 9.0 8.2 8.4 (4.8) N/A
Erad Holding Limited Co 5.0
Source: Tadawul, Zawya, Company, NCBC Research
*Financials of 2007 for 5 months
**Financials of 2008 for 17 months
Also known as
Not Covered Saudi Indian SIICI, SAUDI
INDIAN
Current Price (SR) 30.7 In 2007, Saudi Indian Company for Co-operative Insurance (Saudi
Pricing / Valuation as on June 13, 2010 Indian) was established by New India Assurance Company, Life
Insurance Corporation of India (Intl) and Fawaz Abdulaziz Al Hokair and
Stock details Company. Saudi Indian is headquartered in Riyadh and provides
52-week range H/L (SR) 71.8/28.0 financial security to individuals and commercial establishments.
Market cap ($mn) 81.8
Shares outstanding (mn) 10.0 x Business brief: Saudi Indian’s product profile is segregated into two broad
Price perf. (%) 1M 3M 12M categories – life insurance and non-life insurance. Under the life insurance
Absolute (27) (35) (47) segment, the company offers various plans related to protection and savings
Market (6) (5) 3 such as Takaful Insurance Plan, Participating Endowment Plan, Cash Back
Sector (16) (18) (18)
Plan, and Money Back & Protect Lifelong. Under the non-life insurance
Avg daily turn.(mn) SR US$
3M 6.6 1.8 segment, Saudi Indian provides fire insurance, motor insurance, engineering
12M 19.5 5.2 insurance, health insurance and other miscellaneous products including
Raw Beta 6m 3yr personal accident, burglary and fidelity guarantee.
1.43 1.29
x Financials: SIICI’s net insurance premium more than doubled from
Reuters code 8110.SE
Bloomberg code SINDIAN AB SR5.1mn in 1Q09 to SR11.0mn in 1Q10. The company incurred a net loss of
Website www.sicci-ksa.com SR5.4mn in 1Q10 compared to SR4.9mn in 1Q09 as net claims paid
increased from SR3.6mn to SR9.8mn during the same period. Saudi Indian’s
Weighting & free float (%)
TASI (free float weight) 0.03
total assets aggregated SR172.4mn, while shareholders’ equity totaled
Valuation multiples x Recent developments: In May 2010, the company announced the
08 09 TTM appointment of Mr. Fouad Hanoun as the company's Acting Chief Executive
P/E (x) N/M N/M N/M Officer to replace Mr. Harish Shandra Mishra.
P/B (x) 3.9 5.9 6.6
P/Sales (x) N/M 8.1 4.0 Company financials
Div yield (%) N/A N/A N/A YoY CAGR (%)
DPS N/A N/A N/A 2007* 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Ins. Premium SRmn - 1 38 11 116.5 N/M
Total Revenues SRmn - 1 42 13 132.7 N/M
Share price performance
Net Income SRmn (12) (9) (27) (5) N/M N/M
7,000 90 Assets SRmn 96 104 183 172 15.3 38.3
6,500 70
Equity SRmn 88 79 52 47 (37.3) (23.0)
6,000 50
5,500 30 Investments SRmn 93 68 68 59 (15.2) (14.3)
5,000 10 Technical Reserves SRmn - 13 79 82 78.3 N/M
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Combined Ratio % N/A N/M 176.3 160.2 - -
TA SI Saudi Indian (RHS)
Net Mgn % N/A N/A N/A N/A - -
ROE % (14.0) (10.4) (41.9) (44.1) - -
Source: Bloomberg
ROA % (12.8) (8.7) (19.1) (12.2) - -
Top 5 shareholders (%) Div Payout % N/A N/A N/A N/A - -
New India Insurance Co 10.6 EPS SR (1.2) (0.7) (2.6) (0.5) N/M N/M
Life Insurance Corp of India 10.2 BVPS SR 8.8 7.9 5.2 4.7 (37.3) (23.0)
Life Insurance Corp (Int’l) 10.2 Source: Tadawul, Zawya Company, NCBC Research
* 14 months Financials reported for 2007
Khaled Abdulaziz Bin Salmah 5.0
Trading Establishment
Saleh Saad Al Khariji 5.0
Establishment
Source: Tadawul, NCBC Research
Current Price (SR) 21.0 In August 2007, Gulf Union Cooperative Insurance Company (Gulf
Pricing / Valuation as on June 13, 2010 Union) was established by Gulf Union Insurance and Projects
Management Holding Company. Gulf Union offers Shariah-compliant
Stock details insurance products which caters to clients in Saudi Arabia as well as
52-week range H/L (SR) 33.1/18.4 customers of its sister company – Gulf Union Insurance and Risk
Market cap ($mn) 122.9
Management Company.
Shares outstanding (mn) 22.0
Price perf. (%) 1M 3M 12M x Business brief: Gulf Union is engaged in cooperative insurance and
Absolute (13) (20) (22) reinsurance activities, excluding protection and savings insurance. The
Market (6) (5) 3 company’s product portfolio comprises insurance for property, liability,
Sector (16) (18) (18)
motor, individual, health, and other related cooperative insurance activities.
Avg daily turn.(mn) SR US$
3M 6.0 1.6 Apart from Dammam, Gulf Union has branches in Jeddah, Khobar and
12M 12.7 3.4 Riyadh.
Raw Beta 6m 2yr
x Financials: Gulf Union incurred a net loss of SR0.6mn in 1Q10 as against a
0.95 1.24
net profit of SR0.03mn in 1Q09. The company’s total assets aggregated
Reuters code 8120.SE
Bloomberg code GULFUNI AB SR195.8mn, while shareholders’ equity totaled SR186.9mn at the end of
Website www.gulfunion.com.sa 1Q10. Gulf Union’s investments and cash at banks stood at SR6.1mn in
1Q10.
