saudi factbook 2010 - gulfbase.com(2020.se) neutral 127.0 the company's high margins, low...

JUNE 2010 THE SAUDI FACTBOOK 2

EXECUTIVE SUMMARY 3

NCBC RECOMMENDATIONS 4

KSA - ECONOMY AND NATION 6

Resilience in the face of adversity 6

The Kingdom’s economy remains exposed to challenges 10

Outlook remains encouraging 14

SAUDI STOCK MARKET 15

Robust despite global uncertainty 15

Saudi market is the largest and most liquid in the region 18

Valuations look reasonable 20

Earnings growth outlook gives confidence 21

IPO market slowly returning 22

Foreign participation increasing 23

A developing debt market 24

INDUSTRIES & COMPANIES 25

Banking & Financials 27

Petrochemicals 43

Cement 62

Retail 75

Agriculture & Food 87

Energy & Utilities 104

Telecom 109

Industrial Investment 118

Multi Investment 134

Building & Construction 144

Real Estate 160

Transportation 170

Media & Publishing 177

Hotels & Tourism 183

Insurance 188Tab

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APPENDIX 222

JUNE 2010 THE SAUDI FACTBOOK

Executive Summary

A Strong Economy… The Saudi Arabian economy remains one of the strongest in the region, and indeed

globally, at a time when macroeconomic concerns still abound on the pace and

sustainability of the recovery after the financial crisis of 2008-2009. Oil prices and

production levels are still major drivers of the Saudi economy. However, years of

proactive measures by the government to diversify the economy, along with

government stimulus efforts, resulted in 2009 real GDP growth remaining positive

at 0.6%. This at a time when most major economies globally faced declining GDP

levels.

Growth in 2010 looks assured, despite new areas of concern in the global economy

coming to the forefront: Greece/the Euro zone budgetary sustainability, US

financial reform, the health of China’s recovery, etc. While oil prices have remained

volatile, we expect the average for the year to remain in the USD75-76 range, up

from the USD62 average in 2009, which should result in a return to a fiscal surplus

and should support growth in the economy. However, higher oil prices alone are not

driving the rebound in the economy. We expect non-oil GDP to grow 3.8% in

2010e, similar to our overall expectations for the economy.

… Supports A Strong Market The Tadawul All Shares Index (TASI) was the strongest in the GCC in 2009 (up

27.5%) and as of mid-year 2010, is the strongest globally at just above flat for the

year. All markets in the region and globally are down so far in 2010 as the ongoing

concerns on the global recovery have halted any market rallies to date.

We note that apart from the Petrochemical Sector, which accounts for about 27% of

the weighting in the TASI and which is very globally exposed, most other sectors

are much more domestically focused. These sectors are benefitting from the

continued growth in the economy, as well as the strong demographic trends such

as a young, growing, and increasingly affluent population. Here we highlight the

Agriculture/Food and Retail sectors, which are amongst the top performing sectors

as of mid-2010, up about 10% each.

Further Upside Likely by Year-end Corporate earnings have been rebounding and we believe 20% plus growth in

earnings for companies in the TASI is possible for 2010e. Given still reasonable

market valuation levels, we believe earnings growth should drive a rise towards the

7,000 level for the TASI by the end of the year. However, volatility is expected to

remain high, especially through the summer period as volumes lighten locally and

regionally. With Ramadan finishing in early September this year, the stage seems

set for a return to growth in the final quarter of the year.

3


NCBC Recommendations Exhibit 1: Summary of our stock recommendations

Company Rating Target Price(SR)

Comments

Almarai (2280.SE)

Neutral 193.0 Geographic expansion and Infant Milk venture key drivers for the stock. With start of production at the new bakery and infant milk plants, integration of HADCO and JV projects with PepsiCo, the coming 12-18 months set to be potentially lucrative. High food costs as well as delays in new ventures key risks

Savola (2050.SE)

Neutral 34.4 Fundamentals remain solid although limited upside remains. Integration of Geant and provisions in non-core Real Estate are possible risks. Expansion in Sugar business acts as a potential positive catalyst

Al Othaim (4001.SE)

Overweight 79.0 Number 2 food retailer in KSA, well positioned to take increasing market share as market shifts to organized retailing. Entrance of foreign player and rising COGS are key risks. Store expansion is key catalyst for the stock.

Jarir (4190.SE)

Overweight 170.0 Plans to almost double number of stores coupled with 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

Al Hokair (4240.SE)

Neutral 46.5 After rapid expansion through FY07, Al Hokair underwent restructuring efforts to streamline its stores in FY08-FY09. Efficiency and profitability have improved and the company looks set to benefit from further growth. From 726 stores at the end of FY09, we estimate1,242 stores by the end of FY16e

Tasnee(2060.SE)

Overweight 36.2 NIC (Tasnee) is the only titanium pigment producer in the Middle Eastand is monetizing its low cost feedstock advantage through its petrochemicals business. The June 2009 start of its ethylene derivatives complex, SEPC, as well as improving trends in titanium should drive 86% growth in net income in 2010e

Sipchem (2310.SE)

Overweight 27.9 Acetyls Complex (Phase II expansion) will double Sipchem’s annual capacity to 2.2mn mt with full-year benefits expected to materialize from 2010 onward. Volatility in the price realization and subdued demand are key risks. Earlier than expected start to Phase III expansion (currently set for 2013) is a potential catalyst

Saudi Kayan (2350.SE)

Neutral 20.3 Diversified product mix and strong links with Sabic are positives however doubts over on-time start of production and lack of revenuesuntil 2011 dim the near term outlook. While 2012e will benefit from full year contribution from its plants however post 2013e net income is likely to contract as the current cycle nears its peak

Sahara(2260.SE)

Neutral 27.2 Sahara has one operational plant, one coming on-stream in 2Q 2010 and a further 3 set to commercialize operations in 2013. The SEPC plant is the only income generator for now. Once all of Sahara's plants are up and running, the company will have amongst the most diverse product portfolios in the sector with a range of ethylene derivatives, super absorbent polymers and acrylates.

Yansab(2290.SE)

Neutral 50.7 Yansab has recently started commercial operations in March 2010. The timing looks ideal as both demand and pricing are gaining traction. However with the strong performance of the stock over the past year. we believe much of this is priced in.

Petrochem (2002.SE)

Underweight 15.8 Expected to commence operations in 2012e and will be entering into the Ethylene and Propylene derivatives arena through a JV with Chevron Phillips. However there will be likely no revenue until 2012e and net losses in 2010e-2011e.

SAFCO(2020.SE)

Neutral 127.0 The company's high margins, low capital expenditure requirement and short cash conversion cycle results in high free cash flows, hence,high dividends payments. We believe the expected increase in ammonia and urea prices that will help the company to grow bottom line is already priced in by the market

Ma'aden (1211.SE)

Underweight 15.3 Concerns regarding long term reserves exist despite the higher gold price. Phosphate unit is the main value driver for Maaden and is expected to start commercially in June 2011. High Zakat expense and growing debt levels are a drag on the company's value in the short and medium term. The aluminum project may not be value accretive. We do not include the aluminum project in our valuation until we have further clarity

4


NCBC RECOMMENDATIONS

Exhibit 1: Summary of our stock recommendations

Company Rating Target Price (SR)

Comments

Saudi Steel Pipes (1320.SE)

Overweight 40.5 Increasing demand in medium size pipes, and the start of a large diameter pipe production facility (which SSP owns 33%) in 2012 will drive robust revenue and earnings growth. With the significant growth potential, high dividends yield and clean balance sheet; we think the market is not pricing in the expected performance of SSP over the next 12 months

Saudi Electricity (5110.SE)

Overweight 18.5 The new tariff structure which will affect industrial, commercial and government customers will lead to SR3.2bn increase in revenue that we expect to flow directly to income. This will have a significant impact on profitability which the market has not yet fully realized. Key risks remain the rising cost of purchased energy and rising capital expenditure requirements

Yamama Cement (3020.SE)

Overweight 58.0 Strong demand in Riyadh coupled with highest capacity in the central region a positive. Competition and deterioration in operational performance a risk. Ability to get a higher share in new projects coupled with rationalization of cost structure to boost top and bottom-line

Saudi Cement (3030.SE)

Neutral 41.2 Based in the Eastern region, away from most of the key demand centers. As long as the export ban remains, will hinder growth and profitability.

Qassim Cement (3040.SE)

Neutral 71.3 Lowest cost cement producer in the country with very low inventory levels. Lack of capacity expansion plans could limit growth.

Southern Cement (3050.SE)

Underweight 60.0 Well positioned for Jizan Economic City in the South. New facility near Makkah also helps. However competition is fierce and new capacities will take some time to complete.

Yanbu Cement (3060.SE)

Neutral 39.4 Western region fundamentals remain mixed, volatility in project progress leads to top-line risk in the near term. Increase in the pace of implementation of planned projects to prove near term catalyst

Eastern Cement (3080.SE)

Neutral 44.3 Shifting focus to domestic market due to export ban, with limitation on exports remaining a key downside. Still focused on Eastern region for sales, however lack of major projects limits demand upside.

Source: NCBC Research


Economy and Nation

Resilience in the face of adversity The performance of the Saudi economy has been characterized by considerable

resilience in the face of the global economic slowdown. While this show of strength

highlights the effectiveness with which the government mobilized its reserves to

support economy activity, it also reflects the Kingdom’s increasingly diversified

economy resulting from years of proactive initiatives and a relatively stable banking

sector. Saudi growth remained positive, with real GDP expanding by 0.6% in 2009,

an impressive achievement at a time when most major developed economies

contracted anywhere from 2-5%. Growth was to a large extent driven by the

government sector, which increased 4.4% during the year but also the private

sector recorded strong growth, even if the headline figure declined to 3.5% in 2009

from 4.8% in 2008. The correction was above all driven by the oil sector, which

contracted by a significant 6.7% under the dual pressure of a 70% drop in prices

from their 2008 highs and production and cuts in the OPEC quotas.

Exhibit 2: Real GDP growth CAGR (08 – 12E)

(%)

Exhibit 3: Annual % change in real GDP

(%)

0

2

4

6

8

10

12

Japan UK Russia US KSA Brazil India China

-6

-4

-2

0

2

4

6

2008 2009 2010 2011

World Output US Japan UK KSA

Source: IMF, NCBC Research Source: IMF, NCBC Research

We expect real GDP growth of 3.8% for the Saudi economy in 2010e, which is down

slightly from our projections from the beginning of 2010 (of 4.0%). This reflects the

tentative nature of the private sector recovery in the face of global risks caused by

the sovereign debt crisis in the Euro-zone. In addition, although the oil market

remains subject to strong conflicting pressures, the increased uncertainty about

demand can expected to contain the average price for the year to around USD75-

76 per barrel. We further expect only marginal production growth of 1.2% to 8.4

mn bpd in 2010, due to increasing demand from emerging Asian economies, over

the previous year’s 8.3 mn bpd when production contracted by an estimated

10.0%. These developments will likely result in oil sector growth of around 3.7%

for 2010e. We expect the non-oil sector to record real growth of around 3.8%,

driven largely by strong government spending and increasing private consumption.

The Saudi government’s commitment to economic diversification, as reflected in its

2010 budget, will likely support strong non-oil growth, which should further benefit

from a gradual increase in bank lending. We expect non-oil real GDP to grow by

3.8% in 2010e. This will likely increase Saudi Arabia’s nominal GDP growth to

10.1% in 2010e from a 21.1% contraction in 2009.

Saudi Arabia’s positive GDP

growth during testing

economic times highlights

the strength of its economy


KSA – ECONOMY AND NATION

Exhibit 4: Saudi Arabia macroeconomic indicators

Indicator 2007 2008 2009 2010F 2011F 2012F

Real GDP (%) 3.4 4.5 0.6 3.8 4.2 4.4

Hydrocarbon (%) 0.5 5 (6.7) 3.7 3.9 4.1

Non-hydrocarbon (%) 4.7 4.3 3.7 3.8 4.2 4.5

Nominal GDP (%) 7.1 21.9 (21.1) 10.1 11.9 12.4

Inflation (%) 4 9.9 5.1 4.2 4.6 5.0

Current account balance (% of GDP) 24.9 29.2 7.1 3.1 9.8 15.8

Fiscal balance (% of GDP) 12.4 34.1 (3.2) 4.7 5.1 5.5

Source: SAMA, NCBC Research

Macroeconomic stability, the underlying theme Saudi Arabia enjoyed a high GDP growth rate ranging between 2% and 7% in

2003-08, led by high oil prices and the government’s non-oil diversification

initiatives. Historically, oil has been the primary driver with growth rates reaching

up to 17.2% on account of high prices that spiraled to USD145 per barrel in 2008.

However, the non-oil sector’s performance also improved, thanks to diversification

efforts and increased production capacities with growth rates ranging from 3.6% to

5.2% in 2003-08. Even in the midst of the global economic slowdown, in 2009,

KSA’s non-oil GDP grew 3.7%, supported by government spending and favorable

regulatory policies. During the same time, KSA experienced low inflation ranging

from 0.6% to 6.4%, partly as a result of price subsidies offered by the government.

Effective surplus mobilization by government To stimulate economic activity, the Saudi government engaged in aggressive

countercyclical efforts in 2009. The range of policies included continued public

funding for the six economic cities in the Kingdom and a USD49.6bn stimulus

package, the largest in the GCC. Although these steps resulted in a budget deficit of

USD11.83bn in 2009, the debt-to-GDP ratio of 16.0% in 2009 is only marginally up

on 2008 and compares favorably versus most economies globally.

Exhibit 5: Budget balance and public debt

(SR bn)

-40

-20

0

20

40

60

80

100

120

140

160

180

2008 2009 2010 2011 2012

-10

-5

0

5

10

15

20

25

30

35

40

(%)

Budget balance mil SAR Public debt mil SAR

Budget balance (% of GDP, RHS) Public debt (% of GDP, RHS)

Source: EIU



Resilient financial sector

BANKING SECTOR FUNDAMENTALS REMAIN SOUND

The Saudi banking sector, the second largest in the GCC after the UAE, is

comprised of 12 commercial banks with total assets worth SAR1.3tn. Even in the

face of the global financial crisis, Saudi banks proved their resilience, thanks to

conservative provisioning policies and a strong capital base. The domestic banks

have strong financial ratios, with NPLs at less than 4% of gross loans, loan loss

provisions nearing 90%, return on equity of 14% and return on assets of 2%.

These factors, combined with the global economic rebound, are likely to accelerate

growth in the Saudi banking sector, in our view. Increased lending to the private

sector should become one of the growth drivers in 2010-2011.

The KSA banking sector retains considerable growth potential by global standards.

Its loan-to-GDP ratio of 53.2% and deposit-to-GDP ratio of 67.8% indicate a

tremendous room for convergence-type growth.

Exhibit 6: Saudi Banking Sector still has room to grow 2009 figures in %

0

20

40

60

80

100

120

UAE Kuwait Oman Qatar KSA Bahrain

Credit-to-GDP Customer deposit-to-GDP

Source: Central Banks of GCC countries, IMF, NCBC Research

Even as the financial crisis wreaked havoc across the global banking sector, but

banks in the Kingdom have not been as negatively affected, given their minimal

exposure to US sub-prime mortgages and SAMA’s conservative approach. Saudi

Arabia’s performance in this regard compares favorably even to the rest of the Gulf

region where a number of governments provided large-scale support to the

financial sector.

A NASCENT DEBT MARKET

KSA’s debt market is in its nascent stage of development with only seven bond

issues publicly traded at present. Despite efforts to increase market depth by

introducing the Tadawul bond and Sukuk platform in June 2009, only three

companies have raised long-term financing via this route. In addition, there have

been a number of private placements. The government is taking additional steps to

boost liquidity and trading volumes in this segment so as to make the Saudi debt

market attractive for investors. Sukuk are are asset-based, Shariah-compliant

financial instruments which have a potentially important role in enabling companies

to raise long-term capital and helping investors diversify their portfolios.



Government’s proactive measures to facilitate growth During the past decade, the government has been actively boosting its capital

expenditures with a view to improving and expanding the country’s social and

economic infrastructure. This agenda has proceeded hand in hand with efforts to

increase the proportion of non-oil revenues and reduce its broader economic

dependence on oil, petrochemicals and related sectors. In 2009, the government

under its budget spent some USD54.9bn on human resource development,

transport and communications, economic resource development and social and

health development.

Strongly supported by the government’s diversification initiatives, the non-oil sector

has been a key driver of growth in recent years. KSA has been actively building

education and health facilities and actively stimulating the growth of a range of

sectors. Highlighting the importance of stimulus spending, the government sector

grew by 4.0%, while the private sector expanded by 2.5% in 2009.

Exhibit 7: Oil and non-oil GDP contribution

(%)

Exhibit 8: Real non-oil GDP breakup

(%)

0

20

40

60

80

100

120

2005 2006 2007 2008 2009

Oil Non-oil

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 (P) 2009 (F)

Agriculture Electricity, Gas & Water

Construction Manufacturing (non-oil)

Private Services Government Services

Source: SAMA, NCBC Research Source: SAMA, NCBC Research

To keep the Kingdom on its trend growth path, the government unveiled a budget

for 2010 that boosted capital expenditure in the infrastructure, healthcare and

education sectors. As a result, the budget proposed a deficit of USD18.7bn for

2010, for only the second time since 2002.

The government has also implemented various liberalization policies to increase

investor confidence in the economy and boost foreign direct investment (FDI).

According to the 2009 World Investment Report, Saudi Arabia experienced an

inward flow of approximately USD38bn of FDI, the highest in the United Nations

Economic and Social Commission for the Western Asia (ESCWA) region. FDI is likely

to further increase with the development of new economic cities and special

economic zones in the country.

Liberalization of the

economy has led to a spurt

in FDI in KSA, making it the

highest FDI recipient in

2008 in the ESCWA region



However, the Kingdom’s economy remains exposed to challenges Despite the government’s efforts to increase revenues from non-hydrocarbon

related sectors, including tourism, agriculture and fishing, power and energy related

sectors, oil continued to contribute about 29% of the 2009 real GDP. In the area of

fiscal policy, the dependence is even more total. In 2009, oil and related sectors

contributed about 89.9% of total government revenues.

Exhibit 9: Contribution of oil and non-oil sectors to total revenues (%)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2002 2005 2008 2009

Oil revenues Other revenues


This heavy dependence on oil leaves the economy vulnerable to oil price volatility.

Average crude oil prices have ranged from some USD35 to around USD145 from

2005 onwards. This extreme volatility has been reflected in sharp variations in

government revenues, which are still largely derived from oil exports. A sharp

decline in oil prices from the current levels could dent market sentiment and

negatively impact the economic recovery. Also, since oil exports account for almost

90% of the Kingdom’s total exports, any fall in oil prices will sharply affect KSA’s

trade balance.

Regional issues have an impact on sentiment The Kingdom’s economy remains highly exposed to contagion from economic

instability in the broader regional economy. For instance, the Dubai debt crisis,

which erupted in November 2009, after the government-owed Dubai World sought

a moratorium on its debt obligations had a negative impact on investor sentiment

across the GCC countries. Because of regional credit exposures to Dubai, problems

at Dubai World risked having a ripple effect on over 100 banks across the GCC

region and abroad. More generally, problems such as this have have raised broader

questions about corporate and credit practices in the region and created additional

pressures for transparency.

Also Kuwait’s banking and investment company sectors have been hit by the global

economic crisis, given their exposures to overleveraged property ventures and the

regional stock markets. Even though the fundamentals in Saudi Arabia look healthy



by comparison, the recurrent uncertainty, further amplified by the European debt

crisis, has had and risks continuing to have spillover effect on the Saudi market.

Private sector faces the heat

AL GOSAIBI AND SAAD DEFAULTS HURT SENTIMENT

The debt woes faced by the well-known family companies Al Gosaibi & Bros (AHAB)

and Saad Group last year sent shockwaves throughout the Gulf financial sector and

tarnished KSA’s corporate image, forcing banks to tighten their lending criteria.

Banks in KSA have been forced to significantly write down their exposures to these

groups. The uncertainty and lack of disclosure over the total exposure to these

business groups has had a general adverse effect on business confidence in the

region and has likely delayed the normalization in bank lending. In 2009, the

banking sector’s non-performing loans increased substantially to SAR25.7bn. The

provision coverage ratio dropped to 89.8% which we believe may indicate further

increases in provisions through 2010.

Exhibit 10: NPLs and Provisions

Indicator 2007 2008 2009

Non-Performing Loans (SR mn) 10,696 10,502 25,771

Provisions (Coverage %) 145.1 152.3 89.8


BANK CREDIT REMAINS SUBDUED

Total annual bank credit in 2009 declined for the first time since 2001, reflecting

the sector’s continued nervousness about rising defaults and loan losses. According

to SAMA, credit offered by Saudi banks declined to SAR736.9bn in 4Q09 from

SAR744.8bn in 4Q08. The fall in 4Q09 was the worst in the last 13 months as credit

to the private sector fell to SAR708.7bn.

Exhibit 11: Credit to private and public sector

(SR bn)

0

100

200

300

400

500

600

700

800

1Q-08 2Q-08 3Q-08 4Q-08 1Q-09 2Q-09 3Q-09 4Q-09

Private Sector Public Sector


The pace of private sector recovery remains one of the main near-term challenges

facing the Saudi economy. New bank lending to the private sector has been highly

volatile in recent months, with a positive trend yet to emerge, partly because of the



apparent preference of many lenders for government projects. Banks are still

cautious in the face of regional corporate scandals and, moreover, the low interest

rate environment creates attractive low-risk investment opportunities in the form of

placing current deposits in government securities. The low probability of a near-

term interest rate hike in the US constitutes a risk in this regard.

A majority of Saudi banks reported significant declines in their profits or posted

outright losses during 4Q09, largely due to higher provisions. Only two banks

reported higher profits. At the same time, lending remained sluggish as banks

continued to adhere to the cautious stance they have adopted during the crisis.

Having cut lending in response to the woes of the Saad and Al Gosaibi groups,

regional banks were hit again by the Dubai World crisis, even if the direct

exposures of the Saudi banks were minimal. Going forward, small private sector

entities will likely continue to find it difficult to secure credit during 2010 due to

their smaller size and high risk profile, we believe. Lending activity will remain

subdued until a new paradigm for corporate lending emerges and confidence

rebounds.

Inflation remains a key concern for policy makers According to the General Statistics Department, Ministry of Finance, inflation as

measured by the Consumer Price Index accelerated to 5.4% YoY in May 2010, the

highest figure in the last twelve months and up from 4.9% in April 2010. This is

likely to negatively affect businesses, increase costs and dent consumer buying

power. The increase was largely driven by the rent index, which rose by 1.1% and

the food & beverages index which fell 0.1% over April. SAMA recently

acknowledged that a lack of affordable housing units in the Kingdom will likely

continue to push up rental prices, thereby sustaining inflationary pressures in the

economy at least in the near term.

Exhibit 12: KSA CPI, housing and food inflation

(%)

-5

0

5

10

15

20

25

Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10

General Index Food Housing




Although food inflation fell to 5.0% in May 2010 but is still 5.4% Y-o-Y. Since KSA

imports 65-70% of its total food requirement, the significant rise in global food

prices has also impacted food prices in the Kingdom. The housing/rent index rose

10.7% in May 2010. Increases in food prices coupled with increasing housing costs

is likely to continue to put upward pressure on Saudi inflation. Rising housing

demand due to an acute shortage of houses in the Saudi region will likely continue

to push the index higher as the global economy bounces back. The Dollar peg,

combined with the prospect of low interest rates in the US for the foreseeable

future, will make it difficult for the authorities to contain the mounting inflationary

expectations. The constraints on their room for maneuver became very evident

during the inflationary bout of 2007-2008.



Outlook remains encouraging

Minimal impact of the current global situation KSA’s growing trade and investment links with China and India, which figure as the

Kingdom’s leading trade partners, coupled with strong government spending has

ensured that the Saudi Arabia is to a large extended shielded from the current

global situation. The two BRIC countries accounted for approximately 16.3% of all

Saudi exports in 2008-09. In spite of increased government spending the

government is pushing developmental and infrastructure projects to ensure long

term growth prospects for the nation. The situation in Europe, along with the fragile

recovery in the US, will continue to depress oil demand from the West, which may

adversely affect prices even as growing Asian hubs like China will continue to fuel

oil demand. The near-term outlook therefore seems one of increased volatility,

made worse by supply concerns in the wake of the Gulf of Mexico.

Oil prices are now more resilient Even after years of diversification and the government’s efforts to increase

revenues from non-hydrocarbon related sectors, oil accounted for about 29% of the

2009 real GDP. In 2009, oil and related sectors contributed about 89.9% to total

government revenues. Even though the demand and supply outlook for oil remains

unusually uncertain, we expect gradual growth, allowing the oil sector to return to

the status of a key growth driver again.

To actively support growth and development of human capital, the government

released an expansionary budget for 2010. The total budgeted expenditure for

2010 is approximately SAR540 billion, of which around SAR260 billion, or 48%, has

been allocated for capital expenditure, highlighting the government’s determination

to upgrade critical infrastructure and boost the non-oil sector. This is around 16%

higher than the 2009 budget. While boosting infrastructure spending, the budget

also prioritizes social spending in education and health. This will upgrade the social

infrastructure and create job opportunities in the medium term. Spending on

education and training has been boosted to SAR137.6bn, or over 25% of the total.

The government has also been aggressively pushing major real estate projects to

ensure steady growth in the residential market and bring down the spiraling rent

costs to sustainable levels. The much-awaited mortgage law, finally expected to be

implemented by the end of 2010, is a step in the right direction and will enable

individuals to finance at least 80% of their property through loans. The new law

should help in easing the acute housing shortage and fulfill the current requirement

of 1.5 million new homes by 2015


KSA Stock Market

Robust despite global uncertainty For 2009, the Tadawul All Shares Index (TASI) rebounded a strong 27.5%, after a

significant 56% decline in 2008. However, performance through the year was

volatile, ranging from a decline of 14% to a rise of 32%, reflecting the ongoing

uncertainties in the local, regional and global markets in the aftermath of the global

financial crisis.

So far in 2010 (to June), the market is just above flat for the year, however

volatility has remained high. The TASI had risen 13% by the end of April, but gave

up all of these gains in the following month as global concerns on Greece/the Euro,

a slowdown in China, US bank reform, and general fears on the pace of global

economic recovery impacted most markets globally.

Exhibit 13: Market Volatility Continues for the TASI

TASI Index levels for 2009 and 2010 YTD

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

31-D

ec-0

8

31-J

an-0

9

28-F

eb-0

9

31-M

ar-0

9

30-A

pr-

09

31-M

ay-0

9

30-J

un-0

9

31-J

ul-

09

31-A

ug-0

9

30-S

ep-0

9

31-O

ct-0

9

30-N

ov-

09

31-D

ec-0

9

31-J

an-1

0

28-F

eb-1

0

31-M

ar-1

0

30-A

pr-

10

31-M

ay-1

0

25 Nov 2009: 32% rise YTD, however Dubai World debt standstill announcement drives the market down for the rest of the year

9 March 2009: Down 14% for the year and down 80% from its peak of Feb. 2006

June 2009: Saad/Al Gosaibi troubles come to light, impacting the Saudi as well as regional markets

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

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

Source: Zawya, Reuters, NCBC Research

TASI the best performing market in the GCC The ongoing regional and global market uncertainties have been a continuing drag

on the market’s performance, however the TASI has remained one of the strongest

in the region both in 2009 and YTD in 2010, largely due to the stability of the

underlying economy. While the TASI ended 2009 up a respectable 27.5%, this was

down from its high of 32% reached in November up to the Dubai World debt

standstill announcement. This was much better in comparison with some of the

other regional markets due in large part to the limited exposure of Saudi companies

to Dubai World. The Dubai market (DFM) was at its high in 2009, up 43% (in late

October), and was up 28% for the year when Dubai World made its announcement.

Following this, the DFM steadily declined and ended 2009 up just 10% for the year.

So far in 2010, the TASI is one of the few markets showing positive performance

both regionally and globally, as most markets have fallen into the red (as of end-

June) due to ongoing fears on the health of the global recovery. In comparison,

Dubai’s DFM has fallen 16% YTD in 2010, as investors grow increasingly worried on

the outlook for the market and the impact the Dubai World debt restructuring will

have on the local economy.

15


KSA STOCK MARKET

Exhibit 14: 2009 GCC Market Performance

2009 performance of GCC markets

Exhibit 15: 2010 YTD GCC Market Performance

2010 YTD performance of GCC markets

-30%

-20%

-10%

0%

10%

20%

30%

Bahrain Kuwait Qatar Dubai AbuDhabi

Oman TASI

-20%

-15%

-10%

-5%

0%

5%

Dubai AbuDhabi

Kuwait Oman Bahrain Qatar TASI

Source: Zawya, Reuters, NCBC Research Source: Zawya, Reuters, NCBC Research

2010 YTD to 28 June

TASI one of the few global markets up in 2010 From a global perspective, the TASI performed well in 2009 versus the larger

developed economy markets, however was on the low end when compared to other

emerging markets. So far in 2010, the Saudi market is showing its resilience as it is

one of the very few markets which are in positive territory, while most regional and

global markets are down.

Exhibit 16: 2009 performance vs Global Peers

2009 global market performance

Exhibit 17: 2010 YTD performance vs Global Peers

2010 global market performance

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Dow

Jon

es

Nik

kei 225

Euro

Top

100

TASI

Nas

daq

Hang S

eng

Shanghai

Bra

zil

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

Shan

ghai

Nik

kei 225

Bra

zil

Hang S

eng

Euro

Top

100

Dow

Jones

Nasd

aq

TASI

Source: Zawya, Reuters, NCBC Research Source: Zawya, Reuters, NCBC Research; 2010 YTD to 28 June

Sector performance: Retail/Food/Utilities strong The company and sector make-up of the TASI offers some explanations of the

performance in 2009 as well as the resilience so far in 2010. The Petrochemical

sector composes about 27% of the TASI’s free float weighted market capitalization.

While this sector is fully exposed to the global economy, most of the remaining

sectors are more domestically focused, including the larger sectors such as Banking

(35% free float weight), Telecoms (8% free float weight), Agriculture/Food (6%

free float weight), and Cement (6% free float weight). Most companies in these

16


KSA STOCK MARKET

sectors did witness a bottoming in earnings in early 2009 and have been showing a

recovery since. However, due to their domestic focus, these companies are

relatively resilient to ongoing global economic issues and are showing steady

earnings progressions, which is supporting their stock levels.

Exhibit 18: TASI strength driven by Banks, Retail, Utilities, Food sectors

Units as stated

Index No. of Avg dly T/O Mkt cap Free float Change Valuation (%)

Index value companies (SR mn) (SR mn) Wt (%) YTD (%) P/BV P/E TTM

TASI 6,318 142 3,516 1,241,416 100.0 3.2 2.0 18.9

Banking/Financial 16,567 11 507 351,444 34.8 5.7 2.2 16.6

Petrochemicals 5,605 14 1,284 429,389 26.8 3.9 2.4 23.4

Cement 3,966 8 47 42,654 5.6 1.3 2.5 11.8

Retail 4,865 9 87 15,659 2.2 10.9 3.5 16.0

Energy/Utilities 4,865 2 56 57,749 2.1 15.5 1.2 46.2

Agri/Food 5,525 14 184 50,223 5.7 10.3 2.8 19.0

Telecom/IT 1,787 4 163 125,515 7.8 (0.2) 2.0 12.0

Insurance 888 31 427 20,118 1.7 (17.7) 2.7 37.7

Multi-investment 2,240 7 156 34,860 1.0 (8.3) 1.1 62.3

Industrial Inv 4,681 13 239 34,687 3.1 (0.6) 1.3 21.0

Construction 3,492 13 154 20,481 2.7 (6.9) 1.8 16.7

Real Estate 3,187 7 144 45,568 4.8 (2.3) 1.1 20.4

Transport 3,426 4 43 8,221 1.1 0.9 1.2 17.7

Media/Publishing 1,391 3 8 2,614 0.3 (26.5) 1.2 69.7

Hotels/Tourism 5,231 2 18 2,234 0.3 (11.3) 1.3 5.9

Source: Zawya, Reuters, NCBC Research Prices as of 27 June 2010

We note that YTD in 2010, the strongest performing sectors are Agriculture/Food

and Retail, both of which are highly defensive and largely focused on domestic

consumer demand. The strongest sector in the TASI in 2010 to date is the

Energy/Utilities sector, however this is due to the performance of Saudi Electricity,

which comprises nearly 2% of the TASI free-float weighted market capitalization,

and which has risen 20%. Most of this performance was realized since early June

after the company announced an upward revision in its customer tariff structure,

which we believe will result in a large increase in earnings over the coming years

(we have an Overweight rating on Saudi Electricity).

Exhibit 19: 2009 Sector Performance

2009 sector performance in %

Exhibit 20: 2010 YTD Sector Performance

2010 sector performance in %

-10%

0%

10%

20%

30%

40%

50%

60%

70%

Con

stru

ctio

n

Rea

l Est

ate

Med

ia/P

ublis

hin

g

Tel

eco

m/I

T

Tra

nsp

ort

Banki

ng/F

inanci

al

Multi-

inve

stm

ent

Ret

ail

Ener

gy/

Utilit

ies

TASI

Cem

ent

Agri

/Foo

d

Hot

els/

Tou

rism

Indust

rial In

v

Pet

roch

emic

als

Insu

rance

-30%-25%-20%-15%-10%-5%0%5%

10%15%20%

Media

/Publis

hin

g

Insu

rance

Hote

ls/T

ouri

sm

Multi-

inve

stm

ent

Const

ruct

ion

Real Est

ate

Indust

rial

Inv

Tra

nsp

ort

Tel

ecom

/IT

Cem

ent

TASI

Pet

roch

em

ical

s

Banki

ng/F

inan

cial

Agri/F

ood

Reta

il

Energ

y/U

tilit

ies

Source: Zawya, Reuters, NCBC Research Zawya, Reuters, NCBC Research; 2010 YTD to 28 June

17


KSA STOCK MARKET

The Saudi market is the largest and most liquid in the region Within the GCC, the Saudi market is by far the largest both in size and in turnover

value. As of end June 2010, the TASI market capitalization was SR1,241bn

(USD330bn), 51% of the GCC markets total market capitalization of USD650bn.

While the general direction of all of the markets in the region has been similar over

the past few years (peaking in 2008, bottoming in March 2009), the TASI has

shown relative strength as the percentage of GCC market capitalization has grown

over this time. In 2008, the Saudi market made up about 43% of the GCC market

capitalization, while in 2009, this grew to 47%, and more recently has been above

50%.

The major decliners during this period have been Dubai and Kuwait, due to market

specific issues in both countries.

