Earnings Performance (Q2-19)

(1)

August 2019

Inflow projections – Saudi MSCI EM inclusion Final tranche

Earnings Performance (Q2-19)

Quarterly Report | September, 2019

Head of Research

Talha Nazar

+966 11 2256250

[email protected]

Senior Analyst

Jassim Al-Jubran

+966 11 2256248

[email protected]

Analyst

Abdulrahman Al-Mashal

+966 11 2256374

[email protected]

(2)

2

■

Q2-19 earnings witnessed the highest Y/Y decline (31.4%) as compared to the previous three quarters. The decline in Q2-19 can be attributed to the decline in net profit of two key sectors (Banks and Materials).

■

Banking sector, contributed ~51% to net income in Q2-19, a decline of 4.7%. Key contributor to decline was Saudi British Bank (SABB), which reported a loss of SAR 246mn in Q2-19 as compared to profit of SAR 833mn in Q2-18.

The decline in SABB’s net profit was driven by an increase in total operating expenses (due to higher provision for credit losses and SAR 75mn merger-related expenses).

■

Materials sector earnings witnessed a steep decline of 64.9% in Q2-19. This decline is attributed mainly to SABIC and Saudi Kayan, which posted earnings decline of SAR 4.6bn and SAR 1.2bn respectively. Lower average selling prices and decline in share of results of associates and joint ventures were the key reasons for decline in SABIC’s net income.

■

Key margins (GP Margin, Operating Margins and Net Margins) and revenue remained relatively stable in Q2-19 as compared to Q1-19. However, increase in the number of companies posting losses (52 in Q2-19 Vs. 40 in Q2-18) represents an area of concern.

KSA – KEY HIGHLIGHTS: Q2-19

Quarterly Market net income (SAR bn)

+4.5%

+1.5%

-10.8%

-31.4%

32.3

16.1

21.3

19.9 31.8

15.4

23.9

29.0

0.0 10.0 20.0 30.0 40.0

Q3-18/Q3-17 Q4-18/Q4-17 Q1-19/Q1-18 Q2-19/Q2-18

Current Q Prior Q

Earnings performance in the last two quarters (Q1-19 and Q2-19) has been disappointing, as market net income witnessed a decline of 10.8% and 31.4% Y/Y in Q1-19 and Q2-19 respectively, after posting moderate growth in the prior two quarters (Q3-18 and Q4-18).

Source: Argaam

(3)

3

KSA – EARNINGS SUMMARY: Q2-19

Earnings Bridge: Q2-19 (SAR bn) Net income contribution by sector : Q2-19

-10.5%

-31.4%

-10.8%

1.5% 4.5%

0.5 0.7 2.6

9.1

100 90

- -

- 20.0 40.0 60.0 80.0 100.0 120.0

TTM Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 TTM Q2 19

Banks 51%

Materials 19%

Utilities 4%

F & B 3%

Retailing 3%

Other 5%

Telecom 15%

Source: Argaam Source: Argaam

Net Earnings for TTM Q2-19 fell 10.5% Y/Y to 89.6bn, primarily driven by a fall of 31.4% in Q2-19

Banks have the highest contribution in Q2-19 net earnings of 51%; Materials and Telecom contributed by (19%) and (15%) perspectively.

Top Earning Movers: Q2-19 (SAR mn)

RIBL and NCB registered the biggest increase in net earnings with change in Net Earnings of SAR 657.3mn and SAR 519.2mn, respectively. SABIC and Saudi Kayan were the key laggards as their Net Earnings declined by 4.6bn and 1.2bn, respectively. Decline in net income of SABIC can be attributed to decrease in average selling prices coupled with decline in share of results of associates and joint ventures.

Source: Argaam

-4,579 -1,152

-1,079 -1,058

-761

657.3 519.2 404.0 177.1

167.8

-1200 -1000 -800 -600 -400 -200 0 200 400 600 800

SABIC Saudi Kayan SABB Saudi Electric.

