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Global Research 

Economy 

Saudi Arabia 

Saudi Arabia Economic Overview 

Expected to Stand Firm 

January 2009


Global Investment House 

Tel: (965) 2295 1000 - Fax: (965) 2295 1299 

research@global.com.kw 

www.globalinv.net 

Omar M. El-Quqa, CFA 

Executive Vice President 

omar@global.com.kw 

Phone No:(965) 2295 1110 

Faisal Hasan, CFA 

Head of Research 

fhasan@global.com.kw 

Phone No:(965) 22951270 

Mohammed Ali Shah 

Financial Analyst 

mashah@global.com.kw 

Phone No:(965) 22951283 

Syed Mohammed Taimure Akhtar 


sakhtar@global.com.kw 

Phone No:(965) 22951278 

Umar Faruqui 


ufaruqui@global.com.kw 

Phone No:(965) 22951438

Table of Contents 

Economy ................................................................................................................. 2 

Banking Sector ..................................................................................................... 16 

Petrochemical Sector ............................................................................................ 25 

Fertilizer Sector.................................................................................................... 35 

Real Estate Sector ................................................................................................. 38 

Power Sector ......................................................................................................... 47 

Telecom Sector ..................................................................................................... 51 

Cement Sector ....................................................................................................... 54 

Steel Sector ........................................................................................................... 62 

Capital Markets ..................................................................................................... 67 

Global Research -Saudi Coverage ........................................................................ 83 

Global Investment House Saudi Arabia Economic Overview - January 2009

Economy

Economic Snapshot 

Economy 

2004 2005 2006 2007 2008E 

Economic Performance 

Nominal GDP (US$bn) 250.3 315.3 348.7 381.5 467.4 

Nominal GDP Growth (%) 16.7 26.0 10.6 9.4 22.0 

Real GDP (US$bn) 192.6 203.2 209.6 216.8 225.6 

Real GDP Growth (%) 5.3 5.5 3.1 3.4 4.2 

Per Capita GDP (US$) 11,043.1 13,650.8 14,724.1 15,737.1 18,923.0 

Population (mn) 22.7 23.1 23.7 24.0 24.7 

Inflation (cost of living index) (%) 0.3 0.7 2.2 4.1 9.2 

Oil Sector 

Crude Oil Production (mnbpd) 8.9 9.4 9.1 8.7 9.2 

Oil Exports (US$bn) 110.4 161.1 189.1 204.9 296.0 

Oil Exports Price (US$ per barrel) 34.5 50.2 61.1 68.7 95.0 

Government Finance 

Revenue (US$bn) 104.6 150.5 179.6 165.7 293.3 

Expenditure (US$bn) 76.1 92.4 104.9 118.1 136.0 

Surplus/(Deficit) (US$bn) 28.6 58.1 74.8 47.6 157.3 

Money Supply 

M1 Growth (%) 21.6 4.5 10.3 22.6 8.9# 

M2 Growth (%) 21.3 10.0 20.0 23.7 11.8# 

Foreign Trade 

Exports (US$bn) 126.0 180.6 209.6 233.4 326.9 

Imports (US$bn) 44.7 59.5 63.8 82.5 162.7 

Current Account Balance (US$bn) 51.9 90.0 98.9 95.0 150.6 

Current Account Balance / GDP (%) 26.9 44.3 47.2 43.8 32.2 

Capital Markets 

General Price Index (Points) 8,206.2 16,712.6 7,933.3 11,175.9 4,802.9* 

Market Capitalization (US$bn) 306.0 646.2 326.9 519.0 246.0* 

Number of Shares Traded (bn) 10.2 12.2 54.4 58.8 59.6* 

Value of Trading (US$bn) 473.0 1,103.70 1,402.80 682.1 523.4 * 

Source: SAMA, IMF & Global Research 

# till October 2008 

* As on 31 st December 2008 


Economic Overview 

» Saudi Arabia’s economic performance 

has been exceptional over the years, with 

nominal GDP rising to SR1.7trillion in 

2008. The real GDP growth exceeded 3.1% 

in the last two years, expected to reach 4.2% 

in 2008. 

» The Kingdom with more than 20% of the 

world’s oil reserves, remains committed to 

the economic diversification activity in the 

country. 

» The growth outlook for the Saudi Arabian 

economy looks robust, with public & oil 

sectors investment program exceeding 

US$400bn over next 5years. 

» Oil revenues coupled with diversification 

benefits are likely to result in real GDP 

growth. 


GDP by Economic Activity (2006-07) 

Government Services' Producers 

17% 

Community & Social & Personal services 

4% 

GDP 

Finance, Insurance, Real Estate & 

Business services 

11% 

Transport, Storage & Communication 

Manufacturing Industries 

6% 

12% 

Wholesale, Retail, Restaurants & Hotels Electricity, Gas & Water 

8% 

Construction 

2% 

7% 

Source: Central Department of Statistics & Information, Ministry of Economy & Planning 

Real & Nominal GDP 

Import duties 

1% Agriculture forestry & fishing 

5% 

Mining & Quarrying 

27% 

(SR bn) 

1,800 

26.0% 

27% 

1,650 

24% 

22.0% 21% 

1,500 

17.1% 

18% 

1,350 

16.7% 

15% 

13.8% 

1,200 

12.9% 

12% 

1,050 

9% 

7.7% 

7.1% 

4.9% 

5.3% 5.6% 

6% 

900 

3.0% 

3.2% 3.4% 4.2% 3% 

750 

0.5% 0.1% 

0% 

600 

-2.9% 

2000 2001 2002 2003 2004 2005 2006 2007 2008p -3% 

GDP -Nominal (LHS) GDP Growth -Nominal (RHS) GDP Growth -Real (RHS) 

Source: SAMA, & Ministry of Economy & Planning 

Saudi Arabia Economic Overview - January 2009


GDP 

» Saudi Arabia (KSA) as per International Finance Corporation -World Bank report on “Ease of Doing 

Business 2009” was ranked at no. 16 among countries globally, and no. 1 in MENA region. 

» As per the standard of economic openness (foreign trade of goods & services to GDP), KSA during 

1990-2007 recorded an avg. economic openness degree of 71.9% vs. 23.8% in USA. 

» KSA’s inward FDI flows of US$24.3bn in 2007 recorded an annual increase of 33%, and FDI to GDP 

ratio of 6.4%. 

» Non-oil sector GDP growth of 4.5%, while the oil sector GDP increased by 8.0% in 2007. 

Saudi Arabia's FDI vs. GDP (US$ bn) 

Oil & Non-Oil Contribution to GDP 

2007 

59% 

56% 

63% 

60% 

2006 

2005 

2004 

0 50 100 150 200 250 300 350 

GDP Non-Oil sector 

53% 

50% 

47% 

44% 

41% 

38% 

35% 

2003 2004 2005 2006 2007 2008E 

57% 

54% 

51% 

48% 

45% 

42% 

39% 

36% 

GDP Oil sector 

Nominal GDP 

Inward FDI 

GDP Oil sector (RHS) 

GDP Non-oil sector (LHS) 

Source: SAMA, UNCTAD, World Investment Report 2008 

Source: SAMA, & Ministry of Economy & Planning 



GDP 

» Saudi Arabia possessing more than 20% & 10% of world’s oil & gas reserves, respectively, regarded as 

the economic powerhouse of Gulf Cooperation Council (GCC), will further consolidate its position in 

post GCC full economic union. 

» In the scenario of falling oil prices & slowdown of global economy, we expect Saudi economy to record 

real GDP growth of 2.2% in 2009 and an oil price of around US$51/bbl could lead to balancing of 

FY2009 Saudi budget. 


Nominal GDP & Oil Price 

(SR bn) 

1,800 

1,700 

1,600 

1,500 

1,400 

1,300 

1,200 

1,100 

1,000 

900 

800 

700 

600 

(US$/barrel) 

1,753.0 100 

95.0 95 

90 

85 

84.4 

80 

1,430.5 

1,335.6 

75 

70 

1,182.5 

65 

59.0 

60 

55 

49.7 

50 

938.8 

45 

804.6 

40 

34.5 

35 

686.3 707.1 

30 

27.1 

23.1 24.3 

25 

20 

2001 2002 2003 2004 2005 2006 2007 2008E 

Nominal GDP (LHS) 

Source: SAMA, Ministry of Economy & Planning 

Average Price-Arabian Light (RHS) 



Current and Trade Account 

Current and Trade Accounts 

(SR bn) 

840 

780 

720 

660 

600 

540 

480 

420 

360 

300 

240 

180 

120 

60 

0 

2003 2004 2005 2006 2007 2008E 

Current Account Balance (LHS) 

Trade Balance (LHS) 

CA % of GDP (RHS) 

TB % of GDP (RHS) 

46% 

42% 

38% 

34% 

30% 

26% 

22% 

18% 

14% 

10% 

Source: SAMA, Central Department of Statistics & Information & Global Research 

» Trade Balances improved, driven by: 

- High oil prices 

- Diversification initiatives 

» Trade balances and current account balances both increased in 2008. Also in terms of GDP ratio, both 

witnessed increase to 46.8% and 32.2%, respectively. In 2009 we estimate current account balance to 

GDP ratio to drop to around 26.0%. 



Money Supply Responds Favorably 

Money Supply 

» Owing to rising inflation, the reserve requirement on total demand deposits was increased from 7% in 

Nov 07 to 13% till May 08. Although the requirement was relaxed later in 2008, the move delivered the 

desired results. 

» The annual M3 growth dropped from 21.8% in Aug 08 to 19.4% in Sep 08. On MoM basis, M2 growth 

of 2.8% in Jul 08 reduced to 0.2% in Oct 08, while M3 increase of 1.9% in Jul 08 declined to 1.4% in 

Oct 08. 

Money Supply 

End of period 2005 2006 2007 2008 

(All figures in SR bn) Jan Feb Mar Apr May Jun Jul Aug Sep Oct 

Currency in Circulation (1) 64.3 69.3 72.2 71.4 70.8 72.4 71.4 74.4 77.6 78.6 76.9 84.3 81.9 

Demand Deposits (2) 219.3 243.4 311.4 326.8 328.3 339.3 337.0 344.4 351.6 349.1 342.3 333.6 335.8 

Money Supply (M1) (3) = (1) +(2) 283.5 312.7 383.6 398.2 399.1 411.7 408.4 418.9 429.2 427.7 419.2 417.9 417.6 

% growth rate 4.51 10.3 22.6 3.8 0.2 3.2 -0.8 2.6 2.5 -0.3 -2.0 -3.0 -0.1 

Time & Savings Deposits (4) 165.3 226.0 283.1 290.8 293.0 294.1 290.8 284.0 282.8 304.4 318.4 326.5 327.9 

Money Supply (M2) (5) = (3) +(4) 448.8 538.8 666.6 689.0 692.1 705.8 699.2 702.9 711.9 732.1 737.6 744.4 745.5 

% growth rate 10.0 20.0 23.7 3.4 0.5 2.0 -0.9 0.5 1.3 2.8 0.8 0.9 0.2 

Other Quasi Monetary Deposits (6) 104.9 121.8 123.1 126.1 135.2 128.2 127.0 141.6 148.8 145.0 148.2 144.0 155.5 

Money Supply (M3) (7) = (5) +(6) 553.7 660.6 789.8 815.1 827.4 834.0 826.2 844.4 860.7 877.1 885.8 888.5 901.1 

% growth rate 11.6 19.3 19.6 3.2 1.5 0.8 -0.9 2.2 1.9 1.9 1.0 0.3 1.4 

Source: SAMA 




Inflation 

Inflation Peaks Out 

» Saudi Arabia’s strong economic 

performance during times of high 

oil prices, witnessed a surge in 

inflation rate touching the highs of 

11.1%. Historically (2000-06) Saudi 

inflation has been quite low (1.0% to 

2.0%). 

» The rental component played a 

significant upward influence in rising 

inflation levels in 2008. 

» SAMA closely monitoring the 

inflationary trends has taken various 

initiatives that have started bearing 

positive results. The fall in commodity 

prices has offered further support 

in better managing commodity led 

inflationary pressures. 

Inflation rates in 2008 

11.5% 

11.0% 

10.5% 

10.0% 

9.5% 

9.0% 

8.5% 

8.0% 

7.5% 

7.0% 

6.5% 

Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 

Source: SAMA 



Demography 

Kingdom’s Demographic Story 

» Saudi Arabia with an estimated population of 24.7mn in 2008, has one of the fastest population growth 

rate amongst the Arab countries. 

» The Kingdom’s population recorded a 5-year CAGR (2002-07) of 2.2%. 

» An annual growth rate of 4.1% during 1975-2004 is estimated to drop to 2.3% in the period of 2004- 

2015. However, it is still going to be higher than the forecasted growth of 2.0% in other Arab countries 

and 1.3% in developing countries. 

» The population in Saudi Arabia comprises of 72.9% Saudis, and 27.1% non-Saudis. 

Population Statistics 

(mn) 2001 2002 2003 2004 2005 2006 2007 2008E 

Saudi Population 15.2 15.6 16.1 16.4 16.8 17.3 17.5 17.9 

Non-Saudi Population 5.7 5.8 5.9 6.1 6.2 6.4 6.5 6.8 

Total Population 20.9 21.4 22.0 22.5 23.1 23.7 24.0 24.7 

Total Employed 6.2 6.3 6.6 7.2 7.4 7.5 7.7 7.8 

Source: Central Department of Statistics, & Ministry of Economy & Planning 


10 Saudi Arabia Economic Overview - January 2009


Economy 

Saudi Arabia’s 10x10 Vision 

» SAGIA and the Kingdom of Saudi Arabia as a whole are fully committed towards the 

Kingdom’s ambitious project of 10 x 10, which aims at positioning Saudi Arabia amongst 

the top ten most competitive nations by 2010. 

» The realization of 10x10 vision will require substantial steps and effective initiatives, 

which are facilitated through a series of development plans that have reached Eighth 

Developmental Plan (2005-09). 

» The Eighth Plan marks a new phase in a development process that has spanned more than 

three decades. Although the oil sector remains a dominant contributor to the Kingdom’s 

GDP, its contribution may come down in coming years as the government takes on various 

plans to enhance its economic diversification. 

» In the coming five years (2005–09), the Eighth Development Plan aims at increasing 

real GDP from around SR722.2bn in 2004 to around SR895.2bn in 2009. The Plan also 

envisages that by 2009, the share of the non-oil sector in GDP would have increased to 

more than 70%. 

Global Investment House 11 Saudi Arabia Economic Overview - January 2009


Budget 

KSA Budget 2009: Kingdom Spending Remains Unabated in 2009 

» KSA budgets 2009 fiscal deficit of SR65bn with forecasted expenditure of SR475bn (15.9% higher than 

2008) and revenue of SR410bn (8.9% lower than 2008) in 2009. 

