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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