� In Dubai, the impact of the economic downturn on the real estate market and

subsequently on Dubai World has hit the DFM particularly hard given the large

exposure of real estate, construction, and banking in the index. The DFM’s

market capitalization has fallen from 10% of the GCC in early 2008 to 5% more

recently.

� In Kuwait, the large exposure of many of the banks and investment companies

to real estate and the markets has negatively impacted the overall market.

Kuwait comprised about 20% of the GCC market capitalization in 2008 but has

fallen to 15% more recently.

Exhibit 21: Saudi accounts for half the regions mkt cap

Market capitalization of regional markets in USDbn

Exhibit 22: Turnover seems to have bottomed

Daily turnover in USDmn from each of the GCC markets

-

200

400

600

800

1,000

1,200

Jan-0

7

Apr-

07

Jul-

07

Oct

-07

Jan-0

8

Apr-

08

Jul-

08

Oct

-08

Jan-0

9

Apr-

09

Jul-

09

Oct

-09

Jan-1

0

Apr-

10

Saudi Dubai Abu Dhabi Kuwait Qatar Oman Bahrain

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Feb-0

7

May

-07

Aug-0

7

Nov

-07

Feb-0

8

May

-08

Aug-0

8

Nov

-08

Feb-0

9

May

-09

Aug-0

9

Nov

-09

Feb-1

0

May

-10

Saudi Kuwait Abu Dhabi Dubai Qatar Oman Bahrain

Source: Zawya, Reuters, NCBC Research Source: Zawya, Reuters, NCBC Research

Turnover volumes have shifted to the Saudi market The TASI has historically been a relatively high turnover market, reaching a peak of

over USD5bn in average daily trading turnover in 2006 (a peak of over USD12.6bn

in turnover was reached on 14 Feb. 2006). Since then, trading volumes have

steadily declined, but looked to have reached a bottom over the past year. Average

daily trading volumes were SR5bn (USD1.35bn) in 2009 and in 2010 to date have

been SR3.5bn (USD935mn).

18


KSA STOCK MARKET

While volumes on the Saudi market have declined, its relative size in turnover

within the GCC has increased since 2008, as other markets (mainly Dubai/Abu

Dhabi and Kuwait) have seen an even more pronounced drop-off in trading

turnover. This has been partly due to the reduction in market size, but also due to

some increase in investor aversion to exposure to the equity markets following the

impact of Dubai World and other market specific issues.

As of the 2Q2010, the Saudi market accounts for about 75% of trading turnover in

the GCC and in June 2010, the percentage was actually closer to 80%. This

compares to about 60% in 2008 and 66% in 2009. The large decliners during this

time are:

� Kuwait, which fell from 16% in 2008 to closer to 10/11% in 2Q2010.

� Dubai, which was near 10% in 2008 and has fallen below 6% by mid 2010.

� Abu Dhabi, which has fallen from around 7% of turnover in 2008 to just 2% by

mid 2010.

Exhibit 23: Saudi Accounts for 75% of the regional turnover

% of overall daily turnover

Saudi KuwaitAbu

Dhabi Dubai Qatar Oman Bahrain

2007 68.3 12.9 4.8 10.4 3.0 0.5 0.1

2008 60.2 15.9 7.3 9.8 5.5 1.0 0.2

2009 65.9 14.9 3.7 9.3 4.9 1.2 0.1

1Q 2010 60.0 20.3 3.4 9.5 5.6 1.2 0.1

2Q 2010 74.9 10.7 2.1 5.8 5.6 0.9 0.1


Low liquidity a risk for the region We believe the precipitous drop in trading turnover is a risk for the region as lower

volumes could deter both retail and institutional investors from entering the

market, leading to even lower volumes and thus compounding the problem. The

TASI has held up relatively well in this regard, mainly due to the strong retail

trading volumes, which seem to offer an underlying support level to the market.

When comparing yearly turnover to market capitalization ratios, the TASI has

declined the most over time, but is still one of the most liquid markets in the

region. The table below shows that the Saudi market has about a 69% turnover

ratio in 2010 to date compared to 49% for Kuwait, 13% for Abu Dhabi, and 19%

for Qatar. Dubai at 74% looks relatively robust, but given that it accounts for just

5% of the region’s market capitalization, the overall volumes are still minimal.

Exhibit 24: Liquidity has continued to decline, Saudi still look ok

Annual turnover to average yearly Market Cap. Ratios (%)

Saudi KuwaitAbu

Dhabi Dubai Qatar Oman Bahrain

2007 195.5 78.1 56.5 126.1 43.1 32.2 4.0

2008 124.2 70.3 58.5 89.4 43.4 35.5 7.4

2009 117.3 74.9 27.5 123.9 33.6 37.2 2.7

2010 YTD 68.6 49.3 12.9 73.6 18.9 19.8 2.0


19


KSA STOCK MARKET

Another way of analyzing the depth as well as breadth of liquidity in the regional

markets is to see the number of companies in each market which trade above a

certain level on a daily basis. Our analysis, below, shows the number of companies

in each market which trade more than USD1mn, USD2mn and USD5mn on a daily

basis (2010 YTD). Interestingly, in the Saudi market, fully 127 companies trade

more than USD1mn per day, out of 142 listed companies (about 90% of the

companies). Even at the higher trading volume level, above USD5mn per day, the

TASI has 38 companies which consistently trade at these levels, more than twice

the total for the rest of the region.

For the other regional markets, the numbers of companies which have higher

trading volumes levels can be counted in the single digits, which demonstrates the

narrowness of these markets. We believe that this as well has ultimately deterred

investors from these other markets and is a risk going forward, especially in

attracting institutional investors to continue investing in these markets.

Exhibit 25: The Saudi Market has the largest depth and breadth of liquidity

# of stocks in each market with average daily trading turnover above threshold levels

Saudi Kuwait Abu Dhabi Dubai Qatar

Over USD1mn 127 32 7 11 20

Over USD2mn 97 25 4 6 13

Over USD5mn 38 7 2 3 3


Valuations look reasonable We believe one of the factors supporting the Saudi market, despite ongoing global

uncertainties, is that overall valuation levels for the market still look reasonable. On

a trailing 12 month basis, the TASI is trading at about 19x P/E (as of end-June

2010) versus its historical average of around 20x. With earnings still recovering

from the low levels of 2009, this gives some room for an upward move in the

market without stretching valuation multiples.

Exhibit 26: The Saudi Market is trading slightly below its long-run average

TASI level (LHS), P/E (RHS)

-

5,000

10,000

15,000

20,000

25,000

Jan-94 Feb-95 M ar-96 M ar-97 Apr-98 M ay-99 M ay-00 Jun-01 Jul-02 Jul-03 Aug-04 Aug-05 Sep-06 Oct-07 Oct-08 Nov-090

10

20

30

40

50

60

TASI (LHS) TTM P/E (RHS) Average P/E (RHS)


20


KSA STOCK MARKET

Regional markets trading at a discount Comparing the Saudi market to the other GCC markets on a P/E basis gives some

idea of the relative rankings of valuations. However, we also prefer to look at each

of the markets versus their average historic levels as each market may have

different valuation characteristics based on local risk factors and on the company

and sector make-up of each market.

On this basis, we can see that most of the markets in the region are trading below

their recent historical averages. This is not surprising given the economic downturn

and contraction in valuation levels over the past two years. While the Saudi market

is not as discounted to its historic average compared to some of the other regional

markets, we are comfortable with current levels due to the underlying strength and

diversity of the economy and earnings growth potential of the companies in the

market.

Exhibit 27: Most regional markets are trading at reasonable valuations

Trailing 12 month P/E levels and Average P/E since 2007

TTM P/E Avg. P/E*

Saudi Arabia 19.0 20.0

Dubai 11.4 13.4

Abu Dhabi 7.8 10.6

Kuwait 27.0 NA

Qatar 7.4 11.5

Source: Zawya, Reuters, NCBC Research Based on market levels of 27 June 2010

Earnings growth outlook gives confidenceWith valuation levels looking reasonable, we believe the Saudi market has upside

potential through 2010 and into 2011 due to our expectations of continued growth

in earnings.

So far in 2010, first quarter earnings for the market grew 69% YoY, mainly driven

by the rebound in earnings in the Petrochemical sector which recorded a SR7.3bn

profit versus a loss of SR0.5bn in 1Q09.

Our expectations are for overall market earnings to increase by at least 20% in

2010e versus 2009. This should mainly be driven by the Petrochemical sector which

saw 2009 earnings decline over 60% and which could see a strong rebound from

this low level. For the 7 companies in the Petrochemical Sector in our coverage

universe, we expect 2010e earnings to increase by 250% over 2009.

21


KSA STOCK MARKET

Exhibit 28: 1Q10 market earnings rebounded 69%

SR bn

Exhibit 29: 2010e mkt earnings could growth 20%+

SR bn

(1)

4

9

14

19

24

29

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08*

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10

Banks Petrochems Telecoms Other

69%-SAR0.5bn

SAR7.3bn

-

10

20

30

40

50

60

70

80

90

2006 2007 2008* 2009 2010e

Banks Petrochems Telecoms Other

20%+

Source: Reuters, NCBC Research * Not including the SAR30bn write-down at Kingdom Holdings

Source: Reuters, NCBC Research * Not including the SAR30bn write-down at Kingdom Holdings

IPO market slowly returning The Saudi market has been by far the most active for Initial Public Offerings (IPOs)

in the GCC region since the beginning of the economic downturn. In both numbers

of IPOs and amounts raised, the Saudi market has been larger than the rest of the

GCC combined since 2008 and for 2010 to date.

� In 2009, there were 11 IPOs which raised SR3.9bn (USD1bn) in the Saudi

market versus 4 IPOs for the rest of the GCC which raised USD900mn.

� So far in 2010, there have been 8 IPOs, which raised SR3.3bn (USD900mn) in

the Saudi market versus 2 IPOs for the rest of the GCC which raised a

negligible amount.

The outlook for the rest of 2010 seems very strong with 46 more IPOs planned for

the Saudi market versus 34 for the rest of the GCC. While the pipeline seems very

strong, we believe the actual completions will be just a fraction of this, especially

given the continued uncertainty and volatility in the markets.

Exhibit 30: Number of Saudi vs. GCC IPOs Number of IPOs

Exhibit 31: Amounts raised during Saudi vs. GCC IPOsIn SR bn

0

5

10

15

20

25

30

35

40

45

50

2008 2009 2010 YTD 2010e

Saudi IPOs GCC IPOs

-

5

10

15

20

25

30

35

40

2008 2009 2010 YTD

Saudi GCC

Source: Zawya Source: Zawya

22


KSA STOCK MARKET

Foreign participation increasing Trading volumes in the Saudi market have traditionally been dominated by retail

investors, mainly Saudi citizens. In 2008 and 2009, the proportion of trading by

Saudi citizens (retail) was consistently in the 90% plus range. Most of the

remainder of trading was composed of Saudi corporates and mutual funds.

Trading by foreigners has been limited, but the market is slowly opening and

volumes have been marginally increasing by foreigners. Some of the key changes

in the market allowing trading and investments by non-Saudi citizens are as

follows:

� GCC nationals have been able to invest in the Saudi market on a completely

open basis since September 2007. Before this, they were generally able to

trade equivalent to Saudi nationals, however with some restrictions on certain

stocks. Participations here has been limited as these investors have tended to

focus on their own domestic markets. GCC citizens currently account for

between 1-2% of trading volumes on the market.

� Foreign investors have historically been allowed to invest into the country

through mutual funds, although in practical terms, this has been limited in

absolute amounts.

� Foreign and non-GCC Arab investors having residency in the country were

allowed to invest in the market directly since March 2006. This group currently

accounts for about 2% of trading volumes on the market.

� In August 2008, the CMA announced the approval for the use of swap

agreements with authorized persons whereby foreign firms could purchase the

underlying shares, although voting rights would be held by the local authorized

person (bank/brokerage). Material trading using swaps did not begin until early

in 2009 as firms finalized the logistics and approvals for this product. Currently,

swap trades comprise about 1.5% of the overall trading volumes on the

market.

� In March 2010, the CMA approved the first ETF for the Saudi market. The ETF

holds a basket of 30 stocks which allows it to closely track the performance of

the overall market.

Despite the moves outlined above, overall trading by foreigners has remained low,

about 5% of overall trading volumes for all foreigners (including GCC residents),

and about 3-3.5% or foreign and non-GCC entities. In absolute terms, the overall

trading by foreigners on a monthly basis since the beginning of 2010 has been

around SAR7.6bn/USD2bn (combined buy and sell) versus about

SAR150bn/USD40bn for the overall market (combined buy and sell).

23


KSA STOCK MARKET

Exhibit 32: Swap Trading Slowly Taking Hold

Units as stated

Exhibit 33: Foreign Trading Only About 5.5% of Total

%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Mar-

09

Apr-

09

May-

09

Jun-0

9

Jul-

09

Aug-0

9

Sep-0

9

Oct

-09

Nov-

09

Dec-

09

Jan-1

0

Feb-1

0

Mar-

10

Apr-

10

May-

10

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Trading volume (SARmn) LHS

% of Total trading volumes (RHS)

0%

1%

2%

3%

4%

5%

6%

7%

Jan-0

8

Mar

-08

May-

08

Jul-

08

Sep-0

8

Nov-

08

Jan-0

9

Mar

-09

May-

09

Jul-

09

Sep-0

9

Nov-

09

Jan-1

0

Mar

-10

May-

10

Trading by all foreigners

Trading by all non-GCC foreigners

Source: Tadawul Source: Tadawul

A developing debt market To continue with its trend of introducing new products, Tadawul launched an

electronic market for trading in Sukuks & Bonds starting June 2009. Sukuks are

asset-based, Shariah-compliant financial instruments.

The new market provides many services, including listing of Sukuks & Bonds, order

submission, trades execution, clearing & settlement, and price information

dissemination. Trading is conducted through licensed brokerage firms and by using

the same investment portfolio for trading in stocks. The market enables investors to

diversify their investments and provides information about listed Sukuks and Bonds

on the Tadawul website and real time price information through licensed data

vendors.

A total of 55 Sukuk transactions had been logged from the time electronic trading

commenced on 13th June 2009 until the end of the year. The value of bonds traded

during the same period was SAR 27,423,510. Tradable Sukuks and Bonds include:

SABIC 2, Saudi Electricity 2, Saudi Electricity, SABIC 1, and SABIC 3.

Investors can trade in Sukuks/Bonds through licensed brokerage firms and by using

the same portfolio that is used for trading securities. Sukuk/Bond price (%)

includes 3 decimal places, e.g. 101.501%. The tick size is 0.001%. Price change

limit is open (no maximum or minimum limit applies). The trading days are from

Saturday to Wednesday from 11:30 am to 03:00 pm. Saudi Stock Exchange

holidays are applicable to the Sukuk market as well. The settlement cycle is T+2 (2

business days). The maximum commission brokers collect for trading Sukuks/Bonds

in the market is (0.001) of the executed trade value (sakk/bond percentage

price*nominal amount). The minimum commission is SAR500.

24


Industries & Companies

Banking & Financials 27

Petrochemicals 43

Cement 62

Retail 75

Agriculture and Food 87

Energy & Utilities 104

Telecom 109

Industrial Investment 118

Multi Investment 134

Building & Construction 144

Real Estate 160

Transportation 170

Media & Publishing 177

Hotels & Tourism 183

Insurance 188


Banking & Financials

Ticker Company Page No.

1010 Riyad Bank 31

1020 Bank Al Jazira 32

1030 Saudi Investment Bank 33

1040 Saudi Hollandi Bank 34

1050 Banque Saudi Fransi 35

1060 SABB 36

1080 Arab National Bank 37

1090 Samba Financial Group 38

1120 Al Rajhi Bank 39

1140 Bank AlBilad 40

1150 Alinma Bank 41


Banking & Financials

Sector expansion in 2010, despite global worries The Saudi Banking sector, the second largest banking sector in the GCC, remained

relatively stronger in the post crisis period compared to other regional and global

banking sectors which required much more significant government support. Lower

interest rates and a supportive monetary policy kept liquidity at healthy levels in

the country in 2009, but banks remained cautious in lending due to default fears

and focused on maintaining reasonable capital and liquidity positions. Weak macro

factors affected the creditworthiness of customers, leading to increasing defaults in

the economy. Consequently, NPL levels grew 159% YoY in 2009, forcing banks to

increase provisions. This negatively impacted listed banks’ net income, which

declined 10.1% YoY, despite 5.5% YoY growth in operating income.

At the end of 2009, the KSA banking sector comprised 12 domestic and 8 foreign

banks that together operated a network of 1,519 branches and 9,950 ATMs.

Exhibit 34: Key financials of Saudi banks (2009); network of branches and ATMs

SR mn, unless otherwise stated

Banks Branches

(Nos)ATMs(Nos) Assets

Loans &advances

Customerdeposits Net profits

National Commercial Bank 284 1,485 257,452 112,158 202,583 4,040

Samba Financial Group 67 496 185,518 84,147 147,129 4,560

Al Rajhi Bank 442 2,460 170,730 148,707^ 120,533 6,767

Riyad Bank 216 2,433 176,399 106,515 125,278 3,030

Saudi Investment Bank 43 293 50,148 29,785 38,247 522

Bank AlJazira 48 296 29,977 15,504 22,142 28

Bank Albilad 67 450 17,411 11,014 13,721 (248)

Est

ab

lish

ed

as

Sau

di

Ban

ks

Alinma Bank 13 82 17,306 1,126 1,501 215

SABB 72 474 126,838 76,382 89,187 2,032

Banque Saudi Fransi 77 330 120,572 78,315 91,237 2,471

Arab National Bank 139 899 110,297 66,811 82,680 2,370

Do

mest

ic B

an

ks

JV w

ith

Fo

reig

nP

art

ners

Saudi Hollandi Bank 42 221 59,110 36,023 44,827 86

Emirate Bank 1 12

Bank Muscat 1 4

National Bank of Kuwait 1 2

National Bank of Bahrain 1 1

GC

C B

an

ks

Gulf International Bank 2 12*

Deutsche Bank 1

BNP Paribas 1

Fo

reig

n B

an

ks

No

n-

GC

C

J.P. Morgan Chase N.A. 1

Total 1,519 9,950 1,370,258 766,486 979,066 25,873

Source: SAMA, Tadawul, Company data, NCBC Research Note: Financial statements of the banks are consolidated and include financial statements of its subsidiaries, including those located outside KSA. * Four international banks namely, Gulf International Bank, Deutsche Bank BNP Paribas, and J.P. Morgan Chase operate 12 ATMs across KSA. ^ Al Rajhi’s loans include net loans as well as investments.

In 2009, KSA’s total banking assets increased 5.2% YoY to SR1,370.2bn. The top

four banks’—National Commercial Bank, Samba Financial Group, Riyad Bank, and Al

Rajhi Bank—combined market share increased to 57.7% in 2009 from 55.7% in

2008. Gloomy macroeconomic conditions, together with the conservative lending

approach of the 12 commercial banks, led to a 0.7% YoY decline in their total credit

off-take to SR766.5bn, while the customer deposit base increased 6.2% YoY to

SR979.1bn in 2009. Going forward, the ongoing economic recovery is likely to

Conservative lending policy

depressed loan growth,

while liquidity remained

healthy

27


BANKING & FINANCIALS

accelerate the demand for corporate loans. Furthermore, the expected introduction

of a mortgage law is likely to provide impetus to personal lending. We expect banks

to increase lending as default fears decrease and the economy recovers.

The Saudi banking sector is the largest in the GCC in terms of market

capitalization. In terms of total operating income of listed banks, the Saudi

banking sector is second the largest after UAE’s banking sector. Strong

fundamentals and better asset qualities translate into higher ROE. However, Saudi

banks trade at higher P/E of 16.3x compared to UAE banks which trade at 8.7x.

Exhibit 35: Total operating income of GCC banks,

2007–09USD mn

Exhibit 36: Comparison of RoE and P/E of GCC banks,

2009(%)

0

2,500

5,000

7,500

10,000

12,500

15,000

2007 2008 2009

KSA Kuwait Qatar Oman UAE Bahrain

0%

5%

10%

15%

20%

25%

0 20 40 60

P/E (x)

RO

E (

%)

KSA Kuwait Qatar UAE Bahrain Oman

Source: Reuters, NCBC Research; The companies list is not exhaustive Source: Reuters, NCBC Research; Size of the bubble represents market cap. as on 31 March 2010

As on 31 December 2009, Al Rajhi had the largest market capitalization among the

11 listed banks constituting the index. Though NCB is one of KSA’s leading banks, it

is not mentioned in the table as it is a privately held entity.

The following exhibits depict the performance of Saudi banks in terms of net

interest income and net interest margin during 2007 – 2009. In 2009, banks

maintained a conservative lending stance, but focused on maintaining net interest

Net interest margins of

Saudi banks declined

marginally in the range of

0 to 30bps over 2008

Exhibit 37: Sector details

Units as stated

Country% weight in Index

as on Dec 2009NIM (%),

2009Avg. RoE (%),

2009

Alinma Bank (Alinma) 1.59 3.9 24.3

Al Rajhi Bank (Al Rajhi) 8.94 5.8 21.4

Samba Financial Group (SAMBA) 3.80 2.9 16.5

The Saudi British Bank (SABB) 2.72 2.7 11.2

Riyad Bank (RIBL) 3.38 2.7 16.6

Banque Saudi Fransi (Saudi Fransi) 2.46 2.6 17.5

Arab National Bank (Arab National) 2.31 3.1 7.4

The Saudi Investment Bank (SIBC) 0.68 2.1 1.5

Saudi Hollandi Bank (Saudi Hollandi) 0.83 2.7 0.6

Bank AlJazira (BJAZ) 0.48 2.4 NM

Bank AlBilad (AlBilad) 0.52 3.4 1.4

Bloomberg, Tadawul: Company data * NIM stands for Net Interest Margins

28



margins by placing excess funds in low risk investments. The banks’ margins

declined in the range of 0 to 30bps versus 2008. Consequently, total net interest

income of listed banks grew 6.8% YoY in 2009 compared to 12.1% YoY in 2008,

which was supported by an expanded loan portfolio. RIBL and Al Rajhi’s net interest

incomes increased 10.1% YoY to SR4.3bn and 8.7% YoY to SR9.2bn, respectively,

while SIBC and Albilad reported declines of 1.2% YoY and 5.2% YoY in 2009.

Exhibit 38: Net Interest Income of Banks, 2007–09

SRmn

Exhibit 39: Net Interest Margin of Banks, 2007–09

(%)

0

7,000

14,000

21,000

28,000

35,000

2007 2008 2009Al Rajhi SAMBA SABB

RIBL Saudi Fransi Arab National

SIBC Saudi Hollandi BJAZ

Albilad Alinma

0.0

2.0

4.0

6.0

8.0

2007 2008 2009

Al Rajhi SAMBA SABB

RIBL Saudi Fransi Arab National

SIBC Saudi Hollandi BJAZ

Albilad Alinma

Source: Tadawul, NCBC Research Source: Tadawul, NCBC Research

Most banks saw their ROEs decline in 2009; SHB’s ROE declined sharply from

23.9% in 2008 to 1.5% in 2009. On a P/B multiple, Al Rajhi continued to command

the highest P/B, backed by the bank’s ability to maintain profitability in ROE terms.

Exhibit 40: Comparison of P/B and RoE, 2008

(%)


(%)

Al Rajhi

SAMBASABB

RIBL Saudi Fransi

Arab National

Saudi Hollandi

Albilad

SIBC

BJAZ0

5

10

15

20

25

30

35

0.5 1.0 1.5 2.0 2.5 3.0 3.5P/B (x)

RO

E (

%) Al Rajhi

SAMBA

SABBRIBL

Saudi Fransi

Arab National

Saudi Hollandi

Alinma

SIBC BJAZ

0

5

10

15

20

25

30

0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5P/B (x)

RO

E (

%)

Source: Bloomberg, Tadawul, NCBC Research; Size of the bubble represents market cap. as on 31 Dec 2008

Source: Source: Bloomberg, Tadawul, NCBC Research; Size of the bubble represents market cap. as on 31 Dec 2009; Bank Albilad is been excluded due to losses in 2009

Alinma Bank was the most active bank during 2009 in terms of average daily value

traded, while SHB’s stock had the lowest average daily traded value . During Jan

2009 – March 2010, Al Rajhi’s share priced increased 63.8%, while Albilad was the

only bank that saw its share price fall (24.1%).

29



Exhibit 42: Avg. daily turnover of stocks

Jan 2009–Mar2010 SR‘000s

Exhibit 43: Share price movement of Saudi banks,

Jan 2009 – Mar 2010 (SR)

22,2

80

6,0

86

14,9

17

5,2

14

6,6

75

4,1

73

2,6

68

14,1

53

12,5

49

119,2

02

381,3

29

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Al Rajh

i

SAM

BA

SABB

RIB

L

Sau

di Fr

ansi

Ara

b N

ation

al

SIB

C

Saudi H

olla

ndi

BJA

Z

Alb

ilad

Alin

ma

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

0102030405060708090

100

Jan-0

9

Feb-0

9

Mar

-09

Apr-

09

May-

09

Jun-0

9

Jul-

09

Aug-0

9

Sep-0

9

Oct

-09

Nov

-09

Dec-

09

Jan-1

0

Feb-1

0

Mar

-10

Al Rajhi Samba SABBRIBL Saudi Fransi Arab NationalSIBC Saudi Hollandi BJAZAlbilad Alinma

Source: Bloomberg, NCBC Research Source: Bloomberg, NCBC Research

Interest rates in KSA remained stable in 2H-09, after declining from its peak of

4.67% (on 12 October 2008). This was mainly due to declining inflationary pressure

which enabled the Saudi government to cut key benchmark rates. The government

reduced its repo rate from 2.5% to 2%, and reverse repo rate from 1.5% to 0.25%

during the year. Consequently, SAIBOR rates declined from 2.47% at the beginning

of the year to 0.76% at the end of the year. These measures helped the financial

sector to stabilize while boosting liquidity.

Exhibit 44: Movement in Interbank Interest Rates Units as stated

Exhibit 45: Movement in Repo & Reverse Repo rates Units in %

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Jan-08 Jul-08 Jan-09 Jul-09 Jan-10-200

0

200

400

600

800

1,000

Spreads bps (RHS) SAIBOR (%, LHS)LIBOR (%, LHS)

0

2

4

6

8

10

12

Jan-08 Jul-08 Jan-09 Jul-09 Jan-10

Repo R repo Inflation

Source: Bloomberg, NCBC Research Source: Bloomberg, NCBC Research

Heavy provisioning and stagnant loan books affected Saudi banks’ 2009

performance. However, it is expected that the Saudi Government’s focus on

economic growth, expansionary budget policy and increased spending on the

infrastructure sector will help the banking sector to grow. In addition, expected

introduction of the mortgage law is likely to provide an impetus to personal lending.

It is also expected that the provision levels will begin declining YoY from the 2H

2010, providing room for net income growth. Hence, we have a positive outlook for

Saudi banks in 2010 and beyond.

Cut in benchmark rates

reduced interbank rates

from 2.47% at the

beginning of the year to

0.76% at the end of the

year

30

JUNE 2010 RIYAD BANK

Not Covered

Current Price (SR) 28.0

Pricing / Valuation as on 13 June 2010

Stock details

52-week range H/L (SR) 31.2/22.5

Market cap ($mn) 11,197.2

Shares outstanding (mn) 1,500.0

Price perf. (%) 1M 3M 12M

Absolute (3) (1) 19

Market (6) (5) 3

Sector (3) (2) 2

Avg daily turn.(mn) SR US$

3M 17.4 4.6

12M 13.9 3.7

Raw Beta 6m 3yr

0.91 0.91

Reuters code 1010.SE

Bloomberg code RIBL AB

Website www.riyadbank.com

Weighting & free float (%)

TASI (free float weight) 4.11

Free float 48.71

Valuation multiples

08 09 TTM

P/E (x) 15.9 13.9 12.8

P/B (x) 1.6 1.5 1.5

P/Sales (x) 8.0 7.0 7.0

Div yield* (%) 5.2 4.6 N/A


Share price performance

5,0005,500

6,0006,500

7,000

Jun-09 Oct-09 Feb-10 Jun-1020

25

30

35

TASI RIBL (RHS)

Source: Bloomberg

Top 5 shareholders (%)

Public Investment Fund 21.7

General Organization for Social Insurance (GOSI)

21.6

Mohd Ibrahim Mohammed Al Essa

9.8

AlNahla Group [AlNahla Trading and Contracting]

9.0

SAMA 6.5

Source: Tadawul, NCBC Research

BANKS AND FINANCIAL SERVICES

Riyad Bank Also known as

RIBL

Riyad Bank (RIBL), established in 1957, is Saudi Arabia’s third largest

listed bank in terms of asset size, with a market share of about 13.2%.

The bank has 225 branches and 2,511 ATMs in KSA; a branch in London;

an agency in Houston; and a representative office in Singapore.

� Business brief: RIBL performs core-banking activities through four

divisions: Personal banking, Corporate banking, Treasury services and

International banking. The bank offers a range of conventional and Islamic

banking products to its customers. RIBL provides asset management, wealth

management, corporate finance, and brokerage services through its wholly

owned investment banking subsidiary Riyad Capital.

� Financials: RIBL’s financial performance in 1Q10 remained strong as

compared to other Saudi banks. During the quarter, the bank’s loan portfolio

and total deposit base grew 6.1% and 3.4% YoY, respectively. However, due

to decreased net interest margins, the bank’s net interest income declined

9% YoY to SR1,012mn. Nonetheless, RIBL’s investment portfolio, which

recorded losses in 1Q09, turned positive in 1Q10, enabling the bank to

marginally grow its total operating income to SR1,469mn. Furthermore, the

bank’s loan-loss provisions declined to SR193.9mn compared to SR467.7mn

in 1Q09. Consequently, RIBL’s net income increased 55.2% YoY to SR684mn

in 1Q10.

� Recent developments: In March 2010, RIBL announced the distribution of a

cash dividend of SR0.7 per share for the six-month period ended 31

December 2009. In September 2009, Fitch affirmed long-term IDR at ‘A+’

with a stable outlook and short-term IDR of ‘F1’. The $500mn senior

unsecured notes were affirmed at ‘A+’ and Individual rating of 'B/C'.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Sp. Com Income SRmn 3,266 3,947 4,347 1,012 (9.0) 15.4

Operating Income SRmn 5,181 5,248 5,960 1,469 0.7 7.3

Net Income SRmn 3,011 2,639 3,030 684 55.2 0.3

Assets SRmn 121,351 159,653 176,399 174,288 4.2 20.6

Equity SRmn 13,187 25,690 28,235 27,806 9.7 46.3

Advances SRmn 67,340 96,430 106,515 106,277 6.1 25.8

Total Deposits SRmn 102,130 126,269 141,441 139,916 3.4 17.7

Net Interest Margin % 3.2 2.9 2.7 2.4 - -

Cost/Income % 35 40 37 40 - -

ROE % 23.9 13.6 11.2 9.8 - -

ROA % 2.8 1.9 1.8 1.6 - -

Div Payout* % 47.2 71.6 64.4 N/A - -

EPS SR 2.9 2.0 2.0 0.5 58.6 N/A

BVPS SR 12.8 17.1 18.8 18.5 9.7 N/A

Source: Tadawul, Zawya, Company, NCBC Research * Gross dividend is used in div yield calculations for Saudi banking sector

31

JUNE 2010 BANK ALJAZIRA

Not Covered


Pricing / Valuation as on June 13, 2010

Stock details



Shares outstanding (mn) 300.0


Absolute (2) (7) (26)

Market (6) (5) 3

Sector (3) (2) 2


3M 15.4 4.1

12M 14.5 3.9

Raw Beta 6m 3yr

0.44 1.04


Bloomberg code BJAZ AB

Website www.baj.com.sa



Free float 67.80

Valuation multiples

08 09 TTM

P/E (x) 22.9 N/M N/A

P/B (x) 1.1 1.1 1.1

P/Sales (x) 4.5 4.4 4.3

Div yield* (%) 2.9 N/A N/A



5,0005,500

6,0006,500

7,000

Jun-09 Oct-09 Feb-10 Jun-10151719212325

TASI BJAZ (RHS)

Source: Bloomberg


Rashed Al Abdul Rahman Al Rashid and Sons Company

22.2

Al Okhoah Union for development

6.5

National Pakistani Bank 5.8

Saleh Abdullah Mohammed Kamal

5.0



Bank Al Jazira Also known as

BJAZ, BAJ

Bank Aljazira (BJAZ) specializes in Islamic banking and investment

products in Saudi Arabia. The bank was established in 1975, following

the takeover of the Saudi Arabian branches of National Bank of Pakistan.

The bank is headquartered in Jeddah and operates a network of 48

branches and 300 ATMs across KSA.

� Business brief: BJAZ offers Shariah-compliant retail banking, corporate

banking and treasury services. The bank conducts investment banking

business through its subsidiary AlJazira Capital (AJC). The insurance

business is managed by ATATC, which is the first financial institution to

launch an authorized Islamic life insurance program in Saudi Arabia.

� Financials: The bank’s net special commission income declined 2.4% YoY in

1Q10 despite a 6.7% YoY increase in loans, mainly due to contraction in net

interest margins. The bank’s fee income also fell 29.5% YoY; this resulted in

decreased share in the total operating income from 34.7% in 1Q09 to 22.2%

in 1Q10. However, due to robust growth in income from investments, its

total operating income increased 10.3% YoY to SR305mn in 1Q10. In 1Q10,

the bank posted provisions for credit losses amounting SR110mn, which led

to a decline in net income by 87.7% YoY to SR13mn.

