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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