» Budget estimates do reflect the repercussions of global slowdown on Saudi economy but the Kingdom 

draws support from its accumulated reserves esp. in recent oil boom. 

Bugget Revenues & Expenses 

(SR bn) 

1,200 

1,050 

900 

750 

600 

450 

300 

150 

0 

-150 

11.4% 

280.4 

217.8 

107.1 

3.2% 

22.7 

36.0 

4.5% 

178.5 

-26.9 -20.5 

-3.9% 

-2.9% 

2000 2001 2002 2003 2004 2005 2006 2007 2008p 

Budget Balance -(LHS) 

Revenues -(LHS) 

Expenditures -(LHS) 

Balance as % of GDP -(RHS) 

Source: SAMA, Ministry of Finance, & Ministry of Economy & Planning 

18.4% 

21.2% 

12.6% 

590.0 

33.7% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

-5% 




» It is noteworthy that Saudi Arabia like 

other Arab oil-producing countries has 

traditionally presented conservative 

government budget estimates. 

» An announced budget surplus of 

SR40bn (US$10.7bn) in 2008 had 

an actual outcome of SR590bn 

(US$157.3bn) posting an exponential 

increase of more than 1,300% over 

the budgeted estimates. 

» A record fiscal year 2008 performance 

could be mainly attributed to the 

outstanding increase in oil prices 

during the first seven months of 

2008. 

Conservative Budget 

Revenue 

(SR bn) Budget Actual 

% change 

(Actual - 

Budget) 

Budget 

Expenditure 

Actual 

Budget 

% change 

(Actual - 

Budget) 

2000 157 258 64.3% 185 235 27.0% 

2001 215 228 6.0% 215 255 18.6% 

2002 157 213 35.7% 202 233 15.3% 

2003 170 293 72.4% 209 257 23.0% 

2004 200 392 96.0% 230 285 23.9% 

2005 280 564 101.4% 280 346 23.6% 

2006 390 673 72.6% 335 393 17.3% 

2007 400 642 60.5% 380 466 22.6% 

2008 450 1,100 144.4% 410 510 24.4% 

2009 410 - - 475 - - 

Source: Ministry of Finance & SAMA 


Economic Outlook 

Economy 

» Saudi economy with calculated exposure in the global financial markets seems to be more 

comfortably placed in weathering the global distress. However, being an important part of 

the intertwined global markets, it is not completely insulated from the global slowdown. 

» Its ability to maintain its economic growth plans on track is evident from the government 

statements that Saudi Arabia’s important economic development projects would not be 

significantly impacted by the global financial tsunami, and it has adequate fiscal reserves 

(build up over the oil boom period) to handle the current conditions. 

» In addition to the government’s continuing efforts and commitment, support from macroeconomic 

factors is also believed to facilitate the Kingdom’s economic growth. 

- Easing of inflation 

- Low debt to GDP ratio 

- Strong banking system 

- Considerable demand generation from domestic consumption 



Economic Outlook 

Economy 

» Based on the Kingdom’s inherent strengths and our economic forecast for 2009, we are confident that 

although the year ahead will witness softening of the Saudi economy, the budgeted fiscal deficit has high 

chances of being converted into a fiscal surplus. 

» Our forecast of three different scenarios (worst case up-to best case) reveals that Saudi Arabia could 

report a deficit of SR2.3bn in worst case scenario, while it could report fiscal surplus between the range 

of SR79.5bn to SR218.7bn in the most likely and best case scenarios, respectively. 

Scenarios for FY 2009 Budget Outcome 

(SR mn, unless mentioned) Worst Case Most Likely Best Case 

Arab Light Price (US$/b) 55.0 58.0 65.0 

Production (mn b/d) 7.50 8.00 8.50 

Oil Revenues 531,759.4 600,060.0 719,004.4 

Other receipts 69,128.7 78,007.8 93,470.6 

Total Revenue 600,888.1 678,067.8 812,474.9 

Total Expenditure 603,250.0 598,500.0 593,750.0 

Surplus/(Deficit) (2,361.9) 79,567.8 218,724.9 

Source: SAMA, OPEC, & Global Research 


Banking Sector

Banking Sector 

Saudi Banks Weathering Financial Storm Well 

» Saudi banking sector with its relatively limited exposure to the global financial 

markets was somewhat able to escape the severe implications of the global 

financial distress, with not even a single bail out situation reported till now. 

» The well provisioned balance sheet of the Saudi banking sector (with the 

NPL Coverage of above 100%) signals the overall good health quality of the 

Kingdom’s banking assets. 

» However, being an important part of the intertwined global markets, some of 

the dampening effects were directly or indirectly translated into the Kingdom’s 

banking sector performance. These eventualities have been adequately handled 

by SAMA ‘s appropriate market measures from time to time. 

» The robust financial structure in the Kingdom remains very attractive for financial 

market players worldwide. 



Kingdom’s Actions Post Global Financial Crisis 

» Overall, Saudi Arabia’s central bank played down the impact of the global 

financial crisis on the Saudi economy. However, SAMA closely followed the 

market developments and remained ready to provide liquidity when needed. 

» SAMA also informed that it is ready to pump liquidity of SR150bn (US$40bn) 

to help the kingdom’s banks if required and at one stage did inject between 

US$2-3bn to ease money markets. 

» Saudi Arabia’s five financial institutions: Riyad Bank, AlRajhi Bank, Banque 

Saudi Fransi, Samba Financial Group and Arab National Bank stated that their 

financial positions won’t be affected by the global mortgage crisis as they have 

no exposure to the international mortgage market. 

» Although Saudi Arabia at large did not face any economic panic situation during 

this troubled global financial times, SAMA in order to maintain the economic 

stability in the Kingdom acted proactively on various instances. 




SAMA Repo Rate Cuts Aimed at Improving Liquidity 

» Saudi Arabia maintaining its loyalty of the Saudi Riyal peg to US dollar for more 

than two decades, has at large matched the Fed rate cuts by changing its reverse 

repo rate. However, the Kingdom’s proactive approach linked to the domestic 

market dynamics is clearly signaled through its coordinated & uncoordinated rate 

cut decisions. 

» The US Federal Reserve since Sep07 has cut its Federal Funds Target rate (FFTR) 

by 425bps to 1.0%, while over the same period the Saudi reverse repo rate has 

been reduced by 300bps to 2.0%. 

» Since Mar04, the first repo rate cut in Saudi Arabia came in Oct08 in the wake of 

the worsening global financial crisis. 

» In Oct08, Saudi Arabian Monetary Agency (SAMA) reduced its repo rate by 

150bps to 4.0% and also lowered the reserve requirements to 10.0% from 13.0% 

of the total demand deposits. 



SAMA Repo Rate Cuts Aimed Improving Liquidity (contd.) 

» SAMA acted again in Nov08 by the repo rate cut of 100bps to 3.0%, along with the further reduction in 

bank reserve requirements from 10.0% to 7.0%. 

Reverse-Repo and Repo Rates 

7.0% 

6.5% 

6.0% 

5.5% 

5.0% 

4.5% 

4.0% 

3.5% 

3.0% 

2.5% 

2.0% 

1.5% 

1.0% 

0.5% 

Nov-98 

Apr-99 

Sep-99 

Feb-00 

Jul-00 

Dec-00 

May-01 

Oct-01 

Mar-02 

Aug-02 

Jan-03 

Jun-03 

Nov-03 

Apr-04 

Sep-04 

Feb-05 

Jul-05 

Dec-05 

May-06 

Oct-06 

Mar-07 

Aug-07 

Jan-08 

Jun-08 

Nov-08 

Source: SAMA & Global Research 

Official Repo Rate 

Reverse Repo Rate 

» The repo rate cut decisions have been carefully monitored by SAMA, in order to effectively generate the 

desired market effects (esp. to enhance the liquidity in the system). 




» Saudi Banks constituting 32% of 

Tadawul market cap., recorded assets 

to GDP ratio of 73% (Dec07). Overall, 

the sector has Loan to Deposit ratio 

of more than 80%. 

Saudi Banking Assets 

(SR bn) 

240 

220 

200 

180 

» Saudi banking assets recording a 

5-year CAGR(2002-07) of 16%, 

showed YTD asset growth of 20% 

closing at SR1.2trillion in Sep08. 

160 

140 

120 

100 

80 

60 

» KSA’s strong macro-economic 

outlook offers future optimism for 

the financial institutions that can 

capitalize on the growing financing 

appetite and deposit base in the 

Kingdom. 

40 

20 

0 

Al-Jazira Bank 

Bank Al-Bilad 

Al-Rajhi 

Arab National Bank 

Banque Saudi Fransi 

National Commercial Bank 

Riyad Bank 

Saudi British Bank 

Saudi Investment Bank 

SAMBA Financial Group 

Saudi Hollandi Bank 

2004 2005 2006 2007 9M-2008 




» Saudi banks that had consistently 

shown good financial performance in 

the past decade, witnessed a decline 

of 14.6% in FY07 (linked to the 

dampened activity at Tadawul) and 

posted 3-year CAGR(2004-07) of 

22%. 

» The listed Saudi banks (9M08 

profitability) recorded YoY increase 

of 1.6%, posting a consolidated net 

profit of SR19.3bn in 9M08. 

» Based on 9M08 results, Al Rajhi Bank 

with the largest market cap. recorded 

(YoY) rise of 4.7%; while the heavy 

weights like SAMBA Financial 

Group & Riyad Bank declined (YoY) 

by 6.3% & 4.8%, respectively. 

Saudi Banking Sector Profitability 

(SR mn) 

7,500 

7,000 

6,500 

6,000 

5,500 

5,000 

4,500 

4,000 

3,500 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

0 

Al-Jazira Bank 

Bank Al-Bilad 

Al-Rajhi 



National Commercial Bank 

Riyad Bank 



2004 2005 2006 2007 9M-2008 







Saudi Banks Quarterly Performance (net profit in SR mn) 

Symbol Company 

Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 

Actual Actual Actual Actual Actual Actual Actual 

1010 Riyad Bank 655.1 847.6 715.9 792.8 690.7 906.3 513.3 

1020 Bank AlJazira 302.5 207.3 135.0 160.5 153.3 99.9 61.0 

1030 The Saudi Investment Bank 306.1 225.4 336.3 -45.6 262.0 284.5 64.8 

1040 Saudi Hollandi Bank 215.4 166.5 162.9 -106.3 282.4 326.3 306.0 

1050 Saudi Fransi Bank 689.6 727.8 653.1 640.5 733.2 774.1 729.0 

1060 The Saudi British Bank 616.3 634.9 650.9 704.8 757.0 795.1 711.0 

1080 Arab National Bank 642.9 724.9 607.9 485.6 672.2 752.2 628.0 

1090 Samba Financial Group 1,270.2 1,295.8 1,301.7 940.0 1,200.4 1,221.6 1,200.0 

1120 Al Rajhi Bank 1,569.4 1,610.2 1,694.2 1,575.8 1,601.8 1,741.8 1,757.0 

1140 Bank AlBilad 25.7 34.7 39.1 -27.1 50.8 57.0 44.6 

Source: Company reports & Global Research 



Saudi Banking Sector Outlook 

» The Saudi banks (as per the eleven months data for 2008) posted profitability 

increase of 6.0% reaching SR30.0bn. 

» Although Saudi banks are somewhat robust against severe implications of global 

financial crisis, are estimated to record some write downs during the last quarter 

of 2008. 

» According to our estimates, the FY08 overall banking sector results will not 

experience any significant growth as the banking heavy weights performance 

could be mixed for the full year results. Our estimates indicate that amongst the 

listed big banks Al Rajhi Bank and Saudi British Bank will lead the growth, while 

Riyad Bank and Samba financial group could witness decline. 

» Dependant on the stability of global stock markets in 2009, the Kingdom holds 

significant potential to attract investments. The Kingdom’s continued commitment 

towards the projects to ensure sustainable and balanced economic development 

along with banks’ restructuring plans and to lower dependence on revenues 

from equity markets, provide a window for stable if not higher banking sector 

performance during the year. 



Petrochemical Sector

Petrochemical Sector 

Saudi Industry Overview 

Saudi Arabia Regional Share - 2007 

» Largest regional petrochemical producing 

country. 

» SABIC is the leading local and regional company. 

» Petrochem exports mainly on intermediates & 

polymers. 

Saudi Arabia 

53% 

Source: Zawya & Global Research 

MENA 

47% 

SABIC Regional Share - 2007 

Rest of the MENA 

54.7% 

SABIC Share in Saudi Arabia - 2007 

Rest of the Saudi Arabia 

14.1% 

SABIC 

45.3% 

Source: Company Annual Report 2007 & Global Research 

SABIC 

85.9% 

Source: Company Annual Report 2007 & Global Research 



Saudi Sector Performance 2007 

» Sales revenue increased at a CAGR of 23.1% 

during 2004-07 to US$34.8bn in 2007. 

» The profitability during 2004-07 had increased 

at a CAGR of 25.5% to US$8.0bn in 2007. 

» Profit margins recorded at an average level 

of 24.4%. 


40,000.0 

45.6% 

35,000.0 

30,000.0 

25,000.0 

20,000.0 

15,000.0 

15.3% 

11.0% 

10,000.0 

5,000.0 

- 

2005 2006 2007 

Sales Revenue Growth 

Source: Zawya & Companies’ Annual Accounts 


50.0% 

45.0% 

40.0% 

35.0% 

30.0% 

25.0% 

20.0% 

15.0% 

10.0% 

5.0% 

0.0% 

Sector Net Profit Margins 2004-07 Saudi 

27.0% 

26.4% 

26.0% 

25.1% 

25.0% 

24.0% 

23.0% 

23.0% 

22.0% 

21.7% 

Higher financial & depreciation cost 

21.0% 

20.0% 

2004 2005 2006 2007 

Source: Companies’ Annual Accounts & Global Research 


9,000.0 

8,000.0 

40.4% 

33.5% 

7,000.0 

6,000.0 

5,000.0 

4,000.0 

3,000.0 

2,000.0 

1,000.0 

5.6% 

- 

2005 2006 2007 

Profitability Growth 

Source: Zawya & Companies’ Annual Accounts 

45.0% 

40.0% 

35.0% 

30.0% 

25.0% 

20.0% 

15.0% 

10.0% 

5.0% 

0.0% 



9M-2008 Financial Performance 

» Profitability grew at 48.6% over the corresponding 

period last year. 

Sector Sales Revenue Break Up-9M 2008 

SIPCHEM 

1.1% 

Others 

1.1% 

» Gross profit margins recorded at 19.2%. 

» SABIC dominancy remained in the local market 

followed by SIPCHEM. 

