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NCB Capital Research DepartmentJune 2009Economic ResearchDr Jarmo T Kotilainej.kotilaine@ncbc.comEquity ResearchPravin L Rajendranp.rajendran@ncbc.comFarouk Miahf.miah@ncbc.comAhmed Al-Qahtaniah.alqahtani@ncbc.comTariq Al-Alaiwatt.alalaiwat@ncbc.comReem Al Khalifar.alkhalifa@ncbc.comProductionMartin K Arokiarajm.raj@ncbc.comSaudi Arabia FactbookGateway to the KingdomPlease refer to last page for important disclaimerWe look for more


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KSA ECONOMY AND NATION 5Outlook and direction 6Gulf renaissance 6KSA remains an attractive proposition 6Oil price a short-term concern 7Global recessionary fears 9Economic performance 10Strong hydrocarbons fundamentals 15Beyond oil 18International trade 22SAUDI STOCK EXCHANGE 25History and overview 26The leading GCC equity market 26Market composition 29Market regulation and supervision 32Execution of trades 32Tadawul’s performance in 2008 33Comparison with Global Emerging Markets 35SECTOR PERFORMANCE 37-107COMPANY PROFILES 109-259Contents


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KSA: Economy and NationSearching growth beyond oil• Capital – Riyadh• Population – 28.1mn (July 2008E)• Land area – 2.3m sq km• Climate – Hot and dry with mild winters• Language – Arabic• Currency – Saudi Riyal (SR) 1 = 20 qirsh = 100 halalas. The Saudi Riyal (SR) ispegged to the US Dollar (USD) at the rate of USD1=SR 3.745• Nominal GDP 2007 – USD381.5bn• Nominal GDP 2008E – USD467.5bn• Time – GMT + 3:00 Hrs• Fiscal year – Calendar year (January – December)• Tadawul (stock market) market capitalization – USD246.5bn (as on 31 December2008)• Oil reserves – 264.3bn barrels; nearly 25% of the world’s proven oil reserves


Outlook and directionA Gulf renaissanceRapid growth pushes GCCfurther up the global economicladder; the region had theeighth-largest GDP in theemerging world in 2007Rapid economic growth over the past few years has made the Gulf Cooperation Council (GCC)region an increasingly significant bloc in global emerging markets. The GCC’s nominal GDP hastripled in value since 2002 and is expected to have exceeded USD1trn in 2008. High oil pricesin 2003-2007 fueled the expansion of the regional economy at an average annual rate of 7.4%in real terms. This marked a dramatic acceleration over the 1998-2002 average of 2.5% andwent hand in hand with the strategy to invest the petrodollar windfall in sustainabledevelopment. Diversification and greater global integration established themselves as keythemes of Government policy. Infrastructure spending emerged as a particular priority,particularly in the areas of transportation, water desalination, and energy. At the same time, theinvestment environment underwent a dramatic improvement as ambitious regulatory reformscame to complement the region’s traditional macroeconomic stability.After a string of golden years, when talk of a super-cycle began to generate expectations of theirreversibility of the boom, the near-term outlook has changed completely. The intensifyingeconomic turmoil globally led to a sharp fall in oil prices, significantly tighter credit conditions,and lower confidence. According to April-09 IMF projections, Middle East is expected to grow by2.5% and 3.5% in 2009 and 2010 respectively. We expect that the Saudi economy will almostcertainly not exceed 1.0% real growth in 2009; and the IMF now projects a 0.9% real decline inGDP. However, higher oil prices should push growth back to trend in 2010. The situation in therest of the GCC will be largely comparable, with Kuwait and the UAE (particularly Dubai)especially hard hit.KSA remains an attractive propositionKSA’s strategy ofdiversification is strengtheningits business climateThe Kingdom of Saudi Arabia (KSA) is by far the largest economy in the Middle East. Itaccounts for nearly half of the GCC’s GDP and more than a third of the Middle East and NorthAfrica GDP. As the world’s largest producer and exporter of oil, KSA has been a leadingbeneficiary of buoyant crude prices in recent years, earning approximately USD548.5bn from oilexports during 2003–07. Saudi authorities have also endorsed the need to capitalize on thewindfall to foster economic diversification and sustainable growth. The authorities haveanchored these steps in greater global integration, not least the country’s accession to the WTOin Dec 05. This move has encouraged foreign investment in various sectors such astelecommunications, banking, infrastructure, tourism, metals, and mining. Liberalization of thetelecom sector resulted in the entry of new companies in KSA’s fixed-line telephone and mobilesegments. The Saudi Government further raised the ceiling on foreign ownership in domesticbanks to 60% from 40% in 2007 and opened the insurance sector to greater foreign investment.The Saudi authorities have taken impressive steps to create an attractive business climate andthe progress to date has been recognized by external observers and foreign investors alike.The World Bank has identified Saudi Arabia as a leading reformer globally and the Kingdomhas risen from 67th to 16th position in the World Bank’s Ease of Doing Business Index inless than three years. It is now the highest-ranked Middle Eastern country. The improvedbusiness environment has triggered an unprecedented FDI boom in recent years. At home, thedevelopment of the financial sector has facilitated ambitious investments by Saudi corporationsand significantly boosted the role of non-oil sectors as well as private entrepreneurship in theeconomy. These efforts have in turn fueled rapid growth with the country’s real GDP expandingJUNE 2009SAUDI ARABIA FACTBOOK6


OUTLOOK AND DIRECTIONat a CAGR of 5.0% in 2002-2007. GDP growth in 2008 accelerated to 4.2% from the previousyear’s 3.5%, despite a sharp slowdown in the second half of the year.KSA’s impressive economicprofile is supported by threemain factors• Regulatory andinstitutional reforms• Large petrodollar reserves• Strong demographicprofileThe progress of regulatory and institutional reforms has complemented the established robustmacroeconomic health of KSA. Saudi Arabian Monetary Agency (SAMA), the Kingdom’s centralbank, has been highly successful in ensuring price stability, while fiscal policy has built oncautious assumptions about the oil price. For years, the Saudi Government has used its largelyoil-driven surpluses to pay down the country’s external and public sector debt burden, whichwas accumulated during the period of low oil prices of 1980s and 90s. Domestic Governmentdebt in 2008 declined to 13.5% of GDP, compared with a peak of 119% in 1999.Although Saudi Arabia was a key beneficiary of the global imbalances that accumulated duringthe recent boom, it was relatively successful in preventing the mounting surpluses from derailingits macroeconomic stability. The greatest source of concern was the takeoff in inflation in 2006-2008, partly because the dollar peg limited SAMA’s autonomy in countering the price pressures.Otherwise, with some 90% of budget revenues coming from oil, the petrodollar windfall largelytranslated into large fiscal surpluses, which peaked at SR590bn, or 33.7% of GDP in 2008,compared with a surplus of 12.5% of GDP in 2007. The reserves amassed by SAMA and otherentities have placed the Saudi economy well, preparing it to weather even severe economicturbulence in the near future. SAMA’s net foreign assets reached SR1,702bn at the end of Nov08 from SR1,171bn in 2007.An important driver of the attractiveness of the Saudi economy is its sheer size and regionalimportance. For instance, with a market-cap of USD246.5bn as on 31 Dec 08, Tadawulaccounts for more than 45% of GCC’s aggregate market capitalization. From theperspective of investors, the Kingdom boasts the largest market in the region – a youngpopulation of just under 30 million – and some of the largest corporate houses. Major newinfrastructure projects with increased private-sector participation are under way, particularly inpower, water, housing, transport, roads, and railways.Oil price a short-term concernOil prices went on a rollercoasterride, touching the peakof USD147 per barrel and thendropping to USD40 per barrelduring 2008Until recently, the rally in oil prices seemed almost unstoppable with especially emerging marketdemand – typically less price sensitive due to price controls and subsidies – looking extremelyrobust. Nonetheless, since an all-time high of USD147 per barrel of oil in July 08, the oil marketdynamic had experienced a complete reversal. Heightened levels of uncertainty about theextent and duration of the global crisis have weighed on market sentiment. As a result, oil pricestemporarily dipped below the USD40 mark. However, recent months have been characterizedby a relative stabilization and even a recovery of the oil price.Slow replacement andchallenging topographies foroil extraction point towards apossible rebound in oil pricesEven if we see a relatively severe and drawn-out global economic crisis, we believe that the oilmarket downturn will be limited in duration. A number of structural factors are pointing to rapidlytightening markets. In the current environment, insufficient investments are being made into oilproduction globally to replace the production lost from mature fields, which are currentlydeclining at the rate of 5% or more a year. The International Energy Agency (IEA) recentlyfound that even with stable demand for oil up to 2030, production capacity would have to beincreased by 45mn barrels per day. Problematically, much of the new production is in areas thatare remote and in challenging geographic or climatic conditions. Moreover, the reserves are forthe most part controlled by national oil companies who may be swayed by their controllingGovernments’ desire to affect the price outlook.JUNE 2009SAUDI ARABIA FACTBOOK7


OUTLOOK AND DIRECTIONWhile any uptrend in oil pricesin the future will benefit KSA…Even with the multitude of projects on energy conservation and alternative energy sources, areturn to sustainable global growth is only possible if oil production can grow at a more or lesscomparable rate as the real economy. The current investment environment is significantlyjeopardizing that prospect and raising the risk of a swift oil price rebound once the extent ofdemand destruction becomes better understood and the economic situation begins to stabilize.KSA is well positioned to capitalize on this reversal. The Kingdom holds approximately a quarterof the world’s total proven oil reserves, approximately 264.2bn barrels. These reserves areestimated to be sufficient to last for 70-80 years at the 2007 production rate of 8.7mn barrels perday (bpd). KSA also remains one of the few producers which are in a position to act as agenuine swing producer with a number of new fields coming on line.In the longer term, oil prices are expected to remain firm, driven by anticipated growth indemand, especially from emerging markets. The IEA projects an average oil price ofUSD100/b (in real 2007 dollar terms) between 2008 and 2015. Considering this factor and theongoing economic diversification, KSA’s GDP is expected to grow at a healthy rate.… growing contribution of thenon-oil sector due toGovernment’s sustained focuson diversification makes longtermoutlook positiveKSA’s non-hydrocarbon economy has benefited enormously from the favorable economicenvironment in the Kingdom and Government-supported structural reforms. The country’s nonoilsector, which comprises around 46% of the total real GDP, continued to experience stronggrowth (4.2%) in 2008. In recent years, the growth in contribution to Saudi GDP from the non-oilsector has been consistently ahead of the hydrocarbons sector. By 2010, its share of GDP isexpected to reach 49%. Major sectors driving growth are banking, insurance, transport,telecommunications, retail, and construction and building materials. In 2008, the transport andcommunications sector experienced the highest growth at 11.4% and the non-oil industrialsector and construction sector expanded by 5.4% and 4.1% respectively.Even though many sectors of the Saudi economy will encounter short-term turbulence due tothe global downturn, their longer-term outlook remains positive. The key near-term risk for theSaudi real estate sector is the possible though fairly manageable risk of regional contagion fromthe weakened real estate sector in the UAE. The banking sector remains in generally robusthealth, given the conservative stance taken by SAMA as the regulator as well as the limitedexposure of Saudi banks to global markets. Nonetheless, it is clear that the rapid creditexpansion of recent years will not continue, partly because of the economic slowdown andpartly due to more restrictive lending practices by banks. Saudi banks adopted a selectivelending approach in the last two quarters, mainly to keep loan-to-deposit ratios within a SAMAprescribed limit of 85% during 4Q-08 and to position themselves for a likely increase in NPLsfollowing a sharp reversal of a robust boom. However, their well provisioned NPLs, adequatecapital and internationally low loan to deposit ratios (as high as 140% in the UAE, for instance)continues to give them an advantage in the region.Low penetration, coupled witheasing regulations, is likely toprovide a thrust to the financialservices and telecom sectorsGoing forward, the financial sector outlook is strong owing to below-average penetration levelsby regional and global standards, healthy capital adequacy ratios, and relaxation of foreignownership rules. Elements of the sector remain significantly underdeveloped, most notablymortgages and debt capital markets. Mortgages have been a key driver of banking sectorgrowth in mature markets and the impending passage of proper legislation will create the basisfor their expansion in Saudi Arabia as well. The gradual maturation of the sukuk market shouldsustain the emergence of debt capital as a third pillar of the Saudi capital markets.Similar structural factors will foster convergence-driven growth in other sectors. For instance,low broadband and Internet penetration, along with favorable demographics, will continue toJUNE 2009SAUDI ARABIA FACTBOOK8


OUTLOOK AND DIRECTIONpropel growth in the telecom sector. Most importantly, the Government’s commitment toeconomic diversification remains unwavering and the process will thus benefit from a continuedinfusion of public funds. The Government is encouraging privatization and public-privatepartnerships and plans to invest USD300bn in infrastructure development between 2008 and2010. Enormous public investments are being made and planned in expanding and modernizingkey sectors such as education and healthcare.A particularly important driver of longer-term growth in the Kingdom is the dynamic demographicprofile. The population of KSA has grown at a CAGR of 2.7% since 2004 while privateconsumption grew at a CAGR of 13%. Nearly 70% of KSA’s total population is below theage of 30. The prosperity and aspirations of this population are steadily growing. According tothe IMF, KSA’s per capita nominal GDP grew from USD8,065 in 1999 to USD15,724 in 2007and is expected to grow to just under USD28,000 by 2012. A growing workforce and increasingpurchasing power, in turn, are expected to drive housing demand, domestic consumption andpersonal finances higher. Private consumption as a percentage of nominal GDP is set toincrease from 28.3% in 2007 close to 50% during the coming decade, which would mark animportant paradigm shift for the Saudi economy.Global recessionary fears, falling oil prices hitKSA boursesExternal demand shock, alongwith implications for the oilprice and liquidity, hasfundamentally changed themood in the Saudi capitalmarketsThe Saudi market, having initially decoupled from the Western markets, during the first year ofthe credit crunch, experienced a sharp correction in the second half of 2008. In the course ofthe year, the Tadawul All Share Index (TASI) fell by 56.5%, due to the spillover effects of globalrecession and in particular the subdued sentiment caused by the sharply lower oil price. Thecorrection was broad-based with every sector index yielding negative returns.In the wake of the correction, which in fact resumed a longer downturn from the market’seuphoric historic peak in February 2006, valuations of most KSA equities were at or near their15-year lows. The P/E multiple contracted from 27.6 in May 2006 to 20.8 on 1 January 2008and 10.7 on 28 December 2008. TASI’s 12-month trailing P/E declined by 49.0% in 2008. Themultiple represents a 47% discount on its 15-year weekly average of 19.8x.Exhibit 1: Saudi market valuations12%Real GDP CAGR 2008 - 201010%8%6%4%2%GCC (ex KSA)ChinaRussiaIndiaThailandS.KoreaMorrocoKSABrazilArgen inaMexicoKSA 09/05, 33.00%0x 5x 10x 15x 20x 25x 30x 35x 40xForward P/ESource: NCBC Research, Bloomberg, IMFJUNE 2009SAUDI ARABIA FACTBOOK9


OUTLOOK AND DIRECTIONLooking ahead, however, when the global business cycle turns, KSA can easily be one of thefirst to benefit considering its strong position in the global oil sector. Hence, although KSA has alower expected economic growth rate and a higher P/E valuation vis-à-vis its GCC peers, webelieve that the market provides attractive investment opportunities.Economic performanceDuring the extraordinary economic boom of 2003–07, the KSA economy expanded at a CAGRof 15.5% in nominal terms and at a CAGR of 4.3% in real terms, primarily driven by strong oilrevenues and the Government’s diversification initiatives. The non-oil sector grew at a realaverage annual rate of 4.9% during 2003–2007. In 2008, nominal GDP expanded by 22.0% toSR1,753bn, backed by strong and broad-based growth of 34.9% in the oil sector and 8.0% inthe non-oil sector. In real terms, GDP grew 4.2% in 2008. Following a sharp correction in 2009,real GDP growth is likely to return to the range of 3–4.5% in the medium term.Exhibit 2: Average nominal GDP growth rate (%) 05 – 08E353025201510Exhibit 3: Annual % change in real GDP and per capita GDP864205-20Euro AreaJapanUKUSBrazilMiddle-EastRussiaIndiaChinaKSA-42000 2001 2002 2003 2004 2005 2006 2007 2008% change in real GDP % change in per capita real GDPSource: IMF – World Economic Outlook, April 2009, Middle East includes KSA Source: IMF – World Economic Outlook, April 2009KSA’s robust growth performance, also by international standards, has historically taken place inan environment of exceptional price stability. The Kingdom experienced average annual deflationof 1.0% during the 1990s followed by a period of flat prices in the range of 0 to 1% during 2002-05.Thereafter, however, the situation began to change markedly. KSA’s Consumer Price Index (CPI)increased by 6.5% in December 2007 and reached a peak of 11.1% in July 2008. This increasewas led by a surge in oil prices which generated huge trade and current account surpluses, a risein FDI, high international commodity prices (including food prices), and depreciation of the USDollar (to which the Saudi Riyal is pegged). With the dramatically changed economic environment,the inflationary pressures have begun to abate however. Inflation fell back to 9.0% in December2008 and further declined to 5.2% in April 2009 on account of the steep decline in food andcommodity prices and the recent strengthening of the US Dollar. The expected further easing ofinflationary pressure will provide the Saudi authorities with an opportunity to use monetary toolsmore effectively to support growth and liquidity in the Kingdom.Despite inflationary pressures,Saudi Arabia did not abandonthe Riyal’s Dollar pegDespite inflationary pressures hovering around an average level of 10.0% in 2008, the Riyal’s pegto the US Dollar forced SAMA to follow the US monetary policy and cut interest rates. A strongmacro environment, together with negative real interest rates, fueled credit growth by 25.8% YTDby October 2008. However, SAMA’s move to hike bank reserve requirements (from 9% in January2008 to 13% in May 2008) helped curb liquidity, and consequently M3 grew by 14.1% YTD.JUNE 2009 SAUDI ARABIA FACTBOOK 10


OUTLOOK AND DIRECTIONThe dramatic change in the economic environment in the second half of the year led SAMA toquickly reverse its stance. It reduced statutory reserve requirements twice (in October andNovember 2008) back to 7%. This move enabled the banks to utilize about SR20bn of depositsfor lending which were held with SAMA. The Government also deposited USD2.5bn and anequivalent amount in Saudi Riyals with banks. Furthermore, SAMA expressed willingness toinject upto SR150bn deposits into the system and reduced key interest rates.SAMA adopted aggressivemonetary policies to counterthe liquidity crunchSAMA reduced the repo rate four times between Oct and Dec 08 from the level of 5.5%, atwhich it had stood since February 2007. On 19 Jan 09, the Central Bank lowered repo rates50bp to 2% and reverse repo rate 75bp to 0.75%, which resulted in SAIBOR declining 46bp to1.38% on the same day. The reverse repo rate also declined from 4.25% in December 2007 to0.75% by January 2009. It was further lowered by 25bp to 0.5% on 14 April 2009.Thesemeasures are likely to enhance the liquidity position of domestic banks and help curb interbankinterest rates that peaked in October 2008. Currently, interbank interest rates for Saudi Riyalstands at 0.88% (18 May 2009). However, this is not expected to bring about a significantincrease in corporate lending, as banks have become more cautious in the environment ofheightened uncertainty.Exhibit 4: Inflation and interest rate (%)121086420-21999 2000 2001 2002 2003 2004 2005 2006 2007 2008InflationShort and medium term interest rateSource: EIUThe sharp reversals of monetary policy stand in marked contrast to the record year that 2008proved to be in fiscal policy terms. In spite of the pronounced slowdown of the economy duringthe second half of the year, the high oil prices until July translated into the largest-ever budgetsurplus in the country’s history. Actual Government revenues in the course of 2008 rose toSR1,100bn against the budgeted SR450bn (144% higher). Government expenditures reachedSR510bn in 2008, 24% higher than the budgeted figure for the year.A huge budget surplusprovides plenty of room for theSaudi Government to engage infiscal easingThe overall fiscal surplus attained SR590bn in 2008, which was more than three times the 2007figure of SR178.5bn and 14.75 times higher than the budgeted surplus of SR40bn. This enabledthe Saudi Government to further reduce outstanding debt levels and strengthen officialreserves. Domestic Government debt, having peaked at 119.0% of GDP in 1999, continued totrend down from 18.7% to 13.5% of GDP. Government deposits with SAMA increased fromSR517bn in December 2007 to SR1,082bn in October 2008. In addition, KSA’s net foreignassets increased to SR1,689.7bn in October 2008 from SR1,171.0bn in December 2007. KSA’sconservative policy in investing its reserves cushioned it against fall in global equity markets inJUNE 2009SAUDI ARABIA FACTBOOK11


OUTLOOK AND DIRECTION2008. However, investment income from these assets is expected to fall in 2009, as interestrates on foreign deposits and securities drop.Exhibit 5: Budget balance and public debt(USD bn)250200150100500-501999 2000 2001 2002 2003 2004 2005 2006 2007 2008140120100806040200-20PercentagePublic debt (USD bn)Budget balance as % of GDPBudget balance (USD bn)Public debt as % of GDPSource: Ministry of Finance (KSA), EIUWhile overall public sector debt has declined markedly in recent years, Government borrowinghas in relative terms become more reliant on external borrowing. External borrowings, totalingUSD42.3bn, accounted for 19.9% of the total public debt in 1999 and compared to domesticborrowing of USD169.8bn. However, 2007 saw a reversal of the traditional dominance ofdomestic borrowing, with the proportion of external borrowing increasing to 60.7% of total debt.Short-term debt grew from USD19.6bn (46.4% of total external debt) in 1999 to USD35.8bn(37.6% of total external debt) in 2007.Exhibit 6: External debt(USD bn)706050403020102826242220181614% of GDP01999 2000 2001 2002 2003 2004 2005 2006 200712External debt (USD bn) Short term debt (USD bn) External debt (% of GDP)Source: EIUThe favorable debt situationprovides an additional sourceof comfort to investorsMost domestic Government debt has been raised through bond issues subscribed to by localbanks. KSA enjoys a strong credit rating, which was recently upgraded in recognition of themacroeconomic strength of the country, which further boosted the substantial debt repaymentsin recent years. This has improved KSA’s profile as an investment destination and, among otherthings, significantly enhanced the ability of the Saudi corporate sector to raise funds.JUNE 2009 SAUDI ARABIA FACTBOOK 12


OUTLOOK AND DIRECTIONExhibit 7: Sovereign debt ratingS & P Moody’s FitchCountryRating Outlook Rating Outlook Rating OutlookGCCBahrain A Stable A2 Negative A+ StableKuwait AA Stable Aa2 Stable AA StableOman A Stable A2 Stable N/A N/AQatar AA Stable Aa2 Stable N/A N/AKSA AA Stable A1 Positive AA StableUAE AA Stable Aa2 Stable AA StableRegion (ex-GCC)Egypt BBB- Stable Ba1 Negative BBB- NegativeJordan BBB Stable Baa3 Stable N/A N/AMorocco BBB Stable Ba1 Stable BBB StableBRICChina A+ Stable A1 Stable AA StableIndia BBB- Stable Ba2 Stable BBB- StableBrazil BBB+ Stable Ba1 Stable BBB- StableRussia BBB+ Negative Baa1 Stable BBB NegativeArgentina B- Stable B3 Stable B- N/ASouth Africa A+ Negative A2 Stable A NegativeThailand A Negative Baa1 Negative A NegativeVietnam BB+ Negative Ba3 Negative BB NegativeIndonesia BB+ Stable Ba3 Stable BB StableKorea A+ Stable A2 Stable AA NegativeMalaysia A+ Stable A3 Stable A+ StableMexico A+ Stable Baa1 Stable A- NegativeSource: S&P, Moody’s, and FitchEconomic fundamentals of KSAcompare favorably with otherGCC marketsThe strong credit rating is matched by favorable assessments of Saudi competitiveness. The2008-2009 World Economic Forum Global Competitiveness Index (GCI) report finds KSA to bea regional leader.Exhibit 8: KSA’s competitive position in GCCGlobalcompetitivenessindexBasicrequirementsEfficiencyenhancersInnovation andsophisticationfactorsRank Score Rank Score Rank Score Rank ScoreQatar 26 4.83 21 5.50 31 4.53 35 4.14KSA 27 4.72 34 5.21 45 4.35 37 4.09UAE 31 4.68 17 5.67 29 4.64 38 4.09Kuwait 35 4.58 39 5.12 52 4.19 52 3.82Bahrain 37 4.57 28 5.31 46 4.32 54 3.76Oman 38 4.55 31 5.25 61 4.09 48 3.87Source: World Economic Forum, The Global Competitiveness Report 2008-20092009 budget is marked by anexpansionary fiscal stance anda commitment to sustainablegrowthThe 2009 budget, unveiled on 22 Dec 08, continues the tradition of fiscal prudence, although, inrecognition of the growing economic weakness, it proposes deficit spending for the first timeafter a series of surpluses since 2002. Reflecting the unfavorable oil price outlook, the budgetforesees revenues of SR410bn, 9% lower than the 2008 budgeted revenue (SR450bn) and63% lower than the 2008 actual revenues (SR1,100bn). The Government is estimated to havebased its budget on an average annual oil price forecast of approximately USD40 a barrel.However, to show its commitment to support the economy, the Government announcedJUNE 2009SAUDI ARABIA FACTBOOK13


OUTLOOK AND DIRECTIONspending of SR475bn, 16% higher than the 2008 budgeted expenditure of SR410bn, thusimplying a fiscal deficit of SR65bn. Of the total spending, a remarkably high 47% is expected tobe capital expenditure, emphasizing the Government’s willingness to improve criticalinfrastructure and to continue to boost non-oil sector growth in the short run.Budget spending prioritizeseducation, healthcare, andinfrastructureThe Government has increased its spending on education and manpower to SR122bn, or25.7% of the total spending. Key projects include the construction of 1,500 new schools, alongwith the renovation of 2,000 others. The budget further provides for the establishment of aPrincess Norah University for women, as well as a Medical City at Riyadh’s King SaudUniversity. Healthcare and social services were allotted SR52bn (10.6% of the spending) to beused to build hospitals and primary care centers. Apart from developing social infrastructure, theGovernment also announced higher spending on physical infrastructure such as transport andtelecommunication (SR19.2bn for road construction, ports, airports, railroad developments andnew postal services) and water, agriculture and infrastructure (SR35.4bn to finance industrialcities in Jubail and Yanbu).Exhibit 9: KSA - 2009 budget sectoral new appropriations of total USD126.7bnOthers32%Education26%Health & social affairs11%Specialized CreditInstitution16%Water, agriculture &infrastructure7%Municipalty services4%Transporta ion &telecommunica ion4%Source: Ministry of Finance, Government of KSAJUNE 2009SAUDI ARABIA FACTBOOK14


OUTLOOK AND DIRECTIONStrong hydrocarbons fundamentalsCapitalizing on its vastreserves, KSA plans to increaseits oil production capacityKSA holds approximately 25% of the world’s total proven oil reserves and is the world’s leadingproducer. KSA’s known oil reserves are expected to be sufficient for approximately 70–80 years.At an average price of USD96.6 per barrel in 2008, these reserves are worth USD25.5trn. Evenassuming that prices revert to their 2000-2007 average of USD43.75 per barrel due to thecurrent economic crisis, the value of the reserves would amount to USD11.6trn, which isapproximately equal to more than 20 times the current annual Government expenditure.• KSA has the world’s largest oil reserves (25% of the total); fourth largest natural gasreserves (252.6 trillion cubic feet)• It is the world’s leading producer of crude oil; accounting for around 31% of OPEC’sproduction• KSA is undertaking projects to expand its oil production capacity to 12.5mn bpd by 2010• Outlook for 2009 remains bleak due to weak crude oil demand and oil price softness• To counter falling oil prices in the short-term, KSA lowered its oil output to about 8.1mnbpd in January 2009, in line with the OPEC’s decision to cut production• Long-term growth story remains intact; Asian markets will be the key growth driverSaudi Arabia is increasingly the only real swing producer in the oil market, accounting for 31%of OPEC's total production target. Current investment plans look to boost this position further.KSA is planning to increase its production capacity to 12.5mn bpd by 2010 from the currentcapacity of 10.8mn bpd. As of December 2008, projects worth USD152bn were underway in theoil, gas and petrochemicals sectors, a substantial proportion of the aggregate project pipeline ofUSD492bn. The completion of these projects will enable the Kingdom to achieve its desiredtarget.Exhibit 10: World proven crude oil reserves by region (mn barrels)2002 2003 2004 2005 2006 2007North America 27,167 26,954 26,243 26,579 26,699 25,914Latin America 117,528 117,045 118,700 118,141 123,717 134,691Eastern Europe 118,350 121,954 124,451 128,597 129,056 129,049Western Europe 18,081 17,656 16,810 16,716 15,372 15,110Middle East 730,102 735,083 739,136 742,688 743,858 741,566Africa 102,064 112,345 113,264 117,458 117,572 119,572Asia & Pacific 38,441 38,442 38,763 39,000 38,857 38,282Total world 1,151,734 1,169,480 1,177,466 1,189,178 1,195,130 1,204,182OPEC 895,639 904,575 910,754 918,295 927,435 939,016KSA 262,790 262,730 264,310 264,211 264,251 264,209KSA as world % 22.8 22.5 22.5 22. 22.1 21.9Source: OPEC – ABS 2007Exhibit 11: Comparative estimate of remaining life of oil reserves of top five countriesProven oil reserves(bn barrels)Daily oil production(mn barrels)Estimated remaininglife of reserves (years)KSA 264.21 8.82 67.91IR Iran 136.15 4.03 93.16Iraq 115.00 2.18 155.97Kuwait 101.50 2.57 104.54United Arab Emirates 97.80 2.53 90.83Source: OPEC – ABS 2007, U.S. – EIAJUNE 2009SAUDI ARABIA FACTBOOK15


OUTLOOK AND DIRECTIONDespite diversification efforts,the Saudi economy remainsprimarily dependent onhydrocarbonsIn spite of the ongoing diversification efforts, the Saudi economy looks certain to remain heavilyreliant on oil for the foreseeable future. The contribution of the oil sector to the country’s GDPincreased from 33.5% in 1999 to 54.5% in 2006. It contributed almost 82.5% (USD88bn) to thebudget revenues of USD106.67bn in 2007. With oil prices plummeting since last year andprojections of demand destruction still being revised upward, the near-term outlook for the oilprice is weak. Latest IEA figures forecast a 1 mbd drop in global oil consumption in 2009 to 84.8mbd. Moreover, OPEC, which pumps approximately 40% of the world's oil, cut output by 4.2mnbpd during the second half of 2008 in a bid to counter falling prices, the largest-ever such cut. Inline with the OPEC decision, Saudi Arabia lowered its oil output to about 8.1mn bpd in Jan 09.Despite production cuts by the OPEC since September 2008, it has failed to raise oil prices tothe level sought by the members, as the global recession erodes demand. The average price inthe first quarter of 2009 was USD43.32 per barrel, which was 56.0% lower than a year earlier.While production cuts are certain to be implemented to a degree, enforcing discipline has beena persistent problem for OPEC members in the past, which may limit the impact of the cuts onprices.Exhibit 12: KSA - crude oil production (mn barrels)4,000103,00082,000641,000201999 2000 2001 2002 2003 2004 2005 2006 2007 2008Total crude oil productionDaily crude oil production (RHS)0Source: SAMAWeak crude oil demand andprice likely to depress KSAeconomy in 2009, but asignificant pick-up expected in2010Going forward, oil prices will be critically dependent on the demand outlook. Beyond 2010, themarket outlook will be determined above all by emerging markets, with China, India and theMiddle East expected to account for 80% of incremental oil demand up to 2030, accordingto IEA estimates. Demand from Asian emerging economies is set to double from the 14.8mnbpd level in 2004 to 29.8mn bpd in 2030. Growth in other key emerging regions is likely toexceed 70% over the same period. With a number of mature oil fields around the worlddeclining, the oil market is likely to be fairly tight, which should sustain higher oil prices,themselves a precondition for additional investment in the sector.Emerging economies to definethe dynamics of oil demandgrowthKSA’s oil export market is dominated by Asia and the Far East, North America, and WesternEurope. The share of Asia and the Far East has been steadily increasing. The importance of theAsian market will be a key driver of the likely expansion of Saudi production and exports in thecoming years.JUNE 2009SAUDI ARABIA FACTBOOK16


OUTLOOK AND DIRECTIONExhibit 13: KSA’s exports of crude oil by destination (mn barrels)YearNorthAmericaSouthAmericaWestEuropeMiddleEastAfricaAsia &Far East Oceania Total1999 534.20 26.95 454.33 68.97 73.66 921.77 7.80 2,087.682000 577.17 22.47 483.80 60.44 79.45 1,044.67 14.38 2,282.382001 560.06 36.76 405.86 57.44 64.62 1,067.98 10.38 2,203.102002 488.80 22.08 343.12 49.46 68.36 942.89 14.18 1,928.892003 596.92 23.84 434.86 72.69 96.34 1,149.87 6.33 2,380.852004 558.38 22.32 459.56 95.45 88.74 1,251.06 11.26 2,486.772005 530.93 23.79 440.67 112.87 86.02 1,435.34 1.62 2,631.242006 534.50 23.78 374.80 109.48 79.01 1,440.63 3.52 2,565.722007 571.78 22.34 306.04 113.06 71.76 1,453.23 2.95 2,541.16Source: OPEC, SAMAKSA is also well positioned to benefit from the growing interest in natural gas, driven by pollutionconcerns and efficiency considerations. KSA possesses gas reserves of 252.6 trillion cubic feetand ranks fourth in the world after Russia, Iran and Qatar.Exhibit 14: KSA – gas statistics2001 2002 2003 2004 2005 2006 2007Reserves (trillion scf) 227,946 234,673 238,492 241,323 243,648 252,607 257,954Number of discovered fields 12 12 13 14 14 - -Gas production (bn cu m) 57 61 68 76 81 85 -Gas consumption (‘000s barrels) 305,080 327,008 339,796 376,140 416,897 422,905 436,960Source: Ministry of Petroleum and Mineral Resources, Govt. of KSAKSA to witness strong growthin domestic natural gasdemand from utilities andindustryDomestically, Saudi Arabia uses gas for electricity generation, water desalination, and as apetrochemical feedstock. Gas thus plays a critical role in the ongoing and projecteddiversification ventures in the Kingdom. Saudi Arabia's natural gas demand is expected to reach14.5bn cubic feet-a-day (cf/d) over the next 25 years, compared with around 5.5bn cf/d atpresent. Though Saudi Aramco plans to increase the exploration of gas, the growth in naturalgas output under the current expansion plans may in fact fail to meet the soaring demand.Moreover, since much of KSA’s gas production is associated with oil production, the cut in oiloutput to support prices could lead to disruptions in natural gas supply for the industrial andutility sector.JUNE 2009SAUDI ARABIA FACTBOOK17


OUTLOOK AND DIRECTIONUSD347.3bn during the period 2003-2008, benefiting from the country’s strong economicgrowth, the government’s focus on economic diversification, massive investments and low creditpenetration. Going forward, the low penetration of financial services in KSA – loans-to-GDPratio of 41.6% in KSA, compared with more than 80% in the UAE and Bahrain – underscoresthe potential for growth in the sector. Additionally, the anticipated growth in population and theintroduction of a comprehensive regulatory framework for mortgages are likely key catalysts forlong-term credit growth in the Kingdom.Moreover, the liberalization of the insurance sector and regulations mandating motor and healthinsurance are expected to boost expenditure on insurance. KSA is one of the most under-insuredmarkets in the GCC with insurance penetration rates (gross written premium to GDP ratio) at only0.6% in 2007 against UAE’s (1.9%), Oman (1.1%) and Qatar (0.9%). This indicates that the sectorhas potential for exponential growth going forward.Manufacturing, financial andconstruction sectors possesconsiderable convergencepotentialThe Saudi telecommunications sector continues to be among the lucrative markets in the GCCdue to low broadband and Internet penetration as well as favorable demographics. At the sametime, the rising population, a growing hotel and tourism industry and higher personal disposableincome levels are important structural factors fuelling demand in the Kingdom’s real estatemarket. This along with the establishment of a proper regulatory framework for mortgages andthe planned development of the six economic cities is likely to support growth in the constructionsector over the long term. Overall, the manufacturing, financial and construction sectors arelikely to be the prime growth drivers, going forward. We expect these sectors to expand at aCAGR of 9.5-13% in 2008-2010.Favorable demographic profile,an important chapter in KSA’sgrowth storyKSA’s population was more than 24.9mn in 2007, with average annual growth of approx 2.5%over the period 1999-2007. In 2008, the population is estimated to have grown 2.3% to24,807,273 individuals. Of the total, approximately 73% are Saudi nationals. Population growthis set to remain robust in the medium term at 3% pa, driven in part by a continued influx ofexpatriates linked economic liberalization and growth.Exhibit 16: KSA’s population and y-o-y change in population482.7Population (million)43383328232.62.52.4Y-o-y change in popula ion (%)181999 2000 2001 2002 2003 2004 2005 2006 2007 2010 2015 2020 2025 20302.3Population in millionY-o-y change in population(%)Source: EIUIn 2007, KSA’s working age population was 14.5mn (58.5% of total) with 59.4% of thepopulation in the age group of 15-64. At the same time, approximately 42% of the population fellinto the 0–15 age group. KSA’s demographic profile will thus ensure a steady supply of newentrants into the labor force, but the young population also highlights the importance ofJUNE 2009SAUDI ARABIA FACTBOOK19


OUTLOOK AND DIRECTIONappropriate policies to ensure that the workforce is educated and trained. The large share of theworking-age population and favorable employment prospects should continue to boost percapita GDP significantly, which in turn indicates the substantial opportunities for consumptiondrivendemand and growth.Exhibit 17: Population pyramid (estimated)Saudi Arabia: 201080+75-7970-74Male65-69Female60-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-145-90-42.5 2 0 1 5 2 0 0.5 0.0 0.0 0.5 10 15 20 25Population (in mn)MaleSaudi Arabia: 203080+75-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-145-90-4Female2 5 2.0 1 5 2 0 0.5 0.0 0 0 0 5 1.0 1.5 2 0 2 5Population (in mn)Source EIU, Central Department of Statistics and Information of Saudi ArabiaRecent developments suggest that the Government’s efforts to boost employment have startedto yield results — the absolute number of economically active people has increased, while theunemployment rate has come down.Exhibit 18: Labor force and unemploymentLabor force (millions)6 56 36.15 95.75 55 35.11412108642Unemployment rate (%)4 91999 2000 2001 2002 2003 2004 2005 2006 2007Labor forceUnemployment rate - totalUnemployment rate - SaudiUnemployment rate - non-Saudi0Source: EIUWTO accession hasencouraged foreign investmentand created investmentopportunities in many sectorsKSA joined the WTO on 11 Dec 05, after more than a decade of negotiations. The SaudiGovernment has taken a number of important steps to align various policies with WTOregulations. To accelerate liberalization further, KSA Government launched the 10 x 10 mission(to position KSA among the top 10 of the world's most competitive nations by 2010 in 2005).The Kingdom has opened up a wide range of sectors to foreign investment. These includebanking, insurance, wholesale, retail and franchise distribution services, telecommunicationsservices, and the IT sector. The WTO accession is an important anchor to the broader reform,which led to the World Bank recognizing the Kingdom as one of the world's top ten reformers in2006-07. KSA is currently ranked 16th in the World Bank's Ease of Doing Business 2009 index.JUNE 2009SAUDI ARABIA FACTBOOK20


OUTLOOK AND DIRECTIONThe significantly improved business climate, along with the Most Favored Nation (MFN) statusobtained in connected with WTO accession, resulted in FDI worth USD18.3bn flowing into KSAin 2006, the highest among the GCC countries. FDI further grew by 33% to USD24.3bn in 2007.Energy and commodities-related investments accounted for a majority of this figure. Otherfactors contributing to the unprecedented growth in FDI include the removal of minimum capitalrequirements for foreign investors, a reduction in the corporate tax rate from 45% to 20%, andthe opening of the inland transport, wholesale and retail distribution systems to foreigninvestors. Through the Saudi Arabian General Investment Authority (SAGIA), the Government ispromoting private sector investments in the areas of education, energy, health, information andcommunication technology (ICT), life sciences, and transportation.Congenial businessenvironment provides a strongdraw to foreign investmentDue to the ongoing liberalization measures, SAGIA forecasts FDI inflows of up to USD900bnover the next ten years into sectors such as energy, power, financial services, and real estate.Exhibit 19: Improvements after WTO accessionValueAnnual percentage change2007 2000-2007 2006 2007Merchandise tradeMerchandise exports, fob (USD mn) 234,200 17 17 11Marchandise imports, c.i.f. (USD mn) 90,217 17 17 29Share in world total exports 1.68 Share in world total exports 0.63Commercial services tradeCommercial services exports (USD mn) 7,912 7 9 8Commercial services imports (USD mn) 30,560 16 34 58Share in world total exports 0.24 Share in world total imports 0.99Source: October 2008, WTOPrivatization policy andinitiatives likely to boost theGovernment’s revenuesAnother key tenet of economic policy is efforts to foster private entrepreneurship. The SupremeEconomic Council (SEC), established in 1999, formulates and monitors economic developmentpolicies in order to accelerate the privatization program announced by KSA Government in1994. In 2002, the SEC formally endorsed a privatization strategy that aims to improveeconomic efficiency, boost competitiveness, increase private sector investment, and attractdomestic and foreign investors. These initiatives further promise to expand the revenue base ofthe Government budget by creating additional income streams such as privatization proceeds.In pursuit of its objectives, the SEC initially focused on creating a comprehensive regulatory andinstitutional framework for the reforms. The Government set up the Communications andInformation Technology Commission, the Saudi Electricity Regulatory Authority, and the SaudiOrganization for Industrial Estates and Technology Zones, to regulate the relevant sectors.Furthermore, the Council of Ministers issued a list of 22 targeted economic activities andGovernment services to be privatized. The selection of these activities is based on theircontribution to the national economy, particularly in terms of generating employmentopportunities for KSA nationals, and the readiness of particular companies for privatization. Theprivatization process is further driven by the frequent inadequacy of services provided by publicenterprises as well as the absorptive capacity of the capital market. Privatization targets includeaviation, railroads, roads, industrial cities services, and several municipal, social, agricultural,and medical services. Among the main steps approved to date by The Ministerial PrivatizationCommittee was the 2002 IPO of a 30% stake in STC, followed by the further divestment of a50% stake held by the Public Investment Fund in 2003.JUNE 2009SAUDI ARABIA FACTBOOK21


OUTLOOK AND DIRECTIONInternational tradeRecent years have been marked by a steadily increasing integration of Saudi Arabia in theglobal economy. Total exports jumped by 32.0% to USD278.9bn in 2007, supported by high oilprices and the various economic diversification initiatives. Imports grew from USD69.8bn in2006 to USD90.3bn in 2007, buoyed by the oil price-fueled boom. Oil exports accounted for themajority of KSA’s total exports, while engineering products (machinery, electric appliances andequipment) constitute the leading category of imports. The strength of the hydrocarbons marketallowed KSA to record a trade surplus of USD148.3bn in 2007. Official estimates put totalexports of goods and services in 2008 at USD326.9bn. Non-oil exports of goods are expectedto account for a still relatively modest USD30.7bn of this. Total imports of goods and servicesare expected to reach USD162.7bn.Exhibit 20: International trade(USD bn)35030025020015010050100%80%60%40%20%01999 2000 2001 2002 2003 2004 2005 2006 2007 20080%Total exports fobCrude oil as % of total exportsTotal imports cifMachinery as % of total importsSource: Ministry of Finance, Government of KSA , SAMA, EIUKSA’s major export destinations in 2007 included Japan (17.7% of total exports), the U.S(15.9%), South Korea (9.1%), China (7.2%), Taiwan (4.7%) and Singapore (4.5%). Oil exportsform the major component of KSA’s total exports, while other products include barley, dates,dairy products, flowers, chemicals, and plastic products. Since Japan and the US are the twomost important export destinations, an economic slowdown in those countries will inevitablyadversely affect KSA’s exports.The picture is similar on the import side. In 2007, the U.S accounted for 12.3% of total importsfollowed by Germany (8.6%), China (7.9%), Japan (7.3%), the United Kingdom (4.9%), Italy(4.8%), and South Korea (4.1%). Over the past two years, China has quickly established itselfas an important import partner of KSA. Machinery and electrical equipment, transport equipmentand base metals, in that order, are the three leading import categories, accounting for 60% ofthe total.JUNE 2009SAUDI ARABIA FACTBOOK22


OUTLOOK AND DIRECTIONExhibit 21: Major export partners (% of total exports)25%Exhibit 22: Major import partners (% of total imports)2020%1615%1210%85%40%1999 2000 2001 2002 2003 2004 2005 2006 2007Japan USA South Korea China01999 2000 2001 2002 2003 2004 2005 2006 2007USA Germany China JapanSource: SAMA, EIUSource: SAMA, EIUCurrency and exchange ratesKSA follows a fixed exchange rate policy under which the Saudi Riyal is pegged to the USD atthe exchange rate of USD1=SR3.745. The CPI-based Real Effective Exchange Rate (100 in1997) fell sharply from 99.28 in 1999 to 82.22 in 2007. This dented the purchasing power of theSaudi Riyal and contributed to the onset of inflationary pressures in 2007. This led to growingpressures on GCC Governments to drop the peg and to consider measures such as tradeweightedexchange rates. This was indeed the course taken by Kuwait when it de-linked theDinar from the USD in May 07. Among others, the Arab Monetary Fund advocated the idea ofde-pegging in December 07. However, recent statements from various GCC Governmentssuggest that such steps are unlikely in the near term, not least because of the abatinginflationary pressures and the recent recovery in the standing of the greenback. Instead, thefocus appears to have shifted to the goal of adopting a shared currency at the beginning of the2010s, even if the project remain fraught with political tensions and technical delays. The Dollarpeg will probably remain the most logical instrument of exchange rate coordination up to thatpoint, while the introduction of the GCC single currency will create an opportunity to review toexchange rate regime for the region as a whole.Exhibit 23: CPI based Real Effective Exchange Rate (REER)105100959085801999 2000 2001 2002 2003 2004 2005 2006 2007 2008ESource: SAMA, EIUJUNE 2009SAUDI ARABIA FACTBOOK23


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Saudi Stock ExchangeCornerstone of GCC Equity Markets


History and overviewThe leading GCC equity marketTadawul’s operational systemswere far ahead of its timesShares were first offered to the public in KSA in 1954 and by the end of 1975, the number ofpublic companies had reached 14. In 1984, the Ministry of Finance and National Economy, theMinistry of Commerce, and SAMA formed a Ministerial Committee to oversee the developmentand regulation of the stock market. The country’s commercial banks, which were responsible forshare trading, established the Saudi Share Registration Company (SSRC) in 1984. The newentity provided centralized trading facilities for joint stock companies along with the clearing andsettlement of all transactions. Automated clearing and settlement was introduced in 1989followed by the launched of the Electronic Securities Information System (ESIS) a year later. Acomprehensive modern infrastructure for securities trading, clearing and settlements, Tadawul,was set up in October 2001.A modern, comprehensiveregulatory framework wascreated simultaneously with theCapital Market AuthorityThe establishment of Tadawul was backed up by a commitment to establish world-classstandards for the institutional architecture and regulation of the new market. Tadawul wasplaced under the supervision of the newly established Capital Market Authority (CMA) whoseoperations are governed by the 2003 Capital Market Law. Reporting directly to the King, theCMA enjoys financial, legal and administrative independence. Many of the practices adopted byTadawul were in line with or even ahead of international standards (e.g. dematerialization andsame day clearing and settlement since 1990). A special dispute resolution mechanism existsfor the capital markets.The state-owned Tadawul became a joint stock company -- Saudi Stock Exchange (Tadawul)Company -- in March 2007, with a capital of SR1.2bn (USD320mn). Tadawul is managed by aBoard of nine members – the Governor of SAMA, two members, one each from the Ministry ofFinance and National Economy and the Ministry of Commerce, four from licensed brokerages, andtwo from listed companies. Electronic trading in Tadawul was upgraded by the Nordic exchangeoperator OMX in 2007.Between 1999 and 2007, the Saudi stock market experienced almost uninterrupted growth due tothe country’s strong economic performance which in turn drove rapid earnings growth. The TASIsurged by 451% from 2,029 at the end of 1999 to 11,176 at the end of 2007. Total market capincreased from USD61.1bn in 1999 to USD246.9bn at the end of 2008, while the number oftransactions grew from 0.5mn to 52.1mn. The total number of shares traded rose more thanhundred-fold from 0.5bn to 59.7bn. Returns from the index increased at a CAGR of 60.1% fromJan 03 to Dec 08, as surging oil prices translated into higher revenues.Market corrected substantiallyin 2006 due to negativesentiment and increased riskaversionThe performance of the market during this decade has been marked by considerable volatility. Aparticularly robust boom culminated in 2006 with high liquidity levels, backed by seemingly everincreasingoil prices, and by foreign investors (primarily from developed countries) wanting tobenefit from the attractive interest rate differential. Though Tadawul imposed restrictions onshare dealings by foreign investors, participation in open-end mutual funds was allowed.Although corporate earnings continued to grow, the pace was ultimately insufficient to sustainthe market rally. In value terms, shares traded in the last quarter of 2006 fell by almost 49% incomparison to the same period in 2005. Increasing interest rates in developing countriesreduced the attractiveness of the Saudi equity market for foreign investors as well as theirappetite for risk, which they had until then willingly ignored in their quest for higher returns. Theeffects of an overvalued market and of foreign money leaving were felt by the GCC in late 2005JUNE 2009SAUDI ARABIA FACTBOOK26


HISTORY AND OVERVIEWand by the Saudi stock market in early 2006. Consequently, the Saudi stock market witnessed amassive correction in 2006, with the TASI shedding 52.5% y-o-y to end 2006 at 7,933. Thecorrection helped re-align valuations to underlying fundamentals.TASI rose by 451% in 1999-2007, before correcting again in2008, with corporateprofitability under stressTASI regained traction in 2007 and jumped 40.8% to 11,176, primarily fueled by high oil pricesand attractive valuations of Saudi stocks. Oil prices grew by 60.42% from 29 Dec 06 (USD55.95per barrel) to 28 December 2007 (USD89.76 per barrel). However, in 2008, TASI lost significantground, as the global economic crisis slowly gripped KSA equity markets. The second half of2008 belied all expectations of the Kingdom’s relatively closed domestic market protecting theeconomy from the global downturn and dashed the previously popular decoupling theory.Matching the crash of 2006, share values in KSA dropped by 56.5% in 2008, reflecting fears ofa global recession. This resulted largely from panic selling by retail investors who continue toaccount for approximately 92% of the total turnover on Tadawul. The oil price crash and flight ofliquidity particularly depressed the Petrochemical and Banking & Financial Services sectors,respectively, two heavyweight sectors accounting for over 70% of TASI’s total capitalization.Their losses during the year were 66.5% and 55.5% respectively. Concerns over KSA banks’sub-prime exposure arising from write-downs by banks elsewhere in the region further dentedinvestor confidence in the Kingdom, in spite of reassurances by the authorities. The stockexchange’s market capitalization fell by 52.5% to SR925bn while the number of transactionsreached 59,683mn. In addition, TASI’s 12M trailing P/E multiple contracted by 49.0% during2008.Exhibit 24: Saudi stock exchange – summary statisticsYearTransactions(‘000s)Sharestraded (mn)Mkt cap(SR bn)Mkt cap(USD bn) TASIy-o-ychg. (%)1999 438 528 229 61.07 2,029 43.62000 498 555 254 67.73 2,258 11.32001 605 692 275 73.33 2,430 7.62002 1,034 1,736 280 74.67 2,518 3.62003 3,763 5,566 590 157.33 4,438 76.32004 13,320 10,298 1,149 306.40 8,206 84.92005 46,607 12,281 2,438 650.13 16,713 103.72006 96,096 74,440 1,226 326.93 7,933 (52.5)2007 65,670 61,732 1,946 518.93 11,176 40.92008 52,136 59,683 925 246.67 4,803 (57.0)% change 10 – year 70.1 69.1 16.8 16.8 10.0Source: Saudi Stock ExchangeSaudi retail investors dominate trading on the Tadawul, accounting for 93.5% and 92.8% of totaltrades and turnover, respectively. Saudi corporate and mutual funds account for only 1.9% oftotal turnover. The market thus continues to differ markedly from its more established Westerncounterparts due to the relatively marginal role of institutional investors.JUNE 2009 SAUDI ARABIA FACTBOOK 27


HISTORY AND OVERVIEWExhibit 25: Breakdown of number of tradesExhibit 26: Breakdown of turnoverMutual Fund0.8%Corporate2.0%GCC Citizens1.1%Non-GCCCitizens1.9%Foreigners0.1%Mutual Fund1.2%Corporate1.4%GCC Citizens0 9%Non-GCCCitizens1.9%Foreigners0.2%Individual94.1%Individual94.4%Source TadawulSource TadawulThe dominance of retail investors remains a significant source of volatility on the Saudi equitymarket. Efforts are being made to foster investor education, transparency and the quality andavailability of research. Nonetheless, international experience demonstrates that only a greaterrole assumed by institutional investors can fundamentally ameliorate the situation.The domestic institutional investor base is gradually expanding thanks to the expansion of theinsurance sector and of mutual funds. While positive progress is likely and certain to profit fromfurther de-regulation in the future, greater access by foreign investors constituted anotherpotential way of accelerating the process. In this regard, progress to date has been verygradual. In 2007, the CMA issued a regulation ensuring equality between KSA nationals andcitizens of other GCC countries with regard to investment and trading in the Saudi stock market.SAMA’s guidelines for non-GCC citizens allowsinvestments only throughmutual funds or equity swapsAt present, non-resident non-GCC citizens are not allowed to directly trade in the Saudi equitymarket and can invest only through equity-based mutual funds or – as of 2008 -- through swapdeals. The mutual funds must be managed by a local fund manager. Such funds are supervisedby SAMA.Exhibit 27: Flow chart - Inflows in KSA through mutual fund routeNon-GCC investors –Individuals, Natural EntitiesReturnsFunds flowEquity Mutual fundSaudi Stock MarketReturnsSource: NCBC ResearchSwap deals point to greaterforeign participation once themarket stabilizesUnder swap agreements, non-resident foreign investors are allowed to buy stocks through alicensed intermediary, who would technically be the owner of the shares. However, sharesbought through this arrangement would be for a maximum term of four years. The CMA mustbe notified of the details of such deals and be updated on a monthly basis. This developmentfailed to muster the level of foreign capital inflows expected, as investors were not allowed todirectly own a stock, with all the rights and entitlements associated with stock ownership.JUNE 2009SAUDI ARABIA FACTBOOK28


HISTORY AND OVERVIEWUltimately, foreign interest in the Saudi market is likely to grow steadily and further liberalizingmeasures should gradually materialize. The eventual inclusion of Tadawul in some of the keyemerging market indices would make KSA an essential part of the portfolios of a wide range ofinternational investors. The country will further benefit from its statute as one of the largestemerging capital markets and home to an increasingly diverse economy with exceptional growthpotential.Market compositionTadawul is the dominant marketin the GCC, with the largestmarket capitalization and thehighest liquidityWith a market capitalization of USD246.5bn as of 31 Dec 08, Tadawul is the largest GCC stockmarket accounting for 45.2% of the regional aggregate. It is the most liquid market in GCC withan average daily turnover of USD2.08bn in 2008. Tadawul’s market cap accounted for 6.4% ofthe MSCI Emerging Markets index at the end of 2007. KSA’s equity market delivered a Returnon Equity (RoE) of 24.1% when compared with 16.7% by the MSCI Emerging Markets Indexand 18.9% by BRIC countries in 2007. However, post the credit crisis which began in 2008, theSaudi market has fallen by 56%, one of the sharpest corrections in the region.Exhibit 28: Market cap (USD bn) and index movement y-o-y (%)70060050040030020010001999 2000 2001 2002 2003 2004 2005 2006 2007 2008105%85%65%45%25%5%-15%-35%-55%Market capStock index returns (RHS)Source: Saudi stock exchange, NCBC ResearchThe adoption of a free-floatmethodology was a paradigmshift in Saudi indexingOn 5 April 2008, Tadawul became the first GCC market to introduce the free-float methodologyfor index calculation. Based on Tadawul's data on free float of shares, we estimate the free-floatmarket capitalization of the Saudi stock market to be SR372bn (USD99.47bn) as on 31December 2008, which is 37.6% of the market cap calculated using the full-market capitalizationmethod.JUNE 2009SAUDI ARABIA FACTBOOK29


HISTORY AND OVERVIEWExhibit 29: Concentration of large cap companies fall significantly1009084.8%8063.3%Cumulative weight (%)706050403048.5%45.6%60.9%82.9%2010Top 5 Firms Top 10 Firms Top 25 FirmsOld WeightNew WeightSource: NCBC ResearchIn this new structure, the number of sectors expanded from 8 to 15 2007 with individual subindicesfor each. As of 31 December 2008, the banking sector had maximum weight (31.1%) inthe index, followed by petrochemical (25.6%) and telecom (14.5%). Following theimplementation of the new system, Saudi Basic Industries Corp, Kingdom Holding, and SaudiKayan Petrochemical Company were the top losers in terms of index weightage, while STC, AlRajhi Bank, Samba Financial Group and Saudi Electricity are the top gainers.Banking and financial servicessector companies have thegreatest weight in the SaudimarketExhibit 30: Changes in top 10 companiesCompany Old rank New rankOldweights (%)Newweights (%)Saudi Basic Industries Corp. 1 1 25.8 16.7Saudi Telecom Co. 2 2 7.4 10.6Al Rajhi Bank 3 3 7.3 9.1Kingdom Holding Co. 4 8 4.1 3.2Samba Financial Group 5 4 4.0 5.0Saudi Electricity Co. 6 5 3.4 4.2SABB 7 6 3.1 3.5Riyadh Bank 8 7 2.9 3.4SAFCO 9 10 2.7 2.4Banque Saudi Fransi 10 9 2.7 2.7Arab National Bank 12 12 2.2 2.2Saudi Kayan Petrochemical Co 13 17 2.2 1.6Source: NCBC ResearchKSA the most active IPO market across the GCCLiberalizing reforms haveresulted in more companiesgoing publicThe Saudi Government’s economic reforms and privatization efforts have been a key driver ofstock market development in recent years. A total of 13 companies — three from the insurancesector, three from the industrial investment sector, two from the petrochemical industries sector,and one each from retail, agriculture, telecom, building and construction, and bank and financialservices sectors – went public in 2008, raising a total of SR36.4bn. This compared to 26companies in 2007. Although, stock markets in KSA have recently undergone a deepcorrection, IPO activity remained high during much of 2008, compared with other GCC peers.The Saudi Stock Exchange remained one of the world's busiest IPO markets, generatingUSD9.7bn in net proceeds in the first nine months of 2008.JUNE 2009SAUDI ARABIA FACTBOOK30


HISTORY AND OVERVIEWBased on offer size, the top three IPOs in KSA were those of the shariah-compliant commercialIslamic bank Alinma Bank (USD2.8bn), the mining company Ma’aden (USD2.5bn), and thewireless service provider Zain (USD1.9bn). Other major issues during the year included Al OthaimMarkets, the Saudi Rabigh Refining and Petrochemicals Co., Saudi Reinsurance Co., MohammadAl Mojil Group, and Methanol Chemical Co. The market capitalization of the offered companies atthe end of 2008 was SR66.67bn, representing 7.21% of the total market capitalization.Number of IPO’s in KSAoutstrips other GCC marketsExhibit 31: Total IPOs in the GCC 2005–083025262015105041213106 643 3 3 33222 2 21 11002005 2006 2007 2008Saudi UAE Kuwait Qatar Oman BahrainSource: Zawya, Tadawul, NCBC ResearchAmong GCC member countries, KSA topped the IPO list, followed by the UAE. Threecompanies listed on the Kuwait exchange in 2008 as against one in 2007.Exhibit 32: Returns of companies listed in 20080%-10%-20%-30%-40%-50%-60%-36%-52% -51% -52% -51% -52% -51% -49% -51% -49% -44%-52% -52% -50% -48%-52%-56%UCAAl SagrArabia InsuranceTrade Union CooperativeBUPAAlinmaHalwani BrothersZainAl OthaimSaudi ReCHEMANOLBCIPetro RabighMMGAstra IndustMA'ADENTASISource: Tadawul, NCBC ResearchAll newly listed companies in2008 have outperformed theTASIAll companies that listed on the Saudi stock exchange in 2008 have outperformed the TASIindex, which was down 56.5%. Of the new listings, Methanol Chemicals Company was the bestperformer; its IPO, priced at SR30 a share, was oversubscribed 6.01 times and the stockreturned 16.7% on the first day of listing. The company had a market capitalization ofSR1,344mn as on 31 December 2008.JUNE 2009SAUDI ARABIA FACTBOOK31


HISTORY AND OVERVIEWMarket regulation and supervisionThe Capital Market Authority (CMA) was established with the promulgation of the Capital MarketLaw in 2003 as the independent regulator of the Saudi capital markets. It is vested with theauthority to regulate and develop the Saudi stock exchange, to regulate and monitor securitiesissuance and trading, and to protect investors. The CMA is supported in its functions by thestatutory objectives of the Stock Exchange which, among other things, is required to:• make listing requirements, trading rules and technical mechanisms fair, efficient andtransparent and provide information for securities listed on the exchange;• establish and enforce professional standards for brokers; and• conduct periodic review of compliance by brokers to ensure financial security.The Capital Market Law, which was drafted with a view to incorporating international bestpractice standards, has been of critical importance for fostering high governance andtransparency standards in the Saudi market. It requires every joint stock company to submitquarterly and annual reports to the CMA. The annual reports must be audited. All materialevents must be reported to the CMA, which has the authority to force a company to disclosepublicly any further information it deems appropriate after review.Owning 5% or more voting shares by restricted purchase (buying exchange listed voting shares)or restricted offer (public offer of purchase of exchange listed voting shares) is considered asignificant step. The CMA is authorized to develop, issue, and/or change rules for such activity.If ownership rises to 50% or more, the CMA may force the owner to purchase the remainingshares at a price no more than the highest price paid by the owner during the previous 12months.Execution of tradesThe Tadawul settlement is doneon a T+0 basisTrading hours on the Tadawul are between 11:00am and 03:30pm from Saturday toWednesday. The Tadawul trading system provides real-time information and permits settlementon a T+ 0 basis. A trading day is divided into three different sessions – 10:00 am to 11:00 am(Open Order Maintenance – entering, amending or cancelling an order), 11:00 am to 03:30 pm(Open Trading – regular electronic trading process) and 03:30 pm to 04:30 pm (Pre-Close –cancellation of order while maintaining order validity, decrease in quantity without any pricechange). The different types of orders that can be placed on the Tadawul system are Hit, Take,Match, Market, Limit, Un-priced, Undisclosed Volume, All or None, Minimum Block andMinimum Fill.A Hit order is an order to sell all shares at current best price available, while a Take orderinvolves buying all shares at current best price available. A Match order creates an opposingorder to an existing order, whereas a Limit order sells a specified number of shares at a specificprice.An Un-priced order differs from a Market order as the pricing protection is not available. Toavoid the negative impact of large volumes, only a portion of some orders is displayed. This isachieved by placing an Undisclosed Volume order.JUNE 2009SAUDI ARABIA FACTBOOK32


HISTORY AND OVERVIEWThe All or None order refers to trading the entire volume. A Minimum Block consists of specifiedminimum volume for each trade, whereas a Minimum Fill order refers to the minimum volumethat must be available for trading to take place.Orders may also exist for one day, current week, and current month or up to 30 days.As of 31 December 2008, there were 32 brokerage firms operating on the exchange. Tradingcommissions charged by Tadawul are as follows.• The maximum commission is 0.0012 of the trade value executed by the bank. Thecustomer can negotiate a lower commission with the bank. This commission discount hasto be agreed and documented in advance• Minimum commission imposed is SR12 for any executed order equal or less thanSR10,000Tadawul provides investors with depository services as well. All trades are in the dematerializedform. The dematerialization of shares can be executed by banks, the depository itself, orthrough certificate data processing for portfolios. The electronic system facilitates pledging ofshares, settlement (T+ 0 days) and clearing of shares by ownership transfer. It is a real timesystem which immediately reflects the effects of any corporate action (such as stock split andbonus issues) on an investor’s portfolio. The cash transfer is done electronically via SAMA'sRTGS system – SRIE.Tadawul’s performance in 2008After the 2006 correction and the recovery in 2007, the Saudi stock market registered robustgrowth during the first half of 2008. Benefiting from the effects of escalating oil prices, thecompanies on TASI performed favorably. However, the second half of 2008 saw a sell-off,mirroring global trends triggered by the ongoing financial crisis that stoked fears of a recessionin the Saudi economy. The TASI index closed at a level of 4,802.9 points as on 31 December2008 (compared with 11,176 in December 2007), while the Tadawul’s market cap plunged fromaround USD513.5bn at the end of 2007 to USD246.5bn as on 31 December 2008.Exhibit 33: Saudi stock market - average daily value (USD mn)and average daily volume (mn)Exhibit 34: Saudi stock market – average daily transactions(‘000s)9,0003004008,0007,0006,0005,0004,0002502001503503002502003,0001001502,0001,000-5002003 2004 2005 2006 2007 2008Avg. daily valueAvg. daily volume (RHS) (mn)1005002003 2004 2005 2006 2007 2008Source Bloomberg, TadawulSource Bloomberg, TadawulBoth average daily volume and average daily transactions declined in 2008. The daily averagevalue of shares traded on TASI fell by 24.2% y-o-y to SR7.8bn in 2008. Despite the challengingJUNE 2009SAUDI ARABIA FACTBOOK33


HISTORY AND OVERVIEWeconomic conditions, Tadawul was the most liquid market in GCC with an average dailyturnover of USD2.08bn in 2008. In terms of trading volumes, the petrochemical sector was themost active in 2008, experiencing margin growth led by record oil prices in the first half followedby plummeting end-products prices and severe loss of demand in the second.Exhibit 35: Pricing multiples – TASI302520151050Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08P/E multipleP/BV multipleSource: BloombergWith the downturn in the economic outlook and market performance alike, valuations in KSAhave declined sharply. Tadawul’s P/E, which at the start of May 2006 was 27.6x, decreased to22.2x on 30 December 2007, before reaching 10.7x on 28 December 2008. TASI’s 41% gainsregistered in 2007, as it recovered from the big crash of 2006, were wiped clean in 2008, whereit lost 56.5% of its value, as the oil bubble burst. TASI’s 12M trailing price-to-earnings (P/E) andprice-to-book value (P/BV) multiples contracted 49.0% and 59.2%, respectively, during 2008.However, the multiples have improved considerably in the quarter under review. From a low of11.2x on 03 March 09, the multiples are currently trading at a level of 18.4x (17 May 2009),translating into a correction of approximately 65%. This rally is largely led by improved marketsentiments along with government support measures. Despite this correction, the market looksattractive on a 1-year forward P/E multiple; dropping from a high of 35.2x to 10.78x in 2008.Insurance sector was theExhibit 36: Sector wise performance and returns in 2008worst performing sector in20080(2,000)(4,000)(6,000)(8,000)(10,000)(12,000)(14,000)(16,000)(18,000)Banks/financialPetrochemicalCementRetailEnergy/utilitiesAgri/foodTelecom/ITInsuranceMulti invIndustrial invConstructionReal estateTransportMedia/publishingHotel/tourism0%-10%-20%-30%-40%-50%-60%-70%-80%Net change% changeSource: Tadawul, NCBC ResearchJUNE 2009SAUDI ARABIA FACTBOOK34


HISTORY AND OVERVIEWThe Petrochemical and Banking and Financial Services sectors, two index heavyweightsaccounting for over 70% of TASI’s total capitalization, were most affected by the slump in oilprices and tight liquidity conditions, losing 66.5% and 55.5%, respectively, in 2008. Increasingdoubts over the Government’s ability to support funding growth in the non-oil sectors in light ofthe oil price crash and the consequent likelihood of a budget deficit sent other sectors also intoa tailspin in end-2008. The biggest loser of 2008, however, was the insurance sector, whichplummeted by 73.7%. This was followed by the Multi-investment sector, which crashed 67%, asits investments lost significant value, leading to capital erosion.Comparison with Global Emerging MarketsKSA has shown superiorgrowth from 2005 to 2007,faster than that of the emergingmarketsKSA’s GDP growth rate exceeded the global growth rate in 2005-2007. This is reflected in thesuperior returns from the Saudi stock market, which increased at a CAGR of 34.72%, while thatfrom the MSCI Emerging Markets Index expanded at a CAGR of 17.95% during January 2003to December 2007. This trend continued in 2008 with KSA’s GDP growing at 4.2% compared tothe world GDP growth rate of 3.6%.Globally, the Dow Jones Industrial Average (DJI), the FTSE 100, and the Nikkei 225 fell by33.8%, 32.0%, and 42.1%, respectively, in 2008. The MSCI Emerging Markets Free Index shed47.3%. Dubai and Russia were the worst hit, with their benchmark indices plummeting by72.4%. But the most populous emerging markets of China and India were not far behind withthe Shanghai Composite and BSE Sensex losing 65.4% and 52.4%, respectively.Exhibit 37: Comparison – TASI v/s MSCI emerging markets index (% weekly return)10%5%0%-5%-10%-15%-20%-25%Feb-03 Sep-03 Apr-04 Nov-04 Jun-05 Jan-06 Aug-06 Mar-07 Oct-07 May-08 Dec-08TASIMSCI emerging marketSource: BloombergIn comparison to other globalmarkets, TASI’s performancewas weakIn a comparison of the TASI with the MSCI Emerging Markets Index, it is evident that the KSAmarket is clearly more volatile than emerging markets, on an average, since the marketcorrection began in the middle of 2008. An additional source of volatility in the Gulf was investorexpectations of currency revaluations against the backdrop of inflationary pressures in 2008.The ultimate reversal of the speculative inflows contributed to a far tighter money marketenvironment. In the last quarter of 2008, the 360-day price volatility jumped to 37.9 on 28December 08 from 25.0 on 07 September 08. In the medium term, global cues are likely toupset the market, which may struggle to regain sustainable stability. Moreover, with the SaudiRiyal pegged to the US Dollar, it will be difficult for SAMA to shield KSA from developments inthe US economy. However, in the long term, greater liberalization of foreign investment normsand a maturing market process should lower volatility levels.JUNE 2009SAUDI ARABIA FACTBOOK35


HISTORY AND OVERVIEWExhibit 38: Volatility comparison (360 day volatility)4540353025201510Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08Saudi stock indexMSCI emerging market indexSource: BloombergOverall, however, GCC markets have very low or negative correlation with other internationalmarkets as well as amongst themselves. For the period Jan-06 to Dec-08, KSA had a dailycorrelation of 0.15 with MSCI World, 0.69 with MSCI GCC and 0.08 with India. This is in partdue to significant differences of the sectoral breakdown of the GCC and other emergingmarkets. Low correlations offer significant diversification benefits to international investors,thereby adding to the Saudi stock exchange’s attractiveness. Moreover, GCC markets haveunderperformed emerging and developed markets. Hence, they are now providing interestingabsolute and relative value propositions.Exhibit 39: MSCI EMExhibit 40: MSCI GCCIT11%Telecom12%U ilities3%Materials26%Industrials8%Cons Staples2%Financials24%Energy2%Energy19%Utilities1%Cons Staples4%Industrials10%Materials17%Telecom8%Financials53%Source MSCISource MSCIJUNE 2009SAUDI ARABIA FACTBOOK36


Sector PerformanceThe Kingdom’s growth drivers


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SectorsPage No.Banking and Financials 40Petrochemicals 46Cement 49Retail 52Energy and Utilities 56Agriculture and Food 61Telecom and IT 65Insurance 69Multi Investment 74Industrial Investment 78Building and Construction 82Real Estate 87Transportation 93Media and Publishing 99Hotels and Tourism 103Sectors


Banking and FinancialsLeveraging the GCC growth storySaudi banks strongest in theGCC and have a stable outlookStrong macroeconomic conditions in KSA have fuelled the robust growth in the Saudi bankingsector in recent years. However, the Saudi economy witnessed dramatic changes in 2008.Negative global developments in 2H-08 affected the Saudi economy which had enjoyedbuoyant liquidity in 1H-08. In response, the Government which had earlier focused on curbinginflationary pressures directed its efforts to ensure adequate liquidity by relaxing monetarypolicy and announcing an expansionary budget for 2009. This coupled with healthy capitaladequacy ratios and well-provisioned balance sheets has ensured that even in the currentglobal credit crisis, the Saudi banking sector remains the strongest in the GCC and has a stableoutlook (Please refer to our Saudi Arabia Banking Quarterly report). Going forward, lowpenetration of banking services coupled with the anticipated growth in population and expectedintroduction of a mortgage law are the potential catalysts for long-term credit growth in KSA.The Saudi banking sector comprises 20 banks—12 domestic and 8 foreign—that together havea network of 1,410 branches and 8,993 ATMs across KSA as on 31 December 2008. AlinmaBank, listed in June 2008, is expected to launch commercial operations by the end of 2Q-09.Also, J.P. Morgan N.A. Chase Bank opened a branch in the Kingdom in November 2008.Moreover, two foreign banks—State Bank of India and National Bank of Pakistan—haveobtained licenses to commence business in KSA, but are yet to start operations.Exhibit 41: Key financials of Saudi banks (2008) – SRmn; network of branches and ATMsDomestic BanksForeign BanksEstablished as SaudiBanksJV withForeignPartnersGCC BanksNon- GCCBanks Branches ATMs AssetsLoans &advancesCustomerdeposits Net profitsNational Commercial Bank 275 1,484 221,802 107,909 171,822 2,031Samba Financial Group 65 476 178,891 98,147 134,228 4,454Al Rajhi Bank 425 2,266 164,930 144,758** 120,298 6,525Riyad Bank 201 2,027 159,653 96,430 105,056 2,639The Saudi Investment Bank 33 247 53,250 29,566 40,702 513Bank AlJazira 24 314 27,520 15,133 20,900 222Bank Albilad 61 420 16,052 10,157** 10,971 125SABB 68 452 131,661 80,237 98,522 2,920Banque Saudi Fransi 75 274 125,865 80,866 92,791 2,806Arab National Bank 131 842 121,307 74,662 92,743 2,486Saudi Hollandi Bank 43 169 61,436 38,017 43,012 1,224Emirate Bank 1 5Bank Muscat 1 3National Bank of Kuwait 1 2National Bank of Bahrain 1Gulf International Bank 2 12*Deutsche Bank 1BNP ParibasJ.P. Morgan Chase N.A. Bank 1Total 1,410 8,993 1,302,271 775,872 931,045 25,837Source: SAMA, Tadawul, Company data, NCBC ResearchNote: Financial statements of the banks are consolidated and include financial statements of its subsidiaries, including those located outside KSA. Total assets of NCB include assets ofnewly acquired bank -Turkiye Finans Katlim Bankasi A.S.* Four international banks namely, National Bank of Bahrain, Gulf International Bank, Deutsche Bank and BNP Paribas, operate 12ATMs across KSA. # Alinma Bank has not been included in the above table as it is yet to commence operations. The bank reported total assets of SR15,556.4mn as of December 2008. **Islamic banks – Al Rajhi and Albilad’s – loans and advances amount include credit disbursed as well as investment in securities, as the banks’ financial statement provide a combinedamount under the heading net investments.JUNE 2009SAUDI ARABIA FACTBOOK40


BANKING AND FINANCIALSThe Saudi Banking sector hasreported impressive growth,increasing its banking assetsat a CAGR of 19% over 2003-08During 2003–07, total banking assets increased at a CAGR of 19.0% to SR1,302.3bn. Thesector ranked second among GCC peers in terms of total assets in 2008, after the UAE. The topfour banks—National Commercial Bank (NCB), Samba Financial Group (Samba), Al Rajhi Bank(Al Rajhi), and Riyad Bank—controlled 55.7% of the country’s banking assets in 2008 comparedto 56.7% in 2007. NCB, the market leader in this sector for years lost ground in 2008, butmaintained its dominance, controlling 17.0% of the total banking assets compared with 19.4% in2007. Strong macroeconomic conditions led to robust growth in aggregate lending by thebanking and non-banking financial sector, which expanded at 23.6% CAGR in 2003–08 toSR775.9bn while the customer deposit base of these commercial banks increased at a CAGRof 18.3% during this period to SR931.0bn in 2008.During 2008, credit off-take was 25.2%, backed by increased demand from the corporatesegment. The liquidity environment remained robust in 1H-08 because of high oil prices and thestrong macroeconomic environment. However, negative global developments in 2H-08, includingfalling oil prices affected the Saudi economy. As a result Saudi banks became more cautious onthe lending front and credit off-take slowed to 2% in November 2008 from the September 2008levels, before declining to -1.3% MoM in December 2008. Going forward, the expectedintroduction of a mortgage law is likely to provide impetus to credit off-take in personal lending. EIUexpects lending to the private sector to increase at 18.1% CAGR to SR1256bn during 2007-12.Exhibit 42: Market shares of Saudi banks in credit and customer deposits, 200820%15%10%5%0%NCB Samba Al Rajhi RiyadBankCreditSIBC BJAZ Albilad SABB BSF ANB SHBCustomer DepositsSource: NCBC Research, Company dataNote: NCB’s net loans and deposit s includes loans and deposits of Turkiye Finans Katlim Bankasi A.S; Al Rajhi and Albilad’s loans andadvances amount include credit disbursed as well as investment in securities..Significant growth opportunitiesexist in the Saudi banking sectordue to the low penetration ofbanking services and expectedpopulation growthKSA’s banking sector is under-penetrated in terms of loan-to-GDP and deposit-to-GDP ratioscompared to GCC peers. The country’s loan-to-GDP ratio grew to 42.5% in 2008 from 30.7% in2003, while its deposit-to-GDP ratio increased to 48.3% in 2008 from 45.0% in 2003. Thepenetration of banking services was quite low in the KSA (17,670 individuals per branch) in2008 as compared to Oman (6,329) and the UAE (6,874). This, along with the anticipatedgrowth in Saudi population, is likely to generate significant opportunities for Saudi banks toexpand their branch network and tap the expected demand for financial services.Despite the low penetration, the Saudi banking sector is the largest in the GCC in terms ofmarket capitalization. Moreover, the Saudi banking sector is the leader in the region in terms ofrevenue. As illustrated in Exhibit 44, Saudi banks trade at lower P/E ratios compared to theirpeers in Kuwait and Bahrain.JUNE 2009SAUDI ARABIA FACTBOOK41


BANKING AND FINANCIALSExhibit 43: Revenue of GCC banks, 2005 – 2008 (USD mn) Exhibit 44: Comparison of RoE and P/E of GCC banks, 20086,00030%5,0004,0003,0002,0001,00002005 2006 2007 2008KSA Kuwait Qatar Oman UAE BahrainRoE (%)25%20%15%10%P/E5%4 6 8 10 12 14 16KSA Kuwait Qatar Oman UAE BahrainSource: Gulfbase, Reuters, Bloomberg, NCBC Research;The companies list is not exhaustiveSource: Gulfbase, Reuters, Bloomberg, NCBC Research;Size of the bubble represents market cap. as on 31 Dec 2008As on 31 Dec 08, Al Rajhi had the largest market capitalization among the 11 listed banksconstituting the index (Exhibit 45). Though NCB is one of KSA’s leading banks, it is notmentioned in the table as it is a privately held entity. While Alinma Bank is yet to commenceoperations, the bank was listed on the Tadawul in June 2008 after completion of the SR10.5bnInitial Public Offering (IPO).Exhibit 45: Sector details – public banks% weight in Indexas on Dec 2008*Avg. NIM (%),2005 – 2008*Avg. RoE (%),2005–2008*Alinma Bank (Alinma) 1.80 N/A N/AAl Rajhi Bank (Al Rajhi) 9.09 6.75 38.03Samba Financial Group (SAMBA) 4.99 3.56 31.11The Saudi British Bank (SABB) 3.50 3.37 30.99Riyad Bank (RIBL) 3.44 3.30 22.57Banque Saudi Fransi (Saudi Fransi) 2.74 2.73 29.89Arab National Bank (Arab National) 2.19 3.42 29.36The Saudi Investment Bank (SIBC) 0.81 2.39 20.13Saudi Hollandi Bank (Saudi Hollandi) 1.14 2.71 22.89Bank AlJazira (BJAZ) 0.49 2.96 29.77Bank AlBilad (AlBilad) 0.91 3.82 4.11Source: Bloomberg, Tadawul, Reuters, Company data, NCBC Research* start periods may differ based on availability of dataAverage net interest income ofSaudi banks increased 10.9%YoY to SR3057.6mn in 2008owing to the expansion in theirloan booksExhibits 46 and 47 depict the performance of Saudi banks in terms of net interest income andnet interest margin during 2005 – 2008. For most part of 2008, net interest margins narroweddue to the increased competition for expanding deposit base. Moreover, from October 2008onwards, interest rate cuts announced by SAMA contributed to the overall narrowing of themargins. Although, banks’ margin contracted, expansion in loan books enabled the banks toincrease their average net interest income 10.9% YoY to SR3057.6mn in 2008. Saudi Fransiand RIBL’s net interest incomes increased 22.8% YoY to SR2,821mn and 21.4% YoY toSR3,965mn, respectively, while SIBC was the only bank to report a decline of 3.4% YoY toSR1,019.9mn in 2008. However, with the exception of the Saudi Hollandi Bank, all bankswitnessed a contraction in their net interest margins over 2007 levels.JUNE 2009SAUDI ARABIA FACTBOOK42


BANKING AND FINANCIALSExhibit 46: Net Interest Income of Banks, 2005 – 2008 (SR mn) Exhibit 47: Net Interest Margin (%) of Banks, 2005 – 200810,00088,0006,0004,0002,00002005 2006 2007 2008Al Rajhi SAMBA SABBRIBL Saudi Fransi Arab NationalSIBC Saudi Hollandi BJAZAlbilad64202005 2006 2007 2008Al Rajhi SAMBA SABBRIBL Saudi Fransi Arab NationalSIBC Saudi Hollandi BJAZAlbiladSource: Tadawul, NCBC ResearchSource: Tadawul, NCBC ResearchThe P/B multiple for all banks substantially declined in 2008 because of the meltdown in theSaudi markets. Despite this, Al Rajhi Bank continued to command the highest P/B and RoEmultiples in 2007 and 2008.Exhibit 48: Comparison of P/B and RoE, 2007 Exhibit 49: Comparison of P/B and RoE, 20083530SABBSAMBA3530SaudiHollandiArab NationalSABBRoE (%)25201510Saudi FransiRIBL Arab NationalBJAZSIBCSaudi HollandiAl RajhiRoE (%)25201510RIBLSAMBASaudi FransiAl Rajhi5P/BAlbilad03 4 5 6 7 85SIBCAlbiladBJAZP/B00.5 1.0 1.5 2.0 2.5 3.0 3.5Source: Bloomberg, Reuters, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2007Source: Bloomberg, Reuters, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008Islamic banks such as Al Rajhi, BJAZ, and Al Bilad are preferred by investors which is evidentfrom high trading volumes as compared to conventional peers (Exhibit 50).JUNE 2009SAUDI ARABIA FACTBOOK43


BANKING AND FINANCIALSExhibit 50: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 20082,5002,4012,0001,5001,4731,6271,00050036697542157 194336900Al Rajhi SAMBA SABB RIBL SaudiFransiArabNationalSIBCSaudiHollandiBJAZAlbiladSource: Reuters, NCBC ResearchAs the Saudi riyal is pegged to the US dollar, interest rates in KSA moved in line with the USFederal Reserve (US Fed) rate. Consequently, while interest rates reached their peak in 2H-08,they have steadily declined in response to the steps undertaken by SAMA to mitigate the impactof the global financial crisis on the Saudi Banking sector. This is reflected in KSA’s reverse rateswhich have declined by 450bp from 5.0% (November 2007) to 0.50% (April 2009).Interest rates started increasing from June 08 owing to increasing demand for credit in theKingdom. Furthermore, as the global financial system experienced liquidity crisis, interbankinterest rates peaked in 2008—the SAIBOR rate increased to 4.67% (on 12 October, 2008) andLibor rate to 4.75% (13 October, 2008). The global liquidity squeeze, coupled with nonavailabilityof finance from foreign banks, increased the demand for Saudi riyal loans.Consequently, Saudi banks became conservative / selective in financing the developmentprojects. This caused the cost of debt (in SAIBOR) over the Libor rate to increase to 194bp as of12 November 2008 (average spread in 2008 was 50bp).Steps taken by SAMA to boostliquidity has helped reduced thecost of debt from 194bp inNovember 2008 to 5bp in May2009In light of the worsening global economic scenario, SAMA started taking aggressive measures,such as frequent rate cuts and relaxing reserve requirements (beginning in October 2008) toensure adequate liquidity to meet domestic credit demand. As a result, the Repo rate declinedto 2.0% in January 2009 from 5.5% in November 2007 and the statutory reserve requirementlimit declined to 7% in October 2008 from 13% in May 2008 of demand deposits, which releasedSR20.4bn for banks to lend. In addition, SAMA guaranteed bank deposits and deposited fundsworth USD2.5bn and an equivalent amount in Saudi Riyal to ensure liquidity in both thecurrencies. The steps by SAMA are expected to help stabilize the financial sector while boostingliquidity and reducing loan costs. These steps have resulted in a decline in interbank interestrates from their 2008 peaks—the SAIBOR rate is at 0.88% and LIBOR at 0.83% as of 18 May2009 (Exhibit 51). Consequently, the cost of debt (in SAIBOR) over the LIBOR rate has comedown to 5bp as of 18 May 2009 (average spread of 19bp year-to-date).JUNE 2009SAUDI ARABIA FACTBOOK44


