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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