MAADEN

RIBL NCB STC Jabal Omar Zain Saudi

(4)

4

No. of companies making profit (Q2 19 Vs. Q18) Market Net Income Vs P/E: TTM

Margin Trends Quarterly revenue and Margin

130

118

40 52

0 50 100 150

Q2-18 Q2-19

# making proﬁt # making losses

186

169 167 170

32.3 16.1 21.3 19.9

17.4%

9.5%

12.7%

11.7%

0.0%

5.0%

10.0%

15.0%

20.0%

0.0 50.0 100.0 150.0 200.0

Q3-18 Q4-18 Q1-19 Q2-19

Rev (SAR bn) Net Proﬁt (SAR bn) Net Margin (RHS)

32.3 16.1 21.3 19.9

18.1 17.5

19.8 21.9

0.0 5.0 10.0 15.0 20.0 25.0

0.0 10.0 20.0 30.0 40.0

Q3-18 Q4-18 Q1-19 Q2-19

Net Income (LHS) (SAR bn) P/E (RHS)

31.3%

25.3% 26.8% 27.0%

22.0%

14.2%

17.8 15.9%

17.4%

9.5%

12.7% 11.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Q3-18 Q4-18 Q1-19 Q2-19

GP Margin Operating Margins Net Margins Source: Argaam

Source: Argaam, Bloomberg

The overall profitability picture has worsened in Q2-19 as compared to Q2-18, with the number of companies reporting losses increasing by 12

Revenue remained relatively constant over the last 3 quarters, while net margin increased in Q1-19 and fell marginally in Q2-19

GP Margin has remained relatively stable over the past 3 quarters, while operating and net margins have witnessed fluctuations

The market P/E has remained relatively constant in the last two quarters (Q1-19 and Q2-19) increasing from lower levels reached in Q4-18

KSA – REVENUE AND MARGIN TRENDS

(5)

5

KSA – KEY MULTIPLES: Q2-19

10 lowest P/B with line of market P/B 10 lowest P/E with line of market P/E

10 Highest ROE (TTM) with line of market 10 Highest ROA (TTM) with line of market

Source: Argaam

Source: Argaam, Bloomberg

Dar Al-Arkan and Zamil Industrial have the lowest P/B ratio of 0.66 and 0.69, respectively. Market P/B stood at 1.81

Jarir and Maharah have the highest RoA of 25.3% and 21.3%, respectively. Market RoA stood at 2.3%

Jarir and Maharah have the highest RoE of 64.1% and 41.7%, respectively. Market RoE stood at 8.5%.

Zain Saudi and Al-Etihad have the lowest P/E ratio of 9.68 and 10.31, respectively. Market P/E ratio stood at 21.08

0.66 0.69 0.74 0.74 0.75 0.77 0.77 0.78 0.79 0.81

1.81

0.20 - 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00

Dar Al-Arkan Zamil Industrial Atheeb Telecom Aseer Jouf Cement Najran cement AlAbdullatif SHAKER ALKHODARI SAIC

P/B (TTM) Market P/B

Budget Saudi

ROA (TTM) Market ROA

Advanced Mouwasat

25.3%

21.3%

18.5%

16.7%

15.0%

12.2%11.5%11.0%10.4%10.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Jarir Maharah SAFCO Catering SADAFCO STC Saudi Cement 9.7 10.3 10.9 11.2 11.9 12.6 12.8 13.0 13.1 13.3

21.8

5.00 10.00 15.00 20.00

Zain Saudi Al-Etihad Insurance Arab National BJAZ SAMBA Alinma Buruj Budget Saudi Chubb Arabia Arriyadh Development

P/E (TTM) Market P/E

64.1%

41.7%

33.9%

32.9%

29.9%

24.6%22.3%21.2%

21.0% 21.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Jarir Maharah Catering Extra Fitness Time SAFCO Advanced Zahrat AlWaha Al Rajhi Mouwasat

ROE (TTM) Market ROE

(6)

6

6.48% 6.35% 6.35% 6.32% 6.29% 6.27% 6.27%

3.60%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

YANSAB SGS Alandalus Kingdom SIPCHEM SAMBA Taiba Catering SABB Arriyadh Dev

Dividend Yield Average market dividend yield

67.7%

58.9% 58.5% 51.5%49.9%

-51.7%

-40.2% -40.0%-37.95%-37.5%

-80.0%

-40.0%

0.0%

40.0%

80.0%

YSCC QACCO City Cement EPCCO Etihad Etisalat

Enaya Al - Alamiya Amana SPM Anaam

546.2 521.1 567.2 570.6

95.5 97.3 96.3 93.6

2.87%

3.15%

2.98%

2.72%

2.4%

2.6%

2.8%

3.0%

3.2%

0.0 200.0 400.0 600.0

Q3 18 Q4 18 Q1 19 Q2 19

Debt (SAR bn) Cash (SAR bn)