BANKING AND FINANCIALSExhibit 51: Movement in interbank interest rates, Jan 03 – May 0976543210Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-0910008006004002000-200Spreads bps (RHS) SAIBOR (%, LHS) LIBOR (%, LHS)Source: Reuters, NCBC ResearchAlthough, Saudi banks have been less exposed to the US sub-prime market compared to otherGCC banks, a fall in the value of investments held, negatively impacted bottom lines of thebanks in 2008. Fitch Credit Ratings Agency, in a Dec 08 report, cited adverse impact of theglobal credit crisis on profitability and market capitalization as key reasons for lowering thestandalone individual credit rating on eight Saudi banks. Six banks—Arab National, SaudiFransi, NCB, RIBL, SAMBA, and SABB—were downgraded by Fitch from “B” to “B/C”, while twobanks—Saudi Hollandi and SIBC—were downgraded from “B/C” to “C”. However, Fitchreaffirmed the Kingdom’s banking industry status as the strongest in the GCC and maintained astable outlook on the banking sector underpinned by strong Government support.The Saudi Government, concerned about economic growth, has been taking aggressivemeasures since October 2008 to sustain banking sector growth. To that end, the Ministry ofFinance announced an expansionary budget for 2009, with increased spending on theinfrastructure sector and other social projects. In November 2008, the Saudi Governmentannounced plans to implement a SR1,500bn development and investment program in the oiland Government sectors over the next five years. We expect rising levels of governmentspending will drive overall economic growth, thereby boosting the banking sector. Furthermore,introduction of a mortgage law is likely to provide impetus to credit off-take in personal lending.Outlook for the Saudi bankingsector remains positive in lightof the steps undertaken bySAMA to boost liquidity andcontinued government measuresIn addition, SAMA’s recent initiatives such as direct deposits with commercial banks, reductionin key lending rates, and relaxation of reserve requirement limits reflect the Central Bank’swillingness to ease the monetary policy to ensure liquidity. In addition, SAMA’s willingness toinject up to SR150bn into the banking system would help the Government keep liquidity athealthy levels. EIU expects total lending by the banking and non-banking financial sector inSaudi Arabia to remain strong, growing to SR1,695bn by 2012 and it estimates total bankingdeposits to increase at 10.1% CAGR during 2007-12, to SR964bn by 2012. Although,competition to attract more deposits may put pressure on net interest margins of banks, theirexpanded loan books are likely to drive net interest income growth. Hence, despite the difficultglobal economic climate, we expect a positive outlook for Saudi banks in 2009, based on theirstrong balance sheets and expectations of continued Government support.JUNE 2009SAUDI ARABIA FACTBOOK45


PetrochemicalsCost advantage fuelling growthKSA’s petrochemical industry, concentrated mainly in the industrial cities of Jubail and Yanbu, isone of the heavy weight sectors of the KSA economy. The Saudi petrochemical sector hasgrown from one company (KSA Fertilizers) in 1965 to 13 listed companies in 2008. At present,Saudi Basic Industries Co (SABIC) is the largest petrochemical company in the sector with anestimated capacity of approximately 44mn tons (mt) per annum (as of 2008). Historically, robustdemand for petrochemical products has helped the sector sustain growth. Since inception, theSaudi petrochemicals industry has received several incentives from the Government; the mostimportant being low-cost raw material, giving KSA companies an edge over their global peers.KSA operates from a position of significant strength in the GCC petrochemical industry,accounting for majority of the region’s petrochemical production. By 2010-end, KSA, whichholds close to 21% of the world’s proven oil reserves, is expected to meet around 13% ofthe global demand for petrochemical products, increasing from 8% in 2006. KSA alsopossesses gas reserves of 253 trillion cubic feet and ranks fourth in the world after Russia, Iranand Qatar. Natural gas produced in KSA is priced at USD0.75 per mmbtu, much lower than theglobal price of USD4-5 per mmbtu, and the Kingdom benefits from its low feedstock cost.Saudi petrochemical sectorenjoys an absolute feedstockadvantage, relatively youngcracker fleet and economies ofscaleTo capitalize on the feedstock advantage, GCC petrochemical players undertook significantcapacity expansion plans. Total petrochemical projects worth USD114bn are currently underprogressor planned in the GCC, of which, 54% are in KSA (MEED Projects). Some of theseprojects are under renegotiation, due to the decline in commodity prices in 2H-08.Petrochemical companies in KSA also enjoy a dual pricing system under the country’sagreement with the WTO. This has helped these companies to get superior prices for theirproducts in the international market, thus lifting overall profitability.However, the global petrochemical sector is currently facing a downtrend. Lower demand forpetrochemical products in both developed and developing nations has depressed utilizationrates. We believe that the Saudi petrochemical sector is on a better platform, compared withglobal peers, due to its absolute feedstock advantage, relatively young cracker fleet, and anexpanded production base offering economies of scale.Exhibit 52 shows the 13 companies comprising the petrochemical sub-index of TadawulExhibit 52: Sector details% weight inIndex as onDec 2008*Avg. NPM (%),1Q05 – 4Q08*Avg. RoE (%),2005 – 2008*Saudi Basic Industries Corp (SABIC) 16.71 20.8 29.9KSA Fertilizers Co (SAFCO) 2.43 65.0 37.9Saudi Industrial Investment Group (SIIG) 0.49 33.7 14.5Sahara Petrochemical 0.24 NM 5.5Yanbu National Petrochemical Company (YANSAB) 0.90 NM 7.4Nama Chemicals 0.12 5.7 3.1Saudi International Petrochemical Co (Sipchem) 0.56 37.3 20.6National Industrialization Co (NIC) 0.65 17.4 15.4Alujain Corporation 0.08 NM (4.0)Advanced Polypropylene Company 0.24 12.6 7.0Saudi Kayan Petrochemical Company 1.58 NM 1.1Rabigh Refining and Petrochemical Co 1.47 NM (16.5)Chemanol 0.15 5.8 3.7Source: Bloomberg, Saudi Stock Exchange (Tadawul), Reuters* start period may differ based on availability of dataJUNE 2009SAUDI ARABIA FACTBOOK46


PETROCHEMICALSThe combined revenue of all the 13 companies increased 26.2% YoY in 2008; SABIC,accounted for approximately 84% of the total revenue of the sector in 2008. SABIC reportedrevenue growth of 20.8% YoY in 2008, largely supported by high petrochemical prices, in linewith the surge in crude oil prices in 1H-08. However, the average net profit of nine companiesdeclined 12.1% YoY in 2008, with SABIC accounting for approximately 78.8% of the decline.Rabigh Refining and Petrochemical, Alujain, Sahara Petrochemical and Yanbu NationalPetrochemical reported losses in 2008. SABIC’s net income declined 18.5% YoY in 2008.Led by slump in demand,operating rates fell to historiclows while prices tanked4Q-08 experienced a major reversal in trend, led by sharp decline in demand for petrochemicalproducts, resulting in prices moving southwards. The ongoing economic slowdown is affectingindustrial activities worldwide, leading to demand for petrochemicals softening in key marketsand in turn lowering operating rates for the Saudi petrochemical players as well. SABIC’srevenue slid 37.7% YoY to SR24,714mn in 4Q-08. Revenue of NIC and SAFCO alsoplummeted 71.1% and 16.3% YoY, respectively, in 4Q-08. SABIC’s profit margin contracted by1,603bps YoY in 4Q-08 and its net profit dived 95.5% YoY. Net profit of NationalIndustrialization Company and Sipchem also declined sharply by 87.0% YoY and 86.5% YoY,respectively, in 4Q-08.The petrochemical sector reported net losses of SR271.5mn in 4Q-08 (compared with a gain ofSR8.9bn in 4Q-07). Going forward, with petrochemical prices plummeting in the wake ofturbulent market conditions, the margins of the petrochemical companies in KSA may remainunder pressure.Exhibit 53: Revenue of companies, 2005 – 2008 (SR mn) Exhibit 54: Profitability (%) of companies, 2005 – 200812,00010,0008,000160,000140,00010080606,000120,0004,000100,0002,000080,0002005 2006 2007 2008SAFCO SIIG SPC NamaSipchem NIC Chemanol SABIC *40200-20-402005 2006 2007 2008SABIC SAFCO SIIG SPCNama Sipchem NIC ChemanolSource: Reuters; Companies marked * are on secondary axis;Top eight companies (operational on 01 January 2008) by market cap have been considered.Source: Reuters; SPC’s margin for 2008 is not included as it is not meaningful;Top eight companies (operational on 01 January 2008) by mcap have been consideredThe price multiples of Saudi petrochemical companies were at their peak during 2005. This wasdue to the anticipated growth in the sector because of lower feedstock costs and increasingdemand from developing countries. Furthermore, the Government promoted foreigninvestments in the sector through joint ventures in a bid to achieve capacity expansion andtechnological up-gradation. However, the multiples fell significantly in 2008 following a downturnin the global stock markets. In 2008, Nama Chemicals had the highest P/E multiple of 93.7xfollowed by Saudi Kayan Petrochemical Co. (85.2x). As illustrated below, SAFCO had thehighest RoE (60.9%) and P/B multiple (2.8x) in 2008. SABIC’s RoE contracted 1,025bp to22.7% in 2008.JUNE 2009SAUDI ARABIA FACTBOOK47


PETROCHEMICALSExhibit 55: Comparison of P/B and RoE, 2007 Exhibit 56: Comparison of P/B and RoE, 200860706040SAFCO5040SAFCORoE (%)20NICSipchemSIIGSABICRoE (%)3020SipchemSABICSPC APCP/BYanbu0Alujain-202 3 4 5 6 7100-10-20NICSIIGAPCKayanSPCYanbuRabigh0.5 1.5 2.5P/BSource: Bloomberg, Reuters, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2007Source: Bloomberg, Reuters, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008Saudi Kayan Petrochemical Company recorded the highest average daily trading volume in2007-08.Exhibit 57: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 200820,00019,49615,00010,0005,0004,7367241,924 1,1942,0025,0902,718 2,012 1,826 2,206 13,7575,9210SABICSAFCOSIIGSPCYanbuNamaSipchemNICAlujainAPCKayanRabighChemanolSource: Reuters Knowledge, TadawulThough oversupply situation islikely to further depressmargins, low cost structureremains a huge positiveWith hydrocarbon prices trending lower, the outlook for petrochemical prices also looks bleak.Moreover, as massive capacity expansion projects are in progress in the Middle East, they areexpected to trigger an overcapacity situation once they go on-stream in 2011-12. This, in turn,will likely depress utilization rates further, exerting pressure on prices. We expect the Saudipetrochemical sector to experience margin erosion, although to a much lesser extent vis-à-visglobal peers, given access to cheap feedstock advantage and higher economies of scale.Moreover, in the long term, we expect demand to regain momentum once the global economyrecovers, with major growth coming from the Asian countries, particularly China and India.Overall, although the outlook for 2009 remains negative based on declining demand and prices,as seen in 4Q-08, we believe that the long-term outlook for the Saudi petrochemical sectoris positive owing to its feedstock advantage, joint venture opportunities with globalpeers, expanding production base, and proximity to the high-growth Asian and MiddleEastern markets. However, allocation of low cost feedstock for the upcoming new productionfacilities would be a challenge for Saudi players.JUNE 2009SAUDI ARABIA FACTBOOK48


CementOversupply concernsThe Saudi cement sector has transitioned from a single company industry (Arabian Cement Co)in 1955 to one comprising twelve cement companies with an estimated total production capacityof 44mn tons as at the end of 2008. Currently, there are twelve cement producers operating inthe Kingdom. Of these, four new cement plants—Riyadh Cement, Najran Cement, MadinaCement, and Western Cement—commenced production during 2008, and together produced3.7mt of cement in 2008 (please refer to our KSA Cement Monthly and Cement Quarterly).Cement price realizations fellfrom SR259 per ton in 3Q-08 toSR234 per ton in 4Q-08In June-08, the Saudi Government imposed restrictions on the export of cement/clinker toforeign countries, with the exception of Bahrain. As a result, cement production in the Kingdomdropped 4.6% YoY in 2H-08, as capacity buildup and export restrictions played spoilsport. Thisbuildup has led to a fall in cement production and higher inventory of clinker, which in turn havehad an impact on cement prices. Average price realization declined from SR259 per ton in 3Q-08 to SR234 per ton in 4Q-08.KSA dwarfs GCC peers in production capacity. Companies operating in KSA enjoy the benefitof subsidized fuel (energy and fuel account for 30–40% of the total production cost of cementcompanies) which, in turn, lowers their cost of production, compared with that of other cementproducers in the GCC region. Even though cement prices in KSA are not regulated, officialprices in the local market are determined by a mechanism since 1991. However, the SaudiGovernment does intervene occasionally to prevent large price fluctuations. Increasedcompetition to the existing eight publicly traded players in the cement sector will see a spike inproduction, which will lead to excess capacity and likely bring down cement prices in the longerterm.Exhibit 58 indicates that KSA’s cement sector performed better than that of the entire region onrevenue during 2005–2008. The sector also fares well on RoE, with attractive P/E multiples.Exhibit 58: Revenue of GCC cement companies, 2005 – 2008(USD mn)2,500Exhibit 59: Comparison of RoE and P/E of GCC companies,2008402,00030KSA1,500Oman1,000RoE (%)20Qatar50002005 2006 2007 2008KSA UAE Kuwait Oman Qatar10KuwaitUAEP/E00 10 20 30 40 50 60 70Source: Reuters;The companies list is not exhaustive.Source: Reuters, NCBC Research;Size of the bubble represents market cap. as on 31 Dec 2008Of the twelve cement producers operating in KSA, eight are listed on Tadawul. Exhibit 60outlines the performance of the eight listed companies.JUNE 2009SAUDI ARABIA FACTBOOK49


CEMENTExhibit 60: Sector details% weight in Indexas on Dec 2008*Avg. NPM (%),1Q-05 – 4Q-08*Avg. RoE (%),2005 – 2008*Saudi Cement Company 0.62 50.6 25.5Yamama Saudi Cement Co. Ltd 0.50 63.8 31.1Southern Province Cement Co 0.71 63.5 31.6Yanbu Cement Co 0.44 56.5 25.6The Qassim Cement Co 0.39 72.0 29.9Eastern Province Cement Co 0.37 64.0 23.3Arabian Cement Co 0.27 45.3 20.1Tabuk Cement Co 0.19 55.5 20.3Source: Bloomberg, Tadawul: Company data;* start periods may differ based on availability of dataExports plunged 18.9% YoYdue to the ban imposed by thegovernment in June 2008Cement production by the twelve companies in the KSA grew 8.6% YoY to 32.9mt, whereastheir total domestic sales grew 11.4% YoY to 29.9mt during 2008. The combined domestic salesof the eight listed cement companies aggregated 26.6mt during 2008, declining 0.9% YoY from26.8mn tons a year ago. Cement exports in KSA fell by 18.9% YoY to 2.8mn tons during 2008.Eastern Cement (SR253 per ton), Yanbu Cement (SR253 per ton), Yamama Cement (SR251per ton) and Southern Province Cement (SR250 per ton) were the companies having betterprice realization than the industry average, in 4Q-08.In 4Q-08, Tabuk Cement saw the largest decline in revenue in the sector of 38.0% YoY toSR47.2mn, followed by Qassim Cement with 31% YoY decline to SR165.4mn. The decline inrevenue can be attributed to lower sales volumes and mounting pressure on cement pricesprimarily due to lackluster demand.Exhibit 61: Revenue of companies, 2005 – 2008 (SR mn) Exhibit 62: Profitability (%) of companies, 2005 – 200815001001200909008070600603005002005 2006 2007 2008Saudi Cement Yamamah Southern ProvinceYanbu Cement Qassim Cement Eastern CementArabian Cement Tabuk Cement40302005 2006 2007 2008Saudi Cement Yamamah Southern ProvinceYanbu Cement Qassim Cement Eastern CementArabian Cement Tabuk CementSource: Reuters, BloombergSource: Reuters, BloombergThe price multiples of cement companies in KSA were at their peak during 2005. However, themultiples corrected significantly in 2008, similar to that in 2006, following the stock marketcorrection. As of 31 December 2008, the sector’s P/E and P/BV multiple stood at 8.3x and 1.9xrespectively, compared with P/E and P/BV multiples of 16.5x and 6.2x respectively in 2007. Asillustrated below, Southern Province Cement had the highest RoE (33.6%) and P/B multiples(2.8x) in 2008.JUNE 2009SAUDI ARABIA FACTBOOK50


CEMENTExhibit 63: Comparison of P/B and RoE, 2007 Exhibit 64: Comparison of P/B and RoE, 2008RoE (%)4540353025201510Yanbu CementEasternCementArabianCementQassimCementYamamahSouthernProvinceSaudi CementTabuk CementP/B0 5 10 15 20RoE (%)40302010YamamahArabianCementYanbu CementQassimCementSaudi CementEasternCementTabuk CementSouthernProvinceP/B0 1 2 3 4Source: Bloomberg, Reuters, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2007Source: Bloomberg, Reuters, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008Tabuk Cement had the highest average daily trading volumes in 2007-08.Exhibit 65: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 2008500489400409300227200121 123164180100980SaudiCementYamamahCementSouthernProvinceYanbuCementQassimCementEasternCementArabianCementTabukCementSource: Reuters, TadawulNear-term demand fears andoversupply concerns couldimpact utilization rates andprice realizationsGoing forward, ongoing construction projects (including the construction of the six plannedeconomic cities), public infrastructure projects, and expansion projects in sectors such aspower, utilities, and petrochemicals are likely to help the cement industry in KSA sustain growth.Demand drivers for residential and commercial construction, the two main segments of cementusage, are likely to remain intact. To cater to anticipated growth in demand, some of the cementproducers are enhancing production capacity. In addition, newly established cement companieshave also commenced production. As a result, KSA’s total production capacity is set toincrease. We estimate KSA’s cement production capacity to reach 55mn tons by 2010.Consequently, both the demand and supply of cement seem positioned well in the long term.However, on doing a reality check on the execution of planned infrastructure projects, given theslowdown in economic activity and project financing, we believe that the expected supply ofcement could exceed the likely demand. It is feared that many of the projects (valued ~$600bn),planned and underway in Saudi Arabia, could face delays, or even be shelved. In the near term,this could hurt utilization rates, and consequently price realizations, as seen in 4Q-08. Shouldthe KSA Government lift its export restrictions, we expect better prospects for the cementindustry.JUNE 2009SAUDI ARABIA FACTBOOK51


RetailBetting on increasing consumer base,spendingThe retail sector in the Kingdom of Saudi Arabia, the largest is the Middle East, is largely beingdriven by the growing population, higher per capita income and growing organized retail. Thetwo largest cities Riyadh and Jeddah drive the Kingdom’s retail sector growth. Key players inthe retail sector include Savola, Al Othaim, Fawaz Al-Hokair Group, Jarir Bookstore, FitaihiGroup, Saudi Automotive Services Company, and Carrefour.Favorable demographicscoupled with increasingpreference for internationalbrands, is likely to propelgrowthSupply of retail goods in KSA is still limited. Most supermarkets sell only food items. In addition,the Kingdom is not self-sufficient in terms of supply of retail goods, such as textiles, footwear,and furniture, and relies on imports from countries, including China, Europe, Italy, and the US.However, in spite of the increase in prices of imported goods, demand for these products isrising primarily due to the increase in population and income levels. KSA’s retail sales wereestimated at around SR198.6bn (USD53bn) in 2008, more than half of GCC’s total retail salesof USD100bn in 2007. EIU forecasts retail sales to be close to SAR230bn in 2009 and expectsthe uptrend to continue, going forward. Non-food retail sales are expected to touch SAR28.2bn.Saudi Arabia’s organized retail sector, which includes large retail chain operators, hasregistered significant growth in the past two years, supported by the opening of the sector toforeign investment in March 2007. The increased investment in the sector helped large retailcompanies to aggressively expand their retail operations in the country. However, theunorganized sector, including single-outlet operations, lagged large retailers in terms of growth,as they were hampered by: a) limited availability of finance; and b) spike in purchase cost ofcommodities. Going forward, intensifying competition in KSA’s retail sector is likely to trigger awave of consolidation, with giant retailers acquiring single-store outfits.Sales volume also grew steadily, driven by a rapidly growing population and increased spendingpower of consumers brought about by the rapid economic expansion. By the end of 2008, SaudiArabia’s total population was close to 24.8mn (according to General Statistics and InformationDepartment) and this figure is expected to reach 30.3mn in 2012 (Source: FAO, UN), supportinggrowth in this sector. Over 70% of the country’s population is in their twenties. The entry of thispopulation into the country’s workforce, coupled with the increasing preference of consumers forinternational brands, is likely to propel growth in Saudi Arabia’s retail segment. In terms ofgoods, demand for textiles, clothing and footwear, furniture, and white goods is increasing withthe rise in individual purchasing power. Modern retail formats such as hypermarkets andsupermarkets are becoming increasingly popular.JUNE 2009SAUDI ARABIA FACTBOOK52


RETAILExhibit 66 indicates that Saudi retail sector performed better than other GCC countries onrevenue during 2005–9M-08. The sector also fares well on RoE and has higher P/E multiples(Exhibit 67).Exhibit 66: Revenue of GCC Retail companies,2005–07 (USD mn)2,800Exhibit 67: Comparison of RoE and P/E of GCC companies,20080.42,4002,0000.30.2Bahrain1,6001,200800ROE(%)0.1KSAP/E0-10 -5 0 5 10 15 20-0.1400Kuwait-0.202005 2006 2007 2008KSA Kuwait Bahrain-0.3-0.4Source: ReutersThe companies list is not exhaustive.Source: Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008Exhibit 68 indicates the performance of the eight listed companies on the Tadawul. Abdullah Al-Othaim Market Company was listed in 2008.Exhibit 68: Sector details% weight in indexas on Dec 2008*Avg. NPM (%),1Q-05 – 4Q-08*Avg. RoE (%),2005 – 2008*Abdullah Al-Othaim* 0.1 2.3 N/ASaudi Automotive Services Co 0.06 29.0 14.34National Agriculture Marketing Co 0.02 (2.5) (3.15)Ahmed H. Fitaihi Company 0.06 9.4 2.08Jarir Marketing Co 0.56 15.0 44.53Aldrees Petroleum & Transport Services Co 0.07 5.2 18.57Fawaz Abdulaziz AlHokair Company * 0.24 15.2 25.54Alkhaleej Training and Education Company * 0.05 11.0 N/ASource: Reuters, Tadawul* start periods may differ based on availability of dataRevenue of all retail companies, except Alkhaleej, registered strong growth during 2008,supported by an increase in demand. The Fitaihi Group recorded the largest growth in revenue(62.4% YoY) to SR194.3mn and Abdullah Al Othaim Markets Co. reported the highest revenueof SR2,915.3mn during 2008 among peers. Abdullah Al Othaim Markets Co. also posted thehighest net income of SR67.1mn. Net profit margin of all the companies, except Fitaihi Groupand Abdullah Al Othaim Markets Co. fell during 2008. Net margin of AlHokair Co. contracted themost (1032bp YoY) during the year.In 4Q-08, the combined revenue of all the companies grew 93.9% YoY to SR2,284mn. Jarir’srevenue grew by 51.5% YoY, the highest in the sector, to SR668.8mn during the quarter. Thetotal profit of the sector increased 16.2% YoY to SR172.0mn while average profit margindropped 502bp to 8.3% in 4Q-08. National Agriculture Marketing Co. recorded the largestcontraction (1,919bp) in net margin during the quarter.JUNE 2009SAUDI ARABIA FACTBOOK53


RETAILExhibit 69: Revenue of companies, 2005 – 2008 (SR mn) Exhibit 70: Profitability (%) of companies, 2005 – 20085003,000201204003002001002,5002,0001,5001,000500100-1010080604020002005 2006 2007 2008SASCO National Agri Fitahi GroupAlHokair Company Alkhaleej Al OthaimJarir*Aldrees*-202005 2006 2007 2008National Agri Fitahi Group JarirAldrees AlHokair Company AlkhaleejAl Othaim SASCO *0Source: Reuters, BloombergCompanies marked * are plotted on secondary axis;Source: Reuters, BloombergCompanies marked * are plotted on secondary axis;Price multiples of Saudi retail companies fell during 2006 following the stock market correction.In 2005, the price multiples were at their peak, supported by a growing economy, several IPOs,and a fast developing capital market. In 2008, the return on equity for all the companies, barringNational Agriculture Marketing Co., Ahmed H. Fitaihi Co. and Al Othaim, declined considerably.The average RoE of these companies was 9.5% in 2008, compared with 21.6% in 2007. Jarirhad the highest ROE (54.0%) and the P/B multiple (2.0x) in 2008 (Exhibit 72).Exhibit 71: Comparison of P/B and RoE, 2007 Exhibit 72: Comparison of P/B and RoE, 2008RoE (%)60AlHokair50Jarir4030Alkhaleej20AldreesSASCO10National AgriP/B00 0.5 1 1.5 2 2.5 3-10Fitahi GroupRoE (%)7060504030AlHokairAl Othaim20 AlkhaleejAldrees10SASCOFitahi Group00 1 2-10 National AgriJarirP/BSource: Bloomberg, Reuters, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2007Source: Bloomberg, Reuters, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008JUNE 2009SAUDI ARABIA FACTBOOK54


RETAILAs evident from Exhibit 73, Fitaihi Group has the highest average daily trading volume in 2007-08.Exhibit 73: Avg. daily trading volume of stocks (in 000s) , Jan 2007 – Dec 20083,5003,2153,0002,735 2,7352,5002,2932,0001,8221,5001,000500092546263SASCO Thim'ar Fitahi Group Jarir Aldrees AlHokair Alkhaleej Al Othaim *Source: Reuters*Al Othaim trading started 14 July 2008The slowdown caused by the ongoing global financial crisis is affecting the KSA economy aswell. In the short term, we expect consumer spending, the single-largest growth driver for theretail sector, to be stagnant. Consequently, companies selling high-end consumer durables arelikely to experience revenue growth slowdowns. However, in the long term, the demand forgoods is likely to be on an uptrend. With oil crashing, cost of production has eased. Added tothat, growth in population is expected to result in more new houses being built in KSA. This isexpected to boost demand for electronic appliances, television sets, refrigerators, and washingmachines.Companies selling high endconsumer durables are likely toexperience revenue growthslowdownsTo cater to growing demand, existing retail players are moving toward consolidation andexpanding the number of outlets to enhance their profitability. Liberalization of the retail sectorby the Saudi Government has created significant opportunities for foreign companies. This islikely to affect the competitiveness of existing retail firms. Though the outlook for demand andsupply is favorable, the pricing outlook remains cloudy. The Government’s decision to introduceVAT on certain goods is likely to result in price escalation and in turn impact demand over thelong term. With liberalization of the economy, the already fragmented retail space will likely seefurther competition, depressing margins of companies. Nevertheless, in the long term, webelieve that companies will see revenue growth because of favorable demographics and ananticipated rise in per-capita income in KSAJUNE 2009SAUDI ARABIA FACTBOOK55


Energy and UtilitiesPrivatizing is the key to growthElectricity consumption in KSA has increased rapidly in recent years driven by a robustindustrial sector, growing population, and improvement in living standards. Moreover, lowertariffs fixed by the Government, hot weather conditions, and a surge in power-intensiveindustrial development also supported demand growth. KSA’s energy and utilities sectorcurrently has only two listed companies — Saudi Electricity Company (SECO) and National Gasand Industrialization Co. (NGIC). Both companies are part-owned by the Government. Apartfrom these two companies, there are few other state bodies that contribute to electricitygeneration. These include Saline Water Conversion Corporation (SWCC), Marafiq, and SaudiAramco. In addition, Tihama Power Generation Co. (a private entity owed by Saudi Oger Ltd.and International Power Plc), owns four plants.Electricity consumption percapita is expected to grow at4.1% over 2007-12, accordingto EIUElectricity consumption in the Kingdom increased at a 3.0% CAGR from 6,214 Kilowatt hour(kwh) per head in 2003 to 6,994 kwh per head in 2007. The EIU expects electricity consumptionin the Kingdom to increase to 8,556 kwh per head in 2012 (CAGR of 4.1% during 2007-12),backed by growth in the country’s industrial sectors and population.Exhibit 74: Per capita electricity consumption in Kwh, 2007A–2012E9,0008,4008,5567,8007,9398,2347,2007,3497,6466,6006,9946,0002007 2008 2009 2010 2011 2012Source: EIU (report dated 29 August 2008)GCC countries are expected tospend almost USD217 bn onelectricity projects, of whichalmost 80% will be spent byKSA and the UAEA similar trend is visible across the GCC countries. To cater to growing demand, GCC countriesare targeting to expand installed capacity to 96,700 MW by 2010 from 59,700 MW in 2006.They are also enhancing the electricity transmission network that includes the setting up of GCCInterconnection Grids across the GCC to benefit from differences in peak electricity demand.The first phase of this grid is expected to commence operations in 2Q-09 and would link KSA,Kuwait, Qatar and Bahrain while the second phase will link UAE and Oman. Total spending onthe electricity projects is expected to aggregate USD217bn, of which approximately 80% is likelyto be spent by KSA and the UAE (Exhibit 75).JUNE 2009SAUDI ARABIA FACTBOOK56


ENERGY AND UTILITIESExhibit 75: Country wise distribution of electricity projects in GCC – total of USD217bnBahrainOmanKuwaitQatarUAESaudi Arabia0 20 40 60 80 100 120Source: ProLeads GlobalExhibit 76 indicates that KSA’s energy and utilities sector performed better than that of theentire GCC on revenue during 2005–9M-08. However, the sector lags GCC peers in terms ofreturn on equity (Exhibit 77).Exhibit 76: Revenue of GCC energy & utilities companies,2005 – 2008 (USD mn)6,0005,000Exhibit 77: Comparison of RoE and P/E of GCC companies,200860504,0003,0002,000RoE (%)403020101,00002005 2006 2007 2008KSA Kuwait Qatar UAE00 5 10 15 20 25 30-10P/EKSA Kuwait Qatar UAESource: ReutersThe companies list is not exhaustive.Source: ReutersSize of the bubble represents market cap. as on 31 Dec 2008KSA will need to increase itspower generating capacityfrom 35.9 GW in 2007 to 60.0GW in 2023 to meet risingelectricity demand, accordingto ECRAThough rising demand offers huge growth potential, underinvestment during the last decadehas resulted in power shortages in many regions in KSA. The Saudi Government is increasinglyseeking the participation of private players to overcome the possible supply crunch. Accordingto the Saudi Electricity Company (SECO), the Kingdom’s electricity sector had an installedgeneration capacity of 35.9 Gigawatt (GW) in 2007. Electricity and Cogeneration RegulatoryAuthority (ECRA) estimates that KSA would need to increase its power generating capacity to60,000 Megawatt (MW) by 2023, representing an increase of 1,600 MW per year.Currently, private sector investment in energy projects under development totals USD79bn.According to the Energy Information Administration report (published in August 2008), KSAaims to attract private sector investment for up to 60 percent equity in integrated IndependentWater and Power Projects (IWPPs), with the remainder split between Public Investment FundJUNE 2009SAUDI ARABIA FACTBOOK57


ENERGY AND UTILITIES(PIF) and SECO. Moreover, in a move toward privatization of the power sector, ECRA plans tosplit SECO’s power generation assets into four separate units before eventual privatization ofthe company.Exhibit 78 depicts the performance of the two companies listed on the Tadawul StockExchange. SECO dwarfs NGIC in terms of market capitalization with 4.17% share in the index,as on 31 December 2008.Exhibit 78: Sector details% weight in index ason Dec 2008*Avg. NPM (%),1Q-05 – 4Q-08*Avg. RoE (%),2005 – 2008*Saudi Electricity Co (SECO) 4.17 6.7 2.9National Gas & Industrialization Co (NGIC) 0.14 10.5 13.1Source: Bloomberg, Tadawul* start period may differ based on availability of dataSECO is a dominant player inthe energy sector, controllingover 89% of the Kingdom’sgeneration capacitySECO enjoys a near monopoly in the electricity sector. SECO controlled over 89% of generationcapacity and 100% of the transmission and distribution network in the Kingdom in 2007.SECO’s revenue increased 11.1% YoY to SR5,126.2mn in 4Q-08. However, higher sales costresulted in SECO reporting a net loss of SR435.7mn in 4Q-08. NGIC’s revenue increased 2.8%YoY to SR378.3mn, whereas its profit margin contracted 236bp to 10.8% in 4Q-08. In 2008,SECO’s revenue increased 8.1% YoY to SR22,293.9mn and NGIC’s revenue increased 5.7%YoY to SR1,471.3mn. SECO’s net profit declined 30.8% YoY to SR1,074.8mn because ofhigher personnel and operating costs, whereas NGIC’s net profit increased 6.7% YoY toSR148.7mn in 2008.Exhibit 79: Revenue of companies, 2005 – 2008 (SR mn) Exhibit 80: Profitability (%) of companies, 2005 – 200824,0001,5001522,0001,40012920,0001,300618,0001,200316,0002005 2006 2007 2008SECO NGIC *1,100-2005 2006 2007 2008SECONGICSource: ReutersCompanies marked * are plotted on secondary axisSource: ReutersPricing multiples of both the companies peaked in 2005. In 2008, the decline in the pricingmultiples of these companies has been less severe vis-à-vis the TASI. However, SECO’s P/Emultiples of 35.9x in 2008 is much higher, compared with NGIC’s multiple of 8.7x due toSECO’s positioning as a dominant player in the Saudi energy sector. Nevertheless, NGIC hadhigher RoE (14.3%) and P/B multiples (1.3x) in 2008.JUNE 2009SAUDI ARABIA FACTBOOK58


ENERGY AND UTILITIESExhibit 81: Comparison of P/B and RoE, 2007 Exhibit 82: Comparison of P/B and RoE, 20081512NGIC1512NGICRoE (%)96RoE (%)963SECO3SECO00 1 P/B 2 300 1 P/B 2 3Source: Bloomberg, TadawulSize of the bubble represents market cap. as on 31 Dec 2007Source: Bloomberg, TadawulSize of the bubble represents market cap as on 31 Dec 2008Exhibit 83 indicates that SECO’s trading volumes are higher than that of NGIC.Exhibit 83: Avg. daily trading volume of stocks (‘000s) , Jan 2007 – Dec 20088,0007,5826,4004,8003,2001,6001,7080SECONGICSource: ReutersSince 2000, electricity tariffs have remained constant in KSA. However, increasing participationof the private sector is likely to result in the gradual introduction of market-based tariffs.Electricity & Cogeneration Authority’s (ECRA) approval of the proposed tariff changes is a keygrowth catalyst. This move is expected to provide relief to energy providers by accommodatingthe cost of services to the extent possible and offering sufficient revenue growth opportunitieswhile reducing the burden on low-income families. However, given the deteriorating consumerconfidence amid the ongoing economic crisis, implementation of this new tariff structure is likelyto be muted.Electricity consumption isexpected to slowdown in 2009due to declining industrial andconstruction activity, but longterm is still intactGoing forward, Government’s initiatives to bring about economic growth (in the form ofadditional Government spending and rate cuts) with higher focus on energy-intensive industriesare likely to provide impetus to the energy sector. Though declining industrial and constructionactivity could dent demand growth in 2009, significantly low per capita energy consumption inthe Kingdom offers sufficient room for an upside in the long run. Furthermore, the SaudiGovernment continues to encourage private sector investment in the energy sector, asprivatization will bring in the much-needed investment. The Pan-Arab GCC grid will alsoJUNE 2009SAUDI ARABIA FACTBOOK59


ENERGY AND UTILITIESincrease the utilization rates of Saudi energy firms. However, we remain concerned on thetimely completion of the power projects mainly due to shortage of skilled staff and high demandof power projects elsewhere in the GCC. For instance, Marafiq’s Jubail IWPP project (largest inthe Middle East) has been delayed, whereas the earlier completion target date was 2009.Nevertheless, increasing participation of the private sector, coupled with planned capacityexpansions and favorable demand outlook, could be viewed as catalysts for industry growthgoing forward.JUNE 2009SAUDI ARABIA FACTBOOK60


Agriculture and FoodFulfilling demand through importsKSA is one of the largest importers of agricultural and food products in the world. The Kingdomimports agricultural products from Ukraine, Syria, Brazil, India, the US, European Union (EU),and Australia. KSA imported over SR25.5bn of agriculture products in 2008, up sharply 40%YoY. The agriculture sector in KSA contributed 3% of the GDP and employed around 12% ofthe total workforce in 2007. The prime reason for dependence on imports is the paucity of freshwater and arable land.Demand for agricultural, food, and food-related products continues to remain high, led by thegrowing population, making KSA the leading market in the Middle East for agricultural products.The Saudi Government is planning various initiatives ranging from loan and subsidy policies toboost agriculture activity in the region, while paying special attention to technological upgrading.In the recent 2009 state budget, the agriculture and water sectors were allocated SR35.4bn,which was the third largest amount of the total budget. Major portions of this amount areexpected to be spent on improving agricultural productivity, irrigation, silos, mills, desalination,roads, drainage, and provision of other incentives to farmers. Several water conservationprojects have also been flagged off.These Government initiatives and support have spurred private sector interest in the sector withinvestments expected to reach SR181bn in 2009, after sharply surging in 2008. A total of about23% of this investment is mainly focused on agriculture related projects alone.As a result of the limited arableland and depleting fossil watersources, KSA is expected toincrease its dependence onfood importsAlthough, of the total land area of 2,149,690 sq km in KSA, only a very small portion is arable,thousands of hectares of desert have now been transformed into arable land using moderntechnology and equipment. However, of the total water required for agriculture, majority issourced from non-renewable aquifers. The Saudi Arabian Ministry of Agriculture (MOA)announced 12.5% per annum cut in wheat production from the spring of 2009 until the spring of2016, because of depleting fossil water within KSA. As a result, from 2009–2016, the Kingdomis expected to fulfill its wheat requirements by importing a similar percentage of wheat from theinternational market every year.Moreover, the US Department of Agriculture Foreign Agricultural Service expects the demandfor rice to increase in 2009 due to a rise in population and higher number of pilgrims visitingMecca. The Kingdom, the largest importer of rice from India, faced supply pressures in 2008,due to the ban on non-basmati rice exports from India. Furthermore, the Saudi Governmentimplemented a new rice subsidy program on 5 Jan 08, under which, it subsidized rice imports atthe rate of USD266.67 per metric ton and this is expected to help lower retail prices of highquality rice by up to 20% in KSA.Population growth, higherconsumer spending changes inlife style and eating habits arekey growth driversThe growing population base of Saudi Arabia and higher consumer spending are expected todrive demand for food. With increased focus on urbanization and industrialization and thegrowing influence of western lifestyles in KSA, the eating and living habits of the people havechanged dramatically. As a result, the number of supermarkets and fast food chains areexpected to rise in major urban areas of KSA. In the past ten years, majority of the US quickservicerestaurant franchises such as McDonald’s, Pizza Hut, Subway and KFC, as well asWestern-style supermarkets have entered the Kingdom. Local players in the fast food businessJUNE 2009SAUDI ARABIA FACTBOOK61


AGRICULTURE AND FOODare Herfy, Al-Back, Tazaj, Dajen and Kudu. Further, the rising number of foreign pilgrims islikely to increase per capita food consumption in the Kingdom.The Kingdom imports large quantities of agricultural commodities and food ingredients for itsgrowing food processing sector. Therefore, KSA levies only 5% import duty on the majority offoodstuffs imported. However, rice, food grains and fresh produce are exempted from importduty. Going forward, the KSA Government is phasing out custom duty and will introduce ValueAdded Tax (VAT), in line with the UAE Government’s plan. This development will most likelychange the country’s indirect tax system.KSA companies compare well with GCC peers on revenue parameters.Exhibit 84: Revenue of GCC agriculture companies,2005–2008 (USD mn)700060005000Exhibit 85: Comparison of RoE and P/E of GCC companies,2008,605040400030002000100002005 2006 2007 2008Kuwait Oman KSA Qatar UAEROE (%)3020100-5 0 5 10 15 20 25-10-20P/EKuwait KSA Qatar OmanSource: Gulfbase, ReutersThe companies list is not exhaustiveSource: Gulfbase, Reuters, BloombergSize of the bubble represents market cap. as on 31 Dec 2008The 15 companies that comprise the agriculture sub-index of the Saudi Stock Exchange arelisted in Exhibit 86 along with their respective average net profit margins and average RoE.Almarai had the highest market weight as of December 2008, whereas Savola exhibited thebest RoE (excluding Bishah).Exhibit 86: Sector details% weight in Indexas on Dec 2008Avg. NPM (%),1Q05 – 4Q08*Avg. RoE,2005 – 2008*Savola Group 1.31 13.5 23.6National Agriculture Development Co 0.21 10.1 8.7Qassim Agriculture Co 0.04 53.9 1.1Hail Agriculture Development Co 0.07 16.2 10.9Tabuk Agriculture Development Co 0.04 15.9 7.4Saudi Fisheries Co 0.05 (31.5) (19.4)Ash Shargiyah Agriculture Development 0.01 2.0 2.2Al-Jouf Agriculture Development Co 0.05 25.5 9.9Bishah Agriculture Development Co** 0.04 NM 25.9Jazan Development Co 0.05 318.4 11.8Food Products Co 0.02 6.4 4.7Saudi Dairy & Foodstuff Co 0.06 3.1 5.1Almarai Company 1.65 17.6 -26.5Anaam International Holding Group Co 0.06 7.6 2.1Source: Bloomberg, Tadawul* start period may differ based on availability of data;** Performance up to 1Q-07JUNE 2009SAUDI ARABIA FACTBOOK62


AGRICULTURE AND FOODThe combined revenue of 14 companies (excluding Bishah) increased 10.1% YoY in 2008,although earnings fell over 52.0% during the same period. The top three companies—SavolaGroup, Almarai Company, and National Agriculture Development Co—accounted forapproximately 95.3% of the total revenue. Savola Group, the largest company in the sector,accounted for around 63.2% of the sector’s revenue. Almarai ranks second on revenue.Although growth in earnings has slowed down QoQ, sales across segments remained steadydue to strong domestic demand for food and related products. Most other companies in thesector, including National Agriculture Development Company and Almarai, also recordedrevenue gains. Among the leading players in 4Q-08, Savola’s top line declined 8.9% QoQ andNational Agriculture Development Co’s revenue fell 12.2%.Exhibit 87: Revenue of companies, 2005-2008 (SR mn) Exhibit 88: Profitability (%) of Companies, 2005 – 20088001500025700600120002050090001540030020010060003000105002005 2006 2007 2008Hail Saudi Fisheries Halwani*Savola* NADEC Bishah **SADAFCO*Almarai*0-52005 2006 2007 2008Savola NADEC HailSADAFCO * Almarai HalwaniSource: Reuters, Gulfbase, BloombergCompanies marked * are plotted on secondary axis **up to 2006Source: Reuters, Gulfbase, BloombergAs indicated in Exhibits 89 and 90, the price multiples of Saudi agriculture and food companieswere at their peak prior to the 2006 correction in the Saudi market which resulted in multiplesdeclining significantly. The peer average of companies in this sector stood at 14.8x in FY-08.Savola, the largest amongst peers, traded at 14.3x.Exhibit 89: Comparison of P/B and RoE, 2007 Exhibit 90: Comparison of P/B and RoE, 2008ROE(%)3530252015105P/B00 5 10 15 20Savola GroupNational AgricultureHail AgricultureTabukAl Jouf AgricultureJazan DevelopmentFood ProductsSaudi Dairy & FoodstuffAlmaraiAnaamSource: Gulfbase, Reuters, NCBC ResearchNon meaningful values have been excludedSize of the bubble represents market cap. as on 31 Dec 2007ROE(%)3530252015105P/B00 2 4 6 8 10 12Savola GroupNational AgricultureHail AgricultureTabukAl Jouf AgricultureJazan DevelopmentFood ProductsSaudi Dairy & FoodstuffAlmaraiAnaamHalwaniSource: Gulfbase, Reuters, NCBC ResearchNon meaningful values have been excludedSize of the bubble represents market cap. as on 31 Dec 2008JUNE 2009SAUDI ARABIA FACTBOOK63


AGRICULTURE AND FOODExhibit 91: Average daily trading volume of stocks (‘000s) , Jan07 – Dec08600050004,7364,76340003,6473,586300020002,3552,1481,8071,7992,8192,559 2,715 1,5752,1781000360 3390SavolaNADECQassimHailTabukSaudiFisheriesAshshargiyahAl-JoufBishahJazanFoodSADAFCOAlmaraiAnaamHalwaniSource: Reuters, TadawulKSA is largely dependent on imports for its agriculture and food product requirements. TheGovernment is following a policy of conserving all its depleting fresh water resources whiledeveloping arable land in the Kingdom. Going forward, imports of key inputs such as wheat,rice, barley, are likely to grow in tandem with the development of the economy. With KSA’saccession to the WTO, there has been an inflow of foreign participants, which increasescompetition. In addition, the Government is phasing out customs duty and introducing VAT.Favorable demographics such as rising population will be a key growth driver for this sector.Although efforts to develop desert into arable land are underway, lack of agricultural land andwater resources will continue to increase imports of major foodstuffs. Thus, KSA is expected toremain a net importer of agriculture and food products.JUNE 2009SAUDI ARABIA FACTBOOK64


Telecom and ITFavorable demographics driving growthThe Saudi telecommunication sector has experienced robust growth in the past few years,largely driven by KSA’s young demographic profile (68% of the people are below the age of 30)and rising per capita income. Currently, the telecommunication sector index of the Saudi StockExchange comprises four companies—Saudi Telecom Co (STC), Etihad Etisalat Co (Mobily),Mobile Telecommunication Co. (Zain) and Etihad Atheeb Telecom Company. STC enjoyed amonopoly in the fixed-line telecom service segment until recently, while Mobily and Zaincompete with STC in the mobile telephone service segment.KSA’s low penetration levelindicates significant room forgrowthIn 2008, the KSA Government granted licenses to Bahrain Telecommunication Co. (Batelco),Hong Kong’s PCCW Ltd (PCCW), and US’ Verizon Communications Inc (Verizon); with theirentry, STC’s monopoly in the fixed-line telecom segment has ended. Of the newly licensedplayers, Etihad Atheeb Telecommunication Company completed an IPO of SAR300mn inFebruary 2009, which was oversubscribed 3.5 times. The entry of new companies is expectedto accelerate the expansion of existing infrastructure and implementation of new technologyplatforms. However, with increased competition owing to the entry of new players such asMobily (in 2005) and Zain (in 2008) in wireless telecom segment, the average revenue per user(ARPU) of Saudi telecom sector has seen a sharp decline in the past three years.Despite being one of the largest mobile markets in the GCC region, the country had a relativelylow mobile penetration (116%) and fixed-line penetration (16.8%) in 2007. During 1H-08, theSaudi telecommunication market recorded a mobile penetration rate of 123.3%. KSA’s fixed tomobile substitution has also increased significantly over the last three years. This dented thegrowth in new fixed-line subscriptions and hence restricted the growth in revenue from thissegment. In the operational fixed landline category, KSA had 4mn lines by the end of 2007,taking the fixed-line penetration level at 17%. Internet penetration grew to 26% in 2007, and isexpected to be a catalyst for growth in the telecom sector in the long term.Exhibit 92: Fixed-line and mobile subscribers (per 100population) in KSAExhibit 93: Broadband subscriber lines and internet users (per100 population) in KSA17.01601012016.5120890616.08060415.54023015.02003 2005 2007 2009E 2011EFixed-line subscribersMobile subscribers002003 2005 2007 2009E 2011EBroadband subscribersInternet users0Source: EIUSource: EIUThe sector continues to be among the lucrative markets in the GCC due to its low penetrationlevel compared with other GCC peers, and favorable demographics. Saudi Arabia ranked fourthin terms of mobile penetration in GCC, with UAE being the first with 173%, followed by Qatarand Bahrain with 150.4% and 148.2% penetration levels in 2007 respectively. Moreover, fixed-JUNE 2009SAUDI ARABIA FACTBOOK65


TELECOM AND ITline penetration stands at 17% vis-à-vis 19% in Bahrain and 30% in the UAE. KSA telecomcompanies are diversifying geographically as well, selectively targeting low mobile penetrationmarkets. STC has expanded into the Indian and Indonesian markets on similar lines. Mobilyalso has plans to invest INR700mn (approximately USD15.5mn) in India, where it already hasoperations, to capture the growing Indian Telecommunication sector. These steps are likely toalleviate the profitability concerns due to falling ARPU rate in KSA.KSA’s telecom sector is the largest in GCC in revenue and has better return on equity also.However, KSA companies have better return on equity than Kuwaiti companies do.Exhibit 94: Revenue of GCC Telecom companies,2005 – 2008 (USD mn)16,00014,00012,000Exhibit 95: Comparison of RoE and P/E of GCC companies,2008403510,0008,0006,000RoE (%)30254,0002,00002005 2006 2007 2008Oman Bahrain UAE KSA Kuwait Qatar20P/E156 8 10 12KSA Qatar UAE Kuwait Oman BahrainSource: ReutersThe companies list is not exhaustive.Source: Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008The four telecommunication companies of KSA—STC, Mobily, Zain, and Atheeb—are listed onthe TASI. STC is the largest company in KSA’s telecommunication sector with a market cap ofSR98.2bn as on 31 December 2008. Zain’s initial public offering came in 2008 and the companylaunched commercial services in August 2008. Atheeb was listed in March 2009. The companyhas not yet started operations and plans to launch commercial services in 2009.Exhibit 96: Sector details% weight in indexas on Dec 2008*Avg. NPM (%)1Q05 – 4Q08*Avg. RoE,2005 – 2008*Saudi Telecom Co (STC) 10.62 33.8 35.4Etihad Etisalat Co (Mobily) 2.35 12.1 23.3Mobile Telecommunication Co. (Zain) 1.61 NA NASource: Bloomberg, Tadawul, Reuters* start periods may differ based on the availability of data; does not include Etihad AtheebMobily, which commenced mobile telephone services in early 2005, has performed creditably inthe sector. Mobily’s aggressive focus on the wireless Internet market has generated excellentreturns for the company in the recent past as reflected in the 29.0% YoY rise in revenue and51.2% YoY increase in net profits during 4Q-08. On the other hand, STC recorded a 35.0% YoYrise in revenue for 4Q-08; however, the company’s net profits declined 61.2% YoY for the sameperiod.For 2008, Mobily’s revenue grew 27.9% YoY to SR10.8bn and net profit shot up 51.2% YoY toSR2.1bn. During 2008, STC reported 41.5% rise in revenue to SR47.4bn. Nevertheless, thecompany’s net profit declined 8.1% YoY because of the difference in exchange rates for theJUNE 2009SAUDI ARABIA FACTBOOK66


TELECOM AND ITforeign investments worth SR2bn in 2008. This also had an adverse affect on the bottom-linegrowth of KSA’s telecom sector leading to a 1.9% YoY fall for 2008.Exhibit 97: Revenue of Companies, 2005 – 2008 (SR mn) Exhibit 98: Profitability (%) of Companies, 2005 – 200850,0004240,000352830,0002120,0001410,000702005 2006 2007 200802005 2006 2007 2008STCMobilySTCMobilySource: ReutersSource: ReutersAs of 31 December 2008, the P/E multiples of STC and Mobily were 8.9x and 10.4x,respectively. Similarly, the P/B multiples of STC and Mobily were 2.6x and 2.2x respectively.However, STC has a better return on equity (30.0%) compared with Mobily (26.7%) in 2008.Exhibit 99: Comparison of P/B and RoE, 2007 Exhibit 100: Comparison of P/B and RoE, 2008404036STC36RoE (%)3228MobilyRoE (%)3228MobilySTC242420P/B4 5 6 720P/B1 2 3 4Source: Bloomberg, TadawulSize of the bubble represents market cap. as on 31 Dec 2007Source: Bloomberg, TadawulSize of the bubble represents market cap as on 31 Dec 2008JUNE 2009SAUDI ARABIA FACTBOOK67


TELECOM AND ITZain started trading in 2008 and had the highest daily trading volumes (Exhibit 101).Exhibit 101: Avg. daily trading volume of stocks (‘000s) , Jan 2007 – Dec 200814,00012,00012,06010,0008,0006,0004,0002,0001,6131,0400STC Mobily ZainSource: ReutersInternet and broadbandservices, as well as value addedservices are the relativelyunexplored and key growthareas for the sectorThe telecommunication sector in KSA is emerging as one of the most competitive markets in theregion. With the liberalization of the sector and entry of more players, competition is likely tofurther intensify, depressing the already falling ARPUs. Competition also would increasemarketing costs and promotion expenses. However, strong demand for mobile, reduction inhandset prices and tariffs, and increasing popularity of value-added services offered onmobile platforms, present a significant growth opportunity. We expect growth in customer baseand average minutes of use to offset the effect on revenue of a fall in ARPU. Moreover, theuptake of Internet and broadband services is expected to increase due to a growing youngpopulation, and willingness to adopt new technologies. Although demand for wired Internet islikely to promote fixed-line connectivity we believe companies would focus more on wirelessconnectivity, especially through mobiles, given their high penetration. Furthermore, investmentsin the sector are likely to increase with the opening up of the sector and the entry of newplayers. Therefore, our outlook on growth in KSA’s telecommunication sector is positive.JUNE 2009SAUDI ARABIA FACTBOOK68


InsuranceLong term growth insuredThe insurance sector in KSA, which has the largest population in the GCC, has undergone asea change in the past few years. KSA’s insurance sector emerged stronger on the back ofeconomic growth, increased market liberalization, favorable demographics, and a shift inregulatory patterns. According to Saudi Arabian Monetary Agency (SAMA)’s survey 2006–07report , the Saudi insurance market registered robust growth of 24.0% YoY in 2007, with grosswritten premium increasing from SR6.9bn in 2006 to SR8.6bn in 2007. KSA was the secondlargest insurance market in total premium in the GCC in 2007.In June 2008, 42 insurance companies operated in the Saudi market, 21 of which were fullylicensed to operate in the Kingdom. In addition, eight have applied to the Ministry of Commerceand Industry for licenses. Increasing liberalization and implementation of positive regulatorychanges have led to a marked improvement in the investment climate in KSA’s insurance sectorof late.Low insurance penetration andlow density relative to regionalmarkets indicate future growthpotentialWe believe the insurance sector in KSA is promising in the long term, given that insurancepenetration rates are very low and the sector is at a nascent stage. Although, insurancepenetration in KSA increased from 0.53% in 2006 to 0.61% in 2007, it remained one of the mostunder-penetrated markets in the GCC in 2007. The average insurance penetration level in theGCC (excluding Bahrain) in 2007 was 1.02. Insurance density (gross written premium percapita) in KSA was also the lowest in the GCC (excluding Bahrain).Exhibit 102: Insurance density and penetration – 2006 and 2007Insurance penetration (in % of GDP) Insurance density (per capita in USD)Country 2006 2007 2006 2007KSA 0.5 0.6 63 92Kuwait 0.7 0.6 227 257Oman 1.0 1.1 133 159Qatar 1.1 0.9 683 640UAE 1.7 1.9 585 812Source: Swiss Re SigmaHowever, new rules mandate insurance players to maintain gross premiums below 10x theircapital and reinsure at least 30% of gross written premiums within the Kingdom. Companiesalso have to distribute 10% of net surplus from insurance operations to policyholders in line withthe Mudarabah model of Islamic cooperative insurance. Hence, although the market is expectedto expand in future, the legal framework might make if difficult for new players seeking entry intothe market.Buoyed by cultural factors,Takaful insurance is gainingimportance in GCCThe GCC insurance sector has experienced exceptional growth over the past few years, drivenby improved business and legal environment and increasing maturity of the GCC economies.There has been a paradigm shift in the region’s appetite for insurance, which, in turn, hasattracted many foreign insurers and paved the way for consolidation among local players in theSaudi insurance sector. The GCC insurance market essentially relies on Takaful, an insuranceconcept based on the Islamic banking law, thus making insurance a more widely acceptableand accessible product. According to Swiss Re Sigma, KSA’s insurance sector is the largestgrowth market for Takaful products. KSA alone accounted for approximately 30% of the totalgross premium market in the GCC (excluding Bahrain) in 2007.JUNE 2009 SAUDI ARABIA FACTBOOK 69


INSURANCEExhibit 103: Country wise distribution of gross premiums (USD mn) – 20074,0003,0002,0001,0000Kuwait Oman Qatar Saudi Arabia UAELifeNon-LifeSource: Swiss Re SigmaGiven it is a nascent industry, the Company for Co-operative Insurance (NCCI) is the onlydominant player operating in KSA. KSA leads other GCC insurance companies on revenue(Exhibit 104). However, in terms of RoE and P/B multiple, Qatari insurance companies rules thechart. KSA insurance companies have moderate RoE and P/B multiples vis-à-vis their GCCpeers (Exhibit 105).Exhibit 104: Revenue of GCC Insurance companies, 2005 – 2008(USD mn)800Exhibit 105: Comparison of RoE and P/E of GCC companies,2008252060015400RoE (%)1052000-5P/B02005 2006 2007 2008KSA Kuwait Qatar Bahrain UAE Oman-100.5 1 1.5 2 2.5KSA Kuwait Qatar Bahrain UAE OmanSource: ReutersThe list of companies taken is not exhaustive. Only large players (based on market cap) ofeach country have been considered.Source: ReutersNote: We have taken P/B multiple as most of the GCC companies reflect absurd P/E valuedue to investment losses in 2008.The list of companies taken is not exhaustive. Only large players (based on market cap) ofeach country have been considered;Size of the bubble represents market cap. as on 31 Dec 2008.In 2007, gross written premium in health insurance (36% of the insurance market) and motorinsurance (28%) together accounted for about 64% of the insurance market, compared with60% in 2006. This growth was largely due to the Saudi Government making motor insurancecompulsory for all and mandating employers to provide health insurance to expatriates. Energyinsurance, and Protection and Savings insurance were the fastest growing lines of business in2007 with YoY growth rates of 141% and 50%, respectively.JUNE 2009SAUDI ARABIA FACTBOOK70


INSURANCENon-life insurance to expandannually at 18.6% over 2007-12driven by health and motorinsuranceGoing forward, we expect the health insurance market to grow rapidly, buoyed by theGovernment’s decision of mandating employers to provide health insurance for expatriates. Themotor insurance market is also expected to expand, with motor insurance being declaredcompulsory. BMI expects the total non-life insurance sector to expand at 18.6% CAGR in 2007–12, backed by strength in the health and motor insurance sectors, coupled with increased nonlifepenetration. Meanwhile, the life insurance sector is projected to expand at 25.6% CAGR in2007–12 on population growth and expectations of a rise in density (premium per capita) fromUSD3.6 in 2007 to USD10 in 2012.The Tadawul has 21 listed insurance companies, of which six were listed in 2008. Theseinclude: Arabia Insurance Cooperative Co. (paid-up capital of SR200mn); Trade UnionCooperative Insurance Co. (paid-up capital of SR250mn); Al-Sagr Cooperative InsuranceCompany (paid-up capital of SR200mn); Bupa Arabia for Cooperative Insurance Co. (paid-upcapital of SR400mn); Saudi Re for Cooperative Reinsurance Co. (paid-up capital of SR1bn);and United Cooperative Assurance Co. (paid-up capital of SR200mn). Four other insurancecompanies have floated their IPO in April 2009. These include: Al Rajhi Co. for CooperativeInsurance (offering size of SR60mn); Weqaya for Takaful Insurance and Reinsurance Co.(offering size of SR80mn); ACE Arabia Cooperative Insurance Co. (offering size of SR40mn)and AXA Cooperative Insurance (offering size of SR80mn). NCCI continued to hold a dominantposition in KSA’s insurance sector with 0.18% and 16.0% weight by market capitalization on theTadawul and the Tadawul Insurance index respectively, as on 31 December 2008.Exhibit 106: Sector details% wt inindexAvg. NPM (%),1Q-05 – 4Q-08*Avg. RoE (%)2005 – 2008The Company for Co-operative Insurance (Tawuniya) 0.18 23.30 32.71Malath Co-operative Insurance and Reinsurance Co. (Malath) 0.11 (22.70)Mediterranean & Gulf Insurance and Reinsurance (Medgulf) 0.15 N/ASaudi Fransi Co-operative Insurance Co. (Allianz SF) 0.05 (11.35)Islamic Arab Insurance Co. (SALAMA) 0.04 (4.54)Saudi United Cooperative Insurance Co. (Walaa) 0.03 N/AArabian Shield Co-operative Insurance Co. 0.03 N/ASABB Takaful 0.04 (6.32)Sanad Insurance and Reinsurance Co-operative Co. 0.03 N/AThe Saudi Arabian Cooperative Insurance Co. (SAICO) 0.02 N/ASaudi Indian Company for Cooperative Insurance 0.05 (134.41)Gulf Union Co-operative Insurance Co. 0.03 N/AAlahli Takaful Company (ATC) 0.05 (171.73)Al-Ahlia Insurance Co. 0.03 (802.33)Allied Co-operative insurance group (ACIG) 0..02 N/AArabia Insurance Co-operative Co. (AICC) 0.03 N/ATrade Union Co-operative Insurance 0.03 N/AAl-Sagr Cooperative Insurance Co. 0.03 N/AUnited Co-operative Assurance (UCA) 0.08 N/ASaudi Re for Co-operative Reinsurance Co. 0.10 23.30Bupa Arabia for Co-operative Insurance Co. 0.05 (22.70)Source: Bloomberg, Tadawul, Company data:* start periods may differ based on availability of dataMany insurance players postedloss in 2008 due to investmentlosses and high operationalcosts resulting from inceptionSince the Saudi insurance market is still evolving, majority of the players registered losses in2008 except NCCI, Arabian Shield Co-operative Insurance Co., Gulf Union Co-operativeInsurance Co., and Al-Sagr Cooperative Insurance Co., which posted profits. NCCI has beenable to maintain profitability due to its dominant position in growing insurance segments such asmotor insurance and health insurance. However, NCCI posted negative profitability in 4Q-08JUNE 2009SAUDI ARABIA FACTBOOK71


INSURANCE(YoY), despite growth in revenue. In 2008, NCCI’s profits declined 87% YoY to SR67mn.Although, gross written premium and net premium earned grew 23% and 16% YoY respectively in2008, loss in investment portfolios and competition from the recently licensed companies impactedthe bottom line. Stringent Government regulations on investments such as limiting investment inequity to not more than 15% of total investments to limit downside risks associated with thevolatility of the equity markets are helpful. Nevertheless, a weak financial market is likely to affectthe value of their investment portfolio in the near term.Exhibit 107: Revenue of companies, 2005 – 2008 (SR mn) Exhibit 108: Profitability (%) of companies, 2005 – 20082,80050402,400302,00020101,6002005 2006 2007 200802005 2006 2007 2008Source: Tadawul, ReutersNCCI is the only dominant player operating in KSASource: Tadawul, ReutersNCCI is the only dominant player operating in KSAFollowing the Government’s decision to liberalize the insurance sector in 2006, the sectorexperienced significant growth in 2007. Furthermore, the Government’s phased introduction ofcompulsory health insurance for expatriates in 2006 reflected positively on the sector index.However, plummeting equity markets in KSA in 2008 impacted the valuations of the companiesin this sector. In 2008, P/B multiple contracted because of a weak equity market while P/Emultiples remained high mainly due to a steeper decline in earnings vis-à-vis the share price.For instance, as of 31 December 2008, NCCI’s P/B and P/E and multiple stood at 1.6x and25.2x respectively, compared with 4.1x and 14.3x respectively in 2007. As illustrated below,most of the KSA insurance companies, barring NCCI and the Gulf Union Co-operativeInsurance Co., had negative RoE in 2008.Exhibit 109: P/E of NCCI, 2005–08RoE (%)40200-20-40NCCI (as on 31 Dec2008)Gulf UnionAl-AhliaWalaaMedgulfSAICOACIGMalathNCCI (as on 31 Dec2007)ATCSaudi IndianSALAMASABB TakafulAllianz SF0 2 P/B 4 6Source: Reuters, Bloomberg, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008JUNE 2009SAUDI ARABIA FACTBOOK72


INSURANCESaudi Re, followed by MEDGULF, had the highest daily trading volumes in 2007-08.Exhibit 110: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 20082,0001,5001,0005001,8061,8221,3771,104949 925 937 941781608 574 639 759 760 778 825 8986195082952020NCCIMalathMedgulfAllianz SFSALAMAWalaaArabian ShieldSABB TakafulSanad Ins.SAICOSaudi Indian Co.Gulf UnionATCAl-AhliaACIGAICCTrade UnionAl-SagrUCASaudi ReBupa ArabiaSource: BloombergKSA’s insurance industry is at an incipient stage and offers scope for exponential growth, goingforward. The sector is estimated to benefit largely from increasing liberalization, growingpopulation, and increasing awareness of insurance products.Although long term drivers arepositive, we hold a negativeoutlook on the sector in theshort termHowever, in the near term, a slowdown in business activities will have a negative impact ondemand for non-life insurance. As many companies are listed recently and are at a nascentstage of development, they are expected to incur higher selling and general administrationcosts, which would put pressure on their net income in 2009. In addition, unit-linked lifeinsurance products have lost their charm due to the plunging equity markets, which, in turn, isimpacting the overall growth of the insurance sector. Insurance companies are likely toexperience erosion in their capital values, as they will record mark-to-market losses on theirinvestment portfolio. Hence, we remain cautious on the earnings prospects of insurancecompanies in 2009, and thus hold a negative outlook on this sector in the near-term.JUNE 2009SAUDI ARABIA FACTBOOK73


Multi-investmentLight at the end of the tunnelThe multi-investment sector is made up of companies that invest in projects across a widevariety of sectors. A handful of large diversified conglomerates currently operate in theKingdom. They function mainly in sectors such as real estate, hospitality, industrialmanufacturing, and energy. Although the current global meltdown has severely impacted thesector, anticipated recovery in the medium term has a potential to provide a push to this sectorGovernment support ofvarious sectors is likely tocreate multi-investmentopportunitiesAt present, seven major companies operate in the Saudi multi-investment sector, whosecombined turnover expanded at a staggering 113.2% CAGR between 2005 and 2007, owing tothe robust macroeconomic growth in KSA during that period.The Saudi Government has taken various initiatives such as reducing tax rates applicable toforeign-owned firms from 45% to 20% to encourage more foreign participation across sectors.Government-backed development of economic cities is expected to directly provide growthopportunities to companies operating in the real estate, hotels, and tourism sectors. Suchinitiatives, coupled with KSA’s accession to the WTO and expenditure of SR161.7bn that wasplanned in 2008 towards various sectors, are likely to drive growth; multi-invest companiesstand to benefit from the growth of these sectors in the long term.Revenue of Saudi companies surged in 2007, led by a growing economy, although thesenumbers have fallen sharply in 2008. In the second half of 2008, KSA multi-investmentcompanies had begun feeling the pinch of lower RoEs compared with GCC peers; both RoEsand PEs have entered negative territory at the end of 2008.Exhibit 111: Revenue of GCC multi investment companies,2005–2008 (USD mn)Exhibit 112: Comparison of RoE and P/E of GCC companies,2008300025002000150010005000-500-1000-1500-2000-25002005 2006 2007 2008KSA UAE Kuwait Bahrain OmanROE (%)504030UAE20Oman10P/E0-10 -5 -10 0 5 10 15 20-20Bahrain-30KSA-40-50-60Kuwait-70Source: Gulfbase, Reuters, TadawulThe companies list is not exhaustiveSource: Gulfbase, Reuters, TadawulThe companies list is not exhaustiveSize of the bubble represents market cap. as on 31 Dec 2008JUNE 2009SAUDI ARABIA FACTBOOK74


MULTI-INVESTMENTKingdom Holding Company (Kingdom) currently has the largest market weight, whereas Al-Ahsa Development Company’s profit margins were the highest.Exhibit 113: Sector details% weight in Indexon Dec 2008*Avg. NPM (%),1Q05 – 4Q08*Avg. RoE,2005 – 2008*Kingdom Holding Company (Kingdom) 3.20 NM NMAseer Trading, Tourism & Manufacturing Co (Aseer) 0.14 13.1 8.2Al-Ahsa Development Co (Al Ahsa for Dev.) 0.05 75.5 11.5Saudi Advanced Industries Co (Saudi Advanced) 0.05 28.3 2.3Saudi Arabia Refineries Co (SARCo) 0.09 66.8 6.5Saudi Industrial Services Co (SISCo) 0.07 NM NMAl-Baha Investment & Development Co (Al Baha) 0.02 NM NMSource: Bloomberg, Tadawul, Reuters and Gulfbase* start periods may differ based on availability of dataLeading players in terms of revenue in the Saudi multi-investment sector are Kingdom, Assirand Saudi Industrial Services Co. (SISCO). Kingdom is majority-owned (93.5%) by HH PrinceAlwaleed Bin Talal Bin Abdulaziz Al Saud and is one of the most diversified organizations inKSA. The company has business interests in banking, real estate, technology, hotels andtourism, media and telecommunications, healthcare, and education. Assir is involved inconstruction of agricultural projects, allocation of contracting works, and holds a large tradingportfolio. The combined turnover of both companies accounted for approximately 96% of thesector turnover in 2008.Most of the companies in the sector have experienced robust growth between 2005 and 2007,with revenue expanding at 113.2% CAGR during the period, primarily attributable to overalleconomic growth and liberalization initiatives of the Saudi Government. However, owing tovolatile investment portfolios, falling oil prices and the current unfavorable environment in theglobal equities space, this sector has experienced a sharp downturn in terms of value in the lastquarter of 2008. In 2008, revenue recorded growth of only 11.1% YoY, compared with 332.0%YoY growth in 2007.Global crisis impact on thesector is expected to continuein the near-term futureAfter having grown at a CAGR of 48.8% in 2005-2007 and 148.1% YoY in 2007, the sectorsuffered net losses in excess of SR30bn in 2008, led by the losses made by the leading players.These negative results were primarily due to huge annual losses incurred by the KingdomHolding Company, one of the biggest and worst losses in the history of the region. Kingdomsuffered a loss of SR31bn in the last quarter alone and Assir suffered losses of SR212mn in 4Q-08, posting a loss for the second consecutive quarter. Al-Ahsa also recorded a loss of SR19mnin 4Q-08 and although Saudi Advanced Industries recorded a profit of SR2.1mn, it was down52.1% QoQ. The impact of the global crisis, clearly evident in the last quarter of 2008, is likely tocontinue in the near-term future.JUNE 2009 SAUDI ARABIA FACT BOOK 75


MULTI-INVESTMENTExhibit 114: Revenue of companies, 2005–2008 (SR mn) Exhibit 115: Profitability (%) of companies, 2005 – 2008200600012040001602000080120-2000-40004080-600040-8000-10000002005 2006 2007 2008-12000-14000-402005 2006 2007 2008Al-Ahsa Saudi Advanced Saudi RefineriesSaudi Industrial Al-Baha Kingdom*Assir*Assir Al-Ahsa Saudi AdvancedSaudi Refineries Saudi IndustrialSource: Gulfbase, Bloomberg, Reuters* Saudi Refineries FY08 ended April 08Companies marked * are plotted on secondary axisSource: Gulfbase, Bloomberg, Reuters*non meaningful values have been excludedCompanies operating in the sector had significantly high price multiples in 2005, primarily due toanticipated growth prospects, supported by Government initiatives such as the planneddevelopment of economic cities across KSA. However, following a major correction in the Saudistock market, valuations have significantly corrected and now are at attractive levels, comparedwith 2005 and early 2006 levels. At the end of 2007, the sector had high P/E and P/BV of 45.4xand 2.0x respectively. Both, P/E and P/BV multiples have declined in 2008 with most of theleading companies posting losses for the year. Most companies posted negative RoEs andP/BVs that have fallen from 2007 levels.Exhibit 116: Comparison of P/B and RoE, 2007 Exhibit 117: Comparison of P/B and RoE, 2008386028SaudiRefineries40200SaudiAdvancedAl AhsaSaudiRefineriesROE(%)188AseerAl AhsaROE(%)(20)(40)(60)AseerAl BahaP/BP/B(80)(2)(100)Kingdom(12)Kingdom0 1 2 3 4 5(120)(140)(2) (1) 0 1 2 3 4 5 6 7Source: Gulfbase, Bloomberg, Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2007Source: Gulfbase, Bloomberg, Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008JUNE 2009 SAUDI ARABIA FACT BOOK 76


MULTI-INVESTMENTExhibit 118 displays the daily trading volumes for 2007-08. According to current statistics,Kingdom Holding has the highest average daily volume of stocks traded.Exhibit 118: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 20087,0006,0006,1045,0004,0003,769 3,6493,0002,0002,2642,572 2,6201,0006780Kingdom Assir Al Ahsa SAIC SARCO SISCO Al BahaSource: Reuters, TadawulMore losses expected in nearterm; hospitality and real estatecoupled with Governmentinitiatives likely to support longterm prospectsIn the near term, as evident from the results of some of the major companies in the sector in4Q-08, the multi-investment sector is likely to remain under pressure and may head towardmore losses. However, with a growing economy presenting diverse opportunities, the mediumto-longterm outlook remains positive. Fall in the prices of input commodities such as steel andother construction materials is likely to support the margins of construction companies and helptap new construction projects. The sector, especially the real estate and hospitality industry, isexpected to benefit from higher infrastructure spending (e.g. development of economic citiesacross KSA), which in turn will positively impact multi investment companies. Moreover,investor-friendly initiatives of the Government, including reduction in tax-rates for foreign firmsand liberalization, are likely to boost the economy in the long term, thus in turn enabling themulti-investment sector gain traction.JUNE 2009 SAUDI ARABIA FACT BOOK 77


Industrial InvestmentFacing the impact of economic slowdownand credit crisisCompanies in the Saudi industrial investment sector operate in a diversified stream ofbusinesses. These firms manufacture and distribute a range of products, includingpharmaceuticals, medical appliances, steel wire and wire related products, glass products,textiles, fertilizers, chemicals, and petrochemicals. According to the Ministry of Commerce andIndustry of KSA, in 2007, approximately 3,900 industrial units operated in the Kingdom,employing around 396,000 personnel (approximately 6% of the country’s workforce).The non-oil Industrial sector experienced strong growth during 2007 and 1H-08 and contributedaround 10% to the Kingdom’s GDP in 2007, primarily due to the increase in commodity prices.KSA’s entry into WTO in December 2005 also encouraged diversification and foreign directinvestments in the country’s industrial sector. However, the credit crisis has adversely impactedthe sector in 2H-08 and led to a sharp decline in demand for industrial and building materials.As a result, commodity prices, including industrial and building materials, slumped during theperiod. Furthermore, the liquidity crunch, engendered by a marked shift in foreign capitalinvestments, has compounded the sector’s woes. As a result, the sector is estimated to havegrown 5.4% YoY in 2008, compared with 8.6% in 2007.With developed nations facing worsening recession and with emerging economies slowingdown, we expect demand for metals and commodities to remain subdued in the near-to-mediumterm. However, in the long term, the export of metal products, electrical goods, machinery andindustrial equipment, construction materials, wood products, and textiles and garments isexpected to increase due to the Saudi Government’s thrust on development of the non-oilsectors.Lack of availability of financeand declining demand coulddelay announced expansionplansCompanies in the KSA industrial investment sector are initiating capacity expansion to leveragethe growth potential. MAADEN plans to build an aluminum project worth USD10.5bn and SaudiPaper Manufacturing Company intends to double its capacity by setting up a second plant worthSR36mn with a production capacity of 25,000 tons per year. MAADEN has, however,postponed its plans to construct an integrated aluminum plant worth USD10.5bn byapproximately three years after its partner Rio Tinto Alcan stepped out from the projectdue to a weak market. Furthermore we remain concerned about capacity expansion projectsamid weak demand. Shortage of skilled technical workforce and rise in cost of raw materials in1H-08 have already delayed several capacity expansion projects. Going forward, decline indemand for building materials and reduced availability of capital are likely to further delayprojects and could lead to cost overruns.JUNE 2009SAUDI ARABIA FACTBOOK78


INDUSTRIAL INVESTMENTFirms in KSA lag their GCC peers on RoE but have higher pricing multiples.Exhibit 119: Revenues of GCC industrial investment companies,2005–08 (USD mn)50004500Exhibit 120: Comparison of RoE and P/E of GCC companies,2008604000350050Kuwait3000250020001500RoE (%)4030Qatar100050002005 2006 2007 2008KSA Qatar UAE Kuwait20KSAUAEP/E100 4 8 12 16 20Source: ReutersThe companies list is not exhaustiveSource: Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008In 2H-08, three new companies listed on the index—MAADEN, Basic Chemical Industries (BCI),and Astra Industrial Group. MAADEN is the sector’s largest company in market capitalizationwith 43.5% share in the sector, followed by AlAbdulatif with 15.9% share, as on 31 December2008.Exhibit 121: Sector details% weight in Indexas on Dec 2008*Avg. NPM (%),1Q05 – 4Q08*Avg. RoE (%),2005 – 2008*Saudi Pharmaceutical Indust. Med. Appliances 0.16 15.3 5.4The National Co. for Glass 0.08 97.5 21.8Filing & Packing Materials Manufacturing Co 0.03 9.2 15.9National Metal Manufacturing and Casting Co 0.06 6.7 10.3MAADEN 1.07 50.8 1.8Saudi Chemical Company 0.14 12.4 17.3BCI 0.06 8.5 13.3Astra 0.20 17.4 12.8Saudi Paper Manufacturing Co 0.24 17.5 24.9AlAbdulatif Industrial Investment Co 0.39 14.8 20.2Saudi Industrial Export Co 0.03 6.6 13.9Source: Bloomberg , Tadawul, Gulfbase, Reuters* start periods may differ based on the availability of dataDuring 2005–08, the total revenue of the eleven listed companies increased at 39.0% CAGRand their average profit margin stood at 23.3%. Revenue was up 39.7% YoY to SR7.5bn in2008, of which Saudi Chemical accounted for 20.5%, followed by AlAbdulatif with 15.2% andAstra Industrial Group with 13.2%. In 4Q-08, total revenue declined 0.7% to SR1.8bn, withSaudi Chemical, Saudi Pharmaceutical and Al Abdulatif contributing 26.1%, 16.1%, and 14.1%to the decline respectively. Average net profit margin for the eleven listed companies was10.66% in 4Q-08, although it was 17.54% for eight listed companies in 4Q-07. During 2008,industrial investment sector recorded a 51.1% rise in net profits to SR1.2bn.JUNE 2009SAUDI ARABIA FACTBOOK79


INDUSTRIAL INVESTMENTExhibit 122: Revenue of companies, 2005 – 2008 (SR mn) Exhibit 123: Profitability (%) of companies, 2005 – 20081,000200050140800600400200180016001400120010008004030201012511095806502005 2006 2007 200860002005 2006 2007 200850ZOUJAJ FIPCO NMMCC SPMSIECO MAADEN BCI ASTRASPIMACO * SCCO * ALABDUL *SPIMACO FIPCO NMMCC SCCOSPM ALABDUL SIECO MAADENBCI ASTRA ZOUJAJ *Source: Bloomberg, ReutersCompanies marked * are plotted on secondary axisSource: Bloomberg, ReutersCompanies marked * are plotted on secondary axisThe pricing multiples of Saudi industrial investment companies surged during 2007 following the2006 stock market correction. This was due to exceptional growth in the Saudi stock marketsupported by economic expansion, a developing capital market, privatization programs, andmore number of companies tapping the capital market for funds. However, in 2008, P/Emultiples of companies in the Saudi stock market plummeted, as the global economy sloweddown. In 2008, PE multiples averaged 17.6x, well below the 37.1x recorded in 2007. In thesame period, P/BV ratio averaged 2.0x as against 4.1x in 2007. Average RoE declined 26bp to13.7% in 2008 from 13.9% in 2007.Exhibit 124: Comparison of P/B and RoE, 2007 Exhibit 125: Comparison of P/B and RoE, 2008303025ALABDULSPM25ZOUJAJSPMRoE (%)20151050SPIMACOSCCONMMCCSIECOFIPCO0 2 4 6 8P/BRoE (%)SCCO20BCIALABDUL15 ASTRASIECO10SPIMACONMMCC5MAADENP/B00 2 4 6Source: Bloomberg, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2007*ZOUJAJ cannot be seen in the chartSource: Bloomberg, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008*FIPCO cannot be seen in the chartJUNE 2009SAUDI ARABIA FACTBOOK80


INDUSTRIAL INVESTMENTMAADEN, a newly listed company, topped the chart in terms of average daily volume traded.Exhibit 126: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 200825,00022,07920,00015,00010,0005,0001,409 1,112 9411,983 2,178 2178 2,6281,3312,016 2,3780SPIMACOZOUJAJFIPCONMMCCSCCOSPMALABDULSIECOMAADENBCIASTRASource: Bloomberg, ReutersGovernment’s thrust onmainstream industrialinvestment projects to fuelgrowthTo meet growing demand at home and abroad, companies in the sector are planning to addnew capacity or are in the midst of a capacity expansion. We expect the Government’s focus onincreasing non-oil export revenue to benefit exports of chemicals, metal products, electricalgoods, machinery and industrial equipment, construction materials, wood products, textiles andgarments in the medium-to-long term. However, the sector is likely to face near-term challengesin the form of falling demand and tight liquidity. This would have a major impact on theexpansion plans of companies in this sector, leading to major projects either being kept on holdor cancelled. The Government is likely to take steps to keep the mainstream industrialinvestment projects on track so that the overall growth of the sector is not hindered.Nevertheless, inability to counter these threats effectively could prevent the sector from realizingits full potential, going forward.JUNE 2009SAUDI ARABIA FACTBOOK81


Building and ConstructionHealthy pipeline remains key long-termdriverThe construction sector in KSA holds key importance to the non-oil sector growth in KSA.KSA’s building and construction sector is involved in the manufacture and supply of floor tiles,gypsum and gypsum derivatives, communication cables, copper rods, conductors, accessories,pipes systems, welded and coated steel pipes. The sector also makes and supplies airconditioningsystems, process equipment, transmission and telecommunication towers, vitrifiedclay pipes for sewage systems, computer, telephone, and pilot cables, and modular buildings.Rapid economic development, huge petrodollar influx, shrinking average household size andrising income levels in the Kingdom in the last 2–3 years, has kept demand for residentialbuildings and infrastructure projects in an upswing. According to SAMA, construction activitygrew 9.9% YoY in 2007, contributing 4.6% to GDP in 2007 (compared with 4.5% in 2006). Thissector employed 2.3mn workers as of 2007, accounting for 38.9% of the total number ofworkers in the private sector. Moreover, The Industrial Development Fund in 2008 grantedSR24bn worth of loans to the construction sector, which made up 32% of the total loansapproved to the various sectors. The Government expects the sector to grow by 4.1% in 2008Long-term prospects for thesector remain positiveThe residential real estate segment, which accounts for approximately 75.0% of the total realestate developments in KSA, is currently experiencing a supply shortage. Moreover, KingAbdullah in 2007 introduced 1,800 development and infrastructure projects in Riyadh at aninvestment of more than USD31bn. These projects span the residential, education, healthcare,water & power, housing, and telecommunications sectors. The growth in population has alsotranslated into increased demand for infrastructure development, including the energy, waterand telecommunications sectors.Below are some statistics that support the construction sector’s long-term growth prospects:• 1.3mn housing units are required over the next seven years• Energy and electricity needs are growing, driven by rising population• 600 new factories have been planned• Telecom and water sectors are growing• Tourism and transport needs are increasing• The King Abdullah Economic City (KAEC) and the Jazan Economic City (JEC) are aloneworth USD54.0bn and are part of similar projects being set up.However, hit by the current global credit crisis, development work on many of these projects hastemporarily slowed down.The global crisis has led to asteep fall in value of contractsawarded in the Kingdom in 4Q-08.Within the GCC, economic growth historically has increased demand for residential, commercialand infrastructural projects. KSA is expected to account for 8.0% of the total USD118bninvestment in the sector. However, construction activity across sectors in the GCC has slowedin 4Q-08, led by the global crisis impacting top-line and bottom-line growth of companies. Realestate prices in the UAE have fallen and work on King Abdullah Economic City has lostmomentum, while construction of petrochemical facilities is also likely to slow down. Exhibit 127depicts the reducing value of contracts awarded to the construction sector in the GCC in Q4JUNE 2009SAUDI ARABIA FACTBOOK82