Weighting & free float (%)
TASI (free float weight) 0.04
Company financials
Free float 40.0
YoY CAGR (%)
Valuation multiples 2007* 2008 2009 1Q10 (%) (07-09)
08 09 TTM Net Ins. Premium SRmn - - - - N/A N/M
P/E (x) N/M N/M N/M Total Revenues SRmn - - - - N/A N/M
P/B (x) 2.6 2.7 2.7 Net Income SRmn (22) 2 (2) (1) N/M N/M
P/Sales (x) Assets SRmn 208 205 196 196 (3.0) (2.9)
N/A N/A N/A
Equity SRmn 198 195 189 187 (3.7) (2.4)
Div yield (%) N/A N/A N/A
Investments SRmn 203 175 161 6 (96.4) (11.1)
DPS N/A N/A N/A
Technical Reserves SRmn - - - - N/A N/M
Source: NCBC Research
Combined Ratio % N/A N/A N/A N/A - -
Share price performance Net Mgn % N/A N/A N/A N/A - -
Source: Bloomberg
Current Price (SR) 74.0 AlAhli Takaful Company (ATC), established in 2006, is a joint venture
Pricing / Valuation as on 13 June 2010 between National Commercial Bank, FWU AG, VHV, International
Financial Corporation and a small share owned by local investors.
Stock details Headquartered in Jeddah, the company provides a range of insurance
52-week range H/L (SR) 247.0/71.0 products and services based on Islamic principles.
Market cap ($mn) 197.3
Shares outstanding (mn) 10.0 x Business brief: ATC’s insurance products include special programs for
Price perf. (%) 1M 3M 12M savings, retirement and education. The company’s “AlAhli Takaful and
Absolute (20) (28) (45) Savings Program” targets saving requirements for various purposes such as
Market (6) (5) 3 retirement, children’s education, marriage, etc. The scheme provides
Sector (16) (18) (18)
maturity as well as death benefits.
Avg daily turn.(mn) SR US$
3M 13.6 3.6 x Financials: The company’s revenues increased to SR1mn in 1Q10 from
12M 32.7 8.7
SR0.3mn in 1Q09. Despite the increase, ATC posted a net loss of SR2.9mn in
Raw Beta 6m 2yr
the quarter compared to SR0.6mn in 1Q09 owing to a rise in net claims
1.00 0.83
incurred and a decline in investment and management fee income. ATC’s
Reuters code 8130.SE
Bloomberg code ATC AB assets aggregated to SR200.8mn at the end of 1Q10. However,
Website www.alahlitakaful.com shareholders’ equity decreased to SR73.8mn due to an increase in losses in
the period.
Weighting & free float (%)
TASI (free float weight) 0.04 x Recent developments: On 19 January 2010, the company announced plans
Free float 26.5 to increase capital by SR150mn (USD40mn) through a rights issue to fund
Valuation multiples its expansion plans. The approval for the plan is still awaited. On 20 January
08 09 TTM 2009, Saudi Monetary Agency granted approval to AlAhli to sell and market
P/E (x) N/M N/M N/M its “Group Life Product”.
P/B (x) 8.9 9.6 10.0
P/Sales (x) N/A N/A N/A Company financials
Div yield (%) N/A N/A N/A YoY CAGR (%)
DPS N/A N/A N/A 2007* 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Ins. Premium SRmn - 0 1 1 231.1 N/M
Total Revenues SRmn - (0) 1 1 229.9 N/M
Share price performance
Net Income SRmn (2) (10) (5) (3) N/M N/M
7,000 240 Assets SRmn 95 95 158 201 86.7 28.6
6,500 190
Equity SRmn 94 83 77 74 (10.3) (9.7)
6,000 140
5,500 90 Investments SRmn 94 72 66 64 (8.3) (16.5)
5,000 40 Technical Reserves SRmn - 2 67 105 1,228.0 N/M
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Combined Ratio % N/A N/A 131.2 N/M - -
TA SI A TC (RHS)
Net Mgn % N/A N/A N/M N/M - -
ROE % (2.0) (11.4) (6.5) (15.3) - -
Source: Bloomberg
ROA % (2.0) (10.6) (4.1) (6.4) - -
Top 5 shareholders (%) Div Payout % N/A N/A N/A N/A - -
National Commercial Bank 30.0 EPS SR (0.2) (1.0) (0.5) (0.3) N/M N/M
FWU Group 13.1 BVPS SR 9.4 8.3 7.7 7.4 (10.3) (9.6)
International Finance 13.1 Source: Tadawul, Zawya, Company, NCBC Research
Corporation * 6 Months Financial reported for 2007
7,000 110
Net Mgn % N/A N/A N/M N/M - -
6,500 90 ROE % - (16.7) (46.2) (47.5) - -
6,000 70
ROA % - (13.9) (21.4) (11.1) - -
5,500 50
5,000 30 Div Payout % N/A N/A N/A N/A - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EPS SR - (1.5) (1.1) (0.6) N/M N/M
TA SI A l-A hlia (RHS) BVPS SR 10.0 8.3 5.1 4.5 (42.7) (28.5)
Source: Tadawul, Zawya, Company, NCBC Research
Source: Bloomberg * Financials reported for 2008 is for 18 months
Also known as
Not Covered Allied Co-operative ACIG, Saudi
ACIG
Current Price (SR) 34.5 Allied Cooperative Insurance Group (ACIG) was incorporated in 2007
Pricing / Valuation as on 13 June 2010 through the acquisition of the Saudi assets and client portfolio of its
parent company, ACIG Bahrain. ACIG, based in Jeddah, offers Islamic
Stock details Shariah-compliant insurance and reinsurance products in Saudi Arabia.
52-week range H/L (SR) 74.0/30.9
x Business brief: ACIG offers Islamic general insurance services including
Market cap ($mn) 92.0
Shares outstanding (mn) 10.0 marine, medical, motor, general accident, and engineering insurance. Under
Price perf. (%) 1M 3M 12M its Marine Insurance segment, the company offers marine cargo and inland
Absolute (27) (31) (50) transit insurances. The Motor Insurance segment provides third-party liability
Market (6) (5) 3 protection, personal accident cover (for drivers and passengers) and
Sector (16) (18) (18)
comprehensive ‘own damage’ options; while the General Insurance segment
Avg daily turn.(mn) SR US$
3M 6.8 1.8 provides money, fidelity, personal accident, public liability, workmen’s
12M 20.7 5.5 compensation, and medical malpractice insurance.