Anaam Holding 199%

93% 71% 70%

49% 46% 39% 35% 35% 34%

0.0%

40.0%

80.0%

120.0%

160.0%

200.0%

Alkhodhari Wafa AlSorayai Amiantit Wafrah SPM SFICO Atheeb Telecom TADCO

Source: Argaam Source: Argaam, Bloomberg

YANSAB and SGS have the highest Dividend Yield (TTM) of 7.0% each, respectively. Average Market Dividend yield stood at 3.6%

Total market debt (excluding banks and insurance) has increased since Q1-19, mainly due to impact of IFRS-16. SAIBOR has declined from 3.15% in Q4-18 to 2.7% in Q2-19

Note: Debt includes operating lease as per IFRS-16, all data excludes banks and insurance

With YTD returns of 67.7% and 58.9%, respectively, YSCC and QACCO are the top gainers in 2019, while Enaya and Al Alamiya led the laggards posting returns of -51.7% and -40.2% respectively

Alkhodhari, Wafa Insurance, AlSorayai Group, and Amiantit have accumulated losses (% of capital) of more than 50%

Top 10 Highest Dividend Yield (TTM) Debt, Cash and SAIBOR

Top 10 Accumulated losses (% of capital) Top 5 and bottom 5 stocks with YTD returns

KSA – RETURN ANALYSIS AND DEBT

POSITION: Q2-19

(7)

7

All Companies

Q2-18 Q2-19 Change(%) Ratios (TTM)

Company Net Income (000) EPS Net Income (000) EPS PE ROE PB D/Y

Al Rajhi Bank 2,474.2 0.99 2,580.2 1.03 4.3% 14.0 21.0% 3.0 4.7%

National Commercial Bank 2,166.4 0.69 2,685.6 0.87 24.0% 13.5 18.0% 2.4 4.6%

Samba Financial Group 1,236.6 0.63 934.2 0.48 -24.5% 11.5 11.3% 1.3 6.4%

Riyad Bank 842.5 0.28 1,499.7 0.50 78.0% 13.5 14.8% 1.9 3.2%

Banque Saudi Fransi 841.3 0.70 803.6 0.67 -4.5% 13.1 9.9% 1.3 5.1%

Saudi British Bank/The 832.6 0.56 (246.3) -0.15 - 13.6 7.9% 1.2 6.4%

Arab National Bank 747.2 0.33 894.2 0.60 19.7% 10.4 13.0% 1.3 4.4%

Alinma Bank 605.8 0.41 675.7 0.45 11.5% 12.1 13.2% 1.6 4.5%

Saudi Investment Bank/The 336.8 0.40 (284.7) -0.48 - 15.3 6.3% 1.0 -

Bank AlBilad 265.9 0.29 304.9 0.41 14.7% 16.3 14.5% 2.2 -

Bank Al-Jazira 253.4 0.37 251.8 0.31 -0.6% 10.9 9.0% 1.0 3.7%

Banks 10,602.7 - 10,098.8 - -4.8% - - - 4.5%

Al Babtain Power & Telecommunication Co 20.5 0.48 20.8 0.49 1.7% 13.7 8.8% 1.2 4.5%