BUILDING AND CONTRUCTION2008. The UAE, the region’s largest market, has suffered a near 40.0% drop, highlighting theeffects of the global crisis on development work across the region.Exhibit 127: GCC construction sector contracts awarded value in 2008 (USD bn)Q1 Q2 Q3 Q4 2008 totalBahrain 0.39 0.49 0.44 0.72 2.04Kuwait 0.28 0.97 3.5 0.16 4.91Oman 0.17 0.5 4.9 0 5.57Qatar 5.97 6.6 0.75 0.4 13.72KSA 2.57 2.75 3.85 0.36 9.53UAE 23.4 21.2 23.3 14.1 82.00GCC 32.78 32.51 36.74 15.74 117.77Source: MEEDAt the listed company level, KSA has a large and diversified construction sector with strongrevenue growth historically, although top lines have suffered in the current crisis. RoE has beenon par with GCC peers with a P/E range of around 20x.Exhibit 128: Revenues of GCC building and constructioncompanies, 2005–2008 (USD mn)6000Exhibit 129: Comparison of RoE and P/E of GCC companies,200835500030UAE40003000ROE(%)2520KSA200015Oman100002005 2006 2007 2008KSA UAE Oman KuwaitKuwait10P/E5-10 0 10 20 30 40 50 60 70Source: Gulfbase, ReutersThe companies list is not exhaustive.Source: Gulfbase Reuters, The companies list is not exhaustiveSize of the bubble represents market cap. as on 31 Dec 2008JUNE 2009SAUDI ARABIA FACTBOOK83


BUILDING AND CONTRUCTIONThe building and construction sector has a large number of private players with only 12 listedcompanies. Profit margins were the highest for National Gypsum Company, whereasMohammad Al Mojil group had the highest market weight in the sector.Exhibit 130: Sector details% weight in Indexas of Dec 2008*Avg. NPM (%),1Q05 - 4Q08*Avg. RoE (%),2005 - 2008*Saudi Ceramic Co 0.29 19.9 21.2National Gypsum Company 0.10 46.1 29.4Saudi Cable Company 0.22 5.9 18.4Saudi Industrial Development Co 0.03 NM NMSaudi Arabian Amiantit Co 0.22 2.3 7.8Arabian Pipes Company 0.15 16.0 18.6Zamil Industrial Investment Co 0.28 5.4 24.2AL-Babtain Power & Telecommunication Co 0.19 12.4 24.3Saudi Vitrified Clay Pipes Co 0.05 19.3 44.2Mohammad Al Mojil Group 0.48 23.9 16.4Middle East Specialized Cables Co 0.16 8.8 33.5Red Sea Housing 0.24 22.3 39.4Source: Bloomberg, Gulfbase, Reuters and Tadawul, Annual Report* start periods may differ based on availability of dataTotal revenue of the 12 listed companies increased at 37.8% CAGR and profits grew at 72.6%CAGR in 2005–08. The rise in revenue was backed by growing demand created by the severalongoing infrastructure and industrial projects. For 2008, the revenue of the total sector grew27.5% YoY (compared with 55.2% YoY growth in 2007), on an average. Moreover, net profitshowed an improvement of 17.7% YoY in 2008. Although the potential for construction activitiesis high in KSA, weakening sentiments for the sector in the global market might restrict theupside potential of the sector in the short-term. Demand for the construction of petrochemicalfacilities could see a downturn in the short term due to weak oil prices. This could adverselyimpact the revenue performance of building material providers.In 4Q-08, the average revenue ofthe companies declined 10.0%QoQ, while earnings plummeted75% QoQ.The global credit crisis has resulted in a slowdown in development work on many projects,which is evident in the 4Q-08 results of some of the companies. In 4Q-08, the average revenueof the companies has declined 10.0% QoQ. The picture is grimmer with net profit, whichplummeted an average 75.0% QoQ. Exhibits 131 and 132 display the profitability and revenueof the 12 listed companies until 4Q-08.Exhibit 131: Revenue of companies, 2005–2008 (SR mn) Exhibit 132: Profitability (%) of companies, 2005–200850003540003025300020200015101000502005 2006 2007 2008Saudi CeramicsAmiantitZamilSpecialized CablesSaudi Cable Co.Al babatainRedseaMohamed Al Mojil02005 2006 2007 2008Saudi CeramicsAmiantitZamilSpecialized CablesSaudi Cable Co.Al babatainRedseaMohamed Al MojilSource: Gulfbase , Bloomberg, ReutersSource: Gulfbase , Bloomberg, ReutersJUNE 2009SAUDI ARABIA FACTBOOK84


BUILDING AND CONTRUCTIONThe pricing multiples of the companies in this sector indicate a mixed trend. Some of thecompanies experienced relatively flat multiples, while for others it increased significantly in2005–06. This was due to exceptional growth in the Saudi stock market, supported by agrowing economy, several IPOs, and a fast developing capital market. However, the pricingmultiples are currently at attractive levels, primarily due to the correction in the Saudi stockmarket. As of 2007, P/E was at 30.6x, while P/BV was at 4.7x. As depicted in Exhibit 55 and 56,pricing multiples have been on the decline in 2008, providing an attractive long-term investmentopportunity. Mohamed Al Mojil recorded the highest RoE in 2008, while P/BV was the highestfor Saudi Ceramics.Exhibit 133: Comparison of P/B and RoE, 2007 Exhibit 134: Comparison of P/B and RoE, 2008ROE(%)55453525155-5RedseaArabian pipesSIDCSaudi CableCo.SpecializedCablesAl babatainGypsumZamil SaudiCeramicsAmiantitSaudi VitrifiedP/B0 2 4 6 8 10ROE(%)50403020100-10Saudi CableCo.AmiantitGypsumArabian pipesMohamed AlMojilSaudiVitrifiedZamilRedseaAl babatainSaudiCeramicsSpecializedCables0 1 2 3 4SIDCP/BSource: Bloomberg, Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2007Source: Bloomberg, Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008Exhibit 135 shows the average daily trading volume of the 12 companies. Currently, SaudiIndustrial Development Co has the highest average daily trading volume.Exhibit 135: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 20083,0002,5002,5622,4612,0001,8161,5001,0001,0626967771,4797801,0937825004152410SCERCOSAACZIICMESCNGCOSVCPSCACOAPCOALBABTAIREDSEASIDCMMGSource: Reuters, TadawulJUNE 2009SAUDI ARABIA FACTBOOK85


BUILDING AND CONTRUCTIONSaudi Aramco to award contracts only to Saudicontractors or JVsSaudi Aramco plans a $60bn boost over five years (USD28bn for upstream investment andUSD32bn for downstream spending). The company has allocated $15bn to develop sevenprocess facility projects, nearly $6bn for six offshore facilities and a further $6bn for tenmaintenance programs. Aramco will spend up to $3bn on plant improvements, pipelines, civilinfrastructure and electrical works for 121 projects. It is interesting to note is that media reportsindicate that contracts will only be awarded to Saudi Contractors or to international contractorsthat formed JVs with local contractors.MMG and Arabian Pipes likelyto benefit from contracts tolocal playersWhile most companies to benefit from this would be private players, two listed companies likelyto gain are MMG and Arabian Pipes. MMG executes construction projects within the oil, gas andpetrochemical industry. The services also include maintenance and turnkey contracts, industrialcleaning and pre-commission services, etc. The company delivers tailor-made constructionservices both onshore and offshore. Arabian Pipes Co (APC) manufactures high frequencywelded (HFW) steel pipes for the oil and gas, petrochemical, agricultural and constructionindustries.Expected credit tightening by banks to the real estate developers in the short term amidincreased volatility in the market could slow the pace of construction activities in KSA. Shortageof skilled labor remains an issue and needs immediate attention. However, the long-termoutlook on the sector remains positive. The Saudi Government aims to encourage foreigninvestment in the building and construction sector in light of the steady outlook for economicgrowth. In the long run, the multibillion dollar projects for development of the six plannedeconomic cities and public infrastructure projects are likely to provide further impetus to thebuilding and construction sector. Demand is also expected to be higher due to the growingtourism, transport, and telecommunication sectors, backed by rising population. These factorspoint toward the long-term sustainability of the construction sector in KSA.Cost pressures mitigated byfalling material pricesKSA has been hit by the current global crisis with the IMF forecasting (April-09) a contraction inGDP of (0.9%) in 2009 as against growth of 4.6% in 2008. KSA’s building and constructionsector is also expected to be hit by the slowdown in development work in many projects acrossthe country. However, steady demand from an increasing population (CAGR of 2.8% in the nextfive years according to IMF estimates) is likely to sustain the sector in the long run. Moreover,cost pressure on margins is likely to moderate, led by falling oil prices and lower prices ofcopper, aluminum, and other construction materials.JUNE 2009SAUDI ARABIA FACTBOOK86


Real Estate and DevelopmentShaken but not stirredThe Saudi real estate sector, although shaken by the current global meltdown, continues togrow steadily, benefiting from growing demand for residential and commercial properties. Risingpopulation, changing demographics, growing hotel and tourism industry and higher personaldisposable income are fuelling demand in the Kingdom’s residential markets.KSA’s real estate sector drivenby strong structuralfundamentalsSize of the average household is changing: There is a gradual trend toward the Westernfamily life style of smaller (nuclear) family units. This is one of the by-products of urbanmigration. Furthermore, the young population would marry and form new households. Thecurrent average household size in KSA is estimated to be 5.62. We estimate the total householdsize to decline to 5.2 by 2015. While we expect the expat non-Saudi household size to remainconstant at 4.1, the household size of Saudi families would decline from approximately 6 atpresent to 5.8 by 2015. We have taken into consideration the varying household sizes for eachregion while estimating expected changes for each region.Exhibit 136: Large variance in regional household size9876Size of household543210MadinahJoufArarHailJazanEasternProvinceQassimNajranAseerBahaTabukRiyadhMakkahOverall Saudi Non-SaudiSource: KSA Department of Statistics, NCBC ResearchWe are of the view that a declining household size will fuel demand for housing, creatingdemand for a large number of household units. Simultaneously the lower average householdsize and an improved affordability will also accelerate growth within the apartment segment.JUNE 2009SAUDI ARABIA FACTBOOK87


REAL ESTATE AND DEVELOPMENTExhibit 137: Household sizes forecast to fall to 5.2 by 2015765Size of household43210Overall Saudi Non-Saudi2004 2015ESource: KSA Department of Statistics, NCBC ResearchWe estimated a total incremental demand of over 1.3mn housing units by 2015 (representing anannual requirement of over 190,000 units over the next seven years). Our housing demandestimate would require an investment of over SR680bn (nearly $180bn) by 2015.New economic citiesThe Kingdom’s ambitiouseconomic city projects are animportant step in the ongoingeconomic transformationWith planned investments of more than USD60bn, KSA has begun constructing four integratedeconomic cities located on the Red Sea coast in the Western region of the Kingdom — KingAbdullah Economic City, Jazan (Jazan Economic City), Hail (Prince Abdul Aziz bin MousaedEconomic City), and Madinah (Knowledge Economic City). Two more ventures -- TabukEconomic City and Eastern Province Economic City -- are at the planning stage. According toprojections by the Center for Studies and Research at the Eastern Province Chamber ofCommerce and Industry, the Kingdom's economic cities will contribute USD150bn to country'sannual GDP and create 1.3mn new jobs by 2020. King Abdullah Economic City (KAEC) alone isexpected to contribute one-tenth of the GDP of the construction sector. It is expected to house2,500 manufacturing companies and be home to a 13.8 sq km seaport with the capacity tohandle 10 million containers. The port will be one of the five largest in the world.The economic cities are a part of the ambitious "10×10" program, which aims to place SaudiArabia among the world’s top ten competitive investment destinations by 2010. Some of the keyfacts of these economic cities are cited in the exhibit below.JUNE 2009SAUDI ARABIA FACTBOOK88


REAL ESTATE AND DEVELOPMENTExhibit 138: Economic cities – FactsParametersKing Abdullah EconomicCityJazan Economic CityPrince Abdul Aziz BinMousaed Economic City Knowledge Economic CityArea (mn sqm) 168 100 156 4.8Investment size (USD bn) 27 27 8 7Jobs 1mn 100,000 55,000 20,000Population 2mn 300,000 300,000 150,000ZonesFocusSource: SAGIASea port, industrial zone,central business district,water-front resort area,education zone andresidential zonesPorts, logistics, light industryand servicesIndustrial park (will occupy2/3 of the city), sea port,agriculture repackaging anddistribution, fisheries,business and cultural centre,health and education areasHeavy industries, lifestyle,agro industries and peopledevelopmentLogistics and transportationcentre, dry port, internationalairport, petrochemical andagriculture industries centre,business and knowledgecentre, mining centre andentertainment areaLogistics, agribusiness,minerals and constructionmaterialTaiba complex, technologicaland administrative colleges,theme parks, business centre,residential and commercialareas, passengers station,King Abdul Aziz MosqueKnowledge based industries,tourism and servicesExhibit 139: Six economic cities distributed throughout the countrySource: SAGIA, NCBC ResearchFalling prices and rising rentsOn the pricing front, in recent years, Saudi real estate firms have been enjoying the benefits ofescalating real estate prices led by growing demand-supply mismatch. However, the currentglobal crisis has bought prices under pressure. Real estate companies in Jeddah recentlyslashed prices of new apartments and villas by 12.0% owing to the global downturn. Moreover,the pace of development of many projects has slowed down in recent months, hit by the crisis.Although real estate priceshave been falling in theKingdom, rental yields have stillbeen rising in certain pocketsIt is important to note that while prices have fallen, this is not necessarily true of rentals. Giventhe lack of a clearly defined mortgage regulatory structure and low median incomes, the abilityof Saudis to purchase a property is reduced. This, combined with the slowdown in propertysupply across the Kingdom, is resulting in a situation where rentals are actually increasing incertain pockets. Consequent to this, rental yields have been rising in certain areas of theKingdom.The mortgage lawThe pending mortgage law, which will enable Saudis to avail amortized mortgages as opposedto long-term loans at rates of 3.5% to 5.0%, when passed, is likely to elicit demand from a widerJUNE 2009SAUDI ARABIA FACTBOOK89


REAL ESTATE AND DEVELOPMENTsection of the population. Once approved, we expect this law to boost the real estate marketmore in the medium-to-long term, as currently only about 35% of Saudi families own homes withhome loans making up a paltry 2.0% of the total GDP.The mortgage law would enablewider access to propertyownership, from the current lowrateWe believe that the mortgage law is likely to have four components:a) Mortgage financing componentb) Registered mortgage componentThe mortgage financing component is likely to focus on the financing and lending aspects of themortgage. The registered mortgage component is likely to be more focused on regulatoryaspects and collectability.Supply slowdownThe current sharp decline in oil prices coupled with the credit crisis has resulted in a slowdownin the real estate sector in the entire region. Development work across many projects hasslowed or been put on hold, including the King Abdullah Economic City. Banks have shownreluctance to extend credit to many real estate companies across the region. Moreover, investorsentiment toward real estate in the region remains negative with prices in Dubai and Abu Dhabifalling 40% and 15% respectively from the highs of last year. Unlike other GCC markets,especially Dubai, that has characterized speculative excess, the KSA real estate sector hasbeen primarily driven by fundamentals. As a result, despite the prevailing negative sentiment,the current demand in the country remains steady and is causing a supply shortage in the lowto-middleincome space.UAE is the leader in the regionin terms of revenues, with KSAcompanies also exhibitinglower ROE than GCC peers.Company performanceHistorically, companies in the real estate sector in KSA compare well on revenue terms withtheir GCC peers, although the UAE has been the leader in the region. RoE levels of KSAcompanies are lower than other GCC nations, although they trade at relatively higher P/E’s.Exhibit 140: Revenues of GCC real estate developmentcompanies, 2005 – 2008 (USD mn)900080007000Exhibit 141: Comparison of RoE and P/E of GCC companies,200830UAE600050004000ROE (%)20Qatar3000200010KuwaitKSA100002005 2006 2007 2008KSA UAE Kuwait QatarP/E0-10 0 10 20 30 40Source: Gulfbase, Reuters, Bloomberg;The companies list is not exhaustive.Source: Gulfbase, Reuters, Bloomberg;Size of the bubble represents market cap. as on 31 Dec 2008The sector is seeing the entry of new developers, who are forming alliances with Saudinationals. Emaar, the Economic City is a joint venture between Emaar Properties PJSC (a largeJUNE 2009SAUDI ARABIA FACTBOOK90


REAL ESTATE AND DEVELOPMENTproperty developer in the UAE) and local investors in the Kingdom. Furthermore, in October2008, Bayt Al-Mal Investment and Awan Real Estate Investment and Development Companysigned a deal worth SR7.5bn to implement a massive real estate project in Riyadh. Listed beloware the constituents of the real estate sector in KSA. Alarkan had the highest RoE, whereasaverage profit margins were the highest for Saudi Real Estate Co.Exhibit 142: Sector details% weight in Indexas on Dec 2008*Avg. NPM (%),1Q05 – 4Q08*Avg. RoE (%),2005 – 2008*Saudi Real Estate Co. 0.26 76.8 6.3Taiba Holding Co. 0.29 64.6 8.8Makkah Construction & Development Co. 0.42 72.3 7.1Arriyadh Development Co. 0.10 56.9 5.0Emaar The Economic City 0.82 NM NMJabal Omar Development Company 1.47 NM NMDar Alarkan Real Estate Development Co 1.74 41.4 19.6Source: Bloomberg, Reuters, Gulfbase and Tadawul: Annual Report;* start periods may differ based on availability of dataQ4-08 saw companies postingrevenue declines of over 20%YoY.Total revenue of KSA’s real estate sector increased 38.4% YoY to SR6990.2mn in 2007,expanding at 96.9% CAGR during 2005-2008. This growth was an outcome of strong salesvolumes as well as higher average price realizations. However, in 2008, overall sector earningsdeclined 22.4% YoY and revenue fell 4.8% YoY. On an average, revenue and net profit ofSaudi Real Estate Co and Taiba Holding have declined 24.0% and 39.0% YoY respectively in2008.Exhibit 143: Revenue of companies, 2005–2008 (SR mn) Exhibit 144: Profitability (%) of companies, 2005–200860070001005006000804003002001005000400030002000100060402002005 2006 2007 2008Saudi Real Estate Taiba Makkah002005 2006 2007 2008Saudi Real EstateTaibaMakkahArriyadhArriyadh Dar alarkan *Dar alarkanSource: Gulfbase, Bloomberg, ReutersCompanies marked * are plotted on secondary axisSource: Gulfbase, Reuters, Bloomberg*non meaningful values excludedThe price multiples of Saudi real estate development companies were at their peak in 2005 dueto the euphoria surrounding the growth potential of these companies, with increasing demandand the announcement of the ‘Economic Cities’ project in late 2005. However, the multipleshave declined significantly since the stock market correction in 2006, with continuing downwardmomentum in 2008 led by the current crisis. At the end of 2008, the average P/E multiple ofKSA real estate companies was 14.5x and P/BV was 1.0x, from P/E and P/BV levels of 30.9xand 1.8x respectively in 2007. In 2008, Dar Al Arkan had the highest RoE and Jabal Omar, anew entrant, recorded the highest P/BV.JUNE 2009SAUDI ARABIA FACTBOOK91


REAL ESTATE AND DEVELOPMENTExhibit 145: Comparison of P/B and RoE, 2007 Exhibit 146: Comparison of P/B and RoE, 200830253525Dar alarkanROE(%)20151050MakkahArriyadhTaibaSaudi RealEstateDar alarkan0 1 2 3 4 5 6P/BROE(%)155TaibaMakkahSaudi RealEstateArriyadh-5JabalEmaar-150 0.5 1 1.5 2 2.5 3P/BSource: Gulfbase, Bloomberg, Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2007Source: Gulfbase, Bloomberg, Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008Jabal Omar had the highest average daily trading volume in 2007-08.Exhibit 147: Avg. daily trading volume of stocks (‘000s) , Jan 2007 – Dec 200812,00010,90510,0008,0008,3766,0004,0002,0001,3991,7652,4943,7514,0470Saudi RealEstateTaiba Makkah Arriyadh Al Arkan Emaar Jabal OmarSource: Reuters, TadawulFavorable demographics, risingpopulation, development ofeconomic cities, and growingtourism to boost demandThe impact of the global crisis is evident in the latest financial results of companies and hasslowed the pace of development of some economic cities, with private sector players being hithard in recent quarters. We however expect favorable demographics, rising population,increasing demand for development of the economic cities, growing tourism and hotel industryand public infrastructure projects to continue to boost demand for real estate development inKSA. Moreover, with prices being driven by demand and not speculation, the market is likely toremain shielded from a sudden flight of capital. The Government’s utilization of petrodollarsearned in the past few years to fund infrastructure development projects, coupled withexpansion initiatives by Saudi companies, are likely to boost supply. Additionally, the expectedapproval of the mortgage law would further boost housing demand by easing access tomortgage financing. Therefore, we expect a steady recovery in Saudi real estate prices, led bythe growing demand for real estate development. This might also result in more new playersentering the Kingdom’s real estate market, thereby increasing supply.JUNE 2009SAUDI ARABIA FACTBOOK92


TransportationSuffering due to low demandThe transportation sector in the GCC is currently witnessing a slowdown due to the decline indemand levels. In 2H-08, KSA’s Transportation sectors growth was severely affected by the fallin freight rates, decline in travel rate, and low demand for crude oil, which is the major exportcommodity. Although, the sector is likely to face challenges in the short-term due to fallinginternational trade, the Government’s initiatives to improve transport-related infrastructure islikely to support the sector’s growth in the long term. Furthermore, KSA’s strategic location atthe crossroads of Europe, Africa, and Asia gives it an unmatched advantage over othercountries in the GCC. Keeping this in mind, the Government of Saudi Arabia has estimated atotal expenditure of SR19.2bn for transportation and telecom sector for 2009.Declining international tradecontinues to dent freight ratesacross all modes oftransportationAir is the most preferred transport mode in KSA, with 38.5mn passengers travelling by airwaysin 2007.Exhibit 148: Usage of transport mode – 2007Marine transport3%Roadways14%Railway2%Air transport81%Source: SAMAAir transportLiberalization of aviation sectorset to offer additionalinvestment opportunitiesBenefiting from the Government’s decision to liberalize the aviation sector in 2005, the sectorcontinues to gain momentum. The Government is issuing licenses to private carriers to increasetheir participation. According to the General Authority for Civil Aviation (GACA), total passengertraffic at the international and domestic airports increased 2.4% YoY to 38.5mn in 2007. KSAcurrently has 27 airports of which four are international.National Air Services (NAS), the Kingdom’s first private sector airline, plans to invest aroundUSD4.14bn to boost its fleet from 60 in June 2008 to 142 by 2012. The Government has alsoinfused SR30bn to expand airports in Jeddah, Madinah and Tabuk. Moreover, GACA haslaunched USD1.5bn expansion program at the King Abdul Aziz International Airport (KAIA),Jeddah, to accommodate A380s, the world’s largest aircraft. However, the air transportationsector in KSA has experienced a slowdown in the recent past due to the decline in passengertravel and the reduction in air cargo, heightened by the reduced demand for commodities.JUNE 2009SAUDI ARABIA FACTBOOK93


TRANSPORTATIONRoad transportRoad transport in KSA is Government-owned and largely driven by the growing population andintercity passenger/cargo movement. Huge investments in various projects and rapid growth oflarge cities have underlined the need for a more improved road transport system. Developmentof road infrastructure is required to ease connectivity and help in transporting huge volumes ofmaterials to the construction sites of these projects. To improve the road transportinfrastructure, the Government invested over SR7.5bn on projects for asphalted roads in 2007.In the 2009 budget, the Government has allocated SR11.5bn for road construction projects,which would help in expanding the capacity of transportation sector.Rail transportExpanding population base andrising religious tourism offerssignificant opportunities forroad and rail transport in KSARail transport in KSA is managed by Saudi Railway Organization (SRO) and comprises twomain lines — Dammam-Abqaiq-Hofuf-Riyadh (499.1km) used by passengers and Riyadh-Hardd-Hofuf (555.9km) used by freight trains. Annually, the railway sector handles around850,000 passengers and 850mn tons of cargo. The Kingdom is upgrading its rail network asdemand is expected to increase, particularly from Hajj and Umrah pilgrims. Exhibit 71 depictssignificant new projects approved by SRO.Exhibit 149: Projects approved by SROLength (km)Qualified consortiumsLandbridge project • •• Construction of 950 kmnew track betweenRiyadh and Jeddah• Construction of 115 kmnew line betweenDammam and Jubail• The project is expectedto connect major cities,such as Jeddah,Riyadh, Dammam andJubail• Agility LogisticsConsortium• AlMuhaidib/ ACWAConsortium• Mada Consortium• Saudi BinladinConsortiumMakkah-Madinah Rail Link Project (MMRL)• Construction of 450 kmnew rail line betweenMakkah and Madinah• Construction of twopassenger stations inMakkah• Construction of onestation in Madinah• Estimated cost ofUSD5.3 bn• Al-Rajhi Consortium• The Saudi BinladinGroup• The Saudi Oger• The Saudi JapaneseConsortium• Al-SholahConsortium• OHL InternationalSource: Saudi Railways Organization (SRO)Completion of the Landbridge project is expected to strengthen the Kingdom’s position on boththe regional and international transport maps. However, work on the USD5bn Landbridgeproject has still not started because the Governments of the GCC states could not agree onwhether to have one central or body six national regulatory bodies for regulating the project.Another important milestone in rail transport is the approval of tenders for the Makkah-MadinahRail Link Project (MMRL) to offer transportation solutions predominantly to Hajj and UmrahJUNE 2009SAUDI ARABIA FACTBOOK94


TRANSPORTATIONpilgrims and commuters traveling between Makkah and Madinah. Completion of these twoprojects would strengthen KSA’s rail network in the coming years.Marine transportKSA’s strategic location at thecrossroads of Europe, Asia andAfrica offer significant upsidepotential for sea cargoIn the marine transport segment, there are 21 large ports for marine transportation, which movearound 4mn twenty-foot equivalent units (TEUs) annually with around 12,000 ships visitingSaudi ports each year. The private sector plays an important role in the management, operationand maintenance of ports in KSA. King Abdullah Economic City, near Jeddah, and the JazanEconomic City, which are currently under construction, are expected to have their own ports.Saudi Development and Re-Export Company is likely to open its new terminal at Jeddah IslamicPort, in addition to the South and Jeddah North container terminals, which handled 3.3mn TEUsin 2008. Red Sea Gateway Terminal is expected to increase the port's annual capacity to 5mnTEUs in 2009. With the completion of Landbridge project, connectivity to Jeddah and Dammam,would improve further, providing impetus to marine transport in these areas by changingregional shipment patterns. Since Jeddah is a major transportation hub on the Red Sea andDammam allows further shipment to Iran, Iraq, Kuwait, Qatar, and Bahrain, the Landbridgeproject would provide a link between Jeddah and other GCC countries.However, the shipping freight rates reduced drastically in 4Q-08, compared with 1H-08. Thefreight rates for Very Large Crude Carriers (VLCC) came down to USD63,500 per day in 4Q-08,compared with USD100,000 per day in 1H-08. Similarly, the bulk cargo freight that grew fromaverage of USD106,918 per trip in 2007 to USD150,000 in 1H-08, subsequently fell toUSD10,000-15,000 in 4Q-08.KSA’s transportation sector is an emerging one compared with other GCC countries like theUAE and Kuwait, and hence, shows lower revenue. However, the sector fares well on RoE.Exhibit 150: Revenues of GCC transportation,2005–08 (USD mn)7,0006,000Exhibit 151: Comparison of RoE and P/E of GCC companies,200820Oman5,0004,0003,000RoE (%)15UAEKuwaitQatar2,0001,00010KSA02005 2006 2007 2008KSA UAE Kuwait Oman Qatar5P/E0 9 18 27 36 45Source: Gulfbase, ReutersThe companies list is not exhaustive.Source: Gulfbase, Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008JUNE 2009SAUDI ARABIA FACTBOOK95


TRANSPORTATIONNational Shipping Company is the largest company in the transport sector with SR5.2bn marketcapitalization as on 31 December 2008.Exhibit 152: Sector details% weight in index ason 31 Dec 08Avg. NPM (%),1Q05 – 4Q08*Avg. RoE,2005 – 2008*National Shipping Co. of Saudi Arabia 0.56 26.7 15.1Saudi Public Transport Co. 0.10 21.3 11.6Saudi Land Transport Co. 0.02 16.8 3.9United International Transportation Co Ltd 0.07 13.7 32.9Source: Bloomberg, Gulfbase, Reuters, Tadawul* start periods may differ based on availability of dataAs of 4Q-08, the sector’s largest company, National Shipping Co. of Saudi Arabia (NSCSA)topped the revenue list with SR652.4mn, which accounted for 63.3% of the total sector’sturnover and a 55.9% YoY growth for the company. Profitability margins for the sector in 4Q-08declined sharply, to an average of 15.9% (compared with 27.0% in 4Q-07) because of largedeterioration in crude oil prices. During 2008, the transport sector of KSA had experienced29.8% YoY revenue growth to SR3.9bn and a net profit rise of 34.5% to SR865.7mn. In 2008,NSCSA registered a net profit growth of 75.2% YoY compared with the previous year owing tothe rise in crude oil transport and general goods during first nine months of the year. Thesecond largest company in the sector, Saudi Public Transport recorded a revenue growth of2.7% YoY in 2008, however, the company’s profits declined by 70.0% YoY due to rise inoperating expenses.Exhibit 153: Revenue of companies, 2005 – 2008 (SR mn) Exhibit 154: Profitability (%) of companies, 2005 – 20083,00050502,5002,0001,5001,0005004948474645403020100-1002005 2006 2007 2008NSCSA SAPTCO BUDGET SLTCO *44-202005 2006 2007 2008SLTCO BUDGET NSCSA SAPTCOSource: Reuters, BloombergCompanies marked * are plotted on secondary axisSource: Reuters, BloombergAs of 31 December 2008, the sector’s P/E and P/BV multiple stood at 16.1x and 1.2xrespectively, compared with P/E and P/BV multiple of 30.9x and 3.7x respectively in 2007. Thisdecline can be attributed to the fall in equity markets owing to the global financial crisis. Theaverage RoE for the sector as of 2008 declined 120bp to 12.3%. As illustrated below, UnitedInternational Transportation Co Ltd (BUDGET) had the highest RoE (25.5%) and P/B multiple(1.9x) in 2008.JUNE 2009SAUDI ARABIA FACTBOOK96


TRANSPORTATIONExhibit 155: Comparison of P/B and RoE, 2007 Exhibit 156: Comparison of P/B and RoE, 2008363630302424NSCSABUDGETROE (%)18NSCSABUDGETROE (%)181212SLTCO6PBSAPTCO00 2 4 6 8 106SLTCOSAPTCO00 1 2PBSource: Bloomberg, TadawulSize of the bubble represents market cap. as on 31 Dec 2007Source: Bloomberg, TadawulSize of the bubble represents market cap as on 31 Dec 2008National Shipping Company had the highest average volume traded in 2007-08.Exhibit 157: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 20087,0006,0005,9705,0004,0003,7813,0002,7912,0001,0001,0600NSCSA SAPTCO SLTCO BUDGETSource: Bloomberg, ReutersLong-term outlook promisingon the back of growingdependency on KSA forsourcing global oil requirementGoing forward, the long-term fundamentals of the Saudi transportation sector remain strong.KSA’s oil exports are expected to grow to approximately 9.3 million barrels per day (mn b/d) by2012 from approximately 8.7mn b/d in 2008, according to the data released by BusinessMonitor International Limited‘s 4Q-08 KSA Oil & Gas report. This would give an impetus to thegrowth of transportation sector of KSA in the long term. Rising infrastructural developmentactivities and construction of economic cities are set to boom inter-city and intra-citytransportation in the Kingdom. Across all modes of transportation, the freight tonnage traffic inKSA is expected to grow at an average of 3.7% annually during the next five years, according tothe data released by the Saudi Arabia Freight Transport Report for 1Q-09. An expandingpopulation base and rising religious tourism also generate significant business opportunities forthe firms engaged in road and rail transport in KSA.However, as seen in 4Q-08, declining international trade amid weakening consumer confidencecontinues to dent travel and freight rates across all modes of transportation, in the near-tomediumterm. Consequently, shipping companies have been delaying their capacity expansionplans in an attempt to cope with the decline in demand for marine transportation, oversupplyJUNE 2009SAUDI ARABIA FACTBOOK97


TRANSPORTATIONfears, and plunging freight charges. We believe that KSA’s aviation sector may be somewhatshielded due to significant contribution of religious tourism in the overall tourism industry.Nevertheless, sliding freight rates and weakening demand cloud the overall Saudi transportsector’s earnings visibility for 2009 and 2010. Delayed construction of the planned economiccities and industrial projects further worsens our near-to-medium term outlook on the sector.However, with the onset of economic revival, the Government’s initiatives to strengthen its traderelations with other countries and encourage the participation of private sector are likely toprovide a fillip to the sector.JUNE 2009SAUDI ARABIA FACTBOOK98


Media and PublishingOutlook bleak for conventional printmediaThe media and publishing sector comprises companies involved in publishing, printing andadvertising operations. Advertising primarily leans toward print media (84% of total ad-spend)with TV, radio, cinema and outdoor advertising forming the other revenue streams. Online andRadio advertising, which currently contribute to around 1% and 2% respectively of totaladvertising spend, have also seen considerable growth, with many companies opting for lessexpensive web advertisements over traditional print advertisements. At present, the media andpublishing industry in KSA can be termed as under-developed, characterized by low advertisingspending on per capita basis. The industry, however, faces challenges through increasedcompetition from the Internet and anticipated decline in promotional activities by businesses inthe current global meltdown.Ongoing economic downturn toweaken overall advertisementrevenues in 2009KSA’s media sector at present is dominated by Saudi Research and Marketing Group (SRMG),which also owns Saudi Printing and Packaging Company (SPPC). SRMG is majority-owned byKingdom Holding Company and heirs of Prince Ahmad Bin Salman Bin Abdulaziz Al Saud.Media companies experienced healthy revenue growth primarily due to economic growth in theKingdom, fuelled by the Government’s liberalization initiatives.The UAE and Kuwait experienced robust growth in the publishing, printing, and advertisingbusiness mainly benefiting from the greater freedom to the press and economic development ofthe past few years. Ad spends in most of the GCC countries increased substantially during thefirst half of 2008, over the corresponding 2007 period. Advertising expenditure in the GCC grew23.7% YoY to USD3.77bn in 1H-08 from USD3.05bn. Ad spend in KSA was up 11.0% YoY toUSD550mn in 1H-08. Going forward, the companies are likely to cut their advertising andmarketing expenditures due to the ongoing economic slowdown. The advertising spend in theArab markets is expected to come down to an average of annual USD4bn (during 2009-13),compared with USD10bn in 2008.Exhibit 158: Advertising expenditure in GCC (USD bn), 1H-08(USD bn)1.81.51.20.90.60.30.01.5769%0.9242%0.5524%0.3311%11% 0.15 0.120 051%2%Pan Arab UAE KSA Kuwait Qatar Oman BahrainExpenditure (LHS)% growth y-o-y (RHS)80%60%40%20%0%Source: NCBC Research, Company dataKSA’s media sector performed better than GCC peers did on revenue during 2005–2008. Thesector also fared well on RoE with attractive P/E multiple (Exhibit 159 and 160).JUNE 2009SAUDI ARABIA FACTBOOK99


MEDIA AND PUBLISHINGExhibit 159: Revenues of GCC media companies,2005 – 2008 (USD mn)Exhibit 160: Comparison of RoE and P/E of GCC companies,200850025KSA40020300200RoE (%)1510QatarKuwait1005Bahrain02005 2006 2007 2008KSA Kuwait Qatar Bahrain0P/E0 5 10 15 20 25Source: ReutersSource: ReutersSize of the bubble represents market cap. as on 31 Dec 2008SRMG has the highest weight in the index and SPPC is the top performer in terms of averagenet profit margin and RoE.Exhibit 161: Sector details% weight in indexas on Dec 2008*Avg. NPM (%),1Q05 – 4Q08*Avg. RoE,2005 – 2008*Saudi Research And Marketing Group (SRMG) 0.26 22.6 22.6Saudi Printing & Packaging Co. (SPPC) 0.09 36.7 21.5Tihama Advertising & Public Relations Co. (Tihama) 0.03 16.7** 10.7**Source: Bloomberg, Tadawul, Reuters and Gulfbase* start period may differ based on availability of data** Figures for Tihama have been calendarized based on FY ending of SRMG and SPPCSlump in demand and increasein costs affected profitability in4Q-08Based on revenue, SRMG is the leading company operating in the sector, followed by SPPCand Tihama. SPPC has the highest profitability among the three.In 2008, the sector’s overall revenue grew 17.6% YoY to SR1,893mn. SRMG’s revenueincreased 20.4% YoY and SPPC’s revenue jumped 10.3% YoY in 2008. Tihama’s revenue wasup 13.9% YoY in 2008. However, the net profit margins for the three companies contracted in4Q-08. This trend is expected to continue in the near term with companies, especially in theReal Estate and Tourism sectors, reining in their advertising and marketing expenditures.JUNE 2009SAUDI ARABIA FACTBOOK100


MEDIA AND PUBLISHINGExhibit 162: Revenues of companies, 2005 – 2008 (SR mn) Exhibit 163: Profitability (%) of companies, 2005 – 2008500140040400105030300700202001003501002005 2006 2007 2008SPPC Tihama SRMG *002005 2006 2007 2008SRMG SPPC TihamaSource: ReutersCompanies marked * are on secondary axisFigures for Tihama have been calendarized based on FY ending of SRMG and SPPCSource: ReutersFigures for Tihama have been calendarized based on FY ending of SRMG and SPPCIn 2008, the media and publishing sector’s average PE multiples contracted to 7.9x from 17.8xin 2007. This decline resulted largely from the stock market crash triggered by the ongoingglobal financial crisis. In the same period, P/BV ratio averaged 1.3x as against 3.2x in 2007. Ason 31 Dec 08, SPPC has better return on equity, at attractive multiples, compared with peers. In2008, SRMG’s RoE decreased to 16.2% from 28.2% in 2007 and Tihama’s RoE increasednearly 136bp YoY to 14.2% in 2008.Exhibit 164: Comparison of P/B and RoE, 2007 Exhibit 165: Comparison of P/B and RoE, 2008353030SRMG25SRMGRoE (%)2520SPPCRoE (%)2015SPPCTihama1510Tihama2.5 3 P/B 3.5 410P/B50.5 1.0 1.5 2.0Source: Bloomberg, Reuters, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2007Source: Bloomberg, Reuters, Tadawul, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008Tihama leads on average traded volumes, followed by SPPC and SRMG.JUNE 2009SAUDI ARABIA FACTBOOK101


MEDIA AND PUBLISHINGExhibit 166: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 20082,5002,0001,9851,5001,0001,0785003240SRMG SPPC TIHAMASource: ReutersRobust demand growth fordigital media weakens theoutlook for an alreadystruggling print media industryGoing forward, growth in KSA’s media and publishing sector is likely to be sluggish, marred byslowdown in business promotional activities, the growing popularity of the Internet, and stringentGovernment regulations. Driven by a young demographic profile (more than 45% of thepopulation is under 20 years’ age), the popularity of the Internet is growing. Internet penetration,which currently stands at 22%, is likely to increase further. This in turn will adversely impact thenewspaper readership in the Kingdom. Furthermore, companies are likely to choose lessexpensive web advertisements over traditional paper advertisements. Although the long-termprospects of non-print media advertising business look promising, it is not likely to offset theimpact of decline in revenue from conventional print media completely. In the near term too, thecompanies, particularly those in the real estate and tourism sectors, are likely to cut back theiradvertising and marketing expenditures due to the ongoing economic slowdown. We, therefore,hold a negative outlook for the newspaper and magazine industry.JUNE 2009SAUDI ARABIA FACTBOOK102


Hotel and TourismReligious and business tourism keydriversThe KSA’s hotel and tourism sector has been energized by strong growth in intra-regional travelsupported by increase in expenditure on tourist infrastructure facilities. Of all the GCC countries,KSA holds the edge in religious tourism, with 5mn Muslim pilgrims from across the world visitingIslam’s two holiest sites—Mecca and Medina—each year.SAMA estimated the tourism sector at around SR37.0bn in 2007, or 2.6% of KSA’s total GDPand 5.8% to non-oil GDP. As of 9M-08, the sector was the most profitable one in the Kingdomwith a 102.6% YoY growth in profitability. The Saudi Government estimated wholesale, retail,restaurants and hotel industry to have grown 4.2% in 2008, compared with 6.0% in 2007.Furthermore, religious tourism accounted for 15.1% of domestic tourism and 73.2% of inboundtourism in 2007 in KSA. According to the Saudi Commission for Tourism (SCT), pilgrimsaccount for 51% of all the visitors in KSA, spending approximately SR10bn (USD2.67bn) eachyear. Hence, developing Haj infrastructure continues to remain a priority for the Government.Developing tourism has been apart of government’s long-termobjective of economicdiversificationThe development of KSA’s tourism sector also forms part of a larger plan to diversify theeconomy and create jobs for Saudi nationals. SAMA estimates the number of people employedin the country’s hotel and tourism sector in 2007 to be around 6.7mn or 5.1% of KSA’s totallabor force. Another positive for KSA’s tourism sector has been the SCT’s decision in 2006 togrant travel agencies the right to sponsor tourists. This move has helped in significantlyreducing the processing time for visas, thereby encouraging foreigners to enter the Kingdom.Furthermore, in 2007, SCT implemented multiple-entry one-year business visas, thereby pavingthe way for growth in international tourism. According to EIU estimates, 9.4mn internationaltourists are likely to have visited KSA in 2008, compared with 9.0mn in 2007.Historically, Saudi nationals have preferred to travel within the country. Apart from domestictourists, other Muslim nations such as Kuwait, the UAE, Egypt, Syria, and Pakistan, whichaccount for about 50% of KSA’s international tourism revenue, remain the key source marketsfor the country’s tourism sector.Exhibit 167: International tourist arrivals (% change over same period of the previous year)2017.31614.51210.4846.63.74.91.74.355.673.20World Europe Asia Americas Africa Middle East2006-07 2007-08 (Jan - Aug)Source: World Tourism OrganizationJUNE 2009SAUDI ARABIA FACTBOOK103


HOTEL AND TOURISMSeparately, leisure tourism has failed to pick up in KSA for cultural and religious reasons,contributing a meager 2.1% to inbound tourism in 2007.To drive growth in the sector, the KSA Government plans to increase the number of terminals atexisting airports and construct new airports, apart from liberalizing the Kingdom’s airtransportation laws. Two new budget airlines, Sama and Nas Air, received licenses to operate in2007. Furthermore, according to Saudi Commission for Tourism and Antiquities (SCTA), 13projects related to historical city centers and popular markets are planned in KSA, aimed atdeveloping these sites into attractive tourist destinations. In June 2008, KSA’s Council ofMinisters approved the USD38.0bn tourism development project on the Red Sea coastline. Thisproject is in addition to the USD10.0bn tourism development project at Al-Auqair on the Gulfcoast of KSA.Considerable investment inhotels by domestic andinternational hospitality brandsto meet demandBecause of these positive developments, the real estate and hospitality businesses in KSAhave also seen increased investment activity to meet the demand for hotel space from religiousas well as business travelers. In February 2008, Intercontinental Hotels Group signed afranchise development agreement with Siraj Capital Ltd to develop 12 Holiday Inn Expressproperties by 2013; and the Accor Group plans to expand its upper mid-range Novotel andlower-end Ibis brands.KSA’s hotel industry registered an average room occupancy rate of 62% during 1994-2007(HVS Research). In the GCC, the country lags the United Arab Emirates (73% average roomoccupancy rate in 1994-2007), Qatar (68%) and Bahrain (64%). The room occupancy rate inKSA increased 5% to 72% in 2007 from 67% in 2006, while UAE (84% in 2007) and Qatar (71%in 2007) registered flat growth. In Kuwait, room occupancy rate declined 7% to 58% in 2007from 65% in 2006. Bahrain experienced a 7% rise to 77% in 2007 from 71% in 2006. Theaverage room rate in KSA grew at 5% CAGR to USD183.5 in 1994-2007, compared with 9% inBahrain (to USD249), 1% in Kuwait (to USD239), 13% in Qatar (to USD306), and 6% in theUAE (to USD248) during the same period. The average room rate in KSA was the lowest in theGCC.Exhibit 168 indicates the expected increase in the number of rooms in the Middle East over thenext four years. UAE leads, but KSA, Qatar, and Egypt are expected to perform well.Exhibit 168: New supply by country (rooms over next 4 years)Bahrain5,784Egypt12,942JordanKuwaitLebanonOmanQatarSaudi ArabiaSyria6,8113,3292,0589,17211,4879,9151,585UAE90,5270 20,000 40,000 60,000 80,000 100,000Source: World Tourism OrganizationJUNE 2009SAUDI ARABIA FACTBOOK104


HOTEL AND TOURISMExhibit 169 depicts that KSA’s hotel and tourism sector is an emerging one, compared withother GCC countries. The sector also lags GCC peers on RoE (Exhibit 170).Exhibit 169: Revenues of GCC hotel & tourism companies,2005–08 (USD mn)500Exhibit 170: Comparison of RoE and P/E of GCC companies,200840400Bahrain30300Kuwait200ROE (%)2010010KSA02005 2006 2007 2008Kuwait Oman Bahrain UAE KSAUAEPE00 10 20 30 40 50 60Source: ReutersThe companies list is not exhaustiveSource: Reuters, NCBC ResearchSize of the bubble represents market cap. as on 31 Dec 2008As on 31 December 2008, Saudi Hotels & Resort Areas Co. (Saudi Hotels), with a market capof SR1.6bn, is the largest company in this sector.Exhibit 171: Sector details% weight in index ason Dec 2008*Avg. NPM (%),1Q05 – 4Q08*Avg. RoE,2005 – 2008*Saudi Hotels & Resort Areas Co 0.17 33.4 9.2Tourism Enterprises Co. (SHAMS) 0.02 (18.0) 0.3Source: Bloomberg, Tadawul, Gulfbase, Reuters* start period may differ based on availability of dataSaudi Hotels performed better than Tourism Enterprise Company (TECO) on revenue andprofitability, attributable to higher market share. In 2008, revenue of Saudi Hotels grew 10.6%YoY to SR291.9mn and net income surged 58.8% YoY to SR123.3mn. TECO’s revenue grew0.9% YoY to SR13.3mn and net income grew 25.7% YoY to SR2.7mn in 2008. In 4Q-08, SaudiHotels’ net income declined 1.7% YoY to SR33.8mn and TECO made a net loss of SR1.2mndue to reduced spending by local and foreign tourists.Exhibit 172: Revenue of companies, 2005-2008 (SR mn) Exhibit 173: Profitability (%) of companies, 2005 – 2008204008015300401020005100-4002005 2006 2007 20080-802005 2006 2007 2008TECO SHARCO *SHARCOTECOSource: Reuters, Bloomberg, Companies marked * are plotted on secondary axisSource: Reuters, BloombergJUNE 2009SAUDI ARABIA FACTBOOK105


HOTEL AND TOURISMIn 2008, the sector’s P/B multiple averaged 1.7x in 2008. As of 2008, the sector’s average RoEstood at 5.9% in 2008. As illustrated below, in 2008, Saudi Hotels had better RoE (11.4%) atattractive P/B multiple (1.2x) compared with TECO.Exhibit 174: Comparison of P/B and RoE, 2007 Exhibit 175: Comparison of P/B and RoE, 200816161212SHARCOROE (%)84SHARCOTECOROE (%)840TECOPB00 2 4 6 8 10PB(4)0 1 2 3Source: Gulfbase, Bloomberg, TadawulSource: Gulfbase, Bloomberg, TadawulTECO, however, topped the average trading volume chart in 2007-08.Exhibit 176: Average daily trading volume of stocks (‘000s), Jan 2007 – Dec 20083,0002,5002,4282,0001,9601,5001,0005000SHARCOTECOSource: ReutersKSA government maintains infocus on developing tourisminfrastructure to support longterm demandGoing forward, we expect KSA to maintain focus on religious tourism (both domestic andinternational), the backbone of the tourism sector. The KSA Government has allocatedSR385bn for fortifying the overall infrastructure of tourism sector in its 2009 budget, a 10.9%rise compared with the 2008 budget. The rapid development of infrastructure facilities,liberalization of airlines, capacity expansion at airports, and SCT’s easing of restrictions on nonreligiousvisas and introduction of multiple-entry one-year business visas will likely drive growthin KSA’s hotel and tourism sector. The World Travel and Tourism Council (WTTC) expect KSAto attract 45.3mn tourists by 2020. Furthermore, WTTC also expects revenue from KSA’stourism sector to increase to USD56.1bn in 2016, driven largely by religious tourism. Thesefactors will also underpin growth in the hotel industry, with hotel revenue expected to grow 4%annually to reach SAR14.3bn by 2020.However, we expect the growth in the tourism sector of KSA to be slow in the near-term asdiscretionary spending, and hence travel rate, take a hit in case of domestic as well as foreignJUNE 2009SAUDI ARABIA FACTBOOK106


HOTEL AND TOURISMtourists. Moreover, lack of rapid infrastructure development has been limiting the growth ofreligious tourism in KSA. This has been forcing the Government to restrict the number of visasissued to avoid overcrowding during the annual Hajj pilgrimage. Given these factors, we have aneutral outlook for the near term on KSA’s hotel and tourism sector.JUNE 2009SAUDI ARABIA FACTBOOK107


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Company ProfilesListed companies on the Tadawul


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Company Page No. Banking and FinancialsAl Rajhi Bank 112 PetrochemicalsSamba Financial 113 CementBanque Saudi Fransi 114 RetailArab National Bank 115 Energy and UtilitiesAlinma Bank 116 Agriculture and FoodRiyad Bank 117 Telecom and ITSABB 118 InsuranceSaudi Investment Bank 119 Multi InvestmentBank Al Jazira 120 Industrial InvestmentSaudi Hollandi Bank 121 Building and ConstructionBank Al Bilad 122 Real EstateTransportationMedia and PublishingHotels and Tourism


BANKS AND FINANCIAL SERVICESAl Rajhi BankAlso known asAl RajhiPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR67.5SR101.3bn ($27,036.0mn)1,500.0mn52 week range H/L (SR) 93.0/40.6Avg daily turnover (mn) SR US$3m 130.06 34.7312m 130.23 34.77Raw Beta 6m 3yr1.21 1.23ReutersBloomberg1120.SERJHI ABPrice perform (%) 1M 3M 12MAbsolute (%) 0 43 (23)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www.alrajhibank.com.saValuation multiples2006 2007 2008P/E (x) 17.8 27.3 12.9P/B (x) 6.5 7.4 3.1P/Sales (x) 19.0 22.8 9.9Div yield* (%) 0.8 1.8 6.0Weightage (%)TASI (free float weight) 11.35MSCI Saudi (domestic – large cap) 17.80Free float (%)Free float 50.12Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders %)10080604020-Al Rajhi (RHS)Sulaiman Abdul Aziz Saleh Al Rajhi 24.6Saleh Abdul Aziz Saleh Al Rajhi 13.8General Organization for Social9.9Insurance (GOSI)Abdullah Abdul Aziz Saleh Al Rajhi 5.9Source: NCBC ResearchAl Rajhi Bank (Al Rajhi), the third largest bank in Saudi Arabia in term of assets,was established in 1976. The bank is a full-fledged Islamic bank and offers Shariahcompliantbanking and investment products. It operates 19 branches in Malaysiaand has wholly owned subsidiaries in UK, British Virgin Islands and Jersey.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Sp. Com Income SRmn 5,677 6,843 7,722 8,494 10.0 14.4Operating Income SRmn 7,751 9,510 9,321 10,575 13.5 10.9Net Income SRmn 5,633 7,302 6,450 6,525 1.2 5.0Assets SRmn 95,038 105,209 124,887 164,930 32.1 20.2Equity SRmn 12,878 20,180 23,606 27,032 14.5 28.0Investments SRmn 80,329 89,563 104,875 144,004 37.3 21.5Total Deposits SRmn 75,835 79,356 95,349 130,074 36.4 19.7Net Interest Margin % 6.8 7.1 7.0 6.1 -Cost/Income % 20.4 20.6 26.1 26.3 - -ROE % 52.6 44.2 29.5 25.8 - -ROA % 6.5 7.3 5.6 4.5 - -Div Payout* % 34.5 13.7 50.4 77.5 - -EPS SR 3.8 4.9 4.3 4.3 1.2 5.0BVPS SR 8.6 12.8 14.9 18.0 20.8 28.0Source: Company, NCBC Research* Gross dividend is used in div yield calculations for Saudi banking sectorSegment-wise business analysisProduct segment 2008 Geographic 2008%Assets % Net Inc Breakup %Assets % Net IncRetail Banking 38.8 49.9 Saudi Arabia 74.1Corporate Banking 33.3 22.8 GCC & Mid East 21.3Treasury 28.0 24.8 Eur,NA & Others 1.3Investment Banking 0.0 2.6 South East Asia 3.3Source: Company, NCBC Research• Business brief: Al Rajhi offers Shariah-compliant retail banking, corporate bankingand treasury services to its customers. The bank’s investment banking, assetmanagement and brokerage businesses are managed by its subsidiary, the Al RajhiFinancial Services Company. It has a presence in Europe and plans to expandaggressively in South East Asian and Chinese Islamic financing markets.• Financials: Al Rajhi’s investment portfolio grew 37.3% y-o-y to SR144.0 bn in 2008.The bank’s net interest margin, stood at 6.1%, driven by 10.0% y-o-y growth in netspecial commission income and low cost funding structure. Al Rajhi’s total operatingincome grew 13.5% y-o-y in 2008 due to strong growth in net special commissionincome. However, higher credit loss provisions during the period led to a sluggish1.2% y-o-y expansion in net income in 2008.• Recent developments: In April 2009, the bank announced a net profit ofSR1,732mn for 1Q-09, an increase of 8.1% y-o-y. In the same month, the bank wasawarded second banking license in Malaysia. In addition, Al Rajhi announced that itopened six new branches in last 3 months, and that it is the first foreign Islamic bankto join the MEPS shared ATM Network. In Feb 2009, Al Rajhi Banking & InvestmentCorp., the overseas unit of Al Rajhi raised its paid-up capital to MYR1bn fromMYR600mn.JUNE 2009AL RAJHI BANK112


BANKS AND FINANCIAL SERVICESSamba FinancialAlso known asSAMBAPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR49.9SR44.9bn ($11, 992.0mn)900.0mn52 week range H/L (SR) 86.5/38.2Avg daily turnover (mn) SR US$3m 22.23 5.9412m 35.87 9.58Raw Beta 6m 3yr0.99 0.68ReutersBloomberg1090.SESAMBA ABPrice perform (%) 1M 3M 12MAbsolute (%) (10) 25 (40)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www samba comValuation multiples2006 2007 2008P/E (x) 16.1 22.5 10.4P/B (x) 5.5 6.1 2.3P/Sales (x) 19.5 21.8 9.1Div yield* (%) 2.6 1.6 3.5Weightage (%)TASI (free float weight) 5.57MSCI Saudi (domestic – large cap) 9.32Free float (%)Free float 55.43Relative share price perf.11,0009,0007,0005,0003,000Jun-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10080604020-SAM BA (RHS)Public Investment Fund 22.9General Organization for SocialInsurance (GOSI)11.4Public Pension Authority (PPA) 10.2Ma'an Abdul Wahid Abdul Majeed Al 7.8SanaaSource: NCBC ResearchSamba Financial Group (Samba), the second largest bank in Saudi Arabia in termsof total assets, was incorporated in 1980 through the takeover of Citigroup’sbranches in the Kingdom. The bank also operates in the UK, Pakistan and the UAEthrough its subsidiaries.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Sp. Com Income SRmn 3,508 4,301 4,944 5,061 2.4 13.0Operating Income SRmn 5,828 7,273 7,196 7,012 (2.6) 6.4Net Income SRmn 4,018 5,210 4,808 4,454 (7.4) 3.5Assets SRmn 108,306 124,015 154,414 178,891 15.9 18.2Equity SRmn 12,906 15,300 17,845 19,846 11.2 15.4Advances SRmn 62,386 67,028 80,553 98,147 21.8 16.3Total Deposits SRmn 89,639 100,641 127,236 146,318 15.0 17.7Net Interest Margin % 3.5 3.8 3.7 3.2 - -Cost/Income % 25.9 24.7 28.9 31.0 - -ROE % 34.9 36.9 29.0 23.6 - -ROA % 4.0 4.5 3.5 2.7 - -Div Payout* % 44.4 41.7 36.3 36.1 - -EPS SR 4.5 5.8 5.3 4.9 (7.4) 3.5BVPS SR 12.4 15.8 19.1 22.1 15.5 21.3Source: Company, NCBC Research * Gross dividend is used in div yield calculations for Saudi banking sectorSegment-wise business analysisProduct segment 2008 Geographic 2008%Assets % Net Inc Breakup %Assets % Net IncRetail Banking 18.2 41.0 Saudi Arabia 84.2Corporate Banking 44.1 41.2 GCC & M.E 3.7Treasury 37.6 1.9 Europe 5.1Investment Banking 0.0 15.8 North America 5.8South East As 0.4Other 0.7Source: Company, NCBC Research• Business brief: Samba’s core banking activities include retail banking, corporatebanking and treasury services. Samba Capital & Investment Management Co, theinvestment banking division, handles the asset management and brokerage servicesbusiness. The bank’s subsidiaries are Samba Fund Management, CrescentCommercial Bank Limited (68.4% stake) and Samba Real Estate Company.• Financials: Samba’s strong brand name, innovative product portfolio, and higherliquidity in Saudi Arabia enhanced its customer deposits. Samba’s strong relationswith corporate clients resulted in the expansion of its credit portfolio by 21.8% y-o-y in2008. However, Net Special Commission Income grew only 2.4% y-o-y in 2008primarily due to meager 0.5% y-o-y growth in total Special Commission Income.Operating income declined due to the trading losses of SR623.1mn in 2008.• Recent developments: Samba’s net income increased 6% y-o-y to SR1.27bn for1Q-09. In March 2009, Samba launched ‘new generation’ online banking platform. InFebruary 2009, state-run Public Pension Agency bought 43.5mn shares for overSR1.6 bn, raising its stake in Samba to 15.1%. In December 2008, Fitch affirmedthe bank’s Long-term IDR at ‘A+’ and downgraded Individual rating to 'B/C' from 'B'.JUNE 2009SAMBA FINANCIAL GROUP113


BANKS AND FINANCIAL SERVICESBanque Saudi FransiAlsoknown asBSFPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR43.0SR31.1bn ($8,303.9mn)723.2mn52 week range H/L (SR) 69.5/31.0Avg daily turnover (mn) SR US$3m 8.63 2.3112m 9.50 2.54Raw Beta 6m 3yr0.89 0.85ReutersBloomberg1050.SEBSFR ABPrice perform (%) 1M 3M 12MAbsolute (%) (7) 19 (31)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www alfransi comValuation multiples2006 2007 2008P/E (x) 15.5 24.0 9.0P/B (x) 5.0 5.8 1.8P/Sales (x) 23.1 28.4 9.0Div yield* (%) 1.6 1.6 3.1Weightage (%)TASI (free float weight) 3.80MSCI Saudi (domestic – mid cap)Free float (%)Free float 54.66Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)80604020Saudi Fransi (RHS)Calyon Bank 31.1General Organization for SocialInsurance (GOSI)Rashid Al Abdul Rahman Al Rashid &SonsMohammed Ibrahim Mohammed AlEssaSource: NCBC Research-12.89.85.1Banque Saudi Fransi (BSF), an affiliate of Calyon of France, commenced operationsin December 1977 by taking over the branches of Banque Indosuez. The bank offersconventional and Islamic banking products through a network of 75 branches and274 ATMs in Saudi Arabia.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Sp. Com Income SRmn 1,706 2,017 2,296 2,821 22.8 18.3Operating Income SRmn 3,094 3,939 3,701 4,406 19.0 12.5Net Income SRmn 2,216 3,007 2,711 2,806 3.5 8.2Assets SRmn 67,501 79,581 99,808 125,865 26.1 23.1Equity SRmn 7,185 9,405 11,241 14,069 25.2 25.1Advances SRmn 42,979 51,130 59,850 80,867 35.1 23.5Total Deposits SRmn 56,040 65,454 82,130 101,193 23.2 21.8Net Interest Margin % 2.8 2.8 2.7 2.6 - -Cost/Income % 24.0 21.4 25.6 27.0 - -ROE % 33.4 36.3 26.3 22.2 - -ROA % 3.5 4.1 3.0 2.5 - -Div Payout* % 28.9 25.0 38.8 27.7 - -EPS SR 3.9 5.3 4.8 5.0 3.5 8.2BVPS SR 12.3 16.4 19.4 25.0 28.8 26.6Source: Company, NCBC Research* Gross dividend is used in div yield calculations for Saudi banking sectorSegment-wise business analysisProduct segment 2008 Geographic 2008%Assets % Net Inc Breakup %Assets % Net IncRetail Banking 12.3 22.0 Saudi Arabia 91.1Corporate Banking 56.2 48.2 GCC & MENA 2.3Treasury 31.2 23.8 Eur & America 6.5Other 0.2 6.0 Asia & others 0.1Source: Company, NCBC Research• Business brief: The bank’s core banking activities include retail banking, corporatebanking, and treasury services. BSF’s investment banking activities are conducted byCAAM Saudi Fransi (60.0% stake), Fransi Tadawul (99.0% stake), and Calyon SaudiFransi (45.0% stake). The bank also has an insurance JV with Allianz Group underthe name Allianz Saudi Fransi Co. (32.5% stake). Sofinco Saudi Fransi managesBSF’s consumer finance activities. The bank also has a 27.0% stake in Syria-basedBanque BEMO Saudi Fransi.• Financials: BSF’s focus on corporate banking has enabled it to post 35.1% y-o-ygrowth in loan books in 2008. Net Special Commission Income grew 22.8% y-o-y ledby 7.2% y-o-y growth in total Special Commission Income and 6.3% y-o-y decline inSpecial Commission Expenses. However, net income grew marginally by 3.5% due tothe fall in fee based income and losses on investments amid weak market conditions.• Recent developments: In May 2009, BSF’s shareholders approved an increase inshare capital of the company to SYP3.75bn by issuing bonus and rights shares. InApril 2009, BSF announced net profit of SR741mn for 1Q-09, up 1.2% y-o-y. Thebank issued two bonus shares for seven held, increasing its paid-up capital toSR7.23bn in the same month. In December 2008, Fitch downgraded the bank’sIndividual rating to 'B/C' from 'B' and affirmed Long-term IDR rating at 'A'.JUNE 2009BANQUE SAUDI FRANSI114


BANKS AND FINANCIAL SERVICESArab National BankAlso known asANBPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR45.4SR29.5bn ($7,879.8mn)650.0mn52 week range H/L (SR) 70.0/25.7Avg daily turnover (mn) SR US$3m 10.78 2.8812m 10.54 2.81Raw Beta 6m 3yr1.38 0.97ReutersBloomberg1080.SEARNB ABPrice perform (%) 1M 3M 12MAbsolute (%) (1) 74 (27)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www anb.com.saValuation multiples2006 2007 2008P/E (x) 14.2 22.4 8.2P/B (x) 4.4 5.2 1.6P/Sales (x) 14.1 19.0 6.0Div yield* (%) 1.1 0.0 3.6Weightage (%)TASI (free float weight) 3.24MSCI Saudi (domestic – mid cap)Free float (%)Free float 49.10Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)80604020Arab National (RHS)Arab Bank 40.0General Organization for Social 10.8Insurance (GOSI)Rashid Al Abdul Rahman Al Rashid & 9.9SonsAl Jabar Commercial Co. 5.6Source: NCBC Research-Arab National Bank (ANB), commenced operation in KSA in 1980 after the takeoverof Arab Bank PLC. It has a network of 131 branches and 842 ATMs, and operatesone branch in London. The bank holds 100.0% stake in Arab National InvestmentCo. and 20.0% stake in Saudi Travellers Cheque Co.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Sp. Com Income SRmn 2,189 2,525 2,904 3,354 15.5 15.3Operating Income SRmn 3,142 3,855 3,956 4,128 4.3 9.5Net Income SRmn 1,828 2,505 2,461 2,486 1.0 10.8Assets SRmn 67,492 78,035 94,468 121,307 28.4 21.6Equity SRmn 6,062 7,980 10,525 12,671 20.4 27.9Advances SRmn 38,779 49,747 61,122 74,662 22.2 24.4Total Deposits SRmn 57,209 64,872 78,139 103,253 32.1 21.8Net Interest Margin % 3.4 3.6 3.5 3.2 - -Cost/Income % 33.9 32.9 36.1 38.3 - -ROE % 33.7 35.7 26.6 21.4 - -ROA % 2.8 3.4 2.9 2.3 - -Div Payout* % 30.0 15.5 - 29.4 - -EPS SR 2.8 3.9 3.8 3.8 1.0 10.8BVPS SR 9.3 12.3 16.2 19.5 20.4 27.9Source: Company, NCBC Research * Gross dividend is used in div yield calculations for Saudi banking sectorSegment-wise business analysisProduct segment 2008 Geographic 2008%Assets % Net Inc Breakup %Assets % Net IncRetail Banking 20.9 45.4 Saudi Arabia 95.6Corporate Banking 43.6 36.4 GCC & MENA 0.7Treasury 34.4 6.5 Eur & America 3.6Investment banking and Other 1.0 11.7 Asia & others 0.2Source: Company, NCBC Research• Business brief: Apart from core banking activities, ANB also offers investmentbanking, housing finance and heavy equipment leasing services through itssubsidiaries. ANIC handles investment-banking operations while SHL deals withhousing finance. ANB has also formed joint ventures with Ejara and a Dubai-basedcompany for leasing equipment and plans to enter the insurance market with AIG.• Financials: ANB’s loan portfolio expanded 22.2% y-o-y to SR74.7bn in 2008. Thebank’s customer deposits also recorded a significant 32.1% y-o-y expansion in thesame period. Net Special Commission Income grew 15.5% y-o-y from SR2.9bn in2007 to SR3.4bn in 2008, mainly due to 9.0% y-o-y fall in the Special CommissionExpenses. However, growth in operating income was lower due to investment lossesworth SR424.2mn in 2008. This coupled with higher depreciation charges causedmeager 1.0% rise in the bank’s net income in 2008.• Recent developments: In April 2009, ANB reported a 3.4% y-o-y increase in netprofit to SR695mn for 1Q-09. In December 2008, Fitch affirmed the bank’s Long-termIDR rating at 'A' and downgraded the Individual rating to 'B/C' from 'B'. In September2008, SEI announced partnership with ANB Invest, a subsidiary of Arab NationalBank to provide investment solutions to the investors in Saudi Arabia.JUNE 2009ARAB NATIONAL BANK115


BANKS AND FINANCIAL SERVICESAlinma BankAlso known asDevelopment BankPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR13.4SR20.0bn ($5,347.1mn)1,500.0mn52 week range H/L (SR) 21.0/10.0Avg daily turnover (mn) SR US$3m 441.85 117.999m 595.71 159.07Raw Beta 6m 1yr0.66 0.73ReutersBloomberg1150.SEALINMA ABPrice perform (%) 1M 3M 9MAbsolute (%) 14 23 (20)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www alinma.comValuation multiples2006 2007 2008P/E (x) NA NA 42.7P/B (x) NA NA 1.1P/Sales (x) NA NA NADiv yield (%) NA NA 0.0Weightage (%)TASI (free float weight) 3.13MSCI Saudi (domestic – mid cap)Free float (%)Free float 69.93Relative share price perf.11,0009,0007,0005,0003,000Jul-08 Oct-08 Jan-09 M ay-09TASITop 5 shareholders (%)2015105-Alinma (RHS)Public Investment Fund 10.0General Organization for Social 10.0Insurance (GOSI)Public Pension Authority (PPA) 10.0Alinma Bank (Alinma), was established in March 2006 in accordance with a RoyalDecree with a share capital of SR15 bn. The bank plans to offer retail and corporatebanking services in accordance with Shariah-compliant principles and is expectedto commence operations in 2Q-09.Company financials2008YoY(%)CAGR(%)(05-08)Net Interest Income SRmn NM - -Operating Income SRmn 823 - -Net Income SRmn 390 - -Assets SRmn 15,556 - -Equity SRmn 15,390 - -Advances SRmn 0.0 - -Deposits SRmn 0.0 - -Net Interest Margin % NM - -Cost/Income % NM - -ROE % 2.53 - -ROA % 2.51 - -Div Payout % 0.0 - -EPS SR 0.26 - -BVPS SR 10.3 - -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008Source: Company, NCBC Research%Assets % Net Inc Breakup %Assets % Net Inc• Business brief: Alinma would be a full-fledged Islamic bank providing all the regularproducts and services associated with a commercial bank. The bank plans to offersolutions related to financing projects through Ijara and Istisna contracts, short-termfinance, Murabah and Musharaka programs, and treasury services.• Financials: Alinma is expected to commence core operations from Q2 2009. Thecompany realized income from investment worth SR338.7mn, which drove its netincome to SR390.0mn in 2008.• Recent developments: In April 2009, the company announced 1Q-09 net profit ofSR109mn and that Alinma Investment Co. is to start the operations with a paid upcapital of SR250mn. In January 2009, the company announced its plans tocommence core operations in mid-2009 through 15 branches. The bank alsoannounced the plans to establish an investment company with a capital of SR1bn. InJune 2008, the bank’s stock debuted on the Saudi Stock Exchange (Tadawul).Alinma had offered 70% stake or 1.5 bn shares through IPO in the Kingdom, having aface value of SR10, in April 2008. Moreover, in April 2008, Alinma signed anagreement with Saudi Computer Company Ltd. to design and deploy bankinginformation technology (IT) systems utilizing IBM’s expertise.Source: NCBC ResearchJUNE 2009ALINMA BANK116


BANKS AND FINANCIAL SERVICESRiyad BankAlso known asRIBLPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR24.0SR36.0bn ($9,612.8mn)1,500.0mn52 week range H/L (SR) 41.3/18.0Avg daily turnover (mn) SR US$3m 22.75 6.0712m 23.91 6.39Raw Beta 6m 3yr0.63 0.79ReutersBloomberg1010.SERIBL ABPrice perform (%) 1M 3M 12MAbsolute (%) (5) 21 (40)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www riyadbank.comValuation multiples2006 2007 2008P/E (x) 13.9 19.7 12.1P/B (x) 3.4 4.5 1.2P/Sales (x) 13.8 18.2 8.1Div yield* (%) 5.1 3.5 6.9Weightage (%)TASI (free float weight) 3.06MSCI Saudi (domestic – large cap)Free float (%)Free float 38.04Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)5040302010-R BL (RHS)Public Investment Fund 21.7General Organization for SocialInsurance (GOSI)21.6Mohd Ibrahim Mohammed Al Essa 10.1Al Nahla Commercial & Real Estate Co. 9.9SAMA 6.5Source: NCBC ResearchRiyad Bank (RIBL) is Saudi Arabia’s fourth largest listed bank, in terms of assetsize,with a market share of about 12.3%. Established in 1957, RIBL has a network of201 branches and 1900 multi-functions ATM’s. It also has international presencewith a branch in London, an agency in Houston, and an office in Singapore.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Sp. Com Income SRmn 2,672 2,926 3,266 3,947 20.8 13.9Operating Income SRmn 4,195 4,886 5,168 5,248 1.6 7.8Net Income SRmn 2,837 2,909 3,011 2,639 (12.4) (2.4)Assets SRmn 80,079 94,016 121,351 159,653 31.6 25.9Equity SRmn 10,891 11,992 13,187 25,691 94.8 33.1Advances SRmn 45,606 52,183 67,340 96,430 43.2 28.4Total Deposits SRmn 65,892 77,359 102,130 126,269 23.6 24.2Net Interest Margin % 3.6 3.5 3.2 2.9 - -Cost/Income % 34.0 33.0 35.0 41.0 - -ROE % 28.5 25.4 23.9 13.6 - -ROA % 3.7 3.3 2.8 1.9 - -Div Payout* % 58.8 71.2 68.9 82.7 - -EPS SR 1.9 1.9 2.0 1.8 (12.4) (2.4)BVPS SR 6.7 7.3 8.1 17.1 112.1 36.9Source: Company, NCBC Research* Gross dividend is used in div yield calculations for Saudi banking sectorSegment-wise business analysisProduct segment 2008 Geographic 2008%Assets % Net Inc Breakup %Assets % Net IncRetail Banking 10.4 31.7 Saudi Arabia 87.3Investment and Brokerage 0.0 8.6 GCC & MENA 3.9Corporate Banking 51.4 69.9 Eur & America 8.4Treasury and Investment 37.7 (1.1) Asia & others 0.4Other 0.6 (9.1)Source: Company, NCBC Research• Business brief: RIBL performs core-banking activities such as retail banking,corporate banking and treasury services. The bank offers a range of conventional andIslamic banking products to its customers. RIBL also operates a wholly ownedinvestment banking subsidiary—Riyad Capital through which it provides assetmanagement, wealth management, corporate finance, and brokerage services.• Financials: RIBL reported 43.2% y-o-y expansion in its credit portfolio in 2008 drivenby the robust demand for corporate credit in the country. As a result, net specialcommission income grew 20.8% y-o-y. However, due to losses in trading activities,RIBL recorded a sluggish 1.6% y-o-y growth in total operating income. Higheroperating expenses, credit loss provisions and provisions for impaired assets dentedthe bank’s bottom line in 2008.• Recent developments: RIBL’s 1Q-09 net profit declined 36.2% to SR441 mn due tothe decrease in its investments' values as a result to the global economic crisis. RIBLsigned an agreement with UK based Royal & Sun Alliance in January 2009 to set upa joint venture– The Global Company for Cooperative Insurance with a paid upcapital of SR200 mn. In December 2008, Fitch affirmed Long-term IDR and Seniorunsecured debt at ‘A+’ and downgraded Individual rating to 'B/C' from 'B’.JUNE 2009RIYAD BANK117


BANKS AND FINANCIAL SERVICESSABBAlso known asThe Saudi British BankPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR50.8SR38.1bn ($10,163.6mn)750.0mn52 week range H/L (SR) 78.5/36.4Avg daily turnover (mn) SR US$3m 9.04 2.4112m 6.55 1.75Raw Beta 6m 3yr0.65 0.86ReutersBloomberg1060.SESABB ABPrice perform (%) 1M 3M 12MAbsolute (%) (10) 10 (45)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www sabb.comValuation multiples2006 2007 2008P/E (x) 14.8 21.0 11.5P/B (x) 4.7 5.1 2.8P/Sales (x) 17.1 17.5 10.1Div yield* (%) 3.3 2.7 1.8Weightage (%)TASI (free float weight) 2.80MSCI Saudi (domestic – mid cap)Free float (%)Free float 32.85Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)15010050-SABB (RHS)HSBC Holdings Co. 39.9Al Olayan Saudi Investment Co. 16.9General Organization for Social 9.5Insurance (GOSI)Source: NCBC ResearchSABB (earlier The Saudi British Bank) is an affiliate of HSBC Group. The bankcommenced operations in 1978 and offers conventional and Islamic products underthe brand name SABB AMANAH. SABB operates 68 branches and 452 ATMs, twoseparate subsidiaries for investment banking and also offers insurance services.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Sp. Com Income SRmn 1,974 2,584 3,059 3,207 4.9 17.6Operating Income SRmn 3,820 4,617 4,374 4,825 10.3 8.1Net Income SRmn 2,504 2,988 2,549 2,812 10.3 3.9Assets SRmn 65,928 77,189 98,213 131,661 34.1 25.9Equity SRmn 7,493 9,405 10,425 11,634 11.6 15.8Advances SRmn 40,847 42,450 62,001 80,237 29.4 25.2Total Deposits SRmn 52,584 61,430 79,893 108,747 36.1 27.4Net Interest Margin % 3.3 3.7 3.6 2.9 - -Cost/Income % 31.6 30.4 32.7 34.0 - -ROE % 37.4 35.4 25.7 25.5 - -ROA % 4.0 4.2 2.9 2.4 - -Div Payout* % 32.5 50.2 57.5 20.5 - -EPS SR 4.2 5.1 4.3 4.7 7.9 3.9BVPS SR 11.5 14.1 15.9 19.4 21.8 19.0Source: Company, NCBC Research * Gross dividend is used in div yield calculations for Saudi banking sectorSegment-wise business analysisProduct segment 2008 Geographic 2008%Assets % Net Inc Breakup %Assets % Net IncRetail Banking 18.3 17.3 Saudi Arabia 91.8Corporate Banking 44.4 51.2 Middle East 2.4Treasury 37.2 17.6 Europe 2.4Investment Banking 0.0 10.1 North America 3.4Others 0.1 3.7 Other 0.1Source: NCBC Research, Reuters* Gross dividend is used in div yield calculations for Saudi banking sector• Business brief: SABB offers retail banking, corporate banking and treasury services.The bank also provides investment banking solutions through HSBC Saudi ArabiaLtd. (40.0% stake) which specializes in asset management and corporate financeservices. SABB offers brokerage and securities services through SABB Securities(100.0% stake) and Shariah compliant insurance products through SABB Takaful(32.5% stake).• Financials: SABB enhanced its core banking activities over the years capitalizing onits established brand name, affiliation with HSBC, strong corporate relations and awide range of Islamic product offerings. The bank reported a 29.4% y-o-y growth inloans. However, growth in Net Special Commission Income was constrained due to23.0% y-o-y increase in Special Commission Expenses.• Recent developments: In May 2009, Standard & Poor's affirmed its strong rating ofSABB. In April 2009, SABB announced a 0.4% y-o-y growth in its 1Q-09 net profit toSR760mn. The bank raised its paid-up capital by 25% to SR7.5bn through theissuance of 1:4 bonus shares in March. In December 2008, Fitch affirmed the bank’sLong-term IDR rating and Senior unsecured debt rating at ‘A.JUNE 2009SABB118


BANKS AND FINANCIAL SERVICESSaudi Investment BkAlsoknown asSAIBPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR21.9SR9.9bn ($2,631.5mn)450.0mn52 week range H/L (SR) 35.5/14.1Avg daily turnover (mn) SR US$3m 4.39 1.1712m 6.22 1.66Raw Beta 6m 3yr0.85 0.90ReutersBloomberg1030.SESIBC ABPrice perform (%) 1M 3M 12MAbsolute (%) 0 44 (36)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www saib.com saValuation multiples2006 2007 2008P/E (x) 10.6 27.9 14.1P/B (x) 3.5 3.4 1.1P/Sales (x) 20.7 21.8 7.3Div yield* (%) 0.0 0.0 0.0Weightage (%)TASI (free float weight) 1.35MSCI Saudi (domestic – large cap) 1.34Free float (%)Free float 61.17Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)40302010-S BC (RHS)General Organization for Social 21.5Insurance (GOSI)Public Pension Authority (PPA) 17.3Saudi Oger Ltd. 8.5JPMorgan Chase Co. 7.4National Commercial Bank (NCB) 7.3Source: NCBC ResearchThe Saudi Investment Bank (SAIB) was established in 1976 in Riyadh to providemedium term finance to local companies for industrial projects. In 1983, the bankamended its charter to carry out commercial banking activities under the nameSAIB. SAIB has a network of 33 branches and 247 ATMs.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-07)Net Sp. Com Income SRmn 786 1,031 1,056 1,026 (2.8) 9.3Operating Income SRmn 1,516 2,556 1,403 1,938 38.1 8.5Net Income SRmn 1,064 2,006 822 530 (35.5) (20.7)Assets SRmn 39,581 40,845 46,542 53,596 15.2 10.6Equity SRmn 5,307 6,001 6,770 6,609 (2.4) 7.6Advances SRmn 19,794 20,691 23,129 29,556 27.8 14.3Total Deposits SRmn 31,849 32,378 37,280 45,911 23.2 13.0Net Interest Margin % 2.3 2.6 2.5 2.1 - -Cost/Income % 23.2 17.7 29.6 21.2 - -ROE % 23.9 35.5 12.9 8.0 - -ROA % 3.1 5.0 1.9 1.0 - -Div Payout* % 12.2 - - - - -EPS SR 2.4 4.5 1.8 1.2 (33.3) (20.6)BVPS SR 11.5 13.3 15.0 14.7 (2.0) 8.5Source: Company, NCBC Research * Gross dividend is used in div yield calculations for Saudi banking sectorSegment-wise business analysisProduct segment 2008 Geographic 2008%Assets % Net Inc Breakup %Assets % Net IncRetail Banking 23.6 64.1 Saudi Arabia 91.5Corporate Banking 36.9 103.5 GCC/MENA 0.6Treasury & Capital Market 39.5 (95.8) Eur & America 7.9Investment Services & Brokerage 0.1 28.2 Asia & others 0.0Source: Company, NCBC Research• Business brief: SAIB’s provides personal banking, corporate banking, investmentbanking, Islamic banking, and treasury services to its customers. The bank’s servicesinclude local & international share trading, retail lending, Murabaha finance, AmericanExpress cards and Orix leasing services. SAIB established the SAIB AssetManagement Company in November 2007 to carry out conventional and Islamicasset management service.• Financials: SAIB recorded 27.8% y-o-y growth in its lending portfolio in 2008 due tothe massive investment boom prevailing in the Kingdom, especially during the firsthalf of 2008. The bank also recorded a robust growth of 23.2% y-o-y in deposits inthe same period. Operating income grew 38.1% y-o-y in 2008; however, net incomedeclined 35.5% due to higher provision charges.• Recent developments: In April 2009, SAIB announced that its 1Q-09 net profitdeclined 6.6% y-o-y to SR241mn due to lower fees on banking activities. InDecember 2008, Fitch affirmed the bank’s Long-term IDR rating at ‘A-‘anddowngraded Individual rating to ‘C’ from ‘B/C’. In August 2008, BNP Paribas AssetManagement got approval to acquire 25.0% stake in the bank’s unit- SAIB AssetManagement.JUNE 2009SAUDI INVESTMENT BANK119


BANKS AND FINANCIAL SERVICESBank Al JaziraAlso known asBAJPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR21.6SR6.5bn ($1,730.3mn)300.0mn52 week range H/L (SR) 41.0/13.3Avg daily turnover (mn) SR US$3m 15.96 4.2612m 18.29 4.88Raw Beta 6m 3yr1.15 1.12ReutersBloomberg1020.SEBJAZ ABPrice perform (%) 1M 3M 12MAbsolute (%) 1 49 (46)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www baj.com.saValuation multiples2006 2007 2008P/E (x) 7.5 18.3 20.3P/B (x) 3.5 2.2 1.0P/Sales (x) 30.9 24.8 7.2Div yield* (%) 1.9 0.9 3.3Weightage (%)TASI (free float weight) 1.07MSCI Saudi (domestic – large cap) 1.64Free float (%)Free float 73.63Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)5040302010-BJAZ (RHS)Rashed Al Abdul Rahman Al Rashid 22.2and Sons CompanyAl Okhoah Union for development 6.5National Pakistani Bank 5.8Saleh Abdullah Mohammed Kamal 5.0Source: NCBC ResearchBank Aljazira (BJAZ) specializes in Islamic banking and investment products inSaudi Arabia. BJAZ was established in 1975, following the takeover of the SaudiArabian branches of National Bank of Pakistan. Headquartered at Jeddah, the bankoperates a network of 24 branches and 314 ATMs across KSA.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-07)Net Sp. Com Income SRmn 276 477 595 631 6.1 31.7Operating Income SRmn 1,319 2,615 1,447 1,137 (21.4) (4.8)Net Income SRmn 874 1,974 805 222 (72.4) (36.7)Assets SRmn 14,169 15,713 21,564 27,520 27.6 24.8Equity SRmn 2,670 4,194 4,698 4,637 (1.3) 20.2Advances SRmn 6,911 6,271 9,879 15,133 53.2 29.9Total Deposits SRmn 10,973 11,091 16,364 22,267 27.7 26.6Net Interest Margin % 2.3 3.4 3.4 2.7 - -Cost/Income % 24.7 24.0 46.2 69.6 - -ROE % 41.6 57.5 14.7 4.8 - -ROA % 7.0 13.2 4.3 0.8 - -Div Payout* % 7.7 13.9 16.8 67.5 - -EPS SR 2.9 6.6 2.7 0.7 (72.6) (37.7)BVPS SR 8.7 13.1 22.1 15.5 (30.0) 21.2Source: Company, NCBC Research * Gross dividend is used in div yield calculations for Saudi banking sectorSegment-wise business analysisProduct segment 2008 Geographic 2008%Assets % Net Inc Breakup %Assets % Net IncRetail sector 9.3 10.7Corporate Sector 47.7 118.0Brokerage 2.0 41.5Treasury Sector 41.1 (70.2)Source: Company, NCBC Research• Business brief: BJAZ offers Shariah-compliant retail banking, corporate banking,and treasury services. The bank conducts its investment banking business through itssubsidiary AJC. The insurance business is managed by ATATC, which was also thefirst financial institution to launch an authorized Islamic life insurance program inSaudi Arabia.• Financials: BJAZ’s credit portfolio expanded 53.2% y-o-y to SR15.1bn in 2008.However, the banks net special commission income grew only 6.1% y-o-y during2008, mainly due to 53.9% y-o-y growth in the special commission expenses.Moreover, sluggish stock market conditions led to a 23.0% y-o-y decline in feeincomeand investment and trading loss of SR68.4mn. This led to a 21.4% y-o-y fallin total operating income in 2008. BJAZ also witnessed higher operating expensesduring 2008 (up 18.0% y-o-y), which led to a 72.4% y-o-y fall in net income.• Recent developments: In April 2009, BJAZ obtained "ISO 9001" InternationalCertificate of Quality as the first fully Shari'ah compliant bank in the Kingdom of SaudiArabia. The bank recorded a 33.3% year on year decline in 1Q 09 net profit to SR102mn. In December 2008, Fitch affirmed bank’s Long-term IDR rating at ‘A-‘ andIndividual rating at ‘C’. In April 2008, BJAZ raised its share capital to SR3.0bn fromSR2.25bn, through the issue of bonus shares.JUNE 2009BANK ALJAZIRA120