� Recent developments: In April 2010, the bank announced a joint venture

to establish Al Jazira Cooperative Takaful, wherein the bank would own a

30% stake, other investors would own 40%, and the remaining 30% would

be offered to the public. In March 2010, Fitch affirmed the bank’s long-term

IDR at ‘A-‘ with a stable outlook, short-term IDR as ‘F2’ and the Individual

rating as ‘C/D’.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Sp. Com Income SRmn 595 631 668 168 (2.4) 5.9

Operating Income SRmn 1,447 1,137 1,171 305 10.3 (10.0)

Net Income SRmn 805 222 28 13 (87.7) (81.5)

Assets SRmn 21,564 27,520 29,977 27,791 2.7 17.9

Equity SRmn 4,698 4,637 4,486 4,499 (7.0) (2.3)

Advances SRmn 9,879 15,133 15,504 16,339 6.7 25.3



Cost/Income % 46 70 62 60 - -

ROE % 17.8 4.7 0.6 1.1 - -

ROA % 4.3 0.9 0.1 0.2 - -

Div Payout* % 16.8 67.6 N/A N/A - -

EPS SR 2.7 0.7 0.1 0.0 (88.2) N/A

BVPS SR 15.6 15.5 15.0 15.0 (4.9) N/A


32

JUNE 2010 SAUDI INVESTMENT BANK

Not Covered



Stock details





Absolute 3 7 9

Market (6) (5) 3

Sector (3) (2) 2


3M 4.1 1.1

12M 3.6 1.0

Raw Beta 6m 3yr

0.48 0.94


Bloomberg code SIBC AB

Website www.saib.com.sa



Free float 53.67

Valuation multiples

08 09 TTM

P/E (x) 17.3 17.0 29.4

P/B (x) 1.3 1.2 1.2

P/Sales (x) 4.6 5.8 5.4

Div yield (%) N/A N/A N/A



5,0005,500

6,0006,500

7,000

Jun-09 Oct-09 Feb-10 Jun-101517

1921

23

TASI SIBC (RHS)

Source: Bloomberg



21.5

Public Pension Authority (PPA) 17.3

Saudi Oger Ltd. 8.5

JPMorgan Chase Co. 7.4

National Commercial Bank (NCB)

7.3



Saudi Investment BankAlso

knownas

SAIB

The Saudi Investment Bank (SAIB), established in 1976 in Riyadh,

operates a network of 44 branches and 300 ATMs in KSA. The bank

provides banking and other related services through two subsidiaries

and four joint venture associate companies.

� Business brief: SAIB provides personal, corporate, investment and Islamic

banking along with treasury services in KSA. The bank offers varied financial

services through its two subsidiaries, Alistithmar Capital which offers

brokerage and investment banking services, and BNP Paribas Asset

Management Co; and four joint venture associate companies: AMEX (Saudi

Arabia) Ltd, Saudi Orix Leasing Company, Medgulf KSA, and Amlak

International.

� Financials: In 1Q10, the bank’s net interest income grew by 29.5% YoY

mainly due to liability re-pricing, which resulted in a 67% YoY decline in

interest expense relative to the 26% YoY drop in interest income. The net

interest margin improved 70 basis points over 1Q09. This coupled with

improved fee and investment income led to 42.1% YoY growth in total

operating income. However, a significant increase in provisions from SR5mn

in 1Q09 to SR293mn in 1Q10 resulted in drastic fall in net income from

SR241mn in 1Q09 to SR21mn in 1Q10.

� Recent developments: In May 2010, Standard & Poor's upgraded the

ratings of SAIB from negative to stable and affirmed its long-term and short-

term counterparty credit ratings at ‘A-/A-2’. In March 2010, the Board

appointed Dr.Abdulaziz Al Abdullah Al Ohali as Chairman of the BOD. The

bank is one of the 10 major shareholders involved in establishing the world’s

largest Islamic bank in Bahrain in the next 6–12 months as announced in its

February 2010 news release.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Sp. Com Income SRmn 1,056 1,026 1,014 312 29.5 (2.0)

Operating Income SRmn 1,635 1,938 1,517 451 42.1 (3.7)

Net Income SRmn 822 513 522 21 (91.3) (20.3)

Assets SRmn 46,542 53,596 50,148 49,492 (1.6) 3.8

Equity SRmn 6,770 6,609 7,428 7,658 10.8 4.8

Advances SRmn 23,129 29,556 29,785 30,654 1.8 13.5

Total Deposits SRmn 37,280 45,911 41,459 40,689 (4.2) 5.5


Cost/Income % 30 21 36 30 - -

ROE % 12.9 7.7 7.4 1.1 - -

ROA % 1.9 1.0 1.0 0.2 - -

Div Payout % N/A N/A N/A N/A - -

EPS SR 1.8 1.1 1.2 0.1 (90.6) N/A

BVPS SR 15.0 14.6 16.4 17.0 10.8 N/A

Source: Tadawul, Zawya, Company, NCBC Research

33

JUNE 2010 SAUDI HOLLANDI BANK

Not Covered



Stock details





Absolute 3 3 (13)

Market (6) (5) 3

Sector (3) (2) 2


3M 3.0 0.8

12M 2.6 0.7

Raw Beta 6m 3yr

0.44 0.99


Bloomberg code AAAL AB

Website www.shb.com.sa



Free float 29.3

Valuation multiples

08 09 TTM

P/E (x) 9.2 130.9 N/M

P/B (x) 2.0 2.0 1.9

P/Sales (x) 5.3 5.2 5.5

Div yield* (%) 2.1 N/A N/A



5,000

5,500

6,000

6,500

7,000


30

35

40

45

TASI Saudi Hollandi (RHS)

Source: Bloomberg


RBS, Fortis Group and Banco Santander SA (ABN AMRO)

39.9

Al Olayan Saudi Investment Co.

20.8


9.6



Saudi Hollandi Bank Also known as

SHB

Saudi Hollandi Bank (SHB), headquartered in Riyadh, was established in

1977 by the conversion of ABN into a joint venture bank. Currently, a

consortium led by RBS holds a 40% stake in SHB. The bank offers both

conventional and Islamic products through a network of 44 branches

and 225 ATMs across KSA.

� Business brief: SHB’s core banking activities include retail banking,

corporate banking and treasury services. The bank offers Van Gogh preferred

banking services, such as domestic and international share trading services

and mutual fund portfolios, to high net-worth individuals (HNIs) under its

wealth management segment. In September 2007, SHB established a wholly

owned subsidiary, Saudi Hollandi Capital Company, to offer investment

banking solutions.

� Financials: The bank’s total operating income declined 16.9% YoY to

SR467mn in 1Q10. This was mainly ascribed to lower net special commission

income, which fell 26.7% YoY to SR309mn. However, on a YoY basis, the

bank’s fee income and exchange income rose 13.7% and 21.9%,

respectively. Alinma increased its provisions for credit losses by 120% YoY to

SR42.8mn, but reduced provisions for impaired investments by 95% to

SR2.7mn in 1Q10. Consequently, SHB’s net income fell 19.1% YoY to

SR230mn during the same period.

� Recent developments: In March 2010, Fitch affirmed its ratings for the

bank’s long-term IDR as ‘A-’, with a stable outlook; short-term IDR as ‘F2’

and individual rating as ‘C’. In January 2010, SHB appointed a representative

of ABN AMRO Bank, Mr. Saymon Pini, to the Board to replace Mr. Mino Di

Yajer.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Sp. Com Income SRmn 1,200 1,445 1,570 309 (26.7) 14.4

Operating Income SRmn 1,776 2,111 2,147 467 (16.9) 9.9

Net Income SRmn 439 1,224 86 230 (19.1) (55.7)

Assets SRmn 50,411 61,436 59,110 59,740 (17.6) 8.3

Equity SRmn 4,547 5,715 5,633 5,865 1.2 11.3

Advances SRmn 27,555 38,017 36,023 36,378 (7.5) 14.3



Cost/Income % 47 38 38 41 - -

ROE % 10.0 23.9 1.5 16.0 - -

ROA % 0.9 2.2 0.1 1.5 - -

Div Payout* % 48.5 19.1 N/A N/A - -

EPS SR 1.3 3.7 0.3 0.7 (18.6) N/A

BVPS SR 13.7 17.3 17.0 17.7 1.2 N/A


34

JUNE 2010 BANQUE SAUDI FRANSI

Not Covered



Stock details





Absolute (4) (3) 4

Market (6) (5) 3

Sector (3) (2) 2


3M 5.4 1.4

12M 4.6 1.2

Raw Beta 6m 3yr

1.13 1.08


Bloomberg code BSFR AB

Website www.alfransi.com.sa



Free float 54.66

Valuation multiples

08 09 TTM

P/E (x) 11.7 13.2 13.4

P/B (x) 2.3 2.1 2.1

P/Sales (x) 7.4 7.6 7.6

Div yield* (%) 2.4 3.0 N/A



5,0005,5006,0006,5007,000


40

45

50

TASI Saudi Fransi (RHS)

Source: Bloomberg


Calyon Bank 31.1


12.8

Rashid Al Abdul Rahman Al Rashid & Sons

9.8

Mohammed Ibrahim Mohammed Al Essa

5.0



Banque Saudi Fransi Also known as

BSF

Banque Saudi Fransi (BSF), an affiliate of Calyon of France, commenced

operations in December 1977 by taking over the branches of Banque

Indosuez. The bank offers conventional and Islamic banking products

through a network of 78 branches and 338 ATMs in Saudi Arabia.

� Business brief: The bank’s core banking activities include retail as well as

corporate banking, and treasury services. BSF’s investment banking

activities are conducted by CAAM Saudi Fransi (60.0% stake), Fransi

Tadawul (99.0% stake), and Calyon Saudi Fransi (45.0% stake). The bank

also has an insurance JV with Allianz Group under the name Allianz Saudi

Fransi Co. (32.5% stake). Sofinco Saudi Fransi manages BSF’s consumer

finance activities. Furthermore, the bank has 27% stake in Syria-based

Banque BEMO Saudi Fransi.

� Financials: BSF reported a 2.1% decline in the loan portfolio and 4.1% drop

in total deposits, on a YoY basis, in 1Q10. However, its investments grew

22.6% YoY. The bank’s net interest income fell 5.8% YoY to SR723mn due to

a 10 basis point decline in net interest margins from that in 1Q09 and

reduced loan books. Furthermore, due to strong fee and trading income, its

total operating income decreased just 0.6% in 1Q10. However, a rise in

provisions from SR46mn in 1Q09 to SR54mn in 1Q10 lowered the bank’s net

income 3.7% YoY to SR714mn.

� Recent developments: In June 2010, BSF announced that it would finance

a SR1.8bn project of Saudi Tabreed Cooling Co. and Saudi Aramco to build a

central district cooling unit. In March 2010, Fitch affirmed the bank’s long-

term IDR at ‘A’, with a stable outlook, short-term IDR at ‘F1’ and Individual

rating at B/C. In December 2009, BSF appointed Mr. Ibrahim Abdulaziz Al

Touq as Chairman of the Board, effective 1 January 2010.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


Operating Income SRmn 3,694 4,392 4,295 1,072 (0.6) 7.8

Net Income SRmn 2,711 2,806 2,471 714 (3.7) (4.5)

Assets SRmn 99,808 125,865 120,572 121,246 (2.1) 9.9

Equity SRmn 11,241 14,069 15,752 15,787 5.4 18.4

Advances SRmn 59,850 80,866 78,315 79,578 (2.1) 14.4



Cost/Income % 26 25 27 28 - -

ROE % 26.3 22.2 16.6 18.1 - -

ROA % 3.0 2.5 2.0 2.4 - -

Div Payout* % 38.8 27.7 40.0 N/A - -

EPS SR 3.7 3.9 3.4 1.0 (2.9) N/A

BVPS SR 15.5 19.5 21.8 21.8 (18.0) N/A


35

JUNE 2010 SABB

Not Covered



Stock details





Absolute (7) (11) (15)

Market (6) (5) 3

Sector (3) (2) 2


3M 3.9 1.0

12M 5.3 1.4

Raw Beta 6m 3yr

0.84 1.00


Bloomberg code SABB AB

Website www.sabb.com



Free float 32.87

Valuation multiples

08 09 TTM

P/E (x) 11.1 16.0 17.2

P/B (x) 2.8 2.5 2.4

P/Sales (x) 6.6 6.3 6.4

Div yield* (%) 2.0 2.0 NA



5,0005,5006,0006,5007,000


45

50

55

TASI SABB (RHS)

Source: Bloomberg


HSBC Holdings Co. 40.0

Al Olayan Saudi Investment Co.

16.9


9.5



SABBAlso known as

The Saudi BritishBank

SABB (formerly The Saudi British Bank) is an affiliate of HSBC Group.

The bank commenced operations in 1978, offering conventional and

Islamic products under the brand name SABB AMANAH. SABB operates

75 branches, 479 ATMs and 2 separate subsidiaries for investment

banking; it also offers insurance services.

� Business brief: SABB offers personal, corporate, private and Islamic

banking as well as treasury and trade services. The bank also provides

investment banking solutions through HSBC Saudi Arabia Ltd. (40% stake),

which specializes in asset management, corporate finance services, and debt

finance and advisory services. SABB provides brokerage and securities

services through SABB Securities (100% stake) and Shariah-compliant

insurance products through SABB Takaful (32.5% stake).

� Financials: SABB reported a 4.6% YoY decline in loans and an 8.6% YoY

drop in deposits in 1Q10. Due to this and a decline in net interest margins,

the bank’s net special commission income decreased by 12.6% YoY in 1Q10

to SR770mn. Consequently, the total operating income fell 6.3% YoY to

SR1,205mn. Furthermore, a 52% YoY increase in provision for credit losses

to SR176.5mn resulted in an 18.3% YoY decline in net income for the

quarter to SR621mn.

� Recent developments: In May 2010, SABB signed a one-year MoU with

Adeem Investment and Wealth Management Company with an aim to create

and manage a number of multi-purpose real estate funds. In the same

month, the bank also announced that Mr. David Dew had assumed duties as

SABB’s new MD.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)



Net Income SRmn 2,607 2,920 2,032 621 (18.3) (11.7)

Assets SRmn 98,213 131,661 126,838 120,531 (9.1) 13.6

Equity SRmn 10,425 11,634 13,045 13,732 10.0 11.9

Advances SRmn 62,001 80,237 76,382 75,699 (4.6) 11.0



Cost/Income % 33 33 33 34 - -

ROE % 26.3 26.5 16.5 18.5 - -

ROA % 3.0 2.5 1.6 2.0 - -

Div Payout* % 57.5 22.6 32.5 - - -

EPS SR 3.5 3.9 2.7 0.8 (17.8) N/A

BVPS SR 13.9 15.5 17.4 18.3 10.0 N/A


36

JUNE 2010 ARAB NATIONAL BANK

Not Covered

Curent Price (SR) 41.7


Stock details





Absolute (7) (5) (7)

Market (6) (5) 3

Sector (3) (2) 2


3M 5.3 1.4

12M 5.3 1.4

Raw Beta 6m 3yr

0.98 1.22


Bloomberg code ARNB AB

Website www.anb.com.sa



Free float 49.10

Valuation multiples

08 09 TTM

P/E (x) 10.9 11.4 11.7

P/B (x) 2.1 1.9 1.9

P/Sales (x) 6.6 6.0 6.1




5,0005,5006,0006,5007,000


40

45

50

TASI Arab National (RHS)

Source: Bloomberg


Arab Bank 40.0


10.8

Rashid Al Abdul Rahman Al Rashid & Sons

9.9

Al Jaber Commercial Co. 5.6



Arab National Bank Also known as

ANB

Arab National Bank (ANB) commenced operations in KSA in 1980 after

the takeover of Arab Bank PLC. The bank has a network of 140 branches

and 910 ATMs, and operates one branch in London. ANB holds a 100%

stake in Arab National Investment Co. and a 20% stake in Saudi

Travellers Cheque Co.

� Business brief: ANB offers personal banking, corporate banking, treasury

services and syndications and corporate finance services to its customers.

Besides core banking activities, ANB also offers investment banking, housing

finance and heavy equipment leasing services through its subsidiaries. ANB

Invest handles investment banking operations, while Saudi Home Loans

Company deals with housing finance. ANB has also formed joint ventures

with Ejara and a Dubai-based company for leasing equipment.

� Financials: ANB recorded a 10% YoY decline in its loan book in 1Q10 and a

5.2% YoY decline in total deposits. The bank's net interest income declined

12% YoY mainly due to a YoY decline in the loan book. The net interest

margin declined 23bps in 1Q10 compared to the previous year. Non-interest

income grew a significant 32% YoY mainly due to higher investment income.

Consequently, total operating income declined a marginal 2.8%. ANB’s

provisions for loan losses increased 60% YoY to SR97mn, dragging the net

income down 8.8% to SR634mn for the 1Q10.

� Recent developments: In March 2010, ANB announced it would distribute

a cash dividend of SR1 per share for the year ended 31 December 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)



Net Income SRmn 2,461 2,486 2,370 634 (8.8) (1.9)

Assets SRmn 94,468 121,307 110,297 110,057 (2.1) 8.1

Equity SRmn 10,525 12,671 14,369 14,484 15.8 16.8

Advances SRmn 61,122 74,662 66,811 65,444 (10.1) 4.6



Cost/Income % 36 38 36 35 - -

ROE % 26.6 21.4 17.5 17.6 - -

ROA % 2.9 2.3 2.0 2.3 - -

Div Payout* % - 29.5 30.0 - - -

EPS SR 3.8 3.8 3.7 1.0 (9.3) NA

BVPS SR 16.2 19.5 22.1 22.3 15.8 NA


37

JUNE 2010 SAMBA FINANCIAL

Not Covered



Stock details





Absolute 1 (1) 20

Market (6) (5) 3

Sector (3) (2) 2


3M 17.4 4.6

12M 15.8 4.2

Raw Beta 6m 3yr

1.64 0.96


Bloomberg code SAMBA AB

Website www.samba.com



Free float 50.59

Valuation multiples

08 09 TTM

P/E (x) 11.9 11.6 11.8

P/B (x) 2.7 2.4 2.3

P/Sales (x) 7.6 7.5 7.6




5,0005,5006,0006,5007,000


45

55

65

TASI SAM BA (RHS)

Source: Bloomberg





11.4



Samba Financial GroupAlso

knownas

SAMBA

Samba Financial Group (Samba), the second largest bank in Saudi Arabia

in terms of total assets, was incorporated in 1980 through the takeover

of Citigroup’s branches in the Kingdom. SAMBA operates 67 branches

and 497 ATMs. The bank also operates in the UK, Pakistan and the UAE

through its subsidiaries.

� Business brief: Samba’s core banking activities include retail as well as

corporate banking and treasury services. The bank also offers trade, Islamic

banking and corporate investment services. Samba Capital & Investment

Management Co, the investment banking division, handles asset

management and brokerage services.

� Financials: In 1Q10, Samba’s loan portfolio declined 5.4% YoY, whereas its

total deposits grew 10.1% YoY. Consequently, its investments increased

33.5% in 1Q10 over that in 1Q09. A decline in high yield loans and rise in

cost bearing deposits reduced net interest margins by 58 basis points to

2.6%; as a result, net interest income fell 10.5% YoY. However, Samba’s

provisions for credit losses decreased from SR203mn in 1Q09 to SR160mn in

1Q10, enabling the bank to post a lower decline in net income (4.8% YoY)

relative to that in net special commission income. The bank reported net

income of SR1,210.6mn in 1Q10.

� Recent developments: In April 2010, Samba opened a branch in Doha,

Qatar. In the same month, the bank also announced entering into a

cooperation agreement with Sejel to introduce an automated payments

solution for the Haj Umrah sector. In January 2010, Samba announced that

Mr. Issa Mohammed Al Issa had been appointed Chairman of its Board of

Directors.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Sp. Com Income SRmn 4,944 5,061 5,070 1,172 (10.5) 1.3

Operating Income SRmn 7,196 7,012 7,110 1,841 (7.4) (0.6)

Net Income SRmn 4,828 4,454 4,560 1,210.6 (4.8) (2.8)

Assets SRmn 154,414 178,891 185,518 185,885 10.4 9.6

Equity SRmn 17,845 19,846 22,310 23,167 18.8 11.8

Advances SRmn 80,553 98,147 84,147 85,197 (5.4) 2.2



Cost/Income % 27 30 27 26 - -

ROE % 29.0 23.4 21.4 21.2 - -

ROA % 3.5 2.7 2.5 2.6 - -

Div Payout* % 36.1 36.1 35.2 - - -

EPS SR 5.4 5.0 5.1 1.4 (4.3) N/A

BVPS SR 19.8 22.1 24.8 25.7 20.0 N/A


38

JUNE 2010 AL RAJHI BANK

Not Covered



Stock details





Absolute (3) 2 18

Market (6) (5) 3

Sector (3) (2) 2


3M 127.5 34.0

12M 116.4 31.0

Raw Beta 6m 3yr

1.04 1.19


Bloomberg code RJHI AB

Website www.alrajhibank.com.sa



Free float 49.43

Valuation multiples

08 09 TTM

P/E (x) 18.2 17.5 17.6

P/B (x) 4.4 4.1 4.3

P/Sales (x) 11.2 10.3 10.2

Div yield** (%) 4.3 3.5 NA



5,0005,5006,0006,5007,000

Jun-09 Oct-09 Feb-10 Jun-105565758595

TASI A l Rajhi (RHS)

Source: Bloomberg


Sulaiman Abdul Aziz Saleh Al Rajhi

24.9

Saleh Abdul Aziz Saleh Al Rajhi

14.2


9.9

Abdullah Abdul Aziz Saleh Al Rajhi

5.9



Al Rajhi Bank Also known as

Al Rajhi

Al Rajhi Bank (Al Rajhi), the fourth largest bank in Saudi Arabia in terms

of total assets, was established in 1976. A full-fledged Islamic bank, Al

Rajhi offers Shariah-compliant banking and investment products to its

customers through a network of 443 branches and 2,514 ATMs. The

bank operates 19 branches in Malaysia and has wholly owned

subsidiaries in the UK, British Virgin Islands and Jersey.

� Business brief: Al Rajhi offers Shariah-compliant retail as well as corporate

banking and treasury services to its customers. The bank’s investment

banking, asset management and brokerage businesses are managed by its

subsidiary Al Rajhi Capital. Al Rajhi has obtained regulatory approvals to

open a branch in Kuwait and launch banking operations in Jordan.

� Financials: Al Rajhi recorded a 7% YoY increase in its investment portfolio

and 7.6% YoY growth in total deposits during 1Q10. An enhanced

investment base along with expanding net interest margins enabled the bank

to post 9.8% YoY growth in net special commission income. Due to its large

pool of non-interest bearing deposits and focus on high yield consumer

loans, the bank’s net interest margin increased by 20 basis points YoY to

5.3%. Consequently, operating income grew 3.4% YoY to SR2.8bn. Al Rajhi’s

provisions for loan losses increased 55% YoY to SR359mn in 1Q10, resulting

in a 2.7% YoY decline in net income to SR1.7bn.

� Recent developments: In May 2010, Al Rajhi announced that it will launch

Shariah-compliant sukuk in June 2010 for investors in Gulf Cooperation

Council (GCC) countries, the European Union, Singapore, Malaysia, Brunei,

East Asia and North America. In February 2010, the bank announced plans

to start 90 new branches and expand its network of branches to 546 by

2012-end.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Sp. Com Income SRmn 7,722 8,494 9,232 2,202.9 9.8 9.3

Operating Income SRmn 9,321 10,575 11,505 2,832 3.4 11.1

Net Income SRmn 6,450 6,525 6,767 1,684.1 (2.7) 2.4

Assets SRmn 124,886 164,930 170,730 172,424 7.2 16.9

Equity SRmn 23,606 27,032 28,741 27,848 8.9 10.3

Advances* SRmn 105,785 143,853 140,909 145,708 7.1 15.4


Net Interest Margin % 7.0% 6.1% 6.2% 5.3% - -

Cost/Income % 26% 26% 26% 28% - -

ROE % 29.5% 25.8% 24.3% 23.8% - -

ROA % 5.6% 4.5% 4.0% 3.9% - -

Div Payout** % 50.4 77.5 61.0 - - -

EPS SR 4.3 4.4 4.5 1.1 (2.6) N/A

BVPS SR 15.7 18.0 19.2 18.6 8.9 N/A

Source: Tadawul, Zawya, Company, NCBC Research * Includes investments ** Gross dividend is used in div yield calculations for Saudi banking sector

39

JUNE 2010 BANK ALBILAD

Not Covered



Stock details





Absolute (0) 0 (16)

Market (6) (5) 3

Sector (3) (2) 2


3M 8.4 2.3

12M 11.0 2.9

Raw Beta 6m 3yr

0.35 0.79


Bloomberg code ALBI AB

Website www.bankalbilad.com.sa



Free float 77.18

Valuation multiples

08 09 TTM

P/E (x) 48.5 N/M N/M

P/B (x) 1.9 2.0 2.0

P/Sales (x) 6.8 6.7 6.3

Div yield (%) NA NA NA



5,0005,5006,0006,5007,000

Jun-09 Oct-09 Feb-10 Jun-101520

2530

TASI AL B ilad (RHS)

Source: Bloomberg


Mohammed Ibrahim Mohammed Al Subaei

11.6

Abdullah Ibrahim Mohammed Al Subaei

11.1

First Investment Company 7.4

Abdul Rahman Saleh Abdul Aziz Al Rajhi

6.9

Abdul Rahman Abdul Aziz Saleh Al Rajhi

6.5



Bank AlBilad Also known as

AlBilad

Bank AlBilad (AlBilad), headquartered in Riyadh, was established in

2004 through the merger of eight money-exchange organizations. The

bank operates 69 branches and 458 ATMs. AlBilad’s wholly owned

subsidiaries are AlBilad Brokerage & Securities Management Co., AlBilad

Investment Co., and AlBilad Real Estate Co.

� Business brief: AlBilad’s consumer services segment offers AlBilad Net,

AlBilad Tadawul, AlBilad 24, auto financing, personal financing, real estate

financing, local share investment services and credit cards. The corporate

services segment provides a range of finance solutions such as Murabaha,

Musharaka, Istisna’a and securitization finance. The investment services

segment offers investment avenues in mutual funds, including Akar, Amwal,

Asayel, Al-Murabih and Al-Seef.

� Financials: AlBilad’s loan portfolio increased 23% YoY in 1Q10. The bank’s

deposits also grew 15.3% YoY in the quarter. Expansion in loan portfolio

enabled the bank to increase its net special commission income by 5.7% YoY

despite a decline in net interest margins. In addition, strong fee and

exchange income helped AlBilad post a 27% YoY rise in total operating

income to SR276mn. Due to these factors, its net income surged 135% YoY

to SR52.6mn in 1Q10. AlBilad recorded an 84.3% YoY increase in provisions

for credit losses to SR43.5mn in 1Q10.

� Recent developments: In April 2010, AlBilad announced the appointment

of Mr. Musaed Bin Mohammed Al Snani as Chairman of the Board of

Directors. The bank also announced its intent to focus on retail banking.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Sp. Com Income SRmn 534 578 548 148 5.7 1.3

Operating Income SRmn 779 888 908 276 26.9 8.0

Net Income SRmn 72 125 (248) 53 135.3 N/M

Assets SRmn 16,636 16,052 17,411 18,978 11.2 2.3

Equity SRmn 3,104 3,213 3,002 3,064 (5.6) (1.7)

Advances SRmn 6,190 8,276 11,014 11,190 23.1 33.4



Cost/Income % 82 76 87 65 - -

ROE % 2.4 4.0 (8.0) 6.9 - -

ROA % 0.5 0.8 (1.5) 1.2 - -

Div Payout % - - - - - -

EPS SR 0.2 0.4 (0.8) 0.2 157.1 NA

BVPS SR 10.4 10.7 10.0 10.2 (5.6) NA


40

JUNE 2010 ALINMA BANK

Not Covered



Stock details





Absolute (5) (13) (21)

Market (6) (5) 3

Sector (3) (2) 2


3M 306.4 81.7

12M 318.4 84.9

Raw Beta 6m 3yr

0.59 NA


Bloomberg code ALINMA AB

Website www.alinma.com



Free float 69.93

Valuation multiples

08 09 TTM

P/E (x) 43.1 78.0 N/M

P/B (x) 1.1 1.1 1.1

P/Sales (x) 49.6 27.3 32.3




5,0005,5006,0006,5007,000

Jun-09 Oct-09 Feb-10 Jun-10101112131415

TASI Alinma (RHS)

Source: Bloomberg




10.0




Alinma Bank Also known as

Development Bank

In March 2006, Alinma Bank (Alinma) was established in accordance

with a Royal Decree with a share capital of SR15bn. The bank operates

through a network of 14 branches and 110 ATMs. Alinma offers retail

and corporate banking services as per Shariah-compliant principles and

commenced full-fledged operations in 2009.

� Business brief: Alinma, an Islamic bank, provides retail and corporate

products banking. The bank aims to offer asset management and investment

banking services through Alinma Investment Company and insurance

products through a joint venture insurance company. With this, the bank

intends to capitalize on the vast untapped retail market for Shariah-

compliant insurance options.

� Financials: Alinma’s loan portfolio increased 10x YoY in 1Q10, primarily due

to a lower base in 1Q09. The bank’s deposits grew 411% YoY. Alinma’s

return on investments fell 62% YoY mainly due to a reduction in yields on

earning assets and net interest margins. Alinma incurred a loss of SR75mn in

1Q10 mainly due to lower return on investments and increasing operating

costs owing to the launch of its retail banking operations.

� Recent developments: In June 2010, Alinma entered into agreements

with: (i) Dar Al Tamleek Company to provide Shariah-compliant home

financing; and (ii) Saudi Basic Industries to offer a SR3,750mn credit facility

to finance the latter’s projects. In May 2010, Alinma signed a financing

agreement with Al-Rajhi Steel Industries to provide Shariah-compliant

financing and banking facilities (worth SR737mn). In April 2010, Alinma

formed a joint venture with Tokio Marine & Nichido Fire Insurance Company

(a subsidiary of Tokio Marine Holding and Sabic Industrial Investments

Company) to establish a SR200mn cooperative insurance company. In

January 2010, Alinma Investment Company received approval from the

Capital Market Authority to commence operations in the Kingdom.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Sp. Com Income SRmn - 339 607 67 (62.2) 339

Operating Income SRmn - 339 615 82 (53.8) 339

Net Income SRmn - 390 215 (75) (168.7) 390

Assets SRmn - 15,556 17,306 18,833 16.3 15,556

Equity SRmn - 15,390 15,605 15,530 0.2 15,390

Advances SRmn - - 1,126 3,596 1095.0 -

Total Deposits SRmn - - 1,501 2,975 411.2 -

Net Interest Margin % - 2.3 3.9 1.6 - 2.3%

Cost/Income % - 65.9 67.5 191.2 - 65.9%

ROE % - 2.5 1.4 (1.9) - 2.5%

ROA % - 2.5 1.3 (1.7) - 2.5%

Div Payout % - - - - - -

EPS SR - 0.3 0.1 (0.1) (171.4) 0.3

BVPS SR - 10.3 10.4 10.4 0.2 10.3


41


Petrochemicals


2001 Methanol Chemicals 47

2002 National Petrochem 48

2010 SABIC 49

2020 SAFCO 50

2060 Tasnee 51

2170 Alujain Corporation 52

2210 Nama Chemicals 53

2250 Saudi Industrial 54

2260 Sahara Petrochem 55

2290 YANSAB 56

2310 Sipchem 57

2330 Advanced Petrochem 58

2350 Saudi Kayan 59

2380 Petro Raibgh 60


Petrochemicals

Surplus capacity, worrisome in long run KSA’s petrochemical industry, one of the heavyweight sectors of the KSA economy,

accounted for about 9% of total GDP in 2008. The sector is one of the prime focus

areas of the Saudi Arabian government in its attempt to reduce the economy’s

dependence on petrodollars and to diversify the economy towards value added

industries. The majority of the sector’s activities in KSA are concentrated in the

industrial cities of Jubail and Yanbu. The sector currently comprises 14 listed

companies, with Saudi Basic Industries Co (SABIC) being the largest. Headquartered

in Riyadh, SABIC had an annual production capacity of about 59mn tons (mt) of

petrochemical products and accounted for about 67.5% of the total revenues from

the petrochemical sector of KSA in 2009. Furthermore, SABIC is the largest

petrochemical sector player in the Middle East region and sixth largest in the world.

Access to low cost feedstock and proximity to growing Asian market are key

positives for the Saudi Petrochemical sector. At present, ethane, a key

petrochemical feedstock produced in KSA, is priced at USD0.75 per mmbtu, much

lower than the global price of USD4-5 per mmbtu. As a result, the ethylene

production cost of Saudi plants based on ethane feed is close to USD160/mt, versus

USD380/mt for producers using naphtha-feed crackers. Based on our discussions

with industry players, we believe that the natural gas price of USD0.75/mmbtu will

double to USD1.5/mmbtu in the Kingdom by 2012E. However, even at these

revised levels, the price is well below what is paid by global peers. Petrochemical

companies in KSA also enjoy a dual pricing system under the country’s agreement

with the WTO. This has helped KSA petrochemical companies to secure superior

prices for their products in the international market, thus lifting overall profitability.

Historically, robust demand for petrochemical products has helped the sector to

sustain growth. However, the last 18 months have been particularly difficult for the

global petrochemical sector as the world economy slowed down post the credit

crisis, the ripple effects of which were also felt by the KSA petrochemical sector.

During 1H-09, the KSA petrochemical sector faced severe margin pressures

negatively impacted by falling prices of petrochemical products and muted demand

from both developed and developing nations. As a result, utilization remained

largely depressed. Moreover, a number of projects were put on hold as banks

tightened lending norms. Despite the difficult situations, their feedstock advantage

and proximity to Asian markets provided a floor to their earnings and Saudi firms

collectively reported net income of SR8bn in 2H 2009 compared to net income of

SR0.7bn in 1H 2009. Given the current situation, we believe the Saudi

petrochemical sector is on firmer ground than its global peers.

In the GCC region, KSA operates from a position of significant strength in the

petrochemical industry, accounting for the majority of the region’s petrochemical

production. By 2010-end, KSA, which holds close to 21% of the world’s

proven oil reserves, is expected to meet around 13% of the global demand

for petrochemical products, increasing from 8% in 2006. KSA also possesses

gas reserves of 253 trillion cubic feet and ranks fourth in the world after Russia,

Iran and Qatar.

Petrochemical sector

underwent difficult times

over the past 18 months,

due to slowdown caused by

global credit crisis

With revival of global

economic conditions,

petrochemical demand and

prices are recovering at a

moderate pace

43


PETROCHEMICALS

In 2009, the KSA petrochemical sector’s combined revenue (all the 14 companies)

decreased 15.9% YoY, negatively impacted by the fall in prices of petrochemical

products and the overall suppressed demand for petrochemical products globally.

SABIC, KSA’s largest petrochemical company which constituted 67.6% of the total

petrochemical sector revenue in 2009, reported a 32.1% YoY fall in revenues for

the same period. The average net profit margin of KSA petrochemical companies

declined to 10.5% in 2009 from 12.4% in 2008. Petro Rabigh, Nama Chemicals,

Alujain, Saudi Kayan, Yansab and Petrochemical reported losses in 2009 as many of

them are still in start-up phase.

In 4Q-09, however, the sector’ financial performance showed a marked rebound.

Sector revenues increased 36.4% YoY and 17.5% QoQ, led by the increase in

petrochemical prices. The revenue rebound led to a sharp increase in profits as the

petrochemical sector reported net profit of SR5.1bn in 4Q-09 versus a net loss of

SR272mn in 4Q-08.

