ncbc_saudifactbook_2012

MAY 2012

www.ncbc.com

Equity ResearchFarouk Miah, CFA

Tariq Al-Alaiwat

Iyad Ghulam

Mahmood Akbar

ProductionMartin K Arokiaraj

International Client Contact

[email protected]

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[email protected] Dakkak

Please refer to last page for important disclaimer

Saudi Factbook 2012A Guide to the Kingdom

SAUDI FACTBOOK - 2012 NCB CAPITAL

MAY 2012

Contents

EXECUTIVE SUMMARY 3

NCBC RECOMMENDATIONS 4

KSA - ECONOMY AND NATION 7

SAUDI STOCK MARKET 14Saudi Arabia: Strongest regional market 17Continued strong earnings growth in 2012E 19

INDUSTRIES & COMPANIES 22Banking & Financials 24Petrochemicals 40Cement 59Retail 75Energy & Utilities 88Agriculture & Food 93Telecom 110Insurance 120Multi Investment 155Industrial Investment 165Building & Construction 182Real Estate 201Transport 212Media & Publishing 219Hotels & Tourism 225

APPENDIX 229

EXECUTIVE SUMMARY NCB CAPITAL

MAY 2012

NCBC Recommendations

Exhibit 1: Summary of stock coverage

Stock Current Rating PT (SR) CommentsAl Rajhi (1120. SE)

Overweight 90.2 Al Rajhi ikely to grow faster than industry peers benefitting from its large deposit base. Although the current low interest rates, the bank will benefit from its lower cost of funds in the long run which will support NSCI.

Arab National (1080.SE)

Neutral 32.9 We believe total operating income growth muted. However, its improved asset quality is a key positive which is likely to offset the muted total operating income.

AlBilad(1140. SE)

Neutral 21.4NSCI for 2012. In addition, strong non-interest income and improved asset quality is likely to add to bottom-line. However, operating costs remains a concern for its profitability.

BJAZ(1020. SE)

Neutral 19.6 -line is likely to benefit from both strong loan growth and fee incomeaided by strong brokerage revenue from increasing trading volumes on the Tadawul. However, we believe the potential gains from the surge in market activityhave been priced-in.

.Saudi Fransi(1050. SE)

Overweight 38.3 BSF's retail focus is likely to grow its loan books as well as maintain NIMs. This will keep its NSCI strong. Although the retail focus will increase operating costs, we believe strong top-line growth and better asset quality will offset the impact of that on the bottom-line.

Riyad Bank(1010. SE)

Overweight 33.2 strong corporate and retail presence is likely to benefit the bank to expand its credit portfolio and improving its asset quality.maintain margins is likely to enable the bank to post double digit net earnings growth from 2013.

SABB(1060. SE)

Overweight 40.5 loan volumesand strong fee income. In addition, stable operating expenses and lower provision charges will enable it to marginal growth in net income.

SAIB(1030. SE)

Neutral 18.2 will benefit the bank in long term. However, stiff competition from established players may pressurize its net interest margins in the near term..

Samba(1090.SE)

Overweight 60.6approach keeps us positive on the stock. As the high-yielding corporate bonds mature, Samba will refocus on expanding its loan book and therefore maintain profitability.

Saudi Hollandi (1040.SE)

Overweight 32.2 SHB is likely to grow its loan books benefitting from its microfinance initiative. This is also likely to improve its bottom-line. However, we are concerned about SHBreliance on Tier II subordinated debt for capital adequacy. Considering stringent laws of Basel III, the bank might need to increase its equity which would limit future dividend payouts.

SABIC(2010.SE)

Overweight 124.5 SABIC benefits from its diversified product mix, an integrated production flow, wide geographical reach and continued feedstock cost advantage at its facilities in Saudi Arabia. At current levels, we believe the stock offers an attractive investment opportunity considering the earnings growth potential and sustained focus on expansion in different product lines and geographies.

Sipchem(2310.SE)

Overweight 26.7 1 and 2) were operating at their designed capacities, thereby offering full benefits of anintegrated product flow. Resultant improvement in profitability is expected to drive

earnings in 2012E.

4


MAY 2012

Exhibit 1: Summary of stock coverageStock Current Rating PT (SR) CommentsSAFCO(2020.SE)

Overweight 212.7 The company's high margins, low capex requirements and short cash conversion cycle result in high free cash flows and thereby high dividend payments. We believe continued strength in demand for fertilizers and the SAFCO 5 project would remain attractive in the long run.

NIC (Tasnee)(2060.SE)

Neutral 36.7 Tasnee is the only titanium dioxide (TiO2) pigment producer in the Middle East and is monetizing its low-cost feedstock advantage through its petrochemicals business. Continued rise in TiO2 prices could support 2012E earnings growth;however, petrochemical prices are likely to remain weak. Any positive earnings surprises due to higher-than-expected selling prices in the titanium dioxide business and positive news flow related to the ongoing petrochemical projects are key stock price catalysts.

Sahara(2260.SE)

Neutral 18.5 driven by the full-year contribution from its Al Waha plant, which commenced operations in April 2011. Furthermore, three new start-ups producing acrylates, caustic soda, ethylene dichloride and superabsorbent polymers are likely to support the company 013E earnings. However, poor earnings from the Al Waha project in 2H11 raises concerns over Sahara

Yansab(2290.SE)

Neutral 48.2 We are optimistic on due to its low cost structure and growing demand from emerging economies. However, we believe the current valuation of stock factors in all positives associated with the company andoffers limited upside potential. Moreover, continued uncertainty over economic conditions in Europe (the -term earnings outlook.

Saudi Kayan(2350.SE)

Neutral 18.7 A diversified product mix and strong links with SABIC are key positives for the stock. However, poor performance in 4Q11 indicates Saudi Kayan is facing some technical issues and is not able to manage the integrated product flow as anticipated earlier. In our opinion, the compafull capacity is imperative for growth in future earnings.

Petrochem(2002.SE)

Underweight 19.7 The company is scheduled to commence operations in 2Q12 and would beentering into ethylene and propylene derivatives through a JV with Chevron Phillips. However, prevailing demand and weakness in pricing are likely to restrict earnings growth in 2012E. Any update on the project commencement would be a key catalyst for the stock price.

Yamamah Cement(3020.SE)

Neutral 55.8 Strong demand in Riyadh and the ability to sell in different regions are the main advantages. However, high utilization rate and declining stock level are the key negatives.

Eastern Cement(3080.SE)

Neutral 59.1 Shifting focus to domestic market due to export, but limitation on exports remains key downside. Still focused on Eastern region for sales.

Yanbu Cement(3060.SE)

Neutral 75.2 Demand shift from Central to the western region is key advantage. The company is

tons

Saudi Cement(3030.SE)

Neutral 82.7 Based in the Eastern region, away from most of the key demand centers. However, Its high stock level, excess capacity and re-operating its old lines are positives.

Southern Cement(3050.SE)

Neutral 99.5 Well positioned for Jizan Economic City in the South. New facility near Makkah with 1.5mn tons should also help. High stock level and excess capacity supports the outlook.