BANKS AND FINANCIAL SERVICESSaudi Hollandi BankAlsoknown asSHBPricePricing / Valuation as on May 27, 2009SR39.6Saudi Hollandi Bank (SHB), headquartered in Riyadh, was established in 1977 bythe conversion of Algemene Bank Nederland (ABN) into a JV bank. At present, theMkt capSh. outstandingSR13.1bn ($3,497.4mn)330.8mnRBS led consortium holds a 39.9% stake in the bank. SHB offers both conventionaland Islamic products through a network of 43 branches and 169 ATMs across KSA.Key statisticsCompany financials52 week range H/L (SR) 52.0/25.2Avg daily turnover (mn) SR US$3m 3.58 0.9512m 2.77 0.74Raw Beta 6m 3yr0.50 0.86ReutersBloomberg1040.SEAAAL ABPrice perform (%) 1M 3M 12MAbsolute (%) (14) 23 (34)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www shb.com.saValuation multiples2006 2007 2008P/E (x) 17.5 37.7 8.6P/B (x) 3.9 3.6 1.9P/Sales (x) 14.2 13.8 7.3Div yield* (%) 1.2 1.3 2.2Weightage (%)TASI (free float weight) 0.86MSCI Saudi (domestic – mid cap)Free float (%)Free float 29.35Relative share price perf.11,0009,0007,0005,0003,00080604020M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISaudi Hollandi (RHS)Top 5 shareholders (%)ABN Amro Co. 39.9Al Olayan Saudi Investment Co. 20.8General Organization for Social 9.6Insurance (GOSI)Source: NCBC Research-2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Sp. Com Income SRmn 1,014 1,180 1,200 1,445 20.4 12.6Operating Income SRmn 1,718 1,947 1,776 2,111 18.9 7.1Net Income SRmn 1,052 953 439 1,224 179.0 5.2Assets SRmn 39,958 46,740 50,411 61,436 21.9 15.4Equity SRmn 3,467 4,258 4,547 5,715 25.7 18.1Advances SRmn 23,777 26,480 27,555 38,017 38.0 16.9Total Deposits SRmn 34,362 40,712 43,763 52,299 19.5 15.0Net Interest Margin % 2.8 2.8 2.5 2.7 - -Cost/Income % 33.0 33.1 47.4 38.4 - -ROE % 33.1 24.7 10.0 23.9 - -ROA % 2.9 2.2 0.9 2.2 - -Div Payout* % 38.5 20.5 48.5 19.1 - -EPS SR 4.0 3.6 1.7 4.6 179.0 5.2BVPS SR 13.1 16.1 17.2 21.6 25.7 18.1Source: Company, NCBC Research* Gross dividend is used in div yield calculations for Saudi banking sectorSegment-wise business analysisProduct segment 2008 Geographic 2008%Assets % Net Inc Breakup %Assets % Net IncRetail Banking 7.8 10.5 Saudi Arabia 97.5Corporate Banking 57.8 70.1 Other GCC 1.7Treasury 34.4 17.1 Europe 0.5Investment Banking 0.0 2.3 Other 0.2Source: Company, NCBC Research• Business brief: SHB’s core baking activities include retail banking, corporatebanking, and treasury services. The bank offers Van Gogh preferred bankingservices, such as domestic & international share trading services and mutual fundportfolios, to HNIs under its wealth management segment. In September 2007, SHBestablished a wholly owned subsidiary Saudi Hollandi Capital Company to offerinvestment-banking solutions.• Financials: SHB recorded 38.0% y-o-y expansion in its credit portfolio in 2008. Netspecial commission income grew 20.4% y-o-y in 2008 mainly due to 10.1% y-o-ydecline in the Special Commission Expenses. The banks fee-based income, mainlyassociated with trade finance and other services, also recorded a healthy 46.2% y-o-ygrowth during the same period. SHB’s aggressive clean-up activities in 2008 led toreduced provision for credit loss provisioning in 2008, leading to a strong 179.0% y-o-y growth in net income.• Recent developments: SHB’s net profit increased 0.7% year on year to SR284.4 mnIn March 2009, SHB increased its paid-up capital by 25% to SR3.31bn throughissuance of bonus shares. In December 2008, Fitch affirmed the bank’s Long-termIDR rating at ‘A-‘and downgraded the Individual rating to 'C' from 'B/C’.JUNE 2009SAUDI HOLLANDI BANK121


BANKS AND FINANCIAL SERVICESBank AlBiladAlso known asAlBiladPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsJUNE 2009SR23.6SR7.1bn ($1,890.5mn)300.0mn52 week range H/L (SR) 43.5/17.6Avg daily turnover (mn) SR US$3m 15.76 4.2112m 19.47 5.20Raw Beta 6m 3yr0.14 0.20ReutersBloomberg1140.SEALBI ABPrice perform (%) 1M 3M 12MAbsolute (%) 4 13 (38)Market (%) 6 32 (39)Sector (%) (3) 32 (31)Website: www bankalbilad com saValuation multiples2006 2007 2008P/E (x) 67.0 166.6 67.1P/B (x) 3.9 3.9 2.6P/Sales (x) 33.2 22.6 14.5Div yield (%) 0.0 0.0 0.0Weightage (%)TASI (free float weight) 0.79MSCI Saudi (domestic – large cap) 6.42Free float (%)Free float 50.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)5040302010-AL Bilad (RHS)Mohammed Ibrahim Mohammed Al 11.9SubaeiAbdullah Ibrahim Mohammed Al 11.1SubaeiFirst Investment Company 7.2Abdul Rahman Saleh Abdul Aziz Al 6.9RajhiAbdul Rahman Abdul Aziz Saleh Al 6.5RajhiSource: NCBC ResearchBank AlBilad (AlBilad), headquartered in Riyadh, was established in 2004 by amerger of eight money-exchange organizations. AlBilad’s wholly ownedsubsidiaries are AlBilad Brokerage & Securities Management Co., AlBiladInvestment Co. and AlBilad Real Estate Co.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Sp. Com Income SRmn 109 359 534 578 8.2 74.3Operating Income SRmn 171 655 779 875 12.3 72.5Net Income SRmn (98) 178 73 125 72.6 NMAssets SRmn 7,005 11,281 16,636 16,052 (3.5) 31.8Equity SRmn 2,899 3,024 3,104 3,213 3.5 3.5Investments SRmn 5,212 9,825 13,599 10,157 (25.3) 24.9Total Deposits SRmn 3,916 7,858 12,689 12,435 (2.0) 47.0Net Interest Margin % 3.3 4.2 4.1 3.8 - -Cost/Income % 106.6 71.7 82.3 76.0 - -ROE % (6.8) 6.0 2.4 4.0 - -ROA % (1.4) 1.9 0.5 0.8 - -Div Payout % - - - - - -EPS SR (0.3) 0.6 0.2 0.4 72.6 NMBVPS SR 9.4 9.2 9.9 10.7 8.2 4.3Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Assets % Net Inc Breakup %Assets % Net IncIndividuals 13.9 13.2 Saudi Arabia 93.7Companies and Main Clients 44.5 111.1 GCC and MENA 5.4Treasury 12.9 (27.2) Europe 0.2Transfer, Inv Services & Others 28.8 2.9 Asia and other 0.7Source: Company, NCBC Research• Business brief: AlBilad’s consumer services segment includes, AlBilad Net, AlBiladTadawul, AlBilad 24, local share investment, and credit cards. The corporate servicessegment offers a range of finance solutions such as Murabaha, Musharaka, Istisna’aand securitization finance. The investment-banking segment offers services such asAkar, Amwal, Asayel, Al-Murabih, and Al-Seef.• Financials: AlBilad’s investment portfolio declined 25.3% y-o-y to SR10.2bn in 2008.However, the net special commission income managed to expand 8.2% y-o-y in2008. The bank also witnessed growth in fee-based income during the same period,which led to 12.3% y-o-y growth in the total operating income. Higher operatingincome coupled with reduced other G&A expenses led to a stronger rise in netincome.• Recent developments: In April 2009, Albilad announced a decline of 56% y-o-y in itsnet income for 1Q-09 to SR22.4mn. In June 2008, the bank’s investment arm-AlBilad Investment Co. signed an agreement with Saudi Integrated TelecomCompany (SITC) to become the latter’s IPO manager, financial consultant andcoverage entrepreneur. In May 2008, Pakistan-based United Bank Limited (UBL) andAlBilad signed an agreement for Electronic Home Remittance Facility at the UBLHead Office in Karachi, Pakistan.BANK ALBILAD122


Company Page No. Banking and FinancialsSABIC 124 PetrochemicalsSAFCO 125 CementSaudi Kayan 126 RetailNational Industrial 127 Energy and UtilitiesSaudi Industrial Investment 128 Agriculture and FoodSipchem 129 Telecom and ITRabigh Refining 130 InsuranceSahara Petrochemicals 131 Multi InvestmentYanbu National 132 Industrial InvestmentAdvanced Polypropylene 133 Building and ConstructionNama Chemicals 134 Real EstateAlujain Corporation 135 TransportationMethanol Chemicals 136 Media and PublishingHotels and Tourism


PETROCHEMICAL INDUSTRIESSaudi Basic IndustriesAlso knownasSABICPriceSR64.8Pricing / Valuation as on May 27, 2009Mkt cap SR194.3bn ($51,869.2mn)Sh. outstanding3,000.0mnKey statistics52 week range H/L (SR) 153.3/33.6Avg daily turnover (mn) SR US$3m 754.24 201.4012m 681.72 182.04Raw Beta 6m 3yr1.87 1.13Reuters2010.SEBloombergSABIC ABPrice perform (%) 1M 3M 12MAbsolute (%) 37 77 (54)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www sabic.comValuation multiples2006 2007 2008P/E (x) 13.0 18.4 7.0P/B (x) 3.6 5.4 1.5P/Sales (x) 3.0 3.9 1.0Div yield (%) 3.8 1.8 5.8Weightage (%)TASI (free float weight) 9.99MSCI Saudi (domestic – large cap) 30.73Free float (%)Free float 22.98Relative share price perf.11,0002009,0001507,0001005,000503,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISABIC (RHS)Top 5 shareholders (%)Public Investment Fund 70.0Source: NCBC ResearchSABIC, established in 1976, is one of the leading petrochemical companies in theworld in terms of sales. The company produces basic chemicals-olefins, oxygenatesand aromatics-intermediates and polymers. SABIC also produces fertilizers (throughSAFCO, Ibn Al-Baytar, Al-Bayroni) and metals (through Hadeed, ALBA, GARMCO).Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 78,254 86,328 126,204 150,810 19.5 24.4EBITDA SRmn 35,701 37,005 48,653 46,643 (4.1) 9.3Net Income SRmn 19,160 20,294 27,022 22,030 (18.5) 4.8Assets SRmn 136,951 166,589 253,731 271,760 7.1 25.7Equity SRmn 62,341 72,883 91,154 102,933 12.9 18.2Total Debt SRmn 29,721 39,740 80,109 92,656 15.7 46.1Cash & Equiv SRmn 28,173 41,228 46,056 51,845 12.6 22.5EBITDA Mgn % 45.6 42.9 38.6 30.9 - -Net Mgn % 24.5 23.5 21.4 14.6 - -ROE % 33.8 30.0 32.9 22.7 - -ROA % 14.6 13.4 12.9 8.4 - -Div Payout % 48.0 49.3 33.3 40.9 - -EPS SR 47.9 8.1 9.0 7.3 (18.5) N/MBVPS SR 155.9 29.2 30.4 34.3 12.9 N/MSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008Petrochemicals 106.1 95.1Fertilizers 6.1 27.6Metals 9.8 22.8Corporate 4.5 101.0Eliminations (26.5) (146.4)Source: Company, NCBC Research%Rev % Net Inc Breakup %Rev % Net Inc• Business brief: SABIC has presence across the globe through its subsidiaries andassociates. It operates through its six interlinked divisions – Basic Chemicals,Intermediates, Polymers, Specialty Products, Fertilizers, and Metals. In 2008, thecompany’s total production stood at 55mn metric tons.• Financials: SABIC posted 19.5% y-o-y revenue growth in 2008 to reach SR150.8bn.However, the company’s net income declined by 18.5% y-o-y to SR22.0bn owing toreduced petrochemical demand and sharp fall in realizations.• Recent developments: In 1Q-09, SABIC reported a loss of SR973.9mn (1Q08: netprofit of SR6.9bn) due to fall in petrochemical demand and prices coupled with agoodwill write-down of SR1.2bn. In May 2009, SABIC signed a MOU with Sipchem,under which SABIC will provide ethylene to Sipchem in return of carbon monoxidefrom the latter. In context, SABIC will build SR12bn worth of petrochemical projects inJubail. Under its restructuring initiatives, SABIC has laid off 1,600 jobs globally andhalted operations at high-cost facilities. Its subsidiary, YANSAB is set to beoperational in 2Q-09. SABIC-Sinopec 50:50 owned project producing 1mn tons ofethylene derivatives annually in Tianjin (China) is set to start operations in Nov 2009.JUNE 2009SAUDI BASIC INDUSTRIES124


PETROCHEMICAL INDUSTRIESSaudi Arabia FertilizersAlsoknownasSAFCOPriceSR110.3Pricing / Valuation as on May 27, 2009Mkt capSR27.6bn ($7,359.8mn)Sh. outstanding250.0mnKey statistics52 week range H/L (SR) 272.5/63.0Avg daily turnover (mn) SR US$3m 58.04 15.5012m 126.32 33.73Raw Beta 6m 3yr1.04 1.09Reuters2020.SEBloombergSAFCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 3 22 (54)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www safco.com.saValuation multiples2006 2007 2008P/E (x) 19.8 18.0 5.0P/B (x) 4.8 6.6 2.8P/Sales (x) 12.5 11.3 4.3Div yield (%) 4.8 2.5 14.5Weightage (%)TASI (free float weight) 2.46MSCI Saudi (domestic – large cap) 7.36Free float (%)Free float 39.96Relative share price perf.11,0003009,0002007,0005,0001003,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISAFCO (RHS)Top 5 shareholders (%)Saudi Basic Industries Corporation 42.9General Org. for Social Insurance 13.9Source: NCBC ResearchSaudi Arabia Fertilizers Company (SAFCO), established in 1965 is engaged inproducing ammonia and urea. The company markets its products in Asia, America,Australia, Africa and other middle-east countries apart from domestic market. SaudiBasic Industries Corp. (SABIC) holds 42.9% stake in SAFCO.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,824 1,831 3,516 5,243 49.1 42.2EBITDA SRmn 1,178 1,183 2,471 4,594 85.9 57.4Net Income SRmn 1,100 1,151 2,209 4,530 105.1 60.3Assets SRmn 6,207 6,674 8,153 9,850 20.8 16.6Equity SRmn 4,788 4,739 6,014 8,034 33.6 18.8Total Debt SRmn 695 1,240 975 826 (15.2) 5.9Cash & Equiv SRmn 304 594 1,572 3,918 149.2 134.4EBITDA Mgn % 64.6 64.6 70.3 87.6 - -Net Mgn % 60.3 62.9 62.8 86.4 - -ROE % 24.4 24.2 41.1 64.5 - -ROA % 19.2 17.9 29.8 50.3 - -Div Payout % 76.4 95.5 45.3 71.7 - -EPS SR 27.5 5.8 11.0 18.1 N/M N/MBVPS SR 119.7 23.7 30.1 32.1 N/M N/MSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncAmmonia & Urea 100 N/A Asia 34Melamine & Sulfuric Acid N/A N/A America 26Australia 21Saudi Arabia 13Africa/Middle East 6Source: Company, NCBC Research• Business brief: SAFCO has a urea production capacity over 2.27mn tons per annum(tpa), majority of which is exported. Urea is a key material used in nitrogen fertilizersacross the globe. The company also manufactures 2.1mn tpa of ammonia as anintermediate raw material for producing urea. SAFCO has a sulphuric acid productioncapacity of 130,000 tpa. The company is also constructing SAFCO V, a new fertilizerplant in Jubail, which is expected to increase its urea capacity by 1.5mn tpa andammonia capacity by 1.2mn tpa in 2011.• Financials: In 2008, SAFCO reported a robust year-on-year growth of 49.1% in itstop line to SR5,242.6mn benefiting from higher fertilizer prices during the year.Furthermore, its net income grew 105.1% y-o-y to SR4,530.3mn.• Recent developments: SAFCO declared its 1Q-09 results on April 11, 2009. Netincome declined 27.4% y-o-y to SR525.0mn in 1Q-09 due to lower fertilizer prizes. InAugust 2008, SAFCO stopped production at its Dammam plant to comply with theRoyal decree enforcing environmental regulations. In July 2008, SAFCO signed adeal with Hadeed (SABIC’s wholly owned subsidiary) to establish a steel plant with acapacity of 1.7mn tpa.JUNE 2009SAUDI ARABIA FERTIZERS CO125


PETROCHEMICAL INDUSTRIESSaudi Kayan Petro.Also known asSaudi KayanPriceSR13.2Pricing / Valuation as on May 27, 2009Mkt capSR19.7bn ($5,267.0mn)Sh. outstanding1,500.0mnKey statistics52 week range H/L (SR) 27.3/8.7Avg daily turnover (mn) SR US$3m 103.74 27.7012m 111.80 29.85Raw Beta 6m 2yr1.09 1.11Reuters2350.SEBloombergKAYAN ABPrice perform (%) 1M 3M 12MAbsolute (%) 19 30 (48)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www saudikayan.comValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 2.5 0.9P/Sales (x) NA NM N/MDiv yield (%) NA NM NMSaudi Kayan Petrochemical Company (Kayan) was established by SABIC (35%stake) and Al Kayan Petrochemical (20%) in 2007 for setting up a petrochemicalcomplex, worth about SR38bn, in Jubail Industrial City. The plant has annualinstalled capacity of approximately 6mn tonnes of petrochemical products.Company financials2007 # 2008*YoY(%)CAGR(%)(05-08)Net Revenues SRmn 0 0 - -EBITDA SRmn (100) 0 - -Net Income SRmn 323 494 - -Assets SRmn 15,714 22,402 - -Equity SRmn 15,323 15,494 - -Total Debt SRmn 0 5,815 - -Cash & Equiv SRmn 10,765 3,522 - -EBITDA Mgn % - - - -Net Mgn % - - - -ROE % - - - -ROA % - - - -Div Payout % - - - -EPS SR 0.22 0.33 - -BVPS SR 10.2 10.3 - -Source: Company, NCBC Research* 2008 figures represents the financial performance for 19 months period ending Dec 31, 2008#2007 figures represents the financial performance for 6 months period ending Dec 31, 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 1.89MSCI Saudi (domestic – mid cap) 4.16Free float (%)Free float 42.81Relative share price perf.11,000309,000207,000105,0003,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIKayan (RHS)Top 5 shareholders (%)Saudi Basic Industries Corporation 35.0Kayan Petrochemical Company 20.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: The complex is believed to be the world's largest integratedpetrochemical complex, involving manufacturing of specialized chemicals such aspolycarbonate, bisphenol A, acetone and ethanolamines apart from ethylene,polyethylene, propylene and ethylene glycols. Production is expected to begin by late2010. The engineering, procurement & construction work is 71% complete by 1Q-09.• Financials: Since Kayan is yet to start operations, the company has limited financialhistory. The company reported a non-operational profit (from investments) ofSR494.1mn for 19 months period ending Dec 31, 2008.• Recent developments: Kayan declared its 1Q-09 results on April 15, 2009. Itrecorded a net loss of SR6.3mn in 1Q-09 compared to a non-operational profit ofSR95.6mn in 1Q-08. The Board of Directors appointed Mr. Taha Bin Abdullah AlKuwaiz in place of Mr. Ahmed Bin Omar Abdullatif to the board on March 3, 2009. InDecember 2008, Kayan signed an USD533mn financing contract with Saudi IndustrialDevelopment Fund for the construction of its petrochemical complex in Jubail. SaudiBasic Industries (SABIC) has also said that it would provide help in case of any gap infunding for this project.JUNE 2009SAUDI KAYAN PETROCHEMICAL126


PETROCHEMICAL INDUSTRIESNational IndustrialAlso known asNIC, TasneePricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR21.7SR10.0bn ($2,669.4mn)460.7mn52 week range H/L (SR) 42.8/10.9Avg daily turnover (mn) SR US$3m 20.75 5.5412m 27.39 7.31Raw Beta 6m 3yr1.29 1.41ReutersBloomberg2060.SENIC ABPrice perform (%) 1M 3M 12MAbsolute (%) 42 68 (45)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www nic.com.saValuation multiples2006 2007 2008P/E (x) NM 26.4 10.0P/B (x) 2.1 2.9 0.8P/Sales (x) NM 2.4 0.6Div yield (%) NM 2.0 6.8Weightage (%)TASI (free float weight) 1.76MSCI Saudi (domestic – large cap) 4.18Free float (%)Free float 78.58Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)NIC (RHS)5040302010-Al Sha'er Trade, Industries and 12.3ConstructionGulf Investment Corporation 7.9Kingdom Holding Company 6.2Al Olayan Saudi Investment Co 6.1Swicorp Co. 5.8Source: NCBC ResearchNational Industrialization Company (Tasnee) was established in Riyadh in 1985 tosupport the Kingdom’s industrial. In 2007, Tasnee acquired LyondellBasell’sworldwide titanium business and in 2008, it purchased Australia's BemaxResources Ltd. and International Titanium Powder (ITP).Company financials2006* 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 3,241 7,227 10,037 38.9 -EBITDA SRmn 1,183 1,538 1,756 14.2 -Net Income SRmn 693 661 601 (9.1) -Assets SRmn 10,357 24,237 30,423 25.5 -Equity SRmn 5,567 5,939 7,318 23.2 -Total Debt SRmn 2,568 12,175 16,103 32.3 -Cash & Equiv SRmn 1,401 2,230 3,614 62.1 -EBITDA Mgn % 36.5 21.3 17.5 - -Net Mgn % 21.4 9.1 6.0 - -ROE % - 11.5 9.1 - -ROA % - 3.8 2.2 - -Div Payout % 33.7 52.9 68.0 - -EPS SR 3.0 1.89 1.47 N/M -BVPS SR 23.9 17.0 15.9 N/M -Source: Company, NCBC Research* 2006 figures represents the financial performance for 9 months period ending Dec 31, 2006.Segment-wise business analysisProduct segment 2008 Geographic 2007%Rev % Net Inc Breakdown %Rev % Net IncIndustrial 75.6 N/A Europe 27 N/APetrochemical 33.0 N/A GCC 25 N/AHead Office and others 2.6 N/A Asia 21 N/AAdjustment (11.2) N/A America 19 N/AOthers 8 N/ASource: Company NCBC Research• Business brief: Tasnee enjoys global presence with Europe contributing 27%, GCC- 25%, Asia - 21%, America - 19%, and Others - 8% to its 2007 revenues. Through itsaffiliates, TASNEE offer a wide range of products including polypropylene, titaniumdioxide, automotive batteries, polycarbonate sheets, and carton packaging. Thecompany’s industrial services unit provides services such as waste management andquality inspection. In 2006, TASNEE, in a JV with Sahara Olefins and Basell, formedSaudi Ethylene and Polyethylene Co. (SEPC) with a capacity of 1mn tons per annum(TPA) ethylene cracker, and 400,000 TPA of low and high density polyethylene each.• Financials: Revenues grew 38.9% y-o-y to SR10,037.1mn in 2008. However, the netincome declined 9.1% y-o-y to SR600.9mn in 2008 due to an increase in the cost ofgoods sold, operating expenses as well as financial expenses.• Recent developments: Tasnee reported a loss of SR25.8mn in 1Q-09 compared toa profit of SR148.0mn a year ago. SEPC completed experimental operations at itsethylene complex in March 2009 and would be followed by commercial productionshortly. In October 2008, Cristal, Tasnee’s subsidiary, received the U.S. authority’sapproval for acquisition of ITP for SR412.5mn.JUNE 2009NATIONAL INDUSTRIALIZATION127


PETROCHEMICAL INDUSTRIESSaudi Industrial Invt.Alsoknown asSIIGPriceSR17.1Pricing / Valuation as on May 27, 2009Mkt capSR7.7bn ($2,054.7mn)Sh. outstanding450.0mnKey statistics52 week range H/L (SR) 43.3/9.5Avg daily turnover (mn) SR US$3m 17.69 4.7212m 39.68 10.60Raw Beta 6m 3yr1.15 1.17Reuters2250.SEBloombergSIIG ABPrice perform (%) 1M 3M 12MAbsolute (%) 20 65 (54)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www.siig.com.saValuation multiples2006 2007 2008P/E (x) 13.6 34.6 92.7P/B (x) 2.7 4.8 0.9P/Sales (x) 5.1 10.4 2.1Div yield (%) 2.8 0.7 0.0Saudi Industrial Investment Group (SIIG) was established in 1996 in Riyadh. Thecompany primarily focuses on investment opportunities in the Kingdom’spetrochemical sector. SIIG has entered into a joint venture with Chevron Phillips. Itoperates through two subsidiaries - Saudi Chevron Phillips and Jubail Chevron Phillips.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,159 1,574 1,459 2,139 46.6 22.7EBITDA SRmn 466 618 474 168 (64.6) (28.8)Net Income SRmn 415 587 437 49 (88.9) (51.0)Assets SRmn 3,201 4,421 4,964 8,646 74.2 39.3Equity SRmn 2,327 2,913 3,126 5,197 66.3 30.7Total Debt SRmn 629 1,091 1,372 2,731 99.1 63.1Cash & Equiv SRmn 469 603 749 2,703 260.9 79.3EBITDA Mgn % 40.2 39.3 32.5 7.9 - -Net Mgn % 35.8 37.3 30.0 2.3 - -ROE % 19.6 22.4 14.5 1.2 - -ROA % 15.8 15.4 9.3 0.7 - -Div Payout % - 38.3 25.7 0.0 - -EPS SR 11.5 2.6 1.9 0.11 N/M N/MBVPS SR 64.5 12.9 13.9 11.5 N/M N/MSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncIndustrial Development 100.0 Saudi Arabia 100.0Weightage (%)TASI (free float weight) 1.52MSCI Saudi (domestic) 11.81Free float (%)Free float 88.53Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)SIIG (RHS)5040302010-Public Pension Authority 10.6Ali Abdullah Ibrahim Al Jufaly 6.3Source: NCBC ResearchSource: Company, NCBC Research• Business brief: Saudi Chevron Phillips has an installed capacity of 1.2mn metrictonnes/year (MTA) and produces benzene, cyclohexane and motor gas. JubailChevron Phillips commenced operations in 2H-08. The facility produces styrene,propylene and motor gas. In 2007, SIIG entered into a third joint venture (JV) withNational Chevron Phillips (Chevron) to manufacture adipic acid and nylon. Under thisJV, both companies are setting up SR18.0bn petrochemical complex, which isscheduled to commence operations by 2011.• Financials: In 2008, sales grew 46.6% y-o-y to SR2,139.0mn. However, net profitdeclined 88.9% y-o-y to SR48.8mn due to fall in petrochemical prices coupled with anincrease in the cost of goods sold, operating expenses and financial expenses.Consequently, net margin contracted to 2.3% in 2008 from 30.0% in 2007.• Recent developments: According to SIIG’s estimates, the company has incurred aloss of SR38.7mn in the first four months of 2009 compared to a net profit ofSR193.0mn in the same period a year ago. In 1Q-09, SIIG reported a loss ofSR50.5mn against a profit of SR137.4mn in 1Q-08. In December 2008, SIIG signedan agreement for SR3bn loan from the public Investment Fund for its third project. InJanuary 2009, the company discontinued operations for 25 days at its Saudi ChevronPhillips (joint venture) facility due to maintenance purposes.JUNE 2009SAUDI INDUSTRIAL INVESTMENT GROUP128


PETROCHEMICAL INDUSTRIESSipchemAlso known asSIPCHEMPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR20.8SR6.9bn ($1,851.4mn)333.3mn52 week range H/L (SR) 46.5/12.7Avg daily turnover (mn) SR US$3m 28.83 7.7012m 35.99 9.61Raw Beta 6m 2yr1.07 1.13ReutersBloomberg2310.SESIPCHEM ABPrice perform (%) 1M 3M 12MAbsolute (%) 17 32 (51)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www sipchem comValuation multiples2006 2007 2008P/E (x) 13.4 20.9 9.6P/B (x) 2.7 4.1 1.0P/Sales (x) 4.9 8.1 3.0Div yield (%) 0.0 1.6 6.3Weightage (%)TASI (free float weight) 1.27MSCI Saudi (domestic – mid cap) 4.67Free float (%)Free float 82.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Sipchem (RHS)5040302010-Zamil Group Holding Company 10.2National Manufacturing Holding Co. 8.3Public Pension Agency 7.7Al Olayan Financial Company 6.3Source: NCBC ResearchSaudi International Petrochemical Company (Sipchem), established in 1999, was thefirst to set-up methanol and butanediol plants in KSA. The company invests inpetrochemical and chemical businesses and currently operates through its 2affiliates – International Methanol Co. (IMC) and International Diol Co. (IDC).Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 726 1,334 1,528 1,709 11.8 33.0EBITDA SRmn 539 956 1,091 1,151 5.5 28.7Net Income SRmn 325 494 594 537 (9.6) 18.2Assets SRmn 4,428 5,262 7,750 10,833 39.8 34.7Equity SRmn 1,912 2,406 2,997 4,965 65.7 37.5Total Debt SRmn 1,918 1,813 2,623 3,726 42.0 24.8Cash & Equiv SRmn 1,164 1,507 1,562 2,581 65.2 30.4EBITDA Mgn % 74.3 71.7 71.4 67.4 - -Net Mgn % 44.8 37.0 38.9 31.4 - -ROE % 24.5 22.9 22.0 13.5 - -ROA % 9.2 10.2 9.1 5.8 - -Div Payout % - - 33.7 60.2 - -EPS SR 10.83 3.29 2.97 1.66 N/M N/MBVPS SR 63.7 16.0 15.0 14.9 N/M N/MSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncPetrochemicals 100.0 Asia 57Europe 27Middle East 15US 1Source: Company, NCBC Research• Business brief: Sipchem, through its subsidiaries, has a wide geographical presencewith Asia accounting 57%, Europe-27%, Middle East-15% and US-1% of total sales.IMC produces close to 1mn tpa of methanol. IDC produces 75,000 tpa of butanediol.Sipchem is constructing an acetyl complex comprising of a carbon monoxide plant,an acetic acid unit and a vinyl acetate monomer facility.• Financials: Sipchem’s revenues increased 11.8% y-o-y to SR1,708.6mn while netincome plunged 9.6% y-o-y to SR536.8mn in 2008 due to fall in demand and pricerealizations during 4Q08. Net margin contracted 746 bps y-o-y to 31.4% in 2008.• Recent developments: Sipchem’s net profit fell 87% y-o-y to SR29.2mn in 1Q-09 dueto demand retreat and fall in prices. In May 2009, the company signed a contract withSaudi Basic Industries Cooperation (SABIC), under which the latter will provideethylene to Sipchem while it will provide carbon monoxide to SABIC. Sipchem plans toset up two plants (polyvinyl acetate and ethylene vinyl acetate) in Jubail at an initial costof SR3bn. In line with this, Sipchem entered into an agreement with ExxonMobil to uselatter’s technology for the production of ethylene vinyl acetate. In February 2009,Sipchem secured loan of SR1.35bn from Saudi Public Investment fund for constructionof the Acetyl complex in Jubail industrial city, which is expected to start in mid-2009.JUNE 2009SAUDI INTERNATIONAL PETROCHEMICAL COMPANY129


PETROCHEMICAL INDUSTRIESRabigh RefiningAlso known asPetro RabighPriceSR29.0Pricing / Valuation as on May 27, 2009Mkt capSR25.4bn ($6,783.4mn)Sh. outstanding876.0mnKey statistics52 week range H/L (SR) 64.5/13.8Avg daily turnover (mn) SR US$3m 126.13 33.6812m 206.69 55.19Raw Beta 6m 1yr1.71 1.24Reuters2380.SEBloombergPETROR APrice perform (%) 1M 3M 12MAbsolute (%) 16 64 (48)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www petrorabigh comValuation multiples2006 2007 2008P/E (x) N/A N/A N/MP/B (x) N/A N/A 1.5P/Sales (x) N/A N/A 2.1Div yield (%) N/A N/A 0.0Rabigh Refining and Petrochemical Co. (Petro Rabigh), established in 2005 atRabigh is a joint venture between Saudi Aramco and Sumitomo Chemical (a Japanbasedfirm). The USD10bn project, has an annual production capacity of 18.4mntonnes of refined petroleum products and 2.4mn tonnes of petrochemical products.Company financials2006* 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn - - 6,543 - -EBITDA SRmn (260) (423) (1,029) N/M -Net Income SRmn (175) (423) (1,256) N/M -Assets SRmn 11,171 26,961 47,911 77.7 -Equity SRmn 2,450 5,953 9,264 55.6 -Total Debt SRmn 6,769 19,444 31,569 62.4 -Cash & Equiv SRmn 2,080 186 1,534 725.0 -EBITDA Mgn % N/M N/M (15.7) - -Net Mgn % N/M N/M (19.2) - -ROE % (7.1) (10.1) (16.5) - -ROA % (1.6) (2.2) (3.4) - -Div Payout % - - - - -EPS SR (0.2) (0.7) (1.5) N/M -BVPS SR 2.8 6.8 10.6 55.6 -Source: Company, NCBC Research* 2006 figures are for 16 months period ending December 31, 2006Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 1.05MSCI Saudi (domestic – mid cap) N/AFree float (%)Free float 18.55Relative share price perf.11,000809,000607,000405,000203,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIPetro Rabigh (RHS)Top 5 shareholders (%)Aramco 37.5Sumitomo Chemical Company 37.5Source: NCBC ResearchSource: Company, NCBC Research• Business brief: Aramco is expected to supply 400,000 barrels of crude oil, 95mncubic feet (mcf) of ethane and about 15,000 barrels of butane on a long-term fixedpricebasis to Petro Rabigh. Sumitomo provides technological and marketingexpertise. The plant is equipped with sophisticated olefin and ethane cracker. Thecompany is targeting Europe and Asia (mainly China) for exports of its end products.• Financials: The Company recorded SR6,543.3mn as revenues in 2008. However, itregistered SR1,256.2mn loss in its bottom line compared to a loss of SR422.6mn in2007. This is due to the decline in demand and prices for the company’s products in4Q-08 and expenses related to its under-construction petrochemical facility.• Recent developments: Petro Rabigh reported a net loss of SR28.7mn in 1Q-09compared to a net loss of SR82.1mn a year ago. In May 2009, the company made itsfirst export shipment of 19,200 metric tons of monoethylene glycol to China. Earlier inApril 2009, the company had announced that its Rabigh complex is in the final stagesfor start up and the ethane cracker and refining facilities have started operations.Moreover, Saudi Aramco and Sumitomo Chemical have signed a MoU for doing afeasibility study for the expansion of this facility, under which an additional 30 mcf/dayof ethane and 3mn tons/annum of naphtha will be used. The contract for theengineering work is likely to be awarded in June 2009.JUNE 2009RABIGH REFINING130


PETROCHEMICAL INDUSTRIESSahara PetrochemicalAlso knownasSPCOPriceSR24.5Pricing / Valuation as on May 27, 2009Mkt capSR4.6bn ($1,226.6mn)Sh. outstanding187.5mnKey statistics52 week range H/L (SR) 49.5/10.4Avg daily turnover (mn) SR US$3m 15.54 4.1512m 19.98 5.33Raw Beta 6m 3yr1.24 1.25Reuters2260.SEBloombergSPC ABPrice perform (%) 1M 3M 12MAbsolute (%) 57 94 (44)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www saharapcc.comValuation multiples2006 2007 2008P/E (x) 27.1 N/M N/MP/B (x) 2.2 4.2 1.3P/Sales (x) N/M N/M N/MDiv yield (%) 0.0 0.0 0.0Sahara Petrochemical Company (SPC) was established in 2004 by Al Zamil Group.SPC develops, owns and operates production facilities through joint ventures withother companies in the petrochemical sector. SPC has been working on two projects– Al Waha Petrochemical Company and Saudi Ethylene and Polyethylene Company.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn - - - - - -EBITDA SRmn (6) (14) (12) (39) NM NMNet Income SRmn 319 165 (5) (41) NM NMAssets SRmn 2,305 2,479 3,048 4,721 54.9 27.0Equity SRmn 2,260 1,983 1,950 1,769 (9.3) (7.8)Total Debt SRmn 0 0 542 2,222 310.3 -Cash & Equiv SRmn 2,003 812 81 453 458.2 (39.1)EBITDA Mgn % N/M N/M N/M N/M - -Net Mgn % N/M N/M N/M N/M - -ROE % 16.6 7.8 (0.3) (2.2) - -ROA % 16.5 6.9 (0.2) (1.1) - -Div Payout % - - - - - -EPS SR 10.6 1.1 (0.0) (0.2) NM NMBVPS SR 75.3 13.2 12.5 9.4 NM NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncBasic Chemical Manufacturing 100.0 Saudi Arabia 100.0Weightage (%)TASI (free float weight) 0.92MSCI Saudi (domestic – mid cap) 5.41Free float (%)Free float 90.00Relative share price perf.11,000609,000407,000205,0003,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISPC (RHS)Top 5 shareholders (%)Al Zamil Group Holding Company 7.5Source: NCBC ResearchSource: Company, NCBC Research• Business brief: Al Waha has a production capacity of 460,000 tonnes per annum(tpa) of propylene, which would serve as an input for production of 450,000 tpa ofpolypropylene. Saudi Ethylene and Polyethylene Co. (SEPC) has a productioncapacity of 1mn tpa ethylene cracker, and 800,000 tpa of polyethylene. Trialoperations at SEPC facility completed in March 2009 and would be followed bycommercial production shortly.• Financials: SPC’s investment income declined 79.8% y-o-y to SR3.4mn in 2008while the operating expenses increased 2.3 times y-o-y to SR41.1mn. Consequently,the company incurred a net loss of SR41.1mn in 2008 as against SR5.1mn loss in2007.• Recent developments: In 1Q-09, SPC recorded a loss of SR14.2mn compared to aloss of SR6.7mn a year ago. In May 2009, the company appointed Mr. Esam Himdyas managing director and Mr. Saleh Bahamdan as chief executive officer. On May 11,2009, Al Waha started trial operations at its petrochemical facility. SEPC completedexperimental operations at its ethylene complex in March 2009. In November 2008,Tasnee and Sahara Olefins Co. (SPC’s subsidiary) signed a contract with Rohm andHaas (USA) for the establishment of an acrylic acid plant with annual productioncapacity of 250,000 tonnes. The plant is expected to come on-stream in 2011.JUNE 2009SAHARA PETROCHEMICAL COMPANY131


PETROCHEMICAL INDUSTRIESYanbu NationalAlso known asYANSABPriceSR27.0Pricing / Valuation as on May 27, 2009Mkt capSR15.2bn ($4,055.4mn)Sh. outstanding562.5mnKey statistics52 week range H/L (SR) 64.5/12.5Avg daily turnover (mn) SR US$3m 41.66 11.1212m 54.27 14.49Raw Beta 6m 3yr1.39 1.20Reuters2290.SEBloombergYANSAB ABPrice perform (%) 1M 3M 12MAbsolute (%) 28 66 (55)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www.yansab com.saValuation multiples2006 2007 2008P/E (x) 99.2 N/M N/MP/B (x) 2.4 5.2 1.5P/Sales (x) N/M N/M N/MDiv yield (%) 0.0 0.0 0.0Yanbu National Petrochemicals Company (Yansab), with the majority stake ownedby Saudi Basic Industries Corporation (55%) was established in 2006 to set-up afour mn tonnes/year petrochemical complex in the Yanbu industrial city.Company financials2006 # 2007* 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn - - - - -EBITDA SRmn (49) (83) (26) N/M -Net Income SRmn 140 110 (26) N/M -Assets SRmn 7,082 15,309 18,677 22.0 -Equity SRmn 5,753 5,723 5,697 (0.4) -Total Debt SRmn - 8,166 11,797 44.5 -Cash & Equiv SRmn 822 1,694 1,033 (39.0) -EBITDA Mgn % - - - - -Net Mgn % - - - - -ROE % 2.4 N/M (0.4) - -ROA % 2.0 N/M (0.2) - -Div Payout % - - - - -EPS SR 0.2 0.2 (0.0) N/M -BVPS SR 10.2 10.2 10.1 (0.4) -Source: Company, NCBC Research* 2007 figures represents the financial performance for 23 months period ending Dec 31, 2007# 2006 figures represents the financial performance for 11 months period ending Dec 31, 2006Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.90MSCI Saudi (domestic – large cap) 2.89Free float (%)Free float 26.51Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)80604020YANSAB (RHS)SABIC 51.0General Organization for Social 9.2Insurance (GOSI)Source: NCBC Research-Source: Company, NCBC Research• Business brief: Once fully operational the approximately SR18bn complex isexpected to produce ethylene (1,300 thousand tonnes/year—KTA), Propylene (400KTA), Polypropylene (400 KTA), Polyethylene—low-density and high-density—(400KTA each), Mono, Di and Tri Ethylene Glycol (770 KTA, total), Benzene (170 KTA),Butene -1 (65 KTA), Butene -2 (50 KTA), Methyl Tertiary Butyl Ether (20 KTA) andBenzene Toluene Xylene (70 KTA). Operations are expected to commence in 2Q-09,with pre-commissioning of several units under-progress.• Financials: As Yansab is in pre-operating stage for the fiscal period underconsideration, all revenues and expenses are non-operational in nature. Thecompany reported net loss of SR25.6mn in 2008 while it reported a net profit ofSR109.9mn for the 23 months period ending December 31, 2007. Although theoperating expenses declined, the absence of any non-operating income led to the fallin bottom line in 2008.• Recent developments: Yansab’s net loss widened to SR8.2mn in 1Q-09 comparedto SR6.6mn a year ago due to higher corporate expenses. The company expectsoperations at its petrochemical complex to start in 2Q-09, according to anannouncement on March 11, 2009. In January 2009, the company informed that theconstruction work has reached final phase, with 93% completion by 2008 end.JUNE 2009YANBU NATIONAL132


PETROCHEMICAL INDUSTRIESAdvanced Polyprop.Alsoknown asAPPCPriceSR24.4Pricing / Valuation as on May 27, 2009Mkt capSR3.4bn ($919.2mn)Sh. outstanding141.4mnKey statistics52 week range H/L (SR) 62.5/12.2Avg daily turnover (mn) SR US$3m 43.03 11.4912m 56.63 15.12Raw Beta 6m 2yr1.41 1.13Reuters2330.SEBloombergAPPC ABPrice perform (%) 1M 3M 12MAbsolute (%) 6 65 (50)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www appc.com.saValuation multiples2006 2007 2008P/E (x) N/M N/M 10.4P/B (x) N/M 4.8 1.3P/Sales (x) N/M N/M 1.5Div yield (%) N/M 0.0 0.0Advanced Polypropylene Company (APPC), based in Dammam, was established in2005 to develop a SR3bn integrated propane dehydrogenation and polypropylenecomplex in Jubail Industrial City. This facility having annual production capacity toproduce 450,000tonnes of polypropylene commenced commercial production in 2008.Company financials2006* 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn - - 1,459 - -EBITDA SRmn 2 (1) 366 N/M -Net Income SRmn 2 2 210 9,615.5 -Assets SRmn 1,815 2,545 3,507 37.8 -Equity SRmn 1,415 1,416 1,617 14.2 -Total Debt SRmn 272 1,070 1,713 60.0 -Cash & Equiv SRmn 361 89 216 143.8 -EBITDA Mgn % N/M N/M 25.1 - -Net Mgn % N/M N/M 14.4 - -ROE % 0.1 0.2 13.9 - -ROA % 0.1 0.1 6.9 - -Div Payout % - - - - -EPS SR 0.0 0.0 1.5 N/M -BVPS SR 10.0 10.0 11.4 14.2 -Source: Company, NCBC Research; 2006 figures are for 15 months period ending December 31, 2006Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.49MSCI Saudi (domestic – mid cap) 4.52Free float (%)Free float 63.11Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)80604020-APPC (RHS)Dar Chemicals 15.9Islamic Development Bank Fund 9.0National Polypropylene Company 7.9[NPPC]Source: Company, NCBC Research• Business brief: APPC has an annual production capacity of 450,000 tonnes ofpolypropylene. Polypropylene is used in several applications such as the manufactureof fabrics, moldings, pipes and furniture. The company has appointed VinmarInternational (Houston), Mitsubishi Corp. and Domo (Gent-Zwijnaarde, Belgium) toofftake the output from this complex. Major part of the production would be shippedvia the ports of Dammam, Jeddah, and Al Jubail.• Financials: APPC commenced commercial operations in August 2008. The companyrecorded revenues of SR1,459.2mn in 2008. It registered a net profit of SR210.1mnin 2008 compared to a non-operational profit of SR2.2mn in 2007.• Recent developments: APPC declared its 1Q-09 results on April 8, 2009. APPCrecorded a net income of SR42.9mn in 1Q-09 compared to a loss of SR48,718 in 1Q-08. APPC’s general meeting on March 02, 2009 approved the change in company'sname to Advanced Petrochemicals Co. In August 2008, APPC started commercialproduction at its new propylene and polypropylene plants with a production capacityof 450,000 tonnes per year of polypropylene.Source: NCBC ResearchJUNE 2009ADVANCED POLYPROPYLENE133


PETROCHEMICAL INDUSTRIESNama Chemicals CoAlsoknown asNAMAPriceSR11.7Pricing / Valuation as on May 27, 2009Mkt capSR1.5bn ($399.8mn)Sh. outstanding128.5mnKey statistics52 week range H/L (SR) 28.8/7.4Avg daily turnover (mn) SR US$3m 63.41 16.9312m 57.94 15.47Raw Beta 6m 3yr1.23 1.27Reuters2210.SEBloombergNAMA ABPrice perform (%) 1M 3M 12MAbsolute (%) 26 40 (53)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www nama com saValuation multiples2006 2007 2008P/E (x) 82.7 72.3 N/MP/B (x) 2.3 2.7 0.7P/Sales (x) 4.6 4.8 1.8Div yield (%) 0.0 0.0 0.0Nama Chemicals Company (NAMA) was established in 1992. The companydevelops, owns, and operates industrial projects within the chemical andpetrochemical sectors. NAMA functions via its affiliates - Arabian Alkali Company(55,000mta capacity) and Jubail Chemical Industries Company (60,000mta capacity).Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 293 395 513 622 21.2 28.6EBITDA SRmn 17 40 50 27 (46.8) 17.1Net Income SRmn 30 22 34 (68) (298.0) (231.4)Assets SRmn 1,087 1,115 1,751 2,545 45.4 32.8Equity SRmn 686 784 922 1,557 69.0 31.4Total Debt SRmn 193 254 696 800 15.0 60.6Cash & Equiv SRmn 172 94 82 487 497.9 41.5EBITDA Mgn % 5.7 10.0 9.8 4.3 - -Net Mgn % 10.2 5.6 6.6 (10.9) - -ROE % 4.4 3.0 4.0 (5.4) - -ROA % 2.9 2.0 2.4 (3.1) - -Div Payout % - - - - - -EPS SR 2.3 0.3 0.4 (0.7) N/M N/MBVPS SR 52.8 11.6 12.0 12.1 N/M N/MSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008Epoxy, Caustic Soda 100.0%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.33MSCI Saudi (domestic)N/AFree float (%)Free float 100.00Relative share price perf.11,000309,000207,000105,0003,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASINAMA (RHS)Top 5 shareholders (%)Ahmed Hamad Al Gosa bi Co. 7.4Source: NCBC ResearchSource: Company, NCBC Research• Business brief: Arabian Alkali is one of the largest caustic soda producers in theMiddle East. JANA produces epoxy resins and markets them under the brand namesof RAZEEN and ARALDITE. NAMA is currently setting up the Hassad PetrochemicalsCompany that will manufacture different types of chemicals to supply both thesubsidiaries.• Financials: In 2008, the company‘s sales increased 21.2% y-o-y to SR621.8mn.However, the company reported a net loss of SR67.5mn in 2008. This was due to anincrease in the cost of goods sold and higher selling, general and administrativeexpenses.• Recent developments: NAMA declared its 1Q-09 result on April 21, 2009, reportinga loss of SR32.4mn in 1Q-09 against a net profit of SR12.3mn a year earlier. OnMarch 4, 2009, the company announced that the experimental operations at itsSR1bn Hassad plant would complete soon. In January 2009, NAMA’s subsidiary,JANA received a SR210mn loan from the Saudi Industrial Development Fund. Theloan amount will be used for the expansion of the epoxy factory in order to double itsproduction capacity to 120,000 tons per annum by end of 2011. In November 2008,the company hiked its capital to SR1,285.2mn from SR765mn through a rights issue.JUNE 2009NAMA CHEMICALS COMPANY134


PETROCHEMICAL INDUSTRIESAlujain CorporationAlso known asAlujainPriceSR19.6Pricing / Valuation as on May 27, 2009Mkt capSR1.4bn ($362.2mn)Sh. outstanding69.2mnKey statistics52 week range H/L (SR) 51.5/9.0Avg daily turnover (mn) SR US$3m 20.97 5.6012m 21.66 5.78Raw Beta 6m 3yr1.33 1.35Reuters2170.SEBloombergALCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 26 93 (60)Market (%) 6 32 (39)Sector (%) 27 59 (52)Website: www alujaincorporation.comValuation multiples2006 2007 2008P/E (x) N/M N/M N/MP/B (x) 2.1 5.1 1.5P/Sales (x) N/M N/M N/MDiv yield (%) 0.0 0.0 0.0Alujain Corporation (ALCO), an industrial investment firm, was established in 1991and promoted by Xenel Industries (one of the oldest conglomerates in theKingdom). The company’s investments include 57.4% stake in NationalPetrochemical Co. (NatPet) and a 93.1% stake in Arab Pesticide Co. (MOBEED).Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn - - - - - -EBITDA SRmn (4) (7) (57) (59) N/M N/MNet Income SRmn 3 0 (40) (65) N/M (367.5)Assets SRmn 702 713 2,747 3,229 17.5 66.1Equity SRmn 691 703 651 515 (20.8) (9.2)Total Debt SRmn - - 1,612 2,123 31.7 -Cash & Equiv SRmn 110 64 226 150 (33.6) 74.1EBITDA Mgn % N/M N/M N/M N/M - -Net Mgn % N/M N/M N/M N/M - -ROE % 0.5 0.1 (5.9) (11.2) - -ROA % 0.5 0.0 (2.3) (2.2) - -Div Payout % - - - - - -EPS SR 0.2 0.0 (0.6) (0.9) N/M N/MBVPS SR 49.9 20.4 9.4 7.5 N/M N/MSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncIndustrial Development 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.26MSCI Saudi (domestic – small cap) 4.42Free float (%)Free float 85.09Relative share price perf.11,000609,000407,000205,0003,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIALCO (RHS)Top 5 shareholders (%)Safra Company 14.9Khalid Abdul Rahman Saleh Al Rajhi 9.9Source: NCBC ResearchSource: NCBC Research• Business brief: ALCO predominantly invests in the Saudi petrochemical, energy,mining and metals sector. The company transferred its Alfasel propylene productionfacility to the Teldene Polypropylene project, promoted by associate NatPet, in May2006. NatPet owns a SR2.3bn propylene-polypropylene plant, with 400,000 tonnesper annum (TPA) capacity. The company also signed contracts with SABIC andNoble Group for the offtake of production.• Financials: Since ALCO was not operational in 2008, the company does not reportany sales revenues. In 2008, ALCO’s income from other sources declined 51.2% y-oyto SR11.0mn. This coupled with an increase in the operating expenses led to a netloss of SR65.1mn in 2008 compared to a loss of SR39.6mn in 2007.• Recent developments: ALCO declared its 1Q-09 results on April 20, 2009, reportinga loss of SR10.8mn in 1Q-09 compared to SR13.1mn loss a year ago. In April 2009,the polypropylene plant owned by NatPet started operations. The plant is currentlyrunning at a utilization rate of 73% and is likely to reach full capacity by end of May2009. In February 2009, ALCO increased its stake in MOBEED to 93.1% from 25%earlier. The company also signed an agreement with Safra Co. to maintain andoperate MOBEED's facilities. The Board of Directors appointed Mr. Maatouk HasanAhmad and Mr. Khalid Abdulrazzak Al Nafisi to the board in 2009.JUNE 2009ALUJAIN CORPORATION135


PETROCHEMICAL INDUSTRIESMethanol ChemicalsAlsoknown asChemanolPriceSR13.8Pricing / Valuation as on May 27, 2009Mkt capSR1.7bn ($442.8mn)Sh. outstanding120.6mnKey statistics52 week range H/L (SR) 16.9/9.5Avg daily turnover (mn) SR US$3m 44.94 12.006m 43.40 11.59Raw Beta 6m 3yr0.96 N/AReuters2001.SEBloombergCHEMANOL ABPrice perform (%) 1M 3M 6MAbsolute (%) 11 23 18Market (%) 6 32 19Sector (%) 27 59 40Website: www chemanol.comValuation multiples2006 2007 2008P/E (x) N/A N/A 35.2P/B (x) N/A N/A 1.0P/Sales (x) N/A N/A 2.4Div yield (%) N/A N/A 0.0Methanol Chemicals Company (Chemanol), established in 1989, is a manufacturerof formaldehyde, methanol and derivatives, hexamine, resins and superplasticizers. The company exports about 83% of its products to more than 50countries including UK, France, Germany, South Africa, USA, Canada, and Japan.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 312 376 461 571 23.7 22.3EBITDA SRmn 65 72 61 73 19.7 3.7Net Income SRmn 40 45 25 38 54.9 (1.3)Assets SRmn 427 957 1,301 2,640 102.9 83.5Equity SRmn 182 653 678 1,390 105.0 97.0Total Debt SRmn 180 235 546 1,149 110.3 85.3Cash & Equiv SRmn 24 185 73 379 417.1 152.8EBITDA Mgn % 21.0 19.1 13.2 12.8 - -Net Mgn % 12.7 11.8 5.4 6.7 - -ROE % 23.8 10.6 3.7 3.7 - -ROA % 10.3 6.4 2.2 1.9 - -Div Payout % - - - - - -EPS SR N/A 1.0 0.4 0.5 N/M N/ABVPS SR N/A 14.5 11.3 11.5 N/M N/ASource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.19MSCI Saudi (domestic)N/AFree float (%)Free float 50.00Relative share price perf.8,0007,0006,0005,0004,0003,000Sep-08 Nov-08 Jan-09 M ar-09 M ay-09TASITop 5 shareholders (%)18141062Chemanol (RHS)Abdullah & Abdul Aziz Kanoo Co. 11.2Zamil Group Holding Co. 11.2Mazen Khalifa Al Ahiq Al Nuaimi & 7.5SonsMohammed Jalal & Sons Co. 5.0Al Mazrooe Holding Co 5.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: Chemanol produces and supplies methanol formaldehyde and itsderivatives for use across different industries such as agricultural, pharmaceutical,paper manufacturing and construction. The company came out with an Initial PublicOffering (IPO) on the Saudi Stock Exchange in August 2008 in order to finance anexpansion plan involving investment of approximately SR2bn. The total productioncapacity of the company is 484,600 tons of methanol formaldehyde, derivatives andother methanol-based products per year. By 2009, Chemanol expects to have totalinstalled capacity of 1mn tons.• Financials: Chemanol’s revenues grew by 23.7% to SR570.7mn in 2008, while netincome rose 54.9% to SR38.2mn. Hence, the company’s net margin has shownimprovement of 130 basis points y-o-y and stood at 6.7% in 2008. Moreover, thecompany’s cash balance increased from SR73.4mn in 2007 to SR379.4mn in 2008;as the company raised capital through issuance of equity shares in August 2008.• Recent developments: Chemanol declared its 1Q-09 results on April 12, 2009. Netincome declined 37.5% y-o-y to SR5.0mn in 1Q-09. In November 2008, Chemanolannounced the appointment of Mr. Khaled Al Rabiah as the company's chiefexecutive officer (CEO). In August 2008, Chemanol announced its IPO of 50%shares, which adds up to 60.3mn shares at the offer price of SR12.0 per share.JUNE 2009METHANOL CHEMICALS COMPANY136


Company Page No. Banking and FinancialsSaudi Cement 138 PetrochemicalsYamama Cement 139 CementSouthern Cement 140 RetailQassim Cement 141 Energy and UtilitiesYanbu Cement 142 Agriculture and FoodEastern Cement 143 Telecom and ITArabian Cement 144 InsuranceTabuk Cement 145 Multi InvestmentIndustrial InvestmentBuilding and ConstructionReal EstateTransportationMedia and PublishingHotels and Tourism


CEMENTSaudi CementAlso known asSCCPriceSR58.5Pricing / Valuation as on May 27, 2009Mkt capSR6.0bn ($1,593.3mn)Sh. outstanding102.0 mnKey statistics52 week range H/L (SR) 129.5/45.5Avg daily turnover (mn) SR US$3m 6.72 1.7912m 7.05 1.88Raw Beta 6m 3yr1.09 0. 90Reuters3030.SEBloombergSACCO ABPrice perform (%) 1M 3M 12MAbsolute (%) (18) 17 (54)Market (%) 6 32 (39)Sector (%) (6) 19 (44)Website: www saudicement com saValuation multiples2006 2007 2008P/E (x) 15.8 18.9 9.3P/B (x) 4.1 4.7 2.0P/Sales (x) 8.4 9.5 4.6Div yield (%) 3.7 3.9 6.2Saudi Cement Company (SCC) was established in 1955 to produce and trade incement products. SCC runs two plants–at Hofuf and Ain Dar– with an annualinstalled capacity of 6.0mn tonnes of cement at the beginning of 2008. In the sameyear, the company produced 5.4mn tonnes of cement and 6.4 mn tonnes of clinker.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,116 1,200 1,362 1,260 (7.5) 4.1EBITDA SRmn 604 745 789 713 (9.7) 5.7Net Income SRmn 484 638 686 621 (9.5) 8.7Assets SRmn 2,211 2,705 3,861 4,540 17.6 27.1Equity SRmn 1,970 2,422 2,739 2,848 4.0 13.1Total Debt SRmn - - 695 1,208 73.9 NMCash & Equiv SRmn 290 75 272 31 (88.4) (52.3)EBITDA Mgn % 54.1 62.1 58.0 56.6 - -Net Mgn % 43.4 53.1 50.4 49.3 - -ROE % 24.2 29.0 26.6 22.2 - -ROA % 22.8 26.0 20.9 14.8 - -Div Payout % 75.8 57.6 74.3 57.4 - -EPS SR 23.7 6.3 6.7 6.1 (9.5) -BVPS SR 96.6 23.7 26.9 27.9 4.0 -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncCement Manufacturing 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 1.15MSCI Saudi (domestic – mid cap) 12.85Free float (%)Free float 86.42Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)15010050Saudi Cement (RHS)General Organization for Social 8.5Insurance (GOSI)Khaled Abdul Rahman Saleh Al Rajhi 7.9Public Pension Authority (PPA) 5.0Source: NCBC Research-Source: Company NCBC Research• Business brief: SCC has been losing ground in the domestic market. This isprimarily due to the rising competition in Central Saudi Arabia and the company’sfocus on the export markets. Consequently, SCC is not the largest cement sellingcompany in Saudi Arabia despite being the largest cement producer in the country. In2008, the company’s share in the country’s total production has fallen to 16.3% from17.4% in the previous year. SCC also has a 36% equity stake in United CementCompany, Bahrain, and holds another 33.3% stake in Cement Product Industry Co.Ltd., which meets the cement packaging requirements of SCC and its partnercompanies.• Financials: SCC’s revenues decreased 7.5% y-o-y during 2008 to SR1,259.6 mn.This could be mainly attributed to the ban on cement exports, implemented in SaudiArabia during June 2008. EBITDA margin stood at 56.6% in 2008, a 136 basis pointsdecline y-o-y. The company’s net margin has also slid marginally to 49.3% in 2008from 50.4% in the previous fiscal year.• Recent developments: SCC’s Q109 net profit declined 12.3% y-o-y to SR152 mn asthe government had introduced a ban on cement exports to ease supply bottlenecks.In April 2009, SCC announced the commencement of commercial operations of twonew production lines with a combined annual output of 6.6 mn tons.JUNE 2009SAUDI CEMENT COMPANY138


PricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR39.3SR5.3bn ($1,416.7mn)135.0mn52 week range H/L (SR) 76.8/28.1Avg daily turnover (mn) SR US$3m 9.21 2.4612m 15.50 4.14Raw Beta 6m 3yr0.70 0.89ReutersBloomberg3020.SEYACCO ABPrice perform (%) 1M 3M 12MAbsolute (%) (5) 20 (48)Market (%) 6 32 (39)Sector (%) (6) 19 (44)Website www.yamamacement com saValuation multiples2006 2007 2008P/E (x) 17.6 17.4 7.5P/B (x) 5.5 5.4 1.6P/Sales (x) 11.2 10.7 4.1Div yield (%) 2.5 3.2 5.9Weightage (%)TASI (free float weight) 1.04MSCI Saudi (domestic – mid cap) 11.23Free float (%)Free float 87.65Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)80604020Yamamah Cement (RHS)Prince Sultan Mohammed Saud 9.7AlKabeer Al SaudGeneral Organization for Social 7.1Insurance (GOSI)Public Pension Authority (PPA) 5.0-CEMENTYamama Saudi Cem.Alsoknown asYSCCYamama Saudi Cement Company (YSCC) was founded in Riyadh in 1961 by LatePrince Mohammad Bin Saud Al-Kabir. YSCC commenced production with a meagercapacity of 0.9mn tonnes pa. However, in 2008, the company’s cement sales stood atover 4.0mn tonnes in the domestic market and 0.3mn tonnes in the export market.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 791 950 1,186 1,123 (5.3) 12.4EBITDA SRmn 528 646 826 809 (2.1) 15.3Net Income SRmn 501 601 731 611 (16.5) 6.8Assets SRmn 2,706 3,128 3,604 3,589 (0.4) 9.9Equity SRmn 1,576 1,939 2,365 2,841 20.1 21.7Total Debt SRmn 710 761 581 563 (3.2) (7.5)Cash & Equiv SRmn 565 260 441 643 45.9 4.4EBITDA Mgn % 66.8 68.0 69.7 72.0 - -Net Mgn % 63.3 63.3 61.7 54.4 - -ROE % 34.3 34.2 34.0 23.5 - -ROA % 13.6 20.6 21.7 17.0 - -Div Payout % 53.9 44.9 55.4 44.2 - -EPS SR 55.7 4.5 5.4 4.5 (16.5) -BVPS SR 175.2 16.4 17.5 21.0 20.1 -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncCement Production 100.0 100.0 Saudi Arabia 100.0 100.0Source: Company, NCBC Research• Business brief: YSCC’s cement production accounted for 13.3% of the total cementproduction in Saudi Arabia for 2008. This was a moderate decline from 15.4%reported in 2007. The company also holds stake in companies such as SudaniKuwaiti Holding Co (6.67%), Kafaa for Steel Company (6.00%), Industrialization andEnergy Services Co (5.62%), and Arabian Shield Cooperative Insurance Co (5.00%).• Financials: Company’s sales declined 5.3% y-o-y to SR1,122.9 mn. YSCC’s EBITDAmargin, which stood at 72.0% in 2008, has witnessed improvement as compared toFY05. However, the net margin has been declining over the past 3 years, and stoodat 54.4% in 2008.• Recent developments: In April 2009, YSCC announced a 36% y-o-y fall in Q109 netprofit to SR125.9mn mainly due to lower sales volume during the period as well as aperiodic maintenance on some of its main production lines. In August 2008, YamamaCement announced that it is likely to become a founding partner in Hail Cement Co.,a joint stock company under establishment. In late 2008, the company acquired 5%stake in Hail Cement Company for SR60 mn.Source: NCBC ResearchJUNE 2009YAMAMA SAUDI CEMENT139


CEMENTSouthern CementAlso known asSPCCPriceSR60.0Pricing / Valuation as on May 27, 2009Mkt capSR8.4bn ($2,243.0mn)Sh. outstanding140.0mnKey statistics52 week range H/L (SR) 84.5/45.1Avg daily turnover (mn) SR US$3m 4.56 1.2212m 5.93 1.58Raw Beta 6m 3yr0.40 0.65Reuters3050.SEBloombergSOCCO ABPrice perform (%) 1M 3M 12MAbsolute (%) (5) 15 (27)Market (%) 6 32 (39)Sector (%) (6) 19 (44)Website: www spcc com.saValuation multiples2006 2007 2008P/E (x) 16.4 17.4 8.2P/B (x) 4.7 5.2 2.8P/Sales (x) 10.0 10.6 5.0Div yield (%) 5.5 5.2 10.7Southern Province Cement Company (SPCC) is one of the top three cementproducers in KSA. Established in 1978, the company operates three productionfacilities in Jizan, Bisha and Tihama with a combined capacity to produce over 6mntonnes of cement each year. In 2008, SPCC sold nearly 4.9mn tonnes of cement.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,024 1,026 1,155 1,298 12.4 8.2EBITDA SRmn 690 688 769 864 12.4 7.8Net Income SRmn 615 624 704 791 12.4 8.8Assets SRmn 2,230 2,491 2,648 2,749 3.8 7.2Equity SRmn 1,973 2,201 2,345 2,360 0.6 6.2Total Debt SRmn - - - - - -Cash & Equiv SRmn 678 27 33 64 95.7 (54.5)EBITDA Mgn % 67.4 67.0 66.6 66.6 - -Net Mgn % 60.0 60.8 60.9 60.9 - -ROE % 31.8 29.9 31.0 33.6 - -ROA % 28.4 26.4 27.4 29.3 - -Div Payout % 387.3 89.7 89.5 88.5 - -EPS SR 4.4 4.5 5.0 5.7 12.4 8.8BVPS SR 14.1 15.7 16.7 16.9 0.6 6.2Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncCement Production 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.85MSCI Saudi (domestic – mid cap) 7.59Free float (%)Free float 45.37Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10080604020-Southern Cement (RHS)Public Investment Fund 37.4General Organization for Social 13.0Insurance (GOSI)Source: Company, NCBC Research• Business brief: SPCC has been able to maintain its domestic market share in 2008despite the strengthening competition. In terms of sales volumes, the company held15.5% share in the domestic cement market, slightly lower than 2007. The companyholds 5.62% stake in Industrialization and Energy Services Company.• Financials: SPCC’s cement sales volumes for FY08 increased by 6.7% whichcaused 12.4% y-o-y rise in revenues to SR1,297.9 mn. EBITDA margin rose to 66.6%in 2008, thus remaining at the same level as in 2007. Net margin has remainedconsistent at almost nearly 61% in the past three fiscal years.• Recent developments: In April 2009, SPCC announced a 15% y-o-y decline inQ109 net profits to SR200.2mn. Capital Market Authority (CMA) fined the company inDecember 2008 because it disclosed their nine-month and semi-annual results ofFY08 before submitting them for review. In the recent past, SPCC completed capacityexpansions at its plants. In 2007, the company stated that its new Tihama Cementfactory commenced operations with a daily production capacity of 5,000 tonnes ofclinker.Source: NCBC ResearchJUNE 2009SOUTHERN CEMENT140


CEMENTQassim CementAlso known asQCCPriceSR115.3Pricing / Valuation as on May 27, 2009Mkt capSR5.2bn ($1,384.8mn)Sh. outstanding45.0mnKey statistics52 week range H/L (SR) 188.3/73.0Avg daily turnover (mn) SR US$3m 11.54 3.0812m 13.74 3.67Raw Beta 6m 3yr0.78 1.01Reuters3040.SEBloombergQACCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 2 41 (38)Market (%) 6 32 (39)Sector (%) (6) 19 (44)Website: www qcc com.saValuation multiples2006 2007 2008P/E (x) 22.1 15.1 7.0P/B (x) 5.4 5.3 2.1P/Sales (x) 12.8 9.6 4.4Div yield (%) 3.0 3.5 9.9Qassim Cement Company (QCC) was founded in 1976 in Buraydah, which lies in thecentral region of KSA, 330 km northwest of Riyadh. Commercial production startedin 1981 with the opening of a 2,000 tonnes per day clinker facility. In 2008, QCCproduced 3.22 mn tonnes of cement and 3.38 mn tonnes of clinker.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 494 543 847 820 (3.2) 18.4EBITDA SRmn 329 365 609 597 (1.9) 22.0Net Income SRmn 282 316 540 517 (4.4) 22.4Assets SRmn 1,631 1,755 2,059 2,270 10.2 11.7Equity SRmn 1,188 1,295 1,523 1,724 13.1 13.2Total Debt SRmn 219 219 242 244 0.5 3.6Cash & Equiv SRmn 196 224 207 336 62.5 19.7EBITDA Mgn % 66.7 67.1 71.9 72.8 - -Net Mgn % 57.0 58.1 63.8 63.0 - -ROE % 24.5 25.4 38.3 31.8 - -ROA % 20.6 18.6 28.3 23.9 - -Div Payout % 73.5 65.6 52.5 69.6 - -EPS SR 31.3 7.0 12.0 11.5 (4.4) -BVPS SR 132.0 28.8 33.9 38.3 13.1 -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncCement Production 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.63MSCI Saudi (domestic – mid cap) 7.02Free float (%)Free float 53.94Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)20015010050Qassim Cement (RHS)Public Investment Fund 23.3General Organization for Social 17.5Insurance (GOSI)Public Pension Authority (PPA) 5.0-Source: Company, NCBC ResearchBusiness brief: QCC has held a steady share in the domestic cement market for manyyears. In 2008, the company accounted for 10% of the total cement sales in the Kingdomfrom 9.1% in 2005. Of late, QCC had started exporting some of its products to theneighboring countries. However, the ban on cement exports, implemented in 2008, islikely to impact company’s export revenuesFinancials: In 2008, the company’s sales decreased 3.2% y-o-y to SR 820.2 mn in linewith the sluggish revenue outlook in the industry. Company’s’ total sale volumes fell 7.6%y-o-y to 3.2mn tonnes in 2008. Net income margin declined by 80 basis points to 63% y-oydue to poor sales performanceRecent developments: In April 2009, QCC announced a 5.4% y-o-y decline in Q109 netprofits to SR151.5mn mainly due to decline in the cement prices. QCC’s proposal ofbuilding a new gypsum plant in the Al Asyah area was rejected by Al Asyah Municipality inSeptember 2007. The council had voted unanimously against granting the license as theplant is too close to residential area and could cause health problemsSource: NCBC ResearchJUNE 2009QASSIM CEMENT COMPANY141


CEMENTYanbu CementAlso known asYCCPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR49.0SR5.1bn ($1,373.8mn)105.0mn52 week range H/L (SR) 83.3/34.2Avg daily turnover (mn) SR US$3m 7.17 1.9112m 6.22 1.66Raw Beta 6m 3yr0.92 0.79ReutersBloomberg3060.SEYNCCO ABPrice perform (%) 1M 3M 12MAbsolute (%) (0) 3 (40)Market (%) 6 32 (39)Sector (%) (6) 19 (44)Website: www.yanbucement.comValuation multiples2006 2007 2008P/E (x) 14.8 15.0 7.3P/B (x) 3.6 4.3 1.7P/Sales (x) 9.0 8.5 3.7Div yield (%) 6.2 5.3 10.3Weightage (%)TASI (free float weight) 0.61MSCI Saudi (domestic – mid cap) 6.96Free float (%)Free float 52.62Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10080604020-Yanbu Cement (RHS)Sulaiman Abdul Aziz Saleh Al Rajhi 23.7General Organization for Social 11.7Insurance (GOSI)Public Investment Fund 10.0Abdullah Abdul Aziz Saleh Al Rajhi 5.8Source: NCBC ResearchJeddah-based Yanbu Cement Company (YCC) was established in 1977 through aplant with an initial production capacity of 3,000 tonnes of clinker per day at RasBaridi near Yanbu on the west coast of Saudi Arabia. The company produced 4.3and 3.6 mn tonnes of cement and clinker respectively in 2008.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 779 843 1,171 1,094 (6.6) 12.0EBITDA SRmn 548 602 776 680 (12.4) 7.4Net Income SRmn 454 512 661 560 (15.3) 7.3Assets SRmn 2,243 2,250 2,563 2,600 1.4 5.0Equity SRmn 1,942 2,085 2,324 2,356 1.4 6.6Total Debt SRmn 114 15 19 14 (25.8) (50.6)Cash & Equiv SRmn 89 43 38 132 251.9 14.3EBITDA Mgn % 70.4 71.4 66.3 62.2 - -Net Mgn % 58.2 60.7 56.5 51.2 - -ROE % 22.9 25.4 30.0 23.9 - -ROA % 20.8 22.8 27.5 21.7 - -Div Payout % 92.6 92.2 79.5 75.0 - -EPS SR 21.6 4.9 6.3 5.3 (15.2) -BVPS SR 18.5 19.9 22.1 22.4 1.4 -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncCement Manufacturing 100.0 100.0 Saudi Arabia 100.0 100.0Source: Company, NCBC Research• Business brief: YCC is engaged in the production and marketing of cement and itsderivatives. The company has been losing its position in the domestic cementmarket—it was the largest seller of cement in Saudi Arabia during 2003 and 2004.The Company’s market share, (in terms of sales volumes), in the domestic markethas slid to 14.4% in 2008 from 17.3% in 2007. YCC also has a subsidiary (Yanbu AlShuaiba Paper Products) that produces paper bags for the retail sales of cement.• Financials: Company’s cement sales declined 6.6% y-o-y to SR1,093.5 mn in 2008.This was mainly due to 7.6% y-o-y decline in the sales volumes to 4.3 mn tonnes.Consequently, EBITDA margin declined by 410 basis points to reach 62.2% in 2008.• Recent developments: In April 2009, YCC announced a 10% y-o-y decline in itsQ109 net profits to SR151.8mn mainly due to a decline in sales during the period. InJuly 2008, the company announced the expansion of clinker capacity by 3 mn ton onRed Sea coast with a total cost of SR1.7 bn ($453.3 mn). YCC signed a contractwith Sinoma of China for setting up the cement plant within 30 months. YCC hasalso entered into a contract with M/s Pillard of Germany to upgrade the burning andstorage systems of some of its old kilns.JUNE 2009YANBU CEMENT COMPANY142


PricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR45.8SR3.9bn ($1,051.7mn)86.0 mn52 week range H/L (SR) 85.0/37.8Avg daily turnover (mn) SR US$3m 5.63 1.5012m 7.17 1.92Raw Beta 6m 3yr0.42 0.68ReutersBloomberg3080.SEEACCO ABPrice perform (%) 1M 3M 12MAbsolute (%) (3) 12 (45)Market (%) 6 32 (39)Sector (%) (6) 19 (44)Website: www.eastern-cement.com.saValuation multiples2006 2007 2008P/E (x) 13.4 14.1 8.0P/B (x) 3.3 3.6 1.8P/Sales (x) 7.9 8.3 4.3Div yield (%) 5.7 6.7 7.4Weightage (%)TASI (free float weight) 0.60MSCI Saudi (domestic – small cap) 6.54Free float (%)Free float 68.06Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10080604020-Eastern Cement (RHS)Public Pension Authority (PPA) 10.6Public Investment Fund 10.0General Organization for Social 10.0Insurance (GOSI)CEMENTEastern CementAlso known asEPCCEastern Cement Co. (EPCC) was established in 1982 with a capacity of 7,000 tonnesof clinker per day at Khursaniyah (Dammam). EPCC expanded its plant capacity byadding new production lines, producing as much as 3.1mn tonnes of cement in2008. EPCC has been regularly exporting cement to neighboring countries.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 552 773 924 799 (13.5) 13.1EBITDA SRmn 341 502 600 511 (14.8) 14.4Net Income SRmn 299 456 541 429 (20.7) 12.8Assets SRmn 2,000 2,215 2,496 2,201 (11.8) 3.2Equity SRmn 1,695 1,833 2,114 1,875 (11.3) 3.4Total Debt SRmn 166 202 185 155 (16.2) (2.3)Cash & Equiv SRmn 312 602 628 253 (59.8) (6.8)EBITDA Mgn % 61.8 65.0 64.9 63.9 - -Net Mgn % 54.2 59.0 58.6 53.7 - -ROE % 18.9 25.8 27.4 21.5 - -ROA % 16.7 21.6 23.0 18.3 - -Div Payout % 21.6 77.0 95.3 59.4 - -EPS SR 23.2 5.2 6.3 5.0 (20.7) -BVPS SR 131.4 21.3 24.6 21.8 (11.3) -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008Source: Company, NCBC Research%Rev % Net Inc Breakup %Rev % Net IncSaudi Arabia 81 NARest of World 19 NA• Business brief: In 2008, the company held 8.5% market share (in terms of salesvolumes) in the Saudi Arabian cement market as compared to 8.8% in 2007. Thedecrease in production declined company sales in 2008—export volumes almosthalved to 0.56 mn tones. However, domestic sales volumes increased 7.5% to 2.5mn tonnes. EPCC owns 50% stake in Brainsa, 30% stake in Arabian Yemeni CementCompany, Yemen, and 5.4% stake in Industrialization and Energy ServicesCompany.• Financials: Revenues for FY08 fell by 13.5% y-o-y to SR798.8 mn. The net profit forFY 08 declined by 20.7% y-o-y to SR429.3 mn. Fall in sales could be mainly due toexport ban implemented in 2008. Accordingly, EBITDA margin fell by 98 bps to 63.9%in FY08• Recent developments: In April 2009, EPCC announced a 37% y-o-y decline inQ109 net profits to SR97mn. In July 2007, a unit of the company, Arabian YemeniCement Company, signed an agreement for a $125mn loan with the IMF for installingan electricity station and other facilities at a plant in eastern Yemen.Source: NCBC ResearchJUNE 2009EASTERN PROVINCE CEMENT CO.143


PriceSR46.5Pricing / Valuation as on May 27, 2009Mkt capSR3.7bn ($993.3mn)Sh. outstanding80.0mnKey statistics52 week range H/L (SR) 83.3/29.2Avg daily turnover (mn) SR US$3m 5.10 1.3612m 8.64 2.31Raw Beta 6m 3yr0.70 0.79Reuters3010.SEBloombergARCCO ABPrice perform (%) 1M 3M 12MAbsolute (%) (1) 37 (43)Market (%) 6 32 (39)Sector (%) (6) 19 (44)Website www.arabiacement.comValuation multiples2006 2007 2008P/E (x) 14.5 19.6 7.7P/B (x) 2.9 4.2 1.1P/Sales (x) 6.5 10.6 2.7Div yield (%) 5.0 3.6 9.7CEMENTArabian CementAlso known asArabian CementArabian Cement Company (ACC) was the first company to start cement productionin Saudi Arabia (1959). ACC mainly produces portland cement, Portland pozzolancement, sulfate-resistant cement and ready mix concrete. ACC reported productionof 2.7 mn tonnes of cement and 2.4 mn tonnes of clinker in 2008.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 687 748 722 917 27.1 10.1EBITDA SRmn 397 421 436 400 (8.2) 0.3Net Income SRmn 331 334 392 322 (18.0) (1.0)Assets SRmn 1,751 1,810 2,366 3,647 54.2 27.7Equity SRmn 1,630 1,647 1,841 2,236 21.5 11.1Total Debt SRmn - - 282 1,060 275.5 NMCash & Equiv SRmn 57 1 117 451 287.1 99.7EBITDA Mgn % 57.7 56.3 60.4 43.6 - -Net Mgn % 48.1 44.6 54.3 35.0 - -ROE % 21.7 20.4 22.5 15.8 - -ROA % 19.9 18.7 18.8 10.7 - -Div Payout % 72.5 71.9 71.4 75.0 - -EPS SR 27.6 5.6 5.6 4.0 (28.2) -BVPS SR 135.8 27.5 26.3 27.9 6.3 -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncCement Production 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.59MSCI Saudi (domestic – mid cap) 7.29Free float (%)Free float 71.15Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10050Arab Cement (RHS)Sulaiman Abdul Aziz Saleh Al Rajhi 11.8National Commercial Bank (NCB) 11.3Abdul Aziz Abdullah Sulaiman Al 7.1SulaimanAbdullah Abdul Aziz Saleh Al Rajhi 5.7Public Pension Authority (PPA) 5.1Source: NCBC Research-Source: Company, NCBC Research• Business brief: ACC, the oldest cement company in the Kingdom, produced 8.3% ofthe total cement production in Saudi Arabia in 2008, 100 basis points lower than thecontribution reported in 2007. The company has a cooperation agreement withItalcementi to establish a cement plant in Labuna, in western Saudi Arabia by 2010.ACC also has operations in Bahrain and Jordan through its subsidiaries.• Financials: ACC’s revenues increased 27.1% y-o-y to SR 917.3 mn in FY 08.However, its EBITDA margin declined considerably to 43.6% in FY 08, as comparedto 60.4% in FY 07. Net margin declined to 35.0% in FY 08 from 54.3% in FY 07, whilenet income declined 18.0% y-o-y to SR 321.5 mn in FY 08.• Recent developments: In May 2009, ACC announced plans to launch its first plantoutside Saudi Arabia, to be based in Jordan, with an annual production capacity of 2mn tonnes by 1Q-10. In April 2009, the company announced its net profit for 1Q-09,which declined 10% y-o-y to SR103.8mn. In January 2008, the company raisedSR500mn through a right issue that increased the company’s capital to SR800mn.The proceeds from the issue would be utilized to finance the company’s capacityexpansion in Rabigh plant and facilitate investments in greenfield projects in SaudiArabia and Jordan. ACC plans to invest $900 mn in projects, which is expected tomore than double its annual production capacity to 7mn tonnes by 2010.JUNE 2009ARABIAN CEMENT COMPANY144


CEMENTTabuk CementAlso known asTCCPriceSR22.0Pricing / Valuation as on May 27, 2009Mkt capSR2.0bn ($528.7mn)Sh. outstanding90.0 mnKey statistics52 week range H/L (SR) 38.3/16.3Avg daily turnover (mn) SR US$3m 6.40 1.7112m 5.08 1.36Raw Beta 6m 3yr0.60 0.85Reuters3090.SEBloombergTACCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 0 17 (41)Market (%) 6 32 (39)Sector (%) (6) 19 (44)Website: www tcc-sa.comValuation multiples2006 2007 2008P/E (x) 13.4 17.2 11.4P/B (x) 3.5 3.7 1.7P/Sales (x) 7.6 11.1 6.1Div yield (%) 0.0 5.9 7.6Weightage (%)TASI (free float weight) 0.42MSCI Saudi (domestic – small cap) 4.13Free float (%)Free float 94.69Relative share price perf.11,000409,000307,000205,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITabuk Cement (RHS)Founded in 1994, Tabuk Cement Company (TCC) is the smallest cement company inKSA in terms of market capitalization. In 2008, the company produced 1.1mn tonnesof cement at its plant located in the north-west region of the country. TCC’s strategiclocation enables it to cater to the demand for cement in the northern regions.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 304 380 341 291 (14.7) (1.5)EBITDA SRmn 219 276 263 196 (25.5) (3.7)Net Income SRmn 154 218 220 157 (28.9) 0.5Assets SRmn 1,035 1,154 1,366 1,226 (10.3) 5.8Equity SRmn 824 838 1,031 1,052 2.0 8.4Total Debt SRmn - - - - - -Cash & Equiv SRmn 9 10 3 2 - -EBITDA Mgn % 72.2 72.7 77.2 67.5 - -Net Mgn % 50.8 57.2 64.6 53.9 - -ROE % 18.9 26.2 23.6 15.1 - -ROA % 14.4 19.9 17.5 12.1 - -Div Payout % 90.4 0.6 102.0 86.1 - -EPS SR 11.1 3.1 2.5 1.7 (28.9) -BVPS SR 58.9 12.0 11.5 11.7 2.0 -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncSaudi Arabia 100.0 100.0Source: Company, NCBC Research• Business brief: TCC held 3.9% market share of the domestic cement market in2008, (in terms of sales volumes), a decrease from 5.1% in 2007. The company hasa 3.37% stake in Industrialization & Energy Services Company, a support servicesand product manufacturing company catering to the energy sector.• Financials: Sales fell 14.7% y-o-y to SR290.9 mn in 2008. This could be ascribed toa 15.1% y-o-y decline in the sales volumes to 1.2 mn tonnes. TCC reported EBITDAmargin of 67.5% in 2008, a 971 basis points decline over the previous year. Declinedsales and higher expenses associated with revamping of the production line led to afall in the bottom-line. Net income fell 28.9% y-o-y to SR156.8 mn in 2008.Consequently, company’s net margin stood at 53.9% in 2008 from 64.6% in 2007.Top 5 shareholders (%)Khaled Saleh Abdul Rahman AlShethriSource: NCBC Research6.7• Recent developments: In April 2009, TCC announced a 33.8% decline in net profitsto SR33.5mn driven by a decline in sales as well as cement prices during the period.In February 2007, the company announced plans to construct a new production linewith a daily capacity of 5,000 tonnes. On February 11, 2007, the Capital MarketAuthority agreed to increase TCC’s capital from SR700 mn to SR900 mn by issuingbonus shares.JUNE 2009TABUK CEMENT145