Exhibit 47: Revenues of companies, 2007–09 (SR mn)

Exhibit 48: Profitability of companies, 2007-09 (%)

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2005 2006 2007 2008 2009

SABIC SAFCO SIIG Sahara

Nama Sipchem NIC Alujain

APPC Rabigh Chemanol

-40

-20

0

20

40

60

80

100

2005 2006 2007 2008 2009

SABIC SAFCO SIIGSahara Nama SipchemNIC Chemanol APPC

Source: Zawya, Tadawul, NCBC Research Source: Zawya, Tadawul, NCBC Research


Company

% weight inIndex as on

Dec 2009Net Margin

(%)2009ROE (%),

2009*

Saudi Basic Industries Corp (SABIC) 20.7 8.8 8.6

KSA Fertilizers Co (SAFCO) 2.53 65.7 23.5

Saudi Industrial Investment Group (SIIG) 0.82 12.1 5.7

Sahara Petrochemical 0.52 48.4 3.2

Yanbu National Petrochemical Company (YANSAB) 1.57 N/M (0.5)

Nama Chemicals 0.12 N/M (3.9)

Saudi International Petrochemical Co (Sipchem) 0.66 17.1 2.8

National Industrialization Co (NIC) 1.08 4.8 6.9

Alujain Corporation 0.1 N/M (5.3)

Advanced Petrochemical Company 0.29 8.7 7.7

Saudi Kayan Petrochemical Company 2.28 N/M (0.1)

Rabigh Refining and Petrochemical Co 2.6 N/M (16.8)

Chemanol 0.16 5.5 1.6

Petrochem 0.62 N/M (1.7)

Source: Zawya, Saudi Stock Exchange (Tadawul) * start period may differ based on availability of data

Since 2H-09, margins of

petrochemical players have

shown signs of

improvement

44


PETROCHEMICALS

In 2008, multiples fell significantly, as stock markets crashed globally, and continued

to tread downwards, through 1H-09. However, during 2H-09, multiples started to

improve as the market showed signs of reviving. Of the key stock in the sector,

SABIC traded at P/E and P/BV multiples of 27.3x and 2.3x at end 2009, respectively,

versus 7.0x and 1.5x at end 2008, respectively. More recently, SABIC has been

trading at P/E and P/BV multiples of 17.3x and 2.3x, respectively (31 May 2010).

Exhibit 49: Comparison of P/B and ROE, 2008

(%)


(%)

SABIC

SAFCO

SIIG SPC

Yanbu

Sipchem

NIC APCKayan

Rabigh-20

-10

0

10

20

30

40

50

60

70

0.5 1.5 2.5

P/B (x)

RO

E (

%)

SAFCO

SABIC

SIIGSPC Yanbu

Nama

Sipchem

NIC

Alujain

APC

Kayan

Rabigh

Chemanol Petrochem

-20

-10

0

10

20

30

0 1 2 3 4 5

P/B (x)

RO

E (

%)

Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research

Trading turnover of KSA petrochemical stocks averaged to SR1.2bn daily in 2009

and has averaged SR1.2bn per day since the beginning of 2010. Within the sector,

SABIC with an average daily turnover of SR573mn in 2009 had the largest

turnover. So far in 2010, Saudi Kayan has the largest daily turnover with SR362mn.

Exhibit 51: Average daily turnover, Jan09 – Mar10

(SR mn)

Exhibit 52: Share price movement, Jan09 – Mar10

Prices rebased to 100 on 1st Jan-09

497.0

144.5

91.7

55.2

45.9

45.5

41.8

38.7

37.0

25.8

24.7

23.7

17.7

14.4

0

50

100

150

200

250

300

350

400

450

500

SABIC

Kay

an

Petr

o R

abig

h

Yansa

b

Petr

och

em

SAFC

O

Chem

anol

Nam

a

APP

C

NIC

Sip

chem

Sahara

SII

G

Alu

jain

50

90

130

170

210

250

290

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10

Sipchem NIC KayanYansab Petrochem SaharaPetro Rabigh Alujain ChemanolNama SAFCO SIIGSABIC APPC


The Petrochemical sector has shown a strong rebound from the lows reached in

March 2009, with the sector up 76.3% since then to the end of 2009. So far in

2010, the sector had reached an increase of 22.9% by the beginning of May, but

since then has given up most of its YTD gains (by mid-year). The increase in global

risk aversion due to fears on the Euro, a potential slowdown in China, and a slower

45


PETROCHEMICALS

rebound in the U.S. has impacted stock markets, and has impacted the

Petrochemical sector particularly hard.

Our outlook for the KSA petrochemical sector remains largely positive in

the medium to long term. Sustained demand and price recovery, as seen in 4Q-

09 and early 2010, strengthens our outlook for the Saudi Petrochemical sector in

2010. Moreover, we expect the sector's feedstock advantage and proximity to the

high-growth Asian and Middle Eastern markets to continue to offer support, going

forward. However, we believe challenges in terms of overcapacity situation and

depressing utilization rates, post 2012, are likely to result in the KSA petrochemical

sector growing at a more modest pace in the medium to long term.

NCBC Recommendations in the Sector The Petrochemical stocks under our coverage universe include Tasnee, Sipchem,

Yansab, Sahara, Petrochem and Saudi Kayan. Detailed information on the

companies’ performance is included in our Petrochemical Sector Report released

on 27 April 2010.

Exhibit 53: Coverage stocks details

Stock Current rating PT (SR) Comments

Sipchem (2310.SE)

Overweight 27.9 Acetyls Complex (Phase II expansion) will double Sipchem’s annual capacity to 2.2mn mt with full-year benefits expected to materialize from 2010 onward. Volatility in the price realization and subdued demand are key risks. Earlier than expected start to Phase III expansion (currently set for 2013) is a potential catalyst.

NIC (Tasnee) (2060.SE)

Overweight 36.2 NIC (Tasnee) is the only titanium pigment producer in the Middle East and is monetizing its low cost feedstock advantage through its petrochemicals business. The June 2009 start of its ethylene derivatives complex, SEPC, as well as improving trends in titanium should drive 86% growth in net income in 2010e.

Sahara(2260.SE)

Neutral 27.2 Sahara has one operational plant, on coming on-stream in 2Q 2010 and a further 3 set to commercialize operations in 2013. The SEPC plant is the only income generator for now. Once all of Sahara's plants are up and running, the company will have amongst the most diverse product portfolio's in the sector with a range of ethylene derivatives, super absorbent polymers and acrylates.

Yansab(2290.SE)

Neutral 50.7 Yansab has recently started commercial operations in March 2010. The timing looks ideal as both demand and pricing are gaining traction. However with the strong performance of the stock over the past year. we believe much of this is priced in.

Saudi Kayan (2350.SE)

Neutral 20.3 Diversified product-mix and strong links with SABIC are positives. However, doubts over on-time start of production and lack of revenues until 2011 dim the near outlook. While 2012e will benefit from full year contribution from its plants,post 2013e net income is likely to contract as the current cycle nears its peak.

Petrochem (2002.SE)

Underweight 15.8 Expected to commence operations in 2012e and will be entering into the Ethylene and Propylene derivatives arena through a JV with Chevron Phillips. However there will be likely no revenue until 2012e and net losses in 2010e-2011e.


Though the oversupply

situation could further

depress margins, the low

cost structure remains a

strong positive

46

JUNE 2010 METHANOL CHEMICALS COMPANY

Not Covered



Stock details


Market cap ($mn) 456.6



Absolute (11) (11) (21)

Market (6) (5) 3

Sector (13) (6) 12


3M 44.7 11.9

12M 38.1 10.1

Raw Beta 6m 2yr

1.06 1.12


Bloomberg code CHEMANOL AB

Website www.chemanol.com



Free float 50.0

Valuation multiples

08 09 TTM

P/E (x) 44.8 77.6 65.7

P/B (x) 1.2 1.2 1.2

P/Sales (x) 3.0 4.3 4.2




5,000

5,500

6,000

6,500

7,000

Jun-09 Sep-09 Dec-09 M ar-10 Jun-1010

14

18

22

TASI Chemanol (RHS)

Source: Bloomberg


Abdullah A. Kanoo Co. 11.2

Zamil Group Holding Co. 11.2

Mazen Khalifa Al Ahiq Al Nuaimi & Sons

7.5

Mohammed Jalal & Sons Co. 5.0

Al Mazrooe Holding Co 5.0


PETROCHEMICALS

Methanol Chemicals Also known as

Chemanol

Methanol Chemicals Company (Chemanol), established in 1989, is a

manufacturer of formaldehyde, methanol and derivatives, hexamine,

resins and super plasticizers. The company exports about 83% of its

products to more than 50 countries including the UK, France, Germany,

South Africa, USA, Canada, and Japan.

� Business brief: Chemanol produces and supplies methanol formaldehyde

and its derivatives for use across different industries such as agricultural,

pharmaceutical, paper manufacturing and construction. The company had its

Initial Public Offering (IPO) on the Saudi Stock Exchange in August 2008 in

order to finance an expansion plan involving investment of approximately

SR2bn. In 2010, Chemanol expects to have total installed capacity of

914,000 tons.

� Financials: Chemanol revenues grew by 5.6% YoY to SR111.8mn in 1Q10,

while net income rose 80% YoY to SR9.1mn. The company’s net margin has

shown improvement of 330 basis points YoY and stood at 8.1% in 1Q10. The

company had a cash balance of SR236mn in 1Q10.

� Recent developments: In October 2009, Chemanol started trial operations

at its methanol plant at Jubail with production capacity of 231,000 metric

tons and secured a loan of SR326mn from local and Gulf banks to fund its

projects. In January 2010, Chemanol’s managing director Mazen Khalifa Al

Laheeq Al Nuaimi resigned.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 461 571 402 112 5.6 (6.6)

EBITDA SRmn 61 73 59 20 38.1 (1.8)

Net Income SRmn 25 38 22 9 79.9 (5.5)

Assets SRmn 1,301 2,640 3,033 3,073 12.6 52.7

Equity SRmn 678 1,390 1,411 1,419 1.7 44.2

Total Debt SRmn 546 1,148 1,448 1,448 26.3 62.8

Cash & Equiv SRmn 13 375 270 236 (2.5) 359.6

EBITDA Mgn % 13.2 12.8 14.6 17.5 - -

Net Mgn % 5.4 6.7 5.5 8.1 - -

ROE % 3.7 3.7 1.6 2.6 - -

ROA % 2.2 1.9 0.8 1.2 - -

Div Payout % - - - - - -

EPS SR 0.41 0.48 0.25 0.08 100.0 (21.9)

BVPS SR 11.3 11.5 11.7 11.8 1.7 2.0


47

JUNE 2010 NATIONAL PETROCHEMICAL COMPANY

Underweight

Target Price (SR) 15.8

Price (SR) 15.6


Stock details



Shares outstanding (mn) 480


Absolute (12) 2 N/A

Market (6) (5) 3

Sector (13) (6) 12


3M 60.5 16.1

12M N/A N/A

Raw Beta 6m 2yr

0.92 N/A


Bloomberg code PETROCH AB

Website www.petrochem.com.sa



Free float 17.5

Valuation multiples

08 09 10E

P/E (x) 420.6 NM NM

P/B (x) 3.4 1.6 1.6

P/Sales (x) N/A N/A N/A


Source: NCBC Research estimates


5,0005,500

6,000

6,500

7,000

Aug-09 Nov-09 M ar-10 Jun-101214

16

18

20

TASI Petrochem (RHS)

Source: Bloomberg


Saudi Industrial Investment Group

50.0

Public Pension Agency 16.2

General Organisation for Social Insurance

16.2


PETROCHEMICALS

National Petrochem Also known as

Saudi Petrochem,Petrochem

National Petrochemical Company (Petrochem) was established in 2008.

It is mainly involved in investing in the petrochemical industry through

its 65% owned company, Saudi Polymers Company.

� Business brief: Saudi Polymers Company is a petrochemical project being

built in Jubail Industrial City. The company targets the project to be

completed by the end of 2011, we expect revenues to begin from 2Q12.

Once operational, the project will have annual production capacity of 3.4mn

mtpa, including ethylene, propylene, HDPE, LDPE, polypropylene,

polystyrene, and hexane. Petrochem is 47.7% owned by Saudi Industrial

Investment Group (SIIG).

� Financials: We do not expect the company to report revenues until 2012e.

Until then, the company will likely remain in losses, mainly due to interest

expenses. The estimated cost of the project is over SR20.8bn, financed

through equity and debt funding. Total debt of SR13.5bn was raised from

commercial banks, PIF, and SIDF. The equity contribution of SR7.4bn was

arranged through the IPO and partner contributions.

� Recent developments: Petrochem raised SR2.6bn in its IPO in July 2009 by

offering 240mn shares to the public and 20mn shares to SIIG.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)

Net Revenues SRmn - - - - N/M N/M

EBITDA SRmn (2) (9) (15) (17) 401.1 (0.5)

Net Income SRmn 18 (61) (127) (236) (440.4) (1.4)

Assets SRmn 3,773 14,581 19,228 21,284 286.5 (0.4)

Equity SRmn 2,218 4,757 4,630 4,394 114.5 (0.2)

Total Debt SRmn 1,219 8,712 9,967 12,259 614.5 (0.5)

Cash & Equiv SRmn 1,513 3,272 689 337 116.3 0.6

EBITDA Mgn % - - - - - -

Net Mgn % - - - - - -

ROE % 0.8 (1.3) (2.8) (5.4) - -

ROA % 0.5 (0.4) (0.7) (1.1) - -

Div Payout % - - - - - -

EPS SR 0.1 (0.1) (0.3) (0.5) (262.5) (1.5)

BVPS SR 10.1 9.9 9.7 9.2 (1.7) 0.0

Source: Tadawul, Zawya, Company, NCBC Research estimates

48

JUNE 2010 SABIC

Not Covered



Stock details

52-week range H/L (SR) 108.3/55.3

Market cap ($mn) 71,182

Shares outstanding (mn) 3,000


Absolute (14) (3) 23

Market (6) (5) 3

Sector (13) (6) 12


3M 484.8 129.2

12M 418.9 111.7

Raw Beta 6m 2yr

1.46 1.27


Bloomberg code SABIC AB

Website www.sabic.com



Free float 22.57

Valuation multiples

08 09 TTM

P/E (x) 12.1 29.4 17.2

P/B (x) 2.6 2.5 2.3

P/Sales (x) 1.8 2.6 2.3

Div yield (%) 3.4 1.7 N/A

DPS 3.00 1.50 N/A



5,000

5,5006,000

6,500

7,000


70

90

110

TASI SABIC (RHS)

Source: Bloomberg




PETROCHEMICALS

SABICSaudi Basic Industries Corporation (SABIC), established in 1976, is one

of the leading petrochemical companies in the world, with 2009 sales of

SR103bn (USD27.5bn). The company produces basic chemicals - olefins,

oxygenates and aromatics-intermediates and polymers. SABIC also

produces fertilizers (through SAFCO, Ibn Al-Baytar, Al-Bayroni) and

metals (through Hadeed, ALBA, GARMCO).

� Business brief: SABIC has presence across the globe through its

subsidiaries and associates. It operates through its six interlinked divisions –

Basic Chemicals, Intermediates, Polymers, Specialty Products, Fertilizers,

and Metals. The company is targeting an annual total production capacity of

130mn metric tons by 2020.

� Financials: 2009 was a tough year for SABIC as the global slowdown

severely impacted its financial performance. Revenues declined 31% and net

income an even more dramatic 59% in 2009. However, with the rebound in

petrochemical prices, earnings have shown strong growth since 4Q09. In

1Q10, SABIC posted 72.2% YoY revenue growth to reach SR34.1bn and net

income grew to SR5.4bn compared to loss of SR0.97bn in 1Q09.

� Recent developments: In May 2010, SABIC and Sinopec Corp’s joint

venture petrochemicals complex began commercial operations with annual

production capacity of 3mn metric tons. In April 2010, the SABIC and

Mitsubishi joint venture, Sharq, started commercial operations with annual

production of 5mn metric tons.of petrochemicals. In the same month, SABIC

signed a $400mn deal with Celanese to establish a polyacetal factory with

capacity of 50,000 metric tons. Also, SABIC announced its plans to build a

new iron and steel plant in Jubail Industrial city by 2012.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 126,204 150,810 103,062 34,126 72 (10)

EBITDA SRmn 48,653 48,142 29,577 11,906 194 (22)

Net Income SRmn 27,022 22,030 9,074 5,432 N/M (42)

Assets SRmn 253,731 271,760 296,861 303,186 12 8

Equity SRmn 91,154 102,932 108,255 113,687 12 9

Total Debt SRmn 80,109 92,656 107,015 105,091 29 16

Cash & Equiv SRmn 45,877 51,028 56,377 51,525 (1) 11

EBITDA Mgn % 38.6 31.9 28.7 34.9 - -

Net Mgn % 21.4 14.6 8.8 15.9 - -

ROE % 32.9 22.7 8.6 19.6 - -

ROA % 12.9 8.4 3.2 7.2 - -

Div Payout % 33.3 40.9 49.5 N/A - -

EPS SR 9.0 7.3 3.0 1.8 N/M (42)

BVPS SR 36.5 34.3 36.1 37.9 12 (1)


49

JUNE 2010 SAFCO 50

Neutral

Target Price (SR) 127

Price (SR) 125.5


Stock details

52-week range H/L (SR) 149.5/110.5





Market (6) (5) 3

Sector (13) (6) 12


3M 34.2 9.1

12M 31.7 8.4

Raw Beta 6m 2yr

0.78 1.09


Bloomberg code SAFCO AB

Website www.safco.com.sa



Free float 36.88

Valuation multiples

08 09 TTM

P/E (x) 7.3 17.4 10.9

P/B (x) 3.9 4.5 4.5

P/Sales (x) 6.0 11.4 9.4

Div yield (%) 10.4 9.6 8.0

DPS 13.0 12.0 10.0



5,000

5,500

6,000

6,500

7,000


100

120

140

160

TASI SAFCO (RHS)

Source: Bloomberg


Saudi Basic Industries Corporation

42.9

General Org. for Social Insurance

16.5


PETROCHEMICALS

SAFCO

Saudi Arabian Fertilizer Company (SAFCO), established in 1965,

produces ammonia and urea nitrogen based fertilizers. The company

markets its products in Asia, America, Australia, Africa and Middle East

countries. Saudi Basic Industries Corp. (SABIC) holds a 42.9% stake in

SAFCO.

• Business brief: SAFCO has a urea production capacity over 2.27mn tons

per annum (tpa), the majority of which is exported. Urea is a key nitrogen-

based fertilizer across the globe. The company also manufactures 2.1mn tpa

of ammonia, most of it used as an intermediate raw material for producing

urea.

• Financials: Revenues in 2009 declined 48% and net income 57% as

fertilizer pricing declined following peaks reached in 2008 due to the impact

of the global financial crisis. We expect the financial performance to rebound

in 2010 and have seen strong growth in 1Q10 in revenues (16.8% YoY

growth to SR864mn) and net income (40.1% YoY growth to SR698mn). The

company’s net income margin showed YoY improvement of over 13

percentage points and stood at 80.8% in 1Q10.

• Recent developments: In April 2010, SAFCO announced that it expects to

book a one off gain of SR263.4mn from sale of land in Dammam. In

February 2010, SAFCO announced its plans to cut costs and enter new

markets to boost profit for 2010.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)

Net Revenues SRmn 5,243 2,741 3,354 3,674 (47.7) (11.2)

EBITDA SRmn 4,594 1,889 2,676 2,690 (58.9) (16.3)

Net Income SRmn 4,280 1,804 2,883 2,645 (57.8) (14.8)

Assets SRmn 9,850 8,808 8,236 8,436 (10.6) (5.0)

Equity SRmn 8,034 7,015 6,897 7,042 (12.7) (4.3)

Total Debt SRmn 826 590 353 116 (28.7) (48.0)

Cash & Equiv SRmn 3,918 2,964 2,235 2,247 (24.3) (16.9)

EBITDA Mgn % 87.6 68.9 79.8 73.2 - -

Net Mgn % 81.6 65.8 86.0 72.0 - -

ROE % 60.9 24.0 41.4 38.0 - -

ROA % 47.5 19.3 33.8 31.7 - -

Div Payout % 75.9 162.6 87.0 94.3 - -

EPS SR 17.1 7.4 11.5 10.6 (56.9) (14.8)

BVPS SR 32.1 28.2 28.1 29.7 (12.2) (2.6)


JUNE 2010 TASNEE

Overweight


Price (SR) 26.0


Stock details





Absolute (11) 3 33

Market (6) (5) 3

Sector (13) (6) 12


3M 53.3 14.2

12M 34.5 9.2

Raw Beta 6m 2yr

1.75 1.35


Bloomberg code NIC AB

Website www.tasnee.com



Free float 80.52

Valuation multiples

08 09 TTM

P/E (x) 21.9 25.4 8.6

P/B (x) 1.8 1.7 1.5

P/Sales (x) 1.3 1.2 0.8

Div yield (%) 3.8 2.9 3.8

DPS 1.0 0.8 1.0



5,000

5,500

6,000

6,500

7,000


TASI NIC (RHS)

Source: Bloomberg


Shairco for Trading, Industry and Contracting

9.8

Gulf Investment Corporation 7.9

Kingdom Holding Company 6.2

Swicorp Co. 5.8

Al Olayan Saudi Investment Co. 5.8


PETROCHEMICALS

Tasnee Also known as

NIC, Tasnee

National Industrialization Company (Tasnee) was established in Riyadh

in 1985 to support the Kingdom’s industrial development. In 2007,

Tasnee acquired LyondellBasell’s worldwide titanium dioxide business

and in 2008, it purchased Australia's Bemax Resources Ltd. and

International Titanium Powder (ITP).

� Business brief: Tasnee’s main businesses are in petrochemicals and

Titanium Dioxide. The company also has smaller business lines in automotive

batteries, carton packaging, and related services. In 2006, Tasnee, in a JV

with Sahara Olefins and Basell, formed Saudi Ethylene and Polyethylene Co.

(SEPC) with a capacity of 1mn mtpa ethylene cracker, and 400,000 tpa of

low and high density polyethylene each.

� Financials: We expect 2010e financial performance to show strong growth

as the company benefits from the full year impact of SEPC (which started in

June 2009). Revenues are expected to growth 58% to SR17.1bn and net

income 195% to SR1.5bn in 2010e. Performance in the first quarter of 2010

indicates the company is on track for strong growth as revenues grew

162.2% YoY to SR4bn and net income grew to SR336.2mn in 1Q10

compared to a net loss of SR25.7mn in 1Q09.

� Recent developments: In May 2010, Tasnee announced its plans to raise

$1.7bn for its petrochemical complex project in Jubail. In April 2010, Tasnee

and its joint Venture Saudi Arabia’s Sahara Petrochemical signed a deal with

Germany’s Evonik Industries AG for USD266.7mn to construct an 80,000

metric tons a year polymers plant.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)

Net Revenues SRmn 10,037 10,863 17,123 17,506 8.2 20.4

EBITDA SRmn 1,748 2,493 4,963 4,764 42.6 39.7

Net Income SRmn 601 519 1,530 1,418 (13.5) 33.1

Assets SRmn 30,419 33,168 36,739 38,089 9.0 7.8

Equity SRmn 7,350 7,790 8,859 9,816 6.0 10.1

Total Debt SRmn 15,197 15,316 16,703 15,806 0.8 1.3

Cash & Equiv SRmn 3,613 3,585 4,484 6,233 (0.8) 19.9

EBITDA Mgn % 17.4 22.9 29.0 27.2 - -

Net Mgn % 6.0 4.8 8.9 8.1 - -

ROE % 9.0 6.9 18.4 15.2 - -

ROA % 2.2 1.6 4.4 3.8 - -

Div Payout % 147.0 150.7 332.0 308.0 - -

EPS SR 1.5 1.1 3.3 3.1 (23.1) 28.0

BVPS SR 16.0 16.9 19.2 21.3 6.0 10.1


51

JUNE 2010 ALUJAIN CORPORATION

Not Covered



Stock details





Absolute (16) (24) (42)

Market (6) (5) 3

Sector (13) (6) 12


3M 16.3 4.3

12M 11.5 3.1

Raw Beta 6m 2yr

1.52 1.18


Bloomberg code ALCO AB

Websitewww.alujaincorporation.com



Free float 85.09

Valuation multiples

08 09 TTM

P/E (x) NM NM NM

P/B (x) 1.8 1.7 1.8

P/Sales (x) NM NM NM




5,000

5,5006,000

6,500

7,000


15

20

25

TASI ALCO (RHS)

Source: Bloomberg


Safra Company 14.9

Khalid Abdul Rahman Saleh AlRajhi

9.9


PETROCHEMICALS

Alujain Corporation Also known as

Alujain

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 company’s investments include a

57.4% stake in National Petrochemical Co. (NatPet) and a 93.1% stake

in Arab Pesticide Co. (MOBEED).

� Business brief: Alujain predominantly invests in the Saudi petrochemical,

energy, mining and metals sectors. The company transferred its Alfasel

propylene production facility to the Teldene Polypropylene project, promoted

by associate NatPet, in May 2006. NatPet owns a SR2.3bn propylene and

polypropylene plant, with 400,000 tons per annum capacity. The company

also signed contracts with SABIC and Noble Group for the offtake of

production.

� Financials: Alujain does not have its own operating units, instead generates

its income from investments and its affiliates, therefore, the company does

not report sales revenues. The company has been in losses since 2006 with

2009 recording a loss of SR26mn. Losses continued in 1Q10 with a reported

a loss of SR6.7mn compared to a loss of SR10.8m in 1Q09.

� Recent developments: In April 2009, the polypropylene plant owned by

NatPet started operations. In February 2009, Alujain increased its stake in

MOBEED to 93.1% from 25% earlier. The company also signed an

agreement with Safra Co. to maintain and operate MOBEED's facilities.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn - - - - - -

EBITDA SRmn (57) (59) (63) (11) NM NM

Net Income SRmn (40) (65) (27) (7) NM NM

Assets SRmn 2,747 3,229 3,406 3,476 7.5 11.4

Equity SRmn 651 515 519 507 (1.1) (10.8)

Total Debt SRmn 1,612 2,123 2,066 2,207 3.9 13.2

Cash & Equiv SRmn 201 113 52 64 21.8 (49.1)

EBITDA Mgn % N/M N/M N/M N/M - -

Net Mgn % N/M N/M N/M N/M - -

ROE % (5.9) (11.2) (5.3) (5.2) - -

ROA % (2.3) (2.2) (0.8) (0.8) - -

Div Payout % - - - - - -

EPS SR (0.6) (0.9) (0.4) (0.1) NM NM

BVPS SR 9.4 7.5 7.5 7.3 (1.1) (10.7)


52

JUNE 2010 NAMA CHEMICALS

Not Covered



Stock details





Absolute (13) (5) (26)

Market (6) (5) 3

Sector (13) (6) 12


3M 33.6 9.0

12M 23.1 6.2

Raw Beta 6m 2yr

0.47 1.03


Bloomberg code NAMA AB

Website www.nama.com.sa



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 0.8 0.8 0.8

P/Sales (x) 2.0 3.1 2.9


DPS NA NA



5,000

5,500

6,000

6,500

7,000


10

12

14

TASI NAM A (RHS)

Source: Bloomberg


Ahmed Hamad Al Gosaibi Co. 7.4


PETROCHEMICALS

Nama Chemicals Also known as

NAMA

Nama Chemicals Company (NAMA) was established in 1992. The

company develops, owns, and operates industrial projects within the

chemical and petrochemical sectors. NAMA functions via its affiliates -

Arabian Alkali Company (55,000mta capacity) and Jubail Chemical

Industries Company (60,000mta capacity).

� Business brief: Arabian Alkali is one of the largest caustic soda producers in

the Middle East. JANA produces epoxy resins and markets them under the

brand names of RAZEEN and ARALDITE. NAMA is currently setting up the

Hassad Petrochemicals Company that will manufacture different types of

chemicals to supply both the subsidiaries.

� Financials: In 1Q10, the company’s revenues grew by 27.6% YoY to

SR130mn. The company reported net income of SR2.1mn in 1Q10 compared

to a loss of SR32.4mn in 1Q09. EBITDA margin for the quarter stood at

5.3% compared to loss during the same period last year.

� Recent developments: In January 2010, NAMA’s subsidiary, JANA received

a SR210mn loan from the Saudi Industrial Development Fund. The loan

amount will be used for the expansion of the epoxy factory in order to double

its production capacity to 120,000 tons per annum by end of 2011. In June

2009, NAMA Chemicals Board appointed Mr. Saud Abdulaziz Al-Gosaibi as

the Chairman of the Board.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 50 27 (28) 7 N/M N/M

Net Income SRmn 34 (68) (50) 2 N/M N/M

Assets SRmn 1,751 2,545 2,396 2,437 (1.1) 17.0

Equity SRmn 921 1,557 1,565 1,581 3.1 30.3

Total Debt SRmn 696 800 702 721 (11.7) 0.5

Cash & Equiv SRmn 81 487 325 327 (17.2) 99.7

EBITDA Mgn % 9.7 4.3 (7.0) 5.3 - -

Net Mgn % 6.6 (10.9) (12.5) 1.6 - -

ROE % 4.0 (5.5) (3.2) 0.1 - -

ROA % 2.4 (3.2) (2.0) 0.1 - -

Div Payout % - - - - - -

EPS SR 0.5 (0.7) (0.4) 0.2 N/M N/A

BVPS SR 12.1 12.1 12.2 12.3 3.1 N/A


53

JUNE 2010 SAUDI INDUSTRIAL INVESTMENT GROUP

Not Covered



Stock details





Absolute (17) (12) (1)

Market (6) (5) 3

Sector (13) (6) 12


3M 23.7 6.3

12M 18.2 4.9

Raw Beta 6m 2yr

1.14 1.15


Bloomberg code SIIG AB

Website www.siig.com.sa



Free float 88.53

Valuation multiples

08 09 TTM

P/E (x) 173.1 27.6 16.9

P/B (x) 1.6 1.5 1.5

P/Sales (x) 3.9 2.2 6.3

Div yield (%) N/A 2.7 N/A

DPS N/A 0.50 N/A



5,0005,500

6,000

6,500

7,000


20

25

30

TASI SIIG (RHS)

Source: Bloomberg


Public Pension Authority 10.6

Ali Abdullah Ibrahim Al Jufalli 6.3


PETROCHEMICALS

Saudi Industrial Also known as

SIIG

Saudi Industrial Investment Group (SIIG) was established in 1996 in

Riyadh. The company primarily focuses on investment opportunities in

the Kingdom’s petrochemical sector. It operates through two

subsidiaries – Saudi Chevron Phillips and Jubail Chevron Phillips.

� Business brief: Saudi Chevron Phillips has an installed capacity of 1.2mn

mtpa); it produces benzene, cyclohexane and motor gas. Jubail Chevron

Phillips commenced operations in 2H08. The facility produces styrene,

propylene and motor gas. In 2007, SIIG entered into a third joint venture

with National Chevron Phillips (Chevron) to manufacture adipic acid and

nylon. Under this JV, both companies are setting up a SR18bn petrochemical

complex, which is scheduled to commence operations by 2011.

� Financials: In 1Q10, the revenues of SIIG grew by 203.1% y-o-y to

SR1,332mn from SR440mn in 1Q09. The company reported net income of

SR142mn in 1Q10 compared to a net loss of SR50mn in 1Q09 as higher

selling prices drove the stronger revenue and net income figures.

� Recent developments: In December 2009, SIIG announced that Petchem

(a joint venture between SIIG and Chevron Phillips Chemical Company) is

scheduled to start operations by 2011. The construction of the project is

65% complete. The project includes a cracker that will produce 40% ethane

and 60% propane. SIIG owns 32.5% and Chevron Philips Chemical owns

35% in the project.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 474 168 572 230 2,176.3 9.8

Net Income SRmn 437 49 306 142 N/M (16.4)

Assets SRmn 4,964 8,649 19,699 20,849 122.2 99.2

Equity SRmn 3,126 5,197 5,503 5,645 9.7 32.7

Total Debt SRmn 1,372 2,731 10,174 11,004 218.9 172.3

Cash & Equiv SRmn 749 2,703 4,586 4,354 44.6 147.4

EBITDA Mgn % 32.5 7.9 15.2 17.3 - -

Net Mgn % 30.0 2.3 8.1 10.7 - -

ROE % 14.5 1.2 5.7 10.2 - -

ROA % 9.3 0.7 2.2 2.8 - -

Div Payout % 25.8 - 73.5 - - -

EPS SR 1.9 0.1 0.7 0.3 N/M N/A

BVPS SR 13.9 11.6 12.2 12.6 9.7 N/A


54

JUNE 2010 SAHARA PETROCHEMICAL COMPANY

Neutral


Price (SR) 21.0


Stock details





Absolute (17) (6) 8

Market (6) (5) 3

Sector (13) (6) 12


3M 69.0 18.4

12M 39.7 10.6

Raw Beta 6m 2yr

1.45 1.15


Bloomberg code SPC AB

Website www.saharapcc.com



Free float 90.0

Valuation multiples

08 09 TTM

P/E (x) NM 80.3 10.2

P/B (x) 3.5 2.1 1.7

P/Sales (x) N/A N/A 4.9


DPS N/A N/A N/A



5,000

5,500

6,000

6,500

7,000


15

20

25

30

TASI SPC (RHS)

Source: Bloomberg


Al Zamil Group Holding Company

7.90


PETROCHEMICALS

Sahara Petrochem Also known as

Sahara, SPCO

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. SPC has four subsidiaries: Al Waha Petrochemical,

Tasnee and Sahara Olefins (TSOC), Saudi Acrylic Acid and Arabian Chlor

Vinyl Company (ACVC).

� Business brief: Al Waha has a production capacity of 467k tons per annum

(tpa) of propylene, which is used as an input for production of 450k tpa of

polypropylene. Trial operations started in May 2009 and commercial

production is expected to commence in 2Q10. Saudi Ethylene and

Polyethylene Co. (SEPC) has a production capacity of 1mn tpa ethylene and

800k tpa of polyethylene.

� Financials: Once the Al Waha plant begins commercial production (expected

2Q10), Sahara will begin reporting revenues as income in 2009 was mainly

due to income from associates from SEPC (24% owned by Sahara). In 1Q10,

Sahara reported net income of SR116mn compared to a net loss of

SR14.1mn in 1Q09 (SEPC began contributing to income from 3Q09). We

expect revenues and earnings to ramp up quickly in 2010/2011 as the full

year impact of SEPC benefits 2010 figures and Al Waha adds from the 2Q10

and for the full year 2011.

