Oil & Petrochemicals Monthly Report - August 22 2022

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Oil & Petrochemicals

Monthly Report - August 22

+966 11 2256248

[email protected]

Head of Sell-Side Research Jassim Al-Jubran

2022

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Urea and ammonia prices jumped as an exception to overall negative market trend; Aramco reduced propane and butane prices for September

• Naphtha, propane and butane prices declined: Prices of naphtha decreased 11.8% M/M to USD 670 per ton in August. Propane and butane prices declined 7.6% and 9.0% to USD 670 per ton and USD 660 per ton, respectively. Aramco reduced propane and butane prices further for September to USD 650 per ton and USD 630 per ton, respectively.

• Most product prices declined M/M in August: Urea prices jumped 32.1% M/M to USD 700 per ton, as European producers slashed output further due to surging natural gas prices. Expected demand from India also supported Urea prices. Ammonia prices were also aided by tight supply due to European production cuts, driven by higher gas prices, pushing ammonia prices up by 9.7% M/M to USD 960 per ton. EDC prices plunged 28.0% M/M to USD 335 per ton in August due to subdued demand for downstream PVC in Asia owing seasonality and higher supply of EDC after capacity expansion in the US. VAM prices plummeted by 24.4% M/M to USD 1,550 per ton, as supply started easing while consumption decreased amid weaker construction activity and economic outlook. Subsequently, downstream EVA price also fell 14.5% M/M to USD 2,160 per ton, even though its demand remained firm. MEG was down 11.0% M/M to USD 485 per ton due to sluggish demand.

• Petchem Spreads Trend: PP-propane spread contracted to USD 410 per ton in August from USD 443 per ton in July. PP-butane spread dropped to USD 418 per ton in August from USD 443 per ton in July. HDPE-naphtha spread increased to USD 269 per ton in August as against USD 268 per ton in July.

Weaker factory data and inventory buildup raised demand concerns, dragging oil prices in August

• Brent crude fell below USD 100 mark: Oil prices declined below USD 100/bbl in the first week of August, as demand concerns rose amid weak manufacturing data from major economies, further impacted by inventory buildup for US crude and gasoline. The shutdown of Druzhba pipeline, supplying Russian oil, for a short period supported the prices in the mid of the month. Moreover, Saudi Arabia’s indication that OPEC might cut output to balance out supply from Iran if the country signs a nuclear deal lifted prices above USD 100/bbl. However, crude oil ended lower M/M in August.

Brent prices fell 12.3% M/M, while WTI declined 9.2% M/M in August, ending at USD 96.5/bbl and USD 89.5/bbl, respectively. Natural gas prices at Henry Hub jumped 10.9% M/M to USD 9.1/mn Btu.

• US Manufacturing activity remained unchanged, EU and China slowing down: US manufacturing PMI remained unchanged for another month at 52.8 in August. The figure constitutes expanding new orders, yet slower production. China’s Caixin manufacturing PMI dipped below 50 (a sign on contraction) to surprise forecasts of 50.2 at 49.5 in August.

Eurozone manufacturing PMI declined further from 49.8 in July to report 49.60 in August