Raw Beta 6m 2yr
x Financials: ACIG’s net loss declined from SR5.6mn in 1Q09 to SR5mn in
1.74 1.37
1Q10. The company’s assets totaled SR92mn in 1Q10, while shareholders’
Reuters code 8150.SE
Bloomberg code ACIG AB equity was SR45mn in 1Q10.
Website www.acig.com.sa
x Recent developments: On 26 April 2010, the CMA fined ACIG SR100,000 for
Weighting & free float (%) violating registration and listing regulations. The company was fined
TASI (free float weight) 0.03 SR50,000 each for failing to inform the regulator about changes in senior
Free float 40.0 management and announcing earning results. On 31 October 2009, ACIG
DPS N/A N/A N/A Net Ins. Premium SRmn - - 1 1 N/A N/M
Total Revenues SRmn - - 1 1 N/A N/M
Source: NCBC Research
Net Income SRmn (5) (23) (24) (5) N/M N/M
Share price performance Assets SRmn 94 78 91 92 36.3 (2.0)
7,000 80 Equity SRmn 92 70 50 45 (30.0) (26.4)
6,500 Investments SRmn 91 74 48 47 (25.1) (27.2)
60
6,000
40 Technical Reserves SRmn - - 30 26 N/A N/M
5,500
5,000 20 Combined Ratio % N/A N/A N/M N/M - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Net Mgn % N/A N/A N/M N/A - -
TA SI A CIG (RHS)
ROE % (5.1) (28.1) (40.3) (42.1) - -
ROA % (5.0) (26.4) (28.7) (21.8) - -
Source: Bloomberg
Div Payout % N/A N/A N/A N/A - -
Top 5 shareholders (%) EPS SR (0.5) (2.3) (2.4) (0.5) N/M N/M
Allied Cooperative Insurance 20.0 BVPS SR 9.2 7.0 5.0 4.5 (30.0) (26.4)
Group
Source: Tadawul, Zawya, Company, NCBC Research
Islamic Development Bank 20.0 * 5 month financial reported for 2007
Current Price (SR) 18.0 Arabia Insurance Cooperative Company (AICC) was established in 2007
Pricing / Valuation as on June 13, 2010 and is headquartered in Riyadh. AICC has been able to issue insurance
policies from January 2009.
Stock details
x Business brief: AICC is engaged in insurance as well as reinsurance
52-week range H/L (SR) 33.5/16.9
Market cap ($mn) 95.7
activities and services across Saudi Arabia. The company offers several
Shares outstanding (mn) 20.0 insurance products, including motor, property, marine, medical, and general
Price perf. (%) 1M 3M 12M accident insurance. The company also plans to expand the market for
Absolute (21) (27) (39) Takaful life policies and investment products.
Market (6) (5) 3
Sector (16) (18) (18) x Financials: In 1Q10, AICC did not generate any revenues from operations.
Avg daily turn.(mn) SR US$ Gross premium written and net premium earned for 2009 were nil. However,
3M 9.0 2.4 operational costs, mainly, general and administrative expenses of SR3.8mn
12M 10.5 2.8
incurred during the quarter, led to a net loss of SR2.9mn.
Raw Beta 6m 2yr
0.95 1.06 x Recent developments: In January 2010, AICC announced a net loss of
Reuters code 8160.SE SR11.8mn for 2009 compared to SR26.8mn for 2008.
Bloomberg code AICC AB
Website N/A Company financials
YoY CAGR (%)
Weighting & free float (%)
2007 2008 2009 1Q10 (%) (07-09)
TASI (free float weight) 0.03
Net Insurance Premium SRmn - - - - - -
Free float 40.00
Total Revenues SRmn - - - - - -
P/E (x) (13.4) (30.5) (30.4) Equity SRmn - 171 156 153 (8.7) -
Source: Bloomberg
Current Price (SR) 16.5 Trade Union Cooperative Insurance & Reinsurance Company (Trade
Pricing / Valuation as on June 13, 2010 Union) was established in 2007 as a Saudi-based insurance company.
The company is headquartered in Al Khobar and registered with the
Stock details Council of Cooperative Health Insurance (CCHI).
52-week range H/L (SR) 40.7/15.6
Market cap ($mn) 110.0
x Business brief: Trade Union’s product portfolio includes property insurance
Shares outstanding (mn) 25.0 (fire and allied perils), liability insurance (general and product), marine
Price perf. (%) 1M 3M 12M insurance (hull, cargo and land transit), crime insurance (burglary, computer
Absolute (22) (28) (33) fraud), engineering insurance (machinery breakdown, contractor’s risks),
Market (6) (5) 3
motor insurance (commercial or heavy vehicles), and personal lines
Sector (16) (18) (18)
(household comprehensive, personal accident, new vehicle warranty).
Avg daily turn.(mn) SR US$
3M 9.1 2.4 Additionally, Trade Union provides medical and life insurance products as
12M 17.9 4.8 well as reinsurance services led by Swiss Reinsurance Co. The company’s
Raw Beta 6m 2yr medical treaty is secured by Munich Re.
1.14 1.33
Reuters code 8170.SE x Financials: In 1Q10, Trade Union did not register any revenues either
Bloomberg code TRDUNION AB through premiums or investment income & other income. The company
Website www.tui-sa.com derived Investment & Management Fee Income totaling SR0.3mn in 1Q10
Weighting & free float (%) compared to SR2.4mn in 1Q09. The company also incurred general and
TASI (free float weight) 0.04 administrative expenses of SR0.9mn during the quarter compared to
Free float 42.00 SR1.6mn in 1Q09. Trade Union bore a net loss of SR0.6mn in 1Q10
compared to a net profit of SR0.7mn in 1Q09.
Valuation multiples
08 09 TTM x Recent developments: In February 2010, Trade Union announced an
P/E (x) N/M N/M N/M audited net loss of SR2.1mn for the year 2009.