Astra Industrial Group 16.1 0.20 15.8 0.20 -1.9% high 0.5% 1.1 -

Electrical Industries Co 1.9 0.04 (1.7) -0.04 - - -2.0% 1.1 -

Bawan Co 1.6 0.03 3.0 0.05 89.3% - -29.6% 1.3 -

Saudi Vitrified Clay Pipe Co Ltd 0.9 0.06 0.6 0.04 -30.0% high 1.3% 2.2 -

Al-Ahsa Development Co 0.3 0.01 2.0 0.04 510.1% 39.6 2.6% 1.0 -

Saudi Industrial Export Co 0.3 0.06 (3.3) -0.51 - - -46.5% 7.7 -

Middle East Specialized Cables Co (25.3) -0.63 (6.0) -0.15 76.3% - -15.6% 1.0 -

Saudi Ceramic Co (46.5) -0.78 (16.1) -0.27 65.4% - -11.0% 1.0 -

Saudi Arabian Amiantit Co (53.3) -0.47 (255.8) -2.25 -380.2% - -72.2% 2.2 -

Saudi Cable Co (97.2) -8.80 (18.3) -1.66 81.2% 25.8 4.3% 3.4 -

Capital Goods (180.7) - (259.0) - -43.3% - - - 0.5%

Saudi Airlines Catering Co 120.3 1.47 117.1 1.43 -2.7% 16.3 33.7% 5.5 6.3%

Saudi Printing & Packaging Co (3.1) -0.05 (13.7) -0.23 -346.6% - -9.1% 1.1 -

Commercial & Professional Svc 117.2 - 103.4 - -11.8% - - - 3.9%

Seera Group Holding 107.2 0.36 65.2 0.22 -39.2% - -3.8% 0.9 -

Herfy Food Services Co 45.9 0.71 40.9 0.63 -11.0% 16.6 21.6% 3.5 4.2%

Leejam Sports Co JSC 39.8 0.76 49.6 0.95 24.7% 20.7 29.9% 6.2 2.4%

National Co for Learning & Education 11.0 0.37 11.5 0.36 4.2% 20.5 16.36% 1.7 5.7%

Dur Hospitality Co 14.1 0.13 3.9 0.03 -72.6% 50.8 2.2% 1.1 2.8%

Abdul Mohsen Al-Hokair Tourism and Devel 3.1 0.06 0.6 0.01 -79.9% - -17.1% 1.4 -

Shams (1.3) -0.13 0.2 0.02 - - -2.6% 2.8 -

Al Khaleej Training and Education Co (7.7) -0.17 (3.6) -0.08 53.4% 14.4 7.4% 1.0 -

Consumer Services 201.0 - 168.9 - -16.0% - - - 1.9%

Fitaihi Holding Group 13.6 0.25 7.5 0.14 -45.3% high 0.9% 1.0 4.5%

L'Azurde Co for Jewelry 4.8 0.11 12.2 0.28 151.0% 34.0 4.8% 1.6 -

AlAbdullatif Industrial Investment Co 2.8 0.03 4.1 0.05 45.5% high 0.5% 0.8 2.3%

Al Sorayai Trading Industrial Group Co 0.9 0.14 (49.5) -7.56 - - -103.4% 4.1 -

Saudi Industrial Development Co (1.3) -0.03 (1.7) -0.04 -26.9% - -8.2% 1.0 -

Consumer Durables & Apparel 20.9 - (27.5) - -231.2% - - - 1.7%

Kingdom Holding Co 242.7 0.07 143.6 0.04 -40.8% 44.7 2.0% 0.9 6.5%

Saudi Advanced Industries Co 14.1 0.28 16.4 0.33 16.1% 16.9 4.7% 0.8 1.9%

Aseer Trading Tourism & Manufacturing Co (2.0) -0.01 18.6 0.15 - - -5.6% 0.7 -

Al-Baha Development & Investment Co (12.2) -0.69 0.1 0.005 - - -0.2% 2.1 -

Diversified Financials 242.6 - 178.7 - -26.3% - - - 5.5%

Rabigh Refining & Petrochemical Co 234.5 0.27 (308.5) -0.35 - high 0.8% 1.6 -

National Shipping Co of Saudi Arabia/The 185.4 0.47 45.6 0.12 -75.4% 25.6 4.4% 1.1 5.7%

Aldrees Petroleum and Transport Services 15.1 0.21 17.3 0.29 14.2% 30.6 13.5% 4.1 1.8%

Saudi Arabia Refineries Co (0.5) -0.03 10.2 0.68 - 25.5 5.2% 1.4 1.7%

Energy 434.5 - (235.4) - - - - - 2.1%

Almarai Co JSC 661.4 0.65 582.5 0.59 -11.9% 25.8 13.3% 3.5 1.7%

Savola Group/The 140.7 0.27 110.2 0.21 -21.6% - -6.0% 2.3 -

Saudia Dairy & Foodstuff Co 77.1 2.37 50.2 1.54 -34.9% 13.1 18.1% 2.2 3.1%

Al Jouf Agricultural Development Co 26.1 0.87 1.2 0.04 -95.5% 16.0 6.3% 1.0 4.6%

National Agriculture Development Co/The 19.5 0.23 7.1 0.08 -63.8% - -0.6% 1.4 -

Halwani Brothers Co 8.5 0.27 (3.7) -0.12 - 51.8 4.5% 2.2 -

Tabuk Agriculture 6.6 0.15 (66.6) -1.48 - - -34.4% 0.9 -

Jazan Energy and Development Co 4.2 0.08 (1.8) -0.04 - - -1.9% 1.1 -

Wafrah for Industry and Development 1.7 0.08 0.3 0.01 -82.3% - -22.7% 2.1 -

Al Gassim Investment Holding Co 1.0 0.03 1.5 0.05 49.6% high -0.2% 1.0 -

Source: Argaam, Bloomberg

(8)