Table 1: Petchem Prices – August FY22

Name Price (USD

per ton) M/M % Q/Q % Y/Y % YTD % Naphtha 670 -11.8% -23.9% 1.5% -5.6%

Saudi Propane 670 -7.6% -21.2% 1.5% -15.7%

Butane-Saudi 660 -9.0% -23.3% 0.8% -12.0%

Ethylene 830 -4.6% -24.5% -11.7% -16.6%

Propylene-Asia 855 -2.8% -17.0% -13.6% -11.4%

HDPE 950 -5.0% -15.9% -11.2% -16.7%

LDPE 1,100 -9.1% -23.1% -19.1% -23.6%

LLDPE 940 -6.0% -16.8% -15.3% -18.3%

PP-Asia 920 -4.2% -17.1% -18.6% -16.7%

Styrene-Asia 1,115 -5.5% -19.5% -1.8% 0.9%

Polystyrene-Asia 1,220 -6.9% -15.6% -11.6% -9.6%

PET - Asia 1,110 -1.8% -14.0% 17.5% 6.7%

PVC-Asia 905 0.6% -23.9% -30.9% -32.0%

MEG (Asia) 485 -11.0% -19.8% -26.5% -23.6%

Methanol-China 310 1.6% -10.1% -3.1% 0.0%

DAP-Gulf 925 -3.6% -7.5% 50.4% 3.9%

Urea-Gulf 700 32.1% 2.2% 62.8% -19.1%

Ammonia-Gulf 960 9.7% -1.5% 52.4% 12.9%

MTBE-Asia 1,035 -1.9% -15.2% 42.8% 27.8%

EDC 335 -28.0% -47.7% -55.0% -63.8%

MEG (SABIC) 890 -3.3% -13.6% 2.3% -4.3%

PC 1,950 0.0% -26.4% -48.0% -27.1%

Acetic Acid-AA 540 -1.8% -26.0% -37.9% -37.6%

EVA 2,160 -14.5% -30.0% -4.4% -10.7%

Vinyl Acetate

Monomer-VAM 1,550 -24.4% -36.2% -3.1% -36.1%

Note: Prices as of August 28, 2022

Source: Argaam, Reuters Eikon, AlJazira Capital Research

Table 2: Economic Calendar

Date Country Event

5-Sep KSA S&P Global Saudi Arabia PMI 7-Sep EIA Short-term Energy Outlook

7-Sep US Trade Balance

September

08,14,21,28 US Weekly Petroleum Status Report 8-Sep US Initial Jobless Claims

13-Sep US Monthly Budget Statement 13-Sep OPEC Monthly Oil Market Report 13-Sep KSA GDP Constant Prices YoY

14-Sep IEA Oil Market Report

15-Sep KSA CPI YoY

26-Sep KSA Current Account Balance 28-Sep KSA M3 Money Supply YoY 28-Sep KSA SAMA Net Foreign Assets SAR

29-Sep US GDP Annualized QoQ

7-Oct KSA Current Account Balance

Source: Bloomberg, EIA, OPEC, IEA

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Key comments from international energy agencies

Crude oil supply Global supply

• Global oil supply increased to 100.5 mbpd in July, the highest level post-pandemic, according to IEA.

• Global supplies of crude oil and liquid fuels are expected to rise by 4.4 mbpd to 100.1 mbpd in FY22 and by 1.2 mbpd to 101.3 mbpd in FY23, as per EIA. Non-OPEC supply is forecast to grow 2.1 mbpd to 66.2 mbpd in FY22 and 0.6 mbpd to 66.8 mbpd in FY23.

• Global refining throughputs rose 1.1 mbpd M/M in July, as per IEA. Throughputs are expected to rise by 2.6 mbpd in FY22 and 1.3 mbpd in FY23.

OPEC Supply

• OPEC crude oil production rose 216,000 bpd M/M in July to average at 28.9 mbpd, as per OPEC’s secondary sources.

• On average, OPEC members produced 28.3 mbpd of crude oil in Q2-22 compared to 28.2 mbpd in Q1-22, as per EIA. The agency forecasts OPEC crude oil production to increase to 28.6 mbpd in Q3-22.

• OPEC’s average crude production is estimated at 28.5 mbpd in FY22 and at 29.0 mbpd in FY23, according to EIA.

• OPEC’s unplanned oil supply disruptions averaged 3.01 mbpd in July (versus average of 2.57 for June), as per EIA.

mbpd

80 90 100 110

Jan-15 Oct-15 Aug-16 Jun-17 Mar-18 Jan-19 Nov-19 Sep-20 Jun-21 Apr-22 Feb-23 Dec-23

Figure 1: World Oil Production

Source: OPEC, AlJazira Capital Research

Table 3: OPEC Monthly Oil Production

Prod. (‘000bpd) Cap. May Jun Jul Aug % M/M Chg.