P/B (x) 1.7 1.7 1.7
P/Sales (x) 59.7 41.7 41.7 Company financials
Div yield (%) N/A N/A N/A YoY CAGR (%)
DPS N/A N/A N/A 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Insurance Premium SRmn - - - - - -
Total Revenues SRmn - 7 10 - - -
Share price performance
Net Income SRmn - - - (1) (182.6) -
7,000 50 Assets SRmn - 262 263 264 1.8 -
6,500 40
Equity SRmn - 248 244 242 (2.1) -
6,000 30
5,500 20 Investments SRmn - 257 257 258 1.1 -
5,000 10 Technical Reserves SRmn - - - - - -
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Combined Ratio % - - - - - -
TA SI Trade Unio n (RHS)
Net Mgn % - - - - - -
Source: Bloomberg
ROE % - - - (1.0) - -
ROA % - - - (0.9) - -
Top 5 shareholders (%)
Div Payout % - - - - - -
United Commercial Insurance 22.3 EPS SR - - - (0.0) (182.6) -
Co
BVPS SR - 9.9 9.8 9.7 (2.1) -
Al Ahlia Insurance Company 10.0
Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 50.3 Al Sagr Company for Cooperative Insurance (Al Sagr Saudi) started
Pricing / Valuation as on June 13, 2010 operations in Saudi Arabia in 1983 as a branch of Al Sagr National
Insurance Co. (ASNIC), Dubai. Headquartered in Al Khobar, Sagr
Stock details Insurance operates through its three branches in Dammam, Riyadh and
52-week range H/L (SR) 85.0/40.1 Jeddah.
Market cap ($mn) 267.9
Shares outstanding (mn) 20.0 x Business brief: Sagr Insurance offers a wide range of insurance products to
Price perf. (%) 1M 3M 12M its customers: fire and general (property, engineering, liability and
Absolute (18) (1) 2 miscellaneous), marine (cargo and hull), motor, life and medical insurance
Market (6) (5) 3
services. The company also provides jewelry merchant insurance and
Sector (16) (18) (18)
hotel/furnished apartments-blanket insurance. In addition, Sagr Insurance
Avg daily turn.(mn) SR US$
3M 42.5 11.3 provides reinsurance services—the company has reinsurance treaties with 10
12M 38.8 10.3 re-insurers in the Middle East and Europe including ALLIANZ RE and
Raw Beta 6m 2yr CONVERIUM (Germany), ODYSSEY RE (France), TAKAFUL RE (UAE), and
1.54 0.88
B.E.S.T. RE (Tunis).
Reuters code 8180.SE
Bloomberg code SAGR AB x Financials: In 1Q10, Sagr Insurance did not generate any revenues from its
Website www.alsagrsaudi.com operations. The company’s investment & management fee income totaled
Weighting & free float (%) SR0.4mn in 1Q10 compared to SR2.4mn in 1Q09. However, operational
TASI (free float weight) 0.08 expenses incurred during the quarter, mainly general and administrative,
Free float 42.00 resulted in a net loss of SR1.6mn as against a net profit of SR0.7mn in
1Q09.
Valuation multiples
08 09 TTM x Recent developments: In February 2010, Sagr Insurance announced a
P/E (x) 410.2 7,671.8 N/M 95% YoY decline in its audited net profit to SR0.1mn for 2009. In January
P/B (x) 5.0 5.0 5.1
2010, Al Sagr’s Board of Directors appointed Omar Hamza as General
P/Sales (x) N/M N/M N/M
Manager of the company, effective 1 January 2010.
Div yield (%) N/M N/M N/M
DPS N/M N/M N/M
Company financials
Source: NCBC Research estimates
YoY CAGR (%)
Share price performance 2007 2008 2009 1Q10 (%) (07-09)
Net Insurance Premium SRmn - - - - - -
7,000 90
6,500 Total Revenues SRmn - - - - - -
70
6,000 Net Income SRmn - 2 0 (2) (316.2) -
50
5,500 Assets SRmn - 208 215 215 1.9 -
5,000 30
Jun-09 Sep-09 Dec-09 M ar-10 Jun-10
Equity SRmn - 202 200 199 (2.3) -
Current Price (SR) 25.2 United Cooperative Assurance Company (UCA) is engaged in the
Pricing / Valuation as on June 13, 2010 insurance business in KSA. In 2007, the company was established in
Jeddah as a separate entity from UCA Insurance Co. of Bahrain. In March
Stock details 2008, UCA initiated a public offering selling a 40% stake (or eight
52-week range H/L (SR) 44.4/24.9 million shares) at SR10.0 per share. The stock was listed on the Tadawul
Market cap ($mn) 134.4
in June 2008.
Shares outstanding (mn) 20.0
Price perf. (%) 1M 3M 12M x Business brief: UCA offers a wide range of insurance products such as
Absolute (20) (37) (15)
engineering (contractor’s risks, machinery, and plant & equipment used for
Market (6) (5) 3
construction), medical, personal accident and protection, motor insurance,
Sector (16) (18) (18)
Avg daily turn.(mn) SR US$
and marine cargo. The company’s 220 employees cater to clients through
3M 26.9 7.2 offices in 3 major cities in the Kingdom.
12M 26.3 7.0
x Financials: Investment & management fee income declined 50.7% YoY to
Raw Beta 6m 2yr
SR0.4mn in 1Q10. UCA’s general and administrative expenses stood at
-0.15 0.84
Reuters code 8190.SE SR0.1mn in 1Q10 compared to SR0.4mn in 1Q09. The company’s net income
Bloomberg code UCA AB fell 33.0% YoY to SR0.3mn during the quarter.
Website www.uca.com.sa
x Recent developments: In February 2010, UCA announced an audited net
Weighting & free float (%) loss of SR11.2mn in 2009, compared to a loss of SR10.2mn in 2008.