8

All Companies

Ash-Sharqiyah Development Co (1.7) -0.22 (0.7) -0.10 56.6% - -2.2% 1.5 -

Saudi Fisheries Co (6.8) -0.67 (10.2) -1.01 -50.6% - -50.1% 7.4 -

Food & Beverages 936.3 - 673.8 - -28.0% - - - 1.3%

Abdullah Al Othaim Markets Co 74.1 0.82 58.7 0.65 -20.7% 24.4 19.9% 5.0 3.9%

Anaam International Holding Group Co 2.1 0.11 (3.9) -0.20 - - -16.8% 1.6 -

Saudi Marketing Co (11.3) -0.25 3.8 0.08 - 154.1 0.8% 1.2 -

Food & Staples Retailing 65.0 - 58.6 - -9.8% - - - 3.4%

Mouwasat Medical Services Co 87.9 0.88 90.3 0.90 2.8% 23.4 22.2% 4.9 2.1%

Middle East Healthcare Co 34.3 0.37 12.3 0.13 -64.2% 30.3 6.7% 1.6 -

Saudi Chemical Co 27.8 0.44 30.9 0.49 11.0% 20.9 6.4% 1.3 3.8%

National Medical Care Co 20.3 0.45 13.8 0.31 -31.8% 38.0 6.1% 2.3 1.9%

Al Hammadi Co for Development and Invest 19.9 0.17 20.0 0.17 0.4% 32.2 5.6% 1.8 -

Dallah Healthcare Co 18.7 0.25 15.3 0.21 -18.1% 37.6 7.5% 2.4 2.4%

Health Care Equipment & Svc 208.9 - 182.6 - -12.6% - - - 1.8%

Bupa Arabia for Cooperative Insurance Co 157.4 0.87 186.0 1.56 18.2% 21.6 23.8% 4.3 1.4%

Al Rajhi Co for Co-operative Insurance 49.1 1.23 45.4 1.13 -7.5% 16.4 18.4% 2.8 -

Co for Cooperative Insurance/The 38.3 0.31 51.5 0.41 34.7% - -9.1% 3.9 -

Walaa Cooperative Insurance Co 30.4 0.47 (19.8) -0.38 - 33.3 3.5% 1.2 5.9%

Al-Etihad Cooperative Insurance Co 25.4 0.63 15.1 0.38 -40.4% 8.3 15.6% 1.2 -

Saudi Enaya Cooperative Insurance Co 22.8 0.77 (28.3) -0.98 - - -40.9% 1.5 -

AXA Cooperative Insurance Co 17.1 0.38 24.8 0.55 45.5% 12.5 14.0% 1.7 -

Buruj Cooperative Insurance Co 13.0 0.43 0.0 0.001 -99.8% 10.5 11.1% 1.1 -

Solidarity Saudi Takaful Co 9.0 0.36 0.1 0.005 -98.7% - -20.9% 1.4 -

Chubb Arabia Cooperative Insurance Co 8.3 0.41 3.0 0.15 -63.3% 10.9 12.6% 1.3 -

Allianz Saudi Fransi Cooperative Insuran 7.5 0.38 4.9 0.25 -34.7% 14.8 11.9% 1.6 -

Salama Cooperative Insurance Co 9.0 0.36 (36.4) -1.48 - - -2.2% 1.1 -

AlJazira Takaful Ta'awuni Co 6.3 0.18 9.8 0.28 55.7% 16.0 8.9% 1.4 -

Wataniya Insurance Co 5.7 0.28 (16.0) -0.80 - - -5.5% 1.6 -

Alahli Takaful Co 5.6 0.34 1.6 0.10 -71.3% high 0.3% 1.6 -

Malath Cooperative Insurance Co 3.9 0.08 (14.5) -0.29 - - -2.5% 1.0 -

Al Alamiya for Cooperative Insurance Co 3.7 0.09 5.3 0.13 42.0% 28.4 7.1% 1.9 -

Arabian Shield Cooperative Insurance Co 3.7 0.12 2.0 0.07 -45.3% 22.4 4.8% 1.1 -

Saudi Re for Cooperative Reinsurance Co 3.3 0.04 14.1 0.17 328.5% 19.5 4.5% 0.9 -