Sector Profitability Revenue (US$ Mn) 

40,000 

35,000 

30,000 

25,000 

20,000 

15,000 

10,000 

5,000 

- 

9M-2007 9M-2008 

Source: Zawya & Companies’ 9M-2008 Accounts 

SABIC 97.8% 


Sector Profitability Revenue (US$ Mn) 

40,000 

35,000 

30,000 

25,000 

20,000 

15,000 

10,000 

5,000 

- 

9M-2007 9M-2008 




Saudi Investment Plan 

» The government of KSA had allocated investment of US$51.7bn (SR194.0bn) for the capacity 

expansion. 

» SABIC and its affiliates claimed major chunk of the planned investment in the sector. 

Local Petrochemical Investment - Project Wise 

Olefins Complex 

15.9% 

Acetyles Complex 

3.5% 

Other 

6.7% 

SBIC 

Europe & UK 

23.7% 

Saudi Menthol 

ARRAZI 

1.2% 



Saudi Kayan 

Petrochemical 

25.6% 

YANSAB 

11.0% 

Saudi European-IBN 

ZAHR 

2.6% 

Eastern Petrochemical 

SHARQ 

9.8% 

Local Petrochemical Investment - By Status 

Unclear 

29.9% 

Incurred but not completed 

19.9% 


Incurred 

50.1% 



Saudi Capacity Expansions 

» Based on the given expansion plans, the production capacity of Saudi Petrochemical sector 

is expected to increase at a CAGR of 8.2% during 2007-11 to reach 61.2mn tons in 2011. 

» Expansion will help Saudi to maintain its leading position. 

Petrochemical Capacity Expansion (mn tons) 

Expansion Break Up 2011E - Company Wise 

70.0 

60.0 

50.0 

40.0 

30.0 

8.3% 

13.2% 

6.2% 

5.2% 

14.0% 

12.0% 

10.0% 

8.0% 

6.0% 


52.2% 

SABIC 

44.0% 

20.0 

4.0% 

10.0 

2.0% 

- 

2007 2008E 2009E 2010E 2011E 

Petrochemical Expansion Growth 

0.0% 

SIPCHEM 

3.8% 





Name 

Basic-Olefins 

Aromatic 

Basic- 

Basic- 

Oxygenate 

Expected 

Production 

Saudi European-IBN ZAHR 950,000 - - 4Q2008 

Sino-Saudi Petrochemical Project 1,700,000 - - 2010 

Saudi Kayan 3,800,000 - - 3Q2010 

Sharq-Eastern Petrochemical 2,000,000 - - 3Q2008 

YANSAB 2,005,000 - - 4Q2008 

SIPCHEM-Olefins 2,100,000 - - 2012 

Sahara/Tanesse-Saudi Ethylene & Propylene Plant 1,285,000 - - 4Q2008 

Petrokemya-PVC and Offsite - - - 2010 

Sadaf-Styrene Palnt-Saudi Petrochemical - 600,000 - 2010 

Delta Oil 1,200,000 - - 2009 





Feed Stock & Basic Chemical Prices 

» We forecast crude oil prices to remain in the range of US$55-65 per barrel and gas prices at US$5.5-6.5 

per mmbtu till 2011, which will result lower basic chemical prices. 

» Local complexes are getting feedstock gas at a highly subsidized rate of US$0.75 per mmbtu and also 

getting naphtha at around 30.0% discount to the international prices. 

Crude Oil (US$ / bbl) & Gas (US$ / mmbtu) 

120.0 

100.0 

80.0 

60.0 

40.0 

20.0 

8.0 

7.0 

6.0 

5.0 

4.0 

3.0 

2.0 

1.0 

Prices of Basic Chemicals (US$ per ton) 

1,650 

1,450 

1,250 

1,050 

850 

650 

800.0 

700.0 

600.0 

500.0 

400.0 

300.0 

200.0 

- 

2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 

Crude Oil (LHS) Gas (RHS) 

Source: OPEC & Global Research 

- 

4Q07 

1Q08 

2Q08E 

3Q08E 

4Q08E 

1Q09E 

Ethylene 

Propylene 

Methyl Tretiary Butyl Ether (MTBE) 

Source: Global Research 

2Q09E 

3Q09E 

Butene 


Expected Margins in Saudi Arabia 


» The availability of feed stock at highly subsidized rates increase the capability of local companies to 

perform well in low price scenarios with better margins as compared to international as well as local 

players. 

Expected Margins in Saudi Arabia - Product Wise 

2008E 2009E 2010E 2011E 

Ethylene High High High High 

Propylene Average High High High 

MTBE Low Low Low Low 

Styrene Average Low Low Low 

Benzene High High High High 

Paraxylene Low Low Low Low 

Mono Ethylene Glycol Average Low Low Low 

Di Ethylene Glycol Average Average Average Average 

Teri Ethylene Glycol Average Average Average Average 

Purified Terephthalic Acid - PTA Low High High High 

Ethylene Di Chloride High High High High 

Caustic Soda Low High High High 

Vinyl Chloride Monomer - VCM Average Average Average Average 

Polyethylene Average Average Average Average 

Polypropylene Average Average Average Average 

Polyvinyl Chloride - PVC High High High High 

Polyethylene Terephthalate Resin - PET High Average Average Low 

Polystyrene - PS Low Low Low Low 

Source: Global Research High Return = 50% Average Return = 20%-50% Low Return = Below 20% 




Expected Sales Revenue (US$ mn) Growth 

Expected Profitability (US$ mn) Growth 

60,000.0 

50,000.0 

40,000.0 

30,000.0 

20,000.0 

10,000.0 

- 

45.7% 

Decline in prices 

32.4% 

-1.0% 6.5% 4.5% 

2007 2008E 2009E 2010E 2011E 

50.0% 

40.0% 

30.0% 

20.0% 

10.0% 

0.0% 

-10.0% 

12,000.0 

10,000.0 

8,000.0 

6,000.0 

4,000.0 

2,000.0 

- 

35.6% Higher Financial & Depreciation Charges 

13.6% 

8.2% 

9.3% 

-5.8% 

2007 2008E 2009E 2010E 2011E 

40.0% 

35.0% 

30.0% 

25.0% 

20.0% 

15.0% 

10.0% 

5.0% 

0.0% 

-5.0% 

-10.0% 

Sales Revnue 

Growth 

Profitability 

Growth 


Saudi Petrochemical Outlook 

» Based on our coverage, sales revenues and 

profitability of the sector will increase at a CAGR 

of 9.6% and 6.1% during 2007-11 respectively 

» Leading players to acquire & establish 

manufacturing & marketing units in European 

& American region and utilizing the platform of 

SINOPEC is under-negotiation 


Expected Net Profit Margins 

24.0% 

23.0% 

23.0% 

Dilution in Depreciation Impact 

22.0% 

21.0% 

20.4% 

20.0% 

19.3% 

19.0% 

19.0% 

20.2% 

18.0% 

17.0% 

16.0% 

15.0% 

2007 2008E 2009E 2010E 2011E 



Fertilizer Sector

Fertilizer Sector 

Saudi Fertilizer Overview 

» Saudi Arabia ended 2007 with a designed capacity to produce 6.8mn tons of fertilizer products, which 

constitute 24.6% of the MENA capacity after Egypt. 

» The local sector is mainly dominated by Saudi Arabian Fertilizer Company (SAFCO), affiliate of SABIC, 

which has claimed 74.4% of the local capacity in 2007 and mainly produce Ammonia and Urea. 

Company Wise Capacity Break Up 2007 


33.7% 

Product Wise Capacity Break Up 2007 

Sulphuric Acid 

1.9% 

Melamine 

0.3% 

SAFCO 

66.3% 

Ammonia 

47.1% 

Urea 

50.7% 

Source: Company Reports & Global Research 

Source: Company Reports, Zawya & Global Research 


Fertilizers Sectors 

Saudi Fertilizer Outlook 

» Saudi government had allocated US$8.1bn (SR2.2bn) for making expansions in fertilizer sector during 

2006-12. 

Forecasted Saudi Arabian Fertilizer Capacity (000tons) 

25,000.0 

20,000.0 

15,000.0 

Product Wise Fertilizer Capacity Break Up 20011 

Sulphuric Acid 

22.8% 

Melamine 

0.1% 

Phosphorous Acid 

7.4% 

Urea 

29.9% 

10,000.0 

Completion of SABIC - Maaden Project 

5,000.0 

- 

2007 2008E 2009E 2010E 


2011E 

DAP 

14.3% 

Ammonia 

25.6% 


» Based on the given plan, we expect the production 

capacity of Saudi Arabia will increase at a 

CAGR of 31.5% during 2007-11 to reach at 

20.3mn tons. 

» Completion of SABIC-Maaden fertilizer project 

will add the new production capacity to produce 

2.9mn tons of Di Ammonium Phosphate (DAP). 



Real Estate Sector

Real Estate Sector 

» Real estate plays an important role in the Kingdom’s non-oil economy, which remains focused on the 

government’s effort for economic diversification . 

» Currently the housing finance industry in Saudi Arabia is almost non-existent with the housing finance 

to GDP ratio currently estimated at less than 1%. 

» Generally, Saudi Arabia is witnessing an escalating demand from young middle income Saudis. Thus, if 

Saudi is to meet such demand it will need to build 1.5mn new homes by 2015. 

» Saudi Arabia being one of the largest construction markets in the Middle East is estimated to have the 

total real estate investments of around US$300bn, which are expected to cross US$400bn mark in near 

future. 

» The construction and building activity in the Kingdom grew by 7.1% in 2007 as against the growth of 

7.3% in the preceding year. With a value of SR48.8bn in 2004, the real estate sector had a contribution 

of 6.8% to the Kingdom’s GDP. 




Real Estate contribution to GDP 

(SR mn) 

900,000 

800,000 

700,000 

600,000 

603,589 

714,900 

7.2% 

895,166 

7.3% 

7.2% 

7.1% 

500,000 

400,000 

7.0% 

7.0% 

300,000 

6.9% 

200,000 

100,000 

0 

6.8% 

42,221 48,822 64,872 

1999 2004 2009 (Projected) 

Real estate (LHS) GDP (LHS) Real estate /GDP (RHS) 

6.8% 

6.7% 

Source: Ministry of Economy and Planning & Global Research 

» The real estate activity in the Kingdom is estimated to increase at an average annual rate of 5.8%, with 

its contribution to GDP increasing from 6.8% in 2004 to 7.2% in 2009. 



Key Growth Factors Of Saudi Real Estate 

» Population & Demographic Story 

- Saudi Arabia’s population growth rate, which is the 

fastest amongst the Arab countries, opens up the 

Kingdom for vast array of growth opportunities. 

Population Age-Group (2007) 

64 years and above, 

3% 

- Kingdom’s population is estimated to have grown 

by more than threefold during the last three decades, 

increasing from 7.3mn in 1975 to 23.98mn in 2007 (mid 

estimate). 

Between 

30 to 64 years, 

36% 

Under 

30 years, 

61% 

- Having around 60% population between the working 

age group of 15-64 years indicates a strong demand in 

all categories of daily households in years to come. 

Source: Central Department of Statistics & Information 




Attractive for Foreign & Domestic Investors 

» Besides the government’s focus to provide quality housing facilities in the Kingdom, the demand 

fundamentals of real estate sector increase its attractiveness for both domestic & foreign investors. 

» The FDI inflow as a % of gross fixed capital formation showed a consistent increase in the Kingdom, 

recording a rise from 24.0% in 2006 to 32.1% in 2007. 

Foreign Direct Investment Flows 

(US$ bn) 

24 

33% 

22 

20 

28% 

18 

16 

23% 

14 

12 

18% 

10 

8 

13% 

6 

4 

8% 

2 

0 

3% 

2004 2005 2006 2007 

FDI Saudi Arabia (LHS) FDI UAE (LHS) Saudi FDI /Gross Fixed Capital Formation (RHS) 

Source: UNCTAD, World Investment Report 2008 & Global Research 



Government Focus On Infrastructure Projects 

» According to the estimates, in addition to the large investments in the oil and gas sectors, planned 

investments to be implemented under public-private partnerships mostly in infrastructure (during 2007- 

12) are expected to exceed US$300bn. 

» The plan of developing six mega economic cities across the Kingdom is one of the highlight of Kingdom’s 

investment projects in years to come. 

New Saudi mortgage law expected anytime 

» The government has indicated that detailed mortgage law and mortgage financing regulations are under 

consideration for finalization and will allow a wider access to property ownership in the Kingdom. 

» In anticipation of the long-awaited comprehensive mortgage law, a number of banks have started offering 

Shariah-Compliant home financing credit with tenors extending up to 25 years. 




Economic Cities in Saudi Arabia 

» Saudi Arabia’s government as part of its rapid economic growth and diversification goals, has announced 

one of the largest infrastructure projects undertaken by the Kingdom 

» It is envisioned that the economic cities alone will have three times population of Dubai, a GDP equivalent 

to that of Singapore and an area four times the size of Hong Kong. 

» Saudi Arabian General Investment Authority (SAGIA) with an initial plan to develop six Economic 

Cities in the Kingdom, has already launched a total of four. These cities are expected to be home to 4- 

5mn residents by 2020, besides generating enormous economic growth opportunities. 

Economic Cities' Highlights 

Area 

Investment 

Jobs 

Population 

Exp. completion 

(mn sq.m.) 

(US$ bn) 

(000s) 

(000s) 

(year) 

Knowledge Economic City 4.8 7 20 150 2014 

Prince Abdul Aziz bin Mousaed Economic City 156 8 55 300 2018 

Jazan Economic City 100 27 100 300 2011 

King Abdullah Economic City 168 27 1,000 2,000 2016 

Source: SAGIA, MEED & Global Research 



Saudi Real Estate Market Structure 

Residential Real State Market 

No. of units in KSA (mn) 4 

Avg. price of Land(SR per sqm) 680 

Avg. Rent (per sqm p/a) 220 

Avg. Sales price(SR per sqm) 2,500 

Avg. Rental Yield 9.0% 

Occupancy rate >95% 

Current Household size (# of persons) 5.7 

Residential stock (mn sqm) 875 

Commercial Real State Market 

Office Hotel Retail 

Space area(mn sqm) 8.0 6.0 3.0 

Avg. price of Land(SR per sqm) 15,000 16,000 16,000 

Avg. Rent (per sqm p/a) 1,200 - 1,700 

Avg. Sales price(SR per sqm) 17,000 - 

Avg. Rental Yield 8% - - 

Occupancy rate >90% >85% >85% 

Source: Mazaya Real Estate Index, Colliers, Jones Lang Lasalle, & Global Research 

» With less than 50% of the population having home ownership, while 60% of the population being under 

30years of age and a significant inflow of labour force migration into the Kingdom indicates substantial 

housing demand in the country. 




Real Estate Sector Outlook 

» In recent years, Saudi Arabia undertook many economic reform measures that added further 

clarity to laws and regulations and are aimed at attracting foreign investments and providing 

direct impetus to the real estate sector. 