� Recent developments: In April 2010, Sahara Petrochemical and its joint

venture National Industrial Corporation signed a deal worth USD266.7mn

with Germany’s Evonik Industries AG to construct an 80,000 metric tons a

year polymers plant in Jubail Industrial City. During the same month, SPCO

announced plans to raise capital for funding its three new projects. The

projects include a caustic soda joint venture with Saudi Arabian Mining Co.,

and its acrylic acid and butanol ventures.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)

Net Revenues SRmn - - 1,242 2,358 N/M N/M

EBITDA SRmn (39) (74) 474 887 N/M N/M

Net Income SRmn (41) 76 601 723 N/M N/M

Assets SRmn 4,721 5,956 7,396 8,451 26.2 21.4

Equity SRmn 1,769 2,938 3,539 4,263 66.1 34.1

Total Debt SRmn 2,222 2,260 2,860 2,631 1.7 5.8

Cash & Equiv SRmn 453 556 965 1,005 22.7 30.4

EBITDA Mgn % N/M N/M 38.2 37.6 - -

Net Mgn % N/M N/M 48.4 30.7 - -

ROE % (2.2) 3.2 18.6 18.5 - -

ROA % (1.1) 1.4 9.0 9.1 - -

Div Payout % - - - - - -

EPS SR (0.2) 0.4 2.1 2.5 N/M N/M

BVPS SR 9.4 10.0 15.1 14.5 2.1 15.4


55

JUNE 2010 YANSAB

Neutral


Price (SR) 39.4


Stock details





Absolute (14) 1 33

Market (6) (5) 3

Sector (13) (6) 12


3M 160.3 42.7

12M 89.7 23.9

Raw Beta 6m 2yr

1.90 1.24


Bloomberg code YANSAB AB

Website www.yansab.com.sa



Free float 39.72

Valuation multiples

08 09 TTM

P/E (x) N/A N/A 7.7

P/B (x) 3.9 3.9 2.6



DPS N/A N/A N/A



5,0005,5006,000

6,5007,000


5060

TASI YANSAB (RHS)

Source: Bloomberg


SABIC 51.0


9.2


PETROCHEMICALS

YansabYanbu National Petrochemicals Company (YANSAB) was established in

2006 to set up a 4mn tons per annum petrochemical complex in the

Yanbu Industrial City. Saudi Basic Industries Corporation holds a

majority stake (55%) in Yansab.

� Business brief: Once fully operational, the approximately SR18bn complex

is expected to produce ethylene (1.3mn mtpa), Propylene (400k tpa),

Polypropylene (40.4mn mtpa), Polyethylene—low-density and high-density—

(400k tpa each), Mono, Di and Tri Ethylene Glycol (770k tpa total), Benzene

(170k tpa), Butene -1 (65k tpa), Butene -2 (50k tpa), Methyl Tertiary Butyl

Ether (20k tpa) and Benzene Toluene Xylene (70k tpa).

� Financials: After the commencement of commercial operations in 1Q10,

Yansab posted revenues of SR688.6mn and net income of SR259.4mn in

1Q10 compared to the net loss of SR8.2mn recorded in 1Q09. Given that

1Q10 only had one month of contribution from the start of operations, we

expect a rapid rise in revenues and earnings through the year and into

2011e. For 2010e, we expect revenues of SR7.5bn from zero in 2009 and

net income of SR2.9bn from a slight loss in 2009.

� Recent developments: Yansab commenced commercial production in

March 2010.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)

Net Revenues SRmn - - 7,485 9,771 N/A N/A

EBITDA SRmn (26) (29) 3,902 4,294 N/A N/A

Net Income SRmn (26) (29) 2,874 2,902 N/A N/A

Assets SRmn 18,677 21,124 23,719 25,487 13.1 10.9

Equity SRmn 5,697 5,668 8,542 10,882 (0.5) 24.1

Total Debt SRmn 11,797 14,611 13,696 12,748 23.9 2.6

Cash & Equiv SRmn 1,033 606 2,339 4,037 (41.4) 57.5

EBITDA Mgn % - - 52.1 43.9 - -

Net Mgn % - - 38.4 29.7 - -

ROE % (0.4) (0.5) 40.5 29.9 - -

ROA % (0.2) (0.1) 12.8 11.8 - -

Div Payout % - - - 19.4 - -

EPS SR (0.1) (0.1) 5.1 5.2 N/A N/A

BVPS SR 10.1 10.1 15.2 19.3 (0.5) 24.0


56

JUNE 2010 SIPCHEM

Overweight


Price (SR) 21.7


Stock details





Absolute (12) (4) 3

Market (6) (5) 3

Sector (13) (6) 12


3M 38.4 10.2

12M 26.3 7.0

Raw Beta 6m 2yr

1.18 1.12


Bloomberg code SIPCHEM AB

Website www.sipchem.com



Free float 82.14

Valuation multiples

08 09 10E

P/E (x) 13.4 51.2 8.3

P/B (x) 1.5 1.5 1.3

P/Sales (x) 4.2 8.7 2.6

Div yield (%) 4.6 4.6 4.6

DPS 1.0 1.0 1.0



5,000

5,500

6,000

6,500

7,000


20

25

30

TASI Sipchem (RHS)

Source: Bloomberg


Zamil Group Holding Company

10.1

National Manufacturing Holding Co.

8.3


Al Olayan Financial Company 5.6


PETROCHEMICALS

SipchemSaudi International Petrochemical Company (Sipchem), established in

1999, was the first company to set up methanol and butanediol plants in

KSA. Sipchem invests in petrochemical and chemical businesses and

currently operates through its two affiliates, International Methanol Co.

(IMC) and International Diol Co. (IDC).

� Business brief: IMC produces close to 1mn tpa of methanol, while IDC

manufactures 75,000 tpa of butanediol. The vinyl acetate monomer plant in

Jubail, post completion, is expected to have an annual production capacity of

450,000 tons of acetic acid, 330,000 tons of vinyl acetate monomer and

345,000 tons of carbon monoxide. Moreover, Sipchem aims to establish a

fully integrated Olefins Derivatives Complex in New Jubail-II by 2013.

� Financials: We expect a strong ramp in revenues and earnings for Sipchem

in 2010e as the commercial start of its phase II expansion is expected to

begin during 2Q10. Earnings from this Acetyl complex will likely boost 2010e

net income by over 6x to SR870mn. In 1Q10, Sipchem’s revenue grew

91.3% YoY to SR305.6mn from SR160mn in 1Q09. Net income increased

175.5% to SR81.2mn in 1Q10 from SR29.2mn in 1Q09. The growth can be

ascribed to higher petrochemical prices and profit margins.

� Recent developments: In June 2010, Sipchem commenced commercial

operations at its carbon monoxide and acetic acid plants at its acetyl

complex in Jubail industrial City.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)

Net Revenues SRmn 1,709 830 2,817 3,741 (51.4) 29.9

EBITDA SRmn 1,151 340 1,721 2,269 (70.4) 25.4

Net Income SRmn 537 141 870 1,171 (73.8) 29.7

Assets SRmn 10,833 11,818 12,377 12,852 9.1 5.9

Equity SRmn 4,965 4,922 5,457 6,292 (0.9) 8.2

Total Debt SRmn 3,106 4,241 4,241 3,541 36.5 (2.9)

Cash & Equiv SRmn 2,581 1,831 1,724 1,743 (29.1) (12.3)

EBITDA Mgn % 67.4 41.0 61.1 60.7 - -

Net Mgn % 31.4 17.0 30.9 31.3 - -

ROE % 13.5 2.8 16.8 19.9 - -

ROA % 5.8 1.2 7.2 9.3 - -

Div Payout % 60 238 38 28 - -

EPS SR 1.7 0.4 2.6 3.5 (74.7) 28.4

BVPS SR 14.9 14.8 16.4 18.9 (0.8) 8.2


57

JUNE 2010 ADVANCED PETROCHEM

Not Covered



Stock details





Absolute (11) (8) (25)

Market (6) (5) 3

Sector (13) (6) 12


3M 41.5 11.1

12M 33.4 8.9

Raw Beta 6m 2yr

1.19 1.12


Bloomberg code APPC AB

Website www.advancedpetrochem.com



Free float 95.72

Valuation multiples

08 09 TTM

P/E (x) 40.2 66.4 61.7

P/B (x) 5.2 5.1 5.1

P/Sales (x) 5.8 5.8 5.4

Div yield (%) N/A 5.3 4.0

DPS N/A 1.00 0.8



5,000

5,500

6,000

6,500

7,000


20

25

30

TASI APPC (RHS)

Source: Bloomberg


National Polypropylene Company [NPPC]

7.9

Abdullah Saad Al-Rahman Al-Rashed

5.2


PETROCHEMICALS

Advanced Petrochem Also known as

APPC

Advanced Petrochemical Company (APPC), based in Dammam, was

established in 2005 to develop a SR3bn integrated propane

dehydrogenation and polypropylene complex in Jubail Industrial City. The

facility has an annual production capacity of 450,000 tons of

polypropylene. It commenced commercial operations in 2008.

� Business brief: APPC has an annual production capacity of 450,000 tons of

polypropylene, which is used in several applications such as for

manufacturing fabrics, moldings, pipes and furniture. The company

appointed Vinmar International (Houston), Mitsubishi Corp. and Domo

(Belgium) to offtake the output from this complex. Most of the production

will be shipped through the ports of Dammam, Jeddah and Jubail.

� Financials: In 1Q10, APPC’s revenue grew 25.7% YoY to SR464.5mn from

SR369.5m in 1Q09. The net income increased 22.6% YoY to SR52.6mn

during the same period, largely due to a rise in the prices of APPC’s

products.

� Recent developments: In April 2010, APPC announced the completion of

maintenance of its propylene and polypropylene units, which restarted

operations on 31 March 2010. APPC was fined SR50,000 by Saudi Arabia’s

Capital Market Authority for violating disclosure rules after it delayed the

announcement of its maintenance work at its propylene and polypropylene

units.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn - 1,459 1,467 464 25.7 -

EBITDA SRmn (1) 366 357 108 12.4 NM

Net Income SRmn 2 210 127 53 22.6 666.6

Assets SRmn 2,545 3,507 3,414 3,340 (5.9) 15.8

Equity SRmn 1,416 1,617 1,670 1,651 (0.5) 8.6

Total Debt SRmn 1,070 1,713 1,474 1,434 (16.3) 17.4

Cash & Equiv SRmn 89 216 296 259 (19.0) 82.7

EBITDA Mgn % N/M 25.1 24.3 23.3 - -

Net Mgn % N/M 14.4 8.7 11.3 - -

ROE % 0.2 13.9 7.7 12.7 - -

ROA % 0.1 6.9 3.7 6.2 - -

Div Payout % - - 111.1 202.7 - -

EPS SR 0.0 1.5 0.9 0.4 23.3 570.8

BVPS SR 10.0 11.4 11.8 11.7 (0.4) 8.6


58

JUNE 2010 SAUDI KAYAN PETROCHEMICAL

Neutral


Price (SR) 18.5


Stock details






Market (6) (5) 3

Sector (13) (6) 12


3M 549.6 146.5

12M 268.3 71.5

Raw Beta 6m 2yr

1.21 1.14


Bloomberg code KAYAN AB

Website www.saudikayan.com



Free float 40.56

Valuation multiples

08 09 10E

P/E (x) 56.0 N/A N/A

P/B (x) 1.8 1.8 1.8



DPS N/A N/A N/A



5,000

5,500

6,000

6,500

7,000


15

20

25

TASI Kayan (RHS)

Source: Bloomberg


Saudi Basic Industries Corporation

35.0

Kayan Petrochemical Company

20.0


PETROCHEMICALS

Saudi KayanSaudi Kayan Petrochemical Company (Kayan) was established by SABIC

(35% stake) and Al Kayan Petrochemical (20%) in 2007 to set up a

SR38bn petrochemical complex in Jubail Industrial City. The plant has

the capacity to produce approximately 6mn tons of petrochemical

products each year.

� Business brief: The complex, believed to be the world's largest integrated

petrochemical plant, will manufacture specialized chemicals such as

polycarbonate, bisphenol A, acetone and ethanolamines, besides ethylene,

polyethylene, propylene and ethylene glycols. Production is expected to

commence by 2Q10.

� Financials: Since Kayan is yet to start operations, the company has limited

financial history. We assume that commercial operations of its plants will

begin in 2Q11 thus do not assume any revenue contribution for 2010.

However, once the company does start operations, we expect a quick ramp

in revenues and earnings and forecast 2011e revenues of SR12bn and net

income of SR2.3bn.

� Recent developments: In April 2010, Kayan announced that it would

complete the construction of its LDPE plant at its petrochemical complex in

Jubail in the first half of 2012. In line with this, the company signed a

contract with South Korea’s Daelim Industrial Co. in March 2010 to design

and build the plant for USD426mn. Once operational, the plant will have an

annual production capacity of 300,000 tons. In January 2010, Kayan

awarded a contract for the construction of a 210,000 tons per year amines

plant at its mega complex to CTCI Corp of Taiwan.

Company financials

2008* 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)

Net Revenues SRmn - - - 12,134 - -

EBITDA SRmn 0 0 5 4,028 - NM

Net Income SRmn 494 (17) (96) 2,279 N/M 66.5

Assets SRmn 22,402 35,808 36,099 38,648 59.8 19.9

Equity SRmn 15,494 15,477 15,381 17,660 (0.1) 4.5

Total Debt SRmn 5,815 19,113 19,113 17,878 228.7 45.4

Cash & Equiv SRmn 3,522 2,472 2,685 1,761 (29.8) (20.6)

EBITDA Mgn % - - N/A 33.2 - -

Net Mgn % - - N/A 18.8 - -

ROE % 3.2 (0.1) (0.6) 13.8 - -

ROA % 2.6 (0.1) (0.3) 6.1 - -

Div Payout % - - N/A N/A - -

EPS SR 0.3 (0.0) (0.1) 1.5 N/M 66.4

BVPS SR 10.3 10.3 10.3 11.8 (0.1) 4.5

Source: Tadawul, Zawya, Company, NCBC Research estimates * 2008 figures represents the financial performance for 19 months period ending Dec 31, 2008

59

JUNE 2010 PETRO RABIGH

Not Covered



Stock details





Absolute (14) (22) (15)

Market (6) (5) 3

Sector (13) (6) 12


3M 103.2 27.5

12M 87.8 23.4

Raw Beta 6m 2yr

1.63 1.25


Bloomberg code PETROR AB

Website www.petrorabigh.com



Free float 17.42

Valuation multiples

08 09 TTM

P/E (x) N/A N/A N/A

P/B (x) 2.6 3.0 2.9

P/Sales (x) 3.6 0.8 0.7


DPS N/A N/A N/A



5,000

5,500

6,000

6,500

7,000


25

30

35

40

TASI Petro Rabigh (RHS)

Source: Bloomberg


Aramco 37.5

Sumitomo Chemical Company 37.5


PETROCHEMICALS

Petro Rabigh Rabigh Refining and Petrochemical Co. (Petro Rabigh), established at

Rabigh in 2005, is a joint venture between Saudi Aramco and Sumitomo

Chemical, of Japan. The USD10bn project has the capacity to produce

18.4mn tons of refined petroleum products and 2.4mn tons of

petrochemical products each year.

� Business brief: Aramco is expected to supply 400k barrels of crude oil,

95mn cubic feet (mcf) of ethane and about 15k barrels of butane on a long-

term, fixed-price basis to Petro Rabigh. Sumitomo provides the technological

and marketing expertise. The plant is equipped with a sophisticated High

Olefins Fluid Catalytic Cracker (HOFCC) and Ethane Cracker. End products

will be distributed in Saudi Arabia, Europe and Asia (mainly China) through

the plant’s deep-water port.

� Financials: Petro Rabigh’s revenues grew 89.7% YoY to SR10.7bn in 1Q10

from SR5.6bn in 1Q09. The company’s net income increased to SR271.5mn

in 1Q10 compared to the net loss of SR28.6m recorded in 1Q09 due to an

increase in the prices of refined and petrochemical products.

� Recent developments: In May 2010, Petro Rabigh announced plans to shut

all units at its complex for 45 days during 2Q11 for regular tests and

inspection. Earlier, in April, Petro Rabigh had announced its expansion plans

and welcomed bids for construction of the second phase of the giant

complex. Petro Rabigh intends to add 17 new products through the

expansion, which is estimated to cost the company approximately SR25bn.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn - 6,543 29,423 10,676 89.7 N/M

EBITDA SRmn (423) (1,029) (144) 447 257.0 N/M

Net Income SRmn (443) (1,256) (1,433) 272 N/M N/M

Assets SRmn 26,961 47,911 52,146 48,246 (1.7) 39.1

Equity SRmn 5,953 9,264 7,831 8,102 (12.3) 14.7

Total Debt SRmn 19,444 31,569 33,995 28,708 (13.3) 32.2

Cash & Equiv SRmn 186 1,534 1,306 1,882 75.2 165.0

EBITDA Mgn % N/M (15.7) (0.5) 4.2 - -

Net Mgn % N/M (19.2) (4.9) 2.5 - -

ROE % (10.5) (16.5) (16.8) 13.6 - -

ROA % (2.3) (3.4) (2.9) 2.2 - -

Div Payout % - - - - - -

EPS SR (0.7) (1.5) (1.6) 0.3 N/M N/A

BVPS SR 9.1 10.6 8.9 9.3 (12.2) (0.7)


60


Cement


3010 Arabian Cement 66

3020 Yamama Cement 67

3030 Saudi Cement 68

3040 Qassim Cement 69

3050 Southern Cement 70

3060 Yanbu Cement 71

3080 Eastern Cement 72

3090 Tabuk Cement 73


Cement

Excess supply remains a concern The Saudi market for cement has remained one of the strongest globally, helped by

continued government support for large infrastructure projects in the country and a

relatively strong economy. Domestic cement sales volumes increased by 23% in

2009 and we expect this to expand a further 19% in 2010e to 44 million tons.

However, we believe capacity in the Saudi cement sector will continue to exceed

demand. This concern is exacerbated by the ongoing conditional export ban which

we believe is unlikely to be completely lifted in the short-term. In the scenario that

the ban is completely lifted, we believe the demand base in the GCC region is

significantly lower than a few years ago when much of the current capacity

expansion projects were initiated. Thus, simply allowing exports will not completely

change the outlook for the sector.

We expect the ongoing excess supply situation to lead to lower pricing and

ultimately to margin pressure for the incumbent cement companies. We forecast

average gross margins for these companies to decline to 48% in 2015e from the

54% in 2009. In addition, we expect pressure from new companies to continue. The

incumbent’s lost 20% market share through 2008 and 2009 as new companies

entered the market and we expect this to continue.

Cost advantages lead to higher returnsKSA cement companies’ impressive returns compared to GCC peers are due to their

significant cost advantages. Cement companies in KSA have access to low cost raw

materials compared to their global peers due to access to limestone quarries under

the license granted by the government. The also have access to low cost natural

gas, which is used as fuel by cement plants. As a result, the cost of production for

KSA-based companies is significantly lower than the GCC and global players. Thus,

average gross margins for KSA cement companies are around 54% compared to

the GCC average of 33%.

Exhibit 54: Revenues of GCC cement companies,

2007–09(USD mn)

Exhibit 55: Comparison of ROE and P/E of GCC

companies, 2009 (%)

0

500

1,000

1,500

2,000

2,500

2007 2008 2009

KSA UAE Kuwait Oman Qatar

0

5

10

15

20

25

30

5 10 15 20 25

P/E (x)

RO

E (

%)



Government backed

infrastructure construction

to aid cement demand

Expansion by new players

coupled with export ban

resulting in oversupply

Cost advantage over GCC

players raise KSA cement

players attractiveness

62


CEMENT

The sector fares well on ROE, with attractive P/E multiples. Of the twelve cement

producers operating in KSA, eight are listed on the Tadawul.

Cement production by the twelve companies in KSA grew 8.6% YoY to 32.9mt,

whereas their total domestic sales volumes grew 11.4% YoY to 29.9mt during

2008. Sales volumes in 2009 increased 16% to 37.9 mn tons, driven by increased

construction activities in the region. Yamama Cement reported the highest increase

in sales volumes, while Yanbu Cement’s sales volumes declined the most in 2009.

Higher transport costs and pricing pressure to continueKSA cement companies have experienced a significant rise in transportation costs

post the export ban and due to a strengthening of competition. Traditionally,

cement companies in KSA focused on selling in their immediate regions due to

under developed road and rail networks, or in some cases also exported (given

selling prices about 40% higher than domestic prices). However, the export ban

and rise in competition have pushed companies to venture outside their regional

boundaries, thereby increasing their sales and distribution expenses.



0

1,500

3,000

4,500

6,000

7,500

9,000

2007 2008 2009

Saudi Cement Yamama Southern Province

Yanbu Cement Qassim Cement Eastern Cement

Others

35

45

55

65

75

2007 2008 2009

Saudi Cement YamamaSouthern Province Yanbu CementQassim Cement Eastern CementOthers


Furthermore, due to pressure on prices, cement companies in KSA experienced falls

in profitability during 2009. Price per ton fell 7% to SR235 in 2009 compared to


Company% weight in Index

as on Dec 2009Net Margin (%)

2009ROE (%)

2009Dividend yield

(%)

Saudi Cement Co. 0.49 43.7 19.1 8.0

Yamama Saudi Cement Co. 0.54 48.3 18.4 6.3

Southern Province Cement Co 0.78 55.6 29.8 7.4

Yanbu Cement Co 0.44 50.9 19.9 7.3

Qassim Cement Co 0.52 53.2 28.6 8.9

Eastern Province Cement Co 0.36 45.1 17.3 7.2

Arabian Cement Co 0.29 43.3 14.3 3.6

Tabuk Cement Co 0.15 45.4 11.0 7.2

Source: Bloomberg, Tadawul, Company data, NCBC Research

Rise in transportation cost

due to export ban and

competition impacts

profitability of companies

63


CEMENT

SR253 per ton in 2008. Thus, revenue generated by the eight listed players

declined 0.9% to SR7.5 bn. Qassim Cement reported the highest increase in

revenue of 20.3%, while Arabian Cement’s revenue declined the most in 2009, by

19.6%. Furthermore, adjusted net profits declined 6.7% to SR3.68 bn in 2009. On

a net income basis, Qassim Cement reported the highest increase at 1.7%, while

Tabuk Cement’s net profits declined the most in 2009, by 19.9%.

Reasonable valuations, but limited growth As of 31 December 2009, the sector’s P/E and P/BV multiple stood at 11.8x and

2.3x, respectively, versus 17.9x and 1.9x for the overall market. As of 31 May

2010, the P/E and P/B multiples were 11.1x and 2.3x respectively. While Southern

Cement and Qassim Cement reported the highest ROEs in the range of 29-30%,

Tabuk Cement reported the lowest RoE in the industry at 11%, for 2009.


(%)


(%)

Saudi Cement

Yamamah

SouthernProvince

Yanbu Cement

Qassim Cement

EasternCement

ArabianCement

Tabuk Cement

10

13

16

19

22

25

28

31

34

37

1 2 3

P/B (x)

RoE (

%) Saudi

Cement

Yamamah

SouthernProvince

Yanbu Cement

Qassim Cement

EasternCement

ArabianCement

Tabuk Cement9

12

15

18

21

24

27

30

33

36

1 2 3 4 5

P/B (x)

RoE (

%)


Average daily turnover for the sector stood at SR48mn per day in 2009 and has

averaged SR51mn per day to date. Qassim Cement had the highest average daily

turnover at SR13mn in 2009.

Exhibit 61: Avg. daily turnover, Jan09 – Mar10

(SR mn)

Exhibit 62: Share price movement, Jan09 – Mar10

Rebased to 100 on 1st Jan-09

88

5

13

5 5

4 4

0

3

6

9

12

15

Yam

am

a

Saudi

East

ern

Qas

sim

Yanbu

Ara

bia

n

Sou

ther

n

Tabuk

70

90

110

130

150

170

190

Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10

Yamama Saudi Eastern Qassim

Yanbu Arabian Southern Tabuk


64


CEMENT

Oversupply to continue in the medium-term Going forward, ongoing construction projects (including the construction of the six

planned economic cities), public infrastructure projects, and expansion projects in

sectors such as power, utilities, and petrochemicals are likely to help the cement

industry in KSA to sustain its growth. However, as new players commence

operations, supply in KSA is expected to reach 52 million tons in 2010e, and 60

million tons in 2012e, as some players expand capacity. Furthermore, with the

export ban unlikely to be lifted in the near future, we expect the oversupply

situation in the region to worsen. Thus, we expect cement supply to outstrip

demand in KSA, squeezing prices and affecting the profitability of companies.

Nevertheless, KSA players’ strong margins compared to both the GCC and global

players remains a key advantage. Additionally, any move by the KSA government

to lift export restrictions could act as a growth catalyst for the Kingdom’s cement

industry.

Dividend yields a key positive Generally strong profitability (gross margins in the 54% range), and decreasing

expansion opportunities mean the Saudi cement companies have strong balance

sheets and are very positive cash flow. Most of the companies thus pay out

significant dividends (an average payout ratio of 75% in 2009) and end up with

attractive dividend yields. We believe this is a positive for the sector, especially

during times of equity market volatility, as it often limits the declines in the stocks

NCBC Recommendations in the Sector Despite strong demand factors driven by ongoing construction activities in KSA, we

expect current supply concerns due to capacity expansion and export ban to limit

the sector’s growth prospects in medium term. Currently, we have six stocks under

our coverage which includes Yamama Cement, Eastern Cement, Yanbu Cement,

Saudi Cement, Southern Cement and Qassim Cement.


Stock Current Rating PT (SR) Comments

Yamama Cement (3020.SE)

Overweight 58.0 Strong demand in Riyadh coupled with highest capacity in the central region a positive. Competition and deterioration in operational performance a risk. Ability to get a higher share in new projects coupled with rationalization of cost structure to boost top and bottom-line.

Eastern Cement (3080.SE)

Neutral 44.3 Shifting focus to domestic market due to export, but limitation on exports remains key downside. Still focused on Eastern region for sales, however lack of major projects limits demand upside.

Yanbu Cement (3060.SE)

Neutral 39.4 Western region fundamentals remain strong, volatility in project progress leads to top-line risk in the near term. Increase in the pace of implementation of planned projects to prove near term catalyst.

Saudi Cement (3030.SE)

Neutral 41.2 Based in the Eastern region, away from most of the key demand centers. As long as the export ban remains, will hinder growth and profitability.

Southern Cement (3050.SE)

Underweight 60.0 Well positioned for Jizan Economic City in the South. New facility near Makkah also helps. However competition is fierce and new capacities will take some time to complete.

Qassim Cement (3040.SE)

Neutral 71.3 Lowest cost cement producer in the country with very low inventory levels. Lack of capacity expansion plans could limit growth.


65

JUNE 2010 ARABIAN CEMENT

Not Covered



Stock details





Absolute (6) (17) (23)

Market (6) (5) 3

Sector (6) (10) 2


3M 6.0 1.6

12M 4.0 1.1

Raw Beta 6m 2yr

1.07 0.77


Bloomberg code ARCCO AB

Website www.arabiancement.com



Free float 71.89

Valuation multiples

08 09 TTM

P/E (x) 8.9 16.7 19.2

P/B (x) 1.3 1.3 1.2

P/Sales (x) 4.0 3.9 3.9

Div yield (%) 8.3 3.5 NA

DPS 3.0 1.3 NA



5,000

5,500

6,000

6,500

7,000


35

40

45

50

TASI Arab Cement (RHS)

Source: Bloomberg



11.8

National Commercial Bank (NCB)

9.9

Abdul Aziz Abdullah Sulaiman Al Sulaiman

7.5


5.7



CEMENT

Arabian Cement Also known as

ACC

Arabian Cement Company (ACC) was the first company to start cement

production in Saudi Arabia (1958). ACC mainly produces portland

cement, portland pozzolan cement, sulfate-resistant cement and ready-

mix concrete. As of 2009, ACC had capacity of 3.5mn tons of cement and

3.3mn tons of clinker per year.

� Business brief: ACC, the oldest cement company in the Kingdom, produced

3.0mn tons of cement and clinker in 2009. Its market share dipped from

9.3% in 2007 to 7.9% in 2009, mainly due increased competition following

the entry of four new players in the market.

� Financials: ACC’s financial performance suffered in 2009 due to a series of

write-downs during 4Q09 of approximately SR150mn, which led to a near

halving of net income for the year. For the 1Q10, ACC’s revenues decreased

1.0% YoY to SR201.7mn. However, its EBITDA margin declined considerably

to 56.0% in 1Q10 from 60.3% in 1Q09. ACC’s net margin also declined

considerably to 40.5% in 1Q10 from 50.9% in 1Q09, leading to its net

income declining 21.2% YoY to SR 81.7mn in 1Q10.

� Recent developments: In April 2010, ACC obtained a 20-year license to

operate a quarry in the Thaalaba Mountains in Mecca. Also, ACC’s 1.5mn

tons per annum cement plant in Hadramout, which had been under

construction for the past three years, commenced operations in early April

2010. On 10 February 2010, ACC announced a cash dividend of SR1.25 per

share for the year 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 722 721 737 202 (0.9) 1.0

EBITDA SRmn 436 389 451 113 (8.1) 1.7

Net Income SRmn 392 324 172 82 (21.2) (33.8)

Assets SRmn 2,366 3,518 3,830 3,972 10.3 27.2

Equity SRmn 1,841 2,244 2,222 2,312 4.6 9.9

Total Debt SRmn 282 1,017 1,296 1,393 20.3 114.3

Cash & Equiv SRmn 117 451 52 152 (24.7) (33.5)

EBITDA Mgn % 60.4 53.9 61.2 55.9 - -

Net Mgn % 54.3 44.9 23.3 40.5 - -

ROE % 22.5 15.9 7.7 14.4 - -

ROA % 18.8 11.0 4.7 8.4 - -

Div Payout % 71.4 74.1 58.1 - - -

EPS SR 5.6 4.1 2.2 1.0 (23.1) (38.0)

BVPS SR 26.3 28.1 27.8 28.9 3.8 2.8

Source: Tadawul, Bloomberg, Zawya, Company, NCBC Research

66

JUNE 2010 YAMAMA CEMENT

Overweight


Price (SR) 48.3


Stock details





Absolute (5) (8) 24

Market (6) (5) 3

Sector (6) (10) 2


3M 10.0 2.7

12M 7.5 2.0

Raw Beta 6m 2yr

0.62 0.79


Bloomberg code YACCO AB

Website www.yamamacement.com



Free float 87.35

Valuation multiples

08 09 10E

P/E (x) 10.7 11.6 10.3

P/B (x) 2.3 2.1 2.0

P/Sales (x) 5.8 5.6 5.0

Div yield (%) 4.1 6.2 7.2

DPS 2.0 3.0 3.5



5,0005,5006,0006,5007,000


40

50

60

TASI Yamamah Cement (RHS)

Source: Bloomberg


Prince Sultan Mohammed Saud AlKabeer Al Saud

9.7


7.1



CEMENT

Yamama Cement Also known as

YSCC

Yamama Saudi Cement Company (YSCC) was founded in Riyadh in 1961

when it commenced production with a limited capacity of 0.9mn tons per

year. As of 2009, YSCC’s annual cement and clinker production

capacities have increased to 6.3mn tons and 6.0mn tons, respectively.

Yamama is well located to take advantage of the increased momentum

of the construction sector in 2010, particularly in the Central region. A

low cost base and self integrated plant remain key positives for the

stock.

� Business brief: Yamama is one of the few established cement companies in

the Kingdom which is successfully competing in the face of the industry

excess supply. This is mainly due to its strategic location in Riyadh, where it

is close to most of the major construction projects currently ongoing in the

Kingdom. In 2009, its market share of cement deliveries increased to 14.1%

from 13.6% in 2008. So far in 2010, its share of local cement deliveries

increased to 12.8% in 1Q10 compared to 12.6% in 1Q09.

� Financials: Despite industry revenues falling in 2009, Yamama increased

sales by 3.6% and we expect a further 12% increase in 2010e. Net income

was under pressure in 2009 due to pricing pressure, however we believe the

company will be able to maintain cost control in order to return to earnings

growth in 2010e. In 1Q10, the company’s sales increased a healthy 34.9%

YoY to SR349.0mn. YSCC’s EBITDA margin contracted to 62.4% during the

quarter compared to 69.0% in 1Q09, however net income rose 31% YoY due

to the strong increase in sales.

� Recent developments: In January 2010, YSCC announced a SR2.0 per

share dividend for the year 2009.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)


EBITDA SRmn 809 766 822 808 (5.3) (0.0)

Net Income SRmn 611 562 634 623 (8.1) 0.7

Assets SRmn 3,589 3,694 3,705 3,803 2.9 1.9

Equity SRmn 2,841 3,055 3,214 3,362 7.5 5.8

Total Debt SRmn 748 639 491 441 (14.5) (16.1)

Cash & Equiv SRmn 643 712 708 903 10.8 12.0

EBITDA Mgn % 72.0 65.9 62.9 60.7 - -

Net Mgn % 54.4 48.3 48.5 46.8 - -

ROE % 23.5 19.1 20.2 18.9 - -

ROA % 17.0 15.4 17.1 16.6 - -

Div Payout % 44.4 71.4 74.5 76.1 - -

EPS SR 4.5 4.2 4.7 4.6 (6.7) 0.7

BVPS SR 21.0 22.6 23.8 24.9 7.6 5.8


67

JUNE 2010 SAUDI CEMENT COMPANY

Neutral


Price (SR) 44.3


Stock details






Market (6) (5) 3

Sector (6) (10) 2


3M 11.1 3.0

12M 8.2 2.2

Raw Beta 6m 2yr

1.06 1.07


Bloomberg code SACCO AB

Website www.saudicement.com.sa



Free float 86.42

Valuation multiples

08 09 10E

P/E (x) 10.9 11.6 10.4

P/B (x) 2.4 2.2 2.0

P/Sales (x) 5.4 5.0 4.3

Div yield (%) 7.9 7.9 5.2

DPS 3.5 3.5 2.3



5,000

5,500

6,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-10303540455055

TASI Saudi Cement (RHS)

Source: Bloomberg



8.5

Khaled Abdul Rahman Saleh Al Rajhi

7.9



CEMENT

Saudi Cement Also known as

SCC

Saudi Cement Company (SCC) was established in 1955. It currently

specializes in the production of ordinary Portland cement, sulphate

resisting cement and oil well cement. SCC runs two plants, at Hofuf and

Ain Dar, with an annual installed capacity of 7.0mn tons of cement and

6.6 mn tones of clinker in 2009. SCC has been able to leverage on its

high stock levels by meeting demand easily. However, this has not been

met by similar profitability growth due to lower margins from its high

transport costs/low cement prices.