Al-Ahlia Cooperative Insurance Co 3.1 0.20 (6.4) -0.40 - - -1.3% 1.3 -

United Co-operative Assurance Co 1.1 0.03 6.3 0.16 480.2% - -15.4% 1.0 -

Allied Cooperative Insurance Group (0.1) -0.01 1.3 0.06 - high 0.2% 2.1 -

Arabia Insurance Cooperative Co (0.3) -0.01 (13.5) -0.51 - - -8.3% 2.0 -

SABB Takaful Co (1.1) -0.03 (6.8) -0.20 -499.7% - -1.5% 1.5 -

Amana Cooperative Insurance Co (1.2) -0.05 (4.6) -0.21 -292.6% - -27.4% 1.6 -

AIG-ANB Cooperative Insurance Co (1.8) -0.10 0.2 0.01 - - -8.1% 2.2 -

Saudi Arabian Cooperative Insurance Co (2.0) -0.07 2.5 0.08 - - -2.4% 1.0 -

Al Sagr Cooperative Insurance Co (2.2) -0.04 (8.8) -0.22 -299.2% - -4.3% 0.9 -

Gulf General Cooperative Insurance Co (2.3) -0.11 3.4 0.17 - - -10.1% 1.4 -

MEDGULF (10.1) -0.10 0.8 0.01 - - -28.5% 1.7 -

Alinma Tokio Marine Co (10.7) -0.36 (11.1) -0.37 -4.4% - -14.8% 1.6 -

Gulf Union Cooperative Insurance Co (10.7) -0.72 1.1 0.07 - - -16.5% 1.2 -

Insurance 381.1 - 213.1 - -44.1% - - - 0.6%

Saudi Research & Marketing Group 85.5 1.07 85.6 1.07 0.1% 47.2 13.9% 6.2 -

Tihama Advertising & Public Relations Co 1.8 0.21 1.0 0.13 -45.1% high 4.3% 6.4 -

Media and Entertainment 87.7 - 86.2 - -1.8% - - - -

Saudi Basic Industries Corp 6,695.3 2.23 2,115.5 0.71 -68.4% 20.2 8.9% 1.8 4.4%

Saudi Kayan Petrochemical Co 878.7 0.59 (273.1) -0.18 - - -0.7% 1.0 -

Yanbu National Petrochemical Co 820.9 1.46 316.1 0.56 -61.5% 18.1 10.4% 1.9 7.0%

Saudi Arabian Mining Co 517.8 0.44 (243.7) -0.20 - 154.3 1.2% 1.8 -

Saudi Arabian Fertilizer Co 410.5 0.99 380.4 0.91 -7.3% 18.2 25.5% 4.5 3.1%

National Industrialization Co 395.8 0.59 296.7 0.44 -25.0% 28.2 9.5% 0.9 -

Saudi Industrial Investment Group 321.4 0.71 205.1 0.46 -36.2% 13.4 10.5% 1.4 5.9%

National Petrochemical Co 288.0 0.60 183.5 0.38 -36.3% 11.9 12.1% 1.4 2.2%

Advanced Petrochemical Co 253.3 1.29 192.3 0.98 -24.1% 15.3 22.2% 3.4 5.1%

Sahara International Petrochemical Co 211.4 0.58 210.9 0.43 -0.2% 13.5 5.5% 1.0 6.4%

Saudi Cement Co 58.0 0.38 92.3 0.60 59.1% 22.6 16.7% 3.8 5.1%

Southern Province Cement Co 36.1 0.26 90.8 0.65 151.8% 28.8 8.3% 2.4 3.7%

(9)

9

All Companies

Methanol Chemicals Co 31.6 0.26 (8.6) -0.07 - 56.7 1.4% 0.8 -

Middle East Paper Co 28.9 0.58 (4.0) -0.08 - 13.7 6.0% 0.8 7.9%

Nama Chemicals Co 23.4 1.00 (1.0) -0.04 - - -5.7% 1.3 -

Eastern Province Cement Co 18.8 0.22 31.8 0.37 69.1% 24.2 5.1% 1.2 2.3%

Qassim Cement Co/The 18.4 0.20 70.5 0.78 283.4% 28.1 10.1% 2.8 3.3%

Basic Chemical Industries Ltd 13.0 0.47 9.7 0.35 -25.5% 16.1 7.2% 1.1 -

National Co for Glass Manufacturing/The 11.6 0.35 (1.4) -0.04 - 53.2 1.7% 0.9 4.3%