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Company Page No. Banking and FinancialsJarir Marketing 148 PetrochemicalsFawaz Abdulaziz Alhokair 149 CementAldrees Petroleum 150 RetailSaudi Automotive 151 Energy and UtilitiesAhmed H Fitaihi Company 152 Agriculture and FoodAbdullah Al-Othaim 153 Telecom and ITNational Agriculture 154 InsuranceAlkhaleej Training 155 Multi InvestmentIndustrial InvestmentBuilding and ConstructionReal EstateTransportationMedia and PublishingHotels and Tourism


RETAILJarir Marketing CoAlso known asJARIRPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR177.3SR5.3bn ($1,419.9mn)30.0mn52 week range H/L (SR) 205.0/135.0Avg daily turnover (mn) SR US$3m 10.79 2.8812m 10.32 2.76Raw Beta 6m 3yr0.51 0.56ReutersBloomberg4190.SEJARIR ABPrice perform (%) 1M 3M 12MAbsolute (%) 8 15 (4)Market (%) 6 32 (39)Sector (%) 9 20 (16)Website: www jarirbookdtore.comValuation multiples2006 2007 2008P/E (x) 18.2 17.1 15.5P/B (x) 7.0 7.8 7.5P/Sales (x) 2.9 2.7 2.0Div yield (%) 2.7 5.1 5.2Weightage (%)TASI (free float weight) 1.04MSCI Saudi (domestic) -Free float (%)Free float 87.33Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Jarir (RHS)250200Jarir Commercial Investment Co. 12.0Mohd Abdul Rahman Nasser Al Aqeel 9.0Nasser Abdulrahman Nasser Al Aqeel 9.0Abdullah Abdulrahman Nasser Al 9.0AqeelAbdul Karim Abdul Rahman Nasser Al 9.0AqeelSource: NCBC Research15010050-Jarir Marketing Company (Jarir) was established in Riyadh in 1979. Jarir is engagedin the retail and wholesale trading of office & school supplies, infotainmentequipment, books, etc. Jarir is also involved in the acquisition of land andresidential & commercial buildings.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,210 1,505 1,741 2,520 44.7 27.7EBITDA SRmn 188 261 289 368 27.4 25.0Net Income SRmn 176 243 276 333 20.5 23.6Assets SRmn 746 843 1,069 1,163 8.8 16.0Equity SRmn 510 633 609 687 12.8 10.5Total Debt SRmn 62 1 190 192 1.1 45.7Cash & Equiv SRmn 32 33 18 24 32.4 (8.5)EBITDA Mgn % 15.5 17.3 16.6 14.6 - -Net Mgn % 14.6 16.2 15.9 13.2 - -ROE % 41.8 42.6 44.5 51.4 - -ROA % 25.6 30.6 28.9 29.8 - -Div Payout % 59.9 49.3 86.9 81.1 - -EPS SR 29.4 8.1 9.2 11.1 20.4 (27.7)BVPS SR 84.9 21.1 20.3 22.9 12.7 (35.4)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncStationery Retail 87 Saudi Arabia 87Stationery Wholesale 13 Rest of Middle East 13Source: Company, NCBC Research• Product profile: Jarir’s business activities are divided into four broad segments:School Supplies; Office Supplies; Computer Accessories and EntertainmentProducts; Books. Jarir’s fully owned subsidiaries include Jarir Egypt Financial LeasingCo., United Bookstore (UAE), Jarir Trading Co. (UAE), United Company for OfficeSupplies and Stationeries (Qatar), and Jarir Bookstore (Kuwait).• Financials: Jarir’s revenues grew at a CAGR of 27.7% during 2005-08, and reporteda robust growth of 44.7% y-o-y in 2008. The company’s EBITDA increased 27.4% y-o-y in 2008. However, growth in cost of sales and operating expenses outpaced thegrowth in revenues during the year, leading to decline in EBITDA margins to 14.6% in2008. The company’s net income in 2008 increased 20.5% y-o-y to SR332.8mn.• Recent developments: In May 2009, the co. increased its capital from SR300mn toSR400mn through issue of four bonus shares for every three shares held. In April2009, the co. reported 10.0% y-o-y rise in the Q1 FY09 net income to SR107mn. InFebruary 2009, Jarir announced opening of a new bookstore in Riyadh. In bothSeptember & December 2008, Jarir launched a new bookstore in Dhahran (KSA). InSeptember 2008, Jarir entered into a partnership with Western Digital Corporation forretailing the latter’s portable storage devices in Saudi. In July 2008, the companyreceived the award for the most transparent co. in the BMG’s Transparency Award.JUNE 2009JARIR MARKETING CO148


RETAILFawaz Abdulaziz AlhokairPriceSR29.2Pricing / Valuation as May 27, 2009Mkt capSR2.0bn ($545.8mn)Sh. outstanding70.0mnKey statistics52 week range H/L (SR) 51.0/21.3Avg daily turnover (mn) SR US$3m 22.99 6.1412m 25.51 6.81Raw Beta 6m 2yr1.03 0.98Reuters4240.SEBloombergALHOKAIR ABPrice perform (%) 1M 3M 12MAbsolute (%) 16 16 (38)Market (%) 6 32 (39)Sector (%) 9 20 (16)Website: www alhokair.com.saValuation multiples2007 2008 2009P/E (x) 16.2 18.9 8.0P/B (x) 5.2 4.2 1.9P/Sales (x) 2.7 2.4 0.9Div yield (%) 0.0 5.1 7.5Fawaz Abdulaziz AlHokair Company (AlHokair), established in 1990, is engaged inretail trading and real estate activities. AlHokair has also diversified into food &entertainment, furniture, financial services, telecom, fitness & healthcare, andautomotive sectors.Company financials*2006 2007 2008 2009YoY(%)CAGR(%)(06-09)Net Revenues SRmn 1,294 1,481 1,584 1,888 19.2 13.4EBITDA SRmn 305 287 254 234 (8.0) (8.5)Net Income SRmn 246 247 201 202 0.5 (6.3)Assets SRmn 759 963 1,233 1,590 28.9 28.0Equity SRmn 527 774 905 863 (4.7) 17.9Total Debt SRmn 7 - 102 370 264.1 281.4Cash & Equiv SRmn 13 66 28 24 (12.2) 24.1EBITDA Mgn % 23.6 19.3 16.1 12.4 - -Net Mgn % 19.0 16.7 12.7 10.7 - -ROE % 52.4 38.0 24.0 30.9 - -ROA % 36.2 28.7 18.3 14.3 - -Div Payout % - - 95.6 60.5 - -EPS SR 6.2 6.2 2.9 2.9 0.5 (22.2)BVPS SR 7.5 11.1 12.9 12.3 (4.7) 17.9Source: Company, NCBC Research, *The company’s year ending is 31 st March.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncApparel Stores 100.0 Saudi Arabia 100.0Weightage (%)TASI (free float weight) 0.18MSCI Saudi (domestic – mid cap) 1.29Free float (%)Free float 39.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)AlHokair (RHS)605040302010-Saudi Fas Holding Co. 49.0Fawaz Abdul Aziz Fahd Al Hokair 7.0Salman Abdul Aziz Fahd Al Hokair 7.0Abdul Hameed Abdul Aziz Fahd Al 7.0HokairSource: NCBC ResearchSource: Company, NCBC Research• Business brief: AlHokair operates more than 700 fashion stores and is the retailfranchisee of over 40 global brands. The company’s product offerings include adultapparel, kids & teen fashion, footwear, eyewear, and accessories. AlHokair has twosubsidiaries – Al Waheeda Equipment Co. (95.0% stake) and Haifa Badai Al Kalamand Partners International Co. for Trading (95.0% stake).• Financials: AlHokair recorded 19.2% y-o-y growth in revenues to SR1,888.8mnduring FY 2009. However, the EBITDA margin declined to 12.4% in FY 2009 from16.1% in FY 2008 mainly due to 34.8% y-o-y increase in selling, general andadministrative (SG&A) expenses to SR629.9mn. AlHokair’s net income grew by ameager 0.5% y-o-y from SR201.4mn in FY 2008 to SR202.4mn in FY 2009;supported by income from associates of SR12.9mn.• Recent developments: In April 2009, the company reached a final agreement toacquire Wehbi Commercial Co. for SR175mn. In February 2009, AlHokair announcedthe appointment of Simon Marshal as the new CEO of the company with effect fromMarch 2009. In January 2009, the company announced that it has signed aMemorandum of Understanding with a Saudi retail company for buying some of thelatter's assets having an approximate value of SR80-120mn.JUNE 2009ALHOKAIR149


RETAILAldrees PetroleumAlso known asAPTSCO. AldreesPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR27.4SR0.7bn ($182.9mn)25.0mn52 week range H/L (SR) 45.0/17.6Avg daily turnover (mn) SR US$3m 22.72 6.0712m 14.17 3.78Raw Beta 6m 3yr0.93 1.01ReutersBloomberg4200.SEALDREES ABPrice perform (%) 1M 3M 12MAbsolute (%) 4 17 (34)Market (%) 6 32 (39)Sector (%) 9 20 (16)Website: www aldreestransport.comValuation multiples2006 2007 2008P/E (x) 37.7 26.1 11.8P/B (x) 6.4 4.4 2.0P/Sales (x) 2.0 1.5 0.5Div yield (%) - 2.3 6.0Weightage (%)TASI (free float weight) 0.15MSCI Saudi (domestic – mid cap) 0.40Free float (%)Free float 100.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Aldrees (RHS)Abdul Mohsen Mohammed Saad Al 8.5DreesHamad Mohammed Saad Al Drees 6.7Source: NCBC Research5040302010-Aldrees Petroleum & Transport Services Co. (Aldrees) has three main operations —petroleum, transport and Super 2 division (manages coffee, pastry and car-washingcenters). The company owns a 98% stake in Aldrees Sudan, which is engaged inmarine, land & air transportation.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 784 784 867 1,134 30.9 13.1EBITDA SRmn 51 51 74 93 25.5 22.5Net Income SRmn 39 41 50 53 4.7 10.3Assets SRmn 290 416 532 664 24.9 31.9Equity SRmn 204 245 296 317 7.1 15.8Total Debt SRmn - - 76 122 60.5 -Cash & Equiv SRmn 8 11 13 20 51.8 32.8EBITDA Mgn % 6.4 6.5 8.5 8.2 - -Net Mgn % 5.0 5.3 5.8 4.7 - -ROE % 19.5 18.4 18.6 17.2 - -ROA % 12.9 11.7 10.6 8.8 - -Div Payout % - - 59.52 71.0 - -EPS SR 9.8 2.1 2.5 2.1 (16.2) (40.1)BVPS SR 8.2 9.8 11.8 12.7 7.1 15.8Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncGas Stations 87.8 Saudi Arabia 100.0Transport 11.9Super 2 division 0.3Source: Company, NCBC Research• Business brief: Aldrees Petroleum division is engaged in the wholesale and retaildistribution of petrol products, with a network of 300 gas stations as of 2006, underthe brand - ‘Petrol’. It also services contracts for fuel supply to government andprivate companies. The Aldrees Transportation division operates and maintains afleet of trucks, trailers and tank trucks to transport goods within and outside SaudiArabia. The Super 2 division manages coffee and cake stores under the brand –‘Super Café’ and car wash & car detailing under the brand –‘Super Wash’ locatedwithin the company’s gas station network.• Financials: Aldrees recorded a robust 30.9% y-o-y growth in revenues during 2008.However, the EBITDA margin contracted 30 basis points y-o-y to 8.2% due to higheroperating expenses. Consequently, net income growth was contained to a meager4.7% y-o-y to SR52.8mn during the period.• Recent developments: The company’s net profit for 1Q-09 rose 11% y-o-y toSR13.8mn. In January 2009, Aldrees’s board elected Hamad Aldrees as its newchairman, Abdulmohsen Aldrees as the vice-chairman and re-elected AbdulilahAldrees as the Managing Director (M.D.) of the company. In June 2008, the companywon contract of SR232mn to supply petroleum materials for Northern CementCompany and the transport beans for Soya Company.JUNE 2009ALDREES PETROLEUM150


RETAILSaudi AutomotiveAlso known asSASCOPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR14.9SR0.7bn ($179.0mn)45.0mn52 week range H/L (SR) 21.3/9.7Avg daily turnover (mn) SR US$3m 36.07 9.6312m 27.03 7.22Raw Beta 6m 3yr1.06 1.21ReutersBloomberg4050.SESACO ABPrice perform (%) 1M 3M 12MAbsolute (%) 6 25 (22)Market (%) 6 32 (39)Sector (%) 9 20 (16)Website: www sasco.com.saValuation multiples2006 2007 2008P/E (x) NM 36.0 14.6P/B (x) 3.1 2.9 1.3P/Sales (x) 7.0 6.3 2.4Div yield (%) 0.0 0.0 0.0Weightage (%)TASI (free float weight) 0.15MSCI Saudi (domestic – mid cap) 0.73Free float (%)Free float 100.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Ibrahim Mohammed Ibrahim Al-HadithiSource: NCBC ResearchSASCO (RHS)2520155-06.0Saudi Automotive Services Company (SASCO), headquartered in Riyadh andestablished in 1982 provides a variety of services and utilities for cars, motoristsand travelers. SASCO owns specialized maintenance workshops in Saudi Arabia. Italso owns and manages supermarkets, rest areas and restaurants for travelers.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 153 166 192 214 11.8 11.9EBITDA SRmn 31 20 33 33 (1.9) 1.9Net Income SRmn 78 (10) 33 36 6.3 (23.0)Assets SRmn 538 433 481 469 (2.5) (4.5)Equity SRmn 477 374 422 413 (2.2) (4.7)Total Debt SRmn - - - - - -Cash & Equiv SRmn 111 76 36 73 105.7 (12.9)EBITDA Mgn % 20.2 12.2 17.4 15.3 - -Net Mgn % 50.8 (5.9) 17.4 16.6 - -ROE % 19.1 (2.3) 8.4 8.5 - -ROA % 16.6 (2.0) 7.3 7.5 - -Div Payout % - - - - - -EPS SR 26.7 (0.2) 0.7 0.8 6.6 NMBVPS SR 79.4 8.3 9.4 9.2 (2.2) NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncStations & Rest Area 87Automobile Club 13Source: Company, NCBC Research• Business brief: SASCO offers services such as car maintenance and repair, spareparts, car rescue, first aid, issuance of car test certificates, and international drivinglicenses. The company also runs a network of supermarkets, petrol pumps, housingfacilities, rest areas, restaurants, and other facilities across Saudi Arabia to servicemotorists and travelers. In addition, SASCO is involved in creating clubs such as theSaudi Automobile Touring Association (SATA), which is concerned with motor sports.• Financials: SASCO recorded 11.8% y-o-y growth in revenues to SR214.3mn in 2008from SR191.7mn in 2007. However, the EBITDA margins of the company fell 210basis points in 2008 due to higher cost of sales as well as operating (S,G&A)expenses. Nevertheless, the company posted 6.3% y-o-y net income growth fromSR33.4mn in 2007 to SR35.5mn in 2008 due to an increase in investment incomeduring the year.• Recent developments: In April 2009, the company announced its 1Q-09 resultswherein it reported a y-o-y increase of 3.8% in net profit to SR 5.5mn, In March 2009,SASCO in partnership with NCB has announced 0% down-payment & low 4.99%interest scheme to Saudi customers on purchase of Chevrolet and GMC.JUNE 2009SAUDI AUTOMOTIVE SERVICES COMPANY151


RETAILAhmed H. Fitaihi CoAlsoknown asFitaihiiPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR15.2SR0.8bn ($202.9mn)50.0mn52 week range H/L (SR) 24.3/8.9Avg daily turnover (mn) SR US$3m 41.33 11.0412m 35.36 9.44Raw Beta 6m 3yr0.96 1.01ReutersBloomberg4180.SEAHFCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 19 31 (28)Market (%) 32 (39)Sector (%) 9 20 (16)Website: www.fitaihi com saValuation multiples2006 2007 2008P/E (x) 112.0 NM 27.5P/B (x) 2.0 2.8 0.9P/Sales (x) 11.1 14.8 2.7Div yield (%) - - -Weightage (%)TASI (free float weight) 0.13MSCI Saudi (domestic –small cap) 1.32Free float (%)Free float 78.73Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Fitaihi (RHS)Ahmed Hussain Ahmed Fitaihi 21.2Source: NCBC Research252015105-Ahmed H. Fitaihi Company (AHF), established in 1992, is engaged in the design,manufacture and wholesale & retail distribution of gems, jewelry and preciousstones. The company has two marketing subsidiaries - Marina B Creation Vadosand Marina B Geneve, which market its products across the globe.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 120 111 120 194 62.5 17.5EBITDA SRmn 19 13 13 34 169.6 20.6Net Income SRmn 9 11 1 19 2,208.1 27.8Assets SRmn 687 694 765 720 (5.9) 1.6Equity SRmn 627 627 637 560 (12.1) (3.7)Total Debt SRmn 28 37 87 71 (18.4) 36.4Cash & Equiv SRmn 250 32 15 14 (7.8) (61.8)EBITDA Mgn % 16.2 12.2 10.6 17.6 -Net Mgn % 7.7 10.0 0.7 9.9 - -ROE % 1.9 1.8 0.1 3.2 - -ROA % 1.6 1.6 0.1 2.6 - -Div Payout % - - - - - -EPS SR 2.9 0.3 0.0 0.4 1,815.7 (48.9)BVPS SR 196.2 16.5 15.3 11.2 (27.0) (61.5)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncSource: Company, NCBC Research• Business brief: AHF’s product portfolio includes precious stones, jewelry, consumerproducts, beauty products, kitchenware, leather products and clothing, accessories,perfumes, medical equipment, industrial parts, etc. The company has presence in thehospital industry through its 19.3% investment in International Medical Center and a5.7% stake in Dar Al Fouad Hospital. AHF also holds a 20% stake in Fitaihi Junior.The company owns two premium department stores under the brand name "FITAIHI"in Jeddah and Riyadh, in addition to other outlets.• Financials: AHF’s revenues grew by 62.5% y-o-y to SR194.3mn in 2008. Thecompany’s EBITDA margins increased by 700 basis points to reach 17.6% owing tohigher revenues and lower operating (S,G&A) expenses. Driven by this and decreasein other non-operating expenses, the net income grew significantly from SR0.8mn in2007 to SR19.2mn in 2008.• Recent developments: In April 2009, the company reported 26.6% y-o-y decline inQ1-09 net income to SR6.4mn. In August 2008, AHF’s subsidiary bought 5% stake inOriental Weavers Carpet Co. for EGP153mn. On May 07, 2008, the companyannounced setting up of two companies that will invest in real estate sector, each witha capital of SR100mn (USD26.6mn). In the same month, the company’sshareholders gave approval to raise capital by 30% to SR500mn through a bonusissue of 1:3.34.JUNE 2009AHMED H.FITAIHI COMPANY152


RETAILAbdullah Al-OthaimAlso known asAl-OthaimPriceSR41.2Pricing / Valuation as on May 27, 2009Mkt capSR0.9bn ($247.5mn)Sh. outstanding22.5mnKey statistics52 week range H/L (SR) 86.0/23.9Avg daily turnover (mn) SR US$3m 13.15 3.5112m NA NARaw Beta 6m 1yr1.01 NAReuters4001.SEBloombergAOTHAIM ABPrice perform (%) 1M 3M 12MAbsolute (%) 2 14 NAMarket (%) 6 32 (39)Sector (%) 9 20 (16)Website: www othaimmarkets comValuation multiples2006 2007 2008P/E (x) - - 14.4P/B (x) - - 3.0P/Sales (x) - - 0.3Div yield (%) - - 3.8Abdullah Al-Othaim Markets Company (Al-Othaim), established in 1980, is asubsidiary of Saudi Arabia-based Al-Othaim Holding Company. The company is afood and consumer products retailer and wholesaler. AlOthaim also holds a 13.7%stake in AlOthaim Real Estate Investment and Development Company.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,452 1,823 2,320 2,915 25.6 26.1EBITDA SRmn 63 77 90 107 17.9 19.0Net Income SRmn 49 58 60 62 4.2 8.0Assets SRmn 461 598 784 1,081 37.8 32.8Equity SRmn 225 238 237 299 26.3 10.0Total Debt SRmn 3 95 110 285 159.5 344.5Cash & Equiv SRmn 44 22 18 27 48.1 (15.5)EBITDA Mgn % 4.4 4.2 3.9 3.7 - -Net Mgn % 3.4 3.2 2.6 2.1 - -ROE % 33.1 25.1 25.2 23.2 - -ROA % 13.9 11.0 8.7 6.7 - -Div Payout % - - 102.4 54.2 - -EPS SR - 2.6 2.7 2.8 4.2 -BVPS SR 10.0 10.6 10.5 13.3 26.3 10.0Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008NA%Rev % Net Inc Breakup %Rev % Net IncNAWeightage (%)TASI (free float weight) 0.11MSCI Saudi (domestic – mid cap)Free float (%)Free float 51.00Relative share price perf.11,0009,0007,0005,0003,000Jul-08 Oct-08 Jan-09 M ay-09TASITop 5 shareholders (%)A. Othaim M arkets (RHS)80706050403020Al Othaim Holding Company 49.0Abdullah Saleh Ali Al Atheem 6.0Fahd Abdullah Al Atheem 5.0Huda Abdullah Al Atheem 5.0Abeer Abdullah Al Atheem 5.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: AlOthaim primarily operates through four business modelshypermarkets, supermarkets, convenience stores, and wholesale stores. Thecompany owns and operates a chain of 77 stores spread across Riyadh region, northand Aseer. Al-Othaim also has ten warehouses provided with the latest dry and coldstorage facilities and accompanied by a fleet of distribution vehicles. The companyalso plans to open stores in Jeddah and Medina by 2010.• Financials: During the period 2005-08, Al-Othaim’s revenues more than doubled,witnessing a robust CAGR of 26.1%. However, the company has reporteddeteriorating EBITDA margins over the years due to higher cost of sales. The trendcontinued in 2008 with the company reporting a 25.6% y-o-y increase in revenuesfrom SR2,320.1mn in 2007 to SR2,914.9mn. In 2008, the company’s EBITDA margindeclined to 3.7%. Accordingly, Al-Othaim’s bottom-line witnessed a modest growth of4.2% y-o-y from SR59.8mn in 2007 to SR62.3mn in 2008• Recent developments: In April 2009, the company announced its 1Q-09 resultswherein it reported 30% y-o-y decline in net profit to SR16.4mn. In November 2008,the company appointed CISCO for meeting the infrastructure needs of itscommunication network. In June 2008, the company announced its Initial Public Offerof 6.75mn shares at the price of SR40 per share and was listed on Tadawul under theRetail sector on July 14, 2008.JUNE 2009ABDULLAH AL-OTHAIM153


RETAILNational AgricultureAlsoknown asTHIMARPriceSR35.6Pricing / Valuation as on May 27, 2009Mkt capSR0.4bn ($95.1mn)Sh. outstanding10.0mnKey statistics52 week range H/L (SR) 39.4/10.3Avg daily turnover (mn) SR US$3m 62.82 16.7812m 32.85 8.77Raw Beta 6m 3yr0.95 1.43Reuters4160.SEBloombergTHIMAR ABPrice perform (%) 1M 3M 12MAbsolute (%) 34 105 10Market (%) 6 32 (39)Sector (%) 9 20 (16)Website: www.thimar com.saValuation multiples2006 2007 2008P/E (x) NM 205.8 NMP/B (x) 4.9 5.9 1.8P/Sales (x) 4.2 4.4 1.0Div yield (%) 0.0 0.0 0.0National Agriculture Marketing Co (THIMAR), headquartered in Riyadh, is engagedin the production, procurement, processing and marketing of agricultural products,accessories, meat, and other supplies through its various dealers. The companywas established in 1987 and holds a 100% stake in Wasmi Meat.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 84 104 122 146 20.0 20.1EBITDA SRmn (1) (7) 1 2 96.0 NMNet Income SRmn 2 (16) 3 (8) NM NMAssets SRmn 119 108 121 118 (2.5) (0.1)Equity SRmn 105 89 91 84 (8.5) (7.3)Total Debt SRmn - 5 2 NA NA NMCash & Equiv SRmn 2 18 3 2 (37.0) 5.4EBITDA Mgn % (1.3) (6.3) 0.7 1.2 - -Net Mgn % 2.9 (15.5) 2.1 (5.3) - -ROE % 2.4 (16.7) 2.8 (8.8) - -ROA % 2.2 (14.3) 2.2 (6.5) - -Div Payout % - - - - - -EPS SR 4.2 (1.6) 0.3 (0.8) NM NMBVPS SR 52.5 8.9 9.1 8.3 (8.4) NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.08MSCI Saudi (domestic – mid cap) 0.00Free float (%)Free float 100.00Relative share price perf.11,000409,000307,000205,000103,000-M ay-08Aug-08Nov-08Feb-09M ay-09TASIThim'ar (RHS)Top 5 shareholders (%)Source: Company, NCBC Research• Business brief: THIMAR is primarily involved in the sale of agricultural and meatproducts to its clients, which include hotels, restaurants, and the military sector. Inaddition, the company provides services for the operation, management, andmarketing of agricultural projects. THIMAR is also involved in the wholesale and retailtrading of agricultural and meat products. In addition, the company grants creditfacilities to its customers for payment within a month.• Financials: THIMAR has reported consistent revenue growth over the previous yearswith a CAGR of 20.1% during 2005-08. Keeping in line with the trend, in 2008,revenues grew 20.0% y-o-y. Driven by revenue growth and decline in operating(SG&A) expenses, the company reported significant EBITDA growth of 96% y-o-yduring the year. This resulted in a 50 basis points increase in the EBITDA marginsduring 2008. However, the company posted a net loss of SR7.7mn during 2008compared to a profit of SR2.6mn in 2007, mainly due to investment losses as well asdecline in other income.• Recent developments: The company reported a net loss of SR1.51mn in 1Q-09,compared to a loss of SR 951,131 for the same period last year. In June 2008, AbdelSource: NCBC ResearchRahman Saleh Al Hadheef was appointed as chairman of the company’s Board ofDirectors.JUNE 2009NATIONAL AGRICULTURE MARKETING COMPANY154


RETAILAlkhaleej TrainingAlso known asAlkhaleejPricePricing / Valuation as on May 27, 2009SR48.1Mkt capSR0.7bn ($192.7mn)Sh. outstanding 15.0mKey statistics52 week range H/L (SR) 68.8/23.5Avg daily turnover (mn) SR US$3m 37.07 9.9012m 22.94 6.12Raw Beta 6m 1yr1.39 0.98ReutersBloomberg4290.SEALKHLEEJ ABPrice perform (%) 1M 3M 12MAbsolute (%) 3 54 (23)Market (%) 6 32 (39)Sector (%) 9 20 (16)Website: www alkhaleej.com.saValuation multiples2006 2007 2008P/E (x) - 36.7 11.0P/B (x) - 8.6 2.3P/Sales (x) - 4.4 1.3Div yield (%) - - 1.7Weightage (%)TASI (free float weight) 0.07MSCI Saudi (domestic – mid cap)Free float (%)Free float 41.20Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Alkhaleej Trng (RHS)Abdul Aziz Rashid Abdul Rahman Al 20.3RashidAbdul Aziz Hamaad Nasser AlBulaihid13.3Ahmed Ali Ahmed Al Shedwy 13.3AlWaleed Abdul Razzaq Saleh Al 11.8DuraianAhmed Mohammed Salim Al Sirry 7.6Source: NCBC Research80604020-Alkhaleej Training and Education Company (Alkhaleej), was established in 1992 andconducts training programs in the fields of IT, electronics, English language, andadministrative and financial services. The company has more than 81 branches inSaudi Arabia and in more than 17 locations in the Middle East.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 213 242 301 346 14.9 17.5EBITDA SRmn 57 58 60 70 15.7 7.1Net Income SRmn 39 37 36 41 13.7 1.8Assets SRmn 178 236 302 357 18.4 26.1Equity SRmn 93 115 154 195 26.3 27.8Total Debt SRmn 25 42 45 89 100.7 53.9Cash & Equiv SRmn 12 8 26 34 29.7 41.1EBITDA Mgn % 26.6 23.8 20.0 20.1 - -Net Mgn % 18.2 15.3 12.0 11.8 - -ROE % 41.6 35.6 26.8 23.5 - -ROA % 21.8 17.9 13.4 12.4 - -Div Payout % 18.6 39.0 - 18.3 - -EPS SR 5.1 4.8 4.7 4.1 (12.6) (6.8)BVPS SR 9.3 11.5 15.4 19.5 26.3 27.8Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncComputer training 63.2Language schools 21.8Other professional training 15.0Source: Company,NCBC Research• Business brief: Alkhaleej executes its training programs through its various divisionsincluding New Horizons Computer Learning Centers (the largest independent ITtraining company), Direct English Centers, Platinum Center for Advanced TrainingSolutions (provides advanced computer courses); Takniat for Training, Business &Professional Development (specializes in management training); Kawader (employsthe graduates of its programs) and E-Learning (provides more than 2000 coursesonline),• Financials: Alkhaleej has recorded a CAGR of 17.5% in revenues over the period2005-08 due to its established training franchise in the Kingdom. The company’srevenues increased 14.9% y-o-y during 2008. The stable revenue growth caused thecompany’s EBITDA margin to remain steady at 20.1%. The company’s net incomerose 13.7% during 2008 to SR41.0mn in 2008.• Recent developments: For 1Q-09, the Company registered a decline in net profit of7% y-o-y to SR10.23mn. In March 2009, CMA approved Alkhaleej request to increaseits capital from SR100mn to SR150mn by issuing one bonus share for every two held.In July 2008, Alkhaleej bought 11% stake in Injuavon Global System for SR5mn. InJune 2008, the company got the market regulator’s approval to increase its capital toSR100mn through a bonus issue of 1:4.JUNE 2009ALKHALEEJ TRAINING155


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Company Page No. Banking and FinancialsSaudi Electricity 158 PetrochemicalsNational Gas 159 CementRetailEnergy and UtilitiesAgriculture and FoodTelecom and ITInsuranceMulti InvestmentIndustrial InvestmentBuilding and ConstructionReal EstateTransportationMedia and PublishingHotels and Tourism


ENERGY AND UTILITIESSaudi ElectricAlso known asSECPriceSR9.9Pricing / Valuation as on May 27, 2009Mkt capSR41.2bn ($11,014.5mn)Sh. outstanding4,166.6mnKey statistics52 week range H/L (SR) 13.0/8.9Avg daily turnover (mn) SR US$3m 25.84 6.9012m 25.80 6.89Raw Beta 6m 3yr0.25 0.74Reuters5110.SEBloombergSECO ABPrice perform (%) 1M 3M 12MAbsolute (%) 4 5 (24)Market (%) 6 32 (39)Sector (%) 5 6 (23)Website: www se com saValuation multiples2006 2007 2008P/E (x) 39.3 43.2 35.9P/B (x) 1.1 1.3 0.8P/Sales (x) 2.7 2.9 1.7Div yield (%) 5.4 4.7 6.5Saudi Electricity Company (Saudi Electric) is the largest power generator in SaudiArabia. Established in 2000, the company engages in the generation, transmission,and distribution of electric power across the Kingdom. Saudi Electric was formed asa result of the consolidation of 10 regional electricity companies.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 18,761 19,707 20,980 22,294 6.3 5.9EBITDA SRmn 6,995 7,447 7,701 7,626 (2.3) 2.4Net Income SRmn 1,483 1,379 1,424 1,075 (24.5) (10.2)Assets SRmn 117,563 127,208 136,510 145,156 6.3 7.3Equity SRmn 46,262 47,129 48,135 48,523 0.8 1.6Total Debt SRmn 8,341 9,757 19,764 20,142 69.2 58.9Cash & Equiv SRmn 1,008 4,201 5,589 800 (85.7) (7.4)EBITDA Mgn % 37.3 37.8 36.7 34.7 - -Net Mgn % 7.9 7.0 6.8 5.0 - -ROE % 3.2 3.0 3.0 2.2 - -ROA % 1.3 1.1 1.1 0.8 - -Div Payout % 196.7 211.5 204.8 233.3 - -EPS SR 0.4 0.3 0.3 0.3 (24.5) (10.2)BVPS SR 11.1 11.3 11.6 11.6 0.8 (1.6)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment H12008 Geographic H12008%Rev % Net Inc Breakup %Rev % Net IncSaudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 1.59MSCI Saudi (domestic – large cap) 2.62Free float (%)Free float 17.28Relative share price perf.11,000159,000107,0005,00053,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISaudi Electricity (RHS)Top 5 shareholders (%)Government of Saudi Arabia 74.3ARAMCO 6.9Source: NCBC ResearchSource: Company, NCBC Research• Business brief: SEC monopolizes the generation, transmission, and distribution ofelectricity to residential, industrial, commercial, and agricultural customers in theKingdom. The Co. also exports and imports energy, and invests in various Saudipower projects. SEC served approx. 5.2mn subscribers and reported a total availablecapacity of 36,949 MW at the end of 2007.• Financials: SEC’s revenues increased 6.3% y-o-y in 2008 due to rising demand ledby economic growth; however, there was substantial decline in net income toSR1,074.8 mn from SR1,424.1 mn in 2007, mainly due to higher cost of sales. .• Recent developments: In May 2009, SEC signed a SR82mn contract for setting upof a fuel transportation pipeline from Saudi Aramco distribution station to the Jizanpower plant. During the same month, SEC awarded a SR224mn contract to SaudiServices for Electro Mechanic Works Co. for the construction of 380kV cables. SECalso signed two contracts totaling SR409mn with Saudi Co. for Electrical andMechanical Ltd. and Mohammed Al-Ajimi Corp. to install and extend cables. In April2009, SEC reported a net loss of SR771mn for the 1Q-09, the same as thecorresponding quarter last year. In March 2009, KSA’s Electricity and CogenerationAuthority announced plans to split SEC into four independent power generationcompanies to encourage privatization in the sector.JUNE 2009S A U D I E L E C T R I C I T Y C O M P A N Y158


ENERGY AND UTILITIESNational GasAlso known asGASCOPriceSR23.4Pricing / Valuation as on May 27, 2009Mkt capSR1.8bn ($468.6mn)Sh. outstanding75.0mnKey statistics52 week range H/L (SR) 32.5/14.9Avg daily turnover (mn) SR US$3m 12.89 3.4412m 18.13 4.84Raw Beta 6m 3yr0.50 1.00Reuters2080.SEBloombergNGIC ABPrice perform (%) 1M 3M 12MAbsolute (%) 10 14 (19)Market (%) 6 32 (39)Sector (%) 5 6 (23)Website: www.gasco.com.saValuation multiples2006 2007 2008P/E (x) 21.7 18.6 8.7P/B (x) 2.4 2.3 1.4P/Sales (x) 1.8 1.9 0.9Div yield (%) 3.1 4.3 8.6National Gas & Industrialization Company (GASCO) was founded in 1963 as a resultof merger of two companies. GASCO is engaged in filling, refilling and distributionof liquefied petroleum gas (LPG), designing and execution gas networks; sellingand installing gas tanks and gas cylinders.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,281 1,340 1,392 1,471 5.7 4.7EBITDA SRmn 107 122 145 116 (19.8) 2.6Net Income SRmn 175 111 139 149 6.7 (5.2)Assets SRmn 1,600 1,270 1,494 1,297 (14.1) (7.1)Equity SRmn 1,207 992 1,140 941 (14.0) (6.7)Total Debt SRmn 3 - - - - (100.0)Cash & Equiv SRmn 1 5 19 46 136.0 226.3EBITDA Mgn % 8.4 9.1 10.4 7.9 - -Net Mgn % 13.6 8.3 10.0 10.1 - -ROE % 15.0 10.1 13.1 14.0 - -ROA % 11.0 7.8 10.1 10.7 - -Div Payout % 81.7 67.3 80.7 75.0 - -EPS SR 2.3 1.5 1.9 2.0 6.7 (5.2)BVPS SR 16.1 13.2 15.2 13.1 (14.0) (6.7)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment H12008 Geographic H12008%Rev % Net Inc Breakup %Rev % Net IncReal Estate Construction Engg Services 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.27MSCI Saudi (domestic – mid cap) 2.41Free float (%)Free float 68.95Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)40302010Gas&Industrialization (RHS)Saeed Ali Ghadran Al Ghamdi 11.9Public Investment Fund 10.9General Organization for Social 6.1InsuranceSource: NCBC Research-Source: Company, NCBC Research• Business brief: GASCO sells LPG gas cylinders across KSA (in sizes of 26.5 litersand 52.5 liters). The company also provides various types of gas tanks and relatedaccessories. About 350 carriers of GASCO have a capacity of 40,000 liters each,while the remaining 42 have a capacity ranging from 11,000–23,000 liters each. Thefilling plants are located in Riyadh, Jeddah, Dammam, Al Madinah, Taif, Bureidah andKhamis Mushait. The company also designs and implements gas networks for retailand industrial customers.• Financials: On a y-o-y basis, GASCO’s sales increased by 5.7% in 2008, while netincome rose 6.7% due to increase in investment income. However, higher cost ofsales led to decline in EBIDTA margins to 7.9% in 2008 from 10.4% in 2007. Thecompany’s EBITDA was down to SR116.0 mn in 2008 from SR144.7 mn in 2007.• Recent developments: In May 2009, GASCO signed a MoU for the setting up of anatural gas distribution station in Hail by 2011 for a total cost of SR100mn. Thecompany’s net profit for the 1Q-09 decreased 57% y-o-y to, SR12.5mn. In January2009, Abdullah Al-Ali Al-Naim was appointed as the Chairman of the Board ofDirectors. In July 2008, Saudi Arabia’s Council of Ministers approved the proposal ofthe Saudi Economic Council to maintain GASCO’s distribution of gas derivatives for afurther five years.JUNE 2009N A T I O N A L G A S159


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Company Page No. Banking and FinancialsSavola Group 162 PetrochemicalsAlmarai Company 163 CementNational Agriculture 164 RetailHail Agriculture 165 Energy and UtilitiesQassim Agriculture 166 Agriculture and FoodJazan Development 167 Telecom and ITSaudi Dairy & Foodstuff 168 InsuranceAl-Jouf Agriculture 169 Multi InvestmentFood Products 170 Industrial InvestmentAnaam International 171 Building and ConstructionHalwani Brothers 172 Real EstateSaudi Fisheries 173 TransportationTabuk Agriculture 174 Media and PublishingAsh Sharqiyah Development 175 Hotels and Tourism


AGRICULTURE & FOOD INDUSTRIESSavola GroupAlso known asSavolaPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR23.1S11.6bn ($3,084.1mn)500.0mn52 week range H/L (SR) 38.3/16.5Avg daily turnover (mn) SR US$3m 24.35 6.5012m 31.64 8.45Raw Beta 6m 3yr0.99 1.13ReutersBloomberg2050.SESAVOLA ABPrice perform (%) 1M 3M 12MAbsolute (%) 0 38 (38)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www savola comValuation multiples2006 2007 2008P/E (x) 15.3 14.6 59.8P/B (x) 2.9 2.5 1.8P/Sales (x) 1.9 1.7 0.9Div yield (%) 2.1 3.1 4.1Weightage (%)TASI (free float weight) 1.96MSCI Saudi (domestic – large cap) 2.74Free float (%)Free float 75.73Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Sep-08 Jan-09 M ay-09TASITop 5 shareholders (%)40302010SAVOLA Group (RHS)Mohammed Ibrahim Mohammed Al 11.9EssaAbdullah Mohammed Abdullah Al 8.7RabeahGeneral Organization for Social 9.3InsuranceAl-Muhaid b Co. 8.4Source: NCBC Research-Savola Group is a leading retailer of foods in the Middle East region, withoperations extending as far as North Africa and Central Asia. The group’s businessinterests are divided into two segments: Savola Foods Sector (edible oils, sugarand foods) and Savola Retail Sector (retail outlets, real estate and plastics).Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 6,857 9,097 10,410 13,795 32.5 26.2EBITDA SRmn 657 745 826 990 19.8 14.6Net Income SRmn 1,202 1,149 1,230 202 (83.5) NMAssets SRmn 8,117 11,275 11,590 14,527 25.3 21.4Equity SRmn 2,985 6,084 7,157 6,550 (8.5) 29.9Total Debt SRmn 2,562 2,395 1,903 4,709 147.4 22.5Cash & Equiv SRmn 265 2,894 335 544 62.5 27.0EBITDA Mgn % 9.6 8.2 7.9 7.2 - -Net Mgn % 17.5 12.6 11.8 1.5 - -ROE % 47.6 25.3 18.6 3.0 - -ROA % 16.8 11.8 10.8 1.5 - -Div Payout % 29.9 32.6 45.7 247.1 - -EPS SR 40.1 3.1 3.3 0.4 (87.7) NMBVPS SR 99.5 16.2 19.1 13.1 (31.4) NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2007%Rev % Net Inc/(Loss) Breakup %Rev % Net Inc/(Loss)Food Manufacturing 58 0 Saudi Arabia 73Retail 36 76 Iran 12Plastics 6 24 Egypt 10Rest 5Source: Company, NCBC Research• Business brief: Savola enjoys a leading position in edible oils and sugar retailing viaits 79 retail outlets spread across the Kingdom. The group operates through affiliatesincluding Afia International (95% stake), Azizia Panda United (80%), and UnitedSugar Co. (65%). It has diversified into real estate with stakes in United PropertiesCo. (100%) and Kinan Intl. Real Estate Development Co. (30%) amongst others.• Financials: During 2008, Savola’s sales were up 32.5% y-o-y from SR10,410mn in2007 to SR 13,795mn in 2008. EBITDA margins recorded a decline of 70 basis pointsto 7.2% in 2008 from 7.9% in 2007 due to higher cost of sales and operatingexpenses during the period. Higher operating expenses coupled with lowerinvestment income also led to a 83.5% y-o-y decline in net income from SR1,230mnin 2007 to SR202.4mn in 2008.• Recent developments: In April ’09, Savola upped stake in Almarai Co., SavolaFoods Co. and Afia Egypt to 29%, 90% and 99.8%, spending SR500mn, SR167mnand SR65mn, respectively. In the same month, Savola released 1Q-09 result,reporting 22.8% y-o-y decline in net income to SR193mn. Further, the companyannounced to hike its annual edible oil refining capacity to 0.4mn tonnes by the endof 2009. In March ‘09, Savola reiterated its expansion plans and looks to open 12new stores in 2009. In Jan 09, Savola got approval to set up a sugar factory in Egypt.JUNE 2009SAVOLA GROUP162


AGRICULTURE & FOOD INDUSTRIESAlmarai CompanyAlso known asAlmaraiPricePricing / Valuation as on May 27, 2009Mkt capSh. OutstandingKey statisticsSR144.5SR15.8bn ($4,205.7mn)109.0mn52 week range H/L (SR) 185.0/110.0Avg daily turnover (mn) SR US$3m 21.82 5.8312m 33.36 8.91Raw Beta 6m 3yr0.59 0.98ReutersBloomberg2280.SEALMARAI ABPrice perform (%) 1M 3M 12MAbsolute (%) 1 (5) (5)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www.almarai.comValuation multiples2006 2007 2008P/E (x) 16.1 19.6 16.8P/B (x) 4.0 4.3 4.2P/Sales (x) 2.7 3.5 3.0Div yield (%) 5.6 2.1 2.5Weightage (%)TASI (free float weight) 1.47MSCI Saudi (domestic – large cap) 1.41Free float (%)Free float 41.72Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Sep-08 Jan-09 M ay-09TASITop 5 shareholders (%)20015010050-Almarai (RHS)HH Prince Sultan Mohammed Saud 30.2Al Kabir Al SaudSavola Group 27.9Omran Mohammed Al Omran and 5.7CompanySource: NCBC ResearchAlmarai Company, based in Riyadh, is engaged in the production and distribution ofa range of dairy and food products as well as beverages. The company, establishedin 1976, sells products through its own retail outlets under several strong brandssuch as ALMARAI and ALYOUM.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 2,146 2,757 3,770 5,030 33.4 32.8EBITDA SRmn 559 709 1,096 1,440 31.3 37.1Net Income SRmn 386 465 667 910 36.4 33.1Assets SRmn 2,976 3,768 6,336 8,181 29.1 40.1Equity SRmn 1,429 1,894 3,053 3,617 18.5 36.3Total Debt SRmn 1,111 1,388 2,592 3,644 40.6 48.6Cash & Equiv SRmn 42 67 138 247 78.7 80.9EBITDA Mgn % 26.0 25.7 29.1 28.6 - -Net Mgn % 18.0 16.9 17.7 18.1 - -ROE % 30.3 28.0 27.0 27.3 - -ROA % 14.4 13.8 13.2 12.5 - -Div Payout % - 89.9 40.8 41.9 - -EPS SR 19.3 2.2 6.1 8.4 36.4 NMBVPS SR 71.4 9.1 28.0 33.2 18.5 NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008Breakup %Rev % Net Inc Breakup %Rev % Net IncFresh Dairies 49.2 Saudi Arabia 68.7Cheese and Butter 20.4 Other GCC 30.0Bakery Products 10.2 Other countries 1.3Dairy Products 9.9Fruit Juices 9.6Other products 0.6Source: Company, NCBC Research• Business brief: Almarai’s portfolio comprises fresh and long-life dairy products (suchas milk, natural and fruit yoghurts, cream and evaporated milk), several fruit juiceflavors, cheese and butter, bakery products, and other items such as tomato pasteand jams. The company has a leading 27% market share in the GCC dairy market. Ithas a 59% milk market share in KSA• Financials: Almarai’s revenues increased 33.4% on y-o-y basis to SR5,029.9mn in2008 from SR3769.8mn in 2007. However, the EBITDA margin contracted 50 basispoints y-o-y to 28.6% in 2008 due to higher operating (S,G&A) expenses. Revenuegrowth supported 36.4% y-o-y increase in net income to SR910.3mn in 2008.• Recent developments: In May 2009, the company agreed on a share swap dealwith Hail Agricultural Development Co. (HADCO) wherein the latter’s shareholderswill receive 1 share of Almarai for 5 shares in HADCO. In April 2009, Almaraireported a 21.7% y-o-y growth in the 1Q-09 net income to SR197.4mn. In March2009, Almarai announced to enter the infant formula milk market with an investmentof SR650mn. In Feb 2009, Almarai announced a JV with PepsiCo Inc. for investing indairy and juice processors in Asia, Africa and Middle East.JUNE 2009 ALMARAI COMPANY 163


AGRICULTURE & FOOD INDUSTRIESNational AgricultureAlsoknown asNADECPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR38.4SR2.3bn ($615.2mn)60.0 mn52 week range H/L (SR) 45.3/23.5Avg daily turnover (mn) SR US$3m 18.67 4.9812m 13.66 3.65Raw Beta 6m 3yr0.84 1.08ReutersBloomberg6010.SENADEC ABPrice perform (%) 1M 3M 12MAbsolute (%) 12 12 (12)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www nadec.com.saValuation multiples2006 2007 2008P/E (x) 19.7 22.0 23.6P/B (x) 1.6 2.4 1.8P/Sales (x) 1.9 2.3 1.4Div yield (%) 3.5 - 2.4Weightage (%)TASI (free float weight) 0.26MSCI Saudi (domestic – small cap) 2.71Free float (%)Free float 50.04Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Sep-08 Jan-09 M ay-09TASITop 5 shareholders (%)5040302010-NADEC (RHS)Public Investment Fund 20.0Suleiman Abdul Aziz Saleh Al Rajhi 19.7Saleh Abdul Aziz Saleh Al Rajhi 11.4Abdullah Abdul Aziz Saleh Al Rajhi 8.3Riyad Mohammed Abdullah AlHumaidanSource: NCBC Research7.5National Agriculture Development Company (NADEC) commenced operations in1981 with a 20% government stake. The company focuses on agriculturalproduction, food processing and distribution. NADEC operates in three businesssegments – agricultural, dairy and juice products, all sold under the NADEC brand.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 703 852 1,083 1,339 23.6 24.0EBITDA SRmn 142 183 196 258 31.6 22.0Net Income SRmn 58 81 116 80 (30.5) 11.6Assets SRmn 1,270 1,368 1,900 2,414 27.0 23.9Equity SRmn 942 977 1,064 1,060 (0.4) 4.0Total Debt SRmn 57 103 445 922 107.0 153.6Cash & Equiv SRmn 27 4 17 18 7.1 (12.3)EBITDA Mgn % 20.2 21.4 18.1 19.3 - -Net Mgn % 8.2 9.5 10.7 6.0 - -ROE % 6.3 8.5 11.3 7.6 - -ROA % 4.9 6.2 7.1 3.7 - -Div Payout % 77.2 69.8 - 56.0 - -EPS SR 7.8 2.2 2.8 1.3 (52.5) NMBVPS SR 126.5 25.9 25.9 17.7 (31.9) NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncDairies, Fresh & Canned vegetables 70 Saudi Arabia 100Wheat, Corn & Potatoes farming 30Source: Company, NCBC Research• Business brief: The Company offers a wide range of products under each of itsoperating segments. Under its agricultural segment, NADEC offers manufacturedproducts such as tomato paste, grains, vegetables, fruits, fodder, olives and honey.The dairy product segment offers long-life products (including cheese and milk),deserts and special products. The juice segment offers a range of fresh and long-lifejuices in different size containers.• Financials: NADEC’s revenues have shown consistent growth with 23.6% y-o-ygrowth in 2008 and a CAGR of 24.0% during 2005-08. Driven by higher sales,NADEC’s EBITDA also grew 31.6% y-o-y. However, the company’s net incometumbled 30.5% in 2008 largely due to higher interest expenses during the year. TheROE of the company fell to 7.6% while ROA also declined to 3.7% in 2008.• Recent developments: In April 2009, the company recorded a net loss of SR4.4mnfor 1Q-09 vs. SR4.1mn net profit in 1Q-08. In February 2009, the company won aninitial court ruling over a land dispute against Saudi Aramco. In November ’08,NADEC announced to enhance focus in the GCC region due to the growing demandand signed a long-term contract with UAE based Planet Nutrition. In April 2008, thecompany announced, its shareholders approval of one-for-two bonus shares thusmaking capital to 600 mn Saudi riyals from 400 mn Saudi riyals.JUNE 2009NATIONAL AGRICULTURE164


AGRICULTURE & FOOD INDUSTRIESHail AgricultureAlso known asHADCOPriceSR27.4Pricing / Valuation as on May 27, 2009Mkt capSR0.8bn ($219.5mn)Sh. outstanding30.0mnKey statistics52 week range H/L (SR) 29.4/13.9Avg daily turnover (mn) SR US$3m 22.79 6.0912m 19.49 5.20Raw Beta 6m 3yr0.94 1.11Reuters6030.SEBloombergHAACO ABPrice perform (%) 1M 3M 12MAbsolute (%) 7 30 7Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www hadco.com.saValuation multiples2006 2007 2008P/E (x) 29.7 19.9 9.8P/B (x) 2.0 2.3 1.3P/Sales (x) 2.9 3.1 1.6Div yield (%) 1.8 1.5 2.4Weightage (%)TASI (free float weight) 0.18MSCI Saudi (domestic –small cap) 1.0Free float (%)Free float 99.99Relative share price perf.11,000409,000307,000205,000103,000-M ay-08 Sep-08 Jan-09 M ay-09TASIHail Agriculture (RHS)Top 5 shareholders (%)Saleh Abdulaziz Al Rajhi and Co. 6.0Source: NCBC ResearchHail Agriculture Development Company (HADCO) headquartered in Hail, wasestablished in 1982. In Nov.08, Almarai offered to buy HADCO through a share swaparrangement, which is pending for shareholders’ and regulatory approvals. Thecompany markets diversified agricultural products under the brand ‘HADCO’.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 244 283 333 395 18.7 17.5EBITDA SRmn 72 86 112 132 18.0 22.3Net Income SRmn 31 28 51 65 26.7 27.9Assets SRmn 516 577 621 619 (0.4) 6.3Equity SRmn 397 414 451 495 9.7 7.6Total Debt SRmn - 41 45 20 (55.0) NMCash & Equiv SRmn 24 15 31 10 (68.2) (25.9)EBITDA Mgn % 29.7 30.5 33.7 33.5 - -Net Mgn % 12.7 9.9 15.4 16.4 - -ROE % 8.1 6.9 11.8 13.7 - -ROA % 6.5 5.1 8.5 10.5 - -Div Payout % 48.4 53.6 29.3 23.1 - -EPS SR 5.2 0.9 1.7 2.2 26.7 NMBVPS SR 66.2 13.8 15.0 16.5 9.7 NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncPoultry 59.0 33.1Agriculture 41.0 66.9Source: Company, NCBC Research• Business brief: HADCO operates through two main divisions—Agriculture andPoultry—over an area of 35,000 hectares. Under the Agriculture segment, HADCOgrows various products including wheat; yellow corn; alfalfa; palm trees producingdates and grapes. Under the Poultry segment, the company operates six poultryfarms, and has an annual capacity of 215,000 hens and 31mn eggs.• Financials: HADCO’s revenues increased 18.7% y-o-y to SR394.9mn in 2008 drivenby growth in the Agriculture and Poultry segment. Driven by this, the company’sEBITDA grew 18.0% y-o-y to SR132.3mn. However, EBITDA margins declined 20basis points y-o-y to 33.5% in 2008 mainly due to higher operating (S,G&A andamortization) expenses.• Recent developments: In May 2009, the company agreed on a share swap dealwith Almarai Co. wherein the formers’ shareholders will receive 1 share of Almarai for5 shares in HADCO. In April 2009, the company announced 73.0% y-o-y decline 1Q-09 net income to SR4.9mn. In February 2009, HADCO entered into a rental contractwith Ministry of Agriculture for a 28.5 mn sq meter land in Hail primarily aimed atexpansion of poultry business. HADCO announced, in February 2009, plans to investin farming activity in Sudan. In November 2008, the company appointed a financialand legal advisor to evaluate Saudi based Al Marai Company bid to take over thecompany through a share swap of 1:6 shares for HAIL’s shareholders.JUNE 2009HAIL AGRICULTURE165


AGRICULTURE & FOOD INDUSTRIESQassim AgricultureAlso known asGACOPriceSR12.0Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($159.5mn)Sh. outstanding50.0mnKey statistics52 week range H/L (SR) 15.5/6.4Avg daily turnover (mn) SR US$3m 47.05 12.5612m 26.77 7.15Raw Beta 6m 3yr0.99 1.24Reuters6020.SEBloombergQAACO ABPrice perform (%) 1M 3M 12MAbsolute (%) 11 35 (22)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: NAValuation multiples2006 2007 2008P/E (x) NM NM NMP/B (x) 2.6 2.8 0.9P/Sales (x) 16.0 23.1 4.3Div yield (%) NA NA NAWeightage (%)TASI (free float weight) 0.13MSCI Saudi (domestic – small cap) 0.96Free float (%)Free float 100.00Relative share price perf.11,000209,000157,000105,00053,000-M ay-08 Sep-08 Jan-09 M ay-09TASI Qassim Agriculture (RHS)Top 5 shareholders (%)Qassim Agriculture Co. (GACO) was established in 1985 and is headquartered inQassim. The company invests in agricultural businesses and livestock. With theacquisition of the Al Bandaria Group, the company made an entry into the yogurtsegment.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 37 66 49 88 79.6 33.2EBITDA SRmn 10 16 13 1 (91.2) (50.9)Net Income SRmn 72 (55) (3) 0 NM (84.1)Assets SRmn 567 504 498 574 15.2 0.4Equity SRmn 464 407 404 406 0.3 (4.4)Total Debt SRmn 10 8 6 6 2.3 (17.1)Cash & Equiv SRmn 11 52 12 2 (86.2) (46.8)EBITDA Mgn % 25.5 24.0 26.2 1.3 - -Net Mgn % 191.3 (83.2) (5.8) 0.3 - -ROE % 17.4 (12.5) (0.7) 0.1 - -ROA % 14.7 (10.2) (0.6) 0.1 - -Div Payout % NA NA NA 0.0 - -EPS SR 7.2 (1.1) (0.1) 0.0 NM (90.7)BVPS SR 46.4 8.1 8.5 8.1 (4.9) (44.1)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncWheat & Corn Farming 71 Saudi Arabia 100.0 100.0Dates Production 26Dairies Production 3Source: Company, NCBC Research• Business brief: GACO’s main business line involves investment in agriculturalproducts and livestock. In addition, GACO produces 2,500 tons of dates, 25,000 tonsof corn, and 42,000 tons of wheat annually. GACO is also a distributor of dates anddairy products. To meet its internal requirements, the company also invests in theconstruction of cooling stores; transportation; and import of fodder, cereals, andagricultural equipment. GACO has invested approximately SR20mn in Saudi basedcompanies.• Financials: GACO’s revenues grew significantly by 79.6% y-o-y to SR88.4mn in 2008.However, its EBITDA tumbled 91.2% during the year due to increased cost of sales,resulting in EBTIDA margin of 1.3% in 2008 as compared to 26.2% in 2007. GACO’sbottom-line of SR0.3mn turned into positive territory in 2008, after two consecutive yearof losses, driven by higher other non-operating income during the year.• Recent developments: In April 2009, the company reported 80.0% y-o-y decline in1Q-09 net income to SR0.1mn. In December 2008, the company completedacquisition of Al Bandariah Group for SR153.6mn. On July 02, 2008, GACO receivedSource: NCBC Researchsix-year Murbaha facility worth SR 75mn ($20 mn) from Al Rajhi Bank for buyingproperty in Medina and Mekkah. On June 30, 2008, the Company announced itsplans to begin a new SR250mn (USD66.7 mn) poultry project.JUNE 2009QASSIM AGRICULTURE CO.166


AGRICULTURE & FOOD INDUSTRIESJazan DevelopmentAlso known asJAZADCOPriceSR12.8Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($170.9mn)Sh. outstanding50.0mnKey statistics52 week range H/L (SR) 18.5/7.7Avg daily turnover (mn) SR US$3m 28.04 7.4912m 17.90 4.78Raw Beta 6m 3yr0.74 1.16Reuters6090.SEBloombergGIZACO ABPrice perform (%) 1M 3M 12MAbsolute (%) 29 42 (29)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www jazadco.com.saValuation multiples2006 2007 2008P/E (x) 8.9 87.4 23.4P/B (x) 1.5 1.6 0.7P/Sales (x) 64.8 46.6 11.1Div yield (%) 4.1 2.0 5.4Jazan Development Co. (JAZADCO), headquartered in Gazan was established in 1993to conduct agriculture and aquaculture activities in KSA. JAZADCO’s subsidiariesinclude Solenda Aquaculture (U.K.) with a 50% stake, Jannat Agricultural InvestmentCompany (25% stake) and Tabuk Fisheries Company (20% stake).Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 19 19 27 42 55.3 30.1EBITDA SRmn (4) 1 4 0 (87.9) NMNet Income SRmn 69 137 14 20 39.0 (33.8)Assets SRmn 451 836 795 723 (9.0) 17.0Equity SRmn 422 805 769 675 (12.1) 16.9Total Debt SRmn - - - 20 - -Cash & Equiv SRmn 3 445 110 83 -24.6 191.5EBITDA Mgn % (19.2) 3.5 13.1 1.0 - -Net Mgn % 362.0 732.4 53.3 47.7 - -ROE % 19.8 22.3 1.8 2.7 - -ROA % 17.8 21.2 1.8 2.6 - -Div Payout % 18.3 36.6 175.1 126.0 - -EPS SR 13.7 2.7 0.3 0.4 39.0 NMBVPS SR 84.4 16.1 15.4 13.5 (12.1) NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.14MSCI Saudi (domestic)N/AFree float (%)Free float 98.79Relative share price perf.11,000209,000157,000105,00053,000-M ay-08 Sep-08 Jan-09 M ay-09TASI Jazan Development (RHS)Source: Company, NCBC Research• Business brief: JAZADCO provides a range of products under its two operatingsegments—agriculture and aquaculture. The agriculture segment owns and operatesa farm cultivated with tropical fruits such as figs, mangos, guavas, and bananas,while the aquaculture segment operates a shrimp farming project. JAZADCO sells itsproducts across Saudi Arabia and exports to other Gulf Cooperation Council (GCC)and European countries.• Financials: JAZADCO’s revenues grew 55.3% y-o-y to SR41.6mn in 2008. However,EBITDA margins contracted by 12.1 percentage points to 1% in 2008 due to massiverise in cost of sales during the year. On the other hand, the company’s net profitregistered an increase of 39.0% y-o-y to SR19.8mn in 2008.Top 5 shareholders (%)Khaled Saleh Abdul Rahman AlShethrySource: NCBC Research5.1• Recent developments: In April 2009, the company recorded 98.6% y-o-y decline in1Q-09 net income to SR0.07mn. In February 2009, JAZADCO signed contract worth$41 mn for the sale of shrimp. In January 2009, Al-Khabeer Merchant FinanceCorporation signed an agreement with JAZADCO for setting up a SR400mn realestate fund for the Jazan Economic City project. In November 2008, the companystarted experimental operation of SR35.6mn bottling factory project in Jazan with anannual capacity of 46mn liters. In March 2008, JAZADCO announced that it hadsigned an agreement with Tabuk Fisheries Company (Saudi), under which eachcompany would acquire a 23.06% stake in Fjord Marin (Turkey).JUNE 2009JAZAN DEVELOPMENT CO167


AGRICULTURE & FOOD INDUSTRIESSaudi Dairy & FoodstuffPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR27.5SR0.9bn ($238.7mn)32.5mn52 week range H/L (SR) 43.8/15.7Avg daily turnover (mn) SR US$3m 11.33 3.0212m 17.66 4.72Raw Beta 6m 3yr0.86 1.24ReutersBloomberg2270.SESADAFCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 1 45 (21)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www.sadafco.comValuation multiples2007 2008 2009P/E (x) 43.1 10.1 27.3P/B (x) 3.1 1.1 1.6P/Sales (x) 2.0 0.6 0.8Div yield (%) 2.2 8.6 0.0Weightage (%)TASI (free float weight) 0.12MSCI Saudi (domestic)N/AFree float (%)Free float 58.21Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Sep-08 Jan-09 M ay-09TASITop 5 shareholders (%)5040302010-SADAFCO (RHS)United Industries Company 30.1Al Samih Trading Company 11.6Global Investment House 8.9Source: NCBC ResearchJeddah-based Saudia Dairy & Foodstuff Company (SADAFCO) commencedoperations in 1977 focusing on dairy products. The company later diversified itsproduct line by entering into joint ventures with food companies. SADAFCO nowhas a portfolio comprising more than 100 products sold under the SAUDIA brand.Company financials2006 2007 2008 2009YoY(%)CAGR(%)(06-09)Net Revenues SRmn 825 769 878 922 5.0 3.8EBITDA SRmn 52 93 104 102 (2.3) 24.8Net Income SRmn (25) 35 56 29 (48.9) NMAssets SRmn 770 732 764 711 (6.9) (2.6)Equity SRmn 455 488 515 502 (2.4) 3.3Total Debt SRmn 139 22 6 1 (80.2) (79.2)Cash & Equiv SRmn 60 105 83 50 (39.8) (5.9)EBITDA Mgn % 6.3 12.2 11.9 11.0 - -Net Mgn % (3.0) 4.5 6.4 3.1 - -ROE % (5.0) 7.4 11.2 5.6 - -ROA % (3.0) 4.6 7.5 3.9 - -Div Payout % - 93.2 87.0 0.0 - -EPS SR (0.8) 1.1 1.7 0.9 (48.9) NMBVPS SR 14.0 15.0 15.8 15.5 (2.4) 3.3Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncLong Shelf Life UHT 69.8 GCC 100.0 100.0Ice-creams 8.9Tomato paste 7.3Cheeses 5.6Juices & Flavored Milk 5.2Snacks & Canned Peas/beans 2.9Other Dressings 0.4Source: Company, NCBC Research• Business brief: The company operates through five main segments—milk, juices,snacks, ice cream, and other foodstuffs. Under the milk segment, SADAFCO offerscustomers a wide range of milk packs and milk shakes. The ice cream segment sellsa number of ice cream flavors, while the snacks segment includes a few types ofcrispies. The other foodstuffs segment produces tomato paste and hummus.• Financials: SADAFCO‘s revenue grew 5.0% on y-o-y basis to SR922.3mn for theyear ended March 2009. However, the company’s EBITDA margin declined to 11.0%as rise in cost of sales and administrative expenses surpassed the revenue growth.Net profit declined 48.9% y-o-y to SR28.7mn in FY09. The fall in the net income wasmainly due to increase in cost of sales, administrative expenses as well as the losseson investment income.• Recent developments: In April 2008, the company sold land in Riyadh for SR20mn,making a profit of SR15.4mn.JUNE 2009SAUDI DAIRY & FOODSTUFF168


AGRICULTURE & FOOD INDUSTRIESAl-Jouf AgricultureAlso known asJADCOPriceSR28.0Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($149.5n)Sh. Outstanding20.0mnKey statistics52 week range H/L (SR) 38.5/15.0Avg daily turnover (mn) SR US$3m 9.75 2.6012m 15.51 4.14Raw Beta 6m 3yr1.06 1.19Reuters6070.SEBloombergJADCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 1 38 (21)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www.aljouf com saValuation multiples2006 2007 2008P/E (x) 18.4 16.7 7.6P/B (x) 1.8 2.0 0.9P/Sales (x) 4.0 4.5 2.0Div yield (%) 0.0 1.2 2.4Weightage (%)TASI (free float weight) 0.12MSCI Saudi (domestic – mid cap) 0.91Free float (%)Free float 95.20Relative share price perf.11,000409,000307,000205,000103,000-M ay-08 Sep-08 Jan-09 M ay-09TASIJouff Agriculture (RHS)Top 5 shareholders (%)Al-Jouf Agriculture Development Co. (ALJOUF) was established in 1988. Thecompany is headquartered in Al Jouf and is engaged in processing, sellingagricultural, and livestock products. ALJOUF sells its products across Saudi Arabiaand in the neighboring states through a network of channels and marketing outlets.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 145 174 189 213 12.5 13.6EBITDA SRmn 41 84 95 96 1.3 32.9Net Income SRmn 11 38 52 55 6.3 68.8Assets SRmn 393 489 507 545 7.5 11.5Equity SRmn 318 380 430 472 9.8 14.1Total Debt SRmn - 11 1 6 459.0 NMCash & Equiv SRmn 8 37 12 28 129.5 51.2EBITDA Mgn % 28.3 48.0 50.3 45.3 - -Net Mgn % 7.9 21.8 27.3 25.8 - -ROE % 3.7 10.9 12.7 12.2 - -ROA % 3.0 8.6 10.4 10.4 - -Div Payout % 0.0 0.0 19.4 18.2 - -EPS SR 2.8 1.9 2.6 2.7 6.3 NMBVPS SR 79.4 19.0 21.5 23.6 9.8 NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 1H 08 Geographic 1H 08%Rev % Net Inc Breakup %Rev % Net IncGrain, Fruits and Vegetables 100.0 100.0 Saudi Arabia 100.0 100.0Source: Company, NCBC Research• Business brief: ALJOUF’s core activity comprises processing and marketingagricultural and animal products. The company’s product portfolio includes potatoes(table and manufacturing) and potato seeds, onion and onion seeds, fruits such aspeaches, plums, apples and almonds. In addition, the portfolio includes products suchas olive oil, bee honey, wheat and barley, and alfalfa fodder for livestock and fodderdealers. ALJOUF has expanded its product profile by including milk production andprocessing (under the brand AL-SAFWA DAIRIES), and sheep breeding & fattening.• Financials: ALJOUF’s revenues have shown consistent growth with a CAGR of13.6% during 2005-08 and a 12.5% y-o-y growth in 2008 to SR212.8mn. However,the EBITDA of the company grew by a meager 1.3% due to increase in cost of salesand other operating expenses during the year resulting in a 500 basis pointscontraction in EBITDA margins.• Recent developments: The company’s net income in 1Q-09 grew 79% y-o-y toSR13.8mn. In Feb 2009, ALJOUF announced to convert itself into a holdingcompany. The new entity is expected to have three firms under its control. In JanSource: NCBC Research2008, the company announced two contracts to provide clover crop worth SR61 mn.In Nov 2008, Al JOUF recognized strategic plans to venture into new activities,primarily aimed at reducing its reliance on wheat. In April 2008, the company’s Boardapproved to hike the capital of the company to SR250 mn through 1:4 bonus issue.JUNE 2009AL-JOUF AGRICULTURE169


AGRICULTURE & FOOD INDUSTRIESFood Products CoAlso known asWafra, Wafra FoodProducts CompanyPriceSR22.8Pricing / Valuation as on May 27, 2009Mkt capSR0.5bn ($121.8mn)Sh. outstanding20.0mnKey statistics52 week range H/L (SR) 28.5/8.8Avg daily turnover (mn) SR US$3m 61.12 16.3212m 35.05 9.36Raw Beta 6m 3yr1.46 1.26Reuters2100.SEBloombergFPCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 7 70 (9)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www.wafrah.comValuation multiples2006 2007 2008P/E (x) 140.2 103.3 15.8P/B (x) 4.8 4.9 1.3P/Sales (x) 13.3 11.9 2.9Div yield (%) 0 0 0Weightage (%)TASI (free float weight) 0.10MSCI Saudi (domestic – small cap) 0.65Free float (%)Free float 100.00Relative share price perf.11,0009,00030207,0005,000103,000-M ay-08 Sep-08 Jan-09 M ay-09TASIFood (RHS)Top 5 shareholders (%)Riyadh-based Food Products Company was established in 1989 to provide Saudifamilies with high quality food products. It is one of the leading food manufacturingcompanies, concentrating on the processing, marketing, distribution, and export ofvalue added foodstuffs. The company’s target markets are Asia and the Middle East.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 50 54 65 76 16.4 14.7EBITDA SRmn 9 11 19 18 (3.3) 25.9Net Income SRmn (48) 5 8 14 87.3 NMAssets SRmn 128 175 183 186 1.8 13.2Equity SRmn 100 149 158 170 7.6 19.2Total Debt SRmn 8 6 3 0 (100.0) NMCash & Equiv SRmn 2 3 7 5 (21.7) 32.3EBITDA Mgn % 18.2 20.4 29.0 24.1 - -Net Mgn % (95.3) 9.4 11.6 18.7 - -ROE % (36.2) 4.1 4.9 8.6 - -ROA % (29.9) 3.4 4.2 7.7 - -Div Payout % - - - - - -EPS SR (11.9) 0.3 0.4 0.7 87.3 NMBVPS SR 25.1 7.4 7.9 8.5 7.6 (30.3)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncCereals, Pasta, Frozen products 100.0 GCC Countries 100.0Source: Company, NCBC Research• Business brief: The company’s recognized brand name is WAFRA. The companyhas a 10.0% stake in Jannat Agricultural Investment Co. The operations of FoodProducts Company can be classified into four segments, with a state-of-the-art plantfor each segment. The different plants are as follows: meat factory (offers beef andchicken burgers, kebabs, frankfurters, etc.), vegetable factory (offers frozen frenchfries, potato wedges, and varieties of peanuts), pasta factory (produces a wide rangeof pasta under its various brands), and breakfast cereals (supplies corn flakes,frosted flakes, and rice crispies).• Financials: Food Products Company’s sales increased 16.4% on y-o-y basis toSR75.6mn in 2008 driven by the expansion in marketing outlets. However, the rise incost of raw materials led to a 3.3% y-o-y decline in the EBITDA to SR18.2mn. Thisresulted in EBITDA margins falling 590 basis points to 24.1% in 2008. Nevertheless,the substantial increase in other non-operating income during the year helped thecompany’s net income to grow 87.3% y-o-y to SR14.1mn.• Recent Developments: The company reported 3.0% y-o-y decline in 1Q-09 netSource: NCBC Researchincome to SR 2.8mn. In March 2009, Saudi agricultural companies established aconsortium, which included Food Products Co., to direct $40mn worth of investmentsin Africa’s food production.JUNE 2009FOOD PRODUCTS CO.170


AGRICULTURE & FOOD INDUSTRIESAnaam InternationalPriceSR45.0Pricing / Valuation as on May 27, 2009Mkt capSR0.5bn ($131.0mn)Sh. outstanding10.9mnAnaam International, headquartered in Jeddah, Saudi Arabia was established in1982. The company is involved in import and wholesale trade of frozen food,production of animal feed, investment in industrial projects and trade of livestockand patents services. The company has factories and plants at Jouf and Qassim.Key statistics52 week range H/L (SR) 85/24.0Avg daily turnover (mn) SR US$3m 2.16 0.5812m 2.37 0.63Raw Beta 6m 3yr1.16 1.35ReutersBloomberg4061.SEANAAM ABPrice perform (%) 1M 3M 12MAbsolute (%) 14 36 (30)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: NAValuation multiples2006 2007 2008P/E (x) N/M N/M 77.9P/B (x) 21.7 17.2 3.2P/Sales (x) 19.7 22.4 3.7Div yield (%) 0.0 0.0 0.0Weightage (%)TASI (free float weight) 0.10MSCI Saudi (domestic)N/AFree float (%)Free float 89.40Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Sep-08 Jan-09 M ay-09TASITop 5 shareholders (%)10080604020-Anaam Holding (RHS)HH Prince Abdullah Bin Turki Abdul 10.7Aziz Al SaudPrice Mishal Abdullah Turki Al Saud 6.8Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 164 120 88 103 16.8 (14.3)EBITDA SRmn (12) (18) 9 9 (7.9) NMNet Income SRmn (35) (317) (6) 5 NM NMAssets SRmn 703 245 247 248 0.2 (29.4)Equity SRmn 559 109 115 120 3.8 (40.2)Total Debt SRmn 30 30 25 22 (11.7) (10.4)Cash & Equiv SRmn 3 42 29 15 (49.7) 68.1EBITDA Mgn % (7.2) (15.2) 10.6 8.4 - -Net Mgn % (21.6) (264.1) (7.1) 4.7 - -ROE % (6.1) (95.0) (5.6) 4.2 - -ROA % (4.8) (66.9) (2.5) 2.0 - -Div Payout % - - - - - -EPS SR (1.5) (2.6) (0.6) 0.4 NM NMBVPS SR 23.3 0.9 10.6 11.0 3.8 (22.2)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncTrucking and Transportation 1100.0 Saudi Arabia 100.0Source: Company, NCBC Research• Business brief: Anaam International is involved in import, export, supply, trade,transportation and breeding of livestock in Saudi Arabia. The company also tradesin marine equipment and other activities related to production and transportation ofmeat, management and operation of slaughter houses, processing of meat import,wholesale trade of frozen food, production of animal feed and investment inindustrial projects. The total production capacity of the company is 66,000 tons ofanimal feed per year.• Financials: Anaam’s revenues increased 16.8% on y-o-y basis to SR103.1 mn in2008 driven by increased demand for its products. However, the EBITDA fell 7.9%y-o-y to SR8.6 mn resulting in EBITDA margins contracting by 220 basis points.This was a result of a substantial rise in cost of sales, Conversely, its net incomeincreased to SR4.9mn in 2008 compared to a loss of SR6.3mn in 2007 mainly dueto increase in income from subsidiaries as well as decline in other non-operatingexpenses.• Recent Developments: In April 2009, the company reported a net loss of SR2.7mnfor 1Q-09 as compared to the net profit of SR4.5mn in the same period of theSource: NCBC Researchprevious year. In July 2008, the company issued a bank guarantee of SR21.8mn torelease the lien of mortgage on its lands in the Saudi Al Jouf Province.JUNE 2009ANAAM INTERNATIONAL HOLDING171


AGRICULTURE & FOOD INDUSTRIESHalwani Brothers Co.PriceSR40.0Pricing / Valuation as on May 27, 2009Mkt capSR1.1bn ($305.2mn)Sh. outstanding28.6mnKey statistics52 week range H/L (SR) 40.0/14.5Avg daily turnover (mn) SR US$3m 57.40 15.336m 58.29 15.57Raw Beta 6m 1yr0.78 NAReuters6001.SEBloombergHB ABPrice perform (%) 1M 3M 12MAbsolute (%) 61 96 NAMarket (%) 6 32 (39)Sector (%) 4 21 (22)Website: www.halwani.com saValuation multiples2006 2007 2008P/E (x) N/A N/A 15.4P/B (x) N/A N/A 1.2P/Sales (x) N/A N/A 0.8Div yield (%) N/A N/A 7.29Halwani Brothers Company (HB), headquartered in Jeddah, Saudi Arabia wasestablished in 1952. It is engaged in production, marketing and distribution of foodproducts within and outside Saudi Arabia. It has over 26 brands and 15 factoriesand plants in Saudi Arabia and Egypt.Company financials2006 2007 2008YoY(%)CAGR(%)(06-08)Net Revenues SRmn 517 551 758 37.4 21.1EBITDA SRmn 66 61 79 29.1 9.4Net Income SRmn 39 33 38 14.4 (0.9)Assets SRmn 424 438 647 47.4 23.4Equity SRmn 254 267 485 81.2 38.0Total Debt SRmn 45 51 66 27.4 20.2Cash & Equiv SRmn 34 15 188 1143.4 134.9EBITDA Mgn % 12.7 11.0 10.4 - -Net Mgn % 7.5 6.0 5.0 - -ROE % 15.3 12.8 10.1 - -ROA % 9.2 7.7 7.0 - -Div Payout % - - 112.3 - -EPS SR 9.7 1.7 1.3 (19.9) NMBVPS SR 63.6 13.4 17.0 26.9 NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.11MSCI Saudi (domestic)N/AFree float (%)Free float 44.49Relative share price perf.7,0005,0003,000Oct-08TASIM ar-09Top 5 shareholders (%)5040302010-H B (RHS)Dalat Industrial Investment Co 55.5Mohammed Abdulhamid Mahmoud 6.9HalwaniSource: NCBC ResearchSource: Company, NCBC Research• Business brief: HB is involved in production of cheese, ice-cream, frozen andprocessed meat, jams, grains, juices, dates and halawa and manufacture of tissues.It has production capacity of 12,200 tons of Tahina per year, 20,100 tons of Halwaper year, 22,950 tons of meat per year, 3,000 tons of cheese per year, 3,348 tons ofArabic sweets per year, 4,500 tons of dairy products per year and 9,996 tons of jamper year.• Financials: HB’s revenues increased 37.4% y-o-y to SR757.5mn in 2008. However,the company’s EBITDA margin declined 60 basis points y-o-y to 10.4% due toincrease in cost of sales. The company’s net income recorded a 14.4% y-o-y growthfrom SR33.3mn in 2007 to SR38.2mn in 2008.• Recent developments: In April 2009, the company recorded 60.4% y-o-y decline in1Q-09 net income to SR12.5mn. In September 2008, the company sought a loanfrom Saudi Industrial Development Fund for building an industrial complex in Jeddahfor SR380mn. In July 2008, the company announced its initial public offering for8.57mn shares at SR20 each that will boost its capital to SR285.7mn. The IPOreceived a huge response from the public and was oversubscribed over 9 times.JUNE 2009HALWANI BROTHERS CO172


AGRICULTURE & FOOD INDUSTRIESSaudi Fisheries CoAlso known asAlasmakPriceSR53.0Pricing / Valuation as on May 27, 2009Mkt capSR1.1bn ($283.0mn)Sh. outstanding20.0mnKey statistics52 week range H/L (SR) 61.0/14.9Avg daily turnover (mn) SR US$3m 102.41 27.3512m 49.69 13.27Raw Beta 6m 3yr1.07 1.44Reuters6050.SEBloombergSFICO ABPrice perform (%) 1M 3M 12MAbsolute (%) 18 61 4Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www mcdc com.saValuation multiples2006 2007 2008P/E (x) N/M N/M N/MP/B (x) 7.2 6.9 3.0P/Sales (x) 16.2 12.4 4.0Div yield (%) NA NA NASaudi Fisheries Company, based in Dammam, commenced operations in 1981. Thecompany has national as well as international recognition in seafood manufacturingand distribution under its flagship brand ALASMAK. Saudi Fisheries manufacturesthe products at its own processing plants and delivers them using its own fleet.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 82 98 106 123 15.9 14.5EBITDA SRmn (30) (16) (23) (12) NM NMNet Income SRmn (39) (29) (31) (24) NM NMAssets SRmn 162 261 227 203 (10.2) 7.9Equity SRmn 102 221 190 166 (12.8) 17.8Total Debt SRmn 20 - - NA NA NACash & Equiv SRmn 2 12 3 2 (28.9) 10.4EBITDA Mgn % (37.3) (16.2) (21.4) (9.7) - -Net Mgn % (47.2) (29.5) (29.0) (19.8) - -ROE % (32.0) (17.9) (14.9) (13.7) - -ROA % (22.3) (13.7) (12.6) (11.3) - -Div Payout % - - - - - -EPS SR (19.2) (1.7) (1.5) (1.2) (20.6) NMBVPS SR 25.4 11.0 9.5 8.3 (12.8) (31.1)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 1H 08 Geographic 1H 08%Rev % Net Inc Breakup %Rev % Net IncAquaculture and Fishing 100.0 100.0 GCC Countries 100.0 100.0Weightage (%)TASI (free float weight) 0.09MSCI Saudi (domestic – small cap) 0.471Free float (%)Free float 38.49Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Sep-08 Jan-09 M ay-09TASITop 5 shareholders (%)80604020Saudi Fisheries (RHS)Public investment Fund 40.0HH Sheikh Mete’eb Bin Abdul Aziz Al 21.5SaudSource: NCBC Research-Source: Company, NCBC Research• Business brief: Saudi Fisheries derives its revenues from four operating segments:value-added products (production capacity of 2,000 tons), individually quick frozen orIQF products (capacity of 1,000 tons), fish products and a novel product calledAlasmak Tuna. The value-added segment comprises of fish sticks, fish burgers,shrimp nuggets, king shrimp and golden crispy shrimp; the IQF segment comprises ofIQF shrimp in retail packs; offerings under fish products include fresh, frozen whole,gutted, steaks, chunks, and fillets. The company-owned chain of retail shops and fishservice counters handles the distribution process.• Financials: Saudi Fisheries has historically reported losses despite a consistent toplinegrowth, primarily due to its high input costs. During 2008, the company reported a15.9% y-o-y growth in revenues to SR122.7mn. However, the company’s bottom-linecontinued to depict dismal performance, with a net loss of SR24.3mn during the year.Nevertheless, the company reported lower losses as compared to the previous yearmainly due to reduced cost of sales and administrative and overhead expenses.• Recent developments: In April 2009, the company reported its 1Q-09 results andposted a net loss of SR4.0mn in 1Q-09 as compared to a net loss of SR4.2mn in thesame period of the previous year. In December 2008, the company’s Board adjustedits rights issue recommendation from 20mn shares to 47.4mn shares at the price ofSR10.3 per share.JUNE 2009SAUDI FISHERIES CO173