TASI (free float weight) 0.04
Free float 40.00 Company financials
YoY CAGR (%)
Valuation multiples
2007 2008 2009* 1Q10 (%) (07-09)
08 09 TTM
Net Insurance Premium SRmn - - - - - -
P/E (x) (49.5) (45.0) (44.4)
Total Revenues SRmn - - - - - -
P/B (x) 2.7 2.9 2.9
Net Income SRmn - (10) (11) 0 (33.0) -
P/Sales (x) N/M N/M N/M
Assets SRmn - 207 190 190 0.0 -
Div yield (%) N/M N/M N/M
Equity SRmn - 190 175 175 (8.3) -
DPS N/M N/M N/M Investments SRmn - 206 189 190 0.2 -
Source: NCBC Research Technical Reserves SRmn - - - - - -
Current Price (SR) 9.9 Saudi Reinsurance Co (Saudi Re), established in May 2008, is the first
Pricing / Valuation as on June 13, 2010 cooperative reinsurance company of Saudi Arabia; it is headquartered in
Riyadh. The company provides life and non-life Shariah-compliant
Stock details reinsurance products. Its products cover treaty and facultative types of
52-week range H/L (SR) 14.6/9.3 reinsurance in all classes of business within the Kingdom as well as in
Market cap ($mn) 263.9
other countries of the MENA region.
Shares outstanding (mn) 100.0
Price perf. (%) 1M 3M 12M x Business brief: Saudi Re offers a wide range of reinsurance-related
Absolute (10) (10) (20)
products such as fire, marine (hull and cargo), general accident, engineering
Market (6) (5) 3
(machinery breakdown and contractor’s risks), aviation, motor, third-party
Sector (16) (18) (18)
Avg daily turn.(mn) SR US$
liability as well as life and medical insurances.
3M 6.9 1.8
x Financials: Saudi Re recorded a 440% growth in gross premiums written to
12M 13.7 3.7
SR43.5mn during 1Q10. As a result, net premiums earned surged 11-fold
Raw Beta 6m 2yr
from SR0.5mn in 1Q09 to SR5.3mn in 1Q10. As a percentage of total
0.45 0.76
Reuters code 8200.SE revenues, net premiums earned contributed 60.9% and 62.9% in 1Q09 and
Bloomberg code SAUDIRE AB 1Q10, respectively. The company also registered a 9.6-fold growth in total
Website www.saudi-re.com revenues to SR8.5mn in 1Q10. However, profitability of the company was
Weighting & free float (%) strained as total costs and expenses increased to SR16.7mn in 1Q10, a
TASI (free float weight) 0.08 189.5% YoY increase. Also, absence of other income during the quarter
Free float 40.00 compared to the SR11.3mn in 1Q09, led to a net loss of SR5.7mn in 1Q10 as
against a net profit of SR6.3mn in 1Q09
Valuation multiples
08 09 TTM x Recent developments: In March 2010, Saudi Re announced that Standard
P/E (x) N/M N/M N/M
and Poor's had reaffirmed its BBB+ rating with a stable outlook.
P/B (x) 1.0 1.0 1.0
P/Sales (x) 6226.4 75.3 47.5 Company financials
Div yield (%) N/A N/A N/A YoY CAGR (%)
DPS N/A N/A N/A 2007 2008 2009 1Q10 (%) (07-09)
Source: NCBC Research Net Insurance Premium SRmn - 0 8 5 N/M N/M
Total Revenues SRmn - 0 13 8 N/M N/M
Share price performance
Net Income SRmn - 26 5 (6) (189.6) N/M
7,000 15
Assets SRmn - 1,033 1,094 1,198 14.4 -
6,500 13
11 Equity SRmn - 1,026 1,006 994 (3.1) -
6,000
9
5,500 Investments SRmn - 1,012 1,035 1,038 2.4 -
7
5,000 5 Technical Reserves SRmn - 1 15 96 N/M N/M
Jun-09 Oct-09 Feb-10 Jun-10
Combined Ratio % - N/M 403.9 312.1 - -
TASI Saudi Re (RHS)
Net Mgn % - N/M 36.7 (66.8) - -
Pricing / Valuation as on June 13, 2010 was established in Jeddah in 2008. Prior to being publicly listed, Bupa
Arabia conducted its business as a joint venture between Nazer Group
Stock details and the UK-based BUPA Group.
52-week range H/L (SR) 32.6/16.1
x Business brief: The company offers medical insurance cover to companies,
Market cap ($mn) 212.7
Shares outstanding (mn) 40.0 businesses and families. Bupa Arabia’s corporate services include customized
Price perf. (%) 1M 3M 12M healthcare plans, which have been divided into BUPA Direct and BUPA
Absolute (16) (22) (4) Corporate Health Care Scheme. BUPA Direct targets companies having 10–
Market (6) (5) 3
50 employees with three main schemes: Executive, Classic and Essential.
Sector (16) (18) (18)
BUPA Corporate Health Care Scheme targets companies with over 50
Avg daily turn.(mn) SR US$
3M 13.5 3.6 employees.
12M 13.1 3.5
x Financials: Bupa Arabia’s gross premium increased 46.6% YoY to
Raw Beta 6m 2yr
SR637mn, while net premium grew 39.8% YoY to SR368mn in 1Q10. The
1.54 1.17
company’s revenues totaled SR369mn in 1Q10 compared to SR265mn in
Reuters code 8210.SE
Bloomberg code BUPA AB 1Q09. Bupa Arabia incurred a loss in 1Q10 as expenses rose 40.3% YoY to
Website www.bupa.com.sa SR381mn. During the same period, the company’s net loss was SR12.9mn
from SR5.6mn in 1Q09.
Weighting & free float (%)
TASI (free float weight) 0.06 x Recent developments: In June 2010, Bupa Arabia signed a SR2.6mn
Free float 40.00 partnership agreement with Human Resources Development Fund (HRDF) to
Bupa Middle East Holdings 22.5 Source: Tadawul, Zawya, Company, NCBC Research
Current Price (SR) 19.0 Weqaya Takaful Insurance & Reinsurance Company (Weqaya),
Pricing / Valuation as on 13 June 2010 established in May 2009 in Riyadh, offers insurance products in
healthcare, general insurance and reinsurance.
Stock details
x Business brief: Weqaya’s insurance portfolio consists of products such as
52-week range H/L (SR) 54.8/17.5
Market cap ($mn) 101.3
protection and savings, health, and general insurances; and reinsurance
Shares outstanding (mn) 20 services.