Equatorial Guinea 120 90 90 100 100 0.0%

Gabon 220 220 190 200 200 0.0%

Republic of Congo 300 260 270 260 270 3.8%

Venezuela 710 680 710 710 550 -22.5%

Algeria 1,060 1020 1020 1020 1,030 1.0%

Libya 1,200 760 670 700 1,080 54.3%

Angola 1,200 1,160 1,200 1,130 1,170 3.5%

Nigeria 1,600 1,300 1,230 1,200 1,130 -5.8%

Iran 3,830 2,580 2,550 2,520 2,525 0.2%

Kuwait 2,715 2,690 2,640 2,770 2,810 1.4%

U.A.E. 4,200 3,100 3,190 3,240 3,390 4.6%

Iraq 4,800 4,430 4,420 4,420 4,430 0.2%

Saudi Arabia 12,000 10,430 10,600 10,780 10,960 1.7%

Total OPEC 33,955 28,720 28,780 29,050 29,645 0.9%

Source: Bloomberg

Figure 2: OPEC August Oil Production

('000 bpd)

0 2,000 4,000 6,000 8,000 10,000 12,000 Equatorial GuineaGabon

Republic of CongoVenezuelaAlgeria Libya Angola NigeriaKuwaitIran U.A.E.Iraq Saudi Arabia

Source: Bloomberg

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Table 4: World Oil Demand and Supply

(mbpd) FY21 FY22E FY21 FY22E FY23E

World Crude Oil & Liq. Fuels Supply Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

OPEC Supp. 30.34 30.88 32.28 33.10 33.75 33.77 34.11 34.23 31.66 33.97 34.54 Non-OPEC Suppl. 62.45 63.91 64.45 65.24 65.13 65.34 67.10 67.01 64.02 66.15 66.80 Total World Supply 92.79 94.79 96.73 98.35 98.87 99.11 101.21 101.24 95.68 100.12 101.33 World Crude Oil & Liq. Fuels Cons.

OECD Cons. 42.45 44.08 45.82 46.81 45.89 45.05 45.78 46.61 44.81 45.83 46.21 Non-OECD Cons. 51.78 52.21 52.53 53.64 53.13 53.31 53.78 54.16 52.54 53.60 55.28 Total World Cons. 94.23 96.29 98.36 100.45 99.02 98.36 99.56 100.76 97.35 99.43 101.49 OECD Comm. Inventory (mn barrels) 2,908 2,864 2,745 2,636 2,616 2,688 2,798 2,810 2,636 2,810 2,826 OPEC Surplus Crude Oil Prod. Cap. 2.49 2.12 2.15 2.03 1.98 2.42 n/a n/a 2.20 n/a n/a

Source: EIA STEO August 2022, AlJazira Capital Research

• The gap between crude consumption and supply is estimated to increase to 1.65 mbpd in Q3-22 (higher supply than consumption) from 0.75 mbpd in Q2-22 (higher supply than consumption).

• OECD’s crude inventories are expected to be at 2.80bn barrels in Q3-22, higher than 2.69bn in Q2-22.

Crude oil demand

Global

• OPEC estimates 3.1 mbpd increase in global consumption in FY22, revised downward by ~0.3 mbpd from the previous month’s estimate. IEA estimates global oil demand at 99.7 mbpd in FY22 and gain 2.1 mbpd to 101.8 mbpd in FY23. As per EIA, global consumption of petroleum and liquid fuels is forecasted to average at 99.4 mbpd in FY22 (+2.1 mbpd Y/Y) and increase further by 2.1 mbpd Y/Y in FY23.

• Global demand for petroleum and liquid fuels stood at 98.8 mbpd in July, indicating a rise of 0.9 mbpd Y/Y, as per EIA.

OPEC

• OPEC demand for FY22 is estimated to grow 0.9 mbpd Y/Y to 28.8 mbpd (0.3 mbpd lower than the previous estimate).

• OPEC demand for FY23 is forecasted to grow 0.9 mbpd Y/Y to 29.8 mbpd.

Inventory

• OECD industry stock rose 6.2 mb to 2,681 mb, while global observed inventories fell 5.0 mb in June, according to IEA. The release of government stocks amounted to 33.8 mb in June.

• EIA forecasts OECD inventories to stand at 2.81bn barrels by end- FY22 and at 2.83bn by end-FY23.

• Natural gas inventories in the US stood at 2.5tn cu. ft. and are estimated to increase to 3.5tn cu. ft. by end of October 2022, as per EIA.

Price outlook

• Brent spot prices averaged at USD 114 per barrel in Q2-22. The prices are forecasted to average at USD 105 per barrel in FY22 and at USD 95 per barrel in FY23, as per EIA.

• Goldman Sachs forecasts crude oil price to average at USD 110 per barrel and USD 125 per barrel in Q3-22 and Q4-22, respectively.

The price is expected to average at USD 125 per barrel in FY23.