Qassim Cement (3040.SE)

Neutral 81.4 Lowest cost cement producer in the country with very low inventory levels. Lack of capacity expansion plans could limit growth.

Jarir(4190.SE)

Neutral 152.0 Plans to almost double number of stores, coupled with a 50% IT market share,provide strong platform for the stock. Low liquidity and declining price of laptops a concern. Store openings the key catalyst for the stock. Valuation is somewhat stretched at 14.2x 2012e P/E.

5


MAY 2012

Exhibit 1: Summary of stock coverageStock Current Rating PT (SR) CommentsAl-Hokair(4240.SE)

Neutral 68.0 Al Hokair is undergoing aggressive international expansion in former Soviet Union countries such as Kazakhstan and Azerbaijan. We believe this comes with increased risks vs. its Saudi business. We believe the valuation is not attractive at 11.2x 2013e P/E.

Al-Othaim(4001.SE)

Overweight 115.0 Al Othaim is the number two food retailer in the KSA. It is well positioned to increase share as market shifts to organized retailing. Entrance of foreign players and rising COGS are key risks. Store expansion is key catalyst for the stock.Ongoing RE acquisition is holding back the stock.

Savola(2050.SE)

Overweight 39.1 Food retail business is expanding aggressively with margins expected to increase as buying power strengthens. Food business continues to take market share and

value.

Almarai(2280.SE)

Neutral 60.4 Geographic expansion of the bakery and juice businesses and the start of operations at the new poultry venture are key drivers for the stock. Our concerns are on the pace of progress at poultry, as well as the returns which can be gained on this SR4bn investment.

Saudi Telecom Co.(7010.SE)

Overweight 50.2 Key positives of the stock include its dominance in DSL and its higher and more secure ARPU levels. Key concerns on the stock are focused on the limited information available on its international operations as well as FX exposure through its international investments.

Mobily(7020.SE)

Overweight 75.5 Key positives of the stock include its dominance in wireless internet access and its focused strategy. Key concerns on the stock are focused on its declining ARPU levels and acquisition costs of new customers.

Zain KSA(7030.SE)

Neutral 7.0 Key positives of the stock include its attractive and innovative packages and increasing market share. Key concerns on the stock are focused on its high debt levels and the financing of this as well as ownership concerns.

Saudi Electricity(5110.SE)

Neutral 15.3 The new tariff structure on industrial, commercial and government customers came into effect on July 1,profitability, which we believe the market has already priced into the stock. Going forward, the key risks include rising cost of energy purchased from independent producers as well as an increase in depreciation expense.

Dar Al Arkan(4300.SE)

Neutral 10.8 Dar Al Arkan is currently developing a number of capital-intensive projects;however, banks and financial institutions could be reluctant to lend to the company due to allegations of a crisis on its website. Furthermore, investor perception, which has been impacted by weak earnings and lack of transparency over the last few years, could improve if management provides further insight into its land bank. The stock outperformed the TASI index, reflecting the limited upside potential.

Taiba(4090.SE)

Overweight 27.6 With a portfolio of prime assets, expected revenue growth and improvement inincluding its status as one of the holiest

cities for Muslims, makes the stock an attractive play in the hospitality sector.

Al-Akaria(4020.SE)

Neutral 27.3 Good earnings visibility, future growth potential and a large land bank are positives; however, these are partially offset by a low ROE and risk of excess office supply in Riyadh.

Source: NCBC Research

6

Exhibit 2:Real GDP - CAGR (2008 13E) Exhibit 3: Annual change in real GDP

7

Exhibit 4: Saudi Arabia macroeconomic indicators

Indicator 2007 2008 2009 2010 2011 2012E 2013E

Exhibit 5: Shares of oil and non-oil sector in total GDP Exhibit 6: Shares in total non-oil GDP

8

Exhibit 7: Fiscal balance and gross debt

Banking sector fundamentals remain sound

KSA successfully launches project sukuk

TASI has strong start to 2012, although some set-backs recently

9

Exhibit 8: TASI performance in 2011 Exhibit 9: TASI performance in 2012 (YTD return)

Significant expansion in TASI volumes/value traded

10

Exhibit 10: KSA CPI, housing and food inflation

11

Exhibit 11: Share: Oil and non-oil in total revenues (%) Exhibit 12: Non-oil fiscal deficit (% of non-oil GDP)

Bank credit remains subdued

Exhibit 13: Credit to private and public sector

12

Exhibit 14: TASI performance

TASI ends the year down 3.1%

03April2012: TASI touches 7,930

June 2009: Saad/Al Gosaibi troubles emerge, impacting Saudi as well as regional markets

25 Nov 2009: Dubai World debt standstill drives the market down

TASI ends the year up 27.5%, but down 4% from its peak in November

26 April 2010: 13% rise YTD, but Euro/Greece reverse the trend

14

Exhibit 15: 2011 GCC market performance Exhibit 16: 2012 YTD GCC market performance

Exhibit 17: 2011 performance vs global peers Exhibit 18: 1Q12 performance vs global peers

15

Exhibit 19: TASI performance in 2011

Index No. of Daily turnover Mkt cap Free float Change Valuation Index value companies (SR mn) (SR mn) Wt (%) YTD (%) P/BV P/E TTM

Exhibit 20: 2011 sector performance Exhibit 21: 2012 YTD sector performance

16

Exhibit 22: GCC market capitalization: Saudi Arabia constitutes nearly 54% of the region

Exhibit 23: GCC turnover: TASI comprises around 90% of the GCC turnover

17

Exhibit 24: Turnover to market capitalization ratio

Saudi Kuwait Abu Dhabi Dubai Qatar Oman Bahrain

Exhibit 25: % of total turnover Exhibit 26: YTD % performance relative to the TASI

18

Exhibit 27: Aggregate market earnings 2012E could grow further

Petrochemicals a key contributor again

Progress in Banking sector profitability key

19

Exhibit 28: Loan to total deposits of KSA banks

Exhibit 29: TASI at 15.2x is below its historical 17.5x PE multiple

20

Exhibit 30: Sector P/Es versus historical P/Es

Exhibit 31: Dividend yields expected for 2012E

21


MAY 2012

Industries & Companies

Sector Page No.Banking & Financials 24Petrochemicals 40Cement 59Retail 75Energy & Utilities 88Agriculture & Food 93Telecom 110Insurance 120Multi Investment 155Industrial Investment 165Building & Construction 182Real Estate 201Transport 212Media & Publishing 219Hotels & Tourism 225

Please note that our estimates for the companies under coverage have not been updated post the 1Q12 results


MAY 2012

Banking & Financials

Ticker Company Page No.

