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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