• EIA expects natural gas prices at Henry Hub to average at USD 7.54/mn Btu in H2-22 and at USD 5.10/mn Btu in FY23.

Figure 3: OECD Monthly Oil Inventories

Source: US EIA, AlJazira Capital Research

mbpd

2,500 2,700 2,900 3,100 3,300

Jan-14 Oct-14 Jul-15 Apr-16 Jan-17 Oct-17 Aug-18 May-19 Feb-20 Nov-20 Aug-21 May-22 Mar-23 Dec-23

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Petrochemical sector news

• Saudi Arabian Oil Co. (Saudi Aramco) and SABIC Agri-Nutrients Co. (SABIC AN) obtained the world’s first independent certifications recognizing “blue” hydrogen and ammonia production. The certifications were granted by TÜV Rheinland to SABIC AN, in Jubail, for 37,800 tons of “blue” ammonia and to Saudi Aramco’s wholly owned refinery (SASREF), also in Jubail, for 8,075 tons of “blue” hydrogen. (Source:

Argaam)

• Sahara International Petrochemical Co. (Sipchem) said that a fire broke on August 29, in a factory of its Hail-based subsidiary, Saudi Specialized Products Co. (Wahaj), during the trial run period. Wahaj operates an ethylene vinyl acetate films (EVA) plant in Hail. (Source:

Argaam)

• Saudi Aramco announced the signing of a purchase agreement to acquire Valvoline Global Products, a subsidiary of US-based Valvoline Inc., for USD 2.65bn. Saudi Aramco will benefit from Valvoline’s strong manufacturing and distribution network, robust partnerships with users and suppliers. (Source: Argaam)

• Saudi Basic Industries Corp. (SABIC) cut the Asian Contract Price (ACP) for monoethylene glycol (MEG) for September by USD 30 per ton M/M to USD 890 per ton. (Source: Argaam)

• Saudi Arabian Mining Co. (Maaden) launched commercial operations at the third ammonia plant in Ras Al-Khair, with a design capacity of nearly 1.1 million tons per annum (tpa). The plant achieved stability in trial operations, the statement said, adding that the relevant financial impact is forecast to appear on Q2 2022 results. This is first project of the company’s fully-owned subsidiary, (Source: Argaam)

• Saudi Aramco’s capital expenditure will likely reach SAR 150-188bn in FY22, as per President and CEO. He added that Aramco paid nearly SAR 67.0bn in dues related to the acquisition of PIF’s share in SABIC ahead of schedule. (Source: Argaam)

• National Industrialization Co. (Tasnee) is expected to witness lower demand during Q3-22 and may be further into Q4-22, due to the current global recession, according to Finance Manager Fawaz bin Mohamed Al-Fawaz. (Source: Argaam)

Table 5: KSA Petrochemical Companies Key Metrics

Company Net profit

(TTM; SAR mn) P/E P/B EV/ EBITDA DPS (SAR) Dividend yield(TTM) YTD returns

SABIC 25,134.4 12.3x 1.7x 6.9x 4.5 4.4% -11.7%

TASNEE 1,278.2 8.8x 1.2x High - - -16.2%

YANSAB 1,086.2 26.9x 2.1x 10.7x 3.0 5.8% -24.6%

SABIC Agri-Nutrients 9,507.1 9.1x 4.9x 5.2x 7.0 3.8% 3.1%

Sipchem 4,692.4 7.7x 2.3x 6.3x 3.3 6.5% 18.9%

Advanced 653.4 21.1x 3.8x 14.9x 2.4 4.5% -24.6%

KAYAN 1,479.5 15.7x 1.5x 8.0x - - -9.5%

SIIG 844.7 16.7x 1.8x - 1.5 5.5% -13.2%

Nama Chemical 67.9 16.0x 2.8x 10.9x - - 43.3%

Chemanol 348.8 7.5x 2.2x 5.1x - - 8.2%

Source: Bloomberg, Argaam, Aljazira Capital Research

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Brent WTI ORB

-40 20 80 140

Jan-16 Aug-16 Mar-17 Oct-17 May-18 Jan-19 Aug-19 Mar-20 Oct-20 May-21 Jan-22 Aug-22