» Unlike some other Gulf countries, the Saudi real estate market is largely driven by demand 

fundamentals rather than mere speculation. We believe that Saudi Real Estate sector despite 

the global slowdown offers good growth potential based on the domestic demand that is not 

yet completely fulfilled. 

» Based on the 8th Development Plan, the housing demand of around 1.0mn units is estimated 

over 2005-09, which implies an average increase of 200,000 units/year. 

» It is also estimated that the average household size could decline from 5.7 to 5.2 persons 

by 2012. The decline in household size also indicates the rise in housing demand in the 

Kingdom over the coming years. 



Power Sector

Power Sector 

» Saudi Electricity Company (SEC) with quasimonopolistic 

position in electricity generation, 

transmission and distribution, continues with its 

efforts to maintain and ensure stability of 

electric power supply in the Kingdom. 

» The total available capacity for electricity 

generation in Saudi Arabia witnessed a rise of 

6.1%, rising to 36,949MW in 2007. 

» The total peak load during 2007 also witnessed 

a rising trend. The peak load recorded increase 

of 11.9%, rising from 31,240MW in 2006 to 

34,953MW in 2007. 

Kingdom's Power Generation Details 

(MW) 

38,000 

33,500 

29,000 

24,500 

20,000 

15,500 

11,000 

6,500 

2,000 

2005 2006 2007 

Generation Capacity of Purchased Power SEC's Actual Generation Capacity 

Total Available Capacity (KSA) 

Source:: SEC Financial Reports & Global Research 

Region-wise Contribution (MW) from SEC's Own 

Generation Units -2007 

» The total actual capacity from SEC constituted 

89.2% of the total generating capacities in the 

Kingdom, and posting an increase of 7.5% was 

recorded at 32,957MW in 2007. 

10,661 

3,162 

8,314 

10,466 

Central region Eastern region Western region Southern region 

Source: SEC Financial Reports & Global Research 




» SEC has undertaken ongoing initiatives to increase the reach of electricity throughout the Kingdom and 

to enhance the reliability of its power network. 

» During 2007, the total transmission network length rose by 3.6% to 37,981ckm and the distribution 

network increased by 4.8% to 161,923ckm in the Kingdom. 

» SEC has already approved the 2009-2013 Operating Plan. The costs over this planned period are estimated 

to be SR42bn for generation projects, SR38bn for transmission projects and SR10bn for distribution 

projects. 

» Heightened infrastructure investments activity in Saudi Arabia, improving quality of life standards, 

favorable demographics are some of the important factors that are expected to generate higher energy 

demand in future. 

» SEC also has important participation (31.6% shareholding) in the capital of the Gulf Cooperation Council 

Interconnection Authority (GCCIA). This project will link the power networks of the six GCC states, 

enhancing the electricity transmission and distribution between the member countries. 



Power Sector Outlook 

» The formation of the Saudi Electricity Regulatory Authority (SERA) in 2001 was a valuable addition for 

effective development of the Kingdom’s electricity sector. According to the reports, a new electricity 

law under consideration at the Shoura Council envisages privatization of the sector as well as expansion 

of power services throughout Saudi Arabia. 

» In line with the government’s economic reforms the new law is expected to create a suitable atmosphere for 

private investments and also provide consumers a chance to select between the electricity companies. 

» With anticipated growth in power demand, the maximum power load in the Kingdom is expected to 

reach 62,000MW by 2017. This not only indicates rising demand but also offers attractive growth and 

investment opportunities for electricity players in the Kingdom. 

» The materialization of privatization plans will revolutionize the local power sector by possibly breaking 

up the quasi-monopolistic SEC into four entities that will be open to foreign investment amid plans to 

create competition in the electricity sector. 



Telecom Sector

Telecom Sector 

» The Saudi telecom market is the largest by size in the GCC region. 

» The mobile market has been growing rapidly in recent years breaching the 100% penetration mark. 

However, growth in fixed lines services has been stagnant. 

Saudi Telecom Sector Profile 

2002 2003 2004 2005 2006 2007 

Cellular Subscribers (mn) 5.0 7.2 9.2 14.2 19.7 28.4 

Cellular Penetration (%) 23.3 32.9 40.5 61.4 81.6 109.0 

Pre paid subscribers (%) 42.0 52.8 53.3 67.4 76.6 83.1 

Post paid subscribers (%) 58.0 47.2 46.7 32.6 23.4 16.9 

Blended ARPU (US$) 57.0 53.0 48.9 43.8 37.2 35.2 

Fixed Line Subscribers (mn) 3.4 3.5 3.7 3.8 4.0 4.0 

Fixed Line Penetration (%) 15.1 15.0 15.4 15.6 15.7 16.2 

Broadband Subscribers (000s) 34.8 46.0 68.7 67.8 218.2 600.0 

Broadband Penetration (%) 0.2 0.2 0.3 0.3 0.9 2.4 

Source: ITU & Global Research 



Telecom Sector 

Telecom Sector Reforms 

» Post establishment of Communications and Information Technology Commission (CITC) in 2001, 

various initiatives were undertook to actively develop the Kingdom’s telecommunications sector. 

» Saudi Telecom Company had a full monopoly over the mobile market until 2003, when the second 

mobile license was granted in 2004 to Etihad Etisalat Company (Mobily). 

» In March 2007, a consortium led by Zain of Kuwait won the third mobile license with a bid of US$6.1bn, 

and launched its services in 2008. 

» The fixed market was liberalized when three consortia- led by Bahrain Telecommunications (Batelco), 

Hong Kong’s PCCW and US based Verizon Communications won three fixed line licenses in April 2007, 

bringing the total number of fixed line licenses in the kingdom to four and ending STC’s monopoly over 

fixed lines. 

» These reforms facilitated in stimulating the investments in the telecommunications sector and create a 

competitive environment that provides services at fair charges. 


Cement Sector

Cement Sector 

» The Kingdom has huge limestone deposits. 

» There are currently eight producers in Saudi Arabia with a combined annual capacity of around 31mn 

tons. 

» The planned capacity additions will increase the annual capacity to 43mn tons by the end of 2008 and 

49mn by the end of 2009. 

» The export ban announced by the Saudi Ministry of Trade in early June to control inflation, should have 

a negative effect on the industry’s sales growth, albeit on a limited scale and in varying degrees among 

different producers. 

Sector Statistics 

2003 2004 2005 2006 2007 

Cement Sold by KSA (000 Tons) 24,566 25,364 26,079 26,924 30,330 

Price per Ton in KSA US$) 48.0 53.3 58.8 64.9 68.0 

EV/Ton (US$) 428.2 688.6 829.6 600.7 560.7 

Cost per Ton in KSA (US$) 23.5 24.0 24.1 24.9 26.0 

Per Capita Cement Consumption (Kg) 1,004 1,007 1,016 1,045 1,104 

Source: Company Annual Reports & Industry Statistics 



» In terms of market share, Southern Cement leads locally with a share of 16% followed by 14% both by 

Yamama and Saudi Cement. 

» Saudi Cement, leads in terms of export market with a share of more than 31% followed by 20% by 

Eastern Cement. 

Market Share at 9M-2008 

Tabuk 

Cement 

4% 

Local market Share 


10% 

Yamama 

Cement 

14% 

Export Market Share 


15% 

Yamama 

Cement 

12% 

Southern 

Cement 

16% 

Saudi 

Cement 

14% 

Southern 

Cement 

11% 

Arabian 

Cement 

10% 

Yanbu 

Cement 

14% 


Qassim 

Cement 

10% 

Eastern 

Cement 

8% 

Qassim 

Cement 

11% 

Eastern 

Cement 

20% 


Saudi 

Cement 

31% 



» During 2007, cement production rose to 30.3mn tons as compared to 27.0mn tons in 2006. 


» Saudi Cement achieved the highest production numbers, clocking 5.3mn tons in 2007 as compared to 

5.0mn tons in 2006. Yamama Cement was the 2nd largest producer, producing 4.7mn tons in 2007, as 

compared to 3.8mn in 2006. 

» Overall sales volume rose by 13% to 30.3mn tons in 2007 against 26.9mn tons in 2006. Domestic 

deliveries stood at 26.8mn ton in 2007 as compared to 24.7mn tons in 2006, rest being taken by the 

exports. 

Cement Statistics of Saudi Arabia 

Production 

Total Sales 

(000' tons) 

2005 2006 2007 9M-2008 2005 2006 2007 9M-2008 

Yamama Cement 3,566 3,847 4,653 3,589 3,566 3,772 4,628 3,576 

Saudi Cement 5,003 4,966 5,276 4,102 5,014 4,977 5,304 3,969 

Eastern Cement 2,493 3,229 3,482 2,447 2,498 3,221 3,491 2,438 

Qassim Cement 2,226 2,231 3,464 2,491 2,218 2,229 3,460 2,465 

Yanbu Cement 3,742 3,521 4,620 3,311 3,722 3,490 4,651 3,300 

Arabian Cement 3,022 3,026 2,824 2,178 3,045 3,026 2,829 2,196 

Southern Cement 4,561 4,600 4,613 3,915 4,589 4,581 4,607 3,930 

Tabuk Cement 1,419 1,633 1,358 937 1,427 1,628 1,360 937 

Total* 26,032 27,053 30,290 25,756 26,079 26,924 30,330 25,557 

Source: Yamama Cement 

* Sum wouldn’t match because new players production and sales are also included in the total. 



» The massive, liquidity-fuelled infrastructure investment rose the per capita cement consumption to 

1103kg in 2007 from less than a thousand in 2005. 

» Going forward, with the liquidity crunch and lower oil prices, the construction activity might slow 

down. 

Per Capita Consumption in Saudi Arabia 

1,300 

1,225 

(Kg) 

1,150 

1,075 

1,000 

2006 2007 2008 (F) 2009 (F) 2010 (F) 2011 (F) 





Saudi Cement Demand Supply 

» Over the years, there was a gap between the demand and supply which in the coming years is expected 

to be over supplied on account of commissioning of new cement plants and slow down in construction 

activities. 

(tons) 

35,000 

(tons) 

250 

30,000 

200 

25,000 

150 

20,000 

100 

15,000 

50 

10,000 

- 

5,000 

-50 

- 

-100 

2005 2006 2007 9M-2008 

Exports (LHS) Local Demand (LHS) Supply (LHS) GAP (RHS) 

Source: Yamama Cement & Global Research 



» Cement prices in Saudi Arabia are way lower than that in other GCC Countries such as Kuwait, Qatar 

and Bahrain. 

» On an average cement prices in Saudi Arabia has increased at a CAGR of 9% during 2003-07. 

Cement price per ton (Saudi Arabia) 

300.0 

275.0 

250.0 

225.0 

200.0 

175.0 

2003 

2004 

2005 

(SR) 

2006 

2007 

2008F 





Saudi Cement Sector Financial Performance 

» Sector revenue has grown at a CAGR of 12.9% while cost increased at a CAGR of 

8% during 2003-07. 

» Net Profit of the sector surpassed SR4.5bn mark and grew at a CAGR of 16.5% 

during 2003-07. 

» As of 9M-2008, its assets has crossed SR21.6bn mark, with equity accounting to 

77% of the total. 

» Net Profit of the sector were close to SR3.2bn at the end of 9M-2008 as against 

SR3.5bn in the corresponding period of last year. 

» During 3Q-2008, sector profits went down to SR786mn as against SR1.2bn in 3Q- 

2007. 

» The decline in the profits of the cement companies during 9M-2008 was on account 

of decline in sales volume due to the ban on cement exports. 


Steel Sector

Steel Sector 

» Primary steel production in Saudi Arabia 

has grown at a 2003-2007 CAGR of 

15.6% to 7.8mn tons per annum (tpa). 

Steel Production Capacity (tons per annum) 

» Saudi Arabia imported 4.9mn tons of 

steel in 2007 to quench its increasing 

demand. An estimated 55.0-60.0% of 

Saudi Steel consumption is made up of 

rebar. 

» The primary steel capacity in Saudi 

Arabia is expected to increase to 13.5mn 

tons by 2011 to meet the surging local 

demand. 

» Steel producers in Saudi Arabia enjoy 

a comparative advantage due to low 

energy costs of around US$0.8-1.5 per 

mmbtu compared to US$4.0-6.0 per 

mmbtu worldwide. 

Source: Zawya, Company Websites & Global Research 

Steel Imports (mn tons) 

6.0 

5.0 

4.0 

3.0 

2.0 

1.0 

0.0 

2003 2004 2005 2006 2007 

Source: Iron and Steel Statistics Bureau 


» Saudi Consumption has grown at a 2003-2007 CAGR of 27.9% to 10.4mn tons per annum. 

» Steel demand will be driven by massive a investment in petrochemical industry, construction, real-estate 

and infrastructure building. 

» Saudi Arabia is determined to go-ahead with multi-billion dollar projects which includes the economic 

cities which will keep the steel demand strong despite the prevailing financial turmoil 

Consumption in Saudi Arabia (mn tons) 


12 

10 

8 

6 

4 

2 

0 

2003 2004 2005 2006 2007 

Source: Zawya, Metal Bulletin, Company websites & Global Research 




» Saudi Arabia has six major steel companies. 

» No steel company is listed on the Tadawul Stock Exchange. 

» However, investors can get exposure to the steel sector through SABIC which 

owns 100% of Hadeed Steel. 

» Hadeed steel, located in the Industrial city of Jubail, is the largest integrated steel 

producer in Saudi Arabia with a capacity of 2.2mn tpa of flat and 3.3 mn tpa of 

long products. 

Company Category Capacity 

Hadeed steel (SABIC) Primary metal Flat 2.2mn tpa Long 3.3mn tpa 

Ittefaq steel mills Fabricated metal 1.2mn tpa of steel bars 

Al-Rajih steel Primary metal 0.8mn tpa of reinforcement bars, 0.8mn tpa billets 

United Gulf steel Fabricated metal 0.5mn tpa of steel 

Attieh steel Fabricated metal 0.6mn tpa of steel 

Al-Azizia Steel company Ltd. Primary metals Steel billets 0.5mn tpa Rebars 0.1mn tpa 




» Hadeed production has grown at a CAGR of 6.3% to 4.8mn tons. 

» Hadeed exports its products to more than 30 countries across the world including GCC, Asia and 

Europe. 

» Hadeed announced plans to expand its total steel production capacity from 5.5mn tpa to 10mn tpa by 

2015, and subsequently to 15mn tpa by 2020. 

Hadeed Steel Production (000 tons) 

5,000 

4,500 

4,000 

3,500 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

0 


2003 2004 2005 2006 2007 



Capital Markets

» The Saudi stock market got engulfed in the 

downward rush in the global equity markets 

triggered by the prevailing financial crisis. 