1120 Al Rajhi 28

1090 SAMBA 29

1050 Banque Saudi Fransi 30

1010 RIBL 31

1060 SABB 32

1040 Saudi Hollandi 33

1080 Arab National 34

1030 Saudi Investment 35

1140 Al Bilad 36

1020 BJAZ 37

1150 Al Inma Bank 38

Exhibit 32: Key financials of Saudi banks (2011) SR million; network of branches and ATMs

Banks Branches ATMs AssetsLoans &

advancesCustomer deposits Net profits

Dom

estic

Ban

ks

Esta

blis

hed

as S

audi

B

anks

JV w

ith

fore

ign

part

ners

Fore

ign

Ban

ks GC

C B

anks

Non

-GC

C

Total 1,646 11,766 1,505,288 855,330 1,147,133 31,616

24

Exhibit 33: Total operating income of GCC banks, 200911

Exhibit 34: Comparison of RoE and P/E of GCC banks, 2011

Exhibit 35: Sector details

% weight in Index as on 28 Mar 2012

NIM (%),2011

Avg. RoE (%), 2011

25

Exhibit 36: Net Interest Income of Banks, 2009 11 Exhibit 37: Net Interest Margin (%) of Banks, 2009 11

Exhibit 38: Comparison of P/B and RoE, 2010 Exhibit 39: Comparison of P/B and RoE, 2011

Exhibit 40: Movement in Interbank Interest Rates Exhibit 41: Movement in Repo & Reverse Repo rates

26

BANKING NCB CAPITAL

MAY 2012

27

NCBC recommendations in the sector The year 2011 witnessed strong growth in loans and improved asset quality. However, contraction in NIMs due to lower interest rates and increased competition kept NSCI growth muted. Nonetheless, increased non-interest income and reduced provisions improved the bottom-line. We expect loan growth to continue and NIMs to compress, however, the increase in loan volume is expected to aid NSCI growth. In addition, high trading volumes on the Tadawul will enable banks to grow its brokerage income particularly for the smaller banks. Strong fundamentals and improved asset quality of Saudi banks keep our view positive on the sector.

Exhibit 42: Coverage stocks detailsStock Current Rating PT (SR) CommentsAl Rajhi (1120. SE)

Overweight 90.2 Al Rajhi ikely to grow faster than industry peers benefitting from its large deposit base. Although the current low interest rates, the bank will benefit from its lower cost of funds in the long run which will support NSCI.

Arab National (1080.SE)

Neutral 32.9 ns is likely to keep its total operating income growth muted. However, its improved asset quality is a key positive which is likely to offset the muted total operating income.

AlBilad(1140. SE)

Neutral 21.4 growth in its net loans and increase its NSCI for 2012. In addition, strong non-interest income and improved asset quality is likely to add to bottom-line. However, operating costs remains a concern for its profitability.

BJAZ(1020. SE)

Neutral 19.6 -line is likely to benefit from both strong loan growth and fee income aided by strong brokerage revenue from increasing trading volumes on the Tadawul. However, we believe the potential gains from the surge in market activity have been priced-in.

.Saudi Fransi(1050. SE)

Overweight 38.3 BSF's retail focus is likely to grow its loan books as well as maintain NIMs. This will keep its NSCI strong. Although the retail focus will increase operating costs, we believe strong top-line growth and better asset quality will offset the impact of that on the bottom-line.

Riyad Bank(1010. SE)

Overweight 33.2 strong corporate and retail presence is likely to benefit the bank to expand its credit portfolio and improving its asset quality.margins is likely to enable the bank to post double digit net earnings growth from 2013.

SABB(1060. SE)

Overweight 40.5 loan volumes and strong fee income. In addition, stable operating expenses and lower provision chargeswill enable it to marginal growth in net income.

SAIB(1030. SE)

Neutral 18.2 will benefit the bank in long term. However, stiff competition from established players may pressurize its net interest margins in the near term..

Samba(1090.SE)

Overweight 60.6approach keeps us positive on the stock. As the high-yielding corporate bonds mature, Samba will refocus on expanding its loan book and therefore maintain profitability.

Saudi Hollandi (1040.SE)

Overweight 32.2 SHB is likely to grow its loan books benefitting from its microfinance initiative. This is also likely to improve its bottom-line. However, we are concerned about SHBon Tier II subordinated debt for capital adequacy. Considering stringent laws of Basel III, the bank might need to increase its equity which would limit future dividend payouts.

Source: NCBC Research


MAY 2012

Petrochemicals


2010 SABIC 44

2020 SAFCO 45

2310 Sipchem 46

2260 Sahara Petrochemical 47

2060 Industrialization 48

2350 Saudi Kayan 49

2290 YANSAB 50

2002 National Petrochem 51

2250 SIIG 52

2330 Advanced Petrochem 53

2380 Petro Rabigh 54

2210 Nama Chemicals 55

2170 Alujain 56

2001 Methanol Chemicals 57


Country% weight in Index

as on 28 Mar 12NIM (%),

2011Avg. RoE (%), 2011

Exhibit 44: Revenues of companies, 2005 11 Exhibit 45: Profitability of companies, 2005-11

41

Exhibit 46: Comparison of P/B and ROE, 2010 Exhibit 47: Comparison of P/B and ROE, 2011

Exhibit 48: Avg. daily turnover, Jan11 Dec11 Exhibit 49: Share price movement, Jan11 Dec11

Outlook for the Saudi petrochemical sector remains largely positive

42

Exhibit 50: Coverage stocks detailsStock Current Rating PT (SR) Comments

43

Established in 1976, Saudi Basic Industries Corporation (SABIC) is one of the leading petrochemical companies in the world, with sales totaling SR190bn (USD50.7bn) in 2011. The company produces basic chemicals (olefins, oxygenates and aromatics), intermediates and polymers. SABIC also produces fertilizers (through SAFCO, Ibn Al-Baytar and Al-Bayroni) and metals (through Hadeed, ALBA and GARMCO).

Business brief

Financials

Recent developments

OVERWEIGHTCurrent price 99.0

STOCK DETAILS

Price perform (%) 1M 3M 12M

Avg daily turnover (mn) SR US$

WEIGHTING & FREEFLOAT (%)

VALUATION MULTIPLES10A 11A 12E

SHARE PRICE PERFORMANCE

TOP 5 SHAREHOLDERS (%)

Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

44

Established in 1965, Saudi Arabian Fertilizer Company (SAFCO) produces ammonia and urea nitrogen-based fertilizers. The company markets its products in Asia, America, Australia, Africa and the Middle East countries. Saudi Basic Industries Corp. (SABIC) holds a 43% stake in SAFCO.

Business brief

Financials

Recent developments

OVERWEIGHTCurrent price (SR) 181.3

STOCK DETAILS







Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

45

Established in 1999, Saudi International Petrochemical Co (Sipchem) is engaged in producing petrochemical products such as methanol, butanediol, carbon monoxide, acetic acid and vinyl acetate. The company is expanding its product mix through its Phase III development plan.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

46

Sahara Petrochemical Company (Sahara) was established in 2004 by the Al Zamil Group. The company develops, owns and operates production facilities through joint ventures with other companies in the petrochemical sector. Sahara has four subsidiaries: Al Waha Petrochemical (Al Waha), Tasnee &Sahara Olefins (TSOC), Saudi Acrylic Acid Company (SAAC) and Arabian Chlor Vinyl Company (ACVC).

Business brief

Financials

Recent developments

NEUTRALCurrent price (SR) 15.8

STOCK DETAILS







Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

47

National Industrialization Company (Tasnee) was established

worldwide titanium dioxide business. In 2008, it acquired Australia's Bemax Resources Ltd. and International Titanium Powder (ITP).