Price perf. (%) 1M 3M 12M
x Financials: Weqaya reported a net loss of SR1.9mn in 1Q10 mainly due to
Absolute (23) (33) NA
the initial stage of its operations. The company did not yield any sales;
Market (6) (5) 3
Sector (16) (18) (18) however, generated SR1.9mn as investment and management fee. Owing to
Avg daily turn.(mn) SR US$ the newly started operations, operating expenses stood at SR3.7mn,
3M 12.1 3.2 resulting in a net loss for the quarter.
12M 47.5 12.7
Raw Beta 6m 3yr x Recent developments: In June 2010, the company received approval for the
0.57 N/A interim sale of 19 of its insurance products. In April 2010, Weqaya received
Reuters code 8220.SE final approval from SAMA to conduct its business in Saudi Arabia and for the
Bloomberg code WEQAYA AB
sale and marketing of its products.
Website www.weqaya.com.sa
Company financials
Weighting & free float (%)
YoY CAGR (%)
TASI (free float weight) 0.03
2007 2008 2009 1Q10 (%) (07-09)
Free float 40.0
Net Insurance Premium SRmn NA NA NA NA NA NA
Valuation multiples Total Revenues SRmn NA NA NA NA NA NA
08 09 TTM Net Income SRmn NA NA (11) (2) NA NA
P/E (x) N/A NM NM Assets SRmn NA NA 190 188 NA NA
P/B (x) N/A 2.1 2.1 Equity SRmn NA NA 181 178 NA NA
P/Sales (x) N/A N/A N/A Investments SRmn NA NA 182 180 NA NA
Div yield (%) N/A N/A N/A Technical Reserves SRmn NA NA NA NA NA NA
7,000 59 ROA % NA NA NA NA NA NA
6,500 49 Div Payout % NA NA NA NA NA NA
6,000 39 SR
EPS NA NA (1.6) (0.6) NA NA
5,500 29
BVPS SR NA NA 9.1 8.9 NA NA
5,000 19
Jun-10Mar-10Dec-09Sep-09Jun-09 Source: Tadawul, Zawya, Company, NCBC Research
Source: Bloomberg
Current Price (SR) 37.4 Al Rajhi Company for Cooperative Insurance (ARCCI), established in
Weighting & free float (%) 6mn shares (30% share capital), which was oversubscribed by 747 times.
TASI (free float weight) 0.05 The company also received approval from SAMA in February 2010 to offer
Free float 30.0 additional insurance products.
Share price performance Technical Reserves SRmn N/A N/A N/A N/A N/A N/A
Combined Ratio % N/A N/A N/A N/A N/A N/A
7,000 82
72 Net Mgn % N/A N/A N/A N/A N/A N/A
62 % N/A N/A (10.6) (2.7) N/A N/A
6,000 ROE
52
42 ROA % N/A N/A (9.5) (2.5) N/A N/A
5,000 32
Jul-09 Oct-09 Dec-09 Mar-10 May-10 Div Payout % N/A N/A N/A N/A N/A N/A
TASI ACE (RHS) EPS SR N/A N/A (0.9) (0.1) N/A N/A
BVPS SR N/A N/A 9.0 9.0 N/A N/A
Current Price (SR) 26.4 Gulf General Cooperative Insurance Company (Gulf General), the entity
Pricing / Valuation as on June 13, 2010 created through the merger of Saudi General Insurance Co. (SGI) and
Gulf Cooperation Insurance Co. (GCI) was established in December
Stock details 2009. The company, headquartered in Jeddah, provides various general
52-week range H/L (SR) 33.3/22.0 insurance services in Saudi Arabia.
Market cap ($mn) 140.8
Shares outstanding (mn) 20 x Business brief: Gulf General Cooperative Insurance Co. will provide
Price perf. (%) 1M 3M 12M insurance services in various segments, including Fire, Accidents, Property,
Absolute (15) 15 N/A Engineering , Vehicle, Marine (Cargo and Hull), Health, Aviation as well as
Market (6) (5) 3
Energy. Its offices are located in Jeddah, Riyadh and Dammam.
Sector (16) (18) (18)
Avg daily turn.(mn) SR US$ x Financials: Gulf General does not report financials since it is yet to
3M 39.4 10.5 commence operations.
12M N/A N/A
Raw Beta 6m 3yr x Recent developments: In April 2010, Gulf General received a license from
0.85 N/A the SAMA to proceed with activities in the general & health insurance sector,
Reuters code 8260.SE the personal and commercial vehicle sector, and temporary sale of medical
Bloomberg code GGCI AB
insurance products. The company had won a license to conduct insurance
Website www.ggi-sa.com
business in Saudi Arabia in January 2010. Gulf General announced an IPO in
Weighting & free float (%) October 2009 offering 40% (8mn shares) at a price of SAR 10 per share. The
TASI (free float weight) 0.04 stock commenced trading in the stock exchange on 8 February 2010.
Free float 40.0
Company financials
Valuation multiples
YoY CAGR (%)
08 09 TTM
2007 2008 2009 1Q10 (%) (07-09)
P/E (x) N/A N/A N/A
Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A
P/B (x) N/A N/A N/A
Total Revenues SRmn N/A N/A N/A N/A N/A N/A
P/Sales (x) N/A N/A N/A
Net Income SRmn N/A N/A N/A N/A N/A N/A
Div yield (%) N/A N/A N/A
Assets SRmn N/A N/A N/A N/A N/A N/A
Source: NCBC Research
Equity SRmn N/A N/A N/A N/A N/A N/A
Share price performance Investments SRmn N/A N/A N/A N/A N/A N/A
Technical Reserves SRmn N/A N/A N/A N/A N/A N/A
7,000 35
Combined Ratio % N/A N/A N/A N/A N/A N/A
30
6,000 Net Mgn % N/A N/A N/A N/A N/A N/A
25
ROE % N/A N/A N/A N/A N/A N/A
5,000 20
Feb-10 Mar-10 Apr-10 May-10 ROA % N/A N/A N/A N/A N/A N/A
TASI Gulf General (RHS) % N/A N/A N/A N/A N/A N/A
Div Payout
EPS SR N/A N/A N/A N/A N/A N/A
Source: Bloomberg BVPS SR N/A N/A N/A N/A N/A N/A
Source: Tadawul, Zawya, Company, NCBC Research
Top 5 shareholders (%)
Saudi General Insurance Co. 15.0
Gulf Company for Cooperative 15.0
Insurance
Al Fadel Investments 5.0
Current Price (SR) 27.4 Buruj Cooperative Insurance Company (Buruj), a part of Kuwait’s Gulf
Price perf. (%) 1M 3M 12M to mainly deal with insurance segments such as Motor, Property and Fire,
Absolute (21) (20) N/A Marine, Engineering, Fidelity, and Money Insurance and Liability Insurance.