The Saudi stock market lost 52.6% of 

its capitalization in 2008 despite 16 new 

listings. 

» Petro-chemical industry lost 66.1% while 

the banking sector lost 53.1% in 2008 

which pulled the index down. The market 

capitalization, including the new listings, 

stood at US$246bn at December 31, 2008 

compared to US$519bn at the start of the 

year. 

» Telecommunication sector, the third largest 

constituent of the index, accounting for 14.4% 

of total market capitalization, witnessed a 

decline of 36.0% in 2008. 


Tadawul All Share Index Performance 

12,000 

11,000 

10,000 

9,000 

8,000 

7,000 

6,000 

5,000 

4,000 

Source: Tadawul & Global Research 

Market Cap (US$ bn) 

Stock Market 

1-Jan-08 

22-Jan-08 

12-Feb-08 

04-Mar-08 

25-Mar-08 

15-Apr-08 

06-May-08 

27-May-08 

17-Jun-08 

08-Jul08 

29-Jul-08 

19-Aug-08 

09-Sep-08 

30-Sep-08 

21-Oct-08 

11-Nov-08 

02-Dec-08 

23-Dec-08 

700 

600 

500 

400 

300 

200 

100 

0 

2003 2004 2005 2006 2007 2008 

Source: Tadawul & Global Research 



Stock Market Indicators 

Trading Information 2003 2004 2005 2006 2007 2008 

Transactions (mn) 3.8 13.3 46.6 96.1 65.7 52.1 

Shares Traded (bn) 5.6 10.3 12.3 73.4 58.9 59.6 

Value Traded (SR bn) 597 1,774 4,139 5,262 2,558 1,963 

Number of Trading Days 300 300 299 265 248 252 

Daily Average of Transactions (000) 12.5 44.3 155.8 362.6 264.7 206 

Daily average of shares (mn) 19 34 41 277 237 244 

Daily Average of Values (SR bn) 2 5.9 13.8 19.9 10.3 7.7 

Market Capitalization (SR bn) 589 1,148 2,438 1,225 1,946 924 

All Share Index (TASI) 4,437 8,206 16,713 7,933 11,175 4,802 

No. of Listed Companies 70 73 77 86 111 127 

P/E 29.21 36.47 63.77 16.89 23.21 15.55* 

P/B 3.74 6.57 10.11 3.54 4.29 3.50* 

Source: Tadawul, Global Research 

*Estimated figures 



Summary By Sector-2008 

Sector 

Trades (mn) 

% of 

Value Traded 

% of 

Volume (mn) % of Market 

Market US$ (bn) Market 

Banks & Financial Services 5.2 10.01% 9,462 15.85% 55.7 10.65% 

Petrochemical Industries 9.9 18.98% 14,614 24.49% 170.0 32.49% 

Cement 0.5 0.93% 379 0.63% 7.1 1.36% 

Retail 2.6 4.91% 1,637 2.74% 14.6 2.80% 

Energy & Utilities 0.5 1.04% 1,793 3.00% 7.6 1.45% 

Agriculture & Food Industries 3.7 7.19% 3,089 5.18% 26.5 5.08% 

Telecommunication & Information 

Technology 

4.5 8.58% 6,103 10.23% 41.1 7.85% 

Insurance 7.6 14.65% 2,973 4.98% 40.8 7.80% 

Multi-Investment 2.1 4.08% 3,122 5.23% 17.3 3.32% 

Industrial Investment 5.6 10.65% 4,428 7.42% 40.3 7.72% 

Building & Construction 4.1 7.82% 2,178 3.65% 33.2 6.36% 

Real Estate Development 3.7 7.09% 6,304 10.56% 43.6 8.34% 

Transport 1.4 2.73% 2,968 4.97% 19.8 3.79% 

Media and Publishing 0.4 0.68% 331 0.55% 2.7 0.52% 

Hotel & Tourism 0.4 0.68% 301 0.50% 2.5 0.48% 

Total 52.1 100.00% 59,683 100.00% 523.4 100.00% 

Source: Tadawul, Global Research 



New Listings in 2008 

Company Date of Listing Offer size 

Rabigh Refining and Petrochemical Co Jan-08 219mn shares @ SR21/sh 

Arabia Insurance Cooperative Co. Feb-08 8mn shares @ SR10/sh 

Trade Union Cooperative Insurance Co. Feb-08 10.5mn shares @ SR10/sh 

Al Sagr Co operative Insurance Company Feb-08 8.4mn shares @ SR10/sh 

Mobile Telecom. Co. Saudi Arabia (ZAIN KSA) Mar-08 700mn shares @SR10/sh 

Bupa Arabia for Cooperative Insurance Co. May-08 16mn shares @ SR10/sh 

Saudi Re for Cooperative Reinsurance Co. May-08 40mn shares @ SR10/sh 

Mohammad Al Mojil Group Co. May-08 30mn shares @ SR70/sh 

Alinma Bank Jun-08 1,050mn shares@ SR10/sh 

Basic Chemical Industries Co. (BCI) Jun-08 6.6mn shares@ SR30/sh 

United Cooperative Assurance Co. (U C A) Jun-08 8mn shares @ SR10/sh 

Abdullah Al Othaim Markets Co. Jul-08 6.75mn @ SR40/sh 

Halwani Bros Co. Jul-08 8.75mn shares @ SR20/sh 

Saudi Arabian Mining Co. - MA’ADEN Jul-08 462.5mn shares@ SR20/sh 

Astra Industrial Group Company Aug-08 22.2mn shares @ SR42/sh 

Methanol Chemicals Company Aug-08 60.3mn shares @ SR12/sh 

Source: Tadawul 




Market Cap (LHS) vs. Number Of Listed Companies 

(RHS) 

Total Volume (LHS) vs. Value Traded (RHS) 

3,000 

140 

6,000 

80 

2,500 

2,000 

130 

120 

110 

100 

5,000 

4,000 

3,000 

70 

60 

50 

40 

1,500 

1,000 

90 

80 

70 

2,000 

1,000 

30 

20 

10 

500 

2003 2004 2005 2006 2007 2008 

Market Capitalization (SR bn) 

No. of Listed Companies 

60 

0 

2003 2004 2005 2006 2007 2008 

Value Traded (SR bn) Shares Traded (bn) 

0 





Market Profitability 

» The total market profitability increased by 7.7% in the 9M-2008 compared to the corresponding 

period last year. The profitability was led by the petrochemical sector which rode on high 

crude oil and fertilizer prices to register a 17.8% increase in 9M08 YoY. 

» The Saudi banking escaped severe repercussions at a time of global financial distress due to 

limited exposure to the global financial markets. The banking sector posted a modest growth 

of 1.6% in the 9M08 YoY. The bank profitability growth was held back in the third quarter 

with some banks posting a decline on account of investment portfolio losses. 

» Telecommunications sector profitability witnessed a rise of 13.9% in 9M08 YoY which was 

driven by volumetric growth despite a fall in average revenue per unit. 

» Cement sector witnessed a decline in profitability by 7.1% in 9M-2008 YoY mainly due to 

a ban on exports which was imposed in June 2008 to cater for strong local demand while the 

Energy and Utilities sector witnessed a decline of 25.6% on account of higher operational 

costs. 




Tadawul Sectors 9M-2008 Profitability (SR mn) 

9M-2007 9M-2008 Change % 

Banking 19,071.0 19,373.6 1.6% 

Petrochemicals 22,771.7 26,820.3 17.8% 

Cement 3,525.2 3,273.4 -7.1% 

Retail 483.6 597.2 23.5% 

Energy & Utilities 2,175.7 1,618.0 -25.6% 

Agriculture & Food 1,714.4 1,671.2 -2.5% 

Telecommunications 9,827.0 11,195.3 13.9% 

Insurance 489.4 66.0 -86.5% 

Multi-investment 1,214.8 868.2 -28.5% 

Industrial investment 674.9 827.4 22.6% 

Building and Construction 1,473.5 1,974.6 34.0% 

Real Estate 2,182.8 2,274.0 4.2% 

Transport 461.8 698.8 51.3% 

Media and Publishing 419.9 310.8 -26.0% 

Hotel and Tourism 44.9 91 102.6% 

Market 66,530.6 71,659.7 7.7% 

Source: Bloomberg, Global Research 



Capital Market Reforms 

» Saudi Arabia’s Capital Market Authority (CMA) during the year 2008 has taken some 

important decisions to make the Kingdom’s stock market –Tadawul (TASI), more efficient, 

transparent and accessible to foreign investors. 

» CMA has moved to implement the transparency rule whereby the exchange will disclose the 

names of investors with stakes of 5% or more in any listed company. 

» Under the set of new regulations, a widely appreciated new foreign ownership rule give 

foreigners for the first time a chance to buy and sell swaps of Saudi-listed shares through 

authorized brokers. The foreign investors will be allowed to invest in individual stocks that 

are traded at the TASI through swap agreements with local investment banks. 




Company Name Change 2008/2007 

Market Cap Market Cap 

(SR mn) 

(%) 

Riyad Bank -57.2% 31,800 3.44 

Bank Al-Jazirah -69.4% 4,515 0.49 

Saudi Investment Bank -67.5% 7,448 0.81 

Bank Al Saudi Al-Hollandi -36.0% 10,584 1.14 

Bank Al Saudi Al-Faransi -61.0% 25,369 2.74 

Saudi British Bank -39.7% 32,400 3.50 

Arab National Bank -63.2% 20,280 2.19 

Samba Financial Group -57.3% 46,125 4.99 

Al Rajhi Bank -52.2% 84,000 9.09 

Bank Al Bilad -30.4% 8,400 0.91 

Alinma Bank 11.0% 16,650 1.80 

Total Banks & Financial Services 287,570 31.11 

Methanol Chemicals Company -7.1% 1,345 0.15 

Saudi Basic Industries Corp -68.9% 154,500 16.71 

Saudi Arabia Fertilizers Co. -43.5% 22,438 2.43 

National Industrialization Co. -69.5% 6,012 0.65 

Alujain Corporation -77.3% 747 0.08 

NAMA Co -68.0% 1,099 0.12 

Saudi Industrial Investment Group -74.4% 4,523 0.49 

Sahara Petrochemical Co. -72.1% 2,259 0.24 

Yanbu National Petrochemical Company (YANSAB) -71.9% 8,325 0.90 

Saudi International Petrochemical Co -64.8% 5,167 0.56 





(SR mn) 

(%) 

Advanced Polypropylene Company -68.1% 2,177 0.24 

Saudi Kayan Petrochemical Co. -62.5% 14,625 1.58 

Rabigh Refining and Petrochemical Co -25.9% 13,622 1.47 

Total Petrochemical Industries 236,838 25.62 

Arab Cement -67.6% 2,488 0.27 

Yamamah Cement -64.0% 4,577 0.50 

Saudi Cement -55.5% 5,763 0.62 

Qassim Cement -55.4% 3,634 0.39 

Southern Cement -46.6% 6,524 0.71 

Yanbu Cement -58.6% 4,095 0.44 

Eastern Cement -55.1% 3,440 0.37 

Tabuk Cement -52.7% 1,787 0.19 

Total Cement 32,307 3.49 

Abdullah Al Othaim Markets Company 0.0% 900 0.01 

Saudi Automotive Services Co. -56.8% 520 0.06 

National Agriculture Marketing Co. -72.5% 147 0.02 

Ahmed H. Fitaihi Company -70.3% 528 0.06 

Jarir Marketing Co 9.2% 5,160 0.56 

Aldrees Petroleum & Transport Co. -52.6% 623 0.07 

Fawaz Abdulaziz Al Hokair & Co -49.4% 2,240 0.24 






(SR mn) 

(%) 

Alkhaleej Training and Education Company -66.0% 449 0.05 

Total Retail 10,566 1.14 

National Gas and Industrialization Company -49.9% 1,298 0.14 

Saudi Electricity Co. -37.3% 38,541 4.17 

Total Energy & Utilities 39,839 4.31 

SAVOLA Group -32.3% 12,100 1.31 

Food Products -71.2% 223 0.02 

Saudia Dairy and Foodstuff Company -62.4% 566 0.06 

Almarai 16.9% 15,260 1.65 

Anaam International Holding Group 112.1% 382 0.04 

Halwani Bros 3.0% 589 0.06 

National Agriculture Development Co. -25.2% 1,896 0.21 

Qassim Agriculture -66.6% 380 0.04 

Hail Agriculture Development Co. -37.9% 633 0.07 

Tabuk Agriculture Development Co. -68.1% 362 0.04 

Saudi Fisheries -62.3% 496 0.05 

Ash-Sharqiyah Agricultural Development Co. -72.2% 134 0.01 

Al-Jouf Agriculture Development Co. -51.5% 417 0.05 

Bishah Agriculture Development Co. 0.0% 349 0.04 

Jazan Agricultural Development Co. -63.0% 463 0.05 

Total Agriculture & Food Industries 34,247 3.70 





(SR mn) 

(%) 

Saudi Telecom Co. -41.4% 98,200 10.62 

Etihad Etisalat (Mobily) -46.6% 21,700 2.35 

Mobile Telecommunications Company Saudi Arabia 6.5% 14,910 1.61 

Total Telecommunication & Information Technology 134,810 14.58 

NCCI -77.4% 1,700 0.18 

Malath Cooperative Insurance and Reinsurance -78.7% 978 0.11 

Medgulf Saudi -69.0% 1,360 0.15 

Saudi Fransi Cooperative Insurance Company -63.7% 419 0.05 

Saudi IAIC Cooperative Insurance Company -66.1% 332 0.04 

Saudi United Cooperative Insurance Company -77.3% 286 0.03 

Arabian Shield Cooperative Insurance Co. -78.5% 276 0.03 

SABB Takaful -71.4% 333 0.04 

Sanad Insurance & Reinsurance Cooperative Company -79.7% 242 0.03 

Saudi Arabian Cooperative Insurance Company -84.1% 224 0.02 

Saudi Indian Company for Co- operative Insurance -60.4% 423 0.05 

Gulf Union Cooperative Insurance Company -79.2% 278 0.03 

Alahli Takaful Company -70.3% 431 0.05 

Al Ahlia Insurance Company -80.0% 239 0.03 

Allied Cooperative Insurance Group -77.3% 229 0.02 






(SR mn) 

(%) 