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

48

Saudi Kayan Petrochemical Company (Kayan) was established by SABIC (35% stake) and Al Kayan Petrochemical (20%) in 2007 to set up a petrochemical complex in Jubail Industrial City. The plant has the capacity to produce approximately 6mn mtpa of petrochemical products each year.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

49

Yanbu National Petrochemicals Company (Yansab) was established in 2006 to set up a 4mn mt per annum petrochemical complex in the Yanbu Industrial City. SABIC holds a majority stake (51%) in Yansab. The company commenced commercial operations in March 2010.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

50

National Petrochemical Company (Petrochem) was established in 2008. The company is mainly involved in investing in the petrochemical industry through its 65% owned Saudi Polymers Company.

Business brief

Financials

Recent developments

UNDERWEIGHTCurrent price (SR) 24.4

STOCK DETAILS







Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

51

Saudi Industrial Investment Group (SIIG) was established in 1996 in Riyadh. The company primarily focuses on investment

SIIG operates through three subsidiaries Saudi Chevron Phillips, Jubail Chevron Phillips and National Petrochemicals Company (PetroChem).

Business brief

Financials

Recent developments

NOT COVEREDCurrent price 23.4

STOCK DETAILS




VALUATION MULTIPLES09A 10A 11A



Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

52

Advanced Petrochemical Company (APPC) was established in 2005. It developed a SR2.9bn integrated propane dehydrogenation and polypropylene complex in Jubail Industrial City. The facility has an annual production capacity of 450k mt of polypropylene. It commenced commercial operations in 2008.

Business brief

Financials

Recent developments

NOT COVEREDCurrent price (SR) 26.0

STOCK DETAILS

Price perform (%) 1M 3M 12M P

Avg daily turnover (mn) SR US$ A





Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

53

Rabigh Refining and Petrochemical Co. (PetroRabigh), established in Rabigh in 2005, is a joint venture between Saudi Aramco and Sumitomo Chemical. The US$10bn project can produce 130 mn barrels (bbl) of refined products and 2.4mn mt of petrochemical products annually.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

54

Established in 1992, Nama Chemicals Company (NAMA) develops, owns and operates industrial projects within the chemical and petrochemical sectors. NAMA functions through its affiliates Arabian Alkali Company (55k mtpa capacity) and Jubail Chemical Industries Company (60k mtpa capacity).

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

55

Alujain Corporation (Alujain), an industrial investment firm,was established in 1991 and promoted by Xenel Industries (one of the oldest conglomerates in the Kingdom). The

Petrochemical Co. (NatPet) and a 100% stake in Arab Pesticide Co. (MOBEED).

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

56

Established in 1989, Methanol Chemicals Company (Chemanol) is a manufacturer of methanol, formaldehyde and its derivatives, including urea formaldehyde, acetaldehyde, hexamine, resins and super plasticizers. The company exports around 83% of products to more than 50 countries, including the UK, France, Germany, South Africa, the US, Canada, and Japan.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

57


MAY 2012

Cement


3030 Saudi Cement 64

3020 Yamamah Cement 65

3050 Southern Cement 66

3040 Qassim Cement 67

3080 Eastern Cement 68

3060 Yanbu Cement 69

3010 Arabian Cement 70

3091 Al Jouf Cement 71

3090 Tabuk Cement 72

3001 Hail Cement 73

Exhibit 51: Clinker stock per company Exhibit 52: Cement stock per company

Exhibit 53: Gross margin, 2011 Exhibit 54: Comparison of ROE and P/E of GCC cos,2011



as on Mar 2011Net margin

(%), 2011ROE

(%) 2011Div. Yield(%) 2011

60

Exhibit 56: Price/Cost of cement per ton Exhibit 57: Net profit for the sector, 2008 11

61


Exhibit 60: Average daily turnover, Jan Dec 11 Exhibit 61: Share price movement, Jan Dec 11

62

Exhibit 62: Coverage stocks details

StockCurrent Rating PT (SR) Comments

63

65

Yamama Cement Company (YSCC), which is located in Riyadh is one of the oldest and largest cement companies in Saudi Arabia. Its stock level is the key advantage while the limited excess capacity and the shift in demand to the western region are the main concerns.

Business brief YSCC was founded in 1961 and is one of the largest cement companies in Saudi Arabia with annual cement and clinker production capacities of 6.3mn tons and 6.0mn tons, respectively. Based in Riyadh, YSCC is strategically located to take advantage of the increased momentum of the construction sector in 2011, particularly in the Central region. Although it has declined, from 2009, YSCC maintains one of the highest cement market shares in the country (12.2% in 2011 and 13.5% in 2009).

Financials In 2011 s were up 13.4% YoY to SR1,442mn driven by increased sales volume combined with a YoY increase in cement prices.EBITDA grew 10.4% YoY to SR946mn, with net income up 12.6% YoY to SR740mn driven largely by the top-line growth. However, net margin fell slightly by 36bps YoY to 51.3% in 2011 from 51.6% in 2010 due to higher SG&A expenses during the year.

Recent developments On February 26, 2012, YSCC approved the distribution of SR2 per share cash dividend for the six month period ending December 31, 2011. Additionally, on October 2011, the company announced the liquidation of its holding in Sudani Kuwaiti Holding Company, where the companliquidation amounted to SR13,975mn.

CEMENT MAY 2012

YAMAMA CEMENT

ALSO KNOWN AS: YSCC

NEUTRALCurrent price (SR) 47.6Pricing as of 09-05-2012

STOCK DETAILS52-week range H/L (SR) 57/37Market cap ($ mn) 2,570Shares outstanding (mn) 202

Price perform (%) 1M 3M 12MAbsolute (3.1) (6.1) 18.5Market (6.2) 6.2 7.6Sector (0.6) 6.9 33.2

Avg daily turnover (mn) SR US$3M 36.1 9.612M 17.0 4.5

Reuters code 3020.SEBloomberg code YACCO AB

www.yamamacement.com

WEIGHTING & FREEFLOAT (%)TASI (free float weight) 1.38Free float 86.27


P/E (x) 14.7 13.0 11.4P/B (x) 3.1 2.9 2.8P/S (x) 7.6 6.7 5.8Div Yield (%) 5.6 5.6 6.3DPS 2.7 2.7 3.0Source: NCBC Research estimates


33 38 43 48 53 58

5,500 6,000 6,500 7,000 7,500 8,000

May-11 Sep-11 Jan-12 May-12

TASI Yamamah Cement (RHS)

Source: Bloomberg

TOP 5 SHAREHOLDERS (%)Prince Sultan M.S. Al Saud 9.7General Org. for Social Insurance 7.8Public Pension Agency (PPA) 5.3

