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REAL ESTATE DEVELOPMENTMakkah ConstructionAlsoknown asMCDCPriceSR27.0Pricing / Valuation as on May 27, 2009Mkt capSR4.5bn ($1,188.3mn)Sh. outstanding164.8mnKey statistics52 week range H/L (SR) 44.8/18.5Avg daily turnover (mn) SR US$3m 12.29 3.2812m 35.18 9.39Raw Beta 6m 3yr0.37 0.99Reuters4100.SEBloombergMCDCO ABPrice perform (%) 1M 3M 12MAbsolute (%) (5) 10 (26)Market (%) 6 32 (39)Sector (%) 11 19 (39)Website: www mcdc com.saValuation multiples2007 2008 TTMP/E (x) 41.5 34.5 22.4P/B (x) 2.3 1.4 1.1P/Sales (x) 26.1 22.4 15.3Div yield (%) 2.9 3.2 0.0Makkah Construction & Development Co. (MCDC) established in 1989 to developareas around the Holy Mosque in Makkah. The company is engaged in theredevelopment of the Holy Haram Area. MCDC has established the residential andcommercial complex including the Jabal Omar and Jabal Khandama Project.Company financials (year end- April)2006 2007 2008 9M-09YoY(%)CAGR(%)(06-08)Net Revenues SRmn 77 274 272 227 8.9 87.5EBITDA SRmn 66 210 237 193 4.2 89.1Net Income SRmn 178 173 177 185 13.2 (0.3)Assets SRmn 2,607 3,460 4,618 4,202 21.9 33.1Equity SRmn 2,165 3,157 4,234 4,018 28.7 39.9Total Debt SRmn 126 - - - - -Cash & Equiv SRmn 36 125 114 NA NA 79.2EBITDA Mgn % 85.6 76.5 87.1 84.8 - -Net Mgn % 230.2 63.0 65.1 81.5 - -ROE % 8.2 6.5 4.8 5.2 - -ROA % 6.9 5.7 4.4 4.8 - -Div Payout % - 119.6 111.7 - - -EPS SR 1.1 1.0 1.1 1.1 13.2 (0.3)BVPS SR 13.1 18.8 25.7 24.4 36.4 39.9Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncReal Estate Construction Engg Services 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.83MSCI Saudi (domestic – mid cap) 0.06Free float (%)Free float 83.49Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)Makkah (RHS)5040302010-Saudi Bin Laden Group 10.9Mohammed Salah Hamza Sairafi 6.4Source: Company, NCBC Research• Business brief: MCDC is involved in real estate (investment, construction anddevelopment), property management, and hotel management. The company holds100% stake in Makkah Hilton & Towers (the 1,400-room hotel) and Makkah ShoppingCenter (a three-story 451 unit shopping center). MCDC is the biggest stakeholder inthe Jabal Omar Development Company. The Jabal Omar Project is spread across230,000 square meters and includes hotels, commercial centers and prayer facilitiesfor over 200,000 people.• Financials: In 9M-09, ending January 2009, MCDC’s net margins were 81.5%showing an improvement over 9M-08 levels of 78.4%. EBIDTA margins declined to84.8% from 88.6% in 9M-08 due to increase in operating expenses. At SR227.0 mn,sales in 9M-09 grew 8.9% relative to SR208.4 in 9M-08. Earnings improved 13.2% y-o-y to register SR185mn in the nine month period ended January 2009.• Recent developments: In May 2009, the company announced a 16.7% y-o-yincrease in its FY 2009 net profit to SR221.0 mn. In October 2008, MCDC appointedSource: NCBC ResearchMr. Abdulfattah Abdulshakour Fida as the company's general manager to replace Mr.Mamdouh Qari Abdullah Tashkindi.JUNE 2009MAKKAH CONSTRUCTION242