Arabia Insurance Cooperative Company 32.0% 264 0.03 

Trade Union Cooperative Insurance Company 28.0% 320 0.03 

Al Sagr Company for Cooperative Insurance 21.0% 242 0.03 

United Cooperative Assurance Co 252.0% 704 0.08 

Saudi Re for Cooperative Reinsurance Company -12.0% 880 0.01 

Bupa Arabia for Cooperative Insurance 19.5% 478 0.05 

Total Insurance 10,638 1.15 

Saudi Arabia Refineries Co. -39.0% 870 0.09 

Saudi Advanced Industries Co. (SAIDC) -69.5% 434 0.05 

Al Ahsa -70.7% 421 0.05 

Saudi Industrial Services Co. -65.5% 639 0.07 

Aseer Trading, Toursim & Manufacturing Co. -76.6% 1,251 0.14 

Al Baha Investment & Development Co. -72.1% 149 0.02 

Kingdom Holding Co. -62.4% 29,610 3.20 

Total Multi-Investment 33,375 3.61 

Basic Chemical Industries Co. -20.7% 524 0.06 

Saudi Arabian Mining Company -46.8% 9,851 1.07 

Astra Industrial Group -41.8% 1,812 0.20 

Saudi Pharmaceutical Indust.& Med. Appliances Corp. -59.6% 1,479 0.16 

The National Co. for Glass Industries -55.0% 725 0.08 





(SR mn) 

(%) 

Filling & Packing Materials Mnfg Co. -49.6% 303 0.03 

National Metal Manufacturing and Casting Co. -49.8% 554 0.06 

Saudi Chemicals Co. -42.2% 1,325 0.14 

Saudi Paper Manufacturing Co. 22.2% 2,228 0.24 

Al Abdulatif Industrial Investment Co. -18.5% 3,624 0.39 

Saudi Industrial Export Company -65.8% 248 0.03 

Total Industrial Investment 22,672 2.45 

Mohammad Al Mojil Group Company -37.0% 4,410 0.48 

Saudi Ceramic -1.8% 2,663 0.29 

National Gypsum -60.1% 960 0.10 

Saudi Cables -53.5% 2,014 0.22 

Saudi Industrial Development Co. -70.7% 296 0.03 

Saudi Arabian Amiantit Co. -48.2% 2,033 0.22 

Saudi Pipe Co -44.2% 1,405 0.15 

Zamil Industrial Investment Co -37.7% 2,565 0.28 

Al Babtain Power & Telecommunications Company -19.8% 1,755 0.19 

Saudi Vitrified Clay Pipes Co. -69.7% 495 0.05 

Middle East Specialized Cables Co -44.6% 1,484 0.16 

Red Sea Housing Services 8.7% 2,243 0.24 

Total Building & Construction 22,321 2.41 






(SR mn) 

(%) 

Real Estate -61.6% 2,364 0.26 

Taibah Holding -50.6% 2,648 0.29 

Makkah Construction -47.4% 3,857 0.42 

Arriyadh Development Co. -60.4% 970 0.10 

Emaar the Economic City -60.7% 7,608 0.82 

Jabal Omar Development Company -24.1% 13,629 1.47 

Dar Alarkan Real Estate Development Company -59.6% 16,092 1.74 

Total Real Estate Development 47,167 5.10 

National Shipping -34.0% 5,198 0.56 

Saudi Public Transport Co. -59.4% 888 0.01 

Saudi Land Transport Co. -70.2% 224 0.02 

United International Transportation Company Ltd. -69.2% 692 0.07 

Total Transport 7,001 0.76 

Tihamah -62.7% 236 0.03 

Saudi Research and Marketing Group -49.6% 2,368 0.26 

Saudi Printing & Packaging CO -66.1% 840 0.09 

Total Media and Publishing 3,444 0.37 

Hotels and Resorts -42.5% 1,577 0.17 

Tourism Enterprises Co. -67.9% 158 0.02 

Total Hotel & Tourism 1,717 0.19 

Total Market 924,511 100.00 


Price change & Market cap as of 31 st December 2008 


Global - Saudi Coverage

1120.SE (Reuters) 

RJHI AB (Bloomberg) 

Al Rajhi Bank 

CMP: SR55.5 

» Al Rajhi Bank (RJHI) with the largest market cap. of 9.5% amongst listed banks, after the subdued FY07 

performance, recorded 9M08 net profit increase (YoY) of 4.7%. Besides the inherent low cost funding (Islamic 

deposits), RJHI’s performance is based on its success in developing both corporate & investment banking sectors 

together with its retail banking activities. 

» Its increasing efforts to diversify income source from capital markets have started showing positive results, 

reflecting the bank’s ability to adapt to the fast changing market dynamics. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Assets 95,038 105,209 124,886 172,446 190,258 212,616 237,174 

Gross Investments 82,894 92,621 108,627 147,698 161,729 185,989 212,027 

Deposits 73,684 77,889 92,871 129,743 148,233 167,262 188,067 

Shareholders’ Equity 12,878 19,181 22,382 24,372 26,469 28,479 30,793 

Net Investment Income 5,686 6,826 7,722 8,909 10,716 12,559 14,521 

Net profit 5,633 7,302 6,450 6,634 6,988 8,041 9,258 

Ratios 

Yield on earning assets (%) 7.7% 8.5% 8.4% 7.8% 7.6% 8.0% 8.1% 

Cost of funds (%) 0.4% 1.1% 1.0% 1.0% 0.8% 0.9% 0.9% 

Spreads (%) 7.3% 7.4% 7.4% 6.8% 6.8% 7.1% 7.1% 

Investments to Deposits ratio (%) 112.5% 118.9% 117.0% 113.8% 109.1% 111.2% 112.7% 

NPIs /Gross Investments (%) 2.0% 2.2% 2.9% 2.7% 2.7% 2.6% 2.6% 

NPI coverage (%) 166.5% 135.4% 109.1% 108.0% 116.7% 126.9% 132.3% 

ROAA (%) 6.5% 7.3% 5.6% 4.5% 3.9% 4.0% 4.1% 

ROAE (%) 52.6% 45.6% 31.0% 28.4% 27.5% 29.3% 31.2% 

Cost to Income (%) 24.4% 21.1% 27.4% 31.4% 35.5% 35.8% 36.0% 

Dividend yield (%) 0.8% 0.8% 1.8% 5.6% 5.9% 7.2% 8.3% 

Earnings per Share (SR) 3.8 4.9 4.3 4.4 4.7 5.4 6.2 

Book Value per Share (SR) 8.6 12.8 14.9 16.2 17.6 19.0 20.5 

P/E (x) 43.3 17.8 27.3 12.5 11.9 10.4 9.0 

P/BV (x) 18.9 6.8 7.9 3.4 3.1 2.9 2.7 

Historical P / E & P / BV multiples pertain to respecitve year -end prices, while those for future years are based on closing prices on the TASI as of Dec 29, 2008 

(Source: Company Reports & Global Research) 



ARNB AB (Bloomberg) 


CMP: SR29.6 

» Arab National Bank (ANB) despite FY07 net income decline of 1.7% stood 2nd (in profitability terms) amongst 

the sector. ANB with overall improved performance was able to bear the losses incurred in its investment portfolio 

and recorded 9M08 profitability increase (YoY) of 3.9%. 

» ANB’s expansion plans, both domestically & regionally, accompanied by its new strategic initiatives are expected 

to facilitate the bank in strengthening brand image & generating higher future business growth. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Assets 67,492 78,035 94,468 118,138 137,401 151,417 166,731 

Gross Loans 40,477 50,932 62,237 80,279 92,412 103,553 115,922 

Deposits 48,832 61,773 73,692 91,480 107,284 118,411 130,734 


Net Interest Income 2,189 2,525 2,904 3,521 4,038 4,757 5,259 

Net Income 1,828 2,505 2,461 2,586 2,679 3,192 3,496 

Ratios 


Cost of funds (%) 2.2% 3.1% 3.1% 3.4% 3.4% 3.6% 3.6% 

Spreads (%) 3.5% 3.6% 3.8% 3.6% 3.6% 3.8% 3.8% 

Loans to Deposits ratio (%) 82.9% 82.5% 84.5% 87.8% 86.1% 87.5% 88.7% 

NPLs /Gross Loans (%) 2.1% 0.7% 0.5% 0.5% 0.6% 0.6% 0.6% 

NPL coverage (%) 200.6% 320.5% 354.0% 313.6% 259.9% 240.0% 259.9% 

ROAA (%) 2.8% 3.4% 2.9% 2.4% 2.1% 2.2% 2.2% 

ROAE (%) 32.8% 35.7% 26.6% 23.0% 21.2% 22.7% 22.3% 





P/E (x) 27.2 14.2 22.3 7.4 7.2 6.0 5.5 

P/BV (x) 7.8 4.4 5.2 1.6 1.4 1.3 1.2 






BSFR AB (Bloomberg) 


CMP: SR42.0 

» Banque Saudi Fransi’s (BSF) dampened profitability results in FY07, showed improvement in its results posting 

9M08 increase (YoY) of 8.0%. 

» The bank’s improving core banking performance coupled with strong corporate customer relationships, places the 

bank in a good position to derive maximum benefit as it pursues with its strategic priorities. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Assets 67,501 79,581 99,808 124,783 141,428 153,491 169,771 

Gross Loans 43,941 52,024 60,675 82,792 81,747 91,556 98,924 

Deposits 51,093 61,998 74,007 83,628 96,172 107,713 120,639 




Ratiost 


Cost of funds (%) 2.4% 3.5% 3.5% 3.1% 3.2% 3.2% 3.3% 

Spreads (%) 2.8% 2.8% 2.9% 2.7% 2.8% 3.0% 3.3% 



NPL coverage (%) 181.8% 148.3% 189.6% 199.6% 206.4% 191.5% 188.5% 

ROAA (%) 3.5% 4.1% 3.0% 2.5% 2.2% 2.2% 2.5% 

ROAE (%) 35.6% 37.3% 26.9% 24.2% 22.8% 23.9% 27.0% 





P/E (x) 27.4 15.5 24.0 8.5 8.2 7.2 5.8 

P/BV (x) 8.7 5.1 6.0 2.0 1.8 1.6 1.5 





RIBL AB (Bloomberg) 


Riyad Bank 

CMP: SR20.3 

» Riyad Bank (RIBL) being the only Saudi bank showing positive profitability results in FY07, showed (YoY) 

decline of 4.8% in its 9M08 results. At times of increased global financial volatility, the decline in bank’s net 

profit was mainly due to the revaluation of the bank’s trading portfolio during 3Q08. 

» Overall, RIBL’s continuing focus on core banking activities accompanied by its openness for expansion through 

joint ventures in Gulf, business acquisitions, and venturing into other businesses lines provide the bank with a 

wide array of profit generating opportunities. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Assets 80,079 94,016 121,351 149,694 162,627 181,441 198,929 

Gross Loans 46,973 53,660 68,865 96,542 100,207 113,920 131,008 

Deposits 52,730 69,192 84,331 89,391 105,481 126,578 145,564 




Ratios 


Cost of funds (%) 2.2% 3.6% 3.2% 2.7% 2.6% 2.7% 2.6% 

Spreads (%) 3.6% 3.4% 3.6% 3.1% 3.1% 3.2% 3.3% 



NPL coverage (%) 269.5% 176.8% 139.2% 175.8% 180.9% 187.9% 192.2% 

ROAA (%) 3.7% 3.3% 2.8% 2.0% 1.8% 2.1% 2.2% 

ROAE (%) 29.7% 27.7% 26.1% 14.0% 10.8% 13.2% 14.5% 





P/E (x) 37.4 17.3 24.6 11.4 10.6 8.4 7.3 

P/BV (x) 10.5 4.6 6.1 1.2 1.1 1.1 1.0 





SABB AB (Bloomberg) 


CMP: SR52.3 

» Saudi British Bank’s (SABB) net income decline of more than 14% in FY07 has been successfully turned around 

by the bank recording stable growth performance in 2008, posting 9M08 (YoY) rise of 18.8%. 

» The bank’s focus on structured finance deals, advisory & loan syndication, insurance, etc. signal attractive growth 

avenues in time to come. Along with its planned expansion, other alternative delivery channels are likely to assist 

the bank in further strengthening its franchise. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Assets 65,928 77,189 98,213 134,872 152,047 167,930 183,779 

Gross Loans 41,233 42,948 62,572 87,604 95,085 107,106 121,030 

Deposits 48,534 59,258 71,848 98,432 113,196 129,044 145,819 




Ratios 


Cost of funds (%) 2.3% 3.1% 2.9% 2.6% 2.7% 2.7% 2.7% 

Spreads (%) 3.2% 3.8% 4.2% 3.4% 3.4% 3.5% 3.5% 



NPL coverage (%) 194.3% 301.4% 289.7% 308.0% 327.0% 345.7% 355.4% 

ROAA (%) 4.0% 4.2% 3.0% 2.4% 2.0% 2.2% 2.3% 

ROAE (%) 39.8% 38.7% 28.9% 27.7% 25.9% 28.2% 29.4% 





P/E (x) 32.9 14.5 20.6 11.2 10.8 8.9 7.8 

P/BV (x) 11.4 5.2 5.6 2.9 2.7 2.4 2.2 

Historical P / E & P / BV multiples pertain to respecitve year -end prices, while those for future years are based on closing prices on the TASI as of Dec. 29, 2008 




SAMBA AB (Bloomberg) 



CMP: SR47.9 

» Although Samba continues to maintain its core banking strength, it witnessed the performance pressure due to 

subdued non-commission income. Samba’s FY07 dampened profitability performance has not recorded any turn 

around yet. The bank as per its 9M08 results recorded (YoY) decline of 6.3%. 

» The bank’s core banking strength coupled with its developed brand name offers it good potential to benefit by 

pursuing various strategic initiatives. Besides the bank’s future growth plans domestically, it actively plans on 

regional expansion into attractive markets. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Assets 108,306 124,015 154,414 191,265 214,967 233,336 251,235 

Gross Loans 65,140 69,813 83,553 101,147 121,554 136,141 149,901 

Deposits 85,240 94,856 115,811 127,092 145,348 163,505 183,209 




Ratios 


Cost of funds (%) 2.1% 2.7% 2.9% 2.2% 2.4% 2.4% 2.4% 

Spreads (%) 3.6% 4.0% 4.0% 3.6% 3.6% 3.9% 3.9% 



NPL coverage (%) 124.4% 182.4% 159.6% 152.2% 135.3% 135.3% 131.8% 

ROAA (%) 4.0% 4.5% 3.5% 2.5% 2.4% 2.9% 2.9% 

ROAE (%) 39.4% 41.2% 30.5% 23.3% 22.2% 26.7% 27.1% 





P/E (x) 29.1 16.1 22.5 9.9 9.0 6.7 6.1 

P/BV (x) 10.5 5.9 6.2 2.1 1.9 1.7 1.6 





AAAL AB (Bloomberg) 


CMP: SR40.1 

» Saudi Hollandi Bank’s (SHB) continued efforts to recover from its 2007 dismal performance started showing 

results in 2008 as the bank posted a third consecutive double digit growth for its quarterly results, recording 9M08 

(YoY) increase of 67.8%. 