Source: Tadawul, NCBC Research

Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

Revenues SRmn 1,272 1,442 1,672 1,687 13.4 9.9EBITDA SRmn 857 946 1,039 1,049 10.4 7.0Net Income SRmn 657 740 846 856 12.6 9.2Assets SRmn 3,653 3,822 3,874 3,831 4.6 1.6Equity SRmn 3,159 3,375 3,409 3,453 6.8 3.0Total Debt SRmn 267 190 190 98 (28.8) (28.4)Cash & Equiv SRmn 700 898 1,000 1,053 28.3 14.6EBITDA Mgn % 67.4 65.6 62.1 62.2 - -Net Mgn % 51.6 51.3 50.6 50.8 - -ROE % 21.1 22.7 24.9 24.9 - -ROA % 17.9 19.8 22.0 22.2 - -Div Payout % 82.2 73.0 71.8 76.9 - -EPS SR 3.24 3.65 4.18 4.23 12.6 9.2BVPS SR 15.60 16.67 16.83 17.05 6.8 3.0Source: Tadawul, Company, NCBC Research

Tabuk Cement Company (TCC), founded in 1994, is among the smallest cement manufacturers in KSA in terms of market capitalization and capacity. In 2011, the company had anannual production capacity of 1.46mn tons of cement at its plant in the north-west region of the Kingdomenables it to cater to the demand for cement in the northern region.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

72


MAY 2012

Retail


4001 Al Othaim 77

4190 Jarir Marketing 78

4240 AlHokair 79

4200 Aldrees 80

4002 Mouwasat 81

4050 SASCO 82

4180 Fitaihi Group 83

4290 Alkhaleej Trng 84

4160 National Agriculture 85

4003 Extra 86

Exhibit 63: Revenue of companies, 2009 2011 Exhibit 64: Profitability of companies, 2009 2011

75



76

With operations commencing in 1956, Abdullah Al OthaimMarkets Company (Al Othaim) is the second-largest food retailer in Saudi Arabia. It is well positioned to take advantage of the growth prospects of organised food retail in Saudi Arabia. However, high food prices and limited ability to pass on cost inflation amid rising competition are the key risks for the stock.

Business brief

Financials

Recent developments


STOCK DETAILS







2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

77

Jarir Marketing Company (Jarir) was established in Riyadh in 1979. Historically, the company was focused on the sale of books, school items and office supplies. In the past five years, Jarir has increasingly focused on the sale of electronics such as laptops, gaming devices and smartphones. position as one of the leading electronics retailer in the region is a key positive; pressure on margins from competition is a key risk.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

78

Fawaz Abdulaziz AlHokair Company (AlHokair), established in 1990, is the largest fashion retail franchise player in Saudi Arabia, accounting for roughly half of the mid-market fashion retail business in the KSA through its 70 plus brands. The

position as a leading player in the growing market is a key positive, while increased risk from overseas expansion and potential margin pressure are the concerns for the stock.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

FY11 FY12 FY13E FY14EYoY(%)

CAGR (%)(10-13E)

79

Aldrees Petroleum and Transport Services Co. (Aldrees), established in 1963, has three main operational divisions: Petroleum, Transport and Food. The company owns a 98% stake in Aldrees Sudan, which is engaged in marine, land and air transportation.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

80

Mouwasat Medical Services (Mouwasat) owns, manages and operates hospitals, dispensaries and pharmacies across Saudi Arabia. Incorporated in 1974, the company commenced its first owned comprehensive medical facility in 1988.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

81

Saudi Automotive Services Company (SASCO), established in 1982 and headquartered in Riyadh, provides a variety of services and utilities for cars, motorists and travelers. It owns specialized maintenance workshops in Saudi Arabia. Thecompany also owns and manages supermarkets, rest areas and restaurants for travelers.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

82

Established in 1992, Fitaihi Group Holding Company undertakes designing, manufacture, and wholesale and retail distribution of gems, jewelry and precious stones. The company has two marketing subsidiaries, Marina B Creation Vados and Marina B Geneve, which market its products worldwide. It is also engaged in the management of leading hospitals in the region.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

83

Established in 1992, Alkhaleej Training and Education Company (Alkhaleej) conducts training programs in the fields of IT, electronics and English language, and also offers administrative and financial services. It operates more than 82 branches in the KSA, and has presence in over 19 locations in the Middle East and nine facilities outside the region.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

84

National Agriculture Marketing Co (THIMAR), established in 1987 and headquartered in Riyadh, manufactures, procures,processes and markets agricultural products, accessories, meat and other supplies through various dealers. The company, which holds a 100% stake in Wasmi Meat, runs 23stores in Saudi Arabia.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

85

Established in 1994, Extra (UEC, United Electronics Company) is the largest consumer electronics retailer in Saudi Arabia. Extra provides electronic, household and communication devices as well as related solutions and services. The company serves around 90% of customers in Saudi Arabia annually, with more than 12,000 products across 25 stores.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

86


MAY 2012

Energy & Utilities


5110 Saudi Electricity 90

2080 GASCO 91

Exhibit 68: Revenue of GCC energy and utilities companies, 2009 11

Exhibit 69: Comparison of ROE, P/E & Mcap of GCC companies, 2011

88


Country% weight in Index as on 28 Mar 2012

NIM (%), 2011

Avg. RoE (%), 2011

Exhibit 71: Revenue of companies, 2009 11 Exhibit 72: Profitability of SECO, relative to sector avg


89

Saudi Electricity Company (SEC) is the largest power generator in Saudi Arabia. Established in 2000, the company is engaged in the generation, transmission and distribution of electric power across the Kingdom. SEC was formed through the consolidation of 10 regional electricity companies.

Business brief

Financials

Recent developments

Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)


STOCK DETAILS







90

National Gas & Industrialization Company (GASCO) was established in 1963 through the merger of two companies. GASCO is engaged in filling, refilling and distributing liquefied petroleum gas (LPG); designing and building gas networks; and selling as well as installing gas tanks and cylinders.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

91


MAY 2012

Agriculture & Food


2050 Savola Group 95

2280 Almarai 96

6090 Jazan Development 97

2270 SADAFCO 98

6010 NADEC 99

6002 Herfy Foods 100

6070 Jouff Agriculture 101

6020 Qassim Agriculture 102

4061 Anaam International 103

6001 Halwani Bros 104

6050 Saudi Fisheries 105

2100 Wafra Food 106

6040 Tabuk Agriculture 107

6060 Sharqiya Dev Co. 108

Exhibit 74: Revenue of listed GCC agri. companies Exhibit 75: Comparison of ROE & P/E of GCC Cos, 2011

93

Exhibit 76: Revenue of listed companies, 2009 2011

Exhibit 77: Savola - Profitability relative to sector average


94


MAY 2012

Telecom


7020 Etihad Etisalat 114

7010 STC 115

7030 Zain KSA 116

7040 Etihad Atheeb 117

7050 Saudi Integrated 118

Exhibit 79: Fixed-line and mobile penetration rate Exhibit 80: Broadband & internet penetration rate

Exhibit 81: GCC T 2009 11 Exhibit 82: GCC T 1


Country% weight in Index as of March 2012

NIM (%), 2011

Avg. RoE (%), 2011

111

Exhibit 84 Revenue of companies, 2009-2011 Exhibit 85: Net profit margin, 2009-2011


112

Exhibit 88: Avg. daily turnover, Jan11 Dec11 Exhibit 89: Share price movement, Jan11 Dec11


113

Etihad Etisalat Company (Mobily) is the second largest mobile operator in Saudi Arabia. As of December 2011, the company had a market share of around 40%. Stable ARPU, increased equipment sales, gains in data, and a potential upside in the size and frequency of dividends are key positives. The possibility of continued price-led competition, particularly in the international call segment, is a key threat.