� Business brief: SCC has been losing ground in the domestic market mainly

due to competition from new entrants. It currently has a market share of

14.6%, which has been steadily declining over the past 3 years. SCC also

has a 36% equity stake in United Cement Company, Bahrain, and another

33.3% stake in Cement Product Industry Co. Ltd., which meets the cement

packaging requirements of SCC and its partner companies.

� Financials: SCC’s 2009 revenues grew 6.8%, however net income fell 6.2%

as the company suffered from a margin squeeze due to continued pricing

pressure. SCC has one of the lowest selling prices in the industry and one of

the highest cost bases, which leads to the lowest relative margins in the

sector amongst the listed companies (2009 gross and net margins of 51%

and 43.7% respectively). So far in 2010, the company is showing a decent

rebound with 1Q10 revenues rising 17.2% YoY to SR410.9mn and net

income rising 16.2% YoY to SR165mn.

� Recent developments: In May 2010, SCC increased its capital by issuing

one bonus share for every two shares held. The bonus issue has led to a

50% increase in capital to SR1.53bn made up of 153 million shares with a

par value of SR10.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)


EBITDA SRmn 713 820 887 825 15.0 5.0

Net Income SRmn 621 582 654 609 (6.2) (0.6)

Assets SRmn 4,530 4,931 5,078 5,061 8.9 3.8

Equity SRmn 2,848 3,071 3,372 3,621 7.8 8.3

Total Debt SRmn 1,682 1,878 1,706 1,439 11.7 (5.1)

Cash & Equiv SRmn 31 187 144 291 494.7 110.0

EBITDA Mgn % 56.6 60.9 55.9 54.8 - -

Net Mgn % 49.3 43.3 41.2 40.4 - -

ROE % 22.2 19.7 20.3 17.4 - -

ROA % 14.8 12.3 13.1 12.0 - -

Div Payout % 57.4 61.3 53.7 57.8 - -

EPS SR 6.1 5.7 4.3 4.0 (6.4) (13.3)

BVPS SR 27.9 30.1 33.1 35.5 7.9 8.4


68

JUNE 2010 QASSIM CEMENT

Neutral


Price (SR) 69.0


Stock details





Absolute (3) (6) 26

Market (6) (5) (3)

Sector (6) (10) 2


3M 8.2 2.2

12M 12.7 3.4

Raw Beta 6m 2yr

0.54 0.75


Bloomberg code QACCO AB

Website www.qcc.com.sa



Free float 51.31

Valuation multiples

08 09 10E

P/E (x) 12.0 10.2 11.6

P/B (x) 3.6 3.4 3.4

P/Sales (x) 7.6 6.3 6.1

Div yield (%) 11.6 8.7 7.2

DPS 8.0 6.0 5.0



5,000

5,500

6,000

6,500

7,000


50

60

70

80

TASI Qassim Cement (RHS)

Source: Bloomberg




19.9



CEMENT

Qassim Cement Also known as

QCC

Qassim Cement Company (QCC) was founded in 1976 in Buraydah, which

lies in the central region of KSA, 330 km northwest of Riyadh.

Commercial production started in 1981 with the opening of a 2,000 tons

per day clinker facility. As of December 2009, QCC had a total production

capacity of 4.1mn tons of cement and 3.5mn tons of clinker.

� Business brief: QCC has held a steady share in the domestic cement

market for many years. In 2009, the company accounted for 11.2% of the

total cement market in the Kingdom after dropping down to 9.8% in 2008, in

spite of increased competition in the form of new entrants. QCC is one of the

most efficient cement companies in the sector, however, as it is producing at

near capacity and has very low levels of inventory, we believe continued

volume expansion will be limited.

� Financials: 2009 was a decent year for QCC as sales volumes increased

33%, leading to a 20% increase in revenues. Despite continued pricing and

margin pressure, the company was still able to increase net income, even

when adjusting for a SR82mn non-recurring item. In 1Q10, the company’s

sales increased 12.3% YoY to SR272.5mn as QCC benefitted from increased

sales in the Central region. However, net income declined 4% YoY in 1Q10

as net margins declined to 52.2% during the quarter versus 61% in 1Q09.

� Recent developments: At an extraordinary general meeting held on 15

November 2009, shareholders approved an increase in capital from

SR450mn to SR900mn, executed in the form of a 1:1 bonus issue. Retained

earning and legal reserves were used to finance the capital hike, after which

the company's capital increased to 90mn shares with a par value of SR10.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)

Net Revenues SRmn 820 987 1,011 994 20.4 6.6

EBITDA SRmn 597 629 622 617 5.4 1.1

Net Income SRmn 517 608 534 527 17.6 0.6

Assets SRmn 2,270 2,244 2,195 2,228 (1.1) (0.6)

Equity SRmn 1,724 1,829 1,827 1,903 6.1 3.3

Total Debt SRmn 547 419 368 326 (23.4) (15.8)

Cash & Equiv SRmn 336 16 2 93 (95.2) (34.8)

EBITDA Mgn % 72.8 63.7 61.5 62.1 - -

Net Mgn % 63.0 61.6 52.8 53.0 - -

ROE % 31.8 34.2 29.2 28.3 - -

ROA % 23.9 26.9 24.1 23.8 - -

Div Payout % 69.6 89.6 84.3 85.3 - -

EPS SR 11.5 6.7 5.9 5.9 (41.7) (20.1)

BVPS SR 38.3 20.3 20.3 21.1 (47.0) (18.0)


69

JUNE 2010 SOUTHERN CEMENT

Underweight


Price (SR) 68.0


Stock details





Absolute (1) (5) 19

Market (6) (5) 3

Sector (6) (10) 2


3M 3.5 0.9

12M 3.0 0.8

Raw Beta 6m 2yr

0.23 0.60


Bloomberg code SOCCO AB

Website www.spcc.com.sa



Free float 43.81

Valuation multiples

08 09 10E

P/E (x) 12.0 13.0 13.6

P/B (x) 4.0 3.9 3.9

P/Sales (x) 7.3 7.2 7.3

Div yield (%) 7.4 7.4 7.4

DPS 5.0 5.0 5.0



5,000

5,500

6,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-1050556065707580

TASI Southern Cement (RHS)

Source: Bloomberg




14.8


CEMENT

Southern Cement Also known as

SPCC

Southern Province Cement Company (SPCC) is the largest cement

producer in Saudi Arabia in terms of market capitalization and the third

largest in terms of capacity. Established in 1978, the company operates

three production facilities in Jazan, Bisha and Tuhama, the bulk of the

production occurring in the first two facilities. In 2009, the company

produced 5.2mn tons of cement and 5.8mn tons of clinker. Increased

competition, particularly from its local private peer Najran Cement, is a

key concern for Southern Cement

� Business brief: In 2009, SPCC’s share in the domestic market stood at

13.6%, a decline from the 15.2% it held in 2007. The fall has mainly been

due to the entry of several new players in the industry, especially in 2008. In

September 2009, General Organization for Social Insurance (GOSI)

increased its stake in SPCC to 14.8%.

� Financials: SPCC was able to increase revenues slightly in 2009 to

SR1.32bn, however pricing pressure which impacted gross margins led to a

7% decline in net income to SR734mn. We believe 2010e will remain difficult

for the company and expect continued declines in earnings. In 1Q10, SPCC

recorded a 2.5% YoY decline in revenues to SR353.2mn with both EBITDA

and net margins marginally declining to 64.0% and 53.7%, respectively.

� Recent developments: In March 2010, SPCC announced a cash dividend

of SR2.5 per share for 2H09. On 30 December 2009, SPCC and China's

Sinoma International Engineering Company signed a USD147mn contract for

the construction of a second 5,000 ton per day cement clinker at its third

plant, which is expected to be completed within two years.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)


EBITDA SRmn 864 859 850 851 (0.6) (0.5)

Net Income SRmn 791 734 698 690 (7.2) (4.5)

Assets SRmn 2,749 2,802 2,810 2,837 1.9 1.1

Equity SRmn 2,360 2,462 2,458 2,447 4.3 1.2

Total Debt SRmn 389 340 351 391 (12.6) -

Cash & Equiv SRmn 575 607 555 454 5.6 (7.6)

EBITDA Mgn % 66.6 65.2 65.3 63.2 - -

Net Mgn % 60.9 55.7 53.7 51.2 - -

ROE % 33.6 30.4 28.4 28.1 - -

ROA % 29.3 26.4 24.9 24.4 - -

Div Payout % 87.7 96.2 100.2 101.4 - -

EPS SR 5.7 5.2 5.0 4.9 (8.8) (4.7)

BVPS SR 16.9 17.6 17.6 17.5 4.1 1.2


70

JUNE 2010 YANBU CEMENT

Neutral


Price (SR) 42.4


Stock details





Absolute (3) (11) (9)

Market (6) (5) 3

Sector (6) (10) 2


3M 5.2 1.4

12M 4.4 1.2

Raw Beta 6m 2yr

0.45 0.67


Bloomberg code YNCCO AB

Website www.yanbucement.com



Free float 52.51

Valuation multiples

08 09 10E

P/E (x) 8.0 9.2 10.4

P/B (x) 1.9 1.8 1.8

P/Sales (x) 4.1 4.7 5.2

Div yield (%) 9.4 7.1 7.1

DPS 4.0 3.0 3.0



5,000

5,500

6,000

6,500

7,000


45

50

55

TASI Yanbu Cement (RHS)

Source: Bloomberg



23.7


11.8



5.8


CEMENT

Yanbu Cement Also known as

YCC

Jeddah-based Yanbu Cement Company (YCC) was established in March

1976 through a plant with an initial production capacity of 3,000 tons of

clinker per day at Ras Baridi near Yanbu on the west coast of Saudi

Arabia. Currently, YCC has a total cement production capacity of 4.8

mtpa. We believe Yanbu continues to suffer from its old lines and the

slow pace of demand momentum in the Western region

� Business brief: YCC was the largest seller of cement in the Saudi market in

2003/2004, but has been losing market share due to rising competition. The

company’s market share (in terms of sales volumes), in the domestic market

has drastically slid to 10.4% in 2009 from 15.3% in 2007. YCC also has a

subsidiary (Yanbu Al Shuaiba Paper Products) that produces paper bags for

the retail sales of cement.

� Financials: Increasing competition leading to market share pressure has

been reducing pricing and market share for YCC. 2009 saw a 13.8% decline

in revenues and 13.9% decline in earnings and we believe 2010e will show a

similar trend. For the 1Q10, revenues fell 13.7% YoY to SR239.5mn. Gross

margin in 1Q10 was 53.3%, comparatively lower than the 57.6% in 1Q09,

leading to earnings falling 19% YoY for the quarter. We expect this pressure

to remain for the rest of 2010e with full year earnings expected to decline

18.8%.

� Recent developments: In February 2010, YCC announced that it would pay

a SR3.0 dividend for 2009. In January 2010, YCC secured a SR300mn loan

from the Saudi Industrial Development Fund to finance its expansion project,

which includes adding a fifth cement line for approximately SR2.2bn.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)

Net Revenues SRmn 1,094 943 863 965 (13.8) (4.1)

EBITDA SRmn 680 586 547 594 (13.8) (4.4)

Net Income SRmn 560 482 428 441 (13.9) (7.7)

Assets SRmn 2,600 2,831 2,954 3,609 8.9 11.6

Equity SRmn 2,356 2,416 2,527 2,650 2.5 4.0

Total Debt SRmn 227 396 406 934 (74.4) 60.2

Cash & Equiv SRmn 521 295 (364) (506) (43.4) (199.0)

EBITDA Mgn % 62.2 62.1 63.4 61.6 - -

Net Mgn % 51.2 51.1 49.6 45.7 - -

ROE % 23.9 20.2 17.3 17.0 - -

ROA % 21.7 17.7 14.8 13.4 - -

Div Payout % 75.5 65.2 73.5 71.4 - -

EPS SR 5.3 4.6 4.1 4.2 (13.2) (7.5)

BVPS SR 22.4 23.0 24.1 25.2 2.7 4.0


71

JUNE 2010 EASTERN CEMENT

Neutral


Price (SR) 42.3


Stock details





Absolute (3) (15) (4)

Market (6) (5) 3

Sector (6) (10) 2


3M 3.8 1.0

12M 3.7 2.0

Raw Beta 6m 2yr

0.45 0.58


Bloomberg code EACCO AB

Website www.eastern-cement.com.sa



Free float 68.06

Valuation multiples

08 09 10E

P/E (x) 8.4 10.4 9.3

P/B (x) 1.9 1.8 1.7

P/Sales (x) 4.6 4.7 4.2

Div yield (%) 7.1 7.1 7.1

DPS 3.0 3.0 3.0



5,0005,500

6,0006,5007,000


45

50

55

TASI Eastern Cement (RHS)

Source: Bloomberg




General Organization for SocialInsurance (GOSI)

10.0


CEMENT

Eastern Cement Also known as

EPCC

Eastern Cement Co. (EPCC) was established in 1982 with a capacity of

7,000 tons of clinker per day at Khursaniyah (Dammam). Since then,

EPCC has expanded its plant capacity to the current 3.5mn tons and

3.45mn tons per year for cement and clinker respectively. Until 2008,

EPCC was a regular exporter of cement to neighboring countries.

� Business brief: In 2009, EPCC’s market share stood at 8.5%, a decline

from the 9.5% and 11.5% in 2008 and 2007, respectively. It produced

3.20mn tons of cement and 2.98mn tons of clinker in 2009. EPCC owns a

30% stake in Arabian Yemeni Cement Company, Yemen, a 5.4% stake in

Industrialization and Energy Services Company and 1.2% stake in Saudi

Industrial Investment Group.

� Financials: 2009 was a difficult year for EPCC as the full year impact of the

export ban affected its performance. While revenues declined just 2.5%, net

income declined by 19% as it shifted its focus back towards sales in the

domestic market. We expect the company’s financial performance to stabilize

in 2010 and so far it is on track. In 1Q10, EPCC was one of the few

companies to record positive revenue growth, registering an 8.8% YoY

growth in revenue to SR210.2mn. While the EBITDA margin was maintained

at 57.8% compared to 1Q09, the net margin dropped from 50.2% in 1Q09

to 43.9% in 1Q10, leading to a 4.9% decline in net income for the quarter.

� Recent developments: On 30 March 2010, EPCC announced a cash

dividend of SR3.0 per share for the year 2009. In December 2009, EPCC

announced that Saudi Yemeni Cement Co Ltd., in which it holds 30% stake,

began trial operations at its Mukalla plant in southern Yemen. The plant has

a daily capacity to produce 5,200 tons of cement and 400 tons of clinker.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)


EBITDA SRmn 511 441 481 452 (13.7) (4.0)

Net Income SRmn 434 351 391 370 (19.2) (5.2)

Assets SRmn 2,201 2,316 2,411 2,488 5.2 4.2

Equity SRmn 1,875 2,028 2,161 2,271 8.2 6.6

Total Debt SRmn 325 286 251 217 (12.0) (12.6)

Cash & Equiv SRmn 253 341 238 279 34.8 3.3

EBITDA Mgn % 64.0 56.6 55.0 55.1 - -

Net Mgn % 54.3 45.1 44.7 45.1 - -

ROE % 21.8 18.0 18.7 16.7 - -

ROA % 18.5 15.5 16.5 15.1 - -

Div Payout % 60.0 73.2 66.1 69.8 - -

EPS SR 5.0 4.1 4.5 4.3 (18.0) (4.9)

BVPS SR 21.8 23.6 25.1 26.4 8.3 6.6


72

JUNE 2010 TABUK CEMENT

Not Covered



Stock details





Absolute (4) (6) (14)

Market (6) (5) 3

Sector (6) (10) 2


3M 1.9 0.5

12M 2.6 0.7

Raw Beta 6m 2yr

0.28 0.70


Bloomberg code TACCO AB

Website www.tcc-sa.com



Free float 94.69

Valuation multiples

08 09 TTM

P/E (x) 10.5 13.1 13.0

P/B (x) 1.5 1.5 1.5

P/Sales (x) 5.4 5.9 5.8


DPS 1.5 1.3 NA



5,0005,5006,0006,5007,000


17

19

21

TASI Tabuk Cement (RHS)

Source: Bloomberg


Khaled Saleh Abdul Rahman AlShethri

6.9


CEMENT

Tabuk Cement Also known as

TCC

Founded in 1994, Tabuk Cement Company (TCC) is the smallest cement

company in KSA in terms of market capitalization. In 2009, the company

produced 3.9mn tons of cement and 3.6mn tons of clinker at its plant

located in the north-west region of the country. TCC’s strategic location

enables it to cater to the demand for cement in the northern regions.

� Business brief: TCC held 3.4% market share of the domestic cement

market in 2009, a decrease from 4.5% in 2007. The company has a 3.37%

stake in Industrialization & Energy Services Company, a support services and

product manufacturing company catering to the energy sector. It also holds

a marginal stake in the Saudi Cement Co.

� Financials: Revenues in 1Q10 increased 8.7% YoY to SR77.1mn, driven by

increased domestic demand. However, the EBITDA margin declined to 63.7%

in 1Q10 compared to 65.2% in 1Q09. Net margins also registered a decline

in 1Q10 to 44.1% compared to 47.2% in 1Q09.

� Recent developments: In April 2010, TCC shareholders approved a SR1.25

per share dividend for 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 263 196 168 49 5.9 (20.1)

Net Income SRmn 220 151 121 34 1.5 (25.9)

Assets SRmn 1,366 1,226 1,279 1,319 5.1 (3.2)

Equity SRmn 1,031 1,044 1,052 1,086 0.7 1.0

Total Debt SRmn - - - - - -

Cash & Equiv SRmn 472 353 427 462 18.3 (4.9)

EBITDA Mgn % 77.1 67.4 62.9 63.6 - -

Net Mgn % 64.6 51.9 45.3 44.2 - -

ROE % 23.6 14.6 11.5 12.7 - -

ROA % 17.5 11.7 9.7 10.5 - -

Div Payout % 102.0 89.3 92.6 - - -

EPS SR 2.5 1.7 1.4 0.4 2.7 (25.8)

BVPS SR 11.5 11.6 11.7 12.1 0.7 1.0


73


Retail


4001 Al-Othaim 77

4002 Mouwasat 78

4050 Saudi Automotive 79

4160 National Agriculture 80

4180 Fitaihi Group Holding 81

4190 Jarir Marketing 82

4200 Aldrees Petroleum 83

4240 AlHokair 84

4290 Alkhaleej Training 85

JULY 2010 THE SAUDI FACTBOOK

Retail

Despite slowdown, sector witnessed considerable growthThe Retail sector in Saudi Arabia is largely being driven by the growing population,

higher per capita income and increasing trend of organized retail. The KSA retail

space consisting of both the discretionary and non-discretionary items covering

groceries, food processing to leisure and personal goods is highly fragmented.

However, the industry is currently undergoing consolidation, with many leading

retailers increasingly looking to acquire smaller firms. Key players in the retail

sector include Al Othaim, Fawaz Al-Hokair Group, Jarir Marketing, Fitaihi Group and

Saudi Automotive Services Company.

Despite the global economic downturn, the Saudi retail sector remained in good

shape in 2009, generating revenues of SR9.9bn compared SR9.4bn in 2008. The

rising mall culture has led to retailers expanding their operations in the Kingdom by

opening new stores and launching aggressive advertising and promotional

campaigns. Apart from local demand, the KSA retail sector also benefits from

religious tourism; the holy cities of Makkah and Medina are visited by more than 12

million visitors each year.

Jarir and Al-Hokair posted strong margins in 2009 Of the eight companies in the sector, Jarir Marketing Co and Fawaz Abdulaziz Al-

Hokair Co are by far the largest, with market capitalizations of SR5.4bn and

SR2.9bn, respectively, and make up 0.45% and 0.22% of the TASI.

In 2009, the combined revenue of the eight companies grew 5.9% over the

previous year. The sector’s earnings increased 12.1% in 2009 to SR825.1mn

compared to the 11.1% rise in 2008. Jarir Marketing posted a net profit of

SR374mn in 2009, up 12.4% from 2008, whereas Al-Hokair’s net profit for the year

ended March 2010 stood at SR231.5mn, an increase of 14% over 2008. Jarir

Marketing and Al-Hokair posted net margins of 14.6% and 11.2%, respectively,

higher than the industry average of 7.5%.

Exhibit 64: Revenue of companies, 2007–2009

(SR mn)

Exhibit 65: Profitability of companies, 2007–2009

(%)

0

2,000

4,000

6,000

8,000

10,000

2007 2008 2009

Jarir AlHokair Company Al Othaim Others

0

10

20

2007 2008 2009

Jarir AlHokair Company

Al Othaim Others

Source: Bloomberg, NCBC Research; Al-Hokair’s FY ended Mar 31, 2010 Source: Tadawul, Bloomberg, NCBC Research

Favorable demographics

are driving growth in the

Saudi Retail sector

75

JULY 2010 THE SAUDI FACTBOOK

RETAIL

As of 31 December 2009, the average P/B multiple of Saudi retail companies rose

to 3.6x in 2009 from 2.5x in 2008. However, the average reported return on equity

declined slightly from 22.0% in 2008 to 21.1% in 2009. As of 31 May 2010, the

average P/B for the sector was 3.4x.


(%)


(%)

SASCO

National Agri

Fitahi Group

Jarir

Aldrees

AlHokair

Alkhaleej

-30

-20

-10

0

10

20

30

40

50

60

-2 0 2 4 6 8 10

P/B (x)

RO

E (

%)

AldreesSASCO

AlHokairNational Agri

Jarir

Alkhaleej

Al Othaim

Fitahi Group

-20

-10

0

10

20

30

40

50

60

70

0 1 2 3 4 5 6 7 8 9

P/B (x)

RO

E (

%)


Strong demand and rise in investment to drive growthGoing forward, strong macro economic factors, coupled with the rising infrastructural

spending on the new economic cities, are likely to drive growth in the Kingdom’s

retail sector. According to CB Richard Ellis, Saudi Arabia's retail sales is predicted to

grow from about USD75bn in 2009 to USD125bn by 2014, as international brands,

mainly European and US, are increasingly looking to expand overseas, given the

limited growth prospects in their respective home markets. KSA, with one the highest

per capita income and a young demographic profile that is more open to adopting a

western lifestyle present a sizable opportunity for the retail sector.

NCBC Recommendations in the Sector We are positive on the KSA retail sector on an overall long-term perspective, given

the strong fundamentals of the domestic market that are likely to help it remain

relatively immune to any weakness in the global economy. We currently have three

stocks under our coverage in the sector, Jarir, Al-Hokair and Al-Othaim.



Jarir (4190.SE)

Overweight 170.0 Plans to almost double number of stores, coupled with 50% IT market share, provide a strong platform for the stock. Low liquidity and declining price of laptops are a concern. Store openings, the key catalyst for the stock.

Al-Hokair (4240.SE)

Neutral 46.5 After rapid expansion through FY07, Al-Hokair underwent restructuring efforts tostreamline its store in FY08-FY09. Efficiency and profitability have improved and the company looks set to benefit from further growth. From 726 stores at the end of FY09, we estimate 1,242 stores by the end of FY16e.

Al-Othaim (4001.SE)

Overweight 79.0 Number 2 food retailer in the KSA, 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.


76

JUNE 2010 AL-OTHAIM 77

Overweight


Price (SR) 75.8


Stock details





Absolute 1 39 63

Market (6) (5) 3

Sector (3) 5 10


3M 15.4 4.1

12M 23.1 6.2

Raw Beta 6m 2yr

0.51 0.91


Bloomberg code AOTHAIM AB

Website www.othaimmarkets.com



Free float 51.00

Valuation multiples

08 09 10E

P/E (x) 27.5 21.9 17.6

P/B (x) 5.7 5.0 4.2

P/Sales (x) 0.6 0.5 0.5

Div yield (%) 2.0 3.3 2.0



5,000

5,500

6,000

6,500

7,000


50

60

70

80

TASI A. Othaim M arkets (RHS)

Source: Bloomberg


Al Othaim Holding Company 27.6

Abdulaziz Saleh Ali Al Othaim 21.3

Abdullah Saleh Ali Al Othaim 6.0


RETAIL

Al-Othaim

Abdullah Al-Othaim Markets Company (Al-Othaim), established in 1980,

is a subsidiary of Saudi Arabia based Al-Othaim Holding Company. Al-

Othaim is a retailer and wholesaler of food and consumer products. The

company also holds a 13.7% stake in AlOthaim Real Estate Investment

and Development Company.

• Business brief: Al-Othaim primarily operates through four business models:

hypermarkets, supermarkets, convenience stores, and wholesale stores. It

owns and operates a chain of over 80 stores spread across the Riyadh region

and Aseer.

• Financials: Al-Othaim has witnessed steady growth in revenues and

earnings, despite the global economic slowdown, as it is mainly exposed to

the domestic retail market. The company is expanding by increasing its store

count, which drove revenues to increase 7.7% in 2009 and net income

15.7%. Margins have expanded as the company is benefitting from

economies of scale as it is now the second largest retail supermarket chain in

the country. We expect continued growth in 2010e and forecast revenues to

increase 11% and net income to increase 24% for the year.

• Recent developments: In April 2010, the company acquired an 115k

square-meter parcel of land in Al Madinah for SR98.28mn to develop a

commercial complex. Effective 11 May 2010, Mr. Abdulaziz Bin Saleh Al

Othaim was appointed the company’s Chief Executive, replacing Mr.

Mohammed Adel.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)


EBITDA SRmn 107 134 149 159 25.2 14.1

Net Income SRmn 62 78 97 96 25.8 15.7

Assets SRmn 1,081 1,237 1,365 1,506 14.5 11.7

Equity SRmn 299 343 406 469 14.7 16.2

Total Debt SRmn 285 337 338 325 18.2 4.5

Cash & Equiv SRmn 27 107 189 280 297.3 118.1

EBITDA Mgn % 3.7 4.3 4.3 4.0 - -

Net Mgn % 2.1 2.5 2.8 2.4 - -

ROE % 23.1 24.3 25.9 21.9 - -

ROA % 6.6 6.7 7.5 6.7 - -

Div Payout % 53.6 72.5 34.9 34.9 - -

EPS SR 2.8 3.5 4.3 4.3 23.2 15.4

BVPS SR 13.3 15.2 18.1 20.8 14.6 16.1


JUNE 2010 MOUWASAT MEDICAL SERVICES

Not Covered



Stock details

52-week range H/L (SR) 70/44




Absolute (2) 3 N/A

Market (6) (5) 3

Sector (3) 5 10


3M 9.3 2.5

12M N/A N/A

Raw Beta 6m 2yr

0.40 N/A


Bloomberg code MOUWASAT AB

Website www.mouwasat.com



Free float 47.5

Valuation multiples

08 09 TTM

P/E (x) 16.9 15.3 14.5

P/B (x) 4.0 3.4 3.2

P/Sales (x) 3.6 3.2 3.1




5,0005,500

6,000

6,5007,000

Sep-09 Jan-10 M ay-105055

60

6570

TASI M ouwasat (RHS)

Source: Bloomberg


Mohammed Sultan Hammad Al Subaie

17.5

Nasser Sultan Fahad Al Subaie

17.5

Suleiman Mohammed Suleiman Al Saleem

17.5

Tala Trading Company 7.0

Company Credit Suisse/Swap Agreements

5.8


RETAIL

MouwasatMouwasat Medical Services (Mouwasat) owns, manages and operates

hospitals, dispensaries and pharmacies throughout the Kingdom. The

company was incorporated in 1974.

� Business brief: Mouwasat is active in the field of medical services across

the Kingdom and owns nine pharmacies, two dispensaries and five hospitals

(with a combined capacity of 953 beds). Mouwasat’s medical network covers

the main cities of Saudi Arabia, including Dammam, Jubail, Qatif, Al Ahsa,

Riyadh and Al Madina. Al Mouwasat converted from a limited liability

company to a joint stock company in January 2006.

� Financials: Mouwasat’s revenues grew 15.4% YoY to SR143.8mn in 1Q10

due to the rising patient count driven by an increase in the number of

medical facilities. The company added new services, such as an Intensive

Care Unit as its Dammam Hospital, and a Dept. of Gynecology and Obstetrics

at its Jubail Hospital. Net income grew 21.9% YoY to SR32.4mn in 1Q10.

� Recent developments: On 9 May 2009, the company signed an agreement

to buy 11,600 Sq mt of land for SR30mn in Riyadh. The land, located near

the new hospital project, would be used for future expansion of the hospital.

The company launched an IPO on August 15, 2009, offering 30% of its

shares to the public. Proceeds from the IPO aggregated SAR330mn.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 401 455 518 143.8 15.4 13.7

EBITDA SRmn 125 140 156 40 4.9 11.5

Net Income SRmn 89 97 107 32.4 21.9 9.8

Assets SRmn 557 622 720 809 20.1 13.7

Equity SRmn 354 409 480 512 17.6 16.3

Total Debt SRmn 123 113 116 164 23.8 (2.7)

Cash & Equiv SRmn 15 29 48 136 91.1 77.8

EBITDA Mgn % 31.2 30.8 30.1 27.7 - -

Net Mgn % 22.2 21.4 20.7 22.5 - -

ROE % 25.0 23.7 22.3 25.3 - -

ROA % 15.9 15.6 14.9 16.0 - -

Div Payout % - - 42.0 - - -

EPS SR 3.6 3.9 4.3 5.2 21.9 9.8

BVPS SR 14.2 16.4 19.2 20.5 17.6 16.3


78

JUNE 2010 SAUDI AUTOMOTIVE SERVICES COMPANY

Not Covered



Stock details





Absolute (3) (7) (24)

Market (6) (5) 3

Sector (3) 5 10


3M 4.1 1.1

12M 8.3 2.2

Raw Beta 6m 2yr

0.24 0.89


Bloomberg code SACO AB

Website www.sasco.com.sa



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) 15.3 17.5 20.4

P/B (x) 1.3 1.1 1.1

P/Sales (x) 2.6 2.9 2.9




5,000

5,500

6,000

6,500

7,000


12

14

16

18

TASI SASCO (RHS)

Source: Bloomberg


Ibrahim Mohammed Ibrahim Al-Hadithi

7.9

Nahaz Commercial Investments Company

7.2


RETAIL

Saudi Automotive Also known as

SASCO

Saudi Automotive Services Company (SASCO) is headquartered in

Riyadh. Established in 1982, the company provides a variety of services

and utilities for cars, motorists and travelers. SASCO owns specialized

maintenance workshops in Saudi Arabia. It also owns and manages

supermarkets, rest areas and restaurants for travelers.

� Business brief: SASCO offers services such as car maintenance and repair,

spare parts, car rescue, first aid, issuance of car test certificates, and

international driving licenses. The company also operates a network of

supermarkets, petrol pumps, housing facilities, rest areas, restaurants and

other facilities across Saudi Arabia to service motorists and travelers.

� Financials: SASCO recorded 2.7% YoY growth in revenues to SR45.4mn in

1Q10. However, the EBITDA margins of the company fell 470 basis points in

1Q10 due to higher operating expenses. The company’s net income plunged

68.0% YoY to SR2.1mn in 1Q10 from SR6.6mn in 1Q09, mainly due to lower

investment income.

� Recent developments: In June 2010, the company announced plans to

expand its operations by establishing 20 new sites within KSA before the end

of 2011 and to renovate its existing sites.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 33 33 18 5 (29.7) (25.7)

Net Income SRmn 33 36 31 2 (68.0) (2.4)

Assets SRmn 481 469 556 565 19.5 7.6

Equity SRmn 422 413 499 505 20.2 8.8


Cash & Equiv SRmn 106 134 129 117 (9.1) 10.4

EBITDA Mgn % 17.2 15.4 9.6 10.2 - -

Net Mgn % 17.2 16.8 16.5 4.6 - -

ROE % 8.3 8.6 6.9 1.7 - -

ROA % 7.2 7.6 6.1 1.5 - -

Div Payout % - - - - - -

EPS SR 0.7 0.8 0.7 0.1 (66.7) 0.0

BVPS SR 9.4 9.2 11.1 11.2 20.1 8.6


79

JUNE 2010 NATIONAL AGRICULTURE MARKETING COMPANY

Not Covered

CurrentPrice (SR) 23.4


Stock details





Absolute (18) (41) (40)

Market (6) (5) 3

Sector (3) 5 10


3M 35.6 9.5

12M 32.5 8.7

Raw Beta 6m 2yr

0.73 0.89


Bloomberg code THIMAR AB

Website www.thimar.com.sa



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) NM NM NM

P/B (x) 2.9 3.3 3.5

P/Sales (x) 1.6 1.8 1.9

Div yield (%) 0.0 0.0 0.0



5,000

5,500

6,000

6,500

7,000


TASI Thim'ar (RHS)

Source: Bloomberg



RETAIL

National Agriculture Also known as

THIMAR

National Agriculture Marketing Co (THIMAR), headquartered in Riyadh,

is engaged in the production, procurement, processing and marketing of

agricultural products, accessories, meat and other supplies through its

various dealers. The company, established in 1987, holds a 100% stake

in Wasmi Meat.

� Business brief: THIMAR is primarily involved in the sale of agricultural and

meat products to clients in sectors such as hotels, restaurants and the

military. In addition, the company provides services for the operation,

management and marketing of agricultural projects. THIMAR is also engaged

in the wholesale and retail trading of agricultural and meat products.

� Financials: THIMAR’s net revenues declined 29.1% YoY during 1Q10 to

SR25.2mn from SR35.5mn in 1Q09. It reported a loss of SR1.5mn for 1Q10,

similar to the loss for 1Q09. Cash and equivalents stood at SR6mn in 1Q10.

� Recent developments: In May 2010, the company announced the

resignation of Mr. Abdulrahman Saleh Al Hadi, the CEO and Chairman of its

Board of Directors. Mr. Abdulhamid Bin Mohammed Al Jarbu will be replacing

him.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 1 1 (10) (1) NM NM

Net Income SRmn 3 (10) (10) (2) NM NM

Assets SRmn 121 115 100 91 (19.3) (9.3)

Equity SRmn 91 81 70 67 (14.1) (12.2)

Total Debt SRmn 0 - - - - -

Cash & Equiv SRmn 3 5 8 6 (26.0) 54.3

EBITDA Mgn % 0.8 0.7 (7.3) (3.9) - -

Net Mgn % 2.1 (7.0) (7.8) (6.0) - -

ROE % 2.9 (11.9) (13.7) (8.8) - -

ROA % 2.2 (8.7) (9.6) (6.4) - -

Div Payout % - - - - - -

EPS SR 0.3 (1.0) (1.0) (0.6) NM NM

BVPS SR 9.1 8.1 7.0 6.7 (14.1) (12.2)


80

JUNE 2010 FITAIHI GROUP HOLDING

Not Covered



Stock details





Absolute (10) (7) (37)

Market (6) (5) 3

Sector (3) 5 10


3M 11.8 3.2

12M 22.7 6.0

Raw Beta 6m 3yr

0.66 0.86


Bloomberg code AHFCO AB

Website www.fitaihi-group.com



Free float 78.5

Valuation multiples

08 09 TTM

P/E (x) 33.1 61.6 38.1

P/B (x) 1.1 1.0 1.0

P/Sales (x) 3.3 4.1 4.2




5,000

5,500

6,000

6,500

7,000


TASI Fitaihi (RHS)

Source: Bloomberg


Ahmed Hassan Ahmed Fitaihi 22.3


RETAIL

Fitaihi Group Holding Also known as

Fitaihi

Fitaihi Group Holding Company, established in 1992, is engaged in the

design, manufacture and wholesale & 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.