Market (6) (5) 3
x Financials: The Company did not report financials as it has not yet
Sector (16) (18) (18)
Avg daily turn.(mn) SR US$ commenced operations.
3M 25.4 6.8
x Recent developments: Buruj received SAMA’s approval to sell insurance
12M N/A N/A
products in KSA in June 2010. The company had its IPO in October 2009; it
Raw Beta 6m 3yr
1.01 N/A had offered 5.2mn shares (40% of its capital) at a price of SAR 10 per share.
Reuters code 8270.SE Buruj’s shares started trading on the stock exchange on 15 Feb 2010.
Bloomberg code BURUJ AB
Website www.burujinsurance.com Company financials
YoY CAGR (%)
Weighting & free float (%)
2007 2008 2009 1Q10 (%) (07-09)
TASI (free float weight) 0.03
Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A
Free float 40.0 SRmn N/A N/A N/A N/A N/A N/A
Total Revenues
Net Income SRmn N/A N/A N/A N/A N/A N/A
Valuation multiples
Assets SRmn N/A N/A N/A N/A N/A N/A
08 09 TTM
Equity SRmn N/A N/A N/A N/A N/A N/A
P/E (x) N/A N/A N/A
Investments SRmn N/A N/A N/A N/A N/A N/A
P/B (x) N/A N/A N/A
Technical Reserves SRmn N/A N/A N/A N/A N/A N/A
P/Sales (x) N/A N/A N/A
Combined Ratio % N/A N/A N/A N/A N/A N/A
Div yield (%) N/A N/A N/A
Net Mgn % N/A N/A N/A N/A N/A N/A
Source: NCBC Research
ROE % N/A N/A N/A N/A N/A N/A
Share price performance ROA % N/A N/A N/A N/A N/A N/A
Div Payout % N/A N/A N/A N/A N/A N/A
7,000 40
EPS SR N/A N/A N/A N/A N/A N/A
30
6,000 SR N/A N/A N/A N/A N/A N/A
20 BVPS
5,000 10
Source: Tadawul, Zawya, Company, NCBC Research
Feb-10 Mar-10 Apr-10 May-10
TASI Buruj (RHS)
Source: Bloomberg
Price perf. (%) 1M 3M 12M company intends to acquire the insurance business of Royal & Sun Alliance
Absolute (23) (23) N/A Insurance Co. and assets of Al Alamiya Trading & Services Co.
Market (6) (5) 3
x Financials: The company did not report financials as it has not yet
Sector (16) (18) (18)
Avg daily turn.(mn) SR US$ commenced operations.
3M 16.0 4.3
x Recent developments: In April 2010, Managing Director and CEO of Al
12M N/A N/A
Alamiya resigned from the membership of Board of Directors. On 14 Feb
Raw Beta 6m 3yr
0.84 N/A 2010, the company received approval from SAMA to launch 23 insurance
Reuters code 8280.SE products for a period of six months. Al Alamiya had its IPO in October 2009;
Bloomberg code ALALAMIY AB it offered 6mn shares, i.e., 30% of the company’s capital at the price of SAR
Website www.alamiyainsurance.com
.sa
10 per share. Al Alamiya started trading on the stock exchange on 8 Dec
2009.
Weighting & free float (%)
TASI (free float weight) 0.03
Company financials
Free float 30.0
YoY CAGR (%)
08 09 TTM Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A
Total Revenues SRmn N/A N/A N/A N/A N/A N/A
P/E (x) N/A N/A N/A
Net Income SRmn N/A N/A N/A N/A N/A N/A
P/B (x) N/A N/A N/A
Assets SRmn N/A N/A N/A N/A N/A N/A
P/Sales (x) N/A N/A N/A
Equity SRmn N/A N/A N/A N/A N/A N/A
Div yield (%) N/A N/A N/A
Investments SRmn N/A N/A N/A N/A N/A N/A
Source: NCBC Research
Technical Reserves SRmn N/A N/A N/A N/A N/A N/A
Share price performance Combined Ratio % N/A N/A N/A N/A N/A N/A
Current Price (SR) 12.0 Solidarity Saudi Takaful Company (Solidarity) was listed on TASI on 8
Pricing / Valuation as on 13 June 2010 June 2010. The company intends to provide insurance services in
segments like property, medical, marine (cargo and hull), general
Stock details accident and motor. Solidarity is headquartered in Riyadh and has
52-week range H/L (SR) N/A offices in Jeddah and Khobar.
Market cap ($mn) 176.8
x Business brief: Solidarity, with a paid up capital base of SR555mn, plans to
Shares outstanding (mn) 55.5
offer insurance products in the KSA in various categories, including property,
Price perf. (%) 1M 3M 12M
Absolute N/A N/A N/A medical, marine (cargo and hull), general accident, and motor. The company
Market (6) (5) 3 was listed on the stock exchange in June 2010.
Sector (16) (18) (18)
Avg daily turn.(mn) SR US$
x Financials: Solidarity does not report financials as it is yet to commence
3M N/A N/A operations.
12M N/A N/A
x Recent developments: Solidarity launched an IPO in March 2010, offering
Raw Beta 6m 3yr
22.5mn shares at SR10 each. Approximately 1.25mn investors subscribed to
N/A N/A
Reuters code 8290.SE the IPO, which was oversubscribed three times. The company’s stock started
Bloomberg code SOLIDARI AB trading in stock exchange from 8 June 2010 at the opening price of SR 12.5.