1.5

9.3

0.0 3.0 6.0 9.0

Dec-17 Mar-18 Jul-18 Oct-18 Feb-19 May-19 Sep-19 Dec-19 Apr-20 Jul-20 Nov-20 Mar-21 Jun-21 Oct-21 Jan-22 May-22 Aug-22

Figure 7: Oil Price Trends (USD per Barrel) Figure 8: Henry Hub Natural Gas (USD per MMBTu)

Source: OPEC, AlJazira Capital Research Source: Reuters Eikon, AlJazira Capital Research

Figure 6: US Weekly Natural Gas Storage Figure 5: US Weekly Oil Inventories

Source: US EIA, AlJazira Capital Research Source: US EIA, AlJazira Capital Research

mn bbls

541

300 400 500 600

Jan-14 Dec-14 Nov-15 Nov-16 Oct-17 Oct-18 Sep-19 Sep-20 Aug-21 Aug-22

1,000 2,000 3,000 4,000 5,000

Jan-17 Sep-17 Jun-18 Feb-19 Oct-19 Jul-20 Mar-21 Dec-21 Aug-22

• Ending the last week of August, US weekly oil inventories fell 0.8% W/W to 418.34mn barrels for the week ended August 26. On M/M basis, inventories were down 1.9%.

US oil production averaged 12.01 mbpd in August 2022.

Production rose 1.2% M/M from 11.87 mbpd in July, while increased 6.5% Y/Y from 11.28 mbpd in August 2021.

In the week ended August 26, the rotary rig count in the US stood at 765 (up 3 W/W). The average number of rigs rose 0.9%

M/M in August vis-à-vis a rise of 2.5% in July. The average rig count was up 52.5% Y/Y in August. As of September 02, a total of 758 rigs, 596 (down 9 W/W) were used to drill for oil and 162 (up 4 W/W) for natural gas. In the US, oil exploration increased 47.6% Y/Y, while gas exploration surged 62.9% Y/Y.

• US weekly natural gas storage increased 2.4% W/W to 2,640 bcf by end of the last week ending August 26. On a M/M basis, natural gas storage increased 7.4% by the months end.

Figure 4: US Oil Production versus Rig Count

Source: US EIA, AlJazira Capital Research

Rig count US oil production (RHS)

8 10 12 14

200 800 1,400 2,000

Jan-14 Aug-14 Apr-15 Dec-15 Aug-16 Apr-17 Dec-17 Aug-18 Apr-19 Dec-19 Aug-20 Apr-21 Dec-21 Aug-22

Price Trend: Oil, Natural Gas & Petrochemicals Products

US oil and gas developments

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7

550

100 150 200 300 400 500 600

Jan-14 Jul-14 Feb-15 Sep-15 Apr-16 Nov-16 Jun-17 Jan-18 Jul-18 Feb-19 Sep-19 Apr-20 Nov-20 Jun-21 Jan-22 Aug-22

VAM PC

500 1,500 2,500 3,500 4,500

Jan-14 Aug-14 Feb-15 Sep-15 Apr-16 Nov-16 Jun-17 Jan-18 Aug-18 Feb-19 Sep-19 Apr-20 Nov-20 Jun-21 Jan-22 Aug-22

Figure 15: Methanol-China (USD per Ton) Figure 16: PC-VAM

Source: Argaam, AlJazira Capital Research Source: Argaam, AlJazira Capital Research

Polypropylene

PP-Asia Polystyrene-Asia 1,560

650 695 1,150 1,650 2,150

Ammonia-Gulf Urea-Gulf DAP-Gulf 150

1,100

- 300 600 900 1,200

Figure 13: Polypropylene & Polystyrene Figure 14: Ammonia, Urea & DAP

Naphtha Propane -Saudi Butane-Saudi 150

400 650 900 1,150

Jan-14 Nov-14 Sep-15 Jul-16 Jun-17 Apr-18 Feb-19 Jan-20 Nov-20 Sep-21 Aug-22

LDPE

HDPE LDPE LLDPE

500 900 1,300 1,700 2,100

Jan-14 Mar-15 Jun-16 Sep-17 Nov-18 Feb-20 May-21 Aug-22

Ethylene Propylene-Asia Styrene-Asia 300

700 1,100 1,500 1,900

Jan-14 Aug-14 Feb-15 Sep-15 Apr-16 Nov-16 Jun-17 Jan-18 Aug-18 Feb-19 Sep-19 Apr-20 Nov-20 Jun-21 Jan-22 Aug-22