» The bank’s improved core banking performance has been supported by its non-commission income. However, the 

turnaround in results needs yet need to show the sustainable level of performance. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Assets 39,958 46,740 50,411 62,828 72,759 82,749 93,610 

Gross Loans 24,253 27,259 28,741 42,517 49,177 56,444 64,910 

Deposits 28,565 32,414 34,605 45,949 55,077 64,388 75,295 



Net Income 1,052 953 438 1,023 1,051 1,184 1,291 

Ratios 


Cost of funds (%) 2.6% 3.9% 4.0% 3.3% 3.3% 3.3% 3.5% 

Spreads (%) 2.7% 2.6% 2.4% 2.4% 2.5% 2.6% 2.6% 



NPL coverage (%) 158.4% 113.6% 110.0% 100.0% 109.7% 123.6% 133.9% 

ROAA (%) 2.9% 2.2% 0.9% 1.8% 1.6% 1.5% 1.5% 

ROAE (%) 33.1% 24.7% 10.0% 21.7% 20.8% 21.9% 22.5% 





P/E (x) 24.9 17.5 37.7 10.4 10.1 9.0 8.2 

P/BV (x) 7.6 3.9 3.6 2.2 2.0 1.9 1.8 





SIBC AB (Bloomberg) 

» Although Saudi Investment Bank’s (SAIB) significant profitability decline in FY07 recorded relative improvement, 

its performance remained under pressure. In 9M08 results, SAIB showed profitability decline (YoY) of 30.5%, 

which was mainly due to high provisions carried out to address any decline in part of its investment portfolio 

linked to the global financial distressed conditions. 

» As SAIB continues to work on improving its non-commission income, the bank also needs to further boost its 

efforts for posting improved core banking performance. 



CMP: SR15.9 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Assets 39,581 40,845 46,542 57,192 67,560 76,245 83,204 

Gross Loans 20,481.8 21,468.6 23,850.8 33,948.2 40,737.9 46,848.5 51,533.4 

Deposits 27,858.1 27,931.0 32,768.3 45,713.7 55,627.3 63,798.2 70,213.4 

Shareholders’ Equity 5,306.7 6,001.3 6,769.5 7,107.4 7,384.2 7,701.4 8,039.8 

Net Interest Income 785.7 1,030.5 1,056.0 1,058.4 1,123.9 1,401.3 1,501.0 

Net Income 1,064.5 2,006.3 822.2 415.0 538.2 765.8 817.0 

Ratios 


Cost of funds (%) 3.3% 4.4% 4.3% 4.0% 3.5% 3.8% 3.8% 

Spreads (%) 2.2% 2.3% 2.1% 1.9% 1.9% 2.2% 2.2% 



NPL coverage (%) 364.0% 357.7% 243.2% 230.1% 243.6% 259.8% 284.2% 

ROAA (%) 3.1% 5.0% 1.9% 0.8% 0.9% 1.1% 1.0% 

ROAE (%) 24.1% 35.5% 12.9% 6.0% 7.4% 10.2% 10.4% 





P/E (x) 31.5 10.6 27.9 17.2 13.3 9.3 8.8 

P/BV (x) 6.3 3.5 3.4 1.0 1.0 0.9 0.9 





SABIC AB Equity (Bloomberg) 

Saudi Basic Industries Corporation 

CMP: SR52.5 

» SABIC’s growth story is mainly associated with the expected increase in the production capacity at a CAGR of 

6.2% during 2007-11. 

» The Company is focusing on the acquisition and establishment of companies in European, American and Far 

East regions. This will help the company to encounter with the expected slowdown in demand of petrochemical 

product. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue 78,254 86,328 126,204 165,908 163,418 173,736 181,999 

Gross Profit 33,084 34,912 47,950 58,051 53,041 57,231 61,994 

Operating Profit 29,170 30,886 41,047 46,215 44,053 47,676 51,984 

Net Profit 19,160 20,294 27,022 28,074 27,254 29,177 31,756 

Total Assets 136,950 166,589 256,247 297,369 327,794 347,512 361,571 

Total Liabilities 51,729 66,099 121,751 144,946 158,131 160,897 161,331 

Total Shareholders’ Equity & Minority Interest 85,222 100,490 134,496 152,423 169,663 186,615 200,240 

Ratios 

Current Ratio (x) 2.6 2.9 3.1 2.5 2.1 1.9 1.8 

EBITDA 35,073 35,936 48,653 58,668 59,154 64,925 70,896 

EV 257,945 202,864 426,342 202,169 212,179 215,785 214,519 

EV/EBITDA (x) 7.4 5.6 8.8 3.4 3.6 3.3 3.0 

EBITDA Margin% 44.8% 41.6% 38.6% 35.4% 36.2% 37.4% 39.0% 

Net Profit Margin% 24.5% 23.5% 21.4% 16.9% 16.7% 16.8% 17.4% 

Return On Average Assets % 14.6% 13.4% 12.8% 10.1% 8.7% 8.6% 9.0% 

Return On Average Equity % 33.8% 30.0% 32.9% 28.2% 23.5% 22.0% 21.6% 

EPS 6.4 6.8 9.0 9.4 9.1 9.7 10.6 

Book Value Per Share 31.2 29.2 36.5 36.0 41.4 46.8 51.0 

Dividend Payout % 40.2% 48.0% 32.4% 40.0% 40.0% 45.0% 60.0% 

Market Price 87.7 70.2 132.3 52.5 52.5 52.5 52.5 

P/E Ratio (x) 13.7 10.4 14.7 5.6 5.8 5.4 5.0 

P/BV (x) 2.8 2.4 3.6 1.5 1.3 1.1 1.0 

Historical P / E & P / BV multiples pertain to respective year -end prices, while those for future years are based on closing prices on the TASI as of Dec 29, 2008 




SIPCHEM AB Equity (Bloomberg) 

Saudi International Petrochemical Company 

CMP: SR15.6 

» The production is expected to increase at 2007-11 CAGR of 20.4%, which will lead the profitability to increase at 

a CAGR of 22.1% during 2007-11. 

» SIPCHEM is under bidding process to acquire Lucite International Company of UK, which is involved in the 

production of acrylic products by using Acetate Acid as a feedstock. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue 726 1,334 1,528 1,833 2,614 3,494 3,422 

Gross Profit 476 822 953 1,089 1,491 2,213 2,106 

Operating Profit 451 773 896 1,029 1,387 2,073 1,969 

Net Profit 325 494 594 613 927 1,382 1,318 

Total Assets 4,428 5,262 7,750 9,725 10,055 10,608 11,112 


Total Shareholders’ Equity & Minority Interest 2,355 2,960 3,892 6,052 6,527 7,456 8,322 

Ratios 


EBITDA 575 975 1,087 1,425 1,909 2,640 2,589 

EV 690 8,048 14,223 5,105 4,776 5,240 5,118 

EV/EBITDA (x) 1.2 8.3 13.1 3.6 2.5 2.0 2.0 

EBITDA Margin% 79.2% 73.1% 71.1% 77.7% 73.0% 75.6% 75.6% 




EPS 1.0 1.5 1.8 1.8 2.8 4.1 4.0 



Market Price - 23.6 44.1 15.6 15.6 15.6 15.6 

P/E Ratio (x) - 15.9 24.7 8.5 5.6 3.8 3.9 

P/BV (x) - 1.6 2.8 1.0 0.9 0.8 0.7 






YANSAB AB Equity (Bloomberg) 

Yanbu National Petrochemical Company 

CMP: SR14.6 

» Being a subsidiary of SABIC, the Company has an advantage of guaranteed takeoff through the well established 

platform of SABIC. 

» YANSAB is planned to commence its production by 4Q2008 and expected to post after tax profit of SR73.4mn. 

SRmn 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue - - 2,110 12,858 12,952 12,831 

Gross Profit - - 114 1,534 1,625 1,620 

Operating Profit (49) (83) (308) (212) (262) (420) 

Net Profit 140 110 73 581 734 795 

Total Assets 7,082 15,309 22,952 25,141 25,984 26,090 

Total Liabilities 1,329 9,587 17,156 18,765 18,874 18,184 

Total Shareholders’ Equity & Minority Interest 5,753 5,723 5,796 6,376 7,111 7,906 

Ratios 

Current Ratio (x) 0.7 1.4 0.2 0.3 0.3 0.2 

EBITDA N/A 114 456 3,129 3,352 3,477 

EV N/A 36,143 20,912 19,413 18,276 17,325 

EV/EBITDA (x) N/A N/A 45.8 6.2 5.5 5.0 

EBITDA Margin% N/A N/A 21.6% 24.3% 25.9% 27.1% 

Net Profit Margin% N/A N/A 3.5% 4.5% 5.7% 6.2% 

Return On Average Assets % 2.0% 1.0% 0.4% 2.4% 2.9% 3.1% 

Return On Average Equity % 2.4% 1.9% 1.3% 9.5% 10.9% 10.6% 

EPS N/A 0.2 0.1 1.0 1.3 1.4 

Book Value Per Share N/A 17.0 30.5 33.4 33.6 32.3 

Dividend Payout % N/A 0.0% 0.0% 0.0% 0.0% 0.0% 

Market Price N/A 52.8 14.6 14.6 14.6 14.6 

P/E Ratio (x) N/A N/A N/A 14.1 11.2 10.3 

P/BV (x) N/A 3.1 0.5 0.4 0.4 0.5 





Advanced Polypropylene Company 

APPC AB Equity (Bloomberg) CMP: 15.5 

» The production from APPC’s facility commenced in 3Q2008, which resulted a first ever shipment of 

polypropylene. 

» The Company is expected to show net profit of SR406.5mn for 2008. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue N/A N/A N/A 1,597 2,533 2,548 2,521 

Gross Profit N/A N/A (1) 460 488 489 479 

Operating Profit N/A (2.3) (1) 441 438 438 429 

Net Profit N/A 1.7 2.2 407 399 408 407 

Total Assets N/A 1,815 2,545 3,005 3,125 3,209 3,301 

Total Liabilities N/A 400 1,129 1,385 1,306 1,186 1,075 

Total Shareholders' Equity & Minority Interest N/A 1,415 1,416 1,620 1,819 2,023 2,226 

Ratios 

Current Ratio (x) N/A 1.4 1.8 1.1 1.3 1.8 2.3 

EBITDA N/A 4.1 2.7 524.5 590.6 598.6 597.1 

EV N/A 7,542 8,757 3,028 2,913 2,639 2,367 

EV/EBITDA (x) N/A N/A N/A 5.8 4.9 4.4 4.0 

EBITDA Margin% N/A N/A N/A 32.8% 23.3% 23.5% 23.7% 

Net Profit Margin% N/A N/A N/A 25.5% 15.8% 16.0% 16.1% 

Return On Average Assets % N/A 0.1% 0.1% 14.7% 13.0% 12.9% 12.5% 

Return On Average Equity % N/A 0.1% 0.2% 26.8% 23.2% 21.2% 19.1% 

EPS N/A 0.01 0.02 2.88 2.82 2.88 2.88 

Book Value Per Share N/A 10.0 10.0 11.5 12.9 14.3 15.7 

Dividend Payout % N/A 0.0% 0.0% 50.0% 50.0% 50.0% 50.0% 

Market Price N/A N/A 55.0 15.5 15.5 15.5 15.5 

P/E Ratio (x) N/A N/A N/A 5.4 5.5 5.4 5.4 

P/BV (x) N/A N/A 5.5 1.4 1.2 1.1 1.0 






SAFCO AB Equity (Bloomberg) 

Saudi Arabia Fertilizers Company 

CMP: SR87.2 

» SAFCO has the largest fertilizer producing facilities in Saudi Arabia and at present, is in a negotiation stage to 

finalize the supply of feedstock gas for SAFCO-V project, which will add the 2.7mn tons in the existing capacity 

by 2011 and lead the earning to increase at a CAGR of 13.2% during 2007-11. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue 1,824 1,831 3,516 6,208 4,461 4,691 5,754 

Gross Profit 1,075 1,090 2,295 4,818 2,949 3,028 3,707 

Operating Profit 982 989 2,127 4,659 2,740 2,800 3,459 

Net Profit 1,100 1,151 2,209 4,848 2,893 2,968 3,633 

Total Assets 6,207 6,729 8,153 9,905 10,606 11,229 12,175 


Total Shareholders' Equity & Minority Interest 4,788 4,739 6,014 7,469 8,337 9,079 9,987 

Ratios 


EBITDA 1,178 1,183 2,471 5,012 3,137 3,243 3,952 

EV 24,991 17,569 28,879 20,018 19,219 18,918 18,311 

EV/EBITDA (x) 21.2 14.9 11.7 4.0 6.1 5.8 4.6 

EBITDA Margin% 64.6% 64.6% 70.3% 80.7% 70.3% 69.1% 68.7% 




EPS 4.4 4.6 8.8 19.4 11.6 11.9 14.5 



Market Price 98.4 68.4 118.5 87.2 87.2 87.2 87.2 

P/E Ratio (x) 22.4 14.9 13.4 4.5 7.5 7.3 6.0 

P/BV (x) 5.1 3.6 4.9 2.9 2.6 2.4 2.2 





YACCO AB Equity (Bloomberg) 

Yamama Saudi Cement Company 

CMP: SR34.0 

» Sales revenue of the company is expected to increase at a CAGR of 8% during 2007-11. 

» The company is not undergoing any expansions and will be utilizing its funds and cash to remove the bottlenecks 

in production process and increase its margins. 

» The company gets cushion from its investments as well. 

SR’000’ 2005 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue 791,087 950,121 1,185,501 1,151,251 1,167,502 1,387,531 1,486,324 

Gross Profit 541,653 631,561 768,781 677,772 649,025 770,787 822,340 

Net Profit 500,883 601,159 731,429 618,850 595,249 715,550 763,062 

Equity 1,576,310 1,938,757 2,365,382 2,522,960 2,650,805 2,831,825 2,925,750 

Assets 2,706,197 3,127,862 3,604,324 3,620,164 3,586,681 3,764,671 3,987,458 

Investments 79,117 203,703 336,384 403,661 504,576 555,034 610,537 

Ratios 

EPS (SR) 3.71 4.45 5.42 4.58 4.41 5.3 5.65 

Gross Margins (%) 68.5 66.5 64.8 58.9 55.6 55.6 55.3 

Operating Margins (%) 63.4 62.7 61.5 54.6 51.3 51.7 51.4 

Net Margins (%) 63.3 63.3 61.7 53.8 51 51.6 51.3 

ROAA (%) 21.5 20.6 21.7 17.1 16.5 19.5 19.7 

ROAE (%) 34.3 34.2 34 25.3 23 26.1 26.5 

Market Capitalization (SR mn) 7,019 10,598 12,724 4,590 4,590 4,590 4,590 

EV/Ton (US$) 637 658 545 200 200 194 189 

P/E (x) 42 17.6 17.4 7.4 7.7 6.4 6 

P/Bv (x) 13.4 5.5 5.4 1.8 1.7 1.6 1.6 

Dividend Yield (%) 3.8 2.5 3.2 10.3 10.3 11.8 14.7 






YNCCO AB Equity (Bloomberg) 

Yanbu Cement Company 

CMP: SR38.1 

» Yanbu Cement Company (YCC) is planning to undergo expansion and by the end of 2011 it will have a cement 

capacity of 7mn tons per annum. 