Website www.sstc.com.sa
Company financials
Weighting & free float (%)
YoY CAGR (%)
TASI (free float weight) 0.05
2007 2008 2009 1Q10 (%) (07-09)
Free float 40.00 SRmn N/A N/A N/A N/A N/A N/A
Net Insurance Premium
Total Revenues SRmn N/A N/A N/A N/A N/A N/A
Valuation multiples
Net Income SRmn N/A N/A N/A N/A N/A N/A
08 09 TTM
Assets SRmn N/A N/A N/A N/A N/A N/A
P/E (x) N/A N/A N/A
Equity SRmn N/A N/A N/A N/A N/A N/A
P/B (x) N/A N/A N/A
Investments SRmn N/A N/A N/A N/A N/A N/A
P/Sales (x) N/A N/A N/A
Technical Reserves SRmn N/A N/A N/A N/A N/A N/A
Div yield (%) N/A N/A N/A
Combined Ratio % N/A N/A N/A N/A N/A N/A
Source: NCBC Research
Net Mgn % N/A N/A N/A N/A N/A N/A
Share price performance ROE % N/A N/A N/A N/A N/A N/A
ROA % N/A N/A N/A N/A N/A N/A
7,000 13
6,500 12 Div Payout % N/A N/A N/A N/A N/A N/A
6,000
5,500 11 EPS SR N/A N/A N/A N/A N/A N/A
5,000 10
BVPS SR N/A N/A N/A N/A N/A N/A
8-Jun-10 9-Jun-10 12-Jun- 13-Jun-
10 10 Source: Tadawul, Zawya, Company, NCBC Research
TASI Soliraity (RHS)
Source: Bloomberg
Current Price (SR) 42.9 Wataniya Insurance Company (Wataniya) was listed on the TASI on 6
Pricing / Valuation as on 13 June 2010 June 2010. The company is expected to provide a range of insurance
services in segments such as property, medical, marine, aviation,
Stock details engineering, fire, general accident, motor and liability insurance. The
52-week range H/L (SR) N/A company has offices in Jeddah, Riyadh and Khobar.
Market cap ($mn) 114.4
Shares outstanding (mn) 10.0 x Business brief: Wataniya, a newly started company, intends to offer a wide
Price perf. (%) 1M 3M 12M range of insurance products in KSA. It has strategic partnerships with New
Absolute N/A N/A N/A Re Company (Part of Munich Re Group) and Saudi Hollandi Bank, which will
Market (6) (5) 3
help the company sell its insurance products. Wataniya was recently listed in
Sector (16) (18) (18)
the stock exchange.
Avg daily turn.(mn) SR US$
3M N/A N/A x Financials: Wataniya does not report financials as it is yet to commence
12M N/A N/A
operations.
Raw Beta 6m 3yr
N/A N/A x Recent developments: The Company’ stock began trading on the stock
Reuters code 8300.SE exchange on 6 June 2010. Wataniya announced its IPO in March 2010,
Bloomberg code WATANIYA AB
offering 3mn shares (30% of its capital) at SR10 each. The IPO was twenty
Website www.wataniya.com.sa
times oversubscribed and 1.14mn investors subscribed for it.
Weighting& free float (%)
TASI (free float weight) 0.03 Company financials
Source: Bloomberg
Current Price (SR) 13.6 Amana Cooperative Insurance Company (Amana), listed on 13 June
Pricing / Valuation as on June 13, 2010 2010 on the TASI, is expected to provide various insurance products for
corporates as well as individuals. The company, headquartered in
Stock details Riyadh, also has branches in Jeddah and Khobar.
52-week range H/L (SR) N/A
Market cap ($mn) 116.0
x Business brief: Amana provides insurance services in segments like Health,
Shares outstanding (mn) 32.0 Fire, Car, Property, Marine and Land Shipments, and Engineering, besides
Price perf. (%) 1M 3M 12M other Miscellaneous Insurance. The company was recently listed on the stock
Absolute N/A N/A N/A exchange. The company’s equity paid up capital stands at SR320mn.
Market (6) (5) 3
Sector (16) (18) (18) x Financials: Amana does not report financials since it is yet to commence
Avg daily turn.(mn) SR US$ operations.
3M N/A N/A
x Recent developments: The Company’s stock started trading on the stock
12M N/A N/A
Raw Beta 6m 3yr exchange on 13 June 2010. The company had its IPO in March 2010 and
N/A N/A offered 12.8mn shares (40% of its capital) at SR10 each. The IPO was
Reuters code 8310.SE oversubscribed by 4.5 times and 1.01mn investors subscribed for the IPO.
Bloomberg code AMANA AB
Website www.amana-coop.com.sa Company financials
YoY CAGR (%)
Weighting & free float (%)
2007 2008 2009 1Q10 (%) (07-09)
TASI (free float weight) 0.04
Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A
Free float 40.0
Total Revenues SRmn N/A N/A N/A N/A N/A N/A
Valuation multiples Net Income SRmn N/A N/A N/A N/A N/A N/A
P/E (x) N/A N/A N/A Equity SRmn N/A N/A N/A N/A N/A N/A
P/B (x) N/A N/A N/A Investments SRmn N/A N/A N/A N/A N/A N/A
Technical Reserves SRmn N/A N/A N/A N/A N/A N/A
P/Sales (x) N/A N/A N/A
Combined Ratio % N/A N/A N/A N/A N/A N/A
Div yield (%) N/A N/A N/A
Net Mgn % N/A N/A N/A N/A N/A N/A
Source: NCBC Research
ROE % N/A N/A N/A N/A N/A N/A
Top 5 shareholders (%) ROA % N/A N/A N/A N/A N/A N/A
Amana Gulf Insurance Co. 18.3 Div Payout % N/A N/A N/A N/A N/A N/A
EPS SR N/A N/A N/A N/A N/A N/A
BVPS SR N/A N/A N/A N/A N/A N/A
Source: Tadawul, Zawya, Company, NCBC Research
221
Appendix
In the issue of timeliness, the stock prices throughout the report are based on last traded prices (and thus may differ from the adjusted prices
provided by the exchange post closing).
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