� Business brief: Fitaihi’s product portfolio includes precious stones, jewelry,

consumer products, beauty products, kitchenware, leather products and

clothing, accessories, perfumes, medical equipment, industrial parts, etc.

The company has presence in the hospital industry through its 19.3%

investment in International Medical Center and 5.7% stake in Dar Al Fouad

Hospital. Fitaihi also has a 20% stake in Fitaihi Junior. The company owns

two premium department stores under the brand name FITAIHI in Jeddah

and Riyadh, in addition to other outlets.

� Financials: Fitaihi’s revenues declined 1.9% YoY to SR36mn in 1Q10. The

company’s EBITDA margins also fell from 18% in 1Q09 to 16% in 1Q10,

primarily due to increase in SG&A expenses. Net income almost doubled

from SR6.4mn in 1Q09 to SR12.7mn in 1Q10 due to higher investment

income.

� Recent developments: In April 2010, the company announced the election

of Ahmed Hasan Ahmed Fitaihi as Chairman of the Board of Directors. In the

same month, it also announced the appointment of the following people to

the Board of Directors: Dr. Ibrahim Al Hasan Al Madhoun, Majed Diyaeddine

Karim, Mohammed Ekhwan and others for a three-year term.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 13 34 23 6 (12.8) 32.8

Net Income SRmn 1 19 10 13 99.8 252.5

Assets SRmn 765 720 731 750 2.0 (2.2)

Equity SRmn 637 560 616 652 11.8 (1.7)

Total Debt SRmn 87 71 55 34 (45.7) (20.5)

Cash & Equiv SRmn 15 14 10 3 (79.3) (19.7)

EBITDA Mgn % 10.8 17.5 15.0 16.0 - -

Net Mgn % 0.7 9.9 6.7 35.2 - -

ROE % 0.1 3.2 1.8 8.0 - -

ROA % 0.1 2.6 1.4 6.9 - -

Div Payout % - - - - - -

EPS SR 0.0 0.4 0.2 0.3 92.3 224.0

BVPS SR 12.7 11.2 12.3 13.0 11.8 (1.5)


81

JUNE 2010 JARIR MARKETING

Overweight


Price (SR) 153.5


Stock details

52-week range H/L (SR) 164.3/126.0




Absolute (6) 9 23

Market (6) (5) 3

Sector (3) 5 10


3M 7.0 1.9

12M 5.7 1.5

Raw Beta 6m 2yr

0.31 0.51


Bloomberg code JARIR AB

Website www.jarirbookstore.com



Free float 87.92

Valuation multiples

08 09 10E

P/E (x) 18.4 16.4 15.3

P/B (x) 8.9 8.5 7.7

P/Sales (x) 2.4 2.4 2.1

Div yield (%) 5.2 4.8 5.3



5,000

5,500

6,000

6,500

7,000


120

130

140

150

160

170

TASI Jarir (RHS)

Source: Bloomberg


Jarir Commercial Investment 12.0

Mohd Abdul Rahman Nasser Al Aqeel

9.0

Nasser Abdulrahman Nasser Al Aqeel

9.0

Abdullah Abdulrahman NasserAl Aqeel

9.0

Abdul Karim Abdul Rahman Nasser Al Aqeel

9.0


RETAIL

Jarir Marketing Also known as

JARIR

Jarir Marketing Company (Jarir) was established in Riyadh in 1979. The

company is engaged in the retail and wholesale trading of office &

school supplies, computers and computer supplies, books, among others.

� Product profile: Jarir’s business activities are divided into four broad

segments: School Supplies, Office Supplies, Computer Accessories and

Entertainment Products, and Books. The company’s wholly-owned

subsidiaries include Jarir Egypt Financial Leasing Co., United Bookstore

(UAE), Jarir Trading Co. (UAE), United Company for Office Supplies and

Stationeries (Qatar), and Jarir Bookstore (Kuwait).

� Financials: Sales grew just 1% in 2009 due to a higher proportion of lower

priced netbooks, however net income grew 12% as margins expanded

140bps due to lower cost of merchandise and an increasing proportion of

sales coming from high margin school supplies and computer accessories.

We expcect sales growth to resume in 2010e and for earnings to continue

expanding at a reasonable pace as the company continues opening new

stores (we forecast 3 new stores in 2010e).

� Recent developments: In March 2010, the company announced that it has

opened a new Jarir Bookstore at Panorama Mall in Riyadh. Furthermore, it

has plans to open two more stores (in Mecca and Kuwait) later during the

year. In May 2009, the company increased its capital from SR300mn to

SR400mn through the issue of four bonus shares for every three shares

held.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)


EBITDA SRmn 368 408 430 462 10.8 7.9

Net Income SRmn 333 374 402 433 12.3 9.1

Assets SRmn 1,163 1,250 1,409 1,528 7.5 9.5

Equity SRmn 687 723 802 882 5.2 8.7

Total Debt SRmn 192 137 158 133 (28.6) (11.5)

Cash & Equiv SRmn 24 40 84 100 65.3 60.9

EBITDA Mgn % 14.6 16.0 14.9 14.5 - -

Net Mgn % 13.2 14.6 13.9 13.6 - -

ROE % 51.4 53.1 52.7 51.4 - -

ROA % 29.8 31.0 30.2 29.5 - -

Div Payout % 72.1 79.1 80.7 81.3 - -

EPS SR 11.1 9.4 10.0 10.8 (15.8) (0.8)

BVPS SR 22.9 18.1 20.0 22.1 (21.1) (1.2)


82

JUNE 2010 ALDREES PETROLEUM

Not Covered



Stock details





Absolute (3) 2 27

Market (6) (5) 3

Sector (3) 5 10


3M 7.8 2.1

12M 13.1 3.5

Raw Beta 6m 2yr

0.99 0.77


Bloomberg code ALDREES AB

Website www.aldrees.com



Free float 100.00

Valuation multiples

08 09 TTM

P/E (x) 17.9 13.8 12.7

P/B (x) 3.0 2.7 2.9

P/Sales (x) 0.8 0.7 0.7




5,000

5,500

6,000

6,500

7,000


4045

50

TASI A ldrees (RHS)

Source: Bloomberg


Abdul Mohsen Mohammed Saad Al Drees

8.5

Hamad Mohammed Saad Al Drees

6.7


RETAIL

Aldrees Petroleum Also known as

APTSCO, Aldrees

Aldrees Petroleum and Transport Services Co. (Aldrees) has three main

operations –petroleum, transport and Super 2 division (manages coffee,

pastry and car-washing centers). The company has a 98% stake in

Aldrees Sudan, engaged in marine, land and air transportation.

� Business brief: The Aldrees Petroleum division mainly runs a network of

346 gas stations under the brand Petrol. It also services contracts for fuel

supply to government and private companies. The Aldrees Transportation

division operates and maintains a fleet of 1,032 tractor heads with 1,376

cargo carriers, ranging from chemical/lubricant tankers, trailers, and bulkers

to flat beds. The Super 2 division manages coffee and cake stores under the

brand Super Café and car wash & car detailing under the brand Super Wash

located in the company’s gas station network.

� Financials: Aldrees recorded 10.5% YoY growth in revenues during 1Q10 to

SR343mn. The company’s EBITDA margins also increased 144 basis points

YoY to 9.5%, primarily due to an increase in prices of petroleum products.

Net income grew 44.4% from SR13.8mn in 1Q09 to SR19.9mn in 1Q10.

� Recent developments: Aldrees announced a cash dividend of SR1.50 per

share for the year 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 866 1,134 1,310 343 10.5 23.0

EBITDA SRmn 74 93 118 33 30.2 26.3

Net Income SRmn 50 53 69 20 44.4 17.4

Assets SRmn 531 664 734 719 (0.9) 17.5

Equity SRmn 296 317 347 327 12.3 8.2

Total Debt SRmn 76 122 155 134 (37.5) 42.8

Cash & Equiv SRmn 41 38 70 25 (53.5) 31.4

EBITDA Mgn % 8.5 8.2 9.0 9.5 - -

Net Mgn % 5.8 4.7 5.3 5.8 - -

ROE % 18.5 17.3 20.8 23.6 - -

ROA % 10.6 8.9 9.9 10.9 - -

Div Payout % 59.5 70.8 54.3 - - -

EPS SR 2.5 2.1 2.8 0.8 43.6 4.7

BVPS SR 14.8 12.7 13.9 13.1 12.4 (3.2)


83

JUNE 2010 ALHOKAIR

Neutral


Price (SR) 43.7


Stock details





Absolute 10 22 48

Market (6) (5) 3

Sector (3) 5 10


3M 6.8 1.8

12M 10.3 2.7

Raw Beta 6m 2yr

0.66 0.95


Bloomberg code ALHOKAIR AB

Website www.alhokair.com.sa



Free float 51.00

Valuation multiples

08 09 10E

P/E (x) 15.1 13.2 10.4

P/B (x) 3.5 2.8 2.4

P/Sales (x) 1.6 1.5 1.3

Div yield (%) 4.0 4.1 4.1



5,000

5,500

6,000

6,500

7,000


TASI A lHokair (RHS)

Source: Bloomberg


Fawaz Alhokair Group 49.0

Fawaz Abdul Aziz Fahd Al Hokair

7.0

Dr Abdulmajeed Abdulaziz Fahed Alhokair

7.0

Dr Salman Abdulaziz Fahed Alhokair

7.0


RETAIL

AlHokairFawaz Abdulaziz AlHokair Company (AlHokair), established in 1990, is

the largest fashion retail franchise player in the Saudi market,

accounting for roughly half of the mid-market fashion retail business in

the country through its 70 plus brands.

� Business brief: AlHokair operates more than 700 fashion stores and is the

retail franchise for over 70 global brands. The company’s product offerings

include adult apparel, kids & teen fashion, footwear, eyewear, and

accessories. Major brands include Zara, Banana Republic, GAP, Monsoon,

Marks & Spencers, etc. AlHokair has three subsidiaries – Al Waheeda

Equipment Co. (95% stake), Haifa Badai Al Kalam and Partners International

Co. for Trading (95% stake) and Saudi Retail Company.

� Financials: AlHokair’s revenues increased 9.9% YoY to SR2.1bn in FY2010

(ending 31 March), mainly due to the acquisition of Wahba and the opening

of new stores. Net income grew an even faster 14.6% to SR232mn during

the year as margins expanded following the restructuring efforts of the past

few years. We expect continued expansion in revenues and net income in the

coming years as store counts increase and further efficiencies are

recognized. For FY2011e, we expect 15% revenue growth to SR2,388mn and

26% net income growth to SR293mn.

� Recent developments: On March 13, 2010, AlHokair announced plans to

open 112 stores in 2010–11, with half of the stores in MENA countries and

the remaining in emerging markets. On March 27, 2010, the company signed

a memorandum of understanding with three retail firms – Retail Group Gulf,

Retail Group Egypt and Retail Group Jordon – to acquire a stake in each of

the companies.

Company financials

2009 2010 2011E 2012E

YoY

(%)

CAGR (%)

(09-12E)


EBITDA SRmn 260 318 376 421 22.1 17.4

Net Income SRmn 202 232 293 319 14.6 16.5

Assets SRmn 1,590 1,897 2,203 2,406 19.3 14.8

Equity SRmn 863 1,094 1,264 1,461 26.8 19.2

Total Debt SRmn 370 370 372 324 - -

Cash & Equiv SRmn 24 76 122 130 216.7 75.6

EBITDA Mgn % 13.7 15.3 15.7 15.6 - -

Net Mgn % 10.6 11.2 12.3 11.8 - -

ROE % 22.8 23.7 24.8 23.4 - -

ROA % 14.3 13.3 14.3 13.8 - -

Div Payout % 60.3 54.4 42.9 39.1 - -

EPS SR 2.9 3.3 4.2 4.6 14.1 16.6

BVPS SR 12.3 15.6 18.1 20.9 27.1 19.3


84

JUNE 2010 ALKHALEEJ TRAINING

Not Covered



Stock details





Absolute (7) (11) (29)

Market (6) (5) 3

Sector (3) 5 10


3M 4.8 1.3

12M 9.5 2.5

Raw Beta 6m 2yr

0.83 0.95


Bloomberg code ALKHLEEJ AB

Website www.alkhaleej.com.sa



Free float 44.6

Valuation multiples

08 09 TTM

P/E (x) 13.5 13.2 12.7

P/B (x) 2.8 2.4 2.3

P/Sales (x) 1.6 1.6 1.6




5,000

5,500

6,000

6,500

7,000


35

40

45

50

55

TASI A lkhaleej Trng (RHS)

Source: Bloomberg


Abdul Aziz Rashid Abdul Rahman Al Rashid

20.3

Ahmed Ali Ahmed Al Shedwy 13.3

AlWaleed Abdul Razzaq Saleh Al Duraian

11.8

Abdul-Aziz Hammad Nasser AlBuleihid

10.0

Ahmed Mohammed Salem Al Sirry

6.3


RETAIL

Alkhaleej Training Also known as

Alkhaleej

Alkhaleej Training and Education Company (Alkhaleej), established in

1992, conducts training programs in the fields of IT, electronics, English

language, and administrative and financial services. The company has

more than 81 branches in Saudi Arabia and in more than 17 locations in

the Middle East.

� Business brief: Alkhaleej implements its training programs through its

various divisions, including New Horizons Computer Learning Centers (the

largest independent IT training company), Direct English Centers, Platinum

Center for Advanced Training Solutions (provides advanced computer

courses); Takniat for Training, Business & Professional Development

(specializes in management training); Kawader (employs the graduates of its

programs) and E-Learning (provides more than 2000 courses online).

� Financials: Alkhaleej has reported continued revenue and net income

growth through 2009 as it proved resilient to the economic downturn. This

has continued in the 1Q10 as revenues increased 5.5% YoY to SR93.3mn

and net income increased 15% from SR10.2mn in 1Q09 to SR11.8mn in

1Q10.

� Recent developments: In February 2010, the company announced that it

had signed two five-year Murabaha contracts with Amlak International

Finance for a total value of SR32.3mn to fund its expansion projects.

Alkhaleej announced a cash dividend of SR0.50 per share for the year 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 301 346 350 93 5.5 7.8

EBITDA SRmn 60 70 70 18 18.1 7.6

Net Income SRmn 38 41 42 12 15.0 5.2

Assets SRmn 302 357 425 444 22.6 18.6

Equity SRmn 154 195 228 239 17.9 21.6

Total Debt SRmn 45 89 111 118 34.3 57.4

Cash & Equiv SRmn 26 34 31 20 (30.4) 8.5

EBITDA Mgn % 19.9 20.2 19.9 19.2 - -

Net Mgn % 12.6 11.8 12.0 12.6 - -

ROE % 28.3 23.5 19.9 20.2 - -

ROA % 14.1 12.4 10.8 10.8 - -

Div Payout % - 18.3 17.9 - - -

EPS SR 4.7 4.1 2.8 0.8 14.7 (22.8)

BVPS SR 19.3 19.5 15.2 16.0 (21.4) (11.2)


85


Agriculture & Food


2050 Savola Group 89

2100 Wafra Food 90

2270 SADAFCO 91

2280 Almarai Company 92

4061 Anaam International 93

6001 Halwani Brothers 94

6002 Herfy Foods Services 95

6010 National Agriculture 96

6020 Qassim Agriculture 97

6040 Tabuk Agriculture 98

6050 Saudi Fisheries 99

6060 Ash-Sharqiya Development 100

6070 AL-Jouf Agriculture 101

6090 Jazan Development 102


Agriculture & Food Stepping up to fill the supply gap Saudi Arabia is one of the largest food markets in the Middle East growing at a

CAGR of 8% in the past five years to an estimated SR115bn in 2010, as healthy

population growth and rising per capita income drives demand, and is estimated to

reach SR140bn by 2015e. Saudi Arabia being an agriculture deficient country

depends highly on imported food, which grew 16% YoY to about USD17bn in 2009

(or 15% of all Saudi imports).

Exhibit 69: Revenue of GCC agri. companies, 2007–09

(USD mn)

Exhibit 70: Comparison of ROE & P/E of GCC cos, 2009

(%)

0

100

200

300

400

500

2007 2008 2009

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Oman Qatar UAE Kuwait KSA*

-5

0

5

10

15

20

25

30

0 5 10 15 20 25

P/E (x)

RO

E (

%)

UAE Oman Kuwait Qatar Saudi

Source: Tadawul, Bloomberg, NCBC Research; * Plotted on secondary axis Source: Tadawul, Bloomberg, NCBC Research

Almarai and Savola are the key stocks in the sector Of the 14 companies in the sector, Almarai and Savola are by far the largest with

market capitalizations of SR21.6bn and SR16.9bn respectively, and make up 1.8%

and 2.5% of the TASI, respectively. These two companies also compare favourably

in the sector on profitability and return metrics, with Almarai posting net margins of

18.7% and a ROE of 20.4% in 2009.

In 2009, the combined revenue of the 13 companies (excluding Bishah and Hail

Agriculture) grew at 22% over the previous year. Core earnings grew 24% in 2009

after declining by 36% in 2008. Savola posted revenue growth of 30% and core-

earnings growth of 102% during the year, while Almarai’s revenues grew 17% and

earnings grew 20.5%.


(USD mn)


(%)

0

6,000

12,000

18,000

24,000

30,000

2007 2008 2009

Savola Almarai Others

(12)

0

12

24

2007 2008 2009

Savola Almarai Others

Source: Tadawul, Bloomberg, NCBC Research; * Plotted on secondary axis Source: Tadawul, Bloomberg, NCBC Research

Saudi Arabia is the largest

market for agricultural

products in the MENA

region

87


AGRICULTURE AND FOOD

Strong long-term growth drivers We expect favorable demographics to be the key growth driver for the sector going

forward. A relatively young population (over 60% of the population is under 30

years of age), rising per capita income as well as increasing acceptance of western

culture, lifestyle, and tastes are expected to drive demand for food in KSA.

However, KSA’s large dependence on imports, volatile food prices and depleting

water resources are key concerns.

NCBC Recommendations in the Sector We are positive on the sector on an overall long-term perspective given its strong

fundamental drivers which are focused domestically and thus have limited exposure

to much of the ongoing global difficulties following the financial crisis. We currently

have two stocks under our coverage in the sector, Savola and Almarai.



Savola (2050.SE)

Neutral 34.4 Fundamentals remain solid although we believe this is fully reflected in the current price. Integration of Geant and provisions in non-core businesses are possible risks. Expansion in Food business acts as a potential positive catalyst

Almarai (2280.SE)

Neutral 193.0 Geographic expansion and Infant Milk venture key drivers for the stock. With start of production at the new bakery and infant milk plants, integration of HADCO and JV projects with PepsiCo, the coming 12-18 months set to be potentially lucrative. High foodcosts as well as delays in new ventures key risks


88

JUNE 2010 SAVOLA GROUP 89

Neutral


Price (SR) 35.0


Stock details





Absolute 3 (3) 47

Market (6) (5) 3

Sector 0 (2) 23


3M 17.4 4.6

12M 18.2 4.9

Raw Beta 6m 3yr

1.05 1.06


Bloomberg code SAVOLA AB

Website www.savola.com



Free float 73.52

Valuation multiples

08 09 10E

P/E (x) 86.5 18.4 14.4

P/B (x) 2.7 2.5 2.3

P/Sales (x) 1.3 1.0 0.8

Div yield (%) 2.9 2.9 3.7

DPS 1.0 1.0 1.3



2,000

4,000

6,000

8,000


25

30

35

40

TASI SAVOLA Group (RHS)

Source: Bloomberg



11.9

General Organization for Social Insurance

10.9

Abdullah Mohammed Abdullah Al Rabeah

8.7

Abdul Qader Al Muhaidib and Sons Co.

8.4


AGRICULTURE & FOOD INDUSTRIES

Savola Group Also known as

Savola

Savola Group Company is a leading retailer of foods in the Middle East

region, with operations extending as far as North Africa and Central

Asia. The group’s business interests are divided into four segments:

Savola Foods (edible oils, sugar and foods), Savola Retail (Panda and

Hyper Panda), Real Estate (Kinan International) and Savola Plastic.

• Business brief: Savola enjoys a leading position in edible oils and sugar,

and retailing through its 113 outlets across the Kingdom. Savola has major

investments in Almarai Dairy Company (30%), Herfy Foods Company (47%),

Jordanian Tameer Company (5%), besides being one of the founding

shareholders of Knowledge Economic City in Madinah and a founding

shareholder of King Abdullah Economic City in Rabigh, Saudi Arabia.

• Financials: We expect Savola to continue reporting steady revenue and

underlying net income growth over 2010e and 2011e, mainly driven by its

Food and Retail businesses (adjusting for the SR196mn capital gain from the

IPO of Herfy in 1Q10). In 1Q10, Savola’s revenues grew 31% YoY to SR4.8bn.

Net income rose by 104.6% YoY to SR394mn in 1Q10 from SR193mn in 1Q09,

including the SR196mn capital gain in 1Q10. For 2010, the company has guided

for an adjusted net income level of SR920mn (before one-off itmes), which we

believe is conservative.

• Recent developments: In April 2010, Savola said its current CEO Sami

Baroum will step down by the end of June and Abdu-Raouf Manaa, the

current head of its edible oil firm Afia, will take over. In December 2009,

Savola pulled out of the bidding process for six sugar mills being sold by the

Turkish government, citing that country’s sugar pricing policy. The company

has indicated it is looking for acquisition opportunities in Sudan and Egypt.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)


EBITDA SRmn 1,481 2,074 2,106 2,245 40.1 14.9

Net Income SRmn 202 952 1,216 1,085 370.2 75.0

Assets SRmn 14,546 17,257 19,117 20,036 18.6 11.3

Equity SRmn 6,389 6,961 7,552 8,136 8.9 8.4

Total Debt SRmn 4,550 5,018 5,570 5,559 10.3 6.9

Cash & Equiv SRmn 604 1,001 283 306 65.8 (20.3)

EBITDA Mgn % 10.7 11.6 9.8 9.7 - -

Net Mgn % 1.5 5.3 5.7 4.7 - -

ROE % 3.0 14.3 16.8 13.8 - -

ROA % 1.5 6.0 6.7 5.5 - -

Div Payout % 250.0 52.6 54.2 46.1 - -

EPS SR 0.4 1.9 2.4 2.2 375.0 75.7

BVPS SR 12.8 13.9 15.1 16.3 8.9 8.4


JUNE 2010 WARFA FOOD

Not Covered



Stock details





Absolute (10) (15) (28)

Market (6) (5) 3

Sector 0 (2) 23


3M 13.0 3.5

12M 18.6 5.0

Raw Beta 6m 3yr

0.41 1.01


Bloomberg code FPCO AB

Website www.wafrah.com



Free float 100.00

Valuation multiples

08 09 TTM

P/E (x) 24.7 60.2 57.3

P/B (x) 2.0 2.0 1.9

P/Sales (x) 4.6 4.9 4.8


DPS N/A N/A N/A



5,000

5,5006,000

6,5007,000

Jun-09 Oct-09 Feb-10 Jun-10161820222426

TASI Food (RHS)

Source: Bloomberg




Warfa FoodAlso known as

Wafra, FoodProducts Company

Riyadh-based Food Products Company was established in 1989 to

provide Saudi families with high quality food products. It is one of the

country’s leading food manufacturing companies, concentrating on the

processing, marketing, distribution, and export of value added

foodstuffs. The company’s target markets include Asia and the Middle

East.

� Business brief: The Company operates under the brand name WAFRA and

has a 10% stake in Jannat Agricultural Investment Co. The company

classifies its operations under four business segments: meat factory (offers

beef and chicken burgers, kebabs, frankfurters), vegetable factory (offers

frozen French fries, potato wedges, and a variety of peanuts), pasta factory

(produces a wide range of pasta under its various brands), and breakfast

cereals (supplies corn flakes, frosted flakes, and rice crispies).

� Financials: The Company’s net revenues increased 7.5% YoY to SR19mn in

1Q10 compared to SR17.9mn in 1Q09. Gross margin improved by 515 basis

points to 42% in 1Q10, due to a decline in the cost of goods sold. As of 31

March 2010, the company had zero debt and cash & cash equivalents of

SR7.3mn.

� Recent developments: In April 2010, Jamal Bin Trad Al Saadoun, general

manager of Food Products Co., resigned.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 19 18 14 5 8.4 (14.4)

Net Income SRmn 8 14 6 3 10.4 (15.2)

Assets SRmn 182 185 200 200 7.2 4.6

Equity SRmn 158 170 177 180 4.1 5.8

Total Debt SRmn 3 0 0 0 - -

Cash & Equiv SRmn 7 5 5 7 103.1 (13.5)

EBITDA Mgn % 29.2 23.7 19.5 26.0 - -

Net Mgn % 12.3 18.4 8.1 15.8 - -

ROE % 5.2 8.5 3.3 6.8 - -

ROA % 4.5 7.6 3.0 6.1 - -

Div Payout % 0.0 0.0 0.0 - - -

EPS SR 0.4 0.7 0.3 0.2 7.1 (14.9)

BVPS SR 7.9 8.5 8.8 9.0 4.1 5.7


90

JUNE 2010 SAUDI DAIRY & FOODSTUFF

Not Covered



Stock details





Absolute 2 1 39

Market (6) (5) 3

Sector 0 (2) 23


3M 12.2 3.3

12M 12.7 3.4

Raw Beta 6m 3yr

0.71 0.90


Bloomberg code SADAFCO AB

Website www.sadafco.com



Free float 58.21

Valuation multiples

08 09 10

P/E (x) 25.2 52.0 7.2

P/B (x) 2.9 2.9 2.2

P/Sales (x) 1.7 1.6 1.4

Div yield (%) 2.2 0.0 6.6

DPS 1.0 0.0 3.0



5,000

5,500

6,000

6,500

7,000


35

45

55

TASI SADAFCO (RHS)

Source: Bloomberg


United Industries Company 30.1

Al Samih Trading Company 11.6

Global Investment House 8.9



SADAFCOJeddah-based Saudia Dairy and Foodstuff Company (SADAFCO)

commenced operations in 1977 and focuses on dairy products. The

company later diversified its product line by entering into joint ventures

with other food companies. SADAFCO’s portfolio comprises more than

100 products sold under the SAUDIA brand.

� Business brief: The company operates through five main segments—milk,

juices, snacks, ice cream, and other foodstuffs. Under the milk segment,

SADAFCO offers customers a wide range of milk packs and milk shakes. The

ice cream segment sells a number of ice cream flavors. The other foodstuffs

segment produces tomato paste and hummus.

� Financials: SADAFCO‘s revenue grew 10.9% YoY to SAR1,023mn in 2010

compared to SR922mn in 2009. Both gross and operating margin expanded

by 500 basis points to 35.7% and 12.4%, respectively. The company’s net

income grew by 610.6% YoY to SR204mn in 2010 compared to SR29m in

2009. Net income growth was driven mainly by investment income of

SR119mn in 2010 compared to an investment loss of SR26mn in 2009.

� Recent developments: In December 2009, SADAFCO sold its 51% stake in

Saudi New Zealand Milk products to Fonterra of New Zealand for

SR135.2mn. For the fiscal year 2010, SADAFCO has paid an annual dividend

of SR3.00 per share.

Company financials*

2007 2008 2009 2010

YoY

(%)

CAGR (%)

(07-10)

Net Revenues SRmn 769 878 922 1,023 10.9 10.0

EBITDA SRmn 93 104 103 163 57.7 20.6

Net Income SRmn 33 58 28 203 617.8 83.2

Assets SRmn 732 764 719 964 34.0 9.6

Equity SRmn 488 515 502 667 32.8 11.0

Total Debt SRmn 22 6 1 0 - -

Cash & Equiv SRmn 104 83 50 323 546.5 45.7

EBITDA Mgn % 12.1 11.8 11.2 15.9 - -

Net Mgn % 4.3 6.7 3.1 19.9 - -

ROE % 7.0 11.7 5.6 139.1 - -

ROA % 4.4 7.8 3.8 96.6 - -

Div Payout % 0.0 55.6 0.0 - - -

EPS SR 1.0 1.8 0.9 6.3 594.4 83.0

BVPS SR 15.0 15.8 15.5 20.5 32.3 11.0

Source: Tadawul, Zawya, Company, NCBC Research * Financial Year End March

91

JUNE 2010 ALMARAI COMPANY

Neutral

Target Price (SR) 193

Price (SR) 190.5


Stock details

52-week range H/L (SR) 202.3/145




Absolute (3) 8 31

Market (6) (5) 3

Sector 0 (2) 23


3M 30.8 8.2

12M 23.4 6.2

Raw Beta 6m 3yr

0.69 0.70


Bloomberg code ALMARAI AB

Website www.almarai.com



Free float 41.35

Valuation multiples

08 09 10E

P/E (x) 24.1 20.0 16.5

P/B (x) 6.1 4.1 3.5

P/Sales (x) 4.4 3.7 3.2

Div yield (%) 1.8 2.1 2.4

DPS 3.5 4.0 4.5



5,0005,500

6,000

6,5007,000

Jun-09 Oct-09 Feb-10 Jun-10130150

170

190210

TASI Almarai (RHS)

Source: Bloomberg


Savola Group 29.9

HH Prince Sultan Mohammed Saud Al Kabir Al Saud

28.6

Omran Mohammed Al Omran and Company

5.7



Almarai Company Also known as

Almarai

Almarai Company, based in Riyadh, is the leading milk and dairy

products company in the region and is also expanding into the related

juices and food markets. Almarai is regarded as one of the best

companies in the region in terms of investor openness and disclosure

levels.

� Business brief: Almarai’s portfolio includes fresh and long-life dairy

products (such as milk, natural and fruit yoghurts, cream and evaporated

milk), several fruit juice flavors, cheese and butter, bakery products, and

other items such as tomato paste and jams. The company is also expanding

into the chicken market through HADCO, which it purchased in Oct. 2009 for

SR950mn. In addition, the company is targeting the infant milk market

through its recently formed JV with Mead Johnson.

� Financials: Almarai has recorded steady revenue and earnings growth over

the years as it has expanded its product offering and due to the demographic

growth in its end markets. We expect earnings to continue growing by about

20% annually in 2010e and 2011e. In 1Q10, Almarai’s revenue grew 17.6%

YoY to SR1.6bn. Net profit grew 18.6% YoY to SR234mn. Gross margin were

weak in the quarter due to investments in some of its new business areas,

although this was offset by lower bank charges and G&A expenses

� Recent developments: In March 2010, Almarai entered into a 50:50 joint

venture with Mead Johnson Nutrition Co. to produce, market and distribute

infant nutrition products in the GCC. In January 2010, Almarai announced

the transfer of its 100% stake in International Company for Agro Industrial

Projects (Beyti) to International Dairy and Juice Limited (IDJ). IDJ is a joint

venture between Pepsi Co. and Almarai holds a 48% stake in IDJ.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)


EBITDA SRmn 1,440 1,642 1,942 2,256 14.0 16.1

Net Income SRmn 910 1,097 1,330 1,580 20.5 20.2

Assets SRmn 8,181 10,987 12,318 13,402 34.3 17.9

Equity SRmn 3,617 5,383 6,253 7,315 48.8 26.5

Total Debt SRmn 3,644 4,377 4,345 4,254 20.1 5.3

Cash & Equiv SRmn 247 508 433 302 105.9 7.0

EBITDA Mgn % 28.6 28.0 28.3 28.7 - -

Net Mgn % 18.1 18.7 19.4 20.1 - -

ROE % 27.3 24.4 22.9 23.3 - -

ROA % 12.5 11.4 11.4 12.3 - -

Div Payout % 41.9 41.9 38.8 40.1 - -

EPS SR 8.4 9.5 11.6 13.7 14.3 17.9

BVPS SR 33.2 46.8 54.4 63.6 41.0 24.2


92

JUNE 2010 ANAAM INTERNATIONAL

Not Covered



Stock details





Absolute (12) (28) (4)

Market (6) (5) 3

Sector 0 (2) 23


3M 10.5 2.8

12M 20.5 5.5

Raw Beta 6m 3yr

0.88 1.04


Bloomberg code ANAAM AB

Website www.anaam.com.sa



Free float 100.00

Valuation multiples

08 09 TTM

P/E (x) 96.4 (59.7) (68.5)

P/B (x) 4.0 4.3 4.3

P/Sales (x) 4.7 7.7 7.9


DPS NA NA NA



5,000

5,500

6,000

6,500

7,000

Jun-09 Jan-10 Apr-1030

50

70

90

TASI Anaam Holding (RHS)

Source: Bloomberg


HH Prince Abdullah Turki Abdul Aziz Al Saud

9.7



Anaam International Also known as

Anaam

Anaam International, headquartered in Jeddah, Saudi Arabia, was

established in 1982. The company is engaged in the import and

wholesale trade of frozen food, production of animal feed, investment in

industrial projects and trade of livestock. The company has factories and

plants at Jouf and Qassim

� Business brief: Anaam International is involved in the import, export,

supply, trade, transportation and breeding of livestock in Saudi Arabia. The

company also trades in marine equipment. Other activities include the

production and transportation of meat; management and operation of

slaughter houses; processing of meat imports; wholesale trade of frozen

food; production of animal feed; and investment in industrial projects. The

company has the capacity to produce a total of 66,000 tons of animal feed

per year.