» Its sales revenue and net income is expected to grow at a CAGR of 12% and 10.5% during 2007-11. 

SR’000’ 2005 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue 778,930 843,243 1,170,728 1,066,931 1,045,364 1,123,831 1,851,641 

Gross Profit 476,313 525,914 680,338 580,007 541,158 584,147 1,029,831 

Net Profit 453,615 512,201 660,953 553,698 502,556 539,178 955,703 

Equity 1,942,264 2,084,765 2,323,518 2,455,016 2,535,372 2,547,350 2,870,853 

Assets 2,243,356 2,250,022 2,563,399 2,715,632 3,220,616 3,384,549 3,912,925 

Investments 240,240 286,811 646,550 355,602 391,163 430,279 473,307 

Ratios 

EPS (SR) 4.32 4.88 6.29 5.27 4.79 5.14 9.1 

Gross Margins (%) 61.1 62.4 58.1 54.4 51.8 52 55.6 

Operating Margins (%) 58.8 60.1 56 52 49.4 49.6 53.5 

Net Margins (%) 58.2 60.7 56.5 51.9 48.1 48 51.6 

ROAA (%) 20.8 22.8 27.5 21 16.9 16.3 26.2 

ROAE (%) 22.9 25.4 30 23.2 20.1 21.2 35.3 


EV/Ton (US$) 1,020 500 549 194 222 244 157 

P/E (x) 33.7 14.7 15 7.2 8 7.4 4.2 

P/Bv (x) 7.9 3.6 4.3 1.6 1.6 1.6 1.4 






SACCO AB Equity (Bloomberg) 

Saudi Cement Company 

CMP: SR55.0 

» Saudi Cement Company is on its way to become the biggest cement producer of the country. The company 

presently has 10 cement kilns with a total clinker capacity of 13,825 tons daily (4.15mn tons annually), and 

cement grinding capacity of 6.0mn tons. 

» Saudi Cement Company is investing around SR2.2bn (US$578mn) to step up its production capacity to 

11.3mtpa by 2009. 

SR’000’ 2005 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue 1,116,342 1,200,235 1,361,950 1,349,040 2,004,719 2,223,696 2,312,644 

Gross Profit 528,767 676,023 746,982 702,893 1,048,269 1,184,282 1,253,347 

Net Profit 484,292 637,759 686,397 628,228 919,834 1,049,020 1,114,025 

Equity 1,969,626 2,421,585 2,738,582 2,956,610 3,466,244 4,003,064 4,502,889 

Assets 2,211,866 2,704,581 3,860,734 4,669,625 4,678,944 4,713,284 5,241,136 

Investments 49,182 669,310 59,722 68,680 74,175 81,592 601,990 

Ratios 

EPS (SR) 4.75 6.25 6.73 6.16 9.02 10.28 10.92 

Gross Margins (%) 47.4 56.3 54.8 52.1 52.3 53.3 54.2 


Net Margins (%) 43.4 53.1 50.4 46.6 45.9 47.2 48.2 

ROAA (%) 21.7 25.9 20.9 14.7 19.7 22.3 22.4 

ROAE (%) 24.2 29 26.6 22.1 28.6 28.1 26.2 


EV/Ton (US$) 633 443 595 269 139 128 129 

P/E (x) 30.0 15.8 18.9 8.8 6.0 5.3 5.0 

P/Bv (x) 7.4 4.1 4.7 1.9 1.6 1.4 1.2 







ARCCO AB Equity (Bloomberg) 

Arabian Cement Company 

CMP: SR31.4 

» The company has embarked upon regional expansion and is currently in the process of preparing 2.5mtpa plant 

capacity in Al-Qatarana, Jordan of which ACC holds 95% stake. 

» The company has undertaken a 51:49 joint venture with, Italcementi, to prepare a cement plant with a production 

capacity of 3mtpa to be located in Labouna. 

SR’000’ 2005 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue 687,227 747,848 721,572 945,201 876,160 1,310,224 1,384,135 

Gross Profit 348,550 372,645 421,534 430,621 401,645 633,628 663,361 

Net Profit 330,851 333,580 392,165 342,495 320,679 551,096 577,163 

Equity 1,630,063 1,646,779 1,840,544 2,241,365 2,135,198 2,311,298 2,356,133 

Assets 1,751,070 1,809,594 2,365,727 3,019,091 3,147,004 3,193,438 3,113,708 

Investments 693,503 687,589 352,794 282,236 254,012 279,413 307,355 

Ratios 

EPS (SR) 4.14 4.17 4.9 4.28 4.01 6.89 7.21 

Gross Margins (%) 50.7 49.8 58.4 45.6 45.8 48.4 47.9 


Net Margins (%) 48.1 44.6 54.3 36.2 36.6 42.1 41.7 

ROAA (%) 19.9 18.7 18.8 12.7 10.4 17.4 18.3 

ROAE (%) 21.7 20.4 22.5 16.8 14.7 24.8 24.7 


EV/Ton (US$) 509 717 255 202 237 156 158 

P/E (x) 51.1 19.3 19.6 7.3 7.8 4.6 4.4 

P/Bv (x) 10.4 3.9 4.2 1.1 1.2 1.1 1.1 






QACCO AB Equity (Bloomberg) 

Qassim Cement Company 

CMP: SR80.0 

» Qassim Cement Company’s current annual clinker capacity of the company stands at 3.0mtpa, while the cement 

capacity is 3.7mtpa. 

» The company is expected to report a CAGR of 9% in its net profits during 2007-11. 

» The company enjoys better gross margins as compared to other players in the country. 

SR’000’ 2005 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue 493,728 543,079 847,004 868,892 840,569 925,615 1,025,889 

Gross Profit 298,169 334,786 557,386 555,796 514,239 565,428 633,501 

Net Profit 281,522 315,585 540,548 527,607 491,520 538,165 603,735 

Equity 1,187,751 1,294,736 1,523,384 1,689,191 1,773,911 1,860,276 2,012,211 

Assets 1,631,131 1,755,258 2,059,235 2,146,020 2,048,552 2,148,753 2,226,913 

Investments 11,639 8,479 56,091 249,455 324,590 407,761 560,879 

Ratios 

EPS (SR) 6.26 7.01 12.01 11.72 10.92 11.96 13.42 

Gross Margins (%) 60.4 61.6 65.8 64 61.2 61.1 61.8 

Operating Margins (%) 58 58.8 63.5 61.3 58.6 58.6 59.3 

Net Margins (%) 57 58.1 63.8 60.7 58.5 58.1 58.8 

ROAA (%) 19.4 18.6 28.3 25.1 23.4 25.6 27.6 

ROAE (%) 24.5 25.4 38.4 32.8 28.4 29.6 31.2 


EV/Ton (US$) 1,238 808 567 248 247 247 256 

P/E (x) 37.8 22.1 15.1 6.8 7.3 6.7 6 

P/Bv (x) 9 5.4 5.3 2.1 2 1.9 1.8 

Dividend Yield (%) 1.9 3 3.8 10 11.3 12.5 12.5 






SECO AB (Bloomberg) 

Saudi Electricity Co. 

CMP: SR9.3 

» The revenues of Saudi Electricity Co. (SEC) are cyclical, affected by seasonal weather changes during the year. 

The company’s revenues are lower during the winter months so the first & last quarter financial results do not 

reflect the accurate picture for the full year results. The summer months due to intense weather witness higher 

energy consumption & mostly result in higher revenues. 

» SEC’s profitability increase of 9.8% in FY07, seems to be closing at subdued FY08 levels as 9M08 performance 

recorded 26.5% (YoY) decline. The increased level of operational costs are believed to be the major profitability 

dampener, over which the company is trying to develop better control in future. 

SRmn 2005 2006 2007 2008E 2009E 2010E 2011E 

Sales Revenue 18,761 19,707 20,979 22,401 23,798 25,261 27,058 

Gross Profit 1,645 1,337 1,539 780 1,050 1,433 1,762 

Net Profit 1,483 1,414 1,553 911 1,209 1,571 1,877 


Gross Fixed Assets 170,662 181,636 194,599 210,280 224,559 238,453 252,523 

Total Assets 117,563 127,208 136,510 148,248 159,017 167,109 175,959 

Ratios 

Gross Profit Margin(%) 8.8 6.8 7.3 3.5 4.5 5.7 6.5 

Operating Profit Margin(%) 6.7 5.9 6.0 2.1 3.1 4.4 5.2 

Net Profit Margin (%) 7.9 7.2 7.4 4.1 5.1 6.2 6.9 

LT Debt /Equity (x) 0.5 0.8 0.8 0.8 0.9 0.9 0.9 

ROAA (%) 1.3 1.2 1.2 0.6 0.8 1.0 1.1 

ROAE (%) 3.2 3.0 3.3 1.9 2.5 3.2 3.7 


P/E (x) 81.8 38.3 39.6 42.3 31.9 24.5 20.5 

P/BV (x) 2.6 1.1 1.3 0.8 0.8 0.8 0.7 





STC AB (Bloomberg) 


Saudi Telecom Company 

CMP: SR48.7 

» Saudi Telecom (STC) lost its monopoly when the second mobile license was granted in 2004 to Etihad Etisalat 

Company (Mobily). In Mar 2007, a consortium led by Zain of Kuwait won the third mobile, and launched services 

in 2008. In Apr. 2007, three fixed line licenses were granted in Saudi, ending STC’s monopoly over fixed lines. 

» As a result of increasing competition, the company started expanding outside its home market beginning with the 

Maxis deal which gave STC foothold in Malaysia, India, and Indonesia. Later, STC won the bid for a 26% stake in 

Kuwait’s third mobile service operator. It also acquired a 35% stake in Oger Telecom, which gave STC presence 

in Turkey and South Africa. 

SRbn 2005 2006 2007 2008(F) 2009(F) 2010(F) 2011(F) 

Sales Revenue 32.5 32.4 34.5 48.9 52.5 56.2 59.9 

Gross Profit 19.3 18.4 19.2 28.3 29.7 31.3 33.2 

EBITDA 17.5 16.5 16.7 21.7 23.2 24.6 26.0 

Net Profit 12.4 12.8 12.0 13.4 14.7 15.9 17.1 

Total Assets 44.7 46.1 68.8 110.2 121.5 127.8 133.7 

Total Shareholders’ Equity 32.9 34.2 35.9 37.8 40.1 42.5 44.3 

Ratios 


Quick Ratio (x) 1.2 1.4 0.8 0.9 1.0 1.0 1.0 

Gross Profit Margin (%) 59.4 56.9 55.6 57.9 56.5 55.8 55.4 

EBITDA Margin (%) 53.7 50.9 48.5 44.4 44.1 43.8 43.4 

Net Profit Margin (%) 38.3 39.5 34.9 27.3 28.0 28.3 28.5 

Return on Average Assets (%) 28.7 28.2 20.9 14.9 12.7 12.8 13.0 

Return on Average Equity (%) 39.0 38.2 34.3 36.3 37.8 38.5 39.3 

EPS (SR) 8.3 6.4 6.0 6.7 7.4 8.0 8.5 

Book Value Per Share (SR) 21.9 17.1 17.9 18.9 20.0 21.3 22.1 

EV/EBITDA 14.4 10.2 9.7 3.2 2.9 2.9 2.7 

Market Price (SR) 139.2 83.0 83.8 48.7 48.7 48.7 48.7 

P/E Ratio (x) 16.8 13.0 13.9 7.3 6.6 6.1 5.7 

P/BV (x) 6.4 4.9 4.7 2.6 2.4 2.3 2.2 





EEC AB (Bloomberg) 

Etihad Etisalat Company (Mobily) 

CMP: SR28.8 

» Mobily, Saudi’s second mobile operator, launched services in May 2005. Within three years, the company gained 

a market share of 41% (end 2007), with 11.1mn subscribers. Mobily has been targeting the data and internet 

segment aggressively. 

» In 2007, the company acquired a 99.9% stake of the local data provider Bayanat Al-Oula, and set up Mobily 

InfoTech, a fully owned subsidiary in India, which will provide IT and consulting services. In addition, it acquired 

96% of Zagel International Communication Network Company which is specialized in providing internet services 

in Saudi Arabia. We believe that Mobily’s latest acquisitions will strengthen its position in the wireless broadband 

internet segment. 

SRbn 2005* 2006 2007 2008(F) 2009(F) 2010(F) 2011(F) 

Sales Revenue 1.7 5.8 8.4 10.6 11.8 12.5 12.9 

Gross Profit 0.7 3.2 4.6 6.1 6.8 7.3 7.7 

EBITDA (0.1) 2.0 2.9 3.7 4.2 4.6 4.8 

Net Profit (1.2) 0.7 1.4 1.9 2.2 2.4 2.5 

Total Assets 16.2 17.7 19.9 26.5 28.2 28.9 29.2 

Total Shareholders’ Equity 3.8 4.5 5.9 9.8 11.7 13.4 14.5 

Ratios 


Quick Ratio (x) 0.11 0.17 0.50 0.61 0.65 0.73 0.72 

Gross Profit Margin (%) 41.8 54.1 55.1 57.4 57.5 58.5 59.7 

EBITDA Margin (%) (6.8) 34.3 34.9 35.2 36.1 36.5 37.0 

Net Profit Margin (%) (70.3) 12.0 16.3 17.7 18.4 19.0 19.4 

Return on Average Assets (%) (7.2) 4.1 7.3 8.1 7.9 8.3 8.6 

Return on Average Equity (%) (30.5) 16.7 26.4 24.3 21.1 20.7 20.2 

EPS (SR) NA 1.0 2.0 2.7 3.1 3.4 3.6 

Book Value Per Share (SR) 5.5 6.5 8.4 14.0 16.7 19.1 20.7 

EV/EBITDA NA 18.8 16.6 6.2 5.5 4.9 4.6 

Market Price (SR) 110.5 41.1 58.0 28.8 28.8 28.8 28.8 

P/E Ratio (x) NA 41.0 29.4 10.8 9.3 8.5 8.1 

P/BV (x) - 6.3 6.9 2.1 1.7 1.5 1.4 

Historical P / E & P / BV multiples pertain to respecitve year -end prices, while those for future years are based on closing prices on the TASI as of Dec 29, 2008. (*From 14/12/04 to 31/12/05) 



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