Business brief

Financials

Recent Developments


STOCK DETAILS







Company financials

2010 2011 2012E 2013EYoY(%)

CAGR (%)(10-13E)

114

Despite liberalization of the sector, STC remains the leading telecom company in Saudi Arabia by revenues and market share. Bottom line progress in its international operations and continued growth in the Saudi market are key positives; price-led competition and FX exposure are key areas of concern.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2010 2011 2012E 2013E YoY CAGR (%)

115

Mobile Telecommunications Company Saudi Arabia (Zain KSA) a member of Mobile Telecommunications Group (Zain), Kuwait was established in 2007 in Saudi Arabia to provide wireless telecommunications services. Good progress in growing its subscriber base is a key positive of Zain; continued management change and further delay in balance sheet restructuring are key risks.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2010 2011 2012E

2013EYoY(%)

CAGR (%)(10-13E)

116

Etihad Atheeb Telecommunications Company (Atheeb) was established in 2008 to provide fixed-line telecommunication services in KSA. The company is a joint venture between Bahrain Telecom and KSA-based Atheeb Trading Co, Al-Nahla Trading Co, and Traco Group.

Business brief

Financials

Recent developments


STOCK DETAILS




VALUATION MULTIPLES10A 11A TTM



Company financials*

FY09 FY10** FY11 9M12*YoY(%)

CAGR (%)(09-12E)

117

Saudi Company for Integrated Telecommunications Company (SITC) was formed as a partnership between Integrated Telecom (ITC) and PCCW (one of the biggest telecommunication providers in Hong Kong). In June 2011, SITC launched its IPO to offer 35mn shares, representing 35% of its share capital and was listed on the Tadawul Stock Exchange on June 28, 2011.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

118


MAY 2012

Insurance


8010 Tawuniya 122

8030 MEDGULF 123

8020 Malath Insurance 124

8310 AMANA Insurance 125

8200 Saudi Re 126

8290 Solidarity 127

8210 BUPA Arabia 128

8260 Gulf General 129

8250 AXA-Cooperative 130

8230 ARCCI 131

8170 Trade Union 132

8190 U C A 133

8080 SABB Takaful 134

8130 Alahli Takaful 135

8180 Sagr Insurance 136

8280 Al Alamiya 137

8220 Weqaya Takaful 138

8160 Arabia Insurance 139

8060 Walaa Insurance 140

8120 Gulf Union 141

8070 Arabian Shield 142

8270 Buruj Insurance 143

8090 SANAD 144

8300 Wataniya Insurance 145

8240 ACE Arabia 146

8040 ALLIANZ SF 147

8050 Saudi Salama 148

8140 Al-Ahlia Insurance 149

8150 ACIG 150

8100 SAICO 151

8110 Saudi Indian 152

8311 Saudi Enaya 153

Exhibit 91: Revenue of GCC insurance companies, 2009 11

Exhibit 92: Comparison of ROE and P/E of GCC companies, 2011

120



NIM (%), 2011

Avg. RoE (%), 2011


121

115.6

24.8

(9.6)

146


MAY 2012

Multi-Investment


4280 Kingdom Holding 157

4080 Assir 158

2190 SISCO 159

2030 SARCO 160

2140 Al Ahsa for Dev. 161

2120 Saudi Advanced 162

4130 Al Baha 163

Exhibit 96: Revenue of GCC multi-investment,2009 11



Country% weight in index as on 28 Mar 2012

NIM (%), 2011

Avg. RoE (%), 2011

155



156

Kingdom Holding Company, established in 1996, focuses on banking and financial services, real estate, and hotels & hotel management. Headquartered in Riyadh, the company has six 100% owned subsidiaries globally.

Business brief

Financials

Recent developments


STOCK DETAILS



WEIGHTING & FREE FLOAT (%)




Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

157

Established in 1977 and headquartered in Abha (Southwest Saudi Arabia), Aseer Trading, Tourism and Manufacturing Company (Aseer) is an investment holding company with interests in five sectors food, petrochemicals, real estate, building materials and construction, and financial services.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

158

Established in 1988, Saudi Industrial Services Company (SISCO) undertakes large-infrastructure sector on the build-operate-transfer and build-operate-own models. SISCO has business interests in water desalination and distribution, development of industrial estates, free zone ports and support services.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

159

Saudi Arabia Refineries Company (SARCO), established in Jeddah in 1959, invests in commercial and industrial projects in and outside Saudi Arabia. The company is principally involved in the purchase, refining, transportation, sale, import and export of crude oil and petroleum products.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

160

Al-Ahsa Development Company (AADC) was established in 1993 under the Royal Decree to undertake investment activities in the industrial and service sectors of Saudi Arabia, particularly in the region of Al-Ahsa. AADC has business interests in foods, textiles, and medical services.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

161

Saudi Advanced Industries Co. (SAIC), established in 1987, develops and promotes industrial projects under The Economic Offset Program organized by the Ministry of Defense and Aviation. SAIC encourages firms in the US, the UK and France to collaborate with Saudi companies to establish high-tech plants in diversified industries.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

162

Al-Baha Investment & Development Co. (Al-Baha) was established in 1992 to develop and operate projects in Al-Baha province. Engaged in a wide range of industrial, commercial and agricultural activities, the company plans to expand beyond the region. Al-B estments include a 95% stake in Al-Baha Marble & Granite Company.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

163


MAY 2012

Industrial-Investment


1211 MA'ADEN 167

2230 Saudi Chemical 168

2070 SPIMACO 169

1212 Astra Ind 170

1213 AlSorayai Group 171

2150 ZOUJAJ 172

1214 Shaker Group 173

2300 SPM 174

2340 AlAbdullatif 175

1210 BCI 176

2220 Maadaniyah 177

4140 Saudi Export 178

2180 FIPCO 179

1201 Takween 180

Exhibit 103: Revenue of GCC industrial investment companies, 2009 11

Exhibit 104: Comparison of ROE & P/E of GCC companies, 2011



NIM (%), 2011

Avg. RoE (%), 2011

165

Exhibit 106: Revenue of companies, 2009 11 Exhibit 107: Profitability of Maaden relative to sector average


166

Established in 1997, Saudi Arabian Mining Company es and produces metals and non-metal ores.