MEG-Asia

MEG (Asia) VAM MTBE

0 800 1,600 2,400 3,200

Jan-14 Nov-14 Sep-15 Aug-16 Jun-17 Apr-18 Mar-19 Jan-20 Nov-20 Sep-21 Aug-22

Figure 9: Feedstock Price Trends (USD per Ton)

Figure 11: Polyethylene Price Trends (USD per Ton)

Figure 10: Basic Petchem Price Trends (USD per Ton)

Figure 12: Intermediates Price Trends (USD per Ton)

Source: Argaam, AlJazira Capital Research

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830

0 200 400 600 800 1,000

Jan-14 Jul-14 Jan-15 Aug-15 Feb-16 Sep-16 Mar-17 Oct-17 Apr-18 Nov-18 May-19 Dec-19 Jun-20 Jan-21 Jul-21 Feb-22 Aug-22

215

200 400 600 800 1,000

Jan-14 Aug-14 Mar-15 Nov-15 Jun-16 Jan-17 Sep-17 Apr-18 Nov-18 Jul-19 Feb-20 Sep-20 May-21 Dec-21 Aug-22

380 962

800

150 180 350 550 750 950

Jan-14 Aug-14 Apr-15 Dec-15 Aug-16 Apr-17 Dec-17 Aug-18 Apr-19 Dec-19 Aug-20 Apr-21 Dec-21 Aug-22

350 500 650 800 950

880

395

Figure 17: Naphtha- HDPE

Figure 19: Propane (Saudi)- PP

Figure 18: Naphtha- PP

Figure 20: EDC- PVC

Petchem Spreads Trend

• Naphtha prices averaged at USD 694 per ton in August, down from USD 785 per ton in July.

• Polypropylene average prices fell to USD 946 per ton in August from 1,023 per ton in July.

• The HDPE-naphtha spread increased to USD 269 per ton in August as against USD 268 per ton in July.

• The PP-naphtha spread rose to USD 253 per ton from USD 238 per ton during the previous month.

• The PP-propane spread contracted to USD 410 per ton in August from USD 443 per ton in July.

• The PVC-EDC spread expanded to USD 630 per ton in August from USD 557 per ton in July.

• The polystyrene-benzene spread jumped to USD 333 per ton in August from USD 260 per ton in July.

• The HDPE-ethylene spread stood at USD 148 per ton in August, down from USD 159 per ton in July. PP-butane spread dropped to USD 418 per ton in August from USD 443 per ton in July.

• LDPE-naphtha spread fell 14.8% M/M to USD 429 per ton, while LDPE-ethylene declined 22.0% to USD 308 per ton in August.

• LLDPE-naphtha spread decreased 2.2% M/M to USD 261 per ton, while LLDPE-ethylene spread fell to USD 140 per ton in August versus USD 158 per ton in July.

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Table 6: Petrochemical Products by Saudi Petrochemical Companies

Company Finished Products

SABIC Polyethylene, polypropylene, poly styrene, ethylene glycol (MEG), methyl tert-butyl ether (MTBE), benzene, urea, ammonia, PVC, and PTA

SABIC Agri- Nutrients Urea, ammonia

YANSAB Polyethylene, polypropylene, MEG, MTBE, and benzene Tasnee Polyethylene, polypropylene, and propylene (TiO2)

Saudi Kayan Polyethylene, polypropylene, MEG, polycarbonate, and bisphenol A

Petro Rabigh Polyethylene, polypropylene, propylene oxide, and refined petroleum products

Sahara Petrochemicals (Sipchem) Polyethylene, polypropylene, Methanol, butanol, acetic acid, and vinyl acetate monomer Saudi Group Styrene, benzene, cyclohexene, propylene, polyethylene, polypropylene, and polystyrene

Advanced Polypropylene

Alujain Polypropylene

CHEMANOL Formaldehyde – improvers concrete

NAMA Epoxy resin, hydrochloric acid, liquid caustic soda, and soda granule

MAADEN Ammonia and DAP

Source: Argaam Plus

900

- 40 200 400 600 800 1,000

-200 -195 -100 0 100 200 300 400

380

Figure 21: Benzene- Polystyrene Figure 22: Ethylene- HDPE

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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.

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