AGRICULTURE & FOOD INDUSTRIESTabuk AgricultureAlso known asTADCOPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR27.8SR0.6bn ($148.5mn)20.0mn52 week range H/L (SR) 44.0/14.0Avg daily turnover (mn) SR US$3m 41.21 11.0012m 26.64 7.11Raw Beta 6m 3yr1.31 1.22ReutersBloomberg6040.SETAACO ABPrice perform (%) 1M 3M 12MAbsolute (%) 17 49 (30)Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www tadco-agri.comValuation multiples2006 2007 2008P/E (x) 28.7 54.6 15.3P/B (x) 1.9 2.9 1.0P/Sales (x) 5.0 7.8 2.1Div yield (%) 2.7 0.9 2.8Weightage (%)TASI (free float weight) 0.09MSCI Saudi (domestic – small cap) 0.51Free float (%)Free float 72.50Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Sep-08 Jan-09 M ay-09TASITop 5 shareholders (%)5040302010-Tabuk Agriculture (RHS)Abdullah Abdul Aziz Saleh Al Rajhi 25.0Source: NCBC ResearchTabuk Agriculture Development Company (TADCO), headquartered in Tabuk, wasestablished in 1983, focusing on agricultural production, food processing anddistribution. TADCO range of products include fruits, vegetables, forage products,grains and seeds, and processed products such as olive oil and honey.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 130 150 146 172 18.0 9.7EBITDA SRmn 37 46 47 51 9.3 11.0Net Income SRmn 42 26 21 24 13.6 (17.7)Assets SRmn 461 448 448 435 (3.0) (1.9)Equity SRmn 317 387 391 370 (5.4) 5.2Total Debt SRmn 7 6 5 4 (20.0) (17.0)Cash & Equiv SRmn 69 50 19 4 (78.4) (61.2)EBITDA Mgn % 28.6 30.5 32.0 29.6 - -Net Mgn % 32.5 17.4 14.2 13.7 - -ROE % 12.5 7.4 5.3 6.2 - -ROA % 9.4 5.8 4.6 5.3 - -Div Payout % 47.3 76.6 48.2 42.4 - -EPS SR 10.6 1.3 1.0 1.2 13.6 NMBVPS SR 79.2 19.3 19.5 18.5 (5.4) NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncFruit and Vegetable 41.0 Saudi Arabia 100.0Wheat and Barley 36.7Animal Food Production 20.8Other Food Manufacturing 1.6Source: Company, NCBC Research• Business brief: TADCO produces 20,000 MT of onions, 150,000 MT of tablepotatoes, 58,000 MT of wheat and more than 1mn MT of Alfalfa each year. Thecompany also grows 7,000 MT of grapes, peaches, apricots, pears and plumsannually. TADCO is actively involved in environment protection, water resourcemanagement and human resource development.• Financials: TADCO’s revenues increased 18.0% on y-o-y basis to SR171.8mn in2008. Driven by revenues, EBITDA grew 9.3% y-o-y to SR50.9mn during the year.Furthermore, the company’s net income increased 13.6% to SR23.6mn in the sameperiod.Recent developments: In May 2009, TADCO entered into a memorandum ofunderstanding (MoU) with Jannat Agricultural Investment Co. and the Arab Authority forAgricultural Investment and Development (AAAID) to set up an agricultural investmentsubsidiary outside the Kingdom. In April 2009, the company reported 48% y-o-y decline in1Q-09 net income to SR10.0mn. In March 2009, Saudi agricultural companies establisheda consortium, which included TADCO, to direct $40mn worth of investments in Africa’sfood production.JUNE 2009TABUK AGRICULTURE174


AGRICULTURE & FOOD INDUSTRIESAsh Sharqiyah Dev.Also known asSHADCOPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR44.0SR0.3bn ($88.1mn)7.5mn52 week range H/L (SR) 48.0/11.9Avg daily turnover (mn) SR US$3m 37.47 10.0012m 22.36 5.97Raw Beta 6m 3yr2.03 1.37ReutersBloomberg6060.SEASACO ABPrice perform (%) 1M 3M 12MAbsolute (%) 22 119 4Market (%) 6 32 (39)Sector (%) 4 21 (22)Website: www asharqiyah com.saValuation multiples2006 2007 2008P/E (x) 840.0 141.2 NMP/B (x) 3.7 4.1 1.3P/Sales (x) 7.9 9.0 2.6Div yield (%) NA NA NAWeightage (%)TASI (free float weight) 0.07MSCI Saudi (domestic)Free float (%)Free float 99.97Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Sep-08 Jan-09 M ay-09TASITop 5 shareholders (%)5040302010-Eastern Agriculture (RHS)Asharqiyah Agriculture Development Company (ASH SHARQIYAH) was establishedin 1986. The company provides meat and agricultural products, carries outagricultural projects, rehabilitation of land and irrigation works. ASH SHARQIYAHowns stakes Al Hassa Food Industries, United Dairy Farms and Pure Breed Poultry.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 56 53 54 51 (4.1) (3.8)EBITDA SRmn 11 11 17 21 24.9 39.7Net Income SRmn 11 1 3 (12) NM NMAssets SRmn 143 146 144 133 (7.3) (3.4)Equity SRmn 113 114 117 104 (11.4) (4.3)Total Debt SRmn 10 12 10 11 16.9 8.4Cash & Equiv SRmn 0 4 1 1 (34.4) 295.9EBITDA Mgn % 19.7 21.5 31.9 41.5 - -Net Mgn % 18.9 0.9 6.4 (24.2) - -ROE % 9.7 0.4 3.0 (11.3) - -ROA % 7.9 0.3 2.4 (9.0) - -Div Payout % NA NA NA - - -EPS SR 7.0 0.1 0.5 (1.7) NM NMBVPS SR 75.4 13.8 15.7 13.8 (12.2) (57.2)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncMeat & Dairy Cattle 46.9 Saudi Arabia 100.0 100.0Wheat & Corn Farming 27.5Grains Wholesale 22.4Milk & Dairies Wholesale 3.0Other Farm Products 0.3Source: Company, NCBC Research• Business brief: ASH SHARQIYAH is involved in the production and marketing ofwheat, barley and fodder crops such as alfalfa and Rhodes grass, wheat and barleystraw and potatoes. Under its Animal Husbandry Project, the company produces andmarkets 14.5mn litres of milk annually. Other projects undertaken include calf andsheep breeding, production of bio-fertilizers and honey production.• Financials: ASH SHARQIYAH’s revenue dipped 4.1% y-o-y in 2008 to SR51.3mn,after reporting near to flat growth in 2007. Furthermore, the company reported a netloss of SR12.4mn in 2008 as compared to net income of SR3.4mn in 2007. This wasmainly due to a substantial increase in cost of sales and lower other income.• Recent Developments: In 1Q-09, the company reported a net profit of SR0.5mn ascompared to the net loss of SR2.5mn in the same period of the previous year.Source: NCBC ResearchJUNE 2009ASH SHARQIYAH DEVELOPMENT COMPANY175


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Company Page No. Banking and FinancialsSaudi Telecom 178 PetrochemicalsEtihad Etisalat 179 CementZain KSA 180 RetailEtihad Atheeb 181 Energy and UtilitiesAgriculture and FoodTelecom and ITInsuranceMulti InvestmentIndustrial InvestmentBuilding and ConstructionReal EstateTransportMedia and PublishingHotels and Tourism


TELECOMMUNICATIONSaudi TelecomAlso known asSTCPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR50.5SR101.0bn ($26,969.3mn)2,000.0mn52 week range H/L (SR) 71.3/33.7Avg daily turnover (mn) SR US$3m 39.83 10.6412m 74.79 19.97Raw Beta 6m 3yr0.77 0.77ReutersBloomberg7010.SESTC ABPrice perform (%) 1M 3M 12MAbsolute (%) 7 41 (21)Market (%) 6 32 (39)Sector (%) 4 20 (27)Website: www stc.com.saValuation multiples2006 2007 2008P/E (x) 12.9 13.9 8.6P/B (x) 4.8 4.7 2.6P/Sales (x) 4.9 4.9 2.1Div yield (%) 6.9 6.0 7.6Weightage (%)TASI (free float weight) 3.72MSCI Saudi (domestic – large cap) 6.26Free float (%)Free float 16.44Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)STC (RHS)Public Investment Fund 70.0General Organization for Social 6.9Insurance - Saudi ArabiaPublic Pension Authority 6.6Source: NCBC Research80604020-Saudi Telecom (STC) was established in 1998 as Saudi Arabia’s sole telecomoperator and is still the only integrated operator in Saudi Arabia and provideslandline, mobile, and internet services. Apart from Saudi Arabia, STC has itsoperations in Indonesia, India, South Africa and Kuwait.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 32,540 33,786 34,458 47,445 37.7 13.4EBITDA SRmn 17,198 16,484 16,716 20,289 21.4 5.7Net Income SRmn 12,527 12,786 12,038 11,467 (4.7) (2.9)Assets SRmn 44,744 46,122 68,811 99,909 45.2 30.7Equity SRmn 32,855 34,154 35,876 37,766 5.3 4.8Total Debt SRmn - - 13,580 31,908 135.0 -Cash & Equiv SRmn 4,005 2,909 7,618 8,064 5.8 33.8EBITDA Mgn % 52.9 48.8 48.5 42.8 - -Net Mgn % 38.5 37.8 34.9 24.2 - -ROE % 39.3 38.2 34.4 31.1 - -ROA % 28.8 28.1 20.9 13.6 - -Div Payout % 83.1 89.9 83.3 65.4 - -EPS SR 6.2 6.4 6.0 5.7 (5.0) (2.7)BVPS SR 16.4 17.1 17.9 18.9 5.6 5.1Source: Company, NCBC ResearchSegment-wise business analysisProduct segment %Rev Geographic 20082007 2008 Breakup %Rev % Net IncWireless Telecommunication 73.0 66.0 - -Wired Telecommunication 27.0 34.0Source: Company, NCBC Research• Business brief: STC generates its revenue from the wireless and the wire-linesegments and has five business divisions—Al Hatif, Al Jawal, Saudi Data, Saudinet,and STC Online. Al Hatif offers landline communication, public telephones, prepaidcards, and business services. STC’s mobile operations are under the Al Jawal brand.Saudi Data mainly provides data solutions to businesses. Saudi Net is Saudi Arabia’sfirst ISP while STC Online offers electronic bill payment services• Financials: STC’s revenues increased 37.7% year-on-year (y-o-y) to SR47.4bn in2008. The company’s EBITDA margins declined 570 basis points from 48.5% in 2007to 42.8% in 2008 due to increase in selling, general and administration expenses. Asa result, net profit declined 4.7% y-o-y to SR11.5bn in 2008 from SR12bn in 2007 thatwas adversely impacted by foreign exchange loss.• Recent developments: In May 2009, STC entered into a partnership with Dilithiumfor offering mobile video solutions to its customers. STC’s net profit for 1Q-09declined 18% y-o-y to SR 2.49bn due to foreign currency fluctuations. In April 2009,STC launched its unified international roaming service utilizing strategic partnershipswith mobile services providers. In March 2009, Bahrain’s TelecommunicationsRegulatory Authority announced that STC had fulfilled all the requirements for themobile license it had won in January 2009 for a bid of BD86.7mn.JUNE 2009SAUDI TELECOM178


TELECOMMUNICATIONEtihad Etisalat CoAlso known asMobilyPriceSR36.4Pricing / Valuation as on May 27, 2009Mkt capSR25.5bn ($6,803.7mn)Sh. outstanding700.0mnKey statistics52 week range H/L (SR) 45.8/21.9Avg daily turnover (mn) SR US$3m 32.35 8.6412m 42.42 11.33Raw Beta 6m 3yr0.75 1.00Reuters7020.SEBloombergEEC ABPrice perform (%) 1M 3M 12MAbsolute (%) (4) 5 (16)Market (%) 6 32 (39)Sector (%) 4 20 (27)Website: www.mobily.com.saValuation multiples2006 2007 2008P/E (x) 37.1 26.6 10.4P/B (x) 5.7 6.2 2.2P/Sales (x) 4.2 4.4 2.0Div yield (%) 0.0 0.7 2.4Etihad Etisalat Company (Mobily), the second largest mobile operator in SaudiArabia in terms of market value, was established in 2004 by UAE-based EmiratesTelecommunications Corporation (Etisalat). The company commenced operationsin 2005, providing public wireless telecommunication services.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,662 6,183 8,440 10,795 27.9 86.6EBITDA SRmn (60) 2,125 3,239 3,794 17.2 NMNet Income SRmn (1,167) 700 1,380 2,092 51.6 NMAssets SRmn 16,204 17,689 19,881 27,192 36.8 18.8Equity SRmn 3,833 4,533 5,913 9,754 65.0 36.5Total Debt SRmn 8,948 9,440 8,923 9,790 9.7 3.0Cash & Equiv SRmn 185 548 703 1,264 79.7 89.7EBITDA Mgn % (3.6) 34.4 38.4 35.1 - -Net Mgn % (70.3) 11.3 16.3 19.4 - -ROE % (30.5) 16.7 26.4 26.7 - -ROA % (7.2) 4.1 7.3 8.9 - -Div Payout % - - 18.1 25.1 - -EPS SR (2.1) 1.4 2.8 3.0 NM NMBVPS SR 7.70 9.10 11.80 13.9 NM NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWireless Telecommunication 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 3.33MSCI Saudi (domestic – large cap) 1.35Free float (%)Free float 58.48Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)5040302010-M obily (RHS)Etisalat - UAE 27.4General Organization for Social 11.2Insurance - Saudi ArabiaSource: NCBC ResearchSource: Company, NCBC Research• Business brief: Mobily offers Global System for Mobile communications (GSM), 3Gsystem, and 3.5G technology (services such as video calling, live television,video/audio on demand, high speed Internet and multiplayer gaming). The company’sservices and products also include voice service, mobile internet, billing and payment,credit transfer, Kalemni, Mobily Hawwel, Mobily Al Hilal (news) and Mobily Ranan.Mobily markets its products via four functional lines—channel distribution, corporate &VIP sales, flagship stores, and commercial support. Currently, it has a subscriberbase of 11.1mn, representing around 39% of KSA’s mobile market.• Financials: Mobily’s revenues grew 27.9% year-on-year (y-o-y) to SR10.8bn in FY08mainly due to rise in demand for mobile broadband services and expanding customerbase. The net profits for FY08 amounted to SR2.1bn, a y-o-y rise of 51.6%.Improvement in net margin was also helped by lower interest expenses.• Recent developments: Mobily’s net profit for 1Q-09 increased 47% y-o-y to SR480mn on the back of rising demand in broadband and wholesale sales. In April2009, Mobily commenced a branch in Hail with an investment of SR250mn. In March2009, Mobily announced the allocation of SR1bn for developing its 3.75G networkand signed a SR435mn contract with Motorola for enhancing its GSM coverage inSaudi. In January 2009, Mobily signed a SR200mn deal with Etihad Atheeb Telecomto enhance the latter’s data transmission capacity.JUNE 2009 ETIHAD ETISALAT CO 179


TELECOMMUNICATIONZain KSAAlso known asZAINPriceSR12.1Pricing / Valuation as on May 27, 2009Mkt capSR16.9bn ($4,523.4mn)Sh. outstanding1,400.0mnKey statistics52 week range H/L (SR) 28.0/10.0Avg daily turnover (mn) SR US$3m 188.78 50.4112m 272.34 72.72Raw Beta 6m 1yr0.69 0.86Reuters7030.SEBloombergZAINKSA ABPrice perform (%) 1M 3M 12MAbsolute (%) 13 15 (52)Market (%) 6 32 (39)Sector (%) 4 20 (27)Website: www.sa.zain.comValuation multiples2006 2007 2008P/E (x) N/A N/A NMP/B (x) N/A N/A 1.3P/Sales (x) N/A N/A 29.5Div yield (%) N/A N/A -Mobile Telecommunications Company Saudi Arabia (ZAIN KSA), a member ofMobile Telecommunications Group (Zain), Kuwait, was established in 2007 in SaudiArabia to provide wireless telecommunications services. ZAIN KSA offersmultimedia applications such as video calling and content services.Company financials2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 505 - -EBITDA SRmn (1,242) - -Net Income SRmn (2,278) - -Assets SRmn 26,665 - -Equity SRmn 11,722 - -Total Debt SRmn 13,176 - -Cash & Equiv SRmn 584 - -EBITDA Mgn % NM - -Net Mgn % NM - -ROE % (19.4) - -ROA % (8.5) - -Div Payout % - - -EPS SR (1.6) - -BVPS SR 8.4 - -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 1.71MSCI Saudi (domestic – mid cap) 3.88Free float (%)Free float 45.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)302010-Zain (RHS)Mobile Telecommunications Company 25.0Faden Commercial & Real Estate 6.8EstablishmentSaudi Plastics 6.8Public Pension Authority 5.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: ZAIN KSA is the third mobile operator in KSA and offers multimediaapplications, classic and value-added voice messaging and data services. Thecompany launched commercial services in August 2008 and has added 2mn activesubscribers (approx. 7% market share) between August-December 2008. ZAIN KSAplans to build its own network by 2010 and is targeting positive EBITDA in 2010.• Financials: ZAIN KSA recorded revenues of SR505.2mn in 2008. However, duringthe year, the company incurred a loss of SR1,242.4mn and SR2,278.2mn at theEBITDA and bottom line, respectively. The operational loss was due to to the newlylaunched operations of the company.• Recent developments: In May 2009, ZAIN KSA announced that it has tied up with19 mobile phone operators in 6 countries for roaming services. The company posteda net loss of SR765.4mn in 1Q-09 compared to a net loss of SR2.28bn in the 4Q-08.In March 2009, ZAIN KSA announced plans to expand its private network to 13 citiesacross KSA and expects to reach 85% of the inhabited areas by the end of 2009. InMarch 2009, Zain Group’s CEO Dr Saad Al Barrak was appointed the CEO of ZAINKSA after the resignation of Dr. Marwan Al-Ahmadi. In September 2008, ZAIN Groupraised additional capital of USD4.49bn increasing the total Zain shares to 4.28bn withtotal shareholders equity amounting to USD6.42bn.JUNE 2009ZAIN KSA180


TELECOMMUNICATIONEtihad AtheebAlso known asATHEEBPriceSR17.9Pricing / Valuation as on May 27, 2009Mkt capSR1.8bn ($478.0mn)Sh. outstanding100.0mnKey statistics52 week range H/L (SR) 20.1/13.8Avg daily turnover (mn) SR US$3m N/A N/A12m N/A N/ARaw Beta 6m 3yrNA NAReuters7040.SEBloombergEAT ABPrice perform (%) 1M 3M 12MAbsolute (%) 3 N/A N/AMarket (%) 6 32 (39)Sector (%) 4 20 (27)Website: www.go.com.saValuation multiples2006 2007 2008P/E (x) N/A N/A N/AP/B (x) N/A N/A N/AP/Sales (x) N/A N/A N/ADiv yield (%) N/A N/A N/AEtihad Atheeb Telecommunications Company (ATHEEB), a joint venture betweenKSA-based Atheeb Trading Co., Al-Nahla Trading Co. and Traco Group and BahrainTelecom, was established in 2008 to provide fixed and wireless telecommunicationsservices in KSA.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn - - - - - -EBITDA SRmn - - - - - -Net Income SRmn - - - - - -Assets SRmn - - - - - -Equity SRmn - - - - - -Total Debt SRmn - - - - - -Cash & Equiv SRmn - - - - - -EBITDA Mgn % - - - - - -Net Mgn % - - - - - -ROE % - - - - - -ROA % - - - - - -Div Payout % - - - - - -EPS SR - - - - - -BVPS SR - - - - - -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.12MSCI Saudi (domestic – mid cap)Free float (%)Free float 30.50Relative share price perf.6,400215,800195,200174,600154,0001321-M ar 22-Apr 26-M ayTASIAtheeb (RHS)Top 5 shareholders (%)Atheeb Group 16.1Bahrain Telecom 15.0Al Nahla Group 13.7Traco Group 5.8General Orgn. For Social Insurance 5.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: ATHEEB was set up to build, operate, and maintain the second fixedline telecommunication network in KSA. The company aims to provide innovative andhigh technology solutions, such as video services, Internet telephony, and broadbandinternet, apart from voice telephone communications and data services. ATHEEBobtained a fixed telephony license for SR5mn and a 3.5GHz frequency spectrum forSR520mn. Batelco is likely to provide technical services and expertise to ATHEEB.The company plans to launch commercial services in 2009.• Financials: N.A.• Recent developments: In May 2009, Wipro Ltd signed a partnership agreement withATHEEB for deploying an end-to-end IT solutions and the underlying infrastructurecomponents. In April 2009, the Communications and Information TechnologyCommission awarded ATHEEB license for fixed-line telecom operations in Saudi. InJanuary 2009, ATHEEB floated 30mn shares at SR10 each in an IPO, which wasoversubscribed by 3.5 times. In January 2009, it signed a SR200mn contract withEtihad Etisalat Co. to expand its data transmission capacity. In March 2008, ATHEEBsigned contracts worth USD333mn with Motorola (for WiMax technology), ChinabasedZTE Corp. (for Core Network solutions) and India-based Wipro (for IT services)for executing the first phase of its network infrastructure plan in KSA.JUNE 2009 ETIHAD ATHEEB 181


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Company Page No. Banking and FinancialsTawuniya 184 PetrochemicalsMalath Cooperative 185 CementSABB Takaful 186 RetailSaudi Re 187 Energy and UtilitiesAl Sagr Company 188 Agriculture and FoodMedgulf 189 Telecom and ITBUPA Arabia 190 InsuranceAlahli Takaful 191 Multi InvestmentSaudi IAIC Cooperative 192 Industrial InvestmentTrade Union Cooperative 193 Building and ConstructionSanad Insurance 194 Real EstateSaudi United 195 TransportSaudi Fransi Cooperative 196 Media and PublishingGulf Union Cooperative 197 Hotels and TourismArabia Insurance 198United Cooperative Assurance 199Saudi Indian 200Arabian Shield Cooperative 201Saudi Arabian Cooperative 202Al-Ahlia Insurance 203Allied Cooperative 204


INSURANCETawuniyaAlso known asTawuniyaPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR41.3SR2.1bn ($551.4mn)50.0mn52 week range H/L (SR) 97.5/24.8Avg daily turnover (mn) SR US$3m 12.86 3.4312m 10.66 2.85Raw Beta 6m 3yr1.37 0.93ReutersBloomberg8010.SETAWUNIYA ABPrice perform (%) 1M 3M 12MAbsolute (%) (8) 33 (50)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www tawuniya.com.saValuation multiples2006 2007 2008P/E (x) 11.1 14.3 25.3P/B (x) 3.0 4.1 1.6P/Sales (x) 4.1 4.8 1.1Div yield (%) 9.5 6.7 6.1Weightage (%)TASI (free float weight) 0.25MSCI Saudi (domestic – mid cap)Free float (%)Free float 53.62Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10080604020-Tawuniya (RHS)Public Pension Authority 23.5General Organization for SocialInsuranceSource: NCBC Research22.8The Company for Cooperative Insurance, widely known as Tawuniya wasestablished in Riyadh in 1986. NCCI provides both Islamic and conventional generaland family insurance services. The company’s subsidiaries include, UnitedInsurance Company and Cooperative Real Estate Investment Company.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn 838 997 1,095 1,272 16.1 14.9Total Revenues SRmn 1,218 1,289 1,564 1,602 2.4 9.6Net Income SRmn 313 468 525 67 (87.2) (40.1)Assets SRmn 4,164 4,252 5,308 5,097 (4.0) 7.0Equity SRmn 1,686 1,756 1,847 1,073 (41.9) (14.0)Investments SRmn 1,671 1,717 1,863 1,081 (42.0) (13.5)Technical Reserves SRmn 869 1,596 2,392 2,783 16.4 47.4Combined Ratio % 107.5 90.9 100.9 110.1 - -Net Mgn % 25.7 36.3 33.6 4.2 - -ROE % 25.4 27.2 29.1 4.6 - -ROA % 8.5 11.1 11.0 1.3 - -Div Payout % 478.8 106.8 95.3 153.8 - -EPS SR 6.3 9.4 10.5 1.3 (87.2) (40.1)BVPS SR 33.7 35.1 36.9 21.5 (41.9) (14.0)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008Source: Company, NCBC Research%Rev % Net Inc Breakup %Rev % Net IncNA NA Saudi Arabia 100.0• Business brief: NCCI’s product portfolio falls under two broad categories – retail andcorporate. The retail segment includes motor vehicle, medical, fire & property andmiscellaneous & accident insurance, while the corporate segment offers motorvehicle, medical, fire & property, casualty, engineering, marine, aviation and energyinsurance services. To aid its insurance services, NCCI has entered into agreementwith international re-insurers such as Munich Re.• Financials: NCCI’s net premium earned grew 16.1% yoy during 2008. Consequently,total revenues also increased by 2.4% yoy. The company has been able to grow itspremium due to its dominant position in growing insurance segments such as motorinsurance and health insurance. However, NCCI's investment portfolio sufferedlosses of SR110.75 mn, which led to an 87.2% yoy reduction in net income in 2008.• Recent developments: NCCI declared its 1Q-09 results on April 20, 2009. Thecompany’s net profit surged 9.9% y-o-y to SR26.0mn during the quarter. Cashdividend of SR2 per share was approved in the annual general meeting held in March2009. In February 2008, NNCI entered into an agreement with Bahrain KuwaitInsurance Company (Manama) and Al-Ain Ahlia Insurance Co. (UAE) to market‘Manasik’ for health care insurance to foreign pilgrims.JUNE 2009THE COMPANY FOR CO-OPERATIVE INSURANCE184


INSURANCEMalath CooperativeAlso known asMalath InsurancePricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR31.2SR0.9bn ($249.9mn)30.0mn52 week range H/L (SR) 114.8/19.4Avg daily turnover (mn) SR US$3m 75.89 20.2612m 80.21 21.42Raw Beta 6m 2yr0.80 0.65ReutersBloomberg8020.SEMALATH ABPrice perform (%) 1M 3M 12MAbsolute (%) 6 40 (60)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www malath com saValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 16.2 4.2P/Sales (x) NA NM 22.1Div yield (%) NA NA NAMalath Cooperative Insurance and Reinsurance Company (Malath) was establishedin 2006. Headquartered in Riyadh, Malath is the second insurance company (afterNational Company for Cooperative Insurance (NCCI)) to be listed on the Saudi StockExchange. Besides general insurance, it provides facultative reinsurance products.Company financials2007 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn 2 27 - -Total Revenues SRmn 3 44 - -Net Income SRmn (17) (39) - -Assets SRmn 330 447 35.5 -Equity SRmn 283 233 (17.7) -Investments SRmn 275 144 (47.6) -Technical Reserves SRmn 13 122 879.0 -Combined Ratio % NM 263.4 - -Net Mgn % NM NM - -ROE % (6.1) (15.0) - -ROA % (5.2) (19.9) - -Div Payout % NA NA - -EPS SR (0.6) (1.3) - -BVPS SR 9.4 7.8 (17.7) -Source: Company, NCBC Research, figures for FY2007 are from April- December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.10MSCI Saudi (domestic – small cap) 2.85Free float (%)Free float 47.48Relative share price perf.11,0001509,0001007,000505,0003,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIM alath Insurance (RHS)Top 5 shareholders (%)Source: Company, NCBC Research• Business brief: Malath is engaged in general insurance, medical care insurance andfacultative inward reinsurance activities. The company derives its premium incomemainly from motor, medical, property, aviation, marine cargo & hull, energy,engineering, and other lines of business based on market conditions.• Financials: Company earned net insurance premium of SR27.4mn during 2008. Thiscoupled with earnings from reinsurance and underwriting activities enabled Malath torecord total revenues of SR44.2mn in the same period. However, as the company isa new establishment, it incurred high operating expenses, which caused net loss ofSR38.7mn in 2008.• Recent developments: Malath declared its 1Q-09 results on April 18, 2009. Thecompany recorded a net profit of SR2.1mn during 1Q-09 against a loss of SR3.1mnin the corresponding quarter a year ago. The Board of Directors appointed Mr. Ali BinSulaiman Al Ayed as new Chief Executive Officer with effect from July 1, 2008. Mr. AlAyed replaced Mr. Ibrahim Abdul Shaheed who had resigned in February 2008.Source: NCBC ResearchJUNE 2009MALATH INSURANCE185


INSURANCESABB TakafulAlso known asSaudi BritishBank TakafulPriceSR115.3Pricing / Valuation as on May 27, 2009Mkt capSR1.2bn ($307.7mn)Sh. outstanding10.0mnKey statistics52 week range H/L (SR) 158.5/20.0Avg daily turnover (mn) SR US$3m 38.19 10.2012m 31.20 8.33Raw Beta 6m 2yr1.55 1.00Reuters8080.SEBloombergSABBT ABPrice perform (%) 1M 3M 12MAbsolute (%) 21 58 65Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www sabbtakaful.comValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 21.0 6.5P/Sales (x) NA NM 5.9Div yield (%) NA NA NASABB Takaful was established in 2007 at Riyadh as an associate company of SABBand HSBC. SABB Takaful conducts activities through SABB’s establisheddistribution network (over 70 branches) and direct sales team across Saudi Arabia.SABB offers all its insurance products in compliance with shariah law.Company financials2007 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn 5 53 - -Total Revenues SRmn 6 57 - -Net Income SRmn (45) (4) - -Assets SRmn 79 185 135.5 -Equity SRmn 55 51 (7.7) -Investments SRmn 59 28 (53.6) -Technical Reserves SRmn 6 91 1,444.7 -Combined Ratio % NM 100.6 - -Net Mgn % (728.1) (6.4) - -ROE % (80.4) (6.8) - -ROA % (56.7) (2.8) - -Div Payout % NA NA - -EPS SR (4.5) (0.4) - -BVPS SR 5.5 5.1 (7.7) -Source: Company, NCBC Research, figures for FY2007 are from May – December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.09MSCI Saudi (domestic – small cap) 0.33Free float (%)Free float 35.00Relative share price perf.11,0002009,0001507,0001005,000503,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISABB Takaful (RHS)Top 5 shareholders (%)SABB 32.5HSBC Holding Co. 31.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: SABB Takaful offers Family, General, Corporate and Group Takafulproducts. Under the Family Takaful segment, the company provides cover foreducation, savings, single contribution, retirement to provide individuals with financialsupport. General Takaful provides cover for everyday risks during travel, home, andpersonal accident. Corporate Takaful provides cover for marine cargo, commercialfire protection, and solutions for SMEs.• Financials: SABB Takaful’s revenues grew to SR56.6mn in 2008 as compared toSR6.1mn in 2007 (May – December 2007). As a result, the company reported a netloss of only SR3.6mn in 2008 against a loss of SR44.6mn in 2007. Company’s totalasset base increased 135.5% yoy to SR185.0mn and technical reserves substantiallyincreased to SR91.0mn in 2008 from SR5.9mn in 2007.• Recent developments: SABB Takaful reported its 1Q-09 results on April 21, 2009.The company’s net loss surged to SR5.7mn in 1Q-09 compared to a net loss ofSR4.5mn in 1Q-08. In March 2009, the company received the award of Best TakafulProvider from Euromoney magazine. In February 2009, SABB Takaful entered into anagreement with Saudi Arabian Airlines Co. to provide insurance products.JUNE 2009SABB TAKAFUL186


INSURANCESaudi Re for Coop. ReinsPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR12.0SR1.2bn ($320.4mn)100.0mn52 week range H/L (SR) 19.3/7.8Avg daily turnover (mn) SR US$3m 36.23 9.6812m 26.02 6.95Raw Beta 6m 1yr0.87 0.82ReutersBloomberg8200.SESAUDIRE ABPrice perform (%) 1M 3M 12MAbsolute (%) 3 19 (35)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www saudi-re.comValuation multiples2006 2007 2008P/E (x) NA NA 34.0P/B (x) NA NA 0.9P/Sales (x) NA NA NMDiv yield (%) NA NA NASaudi Re headquartered in Riyadh is a first cooperative reinsurance company ofSaudi Arabia, established in May 2008. It provides life and non-life Sharia-compliantreinsurance products under the purview of The Saudi Arabian Monetary Agency(SAMA) for treaty and facultative types of reinsurance in all classes of business.Company financials2008*YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn - - -Total Revenues SRmn - - -Net Income SRmn 26 - -Assets SRmn 1,033 - -Equity SRmn 1,026 - -Investments SRmn 1,012 - -Technical Reserves SRmn 1 - -Combined Ratio % NM - -Net Mgn % NM - -ROE % 2.5 - -ROA % 2.5 - -Div Payout % - - -EPS SR 0.3 - -BVPS SR 10.3 - -Source: Company, NCBC Research* 2008 figures are for 8 months period ending December 31, 2008Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.11MSCI Saudi (domestic – small cap) NAFree float (%)Free float 40.00Relative share price perf.11,000209,000157,000105,00053,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISaudi Re (RHS)Top 5 shareholders (%)Ahmed Hamad Al Gosa bi and Co 5.0Jordan Islamic Finance Bank 5.0Source: NCBC ResearchSource: NCBC Research• Product profile: Saudi Re offers a wide range of insurance related products such asmarine insurance (hull and cargo), engineering insurance (machinery breakdown,contractor’s risks), motor insurance and insurance for third party liability.• Financials: In 2008, the company posted a net profit of SR25.9mn in 2008, which isprimarily attributable to income from other sources partially offset by high general andadministrative expenses. Total asset base as on 2008 was SR1,033.3mn, while theshareholder’s equity stood at SR1,025.5mn• Recent developments: Saudi Re reported its 1Q-09 results on April 20, 2009. Thecompany recorded a net profit of SR0.1mn in 1Q-09. Corresponding figures for theyear-ago period are not available. In April 2009, the company announced that it couldproceed with its Takaful life insurance portfolio, after receiving the license from SaudiArabian Monetary Agency (SAMA). In October 2008, Standard and Poor’s assigned aBBB+ rating to Saudi Re, citing stable outlook. In August 2008, Saudi Re became thefirst company in Saudi Arabia to receive a Reinsurance license by Saudi ArabianMonetary Agency. In March 2008, Saudi Re offered 40mn shares (40% of the capital)to the public. The issue was oversubscribed by more than three times.JUNE 2009SAUDI RE FOR COOPERATIVE REINSURANCE COMPANY187


INSURANCEAl Sagr CompanyAlso Known asAl Sagr SaudiPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR51.0SR1.0bn ($272.4mn)20.0mn52 week range H/L (SR) 55.8/9.3Avg daily turnover (mn) SR US$3m 52.33 13.9712m 26.84 7.17Raw Beta 6m 1yr0.09 0.92ReutersBloomberg8180.SESAGR ABPrice perform (%) 1M 3M 12MAbsolute (%) 25 83 84Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www alsagrsaudi.comValuation multiples2006 2007 2008P/E (x) NA NA 96.8P/B (x) NA NA 1.2P/Sales (x) NA NA NADiv yield (%) NA NA NAAl Sagr Company for Cooperative Insurance (Sagr Insurance) started operations inSaudi Arabia in 1983 as a branch of Al Sagr National Insurance Co. (ASNIC), Dubai.Headquartered in Al Khobar, Sagr Insurance operates via its three branches inDammam, Riyadh and Jeddah.Company financials2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn - - -Total Revenues SRmn - - -Net Income SRmn 3 - -Assets SRmn 208 - -Equity SRmn 203 - -Investments SRmn 185 - -Technical Reserves SRmn - - -Combined Ratio % - - -Net Mgn % - - -ROE % 1.2 - -ROA % 1.2 - -Div Payout % - - -EPS SR 0.1 - -BVPS SR 10.1 - -Source: Company, NCBC Research, financials for FY 2008 are from February- December 2008.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.10MSCI Saudi (domestic – small cap) NAFree float (%)Free float 42.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)605040302010-Sagr Insurance (RHS)Al Saqar National Insurance Co. 26.0Arabian RedLand Industrial Services 5.0Abdullah Rasheed Al Rasheed & 5.0Sons Co.Source: NCBC ResearchSource: Company, NCBC Research• Product profile: Sagr Insurance offers a wide range of products to its customers thatinclude fire and general insurance (property, engineering, liability and miscellaneous),marine insurance (cargo and hull), motor insurance, life insurance and medicalinsurance services. The company also provides jewelry merchant insurance andhotel/furnished apartments—blanket insurance. In addition, Sagr Insurance providesreinsurance services —the company has Reinsurance Treaties with eight re-insurersin the Middle East and Europe. They include ALLIANZ RE (Germany), CONVERIUM(Germany), ODYSSEY RE (France), TAKAFUL RE (UAE), and B.E.S.T. RE (Tunis).• Financials: Sagr Insurance reported net income of SR2.5mn in 2008. The company’stotal assets stood at SR208.0mn in 2008, while the total equity was SR202.5mn.• Recent developments: Sagr Insurance reported its 1Q-09 results on April 20, 2009.The company recorded a net profit of SR0.7mn in 1Q-09. Corresponding figures forthe year-ago period are not available. In February 2009, the company received finalapproval from the General Secretariat of the Council of Health Insurance to operate inthe field of medical insurance. The purchase of SR29.5mn insurance portfolio (as ofDecember 31, 2006) of Al Sagr (Bahrain) Saudi Insurance Company was approved inthe annual general meeting held in February 2009. In addition to this, the companywill also purchase 15% of the 2007 and 2008 portfolio.JUNE 2009AL SAGR COMPANY188


INSURANCEMedgulfAlso known asMedgulf SaudiPriceSR20.8Pricing / Valuation as on May 27, 2009Mkt capSR1.7bn ($444.3mn)Sh. outstanding80.0mnKey statistics52 week range H/L (SR) 35.5/13.0Avg daily turnover (mn) SR US$3m 17.00 4.5412m 12.34 3.29Raw Beta 6m 2yr0.88 0.94Reuters8030.SEBloombergMEDGULF ABPrice perform (%) 1M 3M 12MAbsolute (%) (9) 22 (22)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www medgulf com.saValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 5.4 1.7P/Sales (x) NA NA NADiv yield (%) NA NA NAMediterranean & Gulf Insurance & Reinsurance Co. (MEDGULF) is a subsidiary ofthe Medgulf Group, a leading insurance and reinsurance company in the MiddleEast operating in Saudi Arabia, Bahrain, Lebanon, Turkey, Jordan, UAE, and UK.Established in 2006, it currently operates through its offices in Jeddah and Khobar.Company financials2007 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn NA NA - -Total Revenues SRmn NA NA - -Net Income SRmn 7 (3) NM -Assets SRmn 807 807 (0.1) -Equity SRmn 807 791 (1.9) -Investments SRmn 758 773 2.0 -Technical Reserves SRmn NA NA - -Combined Ratio % NA NA - -Net Mgn % NA NA - -ROE % 0.8 (0.3) - -ROA % 0.8 (0.3) - -Div Payout % NA NA - -EPS SR 0.09 (0.03) - -BVPS SR 10.1 9.9 (1.9) -Source: Company, NCBC Research, figures for FY2007 are from April- December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.08MSCI Saudi (domestic – small cap)Free float (%)Free float 22.57Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)40302010MEDGULF (RHS)Mediterranean and Gulf Insuranceand Reinsurance – Bahrain32.0Saudi Investment Bank 21.1Source: NCBC Research-Source: Company, NCBC Research• Business brief: MEDGULF offers various insurance products such as aviationinsurance, banker’s blanket bonds, burglary insurance, contractor’s all risk insurance,credit insurance, employer’s liability insurance, fidelity guarantee insurance, marinecargo and hull insurance, and motor insurance. The company also providesinsurances for fire and allied perils, life, medical, personal accident, product andprofessional liability, property all-risk, public liability, workmen’s compensation, (cashin transit and in vault). MEDGULF offers a one-stop solution by providing insuranceand reinsurance services along with risk management and third party administration.• Financials: MEDGULF reported net loss of SR2.5mn in 2008 due to poorperformance of investment portfolio and increased G&A expenses in Q4-08. Therewas also a year-on-year marginal decline in total assets and shareholders’ equity,which aggregated to SR806.5mn and SR790.8mn respectively in 2008.• Recent developments: MEDGULF declared its 1Q-09 results on April 21, 2009. Thecompany’s net profit plunged 66.8% y-o-y to SR1.3mn during the quarter. In April2009, Mr. Nahmeh Sabbagh’s appointment to the company’s board was approved inthe annual general meeting. The Company’s shares were listed on the Saudi StockExchange on May 8, 2007, at SR42 against the issue price SR10.JUNE 2009MEDGULF189


INSURANCEBupa Arabia for Coop InsPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR20.1SR0.8bn ($214.7mn)40.0mn52 week range H/L (SR) 30.8/8.9Avg daily turnover (mn) SR US$3m 29.45 7.8612m 21.42 5.72Raw Beta 6m 1yr1.33 1.19ReutersBloomberg8210.SEBUPA ABPrice perform (%) 1M 3M 12MAbsolute (%) (3) 28 (29)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www bupame.comValuation multiples2006 2007 2008P/E (x) NA NA NMP/B (x) NA NA 1.2P/Sales (x) NA NA NADiv yield (%) NA NA NABUPA Arabia is a medical insurance company established in Jeddah in 2008 byacquiring Bupa Middle East (BME). BME which has been providing health insurancesince 1997 is a joint venture between Nazer Group and BIOL, a fully ownedsubsidiary of U.K. - based BUPA (The British United Provident Association).Company financials2008*YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn - - -Total Revenues SRmn - - -Net Income SRmn (2) - -Assets SRmn 393 - -Equity SRmn 390 - -Investments SRmn 352 - -Technical Reserves SRmn - - -Combined Ratio % - - -Net Mgn % - - -ROE % (0.4) - -ROA % (0.4) - -Div Payout % - -EPS SR (0.0) - -BVPS SR 9.7 - -Source: Company, NCBC Research* 2008 figures are for 8 months period ending December 31, 2008Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.07MSCI Saudi (domestic – small cap) NAFree float (%)Free float 40.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)40302010Bupa Arabia (RHS)BUPA Middle East Holding 22.5BUPA Investments Limited 15.0Modern Software Solutions for5.0Computer ServicesNadher Holding Group 5.0Asas Health Care Company 5.0Source: NCBC Research-Source: Company, NCBC Research• Product profile: BUPA’s customized healthcare plans have been divided into BUPADirect and BUPA Corporate Health Care Scheme. BUPA Direct targets companieswith 10 to 50 employees with three main schemes - Executive, Classic and Essential.BUPA Corporate Health Care Scheme targets companies with over 50 employees.• Financials: In 2008, the company incurred a net loss of SR1.7mn in 2008, mainlydue to high general and administrative expenses partially offset by income frominvestments. Total asset base as on 2008 was SR392.5mn, while the shareholder’sequity stood at SR389.9mn• Recent developments: BUPA reported its 1Q-09 results on April 21, 2009. Thecompany recorded a net profit of SR1.8mn in 1Q-09. Corresponding figures for theyear-ago period are not available. In April 2009, the company announced that it hasentered into a contract with the office of Dr. Mohammed Ali, according to which, thelatter will provide financial and investment consulting services to BUPA. In February2009, the company received Saudi Arabian Monetary Agency (SAMA)’s approval toproceed with its operations in health insurance. Furthermore, in February 2009, Mr.Pablo Juan and Mr. Anthony Cabrelli were appointed to BUPA’s board. In June2008, Saudi British Bank selected BUPA as a health insurance provider to itsemployees for the subsequent three years.JUNE 2009BUPA ARABIA FOR COOPERATIVE INSURANCE190


INSURANCEAlahli Takaful Co.Also known asATC, Alahli TakafulPriceSR149.0Pricing / Valuation as on May 27, 2009Mkt capSR1.5bn ($397.9mn)Sh. outstanding10.0mnKey statistics52 week range H/L (SR) 149.0/24.5Avg daily turnover (mn) SR US$3m 52.40 13.9912m 28.82 7.69Raw Beta 6m 2yr0.13 0.72Reuters8130.SEBloombergATC ABPrice perform (%) 1M 3M 12MAbsolute (%) 83 137 55Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www alahlitakaful.comValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 15.4 5.2P/Sales (x) NA NA NADiv yield (%) NA NA NAAlAhli Takaful Company (ATC), established in 2006, is a joint venture betweenNational Commercial Bank, FWU AG, VHV, International Financial Corporation and asmall share owned by local investors. Headquartered in Jeddah, the companyprovides a range of insurance products and services based on Islamic principles.Company financials2007* 2008YoY(%)CAGR(%)(05-07)Net Insurance Premium SRmn - - - -Total Revenues SRmn - - - -Net Income SRmn (2) (10) - -Assets SRmn 95 95 (0.5) -Equity SRmn 94 83 (11.8) -Investments SRmn 94 72 (23.4) -Technical Reserves SRmn - 2 - -Combined Ratio % - 140.5 - -Net Mgn % - NM - -ROE % (2.0) (11.4) - -ROA % (2.0) (10.6) - -Div Payout % - - -EPS SR (0.2) (1.0) - -BVPS SR 9.4 8.3 (11.8) -Source: Company, NCBC Research; * Figures for FY 2007 are from July- December 2007Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.09MSCI Saudi (domestic – small cap) 0.38Free float (%)Free float 26.45Relative share price perf.11,0002009,0001507,0001005,000503,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIATC (RHS)Top 5 shareholders (%)National Commercial Bank 30.0FWU Group 13.1International Finance Corporation 13.1VHV Vermogensanlage 7.5Source: NCBC ResearchSource: NCBC Research• Business brief: ATC’s insurance products include special programs for savings,retirement, and education. The Company’s “AlAhli Takaful and Savings Program”intends to match each individual’s lifestyle and fulfill saving requirements for variouspurposes such as retirement, children’s education, marriage, etc. The schemeprovides maturity as well as death benefits.• Financials: Despite recording gross premium written of SR6.4mn, ATC’s netpremium earned was only SR42 thousand during 2008. The Company’s total assetsaggregated to SR94.8mn, while shareholder’s equity totaled SR83.1mn at the end of2008. Technical reserves of the company at the end of 2008 stood at SR2.6mn.• Recent developments: ATC reported its 1Q-09 results on April 21, 2009. Thecompany’s net loss declined to SR0.6mn in 1Q-09 compared to a net loss ofSR1.4mn in 1Q-08. In February 2008, ATC’s Board of Directors (BOD) appointed Mr.Omar Hashem Khalifti as the Chairman, thereby succeeding Mr. Mohammed OmarKassem Al-Esayi. On August 18, 2007, ATC listed at SR109.7 against the issue priceof SR10 on the Saudi Stock Exchange. The company's IPO was oversubscribed 11.1times.JUNE 2009ALAHLI TAKAFUL191


INSURANCESaudi IAIC Co-op.Also known asSaudi SalamaPriceSR64.5Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($172.2mn)Sh. outstanding10.0mnKey statistics52 week range H/L (SR) 230.0/22.5Avg daily turnover (mn) SR US$3m 59.47 15.8812m 42.42 11.33Raw Beta 6m 2yr1.75 1.85Reuters8050.SEBloombergSALAMA ABPrice perform (%) 1M 3M 12MAbsolute (%) 14 73 (66)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www salama com.saValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 11.8 5.4P/Sales (x) NA NA 4.4Div yield (%) NA NA NASaudi IAIC Cooperative Insurance Company (SALAMA) was established in 2006.The Jeddah-based company markets its products under the SALAMA brand.SALAMA is engaged in providing general insurance solutions in compliance withIslamic Shariah and is a subsidiary of the UAE-based Islamic Arab Insurance Co.Company financials2007 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn NA 72 - -Total Revenues SRmn NA 76 - -Net Income SRmn (13) (20) - -Assets SRmn 111 251 126.5 -Equity SRmn 83 61 (25.8) -Investments SRmn 103 64 (38.0) -Technical Reserves SRmn NA 134 - -Combined Ratio % NA 114.5 - -Net Mgn % NA (26.8) - -ROE % (16.2) (28.2) - -ROA % (12.1) (11.3) - -Div Payout % NA NA - -EPS SR (1.3) (2.0) - -BVPS SR 8.3 6.1 (25.8) -Source: Company, NCBC Research, figures for FY 2007 are from May- December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.06MSCI Saudi (domestic – small cap)Free float (%)Free float 40.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)25020015010050-SALAMA (RHS)Arab Islamic Insurance Company 30.0Bin Dawood & sons Commercial Co. 5.0Al Sha'er Trade, Industries and5.0ConstructionCooperative Group Company for 5.0Trade & ConstructionSource: NCBC ResearchSource: Company, NCBC Research• Business brief: SALAMA’s products are broadly classified into three segments—health, motor and general insurance. The health insurance segment offers individualand corporate health care cover. The motor insurance segment offers comprehensiveand third party liability insurance cover. The general insurance segment providescover for fire & property, personal accident, marine, engineering, and aviation.• Financials: SALAMA reported revenues of SR76.1mn in 2008 primarily driven bypremium income. However, the company’s net income declined to SR20.4mn mainlydue to loss on investment. SALMA’s equity and investments also declined by 25.8%and 38.0% to SR61.4mn and SR64.1mn respectively.• Recent developments: SALAMA reported its 1Q-09 results on April 21, 2009. Thecompany’s net profit dived 86.2% y-o-y to SR1.6mn during the quarter. On April 30,2009, Mr. Shehzad Hafiz Mousaed was appointed as the General Manager after theresignation of Mr. Khaled Salem Barboud. In November 2008, SALAMA announcedstrategic alliance with NCB Capital to promote Sharia compliant insurance solutions.In October 2008, the company announced launch of its new motor claim center inJeddah, which would enable it to provide value-added services to its clients.JUNE 2009SAUDI IAIC CO-OPERATIVE INSURANCE COMPANY192


INSURANCETrade Union Co-op.Also Known asTUCIC, TUICPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR24.4SR0.6bn ($162.9mn)25.0mn52 week range H/L (SR) 31.5/9.3Avg daily turnover (mn) SR US$3m 39.73 10.6112m 19.73 5.27Raw Beta 6m 1yr1.21 1.35ReutersBloomberg8170.SETRDUNION ABPrice perform (%) 1M 3M 12MAbsolute (%) (9) 54 (12)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www tui-sa.comValuation multiples2006 2007 2008P/E (x) NA NANMP/B (x) NA NA1.3P/Sales (x) NA NA46.4Div yield (%) NA NA0.0Trade Union Cooperative Insurance & Reinsurance Company (Trade Union) wasestablished in 2007 as a Saudi-based insurance company. The company isheadquartered in Al Khobar and is registered with the Council of CooperativeHealth Insurance (CCHI).Company financials2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn 0 - -Total Revenues SRmn 7 - -Net Income SRmn (2) - -Assets SRmn 262 - -Equity SRmn 248 - -Investments SRmn 257 - -Technical Reserves SRmn 0 - -Combined Ratio % NM - -Net Mgn % NM - -ROE % (1.0) - -ROA % (0.9) - -Div Payout % 0.0 - -EPS SR (0.1) - -Book Value Per Share SR 9.9 - -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.06MSCI Saudi (domestic – small cap) NAFree float (%)Free float 42.00Relative share price perf.11,0009,00040307,000205,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09Source: Company, NCBC Research• Product profile: Trade Union’s product portfolio includes property insurance (fire andallied perils), liability insurance (general and product), marine insurance (hull, cargoand land transit), crime insurance (burglary, computer fraud), engineering insurance(machinery breakdown, contractor’s risks), motor insurance (commercial or heavyvehicles), and personal lines (household comprehensive, personal accident, newvehicle warranty). Additionally, Trade Union provides medical and life insuranceproducts as well as reinsurance services led by Swiss Reinsurance Co. Thecompany’s medical treaty is secured by Reinsurance Company Munich Re.TASITrade Union (RHS)• Financials: The company recorded revenues of SR6.9mn in 2008, driven byTop 5 shareholders (%)United Commercial Insurance Co. 22.3Al Ahlia Insurance Company 10.0investment and other income. However, since the company started its coreoperations in March 2008 only, it incurred high operating expenses, which led to a netloss of SR2.4mn. The company’s total asset base as on 2008 was SR261.5mn, whilethe shareholder’s equity stood at SR247.6mn.• Recent developments: Trade Union reported its 1Q-09 results on April 21, 2009.Source: NCBC ResearchThe company recorded a net profit of SR0.8mn in 1Q-09. Corresponding figures forthe year-ago period are not available. The Company’s year-end date has beenfinalized to December 31 in the EGM held in March 2009.JUNE 2009TRADE UNION COOPERATIVE193


INSURANCESanad InsuranceAlso known asSANADPriceSR34.4Pricing / Valuation as on May 27, 2009Mkt capSR0.7bn ($183.7mn)Sh. outstanding20.0mnKey statistics52 week range H/L (SR) 58.5/9.8Avg daily turnover (mn) SR US$3m 46.61 12.4512m 22.20 5.93Raw Beta 6m 2yr1.09 0.97Reuters8090.SEBloombergSANAD ABPrice perform (%) 1M 3M 12MAbsolute (%) (38) 103 1Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www sanad.com.saValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 6.2 1.4P/Sales (x) NA NA 86.4Div yield (%) NA NA 0.0Sanad Insurance & Reinsurance Cooperative Company (SANAD) was established in2006. The company provides a diverse range of car, general, health, property andmarine insurance and reinsurance services. It also has plans to expand productportfolio to cover insurance for agriculture, airlines, ships, petrol and power.Company financials2007 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn NA 3 - -Total Revenues SRmn NA 3 - -Net Income SRmn (9) (16) - -Assets SRmn 191 221 15.6 -Equity SRmn 191 175 (8.4) -Investments SRmn 186 173 - -Technical Reserves SRmn NA 22 - -Combined Ratio % NA 343.9 - -Net Mgn % NA NM - -ROE % (4.7) (8.9) - -ROA % (4.7) (7.9) - -Div Payout % NA 0.0 - -EPS SR (0.5) (0.8) - -Book Value Per Share SR 9.5 8.7 (8.4) -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.06MSCI Saudi (domestic – small cap) 0.61Free float (%)Free float 40.0Relative share price perf.11,000609,000407,0005,000203,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISANAD (RHS)Top 5 shareholders (%)Al Khazna Insurance Co. 15.0Saudi Continental Insurance Co. 10.0Ramat Marketing and Distribution Co. 5.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: SANAD provides fire, travel, medical, motor, property, marine andengineering insurance products. The company also offers insurance against generalaccidents. In addition, SANAD offers life insurance products and reinsuranceservices.• Financials: The company recorded revenues of SR2.8mn in 2008. However, sinceSANAD is a recently established company, it continued to incur high operatingexpenses, which led to a net loss of SR16.2mn in 2008 as compared to SR9.0 mn in2007. SANAD’s total asset base as on 2008 was SR221.1mn while the shareholder’sequity stood at SR175.0mn.• Recent developments: SANAD reported its 1Q-09 results on April 20, 2009. Thecompany’s net loss surged to SR4.8mn in 1Q-09 compared to a net loss of SR0.9mnin 1Q-08. In May 2008, Al Khazna Insurance Co. acquired a 15.0% stake in SANAD,through buying 3mn shares for SR96.8mn. In the same month, the companyappointed Mr. Ahmad Bin Abdullah Al Akili as the new chairperson to replace Mr.Abdullah Bin Yahia Al Muallimi. In addition, Mr. Azman Daya was appointed as thenew CEO.JUNE 2009SANAD INSURANCE194


INSURANCESaudi UnitedAlso known asWala’a InsurancePriceSR31.0Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($165.6mn)Sh. outstanding20.0mnKey statistics52 week range H/L (SR) 39.4/9.6Avg daily turnover (mn) SR US$3m 31.73 8.4712m 16.78 4.48Raw Beta 6m 2yr1.90 1.24Reuters8060.SEBloombergWALAA ABPrice perform (%) 1M 3M 12MAbsolute (%) (4) 74 3Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www.walaa.comValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 6.7 1.6P/Sales (x) NA NA NADiv yield (%) NA NA NASaudi United Cooperative Insurance Company (Walaa Insurance) was established atAl-Khobar in 2006 and specializes in business risks and government agencies. Thecompany markets its products and services under the WALAA brand and operatesthrough its branches in Riyadh, Jeddah, Hofouf, and Makah.Company financials2007 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn NA NA - -Total Revenues SRmn NA NA - -Net Income SRmn (13) (2) - -Assets SRmn 188 187 (0.3) -Equity SRmn 187 181 (3.3) -Investments SRmn 186 182 (1.9) -Technical Reserves SRmn NA NA - -Combined Ratio % NA NA - -Net Mgn % NA NA - -ROE % (6.9) (1.1) - -ROA % (6.9) (1.1) - -Div Payout % NA NA - -EPS SR (0.6) (0.1) NM -BVPS SR 9.4 9.1 (3.3) -Source: Company, NCBC Research, figures for FY 2007 are from July - December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.06MSCI Saudi (domestic – small cap)Free float (%)Free float 40.00Relative share price perf.11,0009,0007,0005,0003,000JUNE 2009M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)5040302010-Walaa Insurance (RHS)International General Insurance Co -Jordan10.5Abdullah Mohammed Taleb Hakim 5.0Source: NCBC ResearchSource: NCBC Research• Business brief: Walaa offers its products through four broad categories. The assets& earnings insurance segment offers a cover against property & businessinterruption. The liabilities segment covers employers, public, products, &professional risks. Under the employees segment, the company offers life, personalaccident, and healthcare insurance products. Under the goods on the move segment,Walaa offers ocean cargo and inland transit insurance products.• Financials: The Company incurred a net loss of SR2.0mn during 2008. Walaa’s totalassets stood at SR186.9mn and shareholders equity at SR181.0mn at the end of2008.• Recent developments: Walaa reported its 1Q-09 results on April 21, 2009. Thecompany incurred a loss of SR2.3mn in 1Q-09 compared to a loss of SR0.3mn in 1Q-08. In February 2009, the company received the Saudi Arabian Monetary Agency(SAMA)'s approval on offering 30 insurance products for 6 months. The company hasalready received Council of Cooperative Health Insurance's approval to issueinsurance policies in August 2008. In February 2009, Walaa also obtained SAMA’sapproval on Mr. Suleiman Bin Abdulaziz Al Tawijri’s appointment to the company’sboard. In January 2009, the company appointed Mr. Andrew Martin Chweinhauser asnew Chief Executive Officer.WALAA INSURANCE195


INSURANCESaudi Fransi Coop.Also known asALLIANZ SFPriceSR81.8Pricing / Valuation as on May 27, 2009Mkt capSR0.8bn ($218.3mn)Sh. outstanding10.0mnKey statistics52 week range H/L (SR) 111.0/25.0Avg daily turnover (mn) SR US$3m 60.08 16.0412m 37.97 10.14Raw Beta 6m 2yr0.22 0.90Reuters8040.SEBloombergALLIANZ ABPrice perform (%) 1M 3M 12MAbsolute (%) 16 25 (9)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website:Valuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 13.7 6.3P/Sales (x) NA NA 54.4Div yield (%) NA NA NASaudi Fransi Cooperative Insurance Company (ALLIANZ SF), formerly known asInsaudi Insurance Company, was established in 2006 in Riyadh. The Company is asubsidiary of Banque Saudi Fransi (member of the Calyon Group) and AssurancesGenerales de France (member of the Allianz Group).Company financials2007 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn NA 7 - -Total Revenues SRmn NA 8 - -Net Income SRmn (16) (14) - -Assets SRmn 104 210 101.8 -Equity SRmn 84 66 (21.3) -Investments SRmn 100 72 (28.2) -Technical Reserves SRmn NA 58 - -Combined Ratio % NA 16.3 - -Net Mgn % NA NM - -ROE % (18.8) (18.8) - -ROA % (15.2) (9.0) - -Div Payout % NA NA - -EPS SR (1.6) (1.4) - -BVPS SR 8.4 6.6 (21.3) -Source: Company, NCBC Research, figures for FY 2007 are from July- December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.06MSCI Saudi (domestic – small cap)Free float (%)Free float 31.00Relative share price perf.11,0001509,0001007,000505,0003,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIALLIANZ SF (RHS)Top 5 shareholders (%)Banque Saudi Fransi 32.5AGF International Co. 16.2SNI Holding Co. 16.2Source: NCBC ResearchSource: Company, NCBC Research• Business brief: ALLIANZ SF offers multiple insurance solutions through two mainsegments- individual and corporate. Under the individual solutions segment, thecompany provides Shariah compliant insurance products including individual financialplanning (for education, protection, and retirement), family income protection, life anddisability insurance, and corporate solutions assurance. The corporate solutionssegment offers insurance cover against fire, general accident, construction/erectionengineering, marine cargo and employee compensation.• Financials: The Company earned net premium of SR7.1mn in 2008, howeverincurred a net loss of SR14.2mn over the same period due to significant general andadministrative expenses. The company’s shareholder equity and investments alsodeclined y-o-y by 21.3% and 28.2% respectively.• Recent developments: The company reported its 1Q-09 results on April 21, 2009.The company recorded a loss of SR3.3mn in 1Q-09 compared to a loss of SR3.7mnin the year ago period. In December 2008, ALLIANZ SF appointed Mr. Samir BinMohammed on the Board of Directors (BOD) to replace Mr. Abdulaziz Al Mechaalwho resigned in February 2008. During October 2008, the company announced itsplan to raise capital through issuance of new preference shares worth SR100 mn.The company has not disclosed further details.JUNE 2009SAUDI FRANSI COOPERATIVE INSURANCE196


INSURANCEGulf Union Co-opAlso known asGulf UnionPriceSR26.9Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($158.0mn)Sh. outstanding22.0mnKey statistics52 week range H/L (SR) 38.0/10.0Avg daily turnover (mn) SR US$3m 44.81 11.9612m 20.57 5.49Raw Beta 6m 1yr1.39 1.28Reuters8120.SEBloombergGULFUNI ABPrice perform (%) 1M 3M 12MAbsolute (%) (25) 66 (4)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: NAValuation multiples2006 2007 2008P/E (x) NA NM 163.7P/B (x) NA 6.7 1.4P/Sales (x) NA NA NADiv yield (%) NA NA NAGulf Union Cooperative Insurance Company (Gulf Union) was established in by theGulf Union Insurance and Projects Management Holding Company. It offers Shariahcompliantinsurance products and serves clients in Saudi Arabia as well as clients ofits sister company - Gulf Union Insurance and Risk Management Company.Company financials2007* 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn - - - -Total Revenues SRmn - - - -Net Income SRmn (22) 2 - -Assets SRmn 208 208 (0.2) -Equity SRmn 198 195 (1.5) -Investments SRmn 203 175 (14.0) -Technical Reserves SRmn - - - -Combined Ratio % - - - -Net Mgn % - - - -ROE % (11.0) 0.9 - -ROA % (10.5) 0.8 - -Div Payout % - - -EPS SR (1.0) 0.1 - -BVPS SR 9.0 8.9 (1.5) -Source: Company, NCBC Research* Figures for FY 2007 are from August- December 2007Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.05MSCI Saudi (domestic – small cap) 0.41Free float (%)Free float 40.00Relative share price perf.11,000409,000307,000205,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIGulf Union (RHS)Top 5 shareholders (%)Gulf Union Insurance Company 23.5Source: NCBC ResearchSource: NCBC Research• Business brief: Gulf Union is engaged in cooperative insurance and reinsuranceactivities excluding protection and savings insurance. The Company’s productportfolio includes insurance for property, liability, motor, individual, health, and otherrelated cooperative insurance activities. Apart from Dammam, Gulf Union hasbranches in Jeddah, Khobar, and Riyadh.• Financials: The Company recorded a net profit of SR1.7mn during 2008 benefitingfrom higher investment income, as compared to net loss of SR21.9mn in 2007. GulfUnion’s total assets aggregated to SR207.5mn, while shareholder’s equity totaledSR195.2mn at the end of 2008.• Recent developments: Gulf Union reported its 1Q-09 results on April 21, 2009. Thecompany’s net profit plunged 94.3% y-o-y to SR31,957 in 1Q-09. In May 2009, MrAhmed Ali Ahmed Al- Shadwi’s appointment to the company’s board was approved inthe annual general meeting. The Company appointed Abdullah Al Nasser as a ChiefExecutive Officer, with effect from November 16, 2008. On September 11, 2007, GulfUnion’s shares were listed on the Saudi Stock Exchange at SR109.75 against theissue price of SR10. The Company’s IPO was oversubscribed 4.9 times.JUNE 2009GULF UNION197


PriceSR28.4Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($151.7mn)Sh. outstanding20.0mnKey statistics52 week range H/L (SR) 37.3/9.8Avg daily turnover (mn) SR US$3m 24.49 6.5412m 13.99 3.74Raw Beta 6m 1yr0.73 1.08Reuters8160.SEBloombergAICC ABPrice perform (%) 1M 3M 12MAbsolute (%) (12) 17 (3)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: NAValuation multiples2006 2007 2008P/E (x) NA NA NMP/B (x) NA NA 1.5P/Sales (x) NA NA NADiv yield (%) NA NA NAINSURANCEArabia InsuranceAlso known asAICCArabia Insurance Cooperative Company (AICC) was established in 2007 and isheadquartered in Riyadh. AICC operates in partnership with Lebanon-based ArabiaInternational Insurance Company (AIIC) and Jordan-based Jordan InsuranceCompany (JIC). The company has acquired the Saudi assets of AIIC and JIC.Company financials2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn - -Total Revenues SRmn - -Net Income SRmn (27) - -Assets SRmn 177 - -Equity SRmn 171 - -Investments SRmn 169 - -Technical Reserves SRmn - - -Combined Ratio % - - -Net Mgn % - - -ROE % (15.7) - -ROA % (15.1) - -Div Payout % - -EPS SR (1.3) - -BVPS SR 8.5 - -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.05MSCI Saudi (domestic – mid cap)Free float (%)Free float 40.00Relative share price perf.11,000409,000307,000205,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIAICC (RHS)Top 5 shareholders (%)Arab Holding Co. 19.2Jordanian Insurance Co. 12.2Arab Supply and Trading (ASTRA) 5.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: AICC is engaged in insurance and reinsurance activities andservices across Saudi Arabia. The company offers several insurance productsincluding motor insurance, property insurance, marine insurance, medical insuranceand general accidents insurance. AICC intends to take advantage of growthopportunities provided by the mandatory health and motor insurance laws in theKingdom. The company also plans to expand the market for Takaful life policies andinvestment products.• Financials: The company recorded net loss of SR26.8mn in 2008, driven by highgeneral and administrative expenses. Total asset base as on 2008 was SR177.0mn,while the shareholder’s equity stood at SR170.8mn.• Recent developments: AICC reported its 1Q-09 results on April 21, 2009. Thecompany recorded a net loss of SR2.9mn in 1Q-09. Corresponding figures for theyear-ago period are not available. In January 2009, Mr.Mohammad Saad SobhiKhabbaz was appointed the company's general manager, replacing Mr. SamirFaddoul Faddoul. The company received Saudi Arabian Monetary Agency's approvalon this appointment in March 2009.JUNE 2009ARABIA INSURANCE COOPERATIVE COMPANY198


INSURANCEUnited Coop. AssurancePricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR28.2SR0.6bn ($150.6mn)20.0mn52 week range H/L (SR) 38.5/16.2Avg daily turnover (mn) SR US$3m 36.09 9.649m 29.22 7.80Raw Beta 6m 9mReutersBloomberg0.92 0.998190.SEUCA ABPrice perform (%) 1M 3M 9MAbsolute (%) 0 40 20Market (%) 6 32 (34)Sector (%) (2) 48 (21)Website: www uca.com.saValuation multiples2006 2007 2008P/E (x) NA NA NMP/B (x) NA NA 3.7P/Sales (x) NA NA NADiv yield (%) NA NA NAUnited Cooperative Assurance Company (UCA) is engaged in insurance businesswithin KSA. In 2007, the company was established in Jeddah as a separate entity ofUCA Insurance Co. of Bahrain. UCA provides all forms of Insurance andReinsurance except Protection and Savings Insurance.Company financials2008*YoY(%)CAGR(%)(05-07)Net Insurance Premium SRmn - - -Total Revenues SRmn - - -Net Income SRmn (10) - -Assets SRmn 207 - -Equity SRmn 190 - -Investments SRmn 206 - -Technical Reserves SRmn 0.0 - -Combined Ratio % NM - -Net Mgn % NM - -ROE % (5.4) - -ROA % (4.9) - -Div Payout % - - -EPS SR (0.5) - -BVPS SR 9.5 - -Source: Company, NCBC Research* 2008 figures are for 7 months period ending December 31, 2008Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.05MSCI Saudi (domestic – small cap) NAFree float (%)Free float 40.00Relative share price perf.11,000409,000307,000205,000103,000-Jun-08 Oct-08 Jan-09 M ay-09TASIU C A (RHS)Top 5 shareholders (%)UCA Insurance Company 32.5Faisaliah Holding Group 5.0Civil Works Company 5.0Source: Company, NCBC Research• Product profile: UCA offers a wide range of insurance products such as engineering(contractor’s risks, machinery and plant & equipment used for construction), medical,personal accident and protection, motor insurance and marine cargo.• Financials: The Company recorded net loss of SR10.2mn in 2008, driven by highgeneral and administrative expenses. Total asset base as on 2008 was SR206.8mn,while the shareholder’s equity stood at SR189.8mn• Recent developments: UCA reported its 1Q-09 results on April 21, 2009. Thecompany recorded a net profit of SR0.4mn in 1Q-09. Corresponding figures for theyear-ago period are not available. In March 2008, the company offered 8mn shares tothe public, representing 40.0% of the total capital. The issue was oversubscribed byeight times.Source: NCBC ResearchJUNE 2009UNITED COOPERATIVE ASSURANCE CO199


INSURANCESaudi Indian Co.Also known asSIICO, SAUDI INDIANPriceSR55.5Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($148.2mn)Sh. outstanding10.0mnKey statistics52 week range H/L (SR) 117.8/19.3Avg daily turnover (mn) SR US$3m 52.17 13.9312m 42.41 11.33Raw Beta 6m 2yr2.49 1.29Reuters8110.SEBloombergSIICO ABPrice perform (%) 1M 3M 12MAbsolute (%) 9 60 1Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www saudi-indianinsurance com saValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 12.2 5.3P/Sales (x) NA NA NADiv yield (%) NA NA NASaudi Indian Company for Co-operative Insurance (Saudi Indian) was established in2007 by New India Assurance Company, Life Insurance Corporation of India (Intl)and Fawaz Abdulaziz Al Hokair and Company. It is headquartered in Riyadh andprovides financial security to individuals, commercial establishments and others.Company financials2007* 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn - 1 - -Total Revenues SRmn - 1 - -Net Income SRmn (12) (7) -Assets SRmn 96 104 8.4 -Equity SRmn 88 79 (9.8) -Investments SRmn 93 68 (26.4) -Technical Reserves SRmn - 13 - -Combined Ratio % - - - -Net Mgn % - - - -ROE % (14.0) (8.8) - -ROA % (12.8) (7.3) - -Div Payout % - -EPS SR (1.2) (0.7) - -BVPS SR 8.8 7.9 (9.8) -Source: Company, NCBC Research* figures for FY2007 are from September 2006- December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.05MSCI Saudi (domestic – small cap)Free float (%)Free float 40.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)15010050Saudi Indian (RHS)New India Assurance Company 10.6Life Insurance Corporation of India 10.2Life Insurance Co. (Global) 10.2Ahmad Mohammed Abdulrahman Al 5.0Sheikh EstablishmentKhalid Abdul Aziz Bin Selmah Trading 5.0EstablishmentSource: NCBC Research-Source: Company, NCBC Research• Business brief: Saudi Indian’s product profile is segregated into two broadcategories: life insurance and non-life insurance. Under its life insurance segment,the company offers various plans related to protection and savings, such as TakafulInsurance Plan, Participating Endowment Plan, Cash Back Plan, and Money Back &Protect Lifelong. Under the non-life insurance segment, Saudi Indian provides fireinsurance, motor insurance, engineering insurance, health insurance and othermiscellaneous products including personal accident, burglary and fidelity guarantee.• Financials: The Company incurred a net loss of SR7.3mn in 2008 as compared toSR12.3mn in 2007 (from September 2006- December 2007). Saudi Indian’s totalassets aggregated to SR103.8mn, while shareholder’s equity totaled SR79.1mn atthe end of 2008.• Recent developments: Saudi Indian reported its 1Q-09 results on April 21, 2009.The company’s net loss surged to SR5.0mn in 1Q-09 compared to a net loss ofSR0.7mn in 1Q-08. The company has received approval from The Council ofCooperative Health Insurance to implement health insurance plans in KSA, as per thecompany’s announcement in April 2009. In July 2008, Saudi Indian received licensefrom the Saudi Arabian Monetary Agency to start operations.JUNE 2009SAUDI INDIAN200


INSURANCEArabian Shield Co-opAlsoknown asArabian ShieldPriceSR27.0Pricing / Valuation as on May 27, 2009Mkt capSR0.5bn ($144.2mn)Sh. outstanding20.0mnKey statistics52 week range H/L (SR) 35.3/10.6Avg daily turnover (mn) SR US$3m 32.35 8.6412m 15.62 4.17Raw Beta 6m 2yr1.08 0.90Reuters8070.SEBloombergSHIELD ABPrice perform (%) 1M 3M 12MAbsolute (%) (12) 46 (8)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www arabianshield.comValuation multiples2006 2007 2008P/E (x) NA NM 184.0P/B (x) NA 6.6 1.4P/Sales (x) NA NA NADiv yield (%) NA NA NAArabian Shield Cooperative Insurance Company (Arabian Shield) was established in2007 with headquarters at Riyadh and commenced operations in January 2008.Arabian Shield is engaged in cooperative insurance and reinsurance activities. Thecompany is a subsidiary of Arabian Shield Insurance Company, based in Bahrain.Company financials2007 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn NA NA - -Total Revenues SRmn NA NA - -Net Income SRmn (5) 2 - -Assets SRmn 204 202 (1.2) -Equity SRmn 195 196 0.8 -Investments SRmn 204 202 (1.0) -Technical Reserves SRmn NA NA - -Combined Ratio % NA NA - -Net Mgn % NA NA - -ROE % (2.7) 0.8 - -ROA % (2.6) 0.7 - -Div Payout % NA NA - -EPS SR (0.3) 0.1 - -BVPS SR 9.7 9.8 0.8 -Source: Company, NCBC Research, figures for FY 2007 are from May- December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.05MSCI Saudi (domestic – small cap) 0.33Free float (%)Free float 40.00Relative share price perf.11,000409,000307,000205,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIArabian Shield (RHS)Top 5 shareholders (%)Arabian Shield Insurance Company 30.0Bahrain National Holding Company 15.0Yamama Saudi Cement Company 5.0Al Oba kan Group for Investment 5.0Source: NCBC ResearchSource: NCBC Research• Business brief: Under the Saudi Arabian Monetary Agency’s control andsupervision, Arabian Shield provides a variety of insurance products and services.These are general insurance (including property, motor, marine, engineering, liability,accident, and airplane), medical insurance (for individuals, companies andestablishments), and energy insurance.• Financials: Arabian Shield recorded net earnings of SR1.5mn in 2008 as comparedto net loss of SR5.2mn in 2007 (from May- December 2007). The company’s totalasset base at the end of 2008 was SR201.8mn while the shareholder’s equity stoodat SR196.3mn.• Recent developments: Arabian Shield reported its 1Q-09 results on April 21, 2009.The company’s net profit slumped 77.4% to SR0.4mn in 1Q-09. In May 2008, theCompany announced the appointment of Mr. Joseph Reso to replace Mr. NizarMohammed Al-Sa'ai in the Board of Directors. On June 26, 2007, Arabian Shield’sshares were listed on the Saudi Stock Exchange with an opening price of SR62.0,which represented a 520% increase over its issue price of SR10.0.JUNE 2009ARABIAN SHIELD201


INSURANCESaudi Arabian Co-opAlsoknown asSAICO SaudiPriceSR57.0Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($152.2mn)Sh. outstanding10.0mnKey statistics52 week range H/L (SR) 89.5/14.9Avg daily turnover (mn) SR US$3m 53.29 14.2312m 30.65 8.18Raw Beta 6m 1yr1.28 1.42Reuters8100.SEBloombergSAICO ABPrice perform (%) 1M 3M 12MAbsolute (%) 10 65 (15)Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www.saicoins com saValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 15.0 2.5P/Sales (x) NA NA NADiv yield (%) NA NA NASaudi Arabian Cooperative Insurance Company (SAICO), established in 2007, offersShariah compliant insurance services across Saudi Arabia. SAICO is a subsidiary ofBahrain based Saudi Arabian Cooperative Insurance Company, which has a 30%stake in the former.Company financials2007 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn NA NA - -Total Revenues SRmn NA NA - -Net Income SRmn (6) (4) - -Assets SRmn 105 94 (10.4) -Equity SRmn 94 90 (3.9) -Investments SRmn 102 91 (10.9) -Technical Reserves SRmn NA - - -Combined Ratio % NA - - -Net Mgn % NA - - -ROE % (6.8) (4.0) - -ROA % (6.1) (3.7) - -Div Payout % NA - - -EPS SR (0.6) (0.4) - -BVPS SR 9.4 9.0 (3.9) -Source: Company, NCBC Research, figures for FY207 ate from August- December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.05MSCI Saudi (domestic – small cap)Free float (%)Free float 40.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10080604020-SAICO (RHS)Saudi Arab Insurance Co - Bahrain 30.0Al Wa'lan Car Co. 5.0Erad Holding 5.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: SAICO, catering to the insurance needs of the Saudi Arabianpopulation, aims to carry out insurance activities in all related fields excludingprotection and saving insurance.• Financials: SAICO’s total assets aggregated SR94.1mn, while shareholder’s equitytotaled SR89.9mn at the end of 2008. The company incurred a net loss of SR3.7mnin the same period as compared to SR6.4mn from August- December 2007.• Recent developments: SAICO reported its 1Q-09 results on April 19, 2009. Thecompany’s net loss surged to SR2.2mn in 1Q-09 compared to a net loss of SR0.8mnin 1Q-08. In May 2009, Saudi Arabian Monetary Agency granted an approval toSAICO to launch five new insurance products. In March 2009, Dr. George Chahinehas been appointed as a member on the board, and is awaiting the AGM’s approval.In November 2008, SAICO appointed Dr. Saud Abdullah Al Ammary on the Board ofDirectors (BOD) to replace Mr. Saleh Khalaf Al-Khalaf who resigned in June 2008. OnSeptember 3, 2007, SAICO’s shares were listed on the Saudi Stock Exchange atSR109.75 per share, an increase of more than 1000% over its issue price of SR10.00per share.JUNE 2009SAUDI ARABIAN CO-OPERATIVE INSURANCE COMPANY202


INSURANCEAl-Ahlia Insurance CoPriceSR56.5Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($150.9mn)Sh. outstanding10.0mnKey statistics52 week range H/L (SR) 104.0/14.1Avg daily turnover (mn) SR US$3m 45.64 12.1912m 38.51 10.28Raw Beta 6m 1yr1.54 1.47Reuters8140.SEBloombergAlahlia AbPrice perform (%) 1M 3M 12MAbsolute (%) 9 65 5Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www.alahlia.com saValuation multiples2006 2007 2008P/E (x) NA NA NMP/B (x) NA 11.9 2.9P/Sales (x) NA NA 149.1Div yield (%) NA NA NAAl-Ahlia Insurance Company (Al-Ahlia) was established in 2007 by the NationalInsurance Company of Egypt and several Saudi investors. Al-Ahlia is headquarteredin Riyadh and offers Islamic Sharia-compliant cooperative insurance andreinsurance services in the Kingdom.Company financials2007 2008YoY(%)CAGR(%)(05-08)Net Insurance premium SRmn - - - -Total Revenues SRmn - 2 - -Net Income SRmn - (15) - -Assets SRmn 113 107 (5.2) -Equity SRmn 100 83 (17.0) -Investments SRmn 100 101 - -Technical Reserves SRmn - 0 - -Combined Rtaio % - - - -Net profit margin % - - - -ROE % - (16.7) - -ROA % - (13.9) - -Div Payout % - 0.0 - -EPS SR - (1.5) - -BVPS SR 10.0 8.3 (17.0) -Source: Company, NCBC Research, figures for 2007 are from July- December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.05MSCI Saudi (domestic)N/AFree float (%)Free float 40.00Relative share price perf.11,0001509,0001007,000505,0003,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIAl-Ahlia (RHS)Top 5 shareholders (%)Al Ahlia Insurance Co. - Egypt 18.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: Al-Ahlia offers a range of general insurance products, which includefire insurance, property insurance, marine insurance, motor insurance, moneyinsurance, engineering insurance, medical insurance, medical malpractice insurance,fidelity insurance and liability insurance.• Financials: Al-Ahlia’s total revenues were SR1.6mn in 2008; however, the companyincurred a net loss of SR15.3mn because of high general and administrativeexpenses. The company’s assets aggregated SR106.9mn, while shareholder’s equitystood at SR83.0mn as of 31 December 2008.• Recent developments: Al-Ahlia reported its 1Q-09 results on April 21, 2009. Thecompany’s net loss rose to SR4.1mn in 1Q-09 compared to a net loss of SR0.5mn in1Q-08. In May 2009, the company announced that Saudi Arabian Monetary Agency(SAMA) has granted it a temporary approval for ten products including marine,property, fire, transportation, and glass insurance. Previously in April 2009, the SAMAapproved some of Al-Ahlia’s products, including car and medical insurance whilegeneral and health insurance product portfolio was approved in March 2009. OnOctober 06, 2007, Al-Ahlia was listed on the Saudi Stock Exchange at SR82.2 pershare as against the issue price of SR10.0. The public issue was oversubscribed 7.9times.JUNE 2009AL-AHLIA INSURANCE CO203


INSURANCEAllied Co-operativeAlso known asACIG, Saudi ACIGPriceSR63.8Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($170.2mn)Sh. outstanding10.0mnKey statistics52 week range H/L (SR) 117.0/15.0Avg daily turnover (mn) SR US$3m 58.50 15.6212m 45.41 12.13Raw Beta 6m 1yr1.00 1.40Reuters8150.SEBloombergACIG ABPrice perform (%) 1M 3M 12MAbsolute (%) (35) 60 19Market (%) 6 32 (39)Sector (%) (2) 48 (26)Website: www acig.com saValuation multiples2006 2007 2008P/E (x) NA NM NMP/B (x) NA 10.9 3.2P/Sales (x) NA NA NADiv yield (%) NA NA NAAllied Cooperative Insurance Group (ACIG) was incorporated in 2007 through theacquisition of the Saudi assets and client portfolio of its parent company, ACIGBahrain. ACIG, based in Jeddah, offers Islamic Shariah-compliant insurance andreinsurance products in Saudi Arabia.Company financials2007* 2008YoY(%)CAGR(%)(05-08)Net Insurance Premium SRmn - - - -Total Revenues SRmn - - - -Net Income SRmn (5) (20) - -Assets SRmn 94 78 (17.2) -Equity SRmn 92 71 (23.5) -Investments SRmn 91 74 (19.1) -Technical Reserves SRmn - - - -Combined Ratio % - - - -Net Mgn % - - - -ROE % (5.1) (24.8) - -ROA % (5.0) (23.4) - -Div Payout % - - - -EPS SR (0.5) (2.0) - -BVPS SR 9.2 7.0 (23.5) -Source: Company, NCBC Research; * figures for FY2007 are from July- December 2007.Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.06MSCI Saudi (domestic – mid cap) 0.29Free float (%)Free float 40.00Relative share price perf.11,0001509,0001007,0005,000503,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIA CIG (RHS)Top 5 shareholders (%)Islamic Development Bank 20.0Allied Coop Ins. Group Bahrain 20.0Source: NCBC ResearchSource: Company, NCBC Research• Business brief: ACIG offers a range of insurance products. Under its marineinsurance segment, it offers marine cargo insurance and inland transit insurance. TheMedical Insurance segment offers four product lines for all types of clients, from theoffice to the factory floor. The Motor Insurance segment provides third-party liabilityprotection, personal accident cover (for drivers and passengers) and comprehensive’own damage’ options. The General Insurance segment provides money insurance,fidelity insurance, personal accident insurance, public liability insurance, workmen’scompensation insurance, and medical malpractice insurance.• Financials: During 2008, the company reported a net loss of SR20.2mn. Thecompany’s assets also decreased to SR78.2mn at the end of 2008; whileshareholders equity aggregated to SR70.5mn.• Recent developments: ACIG reported its 1Q-09 results on April 20, 2009. Thecompany’s net loss widened to SR5.6mn in 1Q-09 compared to a net loss ofSR0.6mn in 1Q-08. In May 2009, ACIG entered into a contract with Netways to linkthe company's point of sales through a network.JUNE 2009ALLIED COOPERATIVE INSURANCE GROUP204


Company Page No. Banking and FinancialsKingdom Holding 206 PetrochemicalsAsser Trading 207 CementSaudi Arabia Refineries 208 RetailSaudi Industrial Services 209 Energy and UtilitiesSaudi Advanced Industries 210 Agriculture and FoodAl-Ahsa Development 211 Telecom and ITAl Baha Investment 212 InsuranceMulti InvestmentIndustrial InvestmentBuilding and ConstructionReal EstateTransportMedia and PublishingHotels and Tourism