The company owns five operating precious metal extraction mines and several new projects. In July 2008,public and raised SR9.2bn, holding to 55% from 100%.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

167

Saudi Chemical Company (SCC) manufactures and sells explosives and detonators for civil and military use. In 2004, SCC entered the seismic explosives market, serving the oil, and gas exploration sector. subsidiary Saudi International Trading Company (SITCO Pharma) supplies medical and surgical equipment to hospitals and medical centers.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

168

Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO) manufactures medicine and medical appliances for local and international markets. Since its establishment in 1986, SPIMACO has augmented its annual production capacity to include 3.5mn liters of liquid medicine,850mn tablets, and 55mn capsules of cream and ointment, aseptic drops and penicillin.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

169

Astra Industrial Group (Astra) operates in the healthcare, chemical, engineering, agricultural and home furnishing industries. subsidiaries are Tabuk Pharmaceutical Manufacturing Co, Astra Polymer Compounding, Astra Industrial Complex Co, and International Building Systems Factory Co.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

170

Al Sorayai Trading & Industrial Group (Al Sorayai) is a wholesale and retail distributor of carpets, rugs, floorings, furniture, blankets, curtain fabrics and related materials. The company exports products to almost 65 countries, including the US, China, India, Iraq, Russia and Poland.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

171

National Company for Glass Industries (Zoujaj) owns glass container factories in Riyadh and Dammam. Zoujaj has a 45% stake in Saudi Guardian International Float Glass and Guardian RAK, and a joint venture with Guardian Industries. These companies manufacture float glass for automotive and construction applications. Zoujaj owns 50% of lighting products manufacturer, Saudi National Lamps & Electrical Co.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

172

Al Hassan Ghazi Ibrahim Shaker Company (Shaker) imports and wholesales air conditioning products and home appliances. The Shaker Group comprises the parent company and three subsidiaries, and is one of the leading players in its sector in KSA. The company completed its IPO in May 2010.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

173

Saudi Paper Manufacturing Company (SPMC) is among the few integrated paper companies in the MENA region. SPMC produces tissue paper, tissue rolls and other paper products, and also owns recycling operations.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

174

Established in 1981, Al-Abdullatif Industrial Investment Company (Al Abdullatif) ranks among the largest carpet manufacturers in the Middle East and Africa region. The company has fully integrated operations, from fiber extrusion to finishing. Its affiliates are ADFA Blanket Co., Eastern Textile Co., National Spinning Co., Shahd Paper Tubes, and Nadeen Arabian Color Co.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

175

Basic Chemical Industries (BCI), incorporated in 1973, produces and sells chemicals through its subsidiaries, which include Saudi Water Treatment (100% stake), National Adhesive (47% stake), Basic Chemicals National (100% Stake), Chemical Marketing and Distribution (99% stake), OKAZ Chemical Marketing and Distribution Co. (100% stake), and Arabian Polyol.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

176

National Metal Mfg & Casting (Maadaniyah) is the largest manufacturer of steel wire and other wire products in Saudi Arabia. The company has two plants a plant in Jubail Industrial City and a plant in Dammam. The plants are equipped with modern machinery for wire drawing, stranding, galvanizing, and manufacturing fasteners. Maadaniyahbrands include Aslak, Mahawer and Masabik.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

177

Saudi Industrial Export Co. (SIEC) exports, imports and distributes agricultural goods, industrial products and bulk commodities. SIEC, which operates through its associates across the globe, has exported over 10 million tons of products to more than 40 markets. The trading markets include Europe, Asia, and Africa.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

178

Filling & Packing Materials Manufacturing Company (FIPCO) produces bags and other woven polypropylene packaging

production facilities located in Riyadh cover an area of 75,000 sq. meters. FIPCO manufactures over 2mn jumbo bags annually.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 20010 2011YoY(%)

CAGR (%)(08-11)

179

Takween Advanced Industries Co. (TAKWEEN), formerly Al-Othman Plastic Products Co., was established in 1993. The company specializes in the production of high quality packaging for the diary and beverage industries in Saudi Arabia and the Middle East. In early 2010, TAKWEEN acquired Advanced Fabrics (SAAF), a non-woven fabrics manufacturer, and Ultrapak, a PET preforms manufacturer. The company went public in January 2012 with an IPO of 9mn shares, accounting for 30% of the total shares outstanding.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(09-11)

180


MAY 2012

Building & Construction


1320 SSP 185

2040 Saudi Ceramics 186

2160 Amiantit 187

2240 Zamil Ind 188

1310 MMG 189

2320 Al Babtain 190

2110 Saudi Cables 191

2200 Arabian Pipes 192

1330 Abdullah A M Al Khodari Sons Co 193

2130 SIDC 194

2090 National Gypsum 195

4230 Red Sea Housing 196

2360 SVCP 197

2370 MESC 198

1301 United Wire Factories 199

Exhibit 110: Revenues of GCC building & construction companies, 2009 11


182



as on 28 Mar 2012NIM (%),

2011Avg. RoE (%),

2011

Exhibit 113: Revenues of companies, 2009 11 Exhibit 114: Profitability of SSP relative to sector average (2009 11)

183



184

*

199


MAY 2012

Real Estate


4090 Taiba 203

4300 Dar Al Arkan 204

4020 Al Akaria 205

4310 KEC Madinah 206

4250 Jabal Omar 207

4100 Makkah 208

4220 Emaar E .C 209

4150 Arriyadh Dev 210

Exhibit 118: Saudi population is the largest in GCC Exhibit 119: Saudi population by age group

201

Exhibit 120: Revenues of companies, 2009 11 Exhibit 121: Profitability of companies relative to the sector average, 2009- 2011


202

209

In 2006, Emaar Economic City (Emaar EC), managed by Emaar Properties, was set up as a joint stock company to develop the SR188bn King Abdullah Economic City (KAEC). KAEC is part of the government’s initiatives to diversify the economy and establish new economic, educational, and technology hubs.

Business brief

KAEC, the single largest private sector-led project in the GCC region (168

million square meters), has six key components: a seaport, an industrial

zone, a residential district, a financial island, an educational zone and a

waterside zone. This mega project is expected to generate about 1-2mn job

opportunities with the residential district expected to house around 2mn

people.

Financials

Emaar EC’s revenues grew 348.4% YoY to SR408mn in 2011 due to a land

sale. The company reported a net profit of SR83mn in 2011 versus a net loss

of SR584mn in 2010.

Recent developments

In January 2012, the company sold 500,000 square meters of land in KAEC’s

Industrial Valley to Tamer Group, a leading healthcare and consumer goods

firm based in Jeddah.

REAL ESTATE DEVELOPMENT MAY 2012

EMAAR THE ECONOMIC CITY

ALSO KNOWN AS EEC, EMAAR EC

NOT COVERED

Current price (SR) 12.1

Pricing as of 09-05-2012

STOCK DETAILS

52-week range H/L (SR) 14/6

Market cap (SR mn) 2,742

Shares outstanding (mn) 850


Absolute (8.0) 40.7 69.2

Market (6.2) 6.2 7.6

Sector (2.6) 31.1 40.0


3M 417.1 111.2

12M 164.0 43.7

Reuters code 4220.SE

Bloomberg code EMAAR AB

www.kingabdullahcity.com


TASI (free float weight) 0.51

Free float 30.0

VALUATION MULTIPLES

09A 10A 11A

P/E (x) NM NM 124.5

P/B (x) 1.3 1.4 1.4

P/S (x) 39.5 113.1 25.2

Div Yield (%) - - -

DPS - - -

Source: NCBC Research estimates


5

7

9

11

13

15

5,500

6,000

6,500

7,000

7,500

8,000

May-11 Sep-11 Jan-12 May-12

TASI Emaar E .C (RHS)