City Cement Co 9.9 0.05 32.3 0.17 226.3% 18.4 7.1% 1.3 2.7%

Zahrat Al Waha For Trading Co 7.8 0.52 10.1 0.68 29.2% 15.9 22.7% 3.4 2.3%

United Wire Factories Co 7.3 0.17 6.0 0.14 -17.9% 75.2 1.6% 1.2 -

Yanbu Cement Co 4.0 0.03 40.4 0.26 902.2% 33.5 5.0% 1.7 3.0%

National Metal Manufacturing & Casting C 3.7 0.13 (4.1) -0.15 - - -0.7% 1.1 -

Takween Advanced Industries Co 2.9 0.03 (13.0) -0.14 - - -9.8% 1.1 -

National Gypsum 1.2 0.06 (1.9) -0.06 - 78.9 1.1% 0.9 3.5%

Filing & Packing Materials Manufacturing 0.7 0.06 (4.8) -0.41 - - -6.9% 1.9 -

Umm Al-Qura Cement Co 0.2 0.004 12.3 0.22 6052.8% 27.6 5.7% 1.5 -

Al Yamamah Steel Industries Co 6.7 0.13 -30.2 -0.59 - - -9.1 1.2 -

Northern Region Cement Co (6.6) -0.04 14.0 0.08 - 36.2 2.3% 0.8 -

Arabian Pipes Co (8.0) -0.20 8.1 0.20 - - -16.0% 0.8 -

Saudi Paper Manufacturing Co (10.4) -0.42 (15.5) -0.63 -48.9% - -42.7% 1.5 -

Al Jouf Cement Co (13.7) -0.10 0.1 - - - -1.8% 0.7 -

Hail Cement Co (18.0) -0.18 (1.9) -0.002 89.3% 73.5 1.1% 0.9 -

Najran Cement Co (31.7) -0.19 (2.6) -0.02 91.8% - -1.9% 0.8 -

Tabuk Cement Co (36.1) -0.40 9.0 0.10 - - -3.4% 1.1 -

Yamama Cement Co (36.3) -0.18 53.2 0.26 - 51.7 2.4% 1.2 -

Saudi Steel Pipe Co (36.8) -0.73 (10.2) -0.20 72.4% - -22.1% 1.8 -

Zamil Industrial Investment Co (39.8) -0.66 (49.6) -0.83 -24.6% - -14.7% 0.7 -

Arabian Cement Co/Saudi Arabia (50.9) -0.51 37.3 0.37 - 28.2 3.8% 1.1 3.4%

Materials 10,786.7 - 3,793.9 - -64.8% - - - 3.6%

Saudi Pharmaceutical Industries & Medica 22.7 0.19 (182.6) -1.52 -905.8% - -6.7% 1.3 5.8%

Pharma, Biotech & Life Sciences 22.7 - (182.6) - -905.8% - - - 5.8%

Fawaz Abdulaziz Al Hokair & Co 249.19 1.19 224.1 1.08 89.9% 44.9 4.4% 2.2 -

Jarir Marketing Co 162.6 1.36 169.1 1.41 4.0% 20.5 63.5% 12.2 5.1%

United Electronics Co 45.6 0.83 72.5 1.51 58.9% 17.9 33.7% 5.8 2.6%

Saudi Co For Hardware CJSC 20.4 0.57 21.7 0.60 6.4% 27.0 18.0% 4.1 2.8%

Saudi Automotive Services Co 9.2 0.15 5.1 0.09 -44.4% 35.2 4.8% 1.7 2.4%

Al Hassan Ghazi Ibrahim Shaker Co (36.6) -0.58 (9.0) -0.14 75.5% - -24.1% 0.8 -

Retailing 208.0 - 269.5 - 29.6% - - - 3.7%

Dar Al Arkan Real Estate Development Co 108.6 0.10 75.0 0.07 -31.0% 77.0 0.9% 0.7 -

Arriyadh Development Co 53.1 0.27 50.0 0.34 -5.8% 12.8 10.4% 1.4 6.3%

Taiba Investments Co 46.5 0.31 49.2 0.32 5.9% 60.8 1.9% 1.2 6.3%

Saudi Real Estate Co 30.3 0.13 21.5 0.09 -28.9% - -6.6% 0.9 -

Makkah Construction & Development Co 106.4 0.65 72.3 0.44 -32.0% 44.2 4.5% 2.5 2.7%