MULTI-INVESTMENTKingdom Holding CoAlsoknown asKHCPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR5.2SR32.4bn ($8,663.6mn)6,300.0mn52 week range H/L (SR) 10.8/3.5Avg daily turnover (mn) SR US$3m 37.13 9.9112m 22.26 5.94Raw Beta 6m 1yr0.48 0.91ReutersBloomberg4280.SEKINGDOM ABPrice perform (%) 1M 3M 12MAbsolute (%) 3 29 (50)Market (%) 6 32 (39)Sector (%) 11 28 (45)Website: www.kingdom.com.saValuation multiples2006 2007 2008P/E (x) N/A 65.1 NMP/B (x) N/A 1.5 1.4P/Sales (x) N/A 15.7 6.2Div yield (%) NA NA NAWeightage (%)TASI (free float weight) 0.44MSCI Saudi (domestic –small cap) 0.96Free float (%)Free float 6.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)15105Kingdom (RHS)HH Prince AlWaleed Talal Abdul AzizAl SaudSource: NCBC Research-95.0Kingdom Holding Company (Kingdom) was established in 1996. Kingdom primarilyfocuses on banking and financial services, real estate, hotels & hotel managementsectors. Headquartered in Riyadh it has holdings in retail, food & entertainment,healthcare, technology, media & telecommunications, automotive, and other sectors.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,167 4,650 5,001 4,771 (4.6) 59.9EBITDA SRmn 217 998 888 (2,023) (13.7) 52.4Net Income SRmn 1,382 968 1,210 (29,911) NM NMAssets SRmn 68,191 92,440 78,508 50,715 (36.8) (10.1)Equity SRmn 61,365 65,660 51,221 21,615 (57.8) (29.4)Total Debt SRmn 4,280 17,628 18,131 17,614 (2.9) 60.2Cash & Equiv SRmn 1,072 2,478 2,329 1,893 (18.7) 20.9EBITDA Mgn % 18.6 21.5 17.8 (42.4) - -Net Mgn % 118.4 20.8 24.2 (627.0) - -ROE % 2.4 1.5 2.1 (138.4) - -ROA % 2.2 1.2 1.4 (59.0) - -Div Payout % 0.0 0.0 0.0 0.0 - -EPS SR 0.2 0.2 0.2 (4.8) NM NMBVPS SR 9.7 10.4 8.1 3.4 (57.8) (29.4)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncEquity 27.3 69.8 Saudi Arabia 100 100Hotels 65.3 30.1Real Estate & Domestic 7.4 0.1Source: Company, NCBC Research• Business brief: Kingdom, with initial activities in the construction, housingdevelopment, and educational projects, enhanced its stake across sectors in anumber of Saudi Arabian, Middle Eastern and international companies. Thecompany’s portfolio consists of premium brands such as Apple, Time Warner,Samba, Citigroup, Pepsi, Walt Disney and Hewlett-Packard. Kingdom has madeinvestments in the domestic health, education and social services sectors. Thecompany is also a private equity player in Saudi Arabia and in developing markets inthe Middle East, Africa and Asia.• Financials: Kingdom’s revenues declined 4.6% year-on-year y-o-y to SR4,770.8 mnin 2008. The company recorded a negative EBITDA in 2008 and recorded a net lossof SR29,911 mn in 2008 mainly due to decline in the investment income.• Recent developments: Kingdom’s 1Q 09 net profit declined 83.4% year on year toSR50.2 mn due to smaller dividend payments from its portfolio companies as well as aslump in its hotel business. In April 2009, Fairmont Raffles Hotels International, in whichKHC has a controlling stake, was put up for sale for up to USD450 mn. In March 2009,the company reduced its stake in Savola Group Co. to less than 5%, acquired a 30%stake worth USD20 mn in Buildworks through its subsidiary, Zephyr Africa ManagementCompany and sold its 50% holding in Four Season Hotel in Geneva.JUNE 2009KINGDOM HOLDING COMPANY206


MULTI-INVESTMENTAseer TradingAlso known asAseerPriceSR14.5Pricing / Valuation as on May 27, 2009Mkt capSR1.8bn ($489.4mn)Sh. outstanding126.4mnKey statistics52 week range H/L (SR) 37.3/8.6Avg daily turnover (mn) SR US$3m 32.90 8.7812m 34.98 9.34Raw Beta 6m 3yr1.11 1.24Reuters4080.SEBloombergATTMCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 6 31 (58)Market (%) 6 32 (39)Sector (%) 11 28 (45)Website: www aseercorp.com.saValuation multiples2006 2007 2008P/E (x) 14.6 20.5 NMP/B (x) 2.4 1.6 0.5P/Sales (x) 3.0 3.6 0.7Div yield (%) 2.3 5.1Weightage (%)TASI (free float weight) 0.21MSCI Saudi (domestic –mid cap) 2.52Free float (%)Free float 50.08Relative share price perf.11,0009,00040307,000205,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIAseer (RHS)Top 5 shareholders (%)Dalat Al Baraka Holding Co. 49.9Aseer Trading, Tourism and Manufacturing Company (Aseer), established in 1975and headquartered in Abha (Southwest of Saudi), is an investment holdingcompany with interests in five sectors – food, petrochemicals, real estate, buildingmaterials and construction, and financial services.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,217 1,378 1,482 1,742 17.5 12.7EBITDA SRmn 131 132 134 155 16.0 5.7Net Income SRmn 247 281 261 (431) NM NMAssets SRmn 2,547 2,766 4,073 3,276 (19.6) 8.8Equity SRmn 1,967 1,699 3,356 2,316 (31.0) 5.6Total Debt SRmn 115 551 158 246 55.5 28.7Cash & Equiv SRmn 53 81 132 251 89.8 68.5EBITDA Mgn % 10.8 9.5 9.0 8.9 - -Net Mgn % 20.3 20.4 17.6 (24.8) - -ROE % 12.6 16.5 10.3 (18.2) - -ROA % 9.7.6 10.6 8.6 (13.2) - -Div Payout % 48.5 N/M - -EPS SR 19.8 3.5 2.1 (3.4) NM NMBVPS SR 157.4 20.1 26.5 18.3 (31.0) 5.6Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncAgriculture 8.2 Saudi Arabia 100 100Manufacturing 71.8Investment 20.0Source: Company, NCBC Research• Business brief: Aseer operates in a wide range of businesses and holdsinvestments in diverse projects including agricultural, cement, printing & publishing,and energy-related projects. The company operates in the travel and tourism industryand owns stakes in resorts and hotels. The company holds investments in DallahIndustrial Investment Company, Al Ustool Arabia Real Estate Development Co. Ltd,Al Khawatem Trading & Contracting Co. Ltd., Al Nasrah International Real EstateDevelopment Co. Ltd. and Al Mawajed International Real Estate Development Co.Aseer has a network of six branches, which are located in Al Madinah, Riyadh, WadiDawaser, Jeddah, Hail and Al Jaouf. The company owns 95% stake in DallahIndustrial Investment Company and 50.4% stake in National Packaging ProductsCompany.• Financials: Aseer’s revenues and profits have shown relatively stable growth overthe years. On a y-o-y basis, revenues grew 17.5% to SR1,741.8mn. However, thecompany incurred a net loss of SR431.2mn during 2008 due to loss on investments.• Recent developments: In April 2009, Aseer reported 1Q 09 net profit of SR12.9 mnSource: NCBC Researchcompared to a net loss of SR77.2 mn in 1Q 08.JUNE 2009ASEER TRADING207


PriceSR57.5Pricing / Valuation as on May 27, 2009Mkt capSR0.9bn ($230.3mn)Sh. outstanding15.0mnKey statistics52 week range H/L (SR) 80.8/37.3Avg daily turnover (mn) SR US$3m 38.75 10.3512m 41.84 11.17Raw Beta 6m 3yr1.32 1.05Reuters2030.SEBloombergSARCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 30 34 (18)Market (%) 6 32 (39)Sector (%) 11 28 (45)Website: www almasafi com.saValuation multiples2007 2008 TTMP/E (x) 133.2 8.8 NMP/B (x) 4.3 1.5 NMP/Sales (x) 105.6 NM NMDiv yield (%) 0.4 1.4 NMMULTI-INVESTMENTSaudi Arabia Refin.Also known asSARCOThe Saudi Arabia Refineries Company (SARCO), established in Jeddah in 1959,invests in commercial and industrial projects in and outside Saudi Arabia. Thecompany principally invests in petroleum refining, transportation services, andhydraulic projects.Company financials2006 2007 2008 8M-08YoY*(%)CAGR(%)(06-08)Net Revenues SRmn 7 14 1 9 - NMEBITDA SRmn 5 11 (2) 7 - NMNet Income SRmn 4 11 99 8 - 426.4Assets SRmn 498 351 609 229 - 10.6Equity SRmn 483 331 597 212 - 11.1Total Debt SRmn - 8 0 0 - NACash & Equiv SRmn 6 1 43 47 - 159.7EBITDA Mgn % 69.7 84.4 (251.5) 81.4 - -Net Mgn % 54.1 79.3 15465.1 90.5 - -ROE % 0.6 2.6 21.3 3.7 - -ROA % 0.6 2.5 20.6 3.4 - -Div Payout % NA 55.9 15.2 94.3 - -EPS SR 0.9 1.8 16.7 0.5 - NMBVPS SR 120.8 55.1 99.5 14.1 - (9.3)Source: Company, NCBC Research * The comparable 8M figure for FY2008 are not availableSegment-wise business analysisProduct segment H109 Geographic H109%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.19MSCI Saudi (domestic –small cap) 1.10Free float (%)Free float 100.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10080604020-SARCO (RHS)HH Mete'eb Bin Abdul Aziz Al Saud 7.3HH Prince Khalid Turki Abdul Aziz 5.0Turki Al SaudSource: Company, NCBC Research• Business brief: Currently, SARCO owns stakes in Arabian Salfonates Company(34%), Arabian Tankers Company (27%), Saudi Industrial Investment Group (3.33%),Tabuk Cement and Riyad Bank. SARCO generates income from: (i) its stakes in theearnings of other companies; and (ii) capital gains on the sale of its investments.• Financials: SARCO reported revenues of SR8.7mn and net profit of SR7.9mn during8M-08. The company also recorded impressive net margin of 90.5% while EBITDAmargin was 81.4%. The company paid a dividend of SR0.5 per share, with a dividendpayout of 94.3%. EPS for 8M-08 was SR0.5.• Recent developments: In April 2009, SARCO reported net profit of SR0.08 mn for1Q 09 compared to a net profit of SR98.6 mn in 1Q 08. In December 2008, thecompany increased its capital from SR60mn to SR150mn, through an issue of 2.5bonus shares for every share held.Source: NCBC ResearchJUNE 2009SAUDI ARABIA REFINERIES CO208


PricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR12.4SR0.8bn ($224.2mn)68.0mn52 week range H/L (SR) 24.0/7.8Avg daily turnover (mn) SR US$3m 36.84 9.8412m 32.65 8.72Raw Beta 6m 3yr1.11 1.17ReutersBloomberg2190.SESISCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 14 33 (44)Market (%) 6 32 (39)Sector (%) 11 28 (45)Website: www.sisco com saValuation multiples2006 2007 2008P/E (x) 258.8 NM NMP/B (x) 3.1 3.3 0.9P/Sales (x) 17.8 12.9 4.7Div yield (%) NA NA NAWeightage (%)TASI (free float weight) 0.15MSCI Saudi (domestic –small cap) NAFree float (%)Free float 79.42Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)252015105-SISCO (RHS)Xenel Industrial Co 20.5MULTI-INVESTMENTSaudi Indl ServicesAlso known asSISCOSaudi Industrial Services Company (SISCO) established in 1988, undertakes largescaleinvestments in KSA’s infrastructure sector on a built-operate-transfer and builtoperate-ownmodel. SISCO has business interests in water desalination anddistribution, development of industrial estates, free zone ports and support services.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 74 74 108 135 25.5 22.2EBITDA SRmn 7 15 37 34 (17.4) 71.1Net Income SRmn 13 5 (5) (24) NM NMAssets SRmn 635 619 703 1,893 155.0 44.2Equity SRmn 454 430 426 722 59.7 16.6Total Debt SRmn 99 97 181 855 372.8 105.5Cash & Equiv SRmn 198 68 54 718 1,234.8 53.8EBITDA Mgn % 8.7 19.5 36.4 24.0 - -Net Mgn % 17.4 6.9 (4.9) (17.9) - -ROE % 3.0 1.2 (1.2) (3.4) - -ROA % 2.4 0.8 (0.8) (1.8) - -Div Payout % N/A N/A N/A N/A - -EPS SR 0.3 0.1 (0.7) (0.4) NM NMBVPS SR 11.4 10.8 11.3 10.6 NM NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncGas Stations and Maintenance 27 Saudi Arabia 100 100Restaurants and Housing Services 0Water Distillation 52Sea Front Project 0Re-Export Projects 21Headquarter 0Source: Company, NCBC Research• Business brief: The company’s affiliate, Support Services Operations Co. (97%owned) provides ancillary services such as building and car maintenance, catering,gas stations in Industrial estates. Saudi Trade & Export Development Co. (76%owned), operates a Free Zone at Jeddah Islamic Sea port on a BOT basis. KindasaWater Services (60% owned) operates a 14,000 cubic meter/day (m3/d) desalinationplant and water distribution network. International Water Distribution Co. (50%owned) is engaged in building & operating water distribution networks within the KSA.• Financials: In 2008, SISCO registered a 25.5% y-o-y increase in sales toSR135.3mn due to increase in demand for the company's products. However, netloss increased from SR5.2mn in 2007 to SR24.2mn mainly due to increase inoperating expenses.• Recent developments: In April 2009, SISCO reported a 1Q 09 net profit of SR0.7Source: NCBC Researchmn compared to a net loss of SR0.3 mn in 1Q 08. September 2008, SISCO’s affiliateAljabr Talke signed a SR100mn deal with National Industrialization Co. for providinglogistics services.JUNE 2009SAUDI INDUSTRIAL SERVICES209


PriceSR13.6Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($156.3mn)Sh. outstanding43.2mnKey statistics52 week range H/L (SR) 24.3/8.2Avg daily turnover (mn) SR US$3m 41.46 11.0712m 22.93 6.12Raw Beta 6m 3yr1.12 1.16Reuters2120.SEBloombergSAIC ABPrice perform (%) 1M 3M 12MAbsolute (%) 3 23 (42)Market (%) 6 32 (39)Sector (%) 11 28 (45)Website: www.saic com.saValuation multiples2006 2007 2008P/E (x) N/M 91.4 21.8P/B (x) 6.2 1.7 0.6P/Sales (x) N/M 64.2 17.3Div yield (%) N/A N/A 5.0MULTI-INVESTMENTSaudi Advanced IndsAlsoknown asSAIOSaudi Advanced Industries Co. (SAIC) is involved in participation, development andpromotion of industrial projects under The Economic Offset Program organized by theMinistry of Defense and Aviation. SAIC encourages U.S, U.K and French firms tocollaborate with Saudi companies to establish high-tech plants in diversified industries.Company financials2005 2006 2007 2008YoY(%)CAGR (%)(05-08)Net Revenues SRmn 5 2 22 25 14.9 71.3EBITDA SRmn 5 2 20 22 10.9 58.6Net Income SRmn 3 0 16 20 27.6 79.7Assets SRmn 103 168 822 894 8.7 105.7Equity SRmn 100 124 820 704 (14.2) 91.9Total Debt SRmn - - - -Cash & Equiv SRmn 2 1 401 1 (99.7) (11.6)EBITDA Mgn % 106.9 100.4 87.9 84.8 (3.5) (7.4)Net Mgn % 67.6 17.7 70.2 78.0 11.0 4.9ROE % 3.5 0.4 1.9 2.6 - (9.3)ROA % 3.4 0.3 1.9 2.3 - (12.0)Div Payout % N/A N/A N/A 1.1 - -EPS SR 0.1 0.0 0.4 0.5 27.6 79.7BVPS SR 2.3 2.9 19.0 16.3 (14.2) 91.9Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.13MSCI Saudi (domestic –small cap) 1.05Free float (%)Free float 100.00Relative share price perf.11,000309,000207,0005,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISaudi Advanced (RHS)Top 5 shareholders (%)Khalid Saleh Abdul Rahman Al Shethry 9.6Source: Company, NCBC Research• Business brief: SAIC has investments in Al Salam Aircraft Co. (10% stake), GulfSalt Co. (4.6% stake), Industrialization & Energy Services Co. (3.4%), ArabianIndustrial Fibers Co. (1.5% stake), and Yanbu National Petrochemicals Co. Moreover,the company enters into contracts with other firms to develop new technologyorientedcompanies.• Financials: SAIC’s total revenue increased 14.9% on y-o-y basis to SR25.5mn in2008 primarily due to increase in income from investment in Islamic Murabaha. Netincome in 2008 increased 27.6% y-o-y to SR19.9mn due to significant decrease infinance charges. This helped a 7.8 percentage points improvement in net marginsform 70.2% in 2007 to 78.0% in 2008• Recent developments: In April 2009, SAIC reported a 40.7% increase in 1Q 09net profit to SR6.2 mn. In October 2008, SAIC acquired a 20% stake in NPS Bahrainfor Oil & Gas Wells Services WLL, an oil and gas exploration and productioncompany, for SR 375mn.Source: NCBC ResearchJUNE 2009SAUDI ADVANCED INDUSTRIES210


MULTI-INVESTMENTAl-Ahsa DevelopmentAlsoknown asADCPriceSR12.6Pricing / Valuation as on May 27, 2009Mkt capSR0.6bn ($164.9mn)Sh. outstanding49.0mnKey statistics52 week range H/L (SR) 23.6/7.8Avg daily turnover (mn) SR US$3m 46.14 12.3212m 30.27 8.08Raw Beta 6m 3yr0.50 1.19Reuters2140.SEBloombergAADC ABPrice perform (%) 1M 3M 12MAbsolute (%) 14 1 (42)Market (%) 6 32 (39)Sector (%) 11 28 (45)Website: www.ahsa-dev com.saValuation multiples2006 2007 2008P/E (x) 20.4 41.6 NMP/B (x) 3.2 2.8 1.1P/Sales (x) 81.3 81.1 NMDiv yield (%) N/A N/A N/AAl-Ahsa Development Company (AADC) was established in 1993 by Royal decree,to undertake investment activities in the industrial and service sectors of SaudiArabia, particularly in the region of Al-Ahsa. AADC has business interests in foods,textiles, and medical services sectors.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 31 18 18 0 (100.0) (100.0)EBITDA SRmn 2 (3) (1) (6) (100.0) 100.0)Net Income SRmn 96 71 35 (56) (100.0) (100.0)Assets SRmn 726 792 727 558 (23.2) (8.4)Equity SRmn 451 456 521 397 (22.7) (3.7)Total Debt SRmn 257 313 168 131 (28.1) (22.2)Cash & Equiv SRmn 2 6 3 6 (55.6) (2.4)EBITDA Mgn % 6.4 (15.2) (6.6) NM - -Net Mgn % 304.1 397.7 194.3 NM - -ROE % 21.2 15.6 6.6 (14.1) - -ROA % 13.2 9.4 4.5 (10.1) - -Div Payout % N/A N/A N/A N/A - -EPS SR 13.9 1.7 0.8 (1.2) NM NMBVPS SR 10.5 10.6 12.1 8.2 (32.3) (7.9)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.14MSCI Saudi (domestic –small cap) 1.44Free float (%)Free float 100.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09TASITop 5 shareholders (%)252015105-Al Ahsa for Dev. (RHS)Source: Company, NCBC Research• Business brief: AADC’s affiliate - Al-Ahsa Medical Services Co. (30% Stake),manages a modern 220 bed hospital in the Al-Ahsa region, Al-Ahsa Food ServicesCo. (50% Stake) a JV with Eastern Agriculture Development Co. with a capacity of5,000 tons of data processing, is engaged in production of date molasses vinegar,dates pest and compressed dates. The company’s affiliate, Saudi Japanese TextileCo. (82% Stake, produces synthetic fiber used in the production of dress material.Currently, AADC is in the process of setting up an aluminum foil factory, a cementplant, and a National University in Al-Ahsa.• Financials: AADC’s did not record any revenue in 2008. The company recorded anegative EBITDA of SR5.9mn in 2008 as compared to negative SR1.7mn in 2007owing to decline in revenues coupled with increase in SG&A expenses. AADCincurred a net loss of SR56.2mn as compared to net income of SR34.5mn in 2007mainly due to decline in revenues and investment income.• Recent developments: In March 2009, the company announced that it signed aSource: NCBC Researchmemorandum of understanding with a Chinese company, to make it a partner in theADC’s aluminum and gypsum plants. In December 2008, the Board of AADCapproved a one-for-seven bonus share issue, which increased the company’s capitalby 14% to SR490 mn with 49mn outstanding shares.JUNE 2009AL-AHSA DEVELOPMENT CO211


MULTI-INVESTMENTAl-Baha InvestmentAlsoknown asAl-bahaPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR21.6SR0.3bn ($86.3mn)15.0mn52 week range H/L (SR) 24.2/7.5Avg daily turnover (mn) SR US$3m 71.72 19.1512m 30.06 8.03Raw Beta 6m 3yr1.57 1.27ReutersBloomberg4130.SEABDICO ABPrice perform (%) 1M 3M 12MAbsolute (%) 35 78 6Market (%) 6 32 (39)Sector (%) 11 28 (45)Website: NAValuation multiples2006 2007 2008P/E (x) NM NM NMP/B (x) 4.8 4.3 1.3P/Sales (x) 148.9 295.8 742.5Div yield (%) 0 0 0Weightage (%)TASI (free float weight) 0.07MSCI Saudi (domestic –small cap) NAFree float (%)Free float 100.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)252015105-Al Baha (RHS)Al-Baha Investment & Development Co (Al-baha) was established in 1992 to developand operate projects in the Al-Baha province. It is engaged in a wide range of industrial,commercial, agricultural activities and has plans to expand beyond the region. Al-baha’sinvestments include a 95% stake in the Al-Baha Marble & Granite Company.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 3 3 2 - (87.3) (59.4)EBITDA SRmn 2 2 (3) (5) NM NMNet Income SRmn (4) (4) (13) (15) NM NMAssets SRmn 102 141 147 119 (10.8) 8.9Equity SRmn 63 102 123 105 (4.5) 23.3Total Debt SRmn 5 7 9 - NM NMCash & Equiv SRmn 5 4 41 28 (31.2) 83.4EBITDA Mgn % 69.3 62.4 NM NM - -Net Mgn % NM NM NM NM - -ROE % (6.3) (4.8) (11.9) (14.3) - -ROA % (4.3) (3.3) (9.3) (21.6) - -Div Payout % - - - - - -EPS SR (0.3) (0.3) (0.9) (0.4) NM NMBVPS SR 27.8 9.1 8.2 6.9 (4.5) 23.3Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncMain Center 0 52Poultry Farms 74 30Leather Factory 2 11Telfrik Project 25 7Source: Company, NCBC Research• Business brief: Al-baha is involved in wholesale & retail trading and industrialprojects including construction. The company also operates refrigeration stores aswell as repairs and maintenance workshops; and develops animal and agriculturalproducts. In addition, Al-baha owns and reclaims agricultural land for use in newprojects. It also constructs, maintains, and operates public utilities including tramwaysand develops recreational and tourist facilities including parks and tourist villages.• Financials: In FY08, Al-Baha’s total revenue decreased 87.3% on y-o-y basis toSR0.226mn primarily due to decrease in demand for the company's core productsand services. Net loss decreased to SR6.6mn from SR13.3mn in 2007 because ofdecrease in operating income and the increase in provisions.• Recent developments: In April 2009, Al-Baha reported a 1Q 09 net loss of SR1.2mn. In January 2008, Al-baha entered into an alliance with Al-Khabeer FinancialAdvisors to enhance the performance of its investments. Moreover, Al-baha’s BoardSource: NCBC Researchof Directors approved to increase the share capital to SR1bn from SR150mn.JUNE 2009AL-BAHA INVESTMENT212


Company Page No. Banking and FinancialsSaudi Arabian Mining 214 PetrochemicalsSaudi Chemical 215 CementSaudi Pharmaceutical 216 RetailAl Abdullatif Industrial 217 Energy and UtilitiesSaudi Paper Manufacturing 218 Agriculture and FoodNational Company for Glass 219 Telecom and ITAstra Industrial Group 220 InsuranceBasic Chemical Industries 221 Multi InvestmentSaudi Industrial Export 222 Industrial InvestmentNational Metal 223 Building and ConstructionFiling and Packaging Materials 224 Real EstateTransportMedia and PublishingHotels and Tourism


INDUSTRIAL INVESTMENTAlsoSaudi Arabian Miningknown asMAADENPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR14.8SR13.7bn ($3,655.5mn)925.0mn52 week range H/L (SR) 32.0/9.9Avg daily turnover (mn) SR US$3m 216.58 57.839m 223.38 59.65Raw Beta 6m 9m1.18 0.89ReutersBloomberg1211.SEMAADEN ABPrice perform (%) 1M 3M 12MAbsolute (%) 17 30 NAMarket (%) 6 32 (39)Sector (%) 11 29 (33)Website: www maaden.com.saValuation multiples2006 2007 2008P/E (x) NA NA 48.4P/B (x) NA NA 0.6P/Sales (x) NA NA 21.4Div yield (%) NA NA 0.0Weightage (%)TASI (free float weight) 1.22MSCI Saudi (domestic – small cap) NAFree float (%)Free float 39.83Relative share price perf.11,0009,0007,0005,0003,000Jul-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)MA'ADEN (RHS)Public Investment Fund 50.0General Organization for Social 5.7Insurance (GOSI)Public Pension Authority 5.0Source: NCBC Research40302010-Saudi Arabian Mining Company (Ma'aden), established in 1997, is engaged inexploration and production of metal and non-metal ores. The company has fiveoperating gold mines in KSA and a number of new projects. In 2008, Maaden wentpublic and raised SR10.5 bn reducing the government’s holding from 100% to 55%.Company financials2005 2006 2007 2008 YoY (%)CAGR(%)(05-08)Net Revenues SRmn 278 350 244 460 88.5 18.3EBITDA SRmn 74 98 (13) 1 NM NMNet Income SRmn 216 318 199 203 2.16 -1.9Assets SRmn 5,659 6,038 5,848 21,358 268.9 56.2Equity SRmn 5,413 5,731 5,484 16,188 198.7 44.6Total Debt SRmn - - - 820 NM NMCash & Equiv SRmn 2,626 182 596 4,145 595.6 16.0EBITDA Mgn % 26.5 28.0 (5.4) 0.27 - -Net Mgn % 77.6 90.9 81.6 43.2 - -ROE % 4.0 5.7 3.6 1.2 - -ROA % 3.8 5.4 3.3 0.95 - -Div Payout % - - - - - -EPS SR 5.4 8.0 5.0 0.2 - -BVPS SR 135.3 143.3 137.1 17.7 - -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncGold 93.3 47.8Phosphate 0.0 (2.07)Others (mainly investment income) 6.7 54.3Source: Company, NCBC Research• Product profile: Ma'aden’s Mahd Ad Dahab mine produced 58,256 ounces of gold in2007. Its Sukhaybarat plant has a rated capacity of 600,000 tonnes per annum (tpa).Further, the Co. is jointly developing its SR13.0bn worth Phosphate Project withSABIC and SR20.9bn worth Aluminum Project. The Co.’s phosphate project, plannedto complete in 2010, is likely to yield 3mn metric tons of diammonia phosphatewhereas the aluminum project is scheduled to complete by 2015.• Financials: Company‘s revenue increased 88.5% y-o-y to SR460.2mn despite thedecline in sales volume as the average selling price doubled in 2008 compared with2007. Net income, however, did not increase proportionally with revenue due tohigher mining costs as well as non-recurring expenses related to the IPO in 2008.• Recent developments: In May 2009 Ma’aden announced that it would proceed withthe construction of a new aluminium smelter after the cost of the project fell toUSD8Bn from USD10bn whiel Dubai Aluminium Co. also expressed an interest injoining the project. Ma’aden’s net profit for 1Q-09 reported a fall of 47% y-o-y toSR18mn. The decline in net profit was due to provisions taken to pay zakat (Islamictaxes). Furthermore, Ma'aden also signed a technology transfer agreement withAluminium Pechiney and an agreement with Rio Tinto Alcan. In February 2009,Ma'aden Infrastructure signed a deal of USD48 mn with Azmeel Contracting andConstruction Corp. for the construction of 500 residential units.JUNE 2009SAUDI ARABIAN MINING COMPANY214


INDUSTRIAL INVESTMENTSaudi Chemical Co.Also known asSCCPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR29.5SR1.9bn ($498.2mn)63.2mn52 week range H/L (SR) 53.3/17.0Avg daily turnover (mn) SR US$3m 51.06 13.6312m 56.16 15.00Raw Beta 6m 3yr0.98 1.12ReutersBloomberg2230.SESCCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 0 34 (30)Market (%) 6 32 (39)Sector (%) 11 29 (33)Website: www saudichemical comValuation multiples2006 2007 2008P/E (x) 12.9 20.5 6.6P/B (x) 2.3 2.6 1.2P/Sales (x) 1.9 1.9 0.9Div yield (%) 3.3 0.0 0.0Weightage (%)TASI (free float weight) 0.40MSCI Saudi (domestic – small cap) 1.21Free float (%)Free float 96.97Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08TASITop 5 shareholders (%)Source: NCBC ResearchNov-08 Feb-09 M ay-09SCC (RHS)605040302010-Saudi Chemical Company (SCC) is engaged in blasting services, production and sale ofexplosives and detonators for civil and military use. In 2004, SCC entered the seismicexplosives market serving the oil and gas exploration sector. Its subsidiary Sitcopharmasupplies medical and surgical equipment to hospitals and medical centers.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 954 1,015 1,230 1,537 24.9 17.2EBITDA SRmn 159 180 171 226 32.1 12.5Net Income SRmn 110 148 112 201 79.9 22.3Assets SRmn 1,347 1,447 1,658 2,024 22.1 14.6Equity SRmn 699 847 896 1,096 22.4 16.2Total Debt SRmn 100 25 138 119 (13.8) 6.0Cash & Equiv SRmn 51 86 166 166 (0.1) 48.6EBITDA Mgn % 16.6 17.8 13.9 14.7 - -Net Mgn % 11.5 14.6 9.1 13.1 - -ROE % 17.1 19.1 12.8 20.2 - -ROA % 8.4 10.6 7.2 10.9 - -Div Payout % 42.7 0.0 0.0 - -EPS SR 10.4 2.3 1.8 3.2 77.8 NMBVPS SR 11.1 13.4 14.2 17.3 21.8 NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc/loss Breakup %Rev % Net IncPharmaceutical 84.2 51.2Explosives 15.8 49.5Ammonium Nitrate 0.0 (0.3)Source: Company, NCBC Research• Business Brief: SCC's products include Prilex, a blasting agent mainly used forfissured sedimentary rocks and underground applications; Kemulex, an emulsionexplosive suitable for worksites with wet holes and underwater blasting; Sanel, a nonelectricshock tube designed for bench and trench blasting; explosives packing;electric detonators; detonating cords and blasting machines.• Financials: SCC’s revenue has increased consistently over the past three years.Top-line increased 24.9% y-o-y to SR1,537.0mn in 2008. Net income grew almost79.9% y-o-y in 2008 mainly due to decline in other expenses and higher otherrevenues. Consequently, net margin improved to 13.1% in 2008 from 9.1% in 2007.• Recent developments: In April 2009, SCC announced a 97% y-o-y increase in itsQ109 net profits to SR67mn. On March 10, 2009, GlaxoSmithKline terminated itsPanadol distribution agreement with SITCO, a 99%-owned subsidiary of SCC.Sitcopharma was awarded SR352mn contract to supply pharmaceutical products forhospitals in KSA, as per the company’s announcement in November 2008. In June2008, SCC acquired 15% stake in Mawarid Trading Co. and 50% stake in Al DawaaMedical Services Co. through its subsidiary, Saudi International Trading Co.JUNE 2009SAUDI CHEMICAL COMPANY215


INDUSTRIAL INVESTMENTSaudi Pharma.Also known asSPIMACOPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR35.0SR2.1bn ($560.7mn)60.0mn52 week range H/L (SR) 62.0/19.4Avg daily turnover (mn) SR US$3m 11.07 2.9512m 24.82 6.63Raw Beta 6m 3yr1.14 1.28ReutersBloomberg2070.SESPIMACO ABPrice perform (%) 1M 3M 12MAbsolute (%) 6 41 (38)Market (%) 6 32 (39)Sector (%) 11 29 (33)Website: www.spimaco.com.saValuation multiples2006 2007 2008P/E (x) 29.4 30.0 11.2P/B (x) 1.5 1.3 1.1P/Sales (x) 4.2 4.6 1.7Div yield (%) 1.9 2.5 6.1Weightage (%)TASI (free float weight) 0.31MSCI Saudi (domestic)NAFree float (%)Free float 65.03Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09TASITop 5 shareholders (%)-M ay-09SP M ACO (RHS)Arab Company for Drug Industries and 20.0Medical AppliancesPublic Pension Authority (PPA) 13.0Source: NCBC Research80604020Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO)manufactures medicines and medical appliances for local and international markets.The company’s annual production capacity includes 3mn liters of liquid medicines,550mn tablets, 12mn tubes of cream and ointment, aseptic drops, and penicillin.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 649 728 798 872 9.3 10.3EBITDA SRmn 124 129 129 142 10.3 4.8Net Income SRmn 96 105 122 132 8.5 11.2Assets SRmn 2,466 2,402 3,357 1,937 (42.3) (7.7)Equity SRmn 2,048 1,995 2,884 1,406 (51.2) (11.8)Total Debt SRmn - - - 40 - -Cash & Equiv SRmn 120 131 170 63 (63.2) NMEBITDA Mgn % 19.0 17.7 16.2 16.3 - -Net Mgn % 14.8 14.4 15.3 15.2 - -ROE % 5.3 5.2 5.0 6.2 - -ROA % 4.4 4.3 4.2 5.0 - -Div Payout % 62.4 57.1 73.9 68.4 - -EPS SR 8.0 1.8 2.0 2.2 8.0 (35.1)BVPS SR 170.6 33.2 48.0 23.3 (51.4) (48.5)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncPharmaceutical and Medical Mnfg. 97.1Investments 2.9Source: Company, NCBC Research• Product profile: SPIMACO commenced production in 1990 with six products. Thecompany’s products include Zimax, Formit, Proton, Famocid 10, Cortimax, SapoffenPlus and Glaze. Through its state-of-the-art facility, the Al-Qassim Plant, thecompany’s portfolio increased to 768 registered products marketed in over 14countries in 2006. SPIMCO offers oral solids, oral liquids, dry powders, injectables,ointments, creams and suppositories.• Financials: SPIMACO’s revenues have grown consistently in the last few years dueto expansion of the sales force and its innovative product line. On a yearly basis,revenues grew 9.3% and net income rose 8.5% in 2008. Company’s net margin slidmarginally to 15.2% in 2008 mainly due to rise in interest expenses.• Recent developments: SPIMACO’s net profit for 1Q-09 increased 4.4% y-o-y toSR42.70mn. In February 2009, Dr. Hussein Al Kahtani, VP Marketing and Sales,was appointed as the CEO of the company. In November 2008, the company won acontract from Ministry of Health for SR102.1mn for the supply of medicines to theGulf Cooperation Council. The company announced to liquidate its fully owned unitSaudi Dawa'akoum Co. during the same month. In June 2008, Spimaco acquired5.83 million new shares of National Industrialization Co. or Tasnee for SR104.94mn;thereby increasing its total stake to 5.25%.JUNE 2009SAUDI PHARMACEUTICALS & MEDICAL APPLIANCES216


PriceSR41.0Pricing / Valuation as on May 27, 2009Mkt capSR3.3bn ($889.5mn)Sh. outstanding81.3mnKey statistics52 week range H/L (SR) 80.0/35.5Avg daily turnover (mn) SR US$3m 36.30 9.6912m 39.68 10.59Raw Beta 6m 2yr0.44 0.59Reuters2340.SEBloombergALABDUL ABPrice perform (%) 1M 3M 12MAbsolute (%) 2 (0) (20)Market (%) 6 32 (39)Sector (%) 11 29 (33)Website: www carpets.comValuation multiples2006 2007 2008P/E (x) NA 22.3 18.0P/B (x) NA 4.0 3.0P/Sales (x) NA 4.2 3.2Div yield (%) NA 2.2 0.0INDUSTRIAL INVESTMENTAl Abdullatif Indl.Also known asAIICAl-Abdullatif Industrial Investment Company (Al Abdullatif), established in 1981,ranks among the largest carpet manufacturers in the world. The company’s fullyintegrated operations—from fiber extrusion to finishing—gives it a comparativeadvantage in the timely and cost-effective execution of orders.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 748 861 1,066 1,139 6.8 15.1EBITDA SRmn 237 265 288 282 (2.1) 6.1Net Income SRmn 173 192 200 201 0.6 5.1Assets SRmn 1,087 1,172 1,312 1,534 17.0 12.2Equity SRmn 719 911 1,111 1,215 9.3 19.1Total Debt SRmn 257 152 63 218 245.2 (5.5)Cash & Equiv SRmn 149 116 75 35 (53.7) (38.3)EBITDA Mgn % 31.6 30.8 27.0 24.8 - -Net Mgn % 23.2 22.3 18.8 17.7 - -ROE % 21.1 23.5 19.8 17.3 - -ROA % 16.2 17.0 16.1 14.1 - -Div Payout % 48.7 0.0 - -EPS SR 3.1 3.0 3.1 2.5 (19.5) (7.7)BVPS SR 13.1 14.0 17.1 15.0 (12.5) 4.6Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.24MSCI Saudi (domestic – small cap) 1.61Free float (%)Free float 32.00Relative share price perf.11,000009,00080607,000405,000203,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIAlAbdullatif (RHS)Top 5 shareholders (%)Al Abdul Latif Holding Group 60.0Amr Sulaiman Saleh Al Abdul Latif 5.8Source: NCBC ResearchSource: Company, NCBC Research• Product profile: Al Abdullatif’s manufactures three kinds of carpets — tufted, woven,and non-woven; primarily made from synthetic fibers. The company exports thesecarpets to more than 25 countries. The color pigment division provides variousshades of color for the production of carpets and blankets. The paper tube divisionprovides paper tubes of different sizes and thicknesses for the winding of carpets andyarn. The company’s five fully owned affiliates provide backward integration supportto the company.• Financials: In 2008, Al Abdullatif’s sales grew 6.8% year-on-year (y-o-y) toSR1,138.9mn. However, net income remained nearly flat at SR201.3mn in 2008 ascompared to SR200.1mn in 2007. This was largely due to higher cost of sales andadministrative expenses in 2008. There was also a significant decline in cash balanceas the company invested heavily in fixed assets.• Recent developments: Al Abdullatif’s net profit for the 1Q-09 decreased 49.53% y-oyto SR 26.01mn. In September 2008, Al Abdullatif announced the acquisition of 27%stake in Red Sea Cables Co.; which is under establishment and has a capital ofSR370mn. In March 2008, the company increased its capital to SR812.5mn throughissuance of bonus shares.JUNE 2009ALABDULLATIF INDUSTRIAL217


INDUSTRIAL INVESTMENTSaudi Paper MnfgAlso known asSPM,Saudi Paper GroupPriceSR57.0Pricing / Valuation as on May 27, 2009Mkt capSR1.7bn ($456.6mn)Sh. outstanding30.0mnKey statistics52 week range H/L (SR) 75.5/43.0Avg daily turnover (mn) SR US$3m 16.10 4.3012m 21.37 5.71Raw Beta 6m 3yr0.50 1.07Reuters2300.SEBloombergSPM ABPrice perform (%) 1M 3M 12MAbsolute (%) 3 10 (15)Market (%) 6 32 (39)Sector (%) 11 29 (33)Website: www.saudipaper.comValuation multiples2006 2007 2008P/E (x) 19.5 22.1 26.3P/B (x) 4.3 4.8 5.0P/Sales (x) 3.7 4.1 4.4Div yield (%) 0.9 1.0 1.3Saudi Paper Manufacturing Company (SPM) is one of the few integrated papercompanies in the MENA region. SPM engages in recycling of waste paper,production of tissue rolls from recycled paper and conversion of rolls intoconsumer products such as paper napkins, towels, facial and toilet paper.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 331 366 444 505 13.9 15.2EBITDA SRmn 104 101 117 125 6.2 6.2Net Income SRmn 68 69 83 85 2.6 7.4Assets SRmn 456 526 628 1,138 81.2 35.6Equity SRmn 240 309 382 448 17.4 23.1Total Debt SRmn 158 176 192 589 206.3 55.0Cash & Equiv SRmn 19 39 27 38 38.4 26.0EBITDA Mgn % 31.5 27.5 26.5 24.7 - -Net Mgn % 20.7 18.8 18.6 16.8 - -ROE % 30.2 25.0 23.9 20.4 - -ROA % 15.4 14.0 14.3 9.6 - -Div Payout % - 17.5 21.8 35.4 - -EPS SR 68.4 2.9 3.4 2.8 (17.9) (65.4)BVPS SR 240.2 12.9 15.9 14.9 (6.0) (60.4)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.19MSCI Saudi (domestic – small cap) 0.78Free float (%)Free float 49.90Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)80604020-SPM (RHS)HH Prince Abdullah Bin Musaed Bin 50.0Abdul Aziz Al SaudRa’ed Bin Abdul Rahman Bin Abdul 8.4Aziz Al Mesha’alFalcom Financial Services Co. 7.7Source: NCBC ResearchSource: Company, NCBC Research• Product profile: SPM has three tissue paper processing plants with an aggregatecapacity of 70,000 tons/year. The company’s wholly owned subsidiary Saudi PaperConverting Co. (SPCC) converts tissue rolls into branded consumables, which arethen distributed through wholesale and retail channels. Saudi Recycling Co. (SRC)collects waste paper, which serves as feed for SPM’s downstream de-inking plants.Al-Madar Trading Co. was set up in the UAE to collect waste paper from internationalsources. SPM is currently expanding its tissue production and conversion facilities.• Financials: In 2008, SPM registered net profit of SR84.8mn on total revenues ofSR505.3mn, representing year-on-year (y-o-y) increase of 2.6% and 13.9%respectively. The lower growth in the net profit is mainly attributable to higher inputcosts, and higher other expenses.• Recent developments: In April 2009, SPM announced its results for 1Q-09 andregistered a net profit increase of 0.5% y-o-y to SR22.62mn. In March 2009, SPMundertook a production expansion at its Dammam plant through an investment ofSR300mn thereby increasing production by 79% to 125,000 tons annually. In April2008, the company hiked its capital by 25% to SR300mn through the issuance ofbonus shares. In 2008, the company undertook initiatives to expand its business inBahrain, Morocco, Algeria, and Jordan.JUNE 2009SAUDI PAPER MANUFACTURING218


INDUSTRIAL INVESTMENTNational Co for GlassAlsoknown asZOUJAJPriceSR33.9Pricing / Valuation as on May 27, 2009Mkt capSR0.8bn ($226.3mn)Sh. outstanding25.0mnKey statistics52 week range H/L (SR) 85.0/22.3Avg daily turnover (mn) SR US$3m 20.96 5.6012m 20.77 5.55Raw Beta 6m 3yr0.93 1.13Reuters2150.SEBloombergZOUJAJ ABPrice perform (%) 1M 3M 12MAbsolute (%) 2 20 (57)Market (%) 6 32 (39)Sector (%) 11 29 (33)Website: www.zoujaj-glass comValuation multiples2006 2007 2008P/E (x) 22.9 20.1 10.7P/B (x) 3.0 3.6 1.7P/Sales (x) 14.4 15.2 6.7Div yield (%) 1.8 1.6 5.2Weightage (%)National Company for Glass Industries (Zoujaj) owns two glass container factories,one each in Riyadh and Dammam. Zoujaj has stakes (45% each) in Saudi GuardianInternational Float Glass and Guardian RAK; a joint venture with Guardian Industries.These facilities manufacture float glass for automotive and construction applications.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 88 77 106 109 2.1 7.3EBITDA SRmn 36 31 46 44 (5.0) 7.2Net Income SRmn 130 48 80 68 (15.8) (19.5)Assets SRmn 418 458 501 488 (2.6) 5.3Equity SRmn 387 367 443 428 (3.3) 3.4Total Debt SRmn 4 53 25 25 1.2 89.4Cash & Equiv SRmn 7 16 3 17 525.0 36.2EBITDA Mgn % 40.7 40.8 43.6 40.6 - -Net Mgn % 148.0 62.9 75.6 62.4 - -ROE % 39.0 12.8 19.9 15.5 - -ROA % 35.8 11.0 16.8 13.7 - -Div Payout % 15.4 41.3 31.1 55.6 - -EPS SR 32.5 2.4 3.2 2.7 (16.1) (56.3)BVPS SR 96.8 18.4 17.7 17.1 (3.6) (43.9)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncGlass Container Manufacturing 100 Saudi Arabia 84.0Rest of the World 16.0TASI (free float weight) 0.16MSCI Saudi (domestic – small cap) 1.25Free float (%)Free float 83.76Relative share price perf.11,0001009,00080607,000405,000203,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIZoujaj (RHS)Source: Company, NCBC Research• Product profile: Zoujaj’s plants in Riyadh and Dammam, which have a productioncapacity of 92,000 metric tons per year, manufacture glass containers for the foodand beverage industry. Saudi Guardian International Float Glass Co has a float glassproduction capacity of 220,000 tons per year, while Guardian RAK has a capacity of700 tons per day. In addition, Guardian RAK is planning to implement a hi-tech glasscoating technology to expand its float glass offerings to regional customers.• Financials: Revenues grew 2.1% year-on-year (y-o-y) to SR108.5mn in 2008. Due tohigher other expenses and sluggish growth in revenues, the company’s net income in2008 declined 15.8% y-o-y to SR67.7mn. Zoujaj’s net profit margin declined to 62.4%in 2008 as compared to 75.6%, a year ago.Top 5 shareholders (%)Riyadh Mohammed Abdullah AlHumaidan14.4• Recent developments: In April 2009, Zoujaj announced a 19% y-o-y decline in Q109net profits to SR20.6mn. In September 2007, Zoujaj commenced the production offloat glass at Guardian RAK.Source: NCBC ResearchJUNE 2009NATIONAL CO. FOR GLASS219


INDUSTRIAL INVESTMENTAstra Indl GroupAlso known asAstraPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR30.2SR2.2bn ($597.7mn)74.1mn52 week range H/L (SR) 48.5/18.3Avg daily turnover (mn) SR US$3m 21.12 5.646m 35.55 9.49Raw Beta 6m 9m1.49 1.21ReutersBloomberg1212.SEASTRA ABPrice perform (%) 1M 3M 12MAbsolute (%) 6 38 NAMarket (%) 6 32 (39)Sector (%) 11 29 (33)Website: www astraindustrial com saValuation multiples2006 2007 2008P/E (x) NA NA 9.8P/B (x) NA NA 1.3P/Sales (x) NA NA 1.8Div yield (%) NA NA 2.0Weightage (%)TASI (free float weight) 0.16MSCI Saudi (domestic – small cap) NAFree float (%)Free float 31.11Relative share price perf.11,0009,0007,0005,0003,000Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Astra Indust (RHS)5040302010-Arab Supply and Trading Corporation 43.8Mohammed Nejir Saqer Al Utaibi 8.0Astra Industrial Group (Astra), operates in healthcare, chemical, engineering,agricultural and home furnishing industries. Its subsidiaries are Tabuk PharmaceuticalManufacturing Co., Astra Polymer Compounding, Astra Industrial Complex Co,International Building Systems Factory Co and Arabian Co. for Comforts and Pillows.Company financials2005 2006 2007 2008 YoY (%)CAGR(%)(05-08)Net Revenues SRmn 558 704 850 991 16.5 21.1EBITDA SRmn 128 181 216 199 (8.1) 15.8Net Income SRmn 99 156 197 185 (6.3) 23.2Assets SRmn 829 920 1,120 1,743 55.6 28.1Equity SRmn 500 649 828 1,438 73.7 42.2Total Debt SRmn 142 84 44 2 (96.1) (77.1)Cash & Equiv SRmn 97 66 43 525 1,131.3 75.8EBITDA Mgn % 22.9 25.8 25.4 20.0 - -Net Mgn % 17.7 22.2 23.2 18.6 - -ROE % 19.7 27.2 26.7 16.3 - -ROA % 12.0 17.8 19.3 12.9 - -Div Payout % - - - 20.1 - -EPS SR 1.3 2.1 2.7 2.5 (6.3) 23.2BVPS SR 6.7 8.8 11.2 19.4 73.7 42.2Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncMedicines 48.9Chemicals 29.9Engineering & Construction 16.9Other 4.3Source: Company, NCBC Research• Product profile: Astra’s broad product portfolio include a range of generic andunder-licensed pharmaceutical products; additives and compounds used in theproduction of plastic products, fertilizers, agricultural pesticides, insecticides andfungicides; pillows, bed sheets, and mattress pads. The group also constructs metalbasedpre-engineered industrial buildings and steel structures.• Financials: The company‘s revenues increased 16.5% y-o-y to SR990.7 mn in 2008.However, net income decreased 6.3% y-o-y to SR184.5 mn. This could be attributedto higher input costs in 2008. Net margin stood at 18.6% in 2008 as compared to23.2% in 2007.• Recent developments: In April 2009, Astra announced its results for 1Q-09 andregistered a net profit decline of 17% y-o-y to SR49.2mn. In August 2008, Astraoffered 22.24mn shares (30% of the capital) to the public. In the same month, AstraPolymer entered into a joint venture agreement with a Swiss chemical company, CibaHolding AG, to produce and sell antioxidant blends in the Middle East.Source: NCBC ResearchJUNE 2009ASTRA INDUSTRIAL GROUP220


INDUSTRIAL INVESTMENTBasic Chemical Inds.Alsoknown asBCIPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR34.6SR0.8bn ($203.3mn)22.0mn52 week range H/L (SR) 120.0/18.1Avg daily turnover (mn) SR US$3m 36.89 9.859m 36.27 9.68Raw Beta 6M 1yr1.28 1.15ReutersBloomberg1210.SEBCI ABPrice perform (%) 1M 3M 12MAbsolute (%) 13 48 NAMarket (%) 6 32 (39)Sector (%) 11 29 (33)Website: www bci.com.saValuation multiples2006 2007 2008P/E (x) NA NA 13.2P/B (x) NA NA 1.7P/Sales (x) NA NA 1.1Div yield (%) NA NA 2.1Weightage (%)TASI (free float weight) 0.13MSCI Saudi (domestic – small cap) NAFree float (%)Free float 78.64Relative share price perf.11,0009,0007,0005,0003,000Jun-08 Sep-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)15010050-BCI (RHS)Ali Al Abdullah Al Tamimi Co. 21.3Abdul Aziz Muhana Abdul Aziz9.1AlmoaibedAbdullah Muhana Abdul Aziz9.1AlmoaibedMohammed & Abdul Rahman Al Saad 7.0Al Buwardi Co.Nour Mehanna Abdulaziz Almaibd 5.0Source: NCBC ResearchBasic Chemical Industries (BCI) incorporated in 1973, is the largest privately ownedchemical company in KSA. Activities of the company include production and sale ofchemicals through its subsidiaries including Saudi Water Treatment, Arabian Polyol,National Adhesive, Basic Chemicals National, Chemical Marketing and Distribution.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 322 352 424 494 16.5 15.4EBITDA SRmn 66 76 92 95 4.2 12.9Net Income SRmn 36 37 48 40 (18.1) 3.5Assets SRmn 467 485 516 531 3.0 4.4Equity SRmn 224 261 285 305 6.9 10.8Total Debt SRmn 142 125 108 93 (13.9) (13.3)Cash & Equiv SRmn 19 47 38 35 (6.1) 23.3EBITDA Mgn % 20.6 21.5 21.6 19.3 - -Net Mgn % 11.1 10.4 11.4 8.0 - -ROE % 16.0 15.1 17.8 13.4 - -ROA % 7.7 7.7 9.7 7.6 - -Div Payout % 0.0 0.0 0.0 27.8 - -EPS SR 3.6 3.7 2.2 1.8 (18.1) (20.4)BVPS SR 22.4 26.1 13.0 13.8 6.9 (14.8)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncChlorine Alkalies Chemicals 19.1 Saudi Arabia 69.3Maintenance and Washing Chemicals 15.3 Other Countries 30.7Polyurethane Chemicals 20.5Adhesive Chemicals 39.2Other Chemicals 5.9Source: Company, NCBC Research• Product profile: BCI produces variety of chemicals such as liquefied chlorine gas,hydrochloric acid, caustic soda, Polyurethane (Polyol), adhesives, calcium chloride,water treatment chemicals, laundry and janitorial products. The company’s plant islocated in the First Industrial Zone in Dammam city, which has an annual productioncapacity of 71,560 tons.• Financials: BCI’s revenues grew 16.5% year-on-year (y-o-y) to SR494.2mn in 2008.The company has shown consistent growth in revenues over the last three years. In2008, the company’s net income fell by 18.1% y-o-y to SR39.6mn. Consequently, netmargin declined to 8.0% in 2008 from 11.4% in 2007.• Recent developments: In May 2009, BCI increased its capital by 25% fromSR220mn to SR275mn, through issue of five bonus shares for four shares held. InApril 2009, BCI announced its results for 1Q-09 with a net profit increase of 87% y-oyto SR12.9mn. In June 2008, BCI came out with an IPO of 6.6mn sharesrepresenting 30% of its total capital. The IPO valued at SR198mn, was oversubscribedby more than nine times.JUNE 2009BASIC CHEMICAL INDUSTRIES221


INDUSTRIAL INVESTMENTAlsoSaudi Indl Export Coknown asSIECPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR48.9SR0.5bn ($141.0mn)10.8mn52 week range H/L (SR) 56.0/15.7Avg daily turnover (mn) SR US$3m 47.27 12.6212m 26.43 7.06Raw Beta 6m 3yr1.48 1.38ReutersBloomberg4140.SESIECO ABPrice perform (%) 1M 3M 12MAbsolute (%) 51 50 23Market (%) 6 32 (39)Sector (%) 11 29 (33)Website: www siec.com.saValuation multiples2006 2007 2008P/E (x) 83.2 136.5 20.7P/B (x) 8.4 8.4 2.5P/Sales (x) 4.5 4.6 0.4Div yield (%) 0.7 0.0 3.7Weightage (%)TASI (free float weight) 0.12MSCI Saudi (domestic – small cap) 0.51Free float (%)Free float 100.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)S ECO (RHS)605040302010-Ibrahim Oudah Abdullah Al Oudah 5.9Source: NCBC ResearchSaudi Industrial Export Co (SIECO) is a trading company engaged in the export, importand distribution of agro goods, industrial products and bulk commodities. The companywas established in 1990. SIECO is represented by its associates across the globe andhas exported over 10 million tons of domestic products to more than 40 markets.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 229 220 220 709 222.6 45.9EBITDA SRmn 7 2 5 22 379.5 48.9Net Income SRmn 32 12 7 14 92.6 -23.3Assets SRmn 150 163 164 147 (10.3) (0.5)Equity SRmn 130 118 121 119 (1.3) (3.0)Total Debt SRmn 12 27 16 0 (100.0) (100.0)Cash & Equiv SRmn 10 82 80 98 23.7 113.6EBITDA Mgn % 2.8 0.7 2.0 3.0 - -Net Mgn % 13.8 5.4 3.4 2.0 - -ROE % 28.0 9.6 6.2 11.9 - -ROA % 22.8 7.6 4.5 9.2 - -Div Payout % 0.0 60.4 0.0 76.9 - -EPS SR 22.0 1.7 0.7 1.3 92.6 (60.8)BVPS SR 90.6 16.4 11.2 11.0 (1.3) (50.5)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncSource: Company, NCBC Research• Product profile: SIECO trades bulk food products including rice, maize, sugar andedible oils; fertilizers, minerals, chemicals and petrochemicals; iron, steel and othermetals; air conditioners, trucks and cables. The company also provides a number ofservices to its suppliers and customers including guaranteed payments, arm-lengthmarketing, financing, and logistics for land and sea transport. SIECO is investing indistribution channels and warehousing facilities to reach more manufacturers andcustomers.• Financials: In 2008, the company’s revenues more than tripled to SR709.1mn ascompared to SR219.8mn in 2007. EBITDA margin increased almost 100 basis points(bps) to 3.0% in 2008. Despite 92.6% yearly growth in the net income, company’s netmargin fell to 2.0% in FY08, a 136 bps decline over the same period last year. Thiscould be attributable to input cost pressures, provisions and absence of investmentincome in 2008. SIECO incurred losses of SR6.8mn in 4Q-08 alone due to massivedip in the top-line.• Recent developments: In April 2009, SIECO announced that it posted a net loss ofSR1.4mn during Q109 as compared to a net profit of SR3.1mn, a year earlier. InAugust 2008, the company bought 3.85% stake in Warehousing And AuxiliaryServices Co. for SR11.0mn. In January 2008, the company signed a memorandum ofunderstanding (with 6-month maturity) to buy 80% stake (SR40.0mn) in PrivateLaboratories Company through a share swap.JUNE 2009SAUDI INDUSTRIAL EXPORT CO222


PriceSR27.8Pricing / Valuation as on May 27, 2009Mkt capSR0.7bn ($189.7mn)Sh. outstanding25.6mnKey statistics52 week range H/L (SR) 66.3/16.8Avg daily turnover (mn) SR US$3m 62.49 16.6912m 67.38 17.99Raw Beta 6m 3yr1.08 1.11Reuters2220.SEBloombergNMMCC ABPrice perform (%) 1M 3M 12MAbsolute (%) 16 15 (53)Market (%) 6 32 (39)Sector (%) 11 29 (33)Website: www.natmetalco comValuation multiples2006 2007 2008P/E (x) 50.7 42.6 12.6P/B (x) 3.1 3.5 1.6P/Sales (x) 3.2 3.0 1.1Div yield (%) 0.0 1.9 1.8INDUSTRIAL INVESTMENTNational MetalAlso known asNATMETAL,MAADANIYAHNational Metal Mfg & Casting (Maadaniyah) is a manufacturer of steel wire and otherwire products. The company’s plants are equipped with modern machinery for wiredrawing, stranding, galvanizing, and fastener manufacturing. The plant has testingfacilities for chemical, mechanical, and spectrometric analyses.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 203 285 369 500 35.4 35.0EBITDA SRmn 31 37 58 64 11.1 26.8Net Income SRmn 19 18 26 44 69.9 31.4Assets SRmn 230 439 452 544 20.4 33.3Equity SRmn 148 296 317 340 7.4 32.1Total Debt SRmn 50 84 66 80 21.8 17.2Cash & Equiv SRmn 10 29 12 14 12.4 11.7EBITDA Mgn % 15.4 12.9 15.6 12.8 - -Net Mgn % 9.6 6.3 7.0 8.8 - -ROE % 14.1 8.1 8.5 13.4 - -ROA % 8.6 5.4 5.8 8.8 - -Div Payout % 79.4 23.2 - -EPS SR 7.8 1.1 1.3 2.2 71.0 NMBVPS SR 59.0 18.2 15.4 16.6 8.1 NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.10MSCI Saudi (domestic – small cap) 1.01Free float (%)Free float 64.53Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10080604020-M aadaniyah (RHS)National Manufacturing Company 35.4Source: NCBC ResearchSource: Company, NCBC Research• Product profile: Maadaniyah has an annual production capacity of 10,000 tonnes(castings), 6,000 units (axles), and 75,000 tonnes (wire). The company specializes inthe manufacture of low relaxation PC strands, high/low- galvanized steel, carbonwires & strands, mattress spring wires, fasteners, welding wires, and steel nails.These products are utilized by various sectors including construction, appliances,electrical cable, building systems, and steel fabrication.• Financials: Maadaniyah’s top-line increased 35.4% y-o-y to SR500.3mn in 2008.This is attributable to the continuous expansion of the production capacity of Al-Jubeilwires plant and the additional sales resulting from the company’s merger in 2006 withArabian Axles Foundries and Spare Parts Co. Company’s net profit grew 69.9% y-o-yto SR44.1mn, and net margin improved to 8.8% in 2008 against 7.0% in 2007.• Recent developments: In April 2009, Maadaniyah announced a 94% y-o-y decline inQ109 net profits to SR1.0mn. In February 2009, the Capital market Authorityapproved the company’s bonus issue of 1:4 shares for increasing its capital toSR255.6mn. In January 2009, the company announced its plan to establish a centerfor upgrading the production facilities of plastics products at an initial cost of overUSD26.7mn. The company plans to raise its annual production capacity ofspecialized wires at the Al Jubail wire plant to more than 110,000 tonnes from 80,000tonnes. Maadaniyah is also closing down some of its secondary plants.JUNE 2009NATIONAL METAL223


INDUSTRIAL INVESTMENTAlso known asFiling & Pkg MaterialsFIPCOPriceSR58.8Pricing / Valuation as on May 27, 2009Mkt capSR0.4bn ($107.9mn)Sh. outstanding6.9mnKey statistics52 week range H/L (SR) 77.5/25.0Avg daily turnover (mn) SR US$3m 14.00 3.7412m 20.57 5.49Raw Beta 6m 3yr1.28 1.08Reuters2180.SEBloombergFIPCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 20 63 (18)Market (%) 6 32 (39)Sector (%) 11 29 (33)Website: www.fipco.com.saValuation multiples2006 2007 2008P/E (x) 36.9 41.4 17.3P/B (x) 5.7 6.7 3.1P/Sales (x) 3.4 4.1 1.7Div yield (%) 1.8 0.6 3.5Filing & Packing Materials Manufacturing Company (FIPCO) is engaged in theproduction of bags and other woven polypropylene packaging products for industrialand agricultural use. The company’s production facilities located in Riyadh cover anarea of 75,000 square meters. FIPCO manufactures over two mn jumbo bags annually.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 124 132 145 178 22.6 12.7EBITDA SRmn 20 22 22 25 14.6 7.3Net Income SRmn 10 12 15 18 20.7 21.8Assets SRmn 94 120 122 139 14.3 13.8Equity SRmn 84 79 90 96 6.9 4.9Total Debt SRmn 0 12 6 11 107.3 -Cash & Equiv SRmn 5 6 3 18 590.5 50.6EBITDA Mgn % 16.1 16.7 14.9 13.9 - -Net Mgn % 7.8 9.3 10.0 9.9 - -ROE % 12.3 15.2 17.1 18.8 - -ROA % 10.3 11.5 12.0 13.5 - -Div Payout % 85.0 66.8 23.7 60.0 - -EPS SR 7.06 1.80 2.11 2.5 20.7 NMBVPS SR 60.7 11.5 13.1 14.0 6.9 NMSource: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.08MSCI Saudi (domestic – small cap) NAFree float (%)Free float 85.32Relative share price perf.11,000809,000607,000405,000203,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIF PCO (RHS)Top 5 shareholders (%)Falcom Financial Services Co. 14.6Source: Company, NCBC Research• Product profile: Products include jumbo bags with capacities ranging from 500 to2,000 kilograms, container liners used in dry cargo shipping and sling bags indifferent sizes. FIPCO also produces leno bags for fresh vegetable and fruit packing,cable fillers for electrical cable manufacturers, fabrics for fire retardant, tents andlumber protection, strapping band used for boxes, agriculture and baler twines forgreen houses and grass baling use.• Financials: FIPCO registered 22.6% y-o-y increase in sales to SR177.8mn in 2008.However, company’s EBITDA margin stood at 13.9% in 2008, a 100 bps decline ascompared to the previous fiscal year. Net income increased 20.7% y-o-y toSR17.5mn and net margin declined marginally to 9.9% in 2008 from 10.0% in 2007.• Recent developments: In April 2009, FIPCO announced a 64% y-o-y increase inQ109 net profits to SR7.2mn. In February 2008, the company entered into a loanagreement worth SR11.4mn with Saudi Industrial Development Fund to set up a newline for the production of polypropylene cement bags.Source: NCBC ResearchJUNE 2009FILING & PACKING MATERIALS224


Company Page No. Banking and FinancialsSA Amiantit 226 PetrochemicalsZamil Industrial 227 CementAl-Babtain Power 228 RetailSaudi Cable Company 229 Energy and UtilitiesSaudi Ceramic Company 230 Agriculture and FoodMohammad Al Mojil 231 Telecom and ITArabian Pipes 232 InsuranceNational Gypsum 233 Multi InvestmentME Specialized Cable 234 Industrial InvestmentRed Sea Housing 235 Building and ConstructionSaudi Industrial 236 Real EstateSaudi Vitrified Clay 237 TransportMedia and PublishingHotels and Tourism


BUILDING & CONSTRUCTIONSA Amiantit CoAlso known asAmiantit Group,SAACPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR22.3SR2.6bn ($686.2mn)115.5mn52 week range H/L (SR) 55.5/14.0Avg daily turnover (mn) SR US$3m 46.80 12.5012m 34.19 9.13Raw Beta 6m 3yr1.55 1.34ReutersBloomberg2160.SESAAC ABPrice perform (%) 1M 3M 12MAbsolute (%) 10 37 (52)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www.amiantit.com/en/default.phpValuation multiples2006 2007 2008P/E (x) NM 61.3 8.6P/B (x) 2.1 3.0 1.4P/Sales (x) 1.0 1.3 0.5Div yield (%) - - 2.8Weightage (%)TASI (free float weight) 0.48MSCI Saudi (domestic – small cap) 2.45Free float (%)Free float 82.73Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Amiantit (RHS)Al Mawarid Investment Co Ltd 15.4HH Price Khalid bin Abdullah Bin 7.4Abdul Rahman Al SaudAbdullah Saleh Abdullah Al Bassam 5.8Source: NCBC Research604020-Saudi Arabian Amiantit Company (SAAC) was established in 1968 to manufacturepipes for the local market. Since then, SAAC has diversified its product line toinclude rubber polymer, plastic, fiberglass materials, storage tanks, chemicals andvarious types of pipes with manufacturing facilities across the globe.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 2,493 2,660 3,102 4,024 29.7 17.3EBITDA SRmn 170 297 498 760 52.4 64.7Net Income SRmn (9) 21 64 235 267.1 NMAssets SRmn 3,587 3,661 4,061 4,478 10.3 7.7Equity SRmn 1,166 1,196 1,320 1,487 12.6 8.4Total Debt SRmn 1,306 1,279 1,527 1,559 2.1 6.1Cash & Equiv SRmn 109 71 202 329 63.0 44.4EBITDA Mgn % 6.8 11.2 16.1 18.9 - -Net Mgn % (0.3) 0.8 2.1 5.8 - -ROE % (0.4) 1.8 5.1 16.8 - -ROA % (0.4) 0.6 1.7 5.5 - -Div Payout % - - - 24.5 - -EPS SR (0.1) 0.2 0.6 2.0 263.8 NMBVPS SR 10.1 10.4 11.4 12.9 12.6 8.4Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncPipes Manufacturing 89.2 100.9 Saudi Arabia 53.2 NATechnical Pipe Development 2.3 (1.4) Europe 36.1 NAWater Management 8.5 0.5 Others 10.7 NASource: Company, NCBC Research• Business brief: SAAC’s core business activities comprise of the manufacturing andsale of pipe systems, ownership and sale of pipe technologies, provision of watermanagement, consultancy and engineering services, and manufacturing and supplyof polymer products. SAAC has 30 pipe system manufacturing plants, six technologycompanies, four materials suppliers, and eight supply and engineering subsidiaries.• Financials: SAAC became profitable in 2006 after incurring losses in 2004 and 2005.After registering a healthy performance in 2007, the company recorded a robust29.7% y-o-y growth in revenues to SR4,024.4mn in 2008. The company’s EBITDAwas up 52.4% y-o-y to SR759.6 mn causing expansion in EBITDA margins to 18.9%in 2008. The company’s net profits also witnessed a significant 267.1% y-o-y growthon the back of a substantial increase in investment income thereby expanding netmargins to 5.8% in 2008.• Recent developments: SAAC’s net income increased 5.0% y-o-y to SR48.0mn in1Q-09. The company’s stake in Arabian Ductile Iron Pipe Co. (SADIP) rose to 100%after its 99% owned subsidiary acquired a 5% stake in SADIP for SR11mn in April2009. Earlier in March 2009, the company had increased its stake in SADIP to 95%for SR16mn. SAAC also announced its plan to set up of a fully owned unit in Bahrainworth SR230mn, for manufacture of pipes, fiberglass tubes and engineering services.JUNE 2009SAUDI ARABIAN AMIANTIT COMPANY226


BUILDING & CONSTRUCTIONZamil IndustrialAlso known asZIICPriceSR53.5Pricing / Valuation as on May 27, 2009Mkt capSR2.4bn ($642.9mn)Sh. outstanding45.0mnKey statistics52 week range H/L (SR) 125.0/36.4Avg daily turnover (mn) SR US$3m 11.23 3.0012m 13.65 3.64Raw Beta 6m 3yr1.35 1.26Reuters2240.SEBloombergZIIC ABPrice perform (%) 1M 3M 12MAbsolute (%) 1 25 (50)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www ziic.comValuation multiples2006 2007 2008P/E (x) 16.9 20.0 11.4P/B (x) 4.4 4.6 2.5P/Sales (x) 1.1 1.1 0.6Div yield (%) 2.1 1.6 2.6Weightage (%)TASI (free float weight) 0.41MSCI Saudi (domestic – small cap) 1.28Free float (%)Free float 75.61Relative share price perf.11,0001409,0001057,000705,000353,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIZIIC (RHS)Top 5 shareholders (%)Zamil Group Holding Company 19.9Al Amanah Saudi Equity Fund 5.0Source: NCBC ResearchZamil Industrial Inv. Co. (ZIIC), established in 1998 and headquartered in Dammam, is aninternational manufacturing & fabrication group as well as the market leader in theMiddle East. ZIIC owns two steel building plants (Egypt and Vietnam) and two airconditioning plants (Climatech, Austria, and GeoClima, Italy).Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 2,370 2,868 3,681 4,550 23.6 24.3EBITDA SRmn 208 290 361 454 25.9 29.7Net Income SRmn 106 192 206 225 9.2 28.4Assets SRmn 2,219 2,943 3,965 5,371 36.0 34.4Equity SRmn 588 742 892 1,028 15.2 20.5Total Debt SRmn 169.3. 138 105 2,862 2,647.7 156.9Cash & Equiv SRmn 131 162 187 201 7.9 15.3EBITDA Mgn % 8.8 10.1 9.8 9.9 - -Net Mgn % 4.5 6.7 5.6 4.9 - -ROE % 19.7 28.8 25.2 23.4 - -ROA % 5.2 7.4 6.0 4.8 - -Div Payout % - 35.2 32.7 30.0 - -EPS SR 2.4 4.3 4.6 5.0 8.7 27.7BVPS SR 13.1 16.5 19.8 23.0 16.1 20.8Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncIron Manufacturing 62.0 Saudi Arabia 55.8Air Conditioning Manufacturing 34.5 Asia 11.3Glass Manufacturing 3.4 Africa 9.1Main Unit 0.1 Europe 1.9Others 21.9Source: Company, NCBC Research,• Business brief: ZIIC exports to over 80 markets globally and has manufacturingplants and offices in 55 countries. The company offers a range of products—airconditioning, pre-engineered steel buildings, process equipment, transmissiontowers, processed architectural glass, and other solutions—to the global constructionindustry. ZIIC operates through Zamil Air Conditioners (ZAC), Zamil Steel Inds. (ZSI),Zamil Glass Industries (ZGI), and Arabian Fiberglass Insulation Co. Ltd (AFICO)• Financials: ZIIC’s revenues increased 23.6% y-o-y to SR4,549.6mn in FY08.However, increase in minority interest and lower other income led to a lower rise inthe company’s net income. Leverage has increased substantially led by the growth inlong-term debt to SR963.2mn in 2008 from SR37.2mn in 2007.• Recent developments: ZIIC’s net profit grew 4.2% y-o-y to SR52.5mn in 1Q-09benefiting from improvement in sales. In May 2009, 3Com Corporation won thecontract to provide network infrastructure to ZIIC. In Dec 2008, Armacell Zamil MiddleEast Co., a joint venture (JV) between ZIIC and Armacell International Holdingstarted a new facility in Dammam for manufacturing rubber insulation products. ZIICannounced 51:49 JV with New Delhi Tele-Towers Pvt. Ltd. in November 2008 with acapital of SR75.0mn. The deal involves supply of telecom towers and other services.JUNE 2009ZAMIL INDUSTRIAL INVESTMENT COMPANY227


BUILDING & CONSTRUCTIONAl-Babtain PowerAlso known asAl BabtainPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR41.4SR1.7bn ($447.7mn)40.5mn52 week range H/L (SR) 85.5/33.7Avg daily turnover (mn) SR US$3m 42.36 11.3112m 26.68 7.12Raw Beta 6m 2yr0.73 1.02ReutersBloomberg2320.SEALBABTAI ABPrice perform (%) 1M 3M 12MAbsolute (%) 5 (10) (41)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www.al-babtain com saValuation multiples2006 2007 2008P/E (x) 20.4 22.8 13.4P/B (x) 4.3 5.2 3.5P/Sales (x) 2.3 2.6 1.7Div yield (%) 1.9 2.5 1.6Weightage (%)TASI (free float weight) 0.38MSCI Saudi (domestic – small cap) 1.09Free float (%)Free float 99.97Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10080604020-AL Babtain (RHS)Al-Babtain Power & Telecommunication Company (Al-Babtain) provides outdoorlighting, transmission & distribution (T&D), and testing station services to thepower sector. In addition, it designs, manufactures, and installs steel towers for thetelecommunications sector. Al-Babtain was established in 1955 in Riyadh.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 543 672 836 1,013 21.2 23.1EBITDA SRmn 88 119 149 210 41.0 33.7Net Income SRmn 66 76 96 131 36.3 25.8Assets SRmn 717 850 991 1,416 43.0 25.5Equity SRmn 314 359 423 499 17.8 16.7Tot Debt SRmn 256 221 328 602 83.4 33.0Cash & Equiv SRmn 19 17 20 68 238.1 53.7EBITDA Mgn % 16.2 17.7 17.9 20.8 - -Net Mgn % 12.1 11.2 11.5 12.9 - -ROE % 21.9 22.5 24.6 28.1 - -ROA % 10.3 9.6 10.4 10.8 - -Div Payout % - 39.3 56.2 20.9 - -EPS SR 2.4 2.8 3.6 4.8 33.3 26.0BVPS SR 11.6 13.3 15.7 18.4 17.2 16.6Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncLighting & Poles 45.4Towers and Steel Structures 24.2Design, Supply & Installation 30.4Source: Company, NCBC Research• Business brief: Al-Babtain’s T&D portfolio comprises transmission towers up to 500kV, monopoles up to 230 kV, and distribution poles up to 33 kV. The company’ssubsidiary Al-Babtain LeBLANC Telecommunication (51% stake) is a joint venturewith LeBLANC provides turnkey solutions for implementing structural steel towers toutilities and the oil & gas, telecom, and broadcasting sectors. The steel galvanizingplant—one of the largest in the region—provides hot dip galvanizing services to makesteel products corrosion-resistant and protect them from early damage. Al-Babtain’smanufacturing facilities are located in Riyadh and Cairo• Financials: Al-Babtain’s top-line grew 21.2% y-o-y to SR1012.7mn in 2008. Animpressive expansion in EBITDA margin helped net margin to grow to 12.9% in 2008.Cash and cash equivalents rose substantially mainly due to the presence of cashcollateral worth SR50.0 mn.• Recent developments: The company announced its 1Q-09 results on April 21, 2009.Net profit slumped 25.1% y-o-y to SR31.1mn in 1Q-09. On April 1, 2009, thecompany issued 1:2 bonus shares. In March 2009, the company appointed eight newSource: NCBC Researchmembers to its board of directors. In June 2008, Al-Babtain signed a contract worthSR242.7 mn with National Contracting Co. Ltd. to supply galvanized powertowers with a capacity of 380 kilovolts.JUNE 2009AL-BABTAIN POWER228


BUILDING & CONSTRUCTIONSaudi Cable CoAlso known asSCC GroupPriceSR26.6Pricing / Valuation as on May 27, 2009Mkt capSR2.0bn ($539.8mn)Sh. outstanding76.0mnKey statistics52 week range H/L (SR) 88.0/17.0Avg daily turnover (mn) SR US$3m 89.18 23.8112m 70.98 18.95Raw Beta 6m 3yr1.22 1.20Reuters2110.SEBloombergSCACO ABPrice perform (%) 1M 3M 12MAbsolute (%) 17 34 (66)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www saudicable.comValuation multiples2006 2007 2008P/E (x) 25.7 17.4 8.1P/B (x) 3.6 4.5 1.8P/Sales (x) 1.6 1.4 0.6Div yield (%) - 1.2 2.8Weightage (%)TASI (free float weight) 0.37MSCI Saudi (domestic – small cap) 6.68Free float (%)Free float 81.21Relative share price perf.11,000909,000707,000505,000303,00010M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISCC (RHS)Top 5 shareholders (%)Xenel Industrial Co. 16.6Source: NCBC ResearchSaudi Cable Company (SCC), established in 1976 by Xenel Industries, is engaged inthe manufacturing of cables and related products for applications in the energy andtelecommunications sectors. The company serves customers in over 60 countriesthrough ten manufacturing units based in three countries.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,185 1,596 3,143 3,495 11.2 43.4EBITDA SRmn 87 175 448 490 9.5 77.8Net Income SRmn 0 101 249 249 (0.1) 1,033.4Assets SRmn 1,344 2,054 2,700 3,440 27.4 36.8Equity SRmn 547 721 965 1,094 13.4 26.0Total Debt SRmn 510 705 786 1,539 95.8 44.5Cash & Equiv SRmn 32 54 69 123 77.5 56.0EBITDA Mgn % 7.4 10.9 14.3 14.0 - -Net Mgn % 0.0 6.3 9.0 7.1 - -ROE % 0.0 15.9 33.5 24.2 - -ROA % 0.0 5.9 11.9 8.1 - -Div Payout % - - 20.2 22.7 - -EPS SR - 1.3 3.7 3.3 (11.9) NMBVPS SR 7.2 9.5 12.7 14.4 13.4 26.0Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 1H 08 Geographic 1H 08%Rev % Net Inc Breakup %Rev % Net IncCopper Wire 100.0 100.0 Saudi Arabia 100.0 100.0Source: Company, NCBC Research• Business brief: SCC’s products include high voltage (HV) underground cables up to400 kV, HV transmission lines and conductors up to 500 kV, and optical fiber countduct cables. SCC’s services also include the integration and transformation of lowpressure, oil filled HV cables to cross-linked HV cable systems. The company alsooffers turnkey solutions for designing, engineering, testing, and installing networks inthe energy and telecommunications sectors. SCC has a manufacturing capacity of6mn core kilometers of metallic telephone lines, 20,000 sheathed kilometers of opticalfiber cables, 140,000 tons of aluminum and copper rods, and 85,000 tons of powercables and conductors.• Financials: On a y-o-y basis, SCC’s revenues grew 11.2% to SR3,494.9 mn.However, the company’s net profit was flat at SR249.0 mn in 2008 mainly due toincrease in investment losses and provisions for doubtful debts. The company’sEBITDA however was up 9.5% y-o-y growth to SR490.4 mn.• Recent developments: SCC’s net profit plunged 45.0% y-o-y to SR46.3mn in 1Q-09.In May 2009, SCC entered into SR250mn worth agreements with contractors tosupply cables. The company also won a SR130mn contract from the Ministry ofElectricity and Water to develop electricity grids in Bahrain. In November 2008, SCCwon a SR200 mn contract for the supply of super high voltage cables. In July 2008,SCC announced that it has acquired a 55% stake in Alemsan Aydinlatma San Tic Sti,a Turkey based manufacturer of cables.JUNE 2009SAUDI CABLE COMPANY229


BUILDING & CONSTRUCTIONSaudi Ceramic CoAlso known asPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR99.0SR2.5bn ($660.9mn)25.0mn52 week range H/L (SR) 172.0/70.8Avg daily turnover (mn) SR US$3m 11.59 3.1012m 17.23 4.60Raw Beta 6m 3yr0. 90 1.05ReutersBloomberg2040.SESCERCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 1 23 (29)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www.saudiceramics comValuation multiples2006 2007 2008P/E (x) 16.6 21.3 15.0P/B (x) 2.8 4.4 3.7P/Sales (x) 3.1 4.4 3.1Div yield (%) 4.0 2.3 2.3Weightage (%)TASI (free float weight) 0.35MSCI Saudi (domestic – small cap) 4.48Free float (%)Free float 63.62Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Ceramic (RHS)180140100General Organization for Social 15.9InsuranceSaleh Abdul Aziz Saleh Al Rajhi 14.3Falcom Financial Services Co 6.8Public Investment Fund 5.4Source: NCBC Research6020Saudi Ceramic Company was initially set-up to manufacture sanitary ware products.Currently, the company also produces and sells ceramic wall and floor tiles, electricwater heaters and ceramic road markers as well as operate 26 showrooms in KSA.Saudi Ceramic, established in 1977, is headquartered in Riyadh.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 425 500 615 857 39.4 26.3EBITDA SRmn 137 146 178 NA NA NANet Income SRmn 84 93 128 178 39.5 28.6Assets SRmn 778 1,026 1,284 1,559 21.5 26.1Equity SRmn 504 546 613 724 18.1 12.8Total Debt SRmn 158 326 499 NA NA NACash & Equiv SRmn 7 14 21 25 21.4 57.1EBITDA Mgn % 32.3 29.2 29.0 NA - -Net Mgn % 19.6 18.6 20.7 20.8 - -ROE % 17.1 17.8 22.0 26.6 - -ROA % 11.9 10.3 11.0 12.5 - -Div Payout % 59.8 67.0 49.0 35.1 - -EPS SR 3.3 3.7 5.1 7.1 39.5 28.7BVPS SR 20.2 21.8 24.5 29.0 18.1 12.8Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncCeramic tiles manufacturing 77.3 88.8 Saudi Arabia 100.0 100.0Heaters/Boilers 22.7 11.2Source: Company, NCBC Research• Business brief: Saudi Ceramics has an annual production capacity of 23 mn sqm ofporcelain and ceramic tiles, 1.8mn pieces of sanitary ware, 950,000 pieces of electricwater heaters and 1.2mn pieces of ceramic road markers. Apart from the domesticmarket, the company exports its products to more than 45 countries. Saudi Ceramicsinvestment portfolio includes a 15.8% stake in Natural Gas Distribution Company.• Financials: Saudi Ceramics performed well over the years as booming constructionsector helped demand growth. The company’s sales increased 39.4% y-o-y in 2008.The net income of the company also grew 39.5% y-o-y to SR177.9mn. While thecompany’s net margins improved marginally to 20.8% in 2008, the ROE and ROAimproved to 26.6% and 12.5% respectively.• Recent developments: The company announced its 1Q-09 results on April 11, 2009.The net income increased 7.9% y-o-y to SR41.0mn in 1Q-09. In October 2008, SaudiCeramics announced it would proceed with its SR300mn expansion in 2009, boostingits tile production capacity to 50mn square meters. In the same month, the companyreceived a loan of SR57mn from Saudi Industrialization Development Fund for plantexpansion for tenure of 6 years. In June 2008, the company announced it wasconsidering setting up of a factory along Riyadh-Alkharj Highway with a productioncapacity of 21mn square meters of floor tiles.JUNE 2009SAUDI CERAMIC COMPANY230


BUILDING & CONSTRUCTIONMohammad Al MojilAlso known asMMGPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR32.8SR4.1bn ($1,094.8mn)125.0mn52 week range H/L (SR) 104.3/28.5Avg daily turnover (mn) SR US$3m 75.28 20.1012m 132.11 35.28Raw Beta 6m 1yr0.97 1.25ReutersBloomberg1310.SEMMG ABPrice perform (%) 1M 3M 12MAbsolute (%) 24 21 (51)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www almojilgroup.comValuation multiples2006 2007 2008P/E (x) N/A N/A 6.6P/B (x) N/A N/A 2.3P/Sales (x) N/A N/A 1.3Div yield (%) N/A N/A 2.3Weightage (%)TASI (free float weight) 0.26MSCI Saudi (domestic)N/AFree float (%)Free float 28.35Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)MMG (RHS)100Mohammad Hamad Abdul Karim Al 50.0MoajilAdel Mohammed Hamad Al Moajil 5.0Al Moajil Holding Co. 5.0Al Moajil Limited Investment Co. 5.0Mohammed Hamad Al MoajilInvestment Co.5.0Source: NCBC Research80604020Mohammad Al Mojil Group Company (MMG) executes the construction projectswithin oil, gas and petrochemical industry. The services include maintenance andturnkey contracts, industrial cleaning and pre-commission services, etc. Thecompany delivers the tailor-made construction services both onshore and offshore.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 466 894 1,955 3,345 71.1 92.9EBITDA SRmn 102 246 640 850 32.9 102.8Net Income SRmn 81 208 549 666 21.3 101.7Assets SRmn 552 1,293 2,225 3,669 64.9 88.0Equity SRmn 402 881 1,295 1,901 46.9 67.9Total Debt SRmn - - 200 500 150.0 -Cash & Equiv SRmn 20 106 63 86 35.7 61.7EBITDA Mgn % 21.9 27.6 32.7 25.4 - -Net Mgn % 17.4 23.3 28.1 19.9 - -ROE % 20.2 32.4 50.4 41.6 - -ROA % 14.7 22.5 31.2 22.6 - -Div Payout % - - - 14.9 - -EPS SR 1.2 2.6 4.7 6.7 42.2 77.5BVPS SR 3.5 10.1 13.6 19.0 40.0 75.1Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008Source: Company, NCBC Research%Rev % Net Inc Breakup %Rev % Net Inc• Business brief: MMG is involved in construction, contracting, maintenance andsupplying equipments for the petrochemical, oil and gas projects, civil andelectromechanical services for refineries, power plants, cement factories and waterdesalination plants. The company has production capacity of 1400 dia inches of steel,1,600 dia inches of stainless steel and 3000 dia inches of steel pipes per day. Inaddition, it has the capacity to produce 2,000 tons of structural steel per month andowns 19 vessels.• Financials: MMG’s revenues increased 71.1% y-o-y to SR3,345.0 mn in 2008.However, its EBITDA margin contracted y-o-y to 25.4% in 2008 from 32.7% in 2007.The net profit grew at a lower rate of 21.3% y-o-y to SR665.5mn. Consequently, thenet margin contracted to 19.9% in FY 08 compared to 28.1% in FY 07.• Recent developments: MMG’s net profit declined 96% y-o-y to SR5.4mn in 1Q-09.In May 2009, MMG signed a letter of intent (LoI) with Saudi Polymers Co. forconstruction of the latter’s Jubail project for SR88.8mn. In May 2009, the company’sgeneral assembly approved the 1:4 bonus share issue. In March 2009, MMG enteredinto a contract with Eastern Petrochemical Co. (SABIC’s subsidiary) worth SR200mn, for the latter’s Jubail project. In February 2009, MMG signed a LoI with ArabianJGC Co. to construct the ethylene plant worth SR408.7mn. In December 2008, thecompany appointed Fahd bin Ali al-Raqtan as its CEO.JUNE 2009MOHAMMAD AL MOJIL231