Source: Reuters


Modern Daim Real Estate 20.0

ME Royal Capital Co. 9.4

Emaar Middle East 5.8

MI Holding Compnay 5.8

ME Strategic Investments 5.8

Source: Tadawul, NCBC Research

Company financials

2008 2009 2010 2011

YoY

(%)

CAGR (%)

(08-11)

Revenues SRmn 102 261 91 408 348.4 58.9

EBITDA SRmn (375) (214) (249) 170 NM NM

Net Income SRmn (292) (309) (584) 83 NM NM

Assets SRmn 9,532 9,305 8,877 13,746 54.8 13.0

Equity SRmn 8,191 7,882 7,298 7,380 1.1 (3.4)

Total Debt SRmn 0 0 0 5,062 NM NM

Cash & Equiv SRmn 2,219 864 339 1,710 404.0 (8.3)

EBITDA Mgn % NM NM NM 41.7 - -

Net Mgn % NM NM NM 20.3 - -

ROE % (3.5) (3.8) (7.7) 1.1 - -

ROA % (3.2) (3.3) (6.4) 0.7 - -

Div Payout % - - - - - -

EPS SR (0.34) (0.36) (0.69) 0.10 NM NM

BVPS SR 9.64 9.27 8.59 8.68 1.1 (3.4)

Source: Tadawul, Zawya, Company, NCBC Research


MAY 2012

Transport


4030 NSCSA 214

4040 SAPTCO 215

4260 Budget Saudi 216

4110 Mubarrad 217

Exhibit 123: Revenues of GCC transport companies, 2009 11




NIM (%), 2011

Avg. RoE (%), 2011

212

Exhibit 126: Revenue of companies, 2009 2011 Exhibit 127: NSCSA profitability relative to the sector avg


213

Established in 1979, The National Shipping Company of Saudi Arabia (NSCSA) provides marine transport services primarily to oil & gas and chemical sectors. NSCSA offers liner (general cargo), ship management, and container storage and repair services.

Business brief

Financials

Recent developments


STOCK DETAILS







COMPANY FINANCIALS YoY CAGR(%)2008 2009 2010 2011 (%) (08-11)

214

Saudi Public Transport Company (SAPTCO) provides bus transport services for domestic and international travel to neighboring countries such as Egypt, Syria, Jordan, Kuwait, Qatar, the UAE, Bahrain, Yemen, Sudan, and Lebanon. Headquartered in Riyadh, the company has about 161 local and international agents.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

215

United International Transportation Co. (Budget Saudi) is the largest car rental company in the MENA region. It is a franchisee of Budget International and operates more than 19,361 vehicles, including luxury, 4x4, full-size, intermediate, compact, and economy cars.

Business brief

Financials

Recent developments

Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)


STOCK DETAILS







216

Saudi Transport and Investment Company (Mubarrad) runs a land transport business across Saudi Arabia and other GCC countries. It also deals in the purchase and sale of land, construction, and management and operation of buildings.

Business brief

Financials

Recent developments

NOT COVEREDCurrent price(SR) 52.0

STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

217


MAY 2012

Media & Publishing


4210 SRMG 221

4070 Tihama 222

4270 SPPC 223

Exhibit 130: Revenue of GCC print/media,2009 11

Exhibit 131: Comparison of ROE & P/E of GCC companies, 2011


Country% weight in Index as of 28 Mar2012

NIM (%), 2011

Avg. RoE (%), 2011

219

Exhibit 133: Revenue of companies, 2009 11 Exhibit 134: Profitability of SRMG relative to sector average


220

Riyadh-based Saudi Research and Marketing Group (SRMG),established in 1988, is a leading publishing group. Itssubsidiaries include Saudi Research and Publishing Company, Saudi Distribution Company, Saudi Specialized Publishing Company (SSPC), and Al Khaleejiah Advertising and Public Relations Company.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

221

Tihama Advertising & Public Relations Co., established in 1983, operates the Egyptian Satellite Channel, Al-Hayat newspaper and Kolness magazine. The company operates through its subsidiaries Tihama Distribution Company, United Journalists, Star Media Co., Saudi Signs Supply Co., Intermarkets Riyadh, and Ad Art Medyan.

Business brief

Financials

Recent developments


STOCK DETAILS




VALUATION MULTIPLES10A 11A TTM



Company financials

FY09 FY10 FY11 9M12YoY(%)

CAGR (%)(09-11)

222

Saudi Printing and Packaging Company (SPPC), formerly Madina Printing and Publishing Company, was established in 1963. SPPC undertakes various commercial and package printing as well as production activities. The company has five printing houses, and a production area spread across 1.0mn sq meters.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

223


MAY 2012

Hotel & Tourism


4010 SHARCO 227

4170 Shams 228

Exhibit 137: Revenues of hotel and tourism companies in GCC, 2009 11

Exhibit 138: Comparison of ROE & P/B of GCC companies, 2011



NIM (%), 2011

Avg. RoE (%), 2011

225



Exhibit 144: Avg. daily volumes, Jan11 Dec11 Exhibit 145: Share price movement, Jan11 Dec11

226

Riyadh-based Saudi Hotels & Resorts Areas Co. (SHARCO),founded in 1979, owns and operates several resorts and hotels independently and through its subsidiaries Al Khaleej Resorts Co. Ltd., Riyadh Hotels Co. Ltd., Makkah Hotels Co. Ltd., Al Nakheel Touristic Area Co. Ltd., Tabuk Hotels Co. Ltd., and Madina Hotels Co. Ltd. Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

227

Tourism Enterprise Co. (TECO) was established in 1991 to construct and manage tourist projects. Headquartered in Dammam, Saudi Arabia, the company primarily focuses on the ownership and management of the Palm Beach Resort. TECO offers sports and recreational activities, conference facilities, cabanas and suites.

Business brief

Financials

Recent developments


STOCK DETAILS







Company financials

2008 2009 2010 2011YoY(%)

CAGR (%)(08-11)

228

Exhibit 146: Performance and valuationExchg Close T/O Mkt cap FF Price change TTM (%) Valuation (x) Div yldcode Company name (SR) (SR mn) (SR mn) Wt (%) % last %YTD ROE ROA P/E-TTM PBV# 11 (%)Banking/Financial

Petrochemicals

Cement

Retail

Energy & Utilities

Agriculture/food

229

Exhibit 146: Performance and valuationExchg Close T/O Mkt cap FF Price change TTM (%) Valuation (x) Div yldcode Company name (SR) (SR mn) (SR mn) Wt (%) % last %YTD ROE ROA P/E-TTM PBV# 10 (%)

Telecom/IT

Insurance

AMANAACE

Gulf

Trade

Multi Investment

Al

Industrial Inv

230

Exhibit 146: Performance and valuationExchg Close T/O Mkt cap FF Price change TTM (%) Valuation (x) Div yldcode Company name (SR) (SR mn) (SR mn) Wt (%) % last %YTD ROE ROA P/E-TTM PBV# 10 (%)

4140120122202180Construction

National

Real Estate

Transport

Media & Publishing

Hotel & Tourism

231

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