Alandalus Property Co 12.2 0.17 15.1 0.22 24.4% 20.2 4.0% 0.9 6.8%

Knowledge Economic City Co (8.9) -0.03 5.5 0.02 - high 0.3% 1.1 -

Red Sea International Co (9.8) -0.16 (27.5) -0.46 -180.4% - -14.7% 1.2 -

Emaar Economic City (47.6) -0.06 (114.7) -0.13 -141.1% - -2.4% 1.1 -

Jabal Omar Development Co (148.0) -0.16 29.8 0.03 - 46.8 5.3% 2.4 -

Arabian Centres Co Ltd 77.4 0.17 223.0 0.49 188.1% - - - -

Real Estate Mgmt & Dev't 220.1 - 399.2 - 81.3% - - - 1.0%

Saudi Ground Services Co 112.7 0.60 123.9 0.66 9.9% 15.0 12.8% 1.9 7.1%

United International Transportation Co 40.8 0.57 43.5 0.61 6.5% 13.0 16.3% 2.1 4.6%

Saudi Industrial Services Co 12.0 0.15 21.3 0.26 77.3% 17.0 6.8% 1.1 2.7%

Batic Investments and Logistic Co 1.9 0.06 1.8 0.06 -7.3% 72.4 3.3% 2.3 -

Saudi Public Transport Co (30.3) -0.24 (9.2) -0.07 69.6% 50.3 2.3% 1.1 -

Transportation 137.2 - 181.2 - 32.1% - - - 4.5%

Saudi Telecom Co 2,444.0 1.22 2,848.0 1.42 16.5% 17.5 18.0% 3.2 6.1%

Mobile Telecommunications Co Saudi Arabi (37.6) -0.06 130.2 0.22 - 9.7 19.0% 1.8 -

Etihad Etisalat Co (78.6) -0.10 37.8 0.05 - high 1.1% 1.4 -

Telecommunication Services 2,327.8 - 3,016.0 - 29.6% - - - 5.4%

Saudi Electricity Co 1,846.6 0.44 788.8 0.19 -57.3% high 0.6% 1.2 0.9%

National Gas & Industrialization Co 32.4 0.43 17.8 0.24 -44.9% 14.7 10.0% 1.2 5.5%

Utilities 1,878.9 - 806.6 - -57.1% - - - 1.0%

Al Moammar Information Systems Co 13.0 0.81 13.0 0.81 0.4% 16.8 26.0% 3.8 -

Software & Services 13.0 - 13.0 - - - - - -

(10)

Asset Management

|

Brokerage

|

Corporate Finance

|

^Custody

|

^Advisory

Head Office: King Fahad Road, P.O. Box: 20438, Riyadh 11455, Saudi Arabia، Tel: 011 2256000 - Fax: 011 2256068

Al-Jazira Capital is a Saudi Investment Company licensed by the Capital Market Authority (CMA), license No. 07076-37

RESEAR CH DIVISION RESEAR CH DIVISION RA TING TERMINOL OGY BR OKER AGE AND INVESTMENT CENTERS DIVISION

Disclaimer

AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business.

1. Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target.

Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months.

2. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target.

Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months.

3. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months.

4. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.

The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by Al-Jazira Capital from sources believed to be reliable, but Al-Jazira Capital has not independently verified the contents obtained from these sources and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. Al-Jazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Al-Jazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. This report has been produced independently and separately by the Research Division at Al-Jazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Al-Jazira Capital. Funds managed by Al-Jazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Al-Jazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Al-Jazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Al-Jazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Al-Jazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.

Head of Research Talha Nazar +966 11 2256250

[email protected]

Senior Analyst Jassim Al-Jubran +966 11 2256248

[email protected]

Analyst

Abdulrahman Al-Mashal +966 11 2256374

[email protected]

General Manager – Brokerage Services &

sales Alaa Al-Yousef +966 11 2256060

[email protected]

AGM-Head of international and institutional brokerage

Luay Jawad Al-Motawa +966 11 2256277

[email protected]

AGM-Head of Qassim & Eastern Province

Abdullah Al-Rahit +966 16 3617547

[email protected]

AGM-Head of Sales And Investment Centers Central Region, & acting head Western and Southern Region Investment Centers Sultan Ibrahim AL-Mutawa +966 11 2256364

[email protected]