BUILDING & CONSTRUCTIONArabian Pipes CoAlso known asAC, APC,AnabibPriceSR36.0Pricing / Valuation as on May 27, 2009Mkt capSR1.1bn ($302.8mn)Sh. outstanding31.5mnKey statistics52 week range H/L (SR) 129.5/26.4Avg daily turnover (mn) SR US$3m 52.48 14.0112m 39.38 10.52Raw Beta 6m 3yr1.41 1.27Reuters2200.SEBloombergAPCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 23 13 (66)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www arabian-pipes.comValuation multiples2006 2007 2008P/E (x) 23.7 20.1 12.0P/B (x) 3.5 3.9 2.0P/Sales (x) 3.0 3.9 1.7Div yield (%) - 1.9Arabian Pipes Co (APC) manufactures high frequency welded (HFW) steel pipes for oil &gas, petrochemical, agricultural and construction industries. The company wasestablished in 1991 and has its headquarters and manufacturing facility in Riyadh. APCexports its products to Sudan, Yemen, Egypt, Nigeria, Iran, and other Gulf countries.Company financials2005 2006 2007 2008YoY CAGR (%)(%) (05-08)Net Revenues SRmn 476 594 640 812 27.0 19.5EBITDA SRmn 89 90 158 146 (7.6) 17.9Net Income SRmn 78 75 126 117 (6.6) 14.7Assets SRmn 962 1,263 1,474 1,635 10.9 19.3Equity SRmn 441 516 642 712 10.9 17.3Tot Debt SRmn 434 673 749 883 17.9 26.8Cash & Equiv SRmn 30 41 17 19 10.4 (14.2)EBITDA Mgn % 18.8 15.1 24.7 18.0 - -Net Mgn % 16.3 12.7 19.6 14.4 - -ROE % 19.3 15.8 21.7 17.3 - -ROA % 10.2 6.8 9.2 7.5 - -Div Payout % - - 37.6 - - -EPS SR 2.5 2.4 4.0 3.7 (6.7) 14.7BVPS SR 14.0 16.4 20.4 22.6 10.9 17.3Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 1H 08 Geographic 1H 08%Rev % Net Inc Breakup %Rev % Net IncPipes and Fittings 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.22MSCI Saudi (domestic – small cap) 1.90Free float (%)Free float 85.82Relative share price perf.11,0001409,0001057,000705,000353,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIAPC (RHS)Top 5 shareholders (%)A Q Al Muhaidib and Sons Group 13.8Al Wusata Financial Company 5.2Source: NCBC ResearchSource: Company, NCBC Research• Business brief: APC’s product line includes–line-pipe applications (for long distancetransportation of oil & gas), structural applications (for construction), general purposeapplications (industrial water and irrigation), standard pressure applications(transmission of different types of fluids), and casting applications (mainly for oil, gasand water well casings). The company's products are coated with anti-corrosives toimprove durability.• Financials: APC reported a revenue growth of 27.0% y-o-y to SR812.2 mn in 2008.However, higher input costs, administrative and marketing expenses and decline inother revenues constrained the growth in the net income, which slid 6.6% y-o-y toSR117.3 mn. Consequently, net margin slid to 14.4% in 2008 from 19.6% in 2007.• Recent developments: APC’s net profit dived 85.2% y-o-y to SR5.6mn in 1Q-09. InApril 2009, the company appointed seven new members to its board of directors.Saudi Arabia's Human Resources Development Fund acquired 7.3% stake in APC inApril 2009. In April 2008, Arabian Pipes Company won a deal worth SR21.3 mn tosupply electric resistance welded pipes to the petroleum and gas field in Egypt.JUNE 2009ARABIAN PIPES COMPANY232


BUILDING & CONSTRUCTIONNational Gypsum CoAlsoknown asGypsumPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR45.4SR1.4bn ($383.9mn)31.7mn52 week range H/L (SR) 82.0/27.2Avg daily turnover (mn) SR US$3m 7.51 2.0112m 33.84 9.04Raw Beta 6m 3yr0.97 0.98ReutersBloomberg2090.SENGCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 3 23 (30)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www.gypsco.com.saValuation multiples2006 2007 2008P/E (x) 17.8 25.4 8.5P/B (x) 4.7 4.6 1.8P/Sales (x) 8.9 10.8 3.7Div yield (%) 3.1 3.3 8.3Weightage (%)TASI (free float weight) 0.17MSCI Saudi (domestic – small cap) 2.16Free float (%)Free float 53.97Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Al Manafa Investment and RealEstate Development Co.Theneyan Fahd Theneyan AlTheneyan10080604020Gypsum (RHS)34.510.3National Gypsum Company, established in 1959, is a leading producer of high qualitygypsum products. The company has several plants in Riyadh, Dammam and Yanbu,manufacturing gypsum plaster, plaster board, spray gypsum, and agriculturalgypsum. National Gypsum holds a 33.3% stake in Qatar Saudi Gypsum.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 269 257 223 260 16.4 (1.1)EBITDA SRmn 149 148 113 133 17.6 (3.6)Net Income SRmn 131 128 95 112 18.4 (5.0)Assets SRmn 486 548 597 602 0.8 7.4Equity SRmn 459 489 528 539 2.0 5.5Total Debt SRmn - 25 39 39 0.0 NMCash & Equiv SRmn 3 10 8 6 (32.9) 21.8EBITDA Mgn % 55.5 57.7 50.8 51.3 - -Net Mgn % 48.7 49.9 42.5 43.2 - -ROE % 33.5 27.1 18.7 21.1 - -ROA % 28.1 24.8 16.6 18.7 - -Div Payout % 72.6 55.6 83.5 70.5 - -EPS SR 4.1 4.1 3.0 3.5 18.2 (4.9)BVPS SR 11.4 13.1 14.1 17.0 20.5 14.2Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 1H 08 Geographic 1H 08%Rev % Net Inc Breakup %Rev % Net IncGypsum products manufacturing 100.0 100.0 Saudi Arabia 100.0 100.0Source: NCBC Research• Business brief: National Gypsum has an annual production capacity of 450,000tonnes of gypsum plaster, 12mn square meters of plaster board, 48,000 tonnes ofspray gypsum and Fixing Plaster, 0.5mn square meters of gypsum ceiling tiles and30,000 tonnes of gypsum powder. The company’s investment portfolio includes a2.9% stake in Transgulf Investment Co.• Financials: National Gypsum reported a decline in sales and profitability for both2006 and 2007; however, it registered a 16.4% y-o-y increase in the top-line in 2008.The company’s margins also expanded marginally during 2008 with EBITDA margingrowing to 51.3% and net margin increasing to 43.2%. This was mainly due to lowercost of sales during the period.• Recent developments: The Company announced its 1Q-09 results on April 11,2009. The net income increased 1.0% y-o-y to SR28.9mn in 1Q-09. In 2007, NationalGypsum increased its share capital to SR316.6 mn from SR237.5 mn, by granting 4-for-3 bonus shares for every share held. As a result, the total number of shares stoodat 31.66 mn compared to the earlier 23.75mn.Source: NCBC ResearchJUNE 2009NATIONAL GYPSUM COMPANY233


BUILDING & CONSTRUCTIONME Specialized CableAlsoknown asMESCPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR36.6SR1.5bn ($390.9mn)40.0mn52 week range H/L (SR) 113.3/24.6Avg daily turnover (mn) SR US$3m 38.93 10.4012m 34.21 9.13Raw Beta 6m 1yr1.43 1.22ReutersBloomberg2370.SEMESC ABPrice perform (%) 1M 3M 12MAbsolute (%) 12 35 (66)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www.mesc.com saValuation multiples2006 2007 2008P/E (x) N/A 17.9 16.8P/B (x) N/A 6.2 2.9P/Sales (x) N/A 2.4 1.1Div yield (%) N/A 0.6 3.2Weightage (%)TASI (free float weight) 0.16MSCI Saudi (domestic – mid cap) N/AFree float (%)Free float 47.97Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)15010050-MESC (RHS)Abdul Aziz Mohammed Sulaiman Al 26.6NamlahMohamad Ali Abdullah Al Suwailem 15.3Lama Ismail Fawzi Abu Khadhra 10.0Mansoor Adbul Aziz Mohamad Ka’aky 8.4Source: NCBC ResearchME Specialized Cable (MESC), manufactures system, industrial & instrumentation andpower & control cables. Since inception in the company has added a wide range ofproducts. After the acquisition of JNC Cable in 2003 and its partnership with Fujikurain 2007, the company made inroads in the low and medium voltage power cables.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 277 648 1,103 1,308 18.6 67.9EBITDA SRmn 50 148 235 245 4.5 70.4Net Income SRmn 38 84 150 88 (41.1) 32.5Assets SRmn 246 846 1,246 1,615 32.3 88.4Equity SRmn 113 324 435 507 16.6 64.7Total Debt SRmn 71 301 470 836 78.0 127.5Cash & Equiv SRmn 2 31 91 54 (39.9) 196.8EBITDA Mgn % 18.0 22.9 21.3 18.7 - -Net Mgn % 13.8 13.0 13.6 6.8 - -ROE % 40.3 38.4 39.6 16.4 - -ROA % 16.3 19.5 14.4 5.8 - -Div Payout % - - 10.7 54.5 - -EPS SR 1.2 2.6 4.7 2.2 (53.2) 22.4BVPS SR 3.5 10.1 13.6 12.7 (6.6) 53.7Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008Source: NCBC Research%Rev % Net Inc Breakup %Rev % Net IncSaudi Arabia 51.8 132.2Jordan 45.7 (35.7)UAE 2.4 3.5• Business brief: The company’s products are categorized into instrumentation andprocess control cables. These are used in indoor, outdoor and control roomapplications, system cables, (data and telephone cables) and power cables (used inapplications requiring greater electrical or electromagnetic protection). Additionally,MESC markets specialized cables for harsh environment applications, such as thehydrocarbon industry. Its production capacity is about 10,000 tons of copper/annually• Financials: MESC’s total revenues increased 18.6% y-o-y to SR1.3bn. Net incomedecreased 41.1% to SR88.4mn due to rise in finance costs, losses from investments infinancial securities, other expenses and higher administrative and marketing expenses.While other expenses rose 110.5% y-o-y to SR127.1 mn, administrative and marketingexpenses increased 26.5% YoY to SR75.5 mn In 2008, the EBITDA margin declined byabout 3 percentage points to 18.7%• Recent developments: MESC announced its 1Q-09 results on April 21, 2009. Netprofit for the quarter plunged 47.2% y-o-y to SR26.0mn. In April 2009, MESCannounced that it has signed a contract worth SR21.6mn to construct a factory in RasAl Khaimah. The new factory will start operations by 2009 end. In December 2008,MESC won a SR132 mn order from the Saudi Electricity Company (SEC). Under theagreement, MESC will supply different kinds of cables to SEC in 2009.JUNE 2009ME SPECIALIZED CABLE234


BUILDING & CONSTRUCTIONRed Sea HousingAlso known asRed SeaPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR67.3SR2.0 bn ($538.7mn)30.0mn52 week range H/L (SR) 140.0/48.5Avg daily turnover (mn) SR US$3m 25.64 6.8512m 36.02 9.62Raw Beta 6m 2yr1.19 1.13ReutersBloomberg4230.SEREDSEA ABPrice perform (%) 1M 3M 12MAbsolute (%) (3) 8 (33)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www rsh com saValuation multiples2006 2007 2008P/E (x) 13.7 17.6 10.3P/B (x) 4.7 3.9 3.3P/Sales (x) 4.0 3.0 2.0Div yield (%) 2.6 2.9 4.7Weightage (%)TASI (free float weight) 0.14MSCI Saudi (domestic – small cap) 1.17Free float (%)Free float 29.96Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Red Sea (RHS)150100Al Dabbagh Holding Co 51.0Mumtaz Foods Co. 5.0The National Scientific Company LTD 5.0Tejariah for Marketing Services and 5.0AgenciesSource: NCBC Research50-Red Sea Housing Services Company was established in Jeddah in 1967. Theobjective was to replicate the American manufactured housing model in SaudiArabia. The company later diversified into manufacturing and propertymanagement, setting up its first manufacturing facility in 1983.Company financials*2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 422 431 690 1,145 65.9 39.5EBITDA SRmn 104 131 159 285 79.6 39.9Net Income SRmn 98 125 117 217 85.8 30.4Assets SRmn 266 489 772 1,012 31.1 56.1Equity SRmn 154 367 529 685 29.5 64.3Total Debt SRmn 5 4 36 99 177.6 170.5Cash & Equiv SRmn 101 193 37 123 229.2 6.8EBITDA Mgn % 24.7 30.3 23.0 24.9 - -Net Mgn % 23.2 29.0 16.9 19.0 - -ROE % 75.5 48.0 26.1 35.8 - -ROA % 39.1 33.1 18.5 24.3 - -Div Payout % 49.7 36.0 51.3 48.4 - -EPS SR 3.3 4.2 3.9 7.2 48.0 30.5BVPS SR 5.2 12.2 19.5 22.8 17.1 64.3Source: Company, NCBC Research* Financial year changed from March to December in 2007Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncOil & Gas / Construction - NA Saudi Arabia 22.3 34.9Mining - NA UAE 38.9 13.0Govt. and Multilateral Organizations - NA Africa 35.0 51.5Manufacturing & Selling 84.4 67.0 Asia - -Rent 15.6 33.0 Middle East - -Other Foreign 3.8 0.7Source: NCBC Research• Business brief: With three manufacturing facilities located in Dubai, Jubail, andAccra (Ghana), Red Sea Housing has the capability to manufacture 920 squaremeters of quality housing a day - which represents an annual production capacity of335,000 square meters. The company serves all types of housing requirements -commercial and residential, temporary and permanent. Red Sea Housing offersspecial services to oil & gas, and mining companies• Financials: In 2008, Red Sea Housing’s total revenues increased 65.9% y-o-y toSAR1,145.1 mn. Net income increased 85.8% y-o-y to SAR217.1 mn led by a declinein selling, general, and administration expenses. Further, other income rose 38.8% y-o-y to SR4.9 mn in 2008. Interest expense more than tripled to SR6.7 mn in 2008.• Recent developments: MESC announced its 1Q-09 results on April 19, 2009. Netprofit for the quarter grew 3.0% y-o-y to SR58.0mn. In August 2008, Red SeaHousing announced its formation of a new subsidiary in Libya. In July 2008, thecompany won a contract worth SR76.7mn to process, deliver and install 1,100residential units for Australia Company.JUNE 2009RED SEA HOUSING235


BUILDING & CONSTRUCTIONSaudi IndustrialAlso known asSIDCPriceSR11.1Pricing / Valuation as on May 27, 2009Mkt capSR0.4bn ($118.0mn)Sh. outstanding40.0mnKey statistics52 week range H/L (SR) 19.0/6.8Avg daily turnover (mn) SR US$3m 28.14 7.5112m 17.01 4.54Raw Beta 6m 3yr1.34 1.16Reuters2130.SEBloombergSIDC ABPrice perform (%) 1M 3M 12MAbsolute (%) 12 32 (39)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www sidc.com.saValuation multiples2006 2007 2008P/E (x) N/M 85.6 N/MP/B (x) 4.6 2.8 1.3P/Sales (x) 2.3 4.4 1.2Div yield (%) - - -Weightage (%)TASI (free float weight) 0.10MSCI Saudi (domestic)N/AFree float (%)Free float 100.00Relative share price perf.11,000209,000157,000105,00053,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISIDC (RHS)Top 5 shareholders (%)Source: NCBC ResearchSaudi Industrial (SIDC), established in 1992, invests in the industrial sector of KSA.In 1997, the company made its first investment by setting up a ceramic plant inYanbu Industrial City. Since then, SIDC has made several investments in diverseindustries such as spring mattresses and polyester fibers.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 438 430 232 250 8.1 (17.0)EBITDA SRmn 11 18 17 17 2.1 17.9Net Income SRmn (29) (19) 12 (5) NM NMAssets SRmn 657 630 619 478 (22.7) (10.1)Equity SRmn 205 214 363 235 (35.1) 4.8Total Debt SRmn 284 213 120 112 (6.5) (26.6)Cash & Equiv SRmn 14 11 21 24 18.4 20.4EBITDA Mgn % 2.4 4.2 7.4 6.9 - -Net Mgn % (6.6) (4.5) 5.1 (1.9) - -ROE % (11.1) (9.2) 4.1 (1.6) - -ROA % (4.4) (3.0) 1.9 (0.9) - -Div Payout % - - - - - -EPS SR (0.7) (0.5) 0.3 (0.1) NM NMBVPS SR 5.1 5.4 9.1 5.9 (35.1) 4.7Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncSponge and matrices 88.9 88.5 Not availableSanitary wares 11.2 (20.6)Others 0.0 32.1Source: Company, NCBC Research• Business brief: SIDC operates through its affiliates. Saudi Ceramic Plant (100%stake), located in Yanbu Industrial City, produces ceramic sanitary ware (annualcapacity of 500,000 pieces) as well as acrylic bathtubs and shower trays (annualcapacity of 100,000 pieces). Arabian Spring and Sponge Mattresses Mfg. Co. (50%stake), formerly known as Sleep High, is a leading manufacturer of spring mattresses.SIDC also has a minority stake in Arabian Industrial Fibers Co. (1.6% stake) whichproduces aromatics (725 kilo tons annually (KTA)), terephathalic acid (350 KTA), andpolyester (150 KTA)• Financials: SIDC’s revenues increased 8.1% y-o-y to SR250.4 mn in 2008. AlthoughSIDC recorded an EBITDA of SR17.4mn, the company incurred a loss of SR4.7mn in2008 compared to a profit of SR11.8mn in 2007. This was mainly due to substantialreduction in other non-operating income and higher minority interest during the year.• Recent developments: SIDC reported a net loss of SR2.8mn in 1Q-09 compared toa loss of SR1.2mn a year ago. In May 2009, the company announced that it hasdefaulted on repayment of the debt it owed to Saudi Industrial Development Fund andhas received a final warning from the Ministry of Finance to settle it. In January 2009,the company announced plans to increase financial guarantees to SME businessesto USD400,000.JUNE 2009SAUDI INDUSTRIAL236


BUILDING & CONSTRUCTIONSaudi Vitrified ClayAlso known asSVCPPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR44.0SR0.7bn ($176.2mn)15.0mn52 week range H/L (SR) 89.8/23.7Avg daily turnover (mn) SR US$3m 11.81 3.1512m 15.41 4.11Raw Beta 6m 2yr1.17 1.01ReutersBloomberg2360.SESVCP ABPrice perform (%) 1M 3M 12MAbsolute (%) (5) 5 (48)Market (%) 6 32 (39)Sector (%) 8 19 (53)Website: www.svcp-sa comValuation multiples2006 2007 2008P/E (x) N/A 37.9 10.6P/B (x) N/A 8.4 2.3P/Sales (x) N/A 7.6 1.9Div yield (%) N/A 1.8 6.8Weightage (%)TASI (free float weight) 0.08MSCI Saudi (domestic – small cap) 0.50Free float (%)Free float 55.67Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)SVCP (RHS)10080604020-Abdul Latif Al Essa Co 15.6HH Prince Faisal Bin Abdul Aziz 15.0Faisal Al SaudSaad Saud Ibrahim Al Sayari 13.3Al Riyadh Investment Co 5.5Source: NCBC ResearchSaudi Vitrified Clay Pipes Co. (SVCP), established in 1977, is a multinational companyinvolved in the production and wholesale trade of glazed vitrified clay pipes, fittings andaccessories for sewage and drainage systems. The company caters not only to the localmarket but also to other Arab countries, the Far East and Europe.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 186 211 215 258 20.1 11.6EBITDA SRmn 53 58 49 53 8.0 (0.2)Net Income SRmn 54 50 43 47 8.0 (5.0)Assets SRmn 158 255 333 443 33.0 41.0Equity SRmn 65 155 196 211 8.0 48.2Total Debt SRmn - 27 61 153 150.6 -Cash & Equiv SRmn 26 74 11 13 21.0 (20.9)EBITDA Mgn % 28.7 27.5 22.8 20.5 - -Net Mgn % 29.2 23.4 20.1 18.0 - -ROE % 83.6 45.0 24.6 22.8 - -ROA % 34.7 24.0 14.7 12.0 - -Div Payout % - - 69.5 72.6 - -EPS SR 3.6 3.3 2.9 3.1 7.6 (5.0)BVPS SR 4.3 10.3 13.1 14.1 8.0 48.2Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncClay pipes 100.0 100.0 Not availableSource: Company, NCBC Research• Business brief: SVCP manufactures vitrified clay pipes (ranging from 100 mm to1200mm) and jacking pipes (150mm to 1000mm). These pipes are used for domesticand industrial sewage systems as well as for storm water disposal. The main featuresof these pipes are their strength, durability, and resistance to chemicals contained insewage and drainage water. SVCP has a state-of-the-art 56,000-square-meterfacility in Riyadh with an annual production capacity of 100,000 tons• Financials: SVCP’s total revenue increased 20.1% y-o-y to SR257.9 mn in 2008.The increase in revenue was offset by a 23.4% y-o-y rise in cost of sales to SR188.9mn. During the year, the net income increased 8.0% to SR46.5 mn. The growth in netincome was constrained by substantial increase in selling and distribution expenses,and higher financial expenses. The administration and marketing expenses grew27.1% in FY08 to SR16.1 mn. Total debt for the company saw a significant rise toSR153.3 mn. The net margin contracted to 18.0% in FY 08 from 20.1% in FY 07.• Recent developments: The company announced its 1Q-09 results on April 20, 2009.Net profit for the quarter dived 22.2% y-o-y to SR9.2mn. In September 2008, SVCPbegun experimental production at its new plant that would increase its productioncapacity by 70% to 170,000 tons per annum. The company expects to startcommercial production at the plant soon.JUNE 2009SAUDI VITRIFIED CLAY237


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Company Page No. Banking and FinancialsDar Al Arkan 240 PetrochemicalsJabal Omar 241 CementMakkah Construction 242 RetailEmaar Economic City 243 Energy and UtilitiesTaiba Holding 244 Agriculture and FoodArriyadh Development 245 Telecom and ITSaudi Real Estate 246 InsuranceMulti InvestmentIndustrial InvestmentBuilding and ConstructionReal EstateTransportMedia and PublishingHotels and Tourism


REAL ESTATE DEVELOPMENTDar Al ArkanAlso known asDAAR, Dar AlArkanPriceSR26.0Pricing / Valuation as on May 27, 2009Mkt capSR18.7bn ($4,998.7mn)Sh. outstanding720.0mnKey statistics52 week range H/L (SR) 43.7/17.2Avg daily turnover (mn) SR US$3m 55.89 14.9212m 74.86 19.99Raw Beta 6m 1yr0.75 0.87Reuters4300.SEBloombergALARKAN ABPrice perform (%) 1M 3M 12MAbsolute (%) 11 19 (39)Market (%) 6 32 (39)Sector (%) 11 19 (39)Website: www alarkan.comValuation multiples2006 2007 2008P/E (x) N/A 19.8 6.8P/B (x) N/A 3.6 1.4P/Sales (x) N/A 8.1 2.9Div yield (%) N/A 4.1 -Dar Al Arkan Real Estate (Dar Al Arkan) is engaged in the purchase of real estateand land as well as the construction of commercial and residential properties. DarAl Arkan is also engaged in car sales and trading of electrical tools, paints, andbuilding materials. The company, headquartered in Riyadh, was established in 1994.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 4,197 4,353 4,926 5,611 13.9 10.2EBITDA SRmn 1,874 2,071 2,313 2,694 16.5 12.9Net Income SRmn 1,776 1,814 2,009 2,356 17.3 9.9Assets SRmn 10,824 11,682 18,374 20,164 9.7 23.0Equity SRmn 10,418 10,612 11,000 11,737 6.7 4.1Total Debt SRmn - 414 6,400 7,635 19.3 NACash & Equiv SRmn 526 184 3,347 717 (78.6) 10.9EBITDA Mgn % 44.7 47.6 46.9 48.0 - -Net Mgn % 42.3 41.7 40.8 42.0 - -ROE % 22.4 17.3 18.6 20.7 - -ROA % 21.0 16.1 13.4 12.2 - -Div Payout % 91.2 89.3 80.7 - - -EPS SR 3.3 3.4 3.7 3.3 (12.0) (0.2)BVPS SR 19.3 19.7 20.4 16.3 (20.0) (5.5)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment H108 Geographic H108%Rev % Net Inc Breakup %Rev % Net IncReal estate development 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 1.89MSCI SaudiN/AFree float (%)Free float 45.24Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Dar Al Arkan (RHS)5040302010-Khalid Abdullah Shelash Al Shelash 9.1Al Arkan Development Co. 8.4Manazel Development Co. 7.9Yousef Abdullah Shelash AL Shelash 7.7Hadhlool Saleh Mohammed Al6.9HadhloolSource: NCBC ResearchSource: Company, NCBC Research• Product profile: Dar Al Arkan has constructed more than 2,300 residential units anddeveloped 9 mn square meters of land since inception. The company is currentlydeveloping a number of residential projects such as Shams Alriyadh, Al Qasr, and Al-Tilal. The company aims to construct 65,000 residential units by 2009. Dar Al Arkanalso offers pre-sales, after-sales, and funding services to its customers.• Financials: Dar Al Arkan’s top line and bottom line have grown over the last fiveyears due to the steady demand for housing from the expanding population in SaudiArabia. Despite the global crisis in 2008, the company reported a revenue growth of13.9% and a net profit growth of 17.3% y-o-y. During the same period, EBITDA andnet profit margins were strong at 48.0% and 42.0% respectively; keeping in line withthe trend over the past 3-4 years.• Recent developments: In May 2009, the Board of Directors recommended a 50%capital increase to SR10.8 bn by issuing one bonus share for every two held. Thecompany’s revenues grew 0.3% year on year to SR1.3 bn while its net profit declined6.2% year on year to SR 424.5 mn in 1Q 09. In Oct 2008, the company announced itsplans to enter a 5-year partnership with various companies to develop KhozamPalace area (Jeddah) at a cost of SR50 bn. In Sept 2008, the company got approvalfor a SR1.8 bn (one-for-three share) bonus issue.JUNE 2009DAR AL ARKAN240


PricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR19.1SR12.8bn ($3,415.3mn)671.4mn52 week range H/L (SR) 28.3/14.8Avg daily turnover (mn) SR US$3m 35.42 9.4612m 58.15 15.53Raw Beta 6m 1yr0.43 0.68ReutersBloomberg4250.SEJOMAR ABPrice perform (%) 1M 3M 12MAbsolute (%) 3 1 (25)Market (%) 6 32 (39)Sector (%) 11 19 (39)Website: www jabalomar comValuation multiples2006 2007 2008P/E (x) N/A N/A N/MP/B (x) N/A N/A 2.0P/Sales (x) N/A N/A N/ADiv yield (%) N/A N/A N/AWeightage (%)TASI (free float weight) 0.92MSCI SaudiN/AFree float (%)Free float 32.20Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)302010Jabal Omar (RHS)Jabal Omar Establishment 50.6Makkah Construction and5.0Development Co.Source: NCBC Research-REAL ESTATE DEVELOPMENTJabal OmarAlso known asJabal Omar,JODCJabal Omar Development Company (Jabal Omar) is engaged in the real estatedevelopment in the Jabal Omar Area. The company buys, builds, develops, manages,rents, leases and sells land and properties, in cooperation with local and internationalsubcontractors. The company headquartered in Mecca was established in 2006.Company financials2008*YoY(%)CAGR(%)(05-08)Net Revenues SRmn - - -EBITDA SRmn (93) - -Net Income SRmn (53) - -Assets SRmn 6,704 - -Equity SRmn 6,661 - -Tot Debt SRmn - - -Cash & Equiv SRmn 946 - -EBITDA Mgn % N/A - -Net Mgn % N/A - -ROE % (0.8) - -ROA % (0.8) - -Div Payout % - - -EPS SR (0.1) - -BVPS SR 9.9 - -Source: Company, NCBC Research;* 2008 figures are for 14 months period ending December 2008Segment-wise business analysisProduct segment H108 Geographic H108%Rev % Net Inc Breakup %Rev % Net IncReal estate development 100.0 100.0 Saudi Arabia 100.0 100.0Source: Company, NCBC Research• Business brief: Jabal Omar builds accommodation for pilgrims visiting Mecca, whichincludes residential towers, hotels, commercial centers, as well as roads and parkingfacilities. The company’s major project, the Jabal Omar project is expected to becompleted in 2010. The project includes two five-star hotels, six three-star hotels, 20-storey residential buildings to accommodate 100,000 people, commercial centers,shops & showrooms, roads, tunnels, a central transport station, parking facility for12,000 vehicles and prayer facilities for 220,000 worshipers.• Financials: The company has not yet started generating revenues. In 14 monthsperiod ending December 2008, the company recorded SR72.4mn as investmentincome. However, the company reported a net loss of SR52.6mn during the period.• Recent developments: In May 2009, Jabal Omar assigned Al Rajhi Financialservices to arrange financing for its Jabal Omar real estate project worth USD3 bn. InApril 2009, the company terminated the deal with Jadwa Investment Company signedin July 2008. In Q1 09, Jabal Omar posted a loss of SR4.1 mn. In July 2008, thecompany announced its plans to construct an SR400 mn electricity distribution stationin Makkah. The company also signed a SR12.4 bn financing agreement with JadwaInvestment for a real estate project in Makkah.JUNE 2009JABAL OMAR241


REAL ESTATE DEVELOPMENTMakkah ConstructionAlsoknown asMCDCPriceSR27.0Pricing / Valuation as on May 27, 2009Mkt capSR4.5bn ($1,188.3mn)Sh. outstanding164.8mnKey statistics52 week range H/L (SR) 44.8/18.5Avg daily turnover (mn) SR US$3m 12.29 3.2812m 35.18 9.39Raw Beta 6m 3yr0.37 0.99Reuters4100.SEBloombergMCDCO ABPrice perform (%) 1M 3M 12MAbsolute (%) (5) 10 (26)Market (%) 6 32 (39)Sector (%) 11 19 (39)Website: www mcdc com.saValuation multiples2007 2008 TTMP/E (x) 41.5 34.5 22.4P/B (x) 2.3 1.4 1.1P/Sales (x) 26.1 22.4 15.3Div yield (%) 2.9 3.2 0.0Makkah Construction & Development Co. (MCDC) established in 1989 to developareas around the Holy Mosque in Makkah. The company is engaged in theredevelopment of the Holy Haram Area. MCDC has established the residential andcommercial complex including the Jabal Omar and Jabal Khandama Project.Company financials (year end- April)2006 2007 2008 9M-09YoY(%)CAGR(%)(06-08)Net Revenues SRmn 77 274 272 227 8.9 87.5EBITDA SRmn 66 210 237 193 4.2 89.1Net Income SRmn 178 173 177 185 13.2 (0.3)Assets SRmn 2,607 3,460 4,618 4,202 21.9 33.1Equity SRmn 2,165 3,157 4,234 4,018 28.7 39.9Total Debt SRmn 126 - - - - -Cash & Equiv SRmn 36 125 114 NA NA 79.2EBITDA Mgn % 85.6 76.5 87.1 84.8 - -Net Mgn % 230.2 63.0 65.1 81.5 - -ROE % 8.2 6.5 4.8 5.2 - -ROA % 6.9 5.7 4.4 4.8 - -Div Payout % - 119.6 111.7 - - -EPS SR 1.1 1.0 1.1 1.1 13.2 (0.3)BVPS SR 13.1 18.8 25.7 24.4 36.4 39.9Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncReal Estate Construction Engg Services 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.83MSCI Saudi (domestic – mid cap) 0.06Free float (%)Free float 83.49Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Makkah (RHS)5040302010-Saudi Bin Laden Group 10.9Mohammed Salah Hamza Sairafi 6.4Source: Company, NCBC Research• Business brief: MCDC is involved in real estate (investment, construction anddevelopment), property management, and hotel management. The company holds100% stake in Makkah Hilton & Towers (the 1,400-room hotel) and Makkah ShoppingCenter (a three-story 451 unit shopping center). MCDC is the biggest stakeholder inthe Jabal Omar Development Company. The Jabal Omar Project is spread across230,000 square meters and includes hotels, commercial centers and prayer facilitiesfor over 200,000 people.• Financials: In 9M-09, ending January 2009, MCDC’s net margins were 81.5%showing an improvement over 9M-08 levels of 78.4%. EBIDTA margins declined to84.8% from 88.6% in 9M-08 due to increase in operating expenses. At SR227.0 mn,sales in 9M-09 grew 8.9% relative to SR208.4 in 9M-08. Earnings improved 13.2% y-o-y to register SR185mn in the nine month period ended January 2009.• Recent developments: In May 2009, the company announced a 16.7% y-o-yincrease in its FY 2009 net profit to SR221.0 mn. In October 2008, MCDC appointedSource: NCBC ResearchMr. Abdulfattah Abdulshakour Fida as the company's general manager to replace Mr.Mamdouh Qari Abdullah Tashkindi.JUNE 2009MAKKAH CONSTRUCTION242


REAL ESTATE DEVELOPMENTAlsoEmaar Economic Cityknown asEEC,Emaar ECPriceSR10.2Pricing / Valuation as on May 27, 2009Mkt capSR8.6bn ($2,303.7mn)Sh. outstanding850.0mnKey statistics52 week range H/L (SR) 26.5/7.6Avg daily turnover (mn) SR US$3m 155.87 41.6212m 135.08 36.07Raw Beta 6m 2yr1.10 1.03Reuters4220.SEBloombergEMAAR ABPrice perform (%) 1M 3M 12MAbsolute (%) 15 26 (54)Market (%) 6 32 (39)Sector (%) 11 19 (39)Website: www kingabdullahcity.comValuation multiples2006 2007 2008P/E (x) N/M 735.3 NMP/B (x) 1.6 2.3 0.9P/Sales (x) N/A N/A 74.9Div yield (%) N/A N/A -Emaar the Economic City (Emaar EC) was started in Sep.’06 by Emaar Properties as ajoint venture with Saudi investors to undertake the development of SR100bn KingAbdullah Economic City. The mega project is part of the Saudi government’s plan toattract foreign investments by providing incentives and tax breaks to investors.Company financials2006(14Weeks) 2007 2008YoY(%)CAGR(%)(06-08)Net Revenues SRmn - - 102 NA NAEBITDA SRmn - (157) (375) NM NANet Income SRmn (13) 26 (292) (1,211.1) NMAssets SRmn 8,637 8,748 9,532 9.0 5.1Equity SRmn 8,456 8,483 8,191 (3.4) (1.6)Tot Debt SRmn - - - NA NACash & Equiv SRmn 4,574 640 2,219 246.8 (30.4)EBITDA Mgn % NA NA (368.9) - -Net Mgn % NA NA (287.5) - -ROE % (0.2) 0.3 (3.5) - -ROA % (0.1) 0.3 (3.2) - -Div Payout % - - - - -EPS SR (0.0) 0.0 (0.3) (1,211.1) NMBVPS SR 9.9 10.0 9.6 (3.4) NMSource: Company, NCBC Research; figures for 2006 are from September – December 2006Segment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncProperty development 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.58MSCI Saudi (domestic – large cap) 1.37Free float (%)Free float 30.00Relative share price perf.11,000309,000207,0005,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIEmaar E .C (RHS)Top 5 shareholders (%)Modern Daim Real Estate 20.0ME Royal Capital Co. 9.4Emaar Middle East 5.8ME Hollandi 5.8ME Strategic Investments 5.8Source: NCBC ResearchSource: Company, NCBC Research• Business brief: KAEC, the single largest private sector-led project (168 mn squaremeters) in the GCC region, has six key components – the sea port, industrial zone, centralbusiness district, resort district, educational zone and residential communities. In earlyJanuary 2009, Emaar EC signed a deal worth SR120 mn with Freyssinet Saudi Arabia, toconstruct a school in the Esmeralda area of the King Abdullah Economic City• Financials: Emaar EC reported revenues of SR101.6 mn for the first time in 2008.After a net profit of SR26.3 mn in 2007, it incurred net losses of SR292.0 mn in 2008led by increase in operating expenses and decline in investment income. Moreover,since October 2008, work on the KAEC has slowed down led by the global crisis.EBITDA, ROA and ROE have all been in the red in 2008.• Recent developments: Emaar Properties recorded net loss of SR62.3 mn in 1Q 09compared to net loss of SR19.3 mn in 1Q 08 due to an increase in operating costsand a decline in the income from deposits. In April 2009, The Saudi Arabian GeneralInvestment Authority (Sagia) and EEC signed a memorandum of understanding(MoU) with sanofi-aventis to set up an entity in KAEC, the largest private sectordevelopment in Jeddah. In March 2009, the company announced that the sale of itsresidential units in the Economic City achieved a return of more than SR2 bn. InFebruary 2009, SAMA canceled the license granted to the company's subsidiary,Emaar Financial Services.JUNE 2009EMAAR ECONOMIC CITY243


REAL ESTATE DEVELOPMENTTaiba Holding CoAlso known asTaibaPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR17.8SR2.7bn ($713.0mn)150.0mn52 week range H/L (SR) 34.5/13.8Avg daily turnover (mn) SR US$3m 9.63 2.5712m 13.36 3.57Raw Beta 6m 3yr0.67 1.13ReutersBloomberg4090.SETIRECO ABPrice perform (%) 1M 3M 12MAbsolute (%) 2 13 (47)Market (%) 6 32 (39)Sector (%) 11 19 (39)Website: www taiba.com.saValuation multiples2006 2007 2008P/E (x) 27.8 13.6 16.5P/B (x) 1.0 1.8 0.9P/Sales (x) 17.0 10.6 9.6Div yield (%) 5.0 4.2 8.5Weightage (%)TASI (free float weight) 0.41MSCI Saudi (domestic – mid cap) 5.24Free float (%)Free float 68.98Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Taiba (RHS)Mohammed Ibrahim Mohammed AlEssaGeneral Organization for SocialInsuranceSource: NCBC Research40302010-16.66.9Taiba Holding Co (Taiba) owns, manages, and invests in real estate, hotels, hospitals,and resorts. The company also constructs, manages, and markets properties. Taibaundertakes electromechanical, agricultural, industrial, architectural, and miningprojects. Taiba was established in September 1988 and is headquartered in Medina.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 153 174 504 277 (45.0) 21.9EBITDA SRmn 80 98 413 164 (60.2) 30.0Net Income SRmn 136 106 393 160 (59.3) 5.5Assets SRmn 1,513 3,091 3,632 3,568 (1.8) 33.1Equity SRmn 1,287 2,848 2,980 2,899 (2.7) 31.1Total Debt SRmn 9 7 34 5 (85.3) (16.6)Cash & Equiv SRmn 18 142 66 287 331.8 146.2EBITDA Mgn % 52.1 56.3 81.9 59.2 - -Net Mgn % 89.1 61.0 78.0 57.8 - -ROE % 11.2 5.1 13.5 5.4 - -ROA % 9.3 4.6 11.7 4.4 - -Div Payout % 132.1 139.2 57.3 140.5 - -EPS SR 0.9 0.7 2.6 1.1 (59.3) 5.5BVPS SR 8.6 19.0 19.9 19.3 (2.7) 31.1Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncReal estate 91.4 NA Saudi Arabia 100.0 100.0Tourism 5.5 NAConstruction and maintenance 2.9 NAConsulting, training and advertising 0.3 NASource: Company, NCBC Research• Product profile: Taiba’s core focus is the real estate sector and it is a major developer inthe central area surrounding the Holy Prophet's mosque. Taiba has subsidiaries andassociate companies, which include TACOMA (involved in projects in the central area),ARAC (tourism activities), Al Aqeeq Real Estate Dev. Co (AQEEQ), TAWD (propertymanagement and marketing), Arabian Resort Areas and Quality Horizons. The companyhas a 20% stake in the Knowledge Economic City, Medina.• Financials: Although Taiba’s revenues grew consistently from 2005-2007, 2008revenues witnessed a fall led by the global meltdown. In 2008, on y-o-y basis,revenues fell 45.0% and net profit fell 59.3%. EBITDA margins depleted to 59.2%from 81.9% levels in 2007. In 2008, ROA fell to 4.4% in 2008 from 11.7% in 2007,while ROE fell to 5.4% from 13.5% in 2007• Recent developments: In April 2009, Taiba announced a 71.1% year on yeardecline in its 1Q 09 net profit to SR 13.9 mn, In December 2008, Taiba announced a50% strategic alliance with Dallah Al-Baraka Group to develop the Ejaba area in Al-Madina Al-Monawara. The company sold its stake of 7 mn shares in Oasis FiberglassCompany to its subsidiary Alzira. Moreover, the company announced thepostponement of IPO’s of two of its subsidiaries in December 2008.JUNE 2009TAIBA HOLDING COMPANY244


REAL ESTATE DEVELOPMENTArriyadh DevelopAlso known asARDCOPriceSR13.0Pricing / Valuation as on May 27, 2009Mkt capSR1.3bn ($347.1mn)Sh. outstanding100.0mnKey statistics52 week range H/L (SR) 24.8/8.7Avg daily turnover (mn) SR US$3m 21.13 5.6412m 25.34 6.77Raw Beta 6m 3yr0.88 1.17Reuters4150.SEBloombergADCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 28 35 (43)Market (%) 6 32 (39)Sector (%) 11 19 (39)Website: www.ardco.com.saValuation multiples2006 2007 2008P/E (x) 30.7 34.7 12.2P/B (x) 1.4 1.8 0.7P/Sales (x) 17.5 19.2 6.9Div yield (%) 2.6 2.0 5.2Weightage (%)TASI (free float weight) 0.29MSCI Saudi (domestic – small cap) 2.97Free float (%)Free float 99.97Relative share price perf.11,000309,000207,0005,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASI Arriyadh Development (RHS)Top 5 shareholders (%)Emaar Arabian Shield Investment Co. 9.6Adyar Holding Co. 7.4Source: NCBC ResearchArriyadh Development Company (ARDCO) is engaged in the construction ofcommercial, office and residential buildings as well as complexes for the purpose ofsale, lease or management. ARDCO also develops public parks, tourist compounds andparking lots. The company, headquartered in Riyadh, was established in 1994.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 106 110 128 140 9.8 9.7EBITDA SRmn 69 71 83 94 13.4 10.9Net Income SRmn 62 63 71 80 12.8 9.0Assets SRmn 1,551 1,536 1,577 1,565 (0.8) 0.3Equity SRmn 1,347 1,355 1,377 1,405 2.0 1.4Total Debt SRmn - - - - NA NACash & Equiv SRmn 12 5 22 163 632.2 NMEBITDA Mgn % 64.9 64.5 65.0 67.1 - -Net Mgn % 58.1 57.0 55.5 57.0 - -ROE % 4.7 4.7 5.2 5.7 - -ROA % 4.1 4.1 4.5 5.1 - -Div Payout % - 79.6 70.7 63.3 - -EPS SR 0.6 0.6 0.7 0.8 12.4 8.8BVPS SR 13.5 13.6 13.8 14.0 2.0 1.4Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncCommercial & Institutional Const 95.8 97.0 Saudi Arabia 100.0 100.0Land Subdivision 4.2 3.0Source: Company, NCBC Research• Business brief: ARDCO has been involved in residential projects such as SunriseCities and commercial projects such as Attameer Trading Center, ArriyadhTransportation Center, Technical Service City, Riyadh Hills and Riyadh Car Auction(project in used car selling). The company has also been engaged in thedevelopment of market areas such as Batha Meat & Vegetable Market, RiyadhWholesale & Retail Market and Riyadh Vegetable & Fruits Market.• Financials: Despite the current global crisis, on y-o-y basis, the company’s revenuesincreased 9.8% in 2008. The company’s net profit grew by 12.8% y-o-y in 2008.ARDCO has reported a CAGR of 9.7% in revenues since 2005 led by steady growthin sales and rising population driving demand for housing. Moreover, the net profitmargin has also been maintained between 55-58% over the years.• Recent developments: In April 2008, ARDCO announced 18% y-o-y growth in Q109 net profit to SR22 mn. In November 2007, ARDCO announced that Urbis-JHD(Australia) had entered the previously signed SR6.3 mn contract to develop the Al-Dahira project in Riyadh. The other parties to this contract include RetirementInstitution, the Public Institution for Social Security, Saudi Maakaliyeh Center, SaudiReal Estate Company, Dar Al Arkan Real Estate Development Company, FAS SaudiHolding Company, and Solidere International.JUNE 2009ARRIYADH DEVELOPMENT COMPANY245


REAL ESTATE DEVELOPMENTSaudi Real EstateAlso known asSRECOAkariaPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR24.0SR2.9bn ($767.4mn)120.0mn52 week range H/L (SR) 47.3/16.8Avg daily turnover (mn) SR US$3m 23.35 6.2412m 13.17 3.52Raw Beta 6m 3yr1.16 1.20ReutersBloomberg4020.SESRECO ABPrice perform (%) 1M 3M 12MAbsolute (%) (7) 28 (40)Market (%) 6 32 (39)Sector (%) 11 19 (39)Website: www sreco.com.saValuation multiples2006 2007 2008P/E (x) 36.5 35.6 16.9P/B (x) 1.3 2.0 0.8P/Sales (x) 24.0 25.3 10.5Div yield (%) 2.2 2.0 5.1Weightage (%)TASI (free float weight) 0.20MSCI Saudi (domestic – mid cap) 1.90Free float (%)Free float 30.64Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Real Estate (RHS)5040302010-Public Investment Fund 64.5Source: NCBC ResearchSaudi Real Estate (SRECO) was established in 1976 in Riyadh. The company owns landfor building, developing, constructing residential and commercial buildings. SRECOalso engages in the trading of construction materials and the sale or lease of equipmentfor the same. The total constructed area by SRECO exceeds 800,000 square meters.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 179 169 243 225 (7.3) 8.0EBITDA SRmn 138 109 153 133 (12.1) NMNet Income SRmn 139 111 173 140 (19.0) 0.4Assets SRmn 1,551 3,110 3,269 3,235 (1.0) 27.8Equity SRmn 1,397 3,003 3,120 3,085 (1.1) 30.2Total Debt SRmn - - - - - -Cash & Equiv SRmn 18 15 2 4 109.5 (39.9)EBITDA Mgn % 77.3 64.8 63.1 59.2 - -Net Mgn % 77.6 65.8 71.2 62.2 - -ROE % 10.3 5.0 5.6 4.5 - -ROA % 9.1 4.8 5.4 4.3 - -Div Payout % 34.7 81.1 69.5 85.8 - -EPS SR 1.2 0.9 1.4 1.2 (19.0) 0.5BVPS SR 11.6 25.0 26.0 25.7 (1.1) 30.2Source: Company, NCBC ResearchSegment-wise business analysisProduct/ Business segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncLand sales 38.5 N/A Saudi Arabia 100.0 100.0Leases 60.4 N/AMaintenance revenue 1.0 N/AOther real estate revenue 0.1 N/ASource: Company, NCBC Research• Business brief: SRECO is one of the pioneers in shopping center construction inGCC. The company has constructed a number of shopping centers in Riyadh andDammam. It has developed housing and office complexes, and executed a number ofprojects outside the Kingdom such as Saudi embassies in some GCC countries.SRECO owns a 15% stake in United Arab Glass Co., about 2.8% in Modern Rafiq forReal Estate Development Co and 9.48% stake in Knowledge Economic City (KSA).• Financials: SRECO’s sales have been on the decline in 2008 led by the global crisis.In 2008, sales were down 7.3% y-o-y to SR225.0 mn. EBIDTA margins were 59.2%in 2008, showing a substantial decline from the past trend (margins of over 77% in2005). Net profit margins also contracted to 62.2% as compared to 71.2% in 2007,while net income fell 19.0% y-o-y to SR139.9 mn in 2008.• Recent developments: In April 2009, SRECO announced a 9.3% year on year increasein the 1Q 09 net profit to SR31.0 bn. In December 2008, SRECO acquired a 9.48% stakein Knowledge Economic City (7,865,000 shares at a price of SR10 per share). In Nov.’08,SRECO announced a strategic alliance with UK’s Atkins Co. to construct a SR24mnresidential and commercial project in Jeddah. In the same month, the company alsoannounced joint ventures with PM Group Ireland and PFS Group Singapore to providereal estate consultancy and asset management services, respectively.JUNE 2009SAUDI REAL ESTATE246


Company Page No. Banking and FinancialsNational Shipping 248 PetrochemicalsSaudi Public Transportation 249 CementUnited International 250 RetailSaudi Transport and Investment 251 Energy and UtilitiesAgriculture and FoodTelecom and ITInsuranceMulti InvestmentIndustrial InvestmentBuilding and ConstructionReal EstateTransportMedia and PublishingHotels and Tourism


TRANSPORTNational ShippingAlso known asNSCSAPriceSR17.3Pricing / Valuation as on May 27, 2009Mkt capSR5.4bn ($1,450.9mn)Sh. outstanding315.0mnKey statistics52 week range H/L (SR) 36.3/13.4Avg daily turnover (mn) SR US$3m 69.14 18.4612m 110.38 29.47Raw Beta 6m 3yr0.56 1.13Reuters4030.SEBloombergNSCSA ABPrice perform (%) 1M 3M 12MAbsolute (%) 2 5 (46)Market (%) 6 32 (39)Sector (%) 5 12 (43)Website: www nscsa.comValuation multiples2006 2007 2008P/E (x) 12.3 20.3 6.9P/B (x) 1.7 1.7 1.0P/Sales (x) 3.1 4.6 2.0Div yield (%) 4.4 4.0 9.1Weightage (%)TASI (free float weight) 0.81MSCI Saudi (domestic – mid cap) 8.37Free float (%)Free float 66.76Relative share price perf.11,000409,000307,000205,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIShipping (RHS)Top 5 shareholders (%)Public Investment Fund 28.1Source: NCBC ResearchNational Shipping Company of Saudi Arabia (NSCSA), established in 1979, isengaged in providing marine transport services primarily to the oil & gas andchemical sectors. Additionally, NSCSA provides liner (general cargo), shipmanagement, and container storage and repair services.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,602 1,651 1,703 2,595 52.3 17.4EBITDA SRmn 685 649 634 1,188 87.3 20.1Net Income SRmn 434 410 388 750 93.1 20.0Assets SRmn 4,834 5,997 7,797 9,819 25.9 26.6Equity SRmn 2,601 3,005 4,660 5,091 9.2 25.1Total Debt SRmn 1,665 2,372 2,432 4,007 64.7 34.0Cash & Equiv SRmn 300 197 191 226 18.4 (9.1)EBITDA Mgn % 42.7 39.3 37.2 45.8 - -Net Mgn % 27.1 24.8 22.8 28.9 - -ROE % 18.4 14.6 10.1 15.4 - -ROA % 9.3 7.6 5.6 8.5 - -Div Payout % - 54.9 81.1 63.0 - -EPS SR 10.9 1.8 1.2 2.4 93.1 (39.7)BVPS SR 65.0 13.4 14.8 16.2 9.2 (37.1)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Op Inc Breakup %Rev % Op IncCrude Oil 43.48 57.75 Saudi Arabia 100.0 100.0General Cargo 28.67 24.12Petrochemicals 27.85 18.13Source: Company, NCBC Research• Business brief: In the beginning of 2008, NSCSA had a fleet of 29 ships, (11 oiltankers, 11 chemical tankers and 4 general cargos). The company is likely to add sixVLCCs to its existing fleet by 2009. NSCSA operates its chemical tankers through its80% subsidiary, National Chemical Carriers. The company is expected to have a totalof about 50 VLCCs and chemical tankers by 2011. Along with transportation, thecompany offers ship management services for its own vessels through its whollyowned subsidiary, Mideast Ship Management.• Financials: In 2008, NSCSA’s sales increased 52.3% year-on-year; while net incomegrew 93.1% during the same period. Factors such as increase in crude oiltransportation and general cargo freight and deployment of new fleet of oil tankerscontributed to the growth in revenue.• Recent developments: In April 2009, the company reported a 12.7% year on yeardecline in the 1Q 09 net profit to SR151.1 mn. In the same month, NSCSA signed aSR1.05 bn Murabaha contact with the General Investment Fund, to finance theconstruction of eight oil transporters. In March 2009, NSCSA announced its plans toextend its network to the US (the port of Charleston, in South Carolina). In the samemonth, NCC sold off three of its chemical tankers to a Norwegian company andrealized a profit of SR27mn. NCC also leased out three VLCCs to Old DominionFreight Line, Inc in Norway.JUNE 2009THE NATIONAL SHIPPING CO248


TRANSPORTSaudi Public Tpt Co Alsoknown asSAPTCOPriceSR8.9Pricing / Valuation as on May 27, 2009Mkt capSR1.1bn ($295.4mn)Sh. outstanding125.0mnKey statistics52 week range H/L (SR) 15.3/6.6Avg daily turnover (mn) SR US$3m 34.72 9.2712m 27.73 7.41Raw Beta 6m 3yr0.49 0.98Reuters4040.SEBloombergSAPTCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 11 11 (38)Market (%) 6 32 (39)Sector (%) 5 12 (43)Website: www saptco.com.saValuation multiples2006 2007 2008P/E (x) 54.2 23.4 29.5P/B (x) 1.5 1.5 0.6P/Sales (x) 3.1 3.0 1.2Div yield (%) 3.3 2.9 7.0Saudi Public Transportation Company (SAPTCO) provides bus transport servicesfor domestic as well as international travel to neighboring countries such as Egypt,Syria, Jordan, Kuwait, Qatar, UAE, Bahrain, Yeman, Sudan and Lebanon. Thecompany headquartered in Riyadh has about 161 local and international agents.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 636 693 732 767 4.7 6.4EBITDA SRmn 185 218 190 154 (19.1) (6.0)Net Income SRmn 123 40 94 30 (67.9) (37.9)Assets SRmn 1,463 1,734 1,909 1,810 (5.2) 7.4Equity SRmn 1,107 1,433 1,489 1,414 (5.0) 8.5Tot Debt SRmn - - 114 63 (44.6) 553.6Cash & Equiv SRmn 67 229 167 410 145.5 83.3EBITDA Mgn % 29.1 31.4 26.0 20.1 - -Net Mgn % 19.7 45.5 12.8 3.9 - -ROE % 11.7 24.8 6.4 2.1 - -ROA % 8.8 19.7 5.1 1.6 - -Div Payout % 48.9 176.3 66.7 207.6 - -EPS SR 6.1 0.4 0.7 0.2 (67.9) (66.0)BVPS SR 55.4 14.3 11.9 11.3 (5.0) (41.1)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncSaudi Arabia 100 100Weightage (%)TASI (free float weight) 0.21MSCI Saudi (domestic – small cap) 2.01Free float (%)Free float 83.63Relative share price perf.11,000209,000157,000105,00053,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASISAPTCO (RHS)Top 5 shareholders (%)Public Investment Fund 15.7Source: Company, NCBC Research• Business brief: SAPTCO has a fleet of 2,714 buses and its operations consist of 579daily scheduled trips connecting 362 cities, towns and villages across the Kingdom.SAPTCO provides intra-city and inter-city transport services across Saudi Arabia alongwith international transport services to 10 neighboring countries. The company providescontract and charter transportation services to schools, colleges and other groups.SAPTCO also provides VIP services in select routes and special transport services toMecca and Medina during the Hajj and Umrah seasons. Additionally, the companyprovides advertising space on its buses; optimizing on its wide presence across cities.• Financials: SAPTCO has shown consistent growth in its revenues since 2003. In2008, the company’s revenues increased 4.7% year-on-year (y-o-y) from SR732.4mnin 2007 to SR766.5mn in 2008. However, the company reported net income ofSR30.1mn; registering a y-o-y decline of 67.9% in 2008.• Recent developments: In May 2009, SAPTCO singed a MOU with Saudi ArabianGeneral Investment Authority to study the plan of providing regular transportationservices to Saudi economic cities. In April 2009, the company recorded a net loss ofSource: NCBC ResearchSR9.0 mn for 1Q 09 compared to a net loss of SR5.2 mn in 1Q 08. In October 2008,SAPTCO signed a 5-year contract of SR50mn with a local advertising company forproviding advertisements on 300 buses owned by the company.JUNE 2009SAUDI PUBLIC TRANSPORT CO249


TRANSPORTUnited InternationalAlso known asBudget Saudi,UniTrans, UITCPriceSR56.5Pricing / Valuation as on May 27, 2009Mkt capSR1.0bn ($276.1mn)Sh. outstanding18.3mnKey statistics52 week range H/L (SR) 107.0/30.0Avg daily turnover (mn) SR US$3m 17.09 4.5612m 20.15 5.38Raw Beta 6m 1yr1.04 0.91Reuters4260.SEBloombergBUDGET ABPrice perform (%) 1M 3M 12MAbsolute (%) (4) 40 (46)Market (%) 6 32 (39)Sector (%) 5 12 (43)Website: www budgetsaudi.comValuation multiples2006 2007 2008P/E (x) - 28.7 8.2P/B (x) - 7.4 1.9P/Sales (x) - 5.7 1.5Div yield (%) - 1.2 4.6United International Transportation Co. (Budget Saudi) is the largest car rentalcompany in the MENA region. The company is a franchisee of Budget International,and operates more than 14,500 vehicles comprising of luxury, 4x4, full size,intermediate, compact and economy cars.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 340 392 397 473 19.1 11.6EBITDA SRmn 218 264 251 320 27.6 13.7Net Income SRmn 67 71 78 84 7.3 7.6Assets SRmn 429 547 683 729 6.7 19.3Equity SRmn 183 254 303 356 17.4 24.8Tot Debt SRmn 116 154 241 248 2.8 28.6Cash & Equiv SRmn 11 21 16 10 (35.8) (2.8)EBITDA Mgn % 64.1 67.3 63.2 67.7 - -Net Mgn % 19.8 18.1 19.7 17.8 - -ROE % 45.5 32.5 28.1 25.5 - -ROA % 18.1 14.5 12.7 11.9 - -Div Payout % 0.0 0.0 35.1 38.2 - -EPS SR 112.2 3.9 4.3 4.6 7.3 (65.6)BVPS SR 305.1 13.9 16.6 19.4 17.4 (60.1)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.10MSCI Saudi (domestic – small cap) 0.87Free float (%)Free float 43.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Budget Saudi (RHS)150100Al Zahid Holding Group 39.5Abdul Elah Abdullah Mahmood Ali 14.3ZahidMohammed Abdullah Mahmood Zahid 9.2Source: NCBC Research50-Source: Company, NCBC Research• Business brief: ISO certified Budget Saudi provides various services such as short termand long term car rentals; chauffeur driven cars; CorpRate Program (a corporate clientorientedservice with preferential rates and value additions such as faster reservations andflexible billing); Budget Express (a loyalty program for members). The company alsoprovides Hajj & Umrah services for visitors, pilgrims and locals; Lodge and Drive(accommodation along with car rental); Premier Limousine Service (chauffeur drivenluxury vehicles); and automotive maintenance (maintenance facilities including satelliteworkshops). Budget Saudi is also engaged in the sales of used cars.• Financials: Budget Saudi has displayed consistent performance with revenues andnet profit growing at a CAGR of 11.6% and 7.6%, respectively, during 2005-2008. In2008, revenues grew 19.1% from SR396.6mn in 2007 to SR472.5mn. Net profitmargins were 17.8% showing a slight decline as compared to 2007. The company’scash balance also declined by 35.8% due to dividend payment in 2008.• Recent developments: In April 2009, Budget Saudi reported a 4.6% year on yearincrease in its 1Q 09 net profit. In November 2008, Budget Saudi canceled aMemorandum of Understanding to buy Morocco's Groupe Finance.com due tocurrent global economic slowdown.JUNE 2009UNITED INTERNATIONAL250


TRANSPORTSaudi Tpt and InvAlso known asMubarradPriceSR24.1Pricing / Valuation as on May 27, 2009Mkt capSR0.4bn ($115.8mn)Sh. outstanding18.0mnKey statistics52 week range H/L (SR) 31.5/10.2Avg daily turnover (mn) SR US$3m 42.75 11.4212m 21.61 5.77Raw Beta 6m 3yr1.30 1.21Reuters4110.SEBloombergSLTCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 43 67 (22)Market (%) 6 32 (39)Sector (%) 5 12 (43)Website: www..mubarrad.com.saValuation multiples2006 2007 2008P/E (x) NM 55.3 20.0P/B (x) 4.0 4.0 1.3P/Sales (x) 14.2 16.2 4.6Div yield (%) - - -Saudi Transport and Investment Company (Mubarrad) is engaged in the landtransport business across Saudi Arabia and the Gulf Cooperation Councilcountries. Mubarrad has recently forayed into the purchase and sale of land as wellas construction, management and operation of buildings.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 44 46 47 49 4.8 3.1EBITDA SRmn 10 13 15 16 4.2 16.3Net Income SRmn 14 (8) 14 11 (18.1) (6.6)Assets SRmn 339 196 219 225 2.8 (12.8)Equity SRmn 288 160 188 166 (11.6) (16.7)Total Debt SRmn - - - 32 - -Cash & Equiv SRmn 15 6 4 6 55.4 (24.2)EBITDA Mgn % 22.1 28.9 31.9 31.7 - -Net Mgn % 30.9 (16.5) 29.3 22.9 - -ROE % 5.0 (3.4) 7.8 6.3 - -ROA % 4.1 (2.8) 6.6 5.0 - -Div Payout % 105.1 0.0 0.0 0.0 - -EPS SR 3.8 (0.4) 0.8 0.6 (18.1) (45.4)BVPS SR 79.9 8.9 10.4 9.2 (11.6) (51.3)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncWeightage (%)TASI (free float weight) 0.10MSCI Saudi (domestic – small cap) 0.74Free float (%)Free float 99.99Relative share price perf.11,000409,000307,000205,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIM ubarrad (RHS)Top 5 shareholders (%)Source: NCBC ResearchSource: Company, NCBC Research• Business brief: Mubarrad owns a fleet of more than 1,000 vehicles (including truckheads, reefer trailers, reefer trucks, flat trucks for dry transport, and trailers for bulktransport.) for carrying all types of general and industrial cargo. It also runs theExpress Parcel Services throughout Saudi Arabia. Furthermore, it constructs,manages and leases cold stores and trailers.• Financials: Mubarrad’s top line continued to grow in 2008 by 4.8% y-o-y to reachSR48.7mn; keeping in line with the trend since 2005; registering a CAGR of 3.1%. In2008, Mubarrad’s net profit fell by 18.1% from SR13.6mn in 2007 to SR11.2mn in2008 mainly due to decline in investment income. Consequently, net margin stood at22.9% in 2008 as compared to 29.3% in 2007.• Recent developments: In April 2009, the company reported 73.0% y-o-y decline inQ1 FY09 net income to SR348.0mn. In September 2008, Mubarrad signed twocontracts worth SR33.1 mn to buy trucks and refrigeration units to boost its fleetcapacity. In February 2008, the company announced the approval of EGM for thedevelopment of hotels, commercial complexes and hospitals. During the same month,the company changed its name from Saudi Land Transport Company to SaudiTransport and Investment Company as it started investing its surplus funds ininvestment portfolios.JUNE 2009SAUDI TRANSPORT AND INVESTMENT CO251


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Company Page No. Banking and FinancialsSaudi Research 254 PetrochemicalsSaudi Printing 255 CementTihama Advertising 256 RetailEnergy and UtilitiesAgriculture and FoodTelecom and ITInsuranceMulti InvestmentIndustrial InvestmentBuilding and ConstructionReal EstateTransportMedia and PublishingHotels and Tourism


MEDIA AND PUBLISHINGSaudi ResearchAlso known asSRMGPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR33.0SR2.6bn ($704.9mn)80.0mn52 week range H/L (SR) 46.0/22.0Avg daily turnover (mn) SR US$3m 4.11 1.1012m 3.70 0.99Raw Beta 6m 3yr1.21 0.90ReutersBloomberg4210.SERESEARCH ABPrice perform (%) 1M 3M 12MAbsolute (%) 7 10 (25)Market (%) 6 32 (39)Sector (%) 12 14 (24)Website: www srmg comValuation multiples2006 2007 2008P/E (x) 21.6 12.0 10.5P/B (x) 5.0 3.4 1.7P/Sales (x) 5.1 4.2 1.8Div yield (%) 2.7 5.1 6.8Weightage (%)TASI (free float weight) 0.36MSCI Saudi (domestic – mid cap)Free float (%)Free float 60.45Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)5040302010-SRMG (RHS)Kingdom Holding Company 29.9HH Prince Faisal Ahmad Bin Salman 6.8Al SaudMohammed Hussain Ali Al Amudy 5.6General Organisation for Social 5.2Insurance (GOSI)Source: NCBC ResearchSaudi Research and Marketing Group (SRMG) is a leading publishing group basedin Riyadh. Established in 1988, SRMG’s subsidiaries include Saudi Research andPublishing Company, Saudi Distribution Company, Saudi Specialized PublishingCompany (SSPC) and Al Khaleejiah Advertising and Public Relations Company.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 1,063 1,161 1,113 1,342 20.6 8.1EBITDA SRmn 254 323 285 312 9.5 7.1Net Income SRmn 181 276 393 226 (42.4) 7.8Assets SRmn 1,398 1,785 2,187 2,259 3.3 17.4Equity SRmn 926 1,195 1,401 1,376 (1.8) 14.1Total Debt SRmn 123 148 121 218 80.4 20.9Cash & Equiv SRmn 117 179 461 141 (69.4) 6.3EBITDA Mgn % 23.9 27.8 25.5 23.2 - -Net Mgn % 17.0 23.8 35.3 16.9 - -ROE % 21.1 26.0 30.3 16.3 - -ROA % 13.4 17.3 19.8 10.2 - -Div Payout % - 58.0 61.0 71.4 - -EPS SR 2.3 3.5 4.9 2.8 (42.4) 7.8BVPS SR 11.6 14.9 17.5 17.2 (1.8) 14.1Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncAdvertising 11.0 Saudi Arabia 100.0 100.0Printing 24.0Publishing 50.9Distr bution 13.9Other 0.22Source: NCBC Research; the product segmental break up is before excluding eliminations.• Business brief: SRMG is engaged in four key activities—publishing, advertising,printing, and distribution. The publishing segment is involved in research andmarketing operations. The advertising segment mainly deals with the production andmarketing of audiovisual media. The printing segment prints newspapers, magazines,books, and journals in various languages.• Financials: SRMG’s revenues increased 20.6% y-o-y during 2008. However, thecompany’s EBITDA margin declined 2.3 percentage points to 23.2% in the sameperiod due to increased cost of sales and S&G expenses. Consequently, net incomealso declined 42.4% denting the net margins.• Recent developments: SRMG announced its 1Q-09 results on April 19, 2009. Itsnet profit plunged 64.7% y-o-y to SR20.5mn due to lower advertising revenue onaccount of slowdown in the financial and real estate sectors. In March 2009, Mr.Tarek Bin Abdulkarim Al Kain was appointed SRMG's vice-chief executive officer. Inthe same month, SRMG increased its stake in Al Maktaba Stores from 51% to 100%for consideration of SR40mn, primarily aimed at improving specialized educationalcontent. In December 2009, SRMG announced transformation from a specializedlimited liability company to a closed joint stock company (holding).JUNE 2009SAUDI RESEARCH254


MEDIA AND PUBLISHINGSaudi PrintingAlso known asSPPCPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR17.5SR1.1bn ($280.4mn)60.0mn52 week range H/L (SR) 30.5/11.8Avg daily turnover (mn) SR US$3m 7.53 2.0112m 6.84 1.83Raw Beta 6m 1yr0.69 0.90ReutersBloomberg4270.SESPPC ABPrice perform (%) 1M 3M 12MAbsolute (%) 1 (11) (40)Market (%) 6 32 (39)Sector (%) 12 14 (24)Website: www sppc.com.saValuation multiples2006 2007 2008P/E (x) NA 18.0 5.6P/B (x) NA 3.5 1.1P/Sales (x) NA 6.7 1.8Div yield (%) NA 2.4 10.8Weightage (%)TASI (free float weight) 0.11MSCI Saudi (domestic – mid cap)Free float (%)Free float 47.50Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)SPPC (RHS)Saudi Research and Marketing Group 42.0Alfiqriah Marketing and Advertising 10.5Holding CompanySaudi Research Marketing Group 7.0Al Mosanafat Scientific Holding 7.0Source: NCBC Research40302010-Saudi Printing and Packaging Company (SPPC) (formerly Madina Printing andPublishing Company) was established in 1963. A subsidiary of Saudi Research andMarketing Group, SPPC is engaged in a variety of commercial and package printingand production and has five print houses and a production area of 1.0 mn sq mts.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 245 312 370 465 25.6 23.7EBITDA SRmn 83 114 118 123 4.5 14.2Net Income SRmn 68 114 137 151 9.5 30.3Assets SRmn 416 814 858 1,068 24.6 36.9Equity SRmn 329 619 701 792 12.9 34.0Total Debt SRmn 3 63 35 36 2.0 121.7Cash & Equiv SRmn 14 103 22 17 (26.0) 6.9EBITDA Mgn % 33.7 36.6 31.8 26.5 - -Net Mgn % 27.7 36.4 37.1 32.4 - -ROE % 21.5 23.9 20.8 20.2 - -ROA % 17.8 18.4 16.4 15.6 - -Div Payout % - - 43.7 60.0 - -EPS SR 1.1 1.9 2.3 2.5 9.5 30.3BVPS SR 5.5 10.3 11.7 13.2 12.9 34.0Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncPrinting 68.5 Saudi Arabia 100 100Head Office & Investments 31.5Source: Company, NCBC Research• Business brief: SPPC offers integrated print production solutions from pre-pressdesigning and printing to post-printing binding and packaging. The company has acapacity of 5,000 magazine copies/hour, 150,000 newspaper copies/hour and bookprinting capacity of 6.5 copies/hour and 10 carton sheet per hour. SPPC also hasexclusive printing rights for its parent company and for the Saudi Research andPublishing Company. The company’s publications include, Sayidaty, Arrajol, AlEqtisadiah, Almajalla and Arab News.• Financials: SPPC registered a strong revenue growth of 25.6% y-o-y in 2008. Higherinput costs resulted in a y-o-y contraction of 5.3 percentage points in the company’sEBITDA margin over the same period. SPPC’s net income increased 9.5% ascompared to previous year. SPPC’s net margins were well above EBITDA margins in2007 and 2008 as the company recorded significant non-operating income duringboth the periods.• Recent developments: SPPC announced its 1Q-09 results on April 19, 2009. Thecompany’s net profit dived 48.1% y-o-y to SR15.7mn during 1Q-09. In November2008, SPCC acquired Saudi Arabia-based Al Aoun Factory for Commercial Labelsand Flexible Packaging for SR90mn. In August 2008, the company sold its 40% stakein Abu Dhabi-based United Printing and Publishing (UPP) for $31.3mn (SR117.4mn).JUNE 2009SAUDI PRINTING255


MEDIA AND PUBLISHINGTihamaAlso known asTAPRCOPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR35.2SR0.5bn ($141.0mn)15.0mn52 week range H/L (SR) 39.5/12.6Avg daily turnover (mn) SR US$3m 54.77 14.6212m 35.93 9.59Raw Beta 6m 3yr1.79 1.39ReutersBloomberg4070.SETAPRCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 46 80 5Market (%) 6 32 (39)Sector (%) 12 14 (24)Website: www tihama comValuation multiples2007 2008 2009P/E (x) 32.6 16.5 10.2P/B (x) 3.0 2.0 1.3P/Sales (x) 5.3 3.4 2.2Div yield (%) 1.8 3.3 -Weightage (%)TASI (free float weight) 0.12MSCI Saudi (domestic – mid cap)Free float (%)Free float 100.00Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Tihama (RHS)5040302010-Tihama Advertising & Public Relations Co. (TAPRCO) was established in 1983. Thecompany operates Egyptian Satellite Channel, the Al-Hayat newspaper, andKolness magazine. TAPRCO operates via its subsidiaries: the Tihama DistributionCompany, United Journalists, Intermarkets Riyadh and Ad Art Medyan.Company financials2006 2007 2008 2009YoY(%)CAGR(%)(06-09)Net Revenues SRmn 117 120 137 142 3.7 6.5EBITDA SRmn 10 17 20 17 (15.7) 20.4Net Income SRmn 12 19 28 30 7.3 35.8Assets SRmn 275 298 338 354 4.7 8.7Equity SRmn 194 211 226 239 5.8 7.2Total Debt SRmn 2 3 1 2 216.5 (3.8)Cash & Equiv SRmn 21 36 85 99 16.5 68.9EBITDA Mgn % 8.3 14.2 14.7 11.9 (2.7) 13.0Net Mgn % 10.2 16.1 20.5 21.2 0.7 27.5ROE % 6.2 9.5 12.8 12.9 0.1 27.6ROA % 4.6 6.7 8.8 8.7 (0.1) 24.0Div Payout % - 58.4 53.5 - - -EPS SR 0.8 1.3 1.9 2.0 7.3 35.8BVPS SR 12.9 14.1 15.0 15.9 5.8 7.2Source: Company, NCBC Research; The company’s year ending is in MarchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncAdvertising 68.0 Saudi Arabia 100% 100%Book Stores 32.0Source: Company, NCBC Research• Business brief: TAPRCO’s operations can be categorized into three segments—media, public relations (PR), and other services. The media segment comprises ofnewspapers, magazines, outdoor advertising, and a satellite television channel. ThePR segment includes press files and promotional information services. Other servicessegment involves video production and distribution of Arabic and American films inthe Middle East. TAPRCO also operates in Cairo, Dubai, London, and Paris.• Financials: TAPRCO’s revenues increased 3.7% y-o-y in 2009. EBITDA marginsdeclined to 11.9% in the same period as compared to 14.7% a year ago. This is dueto the higher growth in cost of sales and SG&A expenses. However, the companycould record a net margin of 21.2% in 2009 (20.5% in 2008) primarily due to higherinterest income arising from associate companies. Consequently, net profit surged7.3% y-o-y to SR30.1mn during 2009.• Recent developments: In May 2009, TAPRCO was chosen as the representative ofPromax, a public relations firm based in Netherlands, in Saudi Arabia. In FebruarySource: NCBC Research2009, TAPRCO opened a new library of size 700 meters in Eastern region(Dammam) for total cost of SR4mn.JUNE 2009TIHAMA256


Company Page No. Banking and FinancialsSaudi Hotels and Resort 258 PetrochemicalsTourism Enterprise 259 CementRetailEnergy and UtilitiesAgriculture and FoodTelecom and ITInsuranceMulti InvestmentIndustrial InvestmentBuilding and ConstructionReal EstateTransportMedia and PublishingHotels and Tourism


PricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR30.0SR2.1bn ($552.8mn)69.0mn52 week range H/L (SR) 43.5/18.5Avg daily turnover (mn) SR US$3m 13.20 3.5312m 16.54 4.42Raw Beta 6m 3yr0.85 0.99ReutersBloomberg4010.SESHARCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 15 27 (17)Market (%) 6 32 (39)Sector (%) 21 26 (9)Website: www saudi-hotels.com.saValuation multiples2006 2007 2008P/E (x) 57.6 25.6 12.8P/B (x) 2.0 2.4 1.2P/Sales (x) 7.0 7.5 5.4Div yield (%) 1.7 1.4 5.2Weightage (%)TASI (free float weight) 0.24MSCI Saudi (domestic – small cap) 1.30Free float (%)Free float 52.68Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)5040302010-Hotels (RHS)Mohammed Ibrahim Mohammed Al 22.4EssaPublic Investment fund 16.6General Organization for Social 6.5InsuranceSource: NCBC ResearchHOTELS AND TOURISMSaudi Hotels & ResortAlso knownasSHARACOSaudi Hotels & Resorts Areas Co. (SHARCO) was founded in 1979. The companyowns and operates many resorts, hotels, and other projects like Ajyad Makkah Hotel,Sahara Airport Hotel, Al-Rawda Toys City, Al-Khaleej Village, Al-Andalus luxuriousvillas, Future Homes "Diplomatic Quarter", Riyadh Marriott Hotel and few others.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 181 220 264 294 11.3 17.5EBITDA SRmn 73 92 123 141 15.4 24.7Net Income SRmn 80 27 78 123 58.4 15.6Assets SRmn 1,496 1,434 1,535 1,953 27.2 9.3Equity SRmn 799 771 820 1,348 64.4 19.1Total Debt SRmn 57 61 58 53 (9.0) (2.8)Cash & Equiv SRmn 11 30 39 26 (33.2) 32.4EBITDA Mgn % 40.3 41.8 46.4 48.1 - -Net Mgn % 44.0 12.1 29.4 41.9 - -ROE % 10.3 3.4 8.9 9.1 - -ROA % 5.3 2.9 5.1 6.3 - -Div Payout % - 97.1 35.4 66.67 - -EPS SR 8.0 0.8 1.6 1.8 13.8 (39.3)BVPS SR 79.8 15.4 16.4 19.5 18.9 (37.4)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncHotel and Resorts revenues 83.4 N/A Saudi Arabia 100.0 N/ARental Revenue 7.1 N/AProperty management 6.0 N/AReal Estate development 3.2 N/AInvestments 0.3 N/ASource: Company, NCBC Research• Business brief: SHARCO engages in activities such as construction, ownership,investment and management of hotels, real estate, resorts and entertainmentcenters. The company reports its revenues under the following business heads—hospitality, real estate, resorts, and entertainment. Saudi Hotels & Resorts alsodevelops, divides, and rents land owned by the company.• Financials: The company has registered a CAGR of 17.5% for the period 2005-08and reported 11.3% y-o-y revenue growth to SR293.9mn in 2008. Furthermore, thecompany’s net profit increased by a significant 58.4% y-o-y to SR123.0mn in 2008due to the expansion in gross and operating margins as well a substantial decreasein minority interests.• Recent developments: The company‘s net profit has increased 5.6% to SR28.2mnin 1Q-09. In April 2009, SHARCO announced that it has received a license tomanage and operate a hotel in Mekkah, which is expected to be completed in twoyears. In June 2008, the company signed an agreement for the sale of plots of landsand buildings owned in the village of East Gulf region for SR485.8mn. In the samemonth, Jenan Real Estate Co. and Al Rashid Co. bought SHARCO’s Al KhaleejVillage project in Dammam for SR500mn.JUNE 2009SAUDI HOTELS AND RESORTS258


HOTELS AND TOURISMTourism Enterprise CoAlso knownasShamsPriceSR36.4Pricing / Valuation as on May 27, 2009Mkt capSR0.4bn ($98.7mn)Sh. outstanding10.2mnKey statistics52 week range H/L (SR) 39.1/9.5Avg daily turnover (mn) SR US$3m 95.20 25.4212m 35.55 9.49Raw Beta 6m 3yr-0.48 1.26Reuters4170.SEBloombergTECO ABPrice perform (%) 1M 3M 12MAbsolute (%) 39 23 23Market (%) 6 32 (39)Sector (%) 21 26 (9)Website: www palmbeach-resort.comValuation multiples2006 2007 2008P/E (x) NM NM NMP/B (x) 6.0 6.8 2.2P/Sales (x) 41.5 37.3 10.7Div yield (%) 0 0 0Tourism Enterprises Co. (TECO) was established in 1991 to construct and managetourist projects. Headquartered in Dammam Saudi Arabia, TECO has soleownership of the Palm Beach Resort® since its establishment in 1995. TECO offersvisitors sports and recreational facilities, conference facilities, cabanas and suites.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 10 10 13 15 11.1 15.5EBITDA SRmn 4 3 5 3 (29.9) (5.2)Net Income SRmn (1) (8) 2 (0) NM (32.7)Assets SRmn 97 90 79 79 (1.1) (6.8)Equity SRmn 81 73 73 73 (0.1) (3.3)Total Debt SRmn 5 2 - 0 - (100.0)Cash & Equiv SRmn 18 19 3 4 17.5 (41.9)EBITDA Mgn % 41.1 27.6 36.0 22.7 - -Net Mgn % (10.9) (80.5) 16.0 1.7 - -ROE % (1.3) (11.6) 2.9 .34 - -ROA % (1.1) (9.4) 2.7 .31 - -Div Payout % - - - - - -EPS SR (0.5) (0.8) 0.2 (0.03) (114.8) (60.6)BVPS SR 39.7 7.1 7.2 7.2 (0.1) (43.5)Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2007 Geographic 2007%Rev % Net Inc Breakup %Rev % Net IncHotels and Resort 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.08MSCI Saudi (domestic)N/AFree float (%)Free float 100.00Relative share price perf.11,000409,000307,000205,000103,000-M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASIShams (RHS)Top 5 shareholders (%)Source: NCBC ResearchSource: Company, NCBC Research• Business brief: The Palm Beach Resort stretches up to 1,300 meters with 165 firstclassChalets, more than 100 Suites and Cabanas overlooking the Arabian Gulf. Thesports and the recreational facilities includes a ladies sports club with swimming pool,men's sports and fitness center, football, tennis, basketball and squash courts, asauna and steam bath, a swimming pool for children, gardens for families and a 24-hour security service.• Financials: In 2008, the company’s total revenues increased 11.1% y-o-y. However,it reported a net loss of SR0.3 million in 2008 mainly due to a decline in gross profitcoupled with lower income from other sources.• Recent developments: The company announced its 1Q-09 results on April 19, 2009.TECO recorded a gain of SR0.1mn in 1Q-09 compared to a loss of SR0.2mn in theyear ago period. On February 03, 2008, the company announced the failure of apreviously signed agreement of the merger of Tourism Enterprises Co. with ArabianCommercial Projects for Travel Company, Al Qafila for Toursim and Travel, andPlage Remal Resort.JUNE 2009TOURISM ENTERPRISE CO259


Kindly send all mailing list requests to research@ncbc.comBrokerage sales Roger Yeoman +966 2646 5724 r.yeoman@ncbc.com+966 565 076 302 (mobile)Brokerage websitewww.alahlitadawul.com / www.alahlibrokerage.comCorporate websitewww.ncbc.comIMPORTANT INFORMATIONThe authors of this document hereby certify that the views expressed in this document accurately reflect their personal views regarding the securitiesand companies that are the subject of this document. The authors also certify that neither they nor their respective spouses or dependants (if relevant)hold a beneficial interest in the securities that are the subject of this document. Funds managed by NCB Capital and its subsidiaries for third partiesmay own the securities that are the subject of this document. NCB Capital or its subsidiaries may own securities in one or more of the aforementionedcompanies, or funds or in funds managed by third parties The authors of this document may own securities in funds open to the public that invest in thesecurities mentioned in this document as part of a diversified portfolio over which they have no discretion. The Investment Banking division of NCBCapital may be in the process of soliciting or executing fee earning mandates for companies that are either the subject of this document or arementioned in this document.This document is issued to the person to whom NCB Capital has issued it. This document is intended for general information purposes only, and maynot be reproduced or redistributed to any other person. This document is not intended as an offer or solicitation with respect to the purchase or sale ofany security. This document is not intended to take into account any investment suitability needs of the recipient. In particular, this document is notcustomized to the specific investment objectives, financial situation, risk appetite or other needs of any person who may receive this document. NCBCapital strongly advises every potential investor to seek professional legal, accounting and financial guidance when determining whether an investmentin a security is appropriate to his or her needs. Any investment recommendations contained in this document take into account both risk and expectedreturn. Information and opinions contained in this document have been compiled or arrived at by NCB Capital from sources believed to be reliable, butNCB Capital has not independently verified the contents of this document and such information may be condensed or incomplete. Accordingly, norepresentation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctnessof the information and opinions contained in this document. To the maximum extent permitted by applicable law and regulation, NCB Capital shall notbe liable for any loss that may arise from the use of this document or its contents or otherwise arising in connection therewith. Any financial projections,fair value estimates and statements regarding future prospects contained in this document may not be realized. All opinions and estimates included inthis document constitute NCB Capital’s judgment as of the date of production of this document, and are subject to change without notice. Pastperformance of any investment is not indicative of future results. The value of securities, the income from them, the prices and currencies of securities,can go down as well as up. An investor may get back less than he or she originally invested. Additionally, fees may apply on investments in securities.Changes in currency rates may have an adverse effect on the value, price or income of a security. No part of this document may be reproduced withoutthe written permission of NCB Capital. Neither this document nor any copy hereof may be distributed in any jurisdiction outside the Kingdom of SaudiArabia where its distribution may be restricted by law. Persons who receive this document should make themselves aware, of and adhere to, any suchrestrictions. By accepting this document, the recipient agrees to be bound by the foregoing limitations.NCB Capital is authorised by the Capital Market Authority of the Kingdom of Saudi Arabia to carry out dealing, as principal and agent, andunderwriting, managing, arranging, advising and custody, with respect to securities under licence number 37-06046. NCB Capital’s registered office isat 25th Floor, Al-Faisaliyah Tower, King Fahad Road, P.O. Box 22216, Riyadh 11495, Kingdom of Saudi Arabia.JUNE 2009SAUDI ARABIA FACTBOOK

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