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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)Sec<strong>to</strong>r (%) 27 59 (52)Website: www appc.<strong>com</strong>.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 <strong>to</strong> develop a SR3bn integrated propane dehydrogenation and polypropylene<strong>com</strong>plex in Jubail Industrial City. This facility having annual production capacity <strong>to</strong>produce 450,000<strong>to</strong>nnes of polypropylene <strong>com</strong>menced <strong>com</strong>mercial production in 2008.Company financials2006* 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn - - 1,459 - -EBITDA SRmn 2 (1) 366 N/M -Net In<strong>com</strong>e 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 <strong>to</strong>nnes ofpolypropylene. Polypropylene is used in several applications such as <strong>the</strong> manufactureof fabrics, moldings, pipes and furniture. The <strong>com</strong>pany has appointed VinmarInternational (Hous<strong>to</strong>n), Mitsubishi Corp. and Domo (Gent-Zwijnaarde, Belgium) <strong>to</strong>offtake <strong>the</strong> output from this <strong>com</strong>plex. Major part of <strong>the</strong> production would be shippedvia <strong>the</strong> ports of Dammam, Jeddah, and Al Jubail.• Financials: APPC <strong>com</strong>menced <strong>com</strong>mercial operations in August 2008. The <strong>com</strong>panyrecorded revenues of SR1,459.2mn in 2008. It registered a net profit of SR210.1mnin 2008 <strong>com</strong>pared <strong>to</strong> a non-operational profit of SR2.2mn in 2007.• Recent developments: APPC declared its 1Q-09 results on April 8, 2009. APPCrecorded a net in<strong>com</strong>e of SR42.9mn in 1Q-09 <strong>com</strong>pared <strong>to</strong> a loss of SR48,718 in 1Q-08. APPC’s general meeting on March 02, 2009 approved <strong>the</strong> change in <strong>com</strong>pany'sname <strong>to</strong> Advanced Petrochemicals Co. In August 2008, APPC started <strong>com</strong>mercialproduction at its new propylene and polypropylene plants with a production capacityof 450,000 <strong>to</strong>nnes per year of polypropylene.Source: NCBC ResearchJUNE 2009ADVANCED POLYPROPYLENE133