� Financials: In 1Q10, Annam’s revenue fell 11% YoY to SR15.8mn compared

to SR17.8mn in 1Q09. However, other operating income of SR2.8mn

recorded by the company in 1Q10 narrowed its net loss to SR1.7mn for the

quarter versus a net loss of SR2.7mn in 1Q09. As of 31 March 2010, the

company has outstanding debt and cash balance of SR18.9mn and

SR21.6mn, respectively

� Recent developments: In December 2009, Anaam appointed Hassan Al

Yamini as the CEO. In February 2010, Anaam said it plans to focus on the

real estate, food and industry sectors and triple its sales to more than

SR150mn in next three years.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 88 103 63 16 (11.0) (15.5)

EBITDA SRmn 9 9 6 0 (69.2) (15.7)

Net Income SRmn 6 5 (8) (2) (37.8) -

Assets SRmn 247 248 233 244 (0.3) (2.9)

Equity SRmn 115 120 112 112 (4.3) (1.5)

Total Debt SRmn 25 22 19 19 (13.5) (13.1)

Cash & Equiv SRmn 22 14 21 12 (15.0) (3.8)

EBITDA Mgn % 10.2 8.4 10.2 0.2 - -

Net Mgn % 6.8 4.9 (12.8) (10.8) - -

ROE % 5.4 4.3 (7.0) (6.1) - -

ROA % 2.4 2.0 (3.4) (2.9) - -

Div Payout % 0.0 0.0 0.0 - - -

EPS SR 0.6 0.4 (0.7) 0.0 (108.0) N/A

BVPS SR 10.6 11.0 10.2 10.3 (4.3) (1.7)


93

JUNE 2010 HALWANI BROTHERS COMPANY

Not Covered



Stock details





Absolute 11 28 10

Market (6) (5) 3

Sector 0 (2) 23


3M 22.0 5.9

12M 21.4 5.7

Raw Beta 6m 2yr

0.43 1.08


Bloomberg code HB AB

Website www.halwani.com.sa



Free float 44.49

Valuation multiples

08 09 TTM

P/E (x) 19.4 26.6 22.2

P/B (x) 2.3 2.4 2.3

P/Sales (x) 1.7 1.8 1.8

Div yield (%) 1.9 2.5 0.0

DPS 0.8 1.0 0.0



5,000

5,500

6,000

6,500

7,000


30

35

40

45

TASI H B (RHS)

Source: Bloomberg


Dalat Industrial Investment Co

55.5

Mohammed Abdulhamid Mahmoud Halwani

6.9



Halwani Brothers Also known as

Halwani, HB

Halwani Brothers Company (HB), headquartered in Jeddah, Saudi

Arabia, was established in 1952. The company is engaged in the

production, marketing and distribution of food products within and

outside Saudi Arabia. HB has over 26 brands and 15 factories and plants

in Saudi Arabia and Egypt.

� Business brief: HB is engaged in the production of cheese, ice-cream,

frozen and processed meat, jams, grains, juices, dates and halawa and

manufacture of tissues. It has the capacity to produce 12,200 tons of Tahina,

20,100 tons of Halwa, 22,950 tons of meat, 3,000 tons of cheese, 3,348 tons

of Arabic sweets, 4,500 tons of dairy products, and 9,996 tons of jam per

year.

� Financials: In 1Q10, HB’s revenues grew 2.9% YoY to SR173mn compared

to SR168mn in 1Q09. The company’s total expenses declined 3.3% YoY to

SR147mn in 1Q10. The increase in revenues and lower costs led to HB’s net

income growing 68% YoY to SR21mn in 1Q10 compared to SR12.4mn in

1Q09.

� Recent developments: In February 2010, HB declared a dividend of SR1

per share for 2009. In December 2009, HB obtained a SR165mn loan from

Saudi Industrial Development Fund in order to finance half its SAR330mn

production plant in Jeddah, which will bring all production units, including the

confectionaries, meat, dairy production and packaging plants, under one

roof.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 61 71 89 30 46.3 21.0

Net Income SRmn 33 58 43 21 68.0 13.7

Assets SRmn 438 646 570 612 (2.9) 14.0

Equity SRmn 267 485 463 484 6.7 31.7

Total Debt SRmn 51 66 0 0 (100.0) (100.0)

Cash & Equiv SRmn 15 188 144 165 (8.4) 210.1

EBITDA Mgn % 11.1 10.8 14.5 17.6 - -

Net Mgn % 6.0 8.8 6.9 12.1 - -

ROE % 12.7 15.5 9.0 17.7 - -

ROA % 7.7 10.8 7.0 14.2 - -

Div Payout % 89.8 30.7 67.1 - - -

EPS SR 1.7 2.4 1.5 0.7 65.9 (5.5)

BVPS SR 13.4 17.0 16.2 16.9 6.7 10.0


94

JUNE 2010 HERFY FOOD SERVICES COMPANY

Not Covered



Stock details





Absolute 17 23 N/A

Market (6) (5) 3

Sector 0 (2) 23


3M 10.4 2.8

12M N/A N/A

Raw Beta 6m 2yr

N/A N/A


Bloomberg code HERFY AB

Website www.herfy.com



Free float 30.0

Valuation multiples

08 09 TTM

P/E (x) 21.9 17.4 16.8

P/B (x) 7.6 6.3 5.8

P/Sales (x) 4.3 3.9 3.8


DPS NA NA NA



5,0005,500

6,000

6,500

7,000

Feb-10 M ay-10505560657075

TASI Herfy Foods (RHS)

Source: Bloomberg


Savola Group Company 47.6

Ahmad Hamad Mohammed Al Saeed

20.3



Herfy Food Services Also known as

Herfy

Herfy Food Services Company (Herfy), established in 1981, has a chain

of fast food restaurants as well as pastry, bakery and chocolate

showrooms all over the Kingdom. Herfy is KSA’s largest food chain with

over 180 fast food restaurants, 16 pastry & chocolate showrooms, and 1

meat-processing plant.

� Business brief: Herfy operates fast food restaurants, food retail outlets,

bakeries and chocolate showrooms. The company is also into meat

processing. Herfy’s combined production capacity of sweets and bakery

products stands at 13,400 tons per annum.

� Financials: Herfy continued its recent steady revenue and net income

growth performance in the first quarter when it posted 11% YoY growth in

revenues to SR136mn in 1Q10 driven by expansion of its outlets as well as

increasing consumer expenditure on restaurants. Net income grew 18.5%

YoY to SR28mn on higher sales and increased asset utilization aided by

enhanced operational efficiency.

� Recent developments: In January 2010, Herfy opened three new branches, one

each in Ras-Tanura, Panorama Mall (Riyadh) and Darren Mall (Dammam), which

boosted its top line. The company raised SR413mn in capital in an IPO that

took place on 2 February 2010.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 84 118 142 29 N/A 30.2

Net Income SRmn 62 91 115 28 18.3 36.4

Assets SRmn 325 355 411 446 N/A 12.3

Equity SRmn 231 262 317 345 N/A 17.1

Total Debt SRmn 42 30 18 18 N/A (34.3)

Cash & Equiv SRmn 20 21 20 49 N/A (0.9)

EBITDA Mgn % 22.0 25.0 27.0 21.0 -

Net Mgn % 16.0 20.0 22.0 21.0 -

ROE % 27.0 35.0 36.0 33.0 -

ROA % 19.0 26.0 28.0 25.0 -

Div Payout % - - 70.0 - -

EPS SR 6.0 9.0 4.0 4.0 (16.9)

BVPS SR 23.0 26.0 12.0 13.0 N/A (28.7)


95

JUNE 2010 NATIONAL AGRICULTURE

Not Covered



Stock details





Absolute (7) (12) (34)

Market (6) (5) 3

Sector 0 (2) 23


3M 4.7 1.2

12M 3.9 1.0

Raw Beta 6m 3yr

0.59 0.80


Bloomberg code NADEC AB

Website www.nadec.com.sa



Free float 48.81

Valuation multiples

08 09 TTM

P/E (x) 22.8 (40.8) (51.8)

P/B (x) 1.5 1.6 1.6

P/Sales (x) 1.2 1.2 1.1

Div yield (%) 2.9 0.0 0.0

DPS 0.8 0.0 0.0



5,000

5,500

6,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-10202530354045

TASI NADEC (RHS)

Source: Bloomberg



Suleiman Abdul Aziz Saleh Al Rajhi

19.7


11.4


8.3



National Agriculture Also known

as

NADEC

National Agriculture Development Company (NADEC) commenced

operations in 1981 with a 20% government stake. The company focuses

on agricultural production, food processing and distribution. NADEC

operates in three business segments – agricultural, dairy and juice

products – all sold under the NADEC brand.

� Business brief: The company offers a wide range of products under each of

its operating segments. Under its agricultural segment, NADEC offers

manufactured products such as tomato paste, grains, vegetables, fruits,

fodder, olives and honey. The dairy products segment offers long-life

products (including cheese and milk), desserts and special products. The

juice segment offers a range of fresh and long-life juices in containers of

various sizes. NADEC has the capacity to annually produce 120,000 tons of

potatoes, 150,000 tons of wheat, 20,000 tons of wheat seeds, 30,000 liters

of olive oil, 300,000 tons of alfalfa, 40,000 tons of onion, 5,402 tons of

dates, 60,000 tons of maize, 300,000 liters of dairy products, 9 tons of

honey and 3,000 tons of grain maize.

� Financials: In 1Q10, NADEC’s revenues grew 14.4% YoY to SR319.7mn

compared with SR279.4mn in 1Q09. NADEC’s operating profit increased

112.3% YoY due to robust revenue growth and lower operating expenses.

Consequently, the company’s net income grew to SR3.8mn in 1Q10

compared to the net loss of SR4.3mn recorded in 1Q09.

� Recent developments: In February 2010, a court ordered ARAMCO to

vacate the land that it was using to lay pipes and conduct excavations, as it

belonged to NADEC. The latter demanded a compensation of SR3.5bn from

ARAMCO for occupying its land for years.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 1,083 1,339 1,335 320 14.4 11.0

EBITDA SRmn 208 260 212 63 20.3 1.0

Net Income SRmn 72 69 (38) 4 N/M N/M

Assets SRmn 1,828 2,442 2,510 2,495 0.9 17.2

Equity SRmn 990 1,059 975 979 (3.0) (0.7)

Total Debt SRmn 448 922 1,103 1,046 5.7 56.9

Cash & Equiv SRmn 20 18 35 28 1.3 33.5

EBITDA Mgn % 19.2 19.4 15.9 19.7 - -

Net Mgn % 6.6 5.1 (2.9) 1.2 - -

ROE % 7.3 6.7 (3.8) 1.6 - -

ROA % 4.5 3.2 (1.6) 0.6 - -

Div Payout % 0.0 65.2 0.0 - - -

EPS SR 1.8 1.2 (0.6) 0.1 N/M N/M

BVPS SR 24.8 17.7 16.3 16.3 (3.0) (18.9)


96

JUNE 2010 QASSIM AGRICULTURE COMPANY

Not Covered



Stock details





Absolute (7) (12) (30)

Market (6) (5) 3

Sector 0 (2) 23


3M 7.4 2.0

12M 13.7 3.6

Raw Beta 6m 3yr

0.62 0.87


Bloomberg code QAACO AB

Website www.gaco.com.sa



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) 1,489.5 (61.5) (74.8)

P/B (x) 1.1 1.1 1.1

P/Sales (x) 4.9 5.1 5.9

Div yield (%) 0.0 0.0 0.0

DPS 0.0 0.0 0.0



5,000

5,500

6,000

6,500

7,000


9

11

13

15

TASI Qassim Agriculture (RHS)

Source: Bloomberg




Qassim Agriculture Also known as

GACO

Qassim Agriculture Co. (GACO), established in 1985, is headquartered in

Qassim. The company invests in agricultural businesses and livestock,

and is also expanding into the poultry business through a SR250mn

investment with a target of 1million birds/year.

� Business brief: GACO’s main business line involves investment in

agricultural products and livestock. The company produces 2,500 tons of

dates, 25,000 tons of corn, and 42,000 tons of wheat annually. It is also a

distributor of dates and dairy products. To meet its internal requirements,

the company invests in the construction of cooling stores; transportation;

and import of fodder, cereals and agricultural equipments. GACO has

invested approximately SR20mn in Saudi-based companies

� Financials: In 1Q10, GACO’s revenues fell by 46% YoY to SR14mn

compared to SR26.5mn in 1Q09. However, the company’s net income rose

to SR1.3mn in 1Q10 compared to SR0.1mn in 1Q09, primarily due to other

income of SR5mn.

� Recent developments: In March 2010, GACO announced the sale of

properties in Medina, realizing a profit of SR4mn. In April 2010, the company

announced the appointment of MR. Abdulaziz Bin Mohammed Al Talas as the

company’s General Manager.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 13 14 6 (4) N/A (29.6)

Net Income SRmn (3) 0 (7) 1 1149.5 N/M

Assets SRmn 498 574 562 565 (1.4) 6.3

Equity SRmn 404 405 399 400 (0.0) (0.7)

Total Debt SRmn 6 7 17 2 (36.8) 65.9

Cash & Equiv SRmn 12 2 0 4 444.3 (86.0)

EBITDA Mgn % 26.3 15.5 7.6 (25.0) - -

Net Mgn % (5.8) 0.3 (8.2) 9.4 - -

ROE % (0.7) 0.1 (1.7) 1.3 - -

ROA % (0.6) 0.1 (1.2) 0.9 - -

Div Payout % 0.0 0.0 0.0 - - -

EPS SR (0.1) 0.0 (0.1) 0.0 (72.0) N/M

BVPS SR 8.1 8.1 8.0 8.0 0.0 (0.8)


97

JUNE 2010 TABUK AGRICULTURE

Not Covered



Stock details





Absolute (14) (16) (28)

Market (6) (5) 3

Sector 0 (2) 23


3M 12.2 3.3

12M 16.3 4.3

Raw Beta 6m 3yr

0.21 0.91


Bloomberg code TAACO AB

Website www.tadco-agri.com



Free float 72.50

Valuation multiples

08 09 TTM

P/E (x) 17.9 59.8 (76.5)

P/B (x) 1.1 1.2 1.2

P/Sales (x) 2.4 2.5 3.3

Div yield (%) 0.0 2.4 0.0

DPS 0.0 0.5 0.0



5,000

5,500

6,000

6,500

7,000


20

25

30

TASI Tabuk Agriculture (RHS)

Source: Bloomberg



25.0



Tabuk Agriculture Also known as

TADCO

Tabuk Agriculture Development Company (TADCO), established in 1983

and headquartered in Tabuk, is an agricultural company. TADCO’s

products include fruits, vegetables, forage products, grains and seeds,

and processed products, such as olive oil and honey.

� Business brief: TADCO produces 20,000 MT of onions, 150,000 MT of table

potatoes, 58,000 MT of wheat and more than 1mn MT of alfalfa each year.

The company also grows 7,000 MT of grapes, peaches, apricots, pears and

plums annually. TADCO is actively involved in environment protection and

water resource management.

� Financials: In 1Q10, TADCO’s revenues fell by 81% YoY to SR9.8mn

compared to SR51.8mn in 1Q09. TADCO posted a net loss of SR2.5mn in

1Q10 compared to SR10.2mn of net profit in 1Q09. The company suffered a

loss mainly due to the large reduction in revenues and its fixed cost base.

� Recent developments: In April 2010, TADCO announced that its Chairman,

Abdullah Abdulaziz Saleh Al Rajhi, resigned for personal reasons and will be

replaced by Mohammed Abdullah Al Rajhi. In June 2009, TADCO signed a

memorandum of understanding (MoU) with the Food Products Company to

establish a new olive firm.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 47 51 35 4 (76.1) (13.8)

Net Income SRmn 20 24 7 (3) N/M (40.9)

Assets SRmn 448 435 423 421 (4.3) (2.8)

Equity SRmn 390 369 359 364 (5.6) (4.2)

Total Debt SRmn 5 4 3 2 (50.0) (22.5)

Cash & Equiv SRmn 6 4 10 28 60.7 34.7

EBITDA Mgn % 32.2 29.7 20.8 40.9 - -

Net Mgn % 13.8 13.7 4.2 (25.9) - -

ROE % 5.2 6.2 1.9 (2.8) - -

ROA % 4.5 5.3 1.6 (2.4) - -

Div Payout % 0.0 0.0 142.9 - - -

EPS SR 1.0 1.2 0.4 (0.1) N/M N/A

BVPS SR 19.5 18.5 17.9 18.2 (5.6) (4.1)


98

JUNE 2010 SAUDI FISHERIES COMPANY

Not Covered

Curent Price (SR) 47.0

Pricing / Valuation as on 13 June, 2010

Stock details





Absolute (1) (10) (17)

Market (6) (5) 3

Sector 0 (2) 23


3M 19.7 5.2

12M 42.6 11.4

Raw Beta 6m 3yr

0.18 1.07


Bloomberg code SFICO AB

Website www.saudi-fisheries.com



Free float 38.49

Valuation multiples

08 09 TTM

P/E (x) (36.4) (32.8) (31.1)

P/B (x) 5.7 6.9 7.2

P/Sales (x) 7.6 8.0 8.6

Div yield (%) 0.0 0.0 0.0

DPS 0.0 0.0 0.0



5,000

5,500

6,000

6,500

7,000


45

60

75

TASI Saudi Fisheries (RHS)

Source: Bloomberg


Public investment Fund 40.0

HH Sheikh Mete’eb Bin Abdul Aziz Al Saud

21.5



Saudi Fisheries Also known as

Alasmak, SFC

Saudi Fisheries Company, based in Dammam, commenced operations in

1981. The company has national as well as international recognition in

seafood manufacturing and distribution, with ALASMAK as its flagship

brand. Saudi Fisheries manufactures products at its processing plants

and delivers them using its own fleet.

� Business brief: Saudi Fisheries generates revenues from four operating

segments: value-added products (production capacity of 2,000 tons);

individually quick frozen or IQF products (capacity of 1,000 tons); fish

products; and a new product Alasmak Tuna. The value-added products

segment comprises fish sticks, fish burgers, shrimp nuggets, king shrimp

and golden crispy shrimp, while the IQF segment offers IQF shrimp in retail

packs. Fish products are offered in fresh, frozen whole, gutted, steak, chunk,

and fillet forms. The company-owned chain of retail shops and fish service

counters handles the distribution process.

� Financials: In 1Q10, the company’s revenues fell 24.5% YoY to SR25.8mn

from SR34.1mn in 1Q09. Saudi Fisheries posted a net loss of SR5.5mn in

1Q10 compared to SR3.9mn in 1Q09, continuing its trend of losses of the

past few years.

� Recent developments: In January 2010, Saudi Fisheries and NCB signed a

two year SR50mn Islamic credit facility to finance the company’s expansion

project in the Asir area. In December 2009, the company received a loan

from the Agricultural Development Fund to finance the company’s shrimp

farm project in the Asir area.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn (23) (12) (11) (3) N/M N/M

Net Income SRmn (31) (26) (29) (6) N/M N/M

Assets SRmn 227 200 187 194 (4.0) (9.3)

Equity SRmn 190 164 136 130 (18.8) (15.5)

Total Debt SRmn - 2 9 23 1137.3 N/M

Cash & Equiv SRmn 3 2 2 4 95.9 (29.1)

EBITDA Mgn % (21.7) (9.8) (9.4) (10.3) - -

Net Mgn % (29.2) (21.0) (24.3) (21.4) - -

ROE % (15.1) (14.6) (19.1) (16.6) - -

ROA % (12.7) (12.1) (14.8) (11.6) - -

Div Payout % 0.0 0.0 0.0 - - -

EPS SR (1.5) (1.3) (1.4) (0.3) N/M N/M

BVPS SR 9.5 8.2 6.8 6.5 (18.8) (15.5)


99

JUNE 2010 ASHARQIYAH AGRICULTURE DEVELOPMENT COMPANY

Not Covered



Stock details





Absolute (6) 1 (31)

Market (6) (5) 3

Sector 0 (2) 23


3M 13.1 3.5

12M 18.8 5.0

Raw Beta 6m 3yr

0.23 1.00


Bloomberg code ASACO AB

Website www.asharqiyah.com.sa



Free float 99.98

Valuation multiples

08 09 TTM

P/E (x) (21.3) (53.2) (30.7)

P/B (x) 2.5 3.0 3.1

P/S (x) 5.0 7.9 8.0


DPS NA NA NA



5,000

5,500

6,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-10203040506070

TASI Ash Shariqiyah Dev. Co. (RHS

Source: Bloomberg




Ash-Sharqiyah Also known as

SHADCO

Ash-Sharqiyah Development Company (Ash-Sharqiyah) was established

in 1986. The company provides meat and agricultural products. It also

undertakes agricultural projects, rehabilitation of land and irrigation

works. Ash-Sharqiyah owns stakes in Al Hassa Food Industries, United

Dairy Farms and Pure Breed Poultry.

� Business brief: Ash-Sharqiyah is involved in the production and marketing

of wheat, barley, fodder crops such as alfalfa and Rhodes grass, wheat and

barley straw, and potatoes. It has annual production capacity of 14.5 million

tones of milk, 14,000 tones of wheat and 550 kilograms of honey. Other

projects undertaken by the company include calf and sheep breeding, and

production of bio-fertilizers and honey.

� Financials: Ash-Sharqiyah’s revenue fell by 3.6% YoY to SR8.6mn in 1Q10

compared to SR8.9mn in 1Q09. Furthermore, the company recorded a net

loss of SR3.0mn in 1Q10 compared to a net profit of SR0.4mn in 1Q09.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 17 21 7 0 (261.2) (35.3)

Net Income SRmn 3 (12) (5) (3) (708.0) N/M

Assets SRmn 144 133 115 114 (13.1) (10.6)

Equity SRmn 117 104 85 82 (21.6) (14.9)

Total Debt SRmn 10 11 8 7 N/M N/M

Cash & Equiv SRmn 1 1 0 0 (86.5) (56.7)

EBITDA Mgn % 31.8 41.2 22.0 4.5 - -

Net Mgn % 6.4 (23.5) (14.9) (35.1) - -

ROE % 3.0 (10.9) (5.1) (14.5) - -

ROA % 2.4 (8.7) (3.9) (10.6) - -

Div Payout % 0.0 0.0 0.0 - - -

EPS SR 0.5 (1.7) (0.6) (0.4) N/M N/M

BVPS SR 15.7 13.8 11.3 10.9 (21.7) (15.2)


100

JUNE 2010 AL-JOUF AGRICULTURE

Not Covered



Stock details





Absolute (1) (20) 0

Market (6) (5) 3

Sector 0 (2) 23


3M 5.6 1.5

12M 7.5 2.0

Raw Beta 6m 3yr

0.40 0.83


Bloomberg code JADCO AB

Website www.aljouf.com.sa



Free float 95.20

Valuation multiples

08 09 TTM

P/E (x) 10.4 9.0 10.0

P/B (x) 1.2 1.1 1.1

P/S(x) 2.6 2.1 2.3

Div yield (%) 1.8 7.1 0.0

DPS 0.5 2.0 0.0



5,0005,500

6,000

6,500

7,000


30

35

40

TASI Jouff Agriculture (RHS)

Source: Bloomberg




Al-Jouf Agriculture Also known as

Al Jouf, JADCO

Al-Jouf Agriculture Development Co. (Al Jouf) was established in 1988.

The company, headquartered in Al Jouf, is engaged in the processing and

selling of agricultural as well as livestock products. Al Jouf sells its

products across Saudi Arabia and in the neighboring states through its

network and marketing outlets.

� Business brief: Al Jouf’s core activities include processing and marketing of

agricultural and animal products. The company’s product portfolio includes

potatoes (table and manufacturing) and potato seeds, onion and onion

seeds, and fruits such as peaches, plums, apples and almonds. Its offering

also includes products such as olive oil, bee honey, wheat and barley, and

alfalfa fodder for livestock and fodder dealers. Al Jouf’s other projects include

milk production and processing (under the brand AL-SAFWA DAIRIES), and

sheep breeding & fattening.

� Financials: In 1Q10, Al Jouf’s revenues fell by 35% YoY to SR33.8mn

compared to SR51.9mn in 1Q09. Net income dropped by 48.2% YoY to

SR7.1mn in 1Q10 compared to SR13.8mn in 1Q09.

� Recent developments: In March 2010 the company approved a cash

dividend of SR2 per share for the financial year 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 95 96 107 16 (51.7) 6.1

Net Income SRmn 50 54 63 7 (48.2) 12.6

Assets SRmn 507 545 578 546 (1.6) 6.7

Equity SRmn 430 472 535 499 2.8 11.5

Total Debt SRmn 1 6 1 1 (88.1) (18.3)

Cash & Equiv SRmn 12 28 94 73 60.1 177.1

EBITDA Mgn % 50.3 45.1 40.2 48.3 - -

Net Mgn % 26.3 25.5 23.7 21.1 - -

ROE % 12.3 12.1 12.5 5.5 - -

ROA % 10.0 10.3 11.2 5.1 - -

Div Payout % 0.0 18.4 63.5 - - -

EPS SR 2.5 2.7 3.2 0.4 (47.8) 12.2

BVPS SR 21.5 23.6 26.8 25.0 2.8 11.6


101

JUNE 2010 JAZAN DEVELOPMENT COMPANY

Not Covered



Stock details





Absolute (5) (4) 5

Market (6) (5) 3

Sector 0 (2) 23


3M 4.3 1.1

12M 8.1 2.1

Raw Beta 6m 3yr

1.55 0.76


Bloomberg code GIZACO AB

Website www.jazadco.com.sa



Free float 98.79

Valuation multiples

08 09 TTM

P/E (x) 34.4 (23.8) (26.5)

P/B (x) 1.0 1.1 1.1

P/S(x) 16.4 16.4 11.6

Div yield (%) 3.6 0.0 0.0

DPS 0.5 0.0 0.0



5,000

5,500

6,000

6,500

7,000


12

14

16

TASI Jazan Development (RHS)

Source: Bloomberg


Suleiman Saleh Suleiman Omary

5.0



Jazan Development Also known as

JAZADCO

Jazan Development Co. (JAZADCO), headquartered in Jazan, was

established in 1993 to conduct agriculture and aquaculture activities in

KSA. JAZADCO’s subsidiaries include Selonda Aquaculture – UK (50%

stake), Jannat Agricultural Investment Company (25% stake) and Tabuk

Fisheries Company (20% stake).

� Business brief: JAZADCO’s principal activities include ownership and

operation of fish, shrimps and fruit farms; investment in the real estate and

agriculture sectors; production of mineral water and seafood; distribution of

industrial, electrical and food retail equipments; and real estate

development. JAZADCO sells its products across Saudi Arabia and also

exports them to other Gulf Cooperation Council (GCC) and European

countries. It has total annual production capacity of 3,000 tons of shrimps,

46 million liters of mineral water, and 800 tons of mango fruits.

� Financials: In 1Q10, JAZADCO’s revenues grew 347.3% YoY to SR22.6mn

compared to SR5.0mn in 1Q09. The company’s net profit grew to SR3mn in

1Q10 compared to SR0.06mn in 1Q09, mainly due to the growth in

revenues.

� Recent developments: In April 2010, JAZADCO commenced test

operations at its second water purifying plant. The plant has capability of

processing 12 liter bottles and can process six million bottles per annum.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 4 0 11 7 274.9 66.2

Net Income SRmn 14 20 (29) 3 4,403.0 N/M

Assets SRmn 795 723 730 731 1.6 (4.2)

Equity SRmn 769 675 649 650 0.7 (8.1)

Total Debt SRmn - 20 20 18 (10.0) N/M

Cash & Equiv SRmn 110 83 42 19 (82.6) (38.2)

EBITDA Mgn % 14.8 1.0 26.4 30.4 - -

Net Mgn % 51.9 47.6 (69.0) 13.3 - -

ROE % 1.8 2.8 (4.4) 1.9 - -

ROA % 1.7 2.6 (4.0) 1.7 - -

Div Payout % 166.7 125.0 0.0 - - -

EPS SR 0.3 0.4 (0.6) 0.1 N/M N/M

BVPS SR 15.4 13.5 13.0 13.0 0.7 (8.2)


102


Energy & Utilities


2080 GASCO 106

5110 Saudi Electricity 107


Energy & Utilities

Primary focus – Power and Water A growing population (28mn in 2009), hot weather conditions and the rapid

industrialization of the Gulf and Red Sea coasts, together accounting for 60% of

demand, has led to electricity consumption in KSA increasing at a fast pace.

Electricity and Cogeneration Regulatory Authority (ECRA) forecasts electricity

demand in the Kingdom to exceed 60,000MW by 2025 at a CAGR of 8%, from

about 38,000MW in 2009.

To step up to the rising demand, the Saudi Government has planned over 24

power projects ranging from 20-30MW and a massive expansion programme of five

independent power projects (IPPs) with investments of around USD20bn, which is

expected to be completed by 2019. In its 2010 budget, Saudi Arabia boosted the

allocation for water and infrastructure sectors by 30% to SAR 46 billion, or 8.5% of

the total budget.

Exhibit 74: Revenue of GCC Energy & Utilities

companies, 2007–2009 (USD mn)

Exhibit 75: Comparison of RoE and P/E of GCC

companies, 2009 (%)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2007 2008 2009

KSA Kuwait Qatar UAE

-50

-40

-30

-20

-10

0

10

20

30

0 5 10 15 20 25 30 35 40 45 50

P/E (x)

RO

E (

%)

KSA Kuwait Qatar UAE

Source: Zawya, NCBC Research The companies list is not exhaustive.

Source: Zawya, NCBC Research Size of the bubble represents market cap. as on 31 Dec 2009

The Energy and Utilities sector currently constitutes two listed companies — Saudi

Electricity Company (SEC) and National Gas and Industrialization Co. (NGIC). Saudi

Electricity is one of the heavyweights in the overall market, SEC comprises 2% of

free float.

SEC enjoys a near monopoly in the electricity sector by controlling over 89% of

generation capacity and 100% of the transmission and distribution network in the

Kingdom; its revenue increased 7% YoY to SR23.85bn in 2009.


Stock % weight in index

as on Dec 2009*Net margin (%), 2009

Avg. ROE (%),2009*

Saudi Electricity Co (SEC) 3.92 4.9 2.4

National Gas & Industrialization Co (NGIC) 0.15 (3.8) (6.0)

Source: Zawya, Tadawul * Start period may differ based on availability of data

GCC countries are expected

to spend almost USD217 bn

on electricity projects, of

which almost 80% will be

by KSA and the UAE

KSA will need to increase

its power generating

capacity from 38 GW in

2009 to 60 GW in 2023,

according to ECRA


ENERGY & UTIL ITIES

Exhibit 77: Revenues of companies, 2007-09

(SR mn)

Exhibit 78: Profitability of companies, 2007-2009

(%)

18,000

20,000

22,000

24,000

26,000

2007 2008 2009

1,100

1,200

1,300

1,400

1,500

1,600

SECO NGIC (RHS)

-4%

-1%

2%

5%

8%

11%

14%

2007 2008 2009

SECO NGIC


The expectation of strong demand growth in the coming decade is likely to see the

Saudi government increasing its focus on securing water and power supplies, as

well as on upgrading existing infrastructure. ERCA recently (June 2010) announced

the new tariff structure industrial, commercial and government customers effective

from 01 July 2010 which would add significantly to the revenues of power firms as

well as boost their profitability.

NCBC Recommendations in the Sector We are positive on the sector especially after the hike in power tariff. We currently

are overweight on Saudi Electricity.



Saudi Electricity (5110.SE)

Overweight 18.5 The change in tariffs for certain end customer segments will generate an additional SR3.2bn in revenues, according to the company. We expect most of this to flow to the bottom line, leading to net income increasing to SR4.2bn in 2011e (the first full year of higher tariffs) versus SR1.2bn in 2009.


105

JUNE 2010 NATIONAL GAS & INDUSTRIALIZATION COMPANY

Not Covered



Stock details





Absolute (6) (9) (14)

Market (6) (5) 3

Sector 15 4 24


3M 1.8 0.5

12M 2.6 0.7

Raw Beta 6m 2yr

0.32 0.68


Bloomberg code NGIC AB

Website www.gasco.com.sa



Free float 68.19

Valuation multiples

08 09 TTM

P/E (x) 10.1 N/M N/M

P/B (x) 1.6 1.5 1.5

P/Sales (x) 1.0 1.0 1.0

Div yield (%) 7.5 2.5 N/M

DPS 1.5 0.5 N/M



5,000

5,500

6,000

6,500

7,000


17

19

21

23

25

TASI Gas&Industrialization (RHS)

Source: Bloomberg


Saeed Ali Ghadran Al Ghamdi 11.9



6.1


ENERGY AND UTIL ITIES

GASCONational Gas & Industrialization Company (GASCO) was established in

1963 through the merger of two companies. GASCO is engaged in

various activities, including filling, refilling and distributing liquefied

petroleum gas (LPG); designing and executing gas networks; and selling

and installing gas tanks and cylinders.

� Business brief: GASCO sells LPG gas cylinders across KSA (in sizes of 26.5

and 52.5 liters). The company also provides various types of gas tanks and

related accessories. About 350 carriers of GASCO have a capacity of 40,000

liters each, while the remaining 42 have a capacity ranging from 11,000–

23,000 liters. The filling plants of the company are located in Riyadh,

Jeddah, Dammam, Al Madinah, Taif, Bureidah, and Khamis Mushait. The

company also designs and implements gas networks for retail and industrial

customers.

� Financials: On a YoY basis, GASCO’s sales increased 4.2% in 1Q10, while

net income rose 29.6% on account of a rise in investment income. However,

due to higher cost of sales, EBIDTA margins declined to 7.0% in 1Q10 from

8.4% in 1Q09. The company’s EBITDA decreased by 12.8% to SR29mn in

1Q10.

� Recent developments: On 31 January 2010, GASCO announced that it had

signed contracts worth SR149mn, which would raise production by 10% at

its seven plants. These contracts have a term of three years.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 151 115 136 28.5 (12.8) (5.2)

Net Income SRmn 139 149 -59 16 29.6 N/M

Assets SRmn 1,494 1,297 1,344 1,401 1.7 (5.1)

Equity SRmn 1,101 941 991 1,030 19.3 (5.1)

Total Debt SRmn - - - - N/M N/M

Cash & Equiv SRmn 19 133 262 262 (0.7) 268.3

EBITDA Mgn % 10.8 7.8 8.8 7.0 - -

Net Mgn % 10.0 10.1 (3.8) 4.0 - -

ROE % 13.3 14.6 (6.1) 6.4 - -

ROA % 10.0 10.7 (4.5) 4.7 - -

Div Payout % 83.3 75.4 N/M - -

EPS SR 1.8 2.0 (0.8) 0.2 29.4 N/M

BVPS SR 14.6 12.6 13.2 13.7 19.3 (4.8)


106

JUNE 2010 SAUDI ELECTRICITY COMPANY 107

Overweight


Price (SR) 13.1


Stock details





Absolute 18 12 39

Market (6) (5) 3

Sector 15 4 24


3M 51.5 13.7

12M 31.5 8.4

Raw Beta 6m 2yr

0.24 0.49


Bloomberg code SECO AB

Website www.se.com.sa



Free float 17.18

Valuation multiples

08 09 10E

P/E (x) 49.2 46.5 23.6

P/B (x) 1.1 1.1 1.1

P/Sales (x) 2.4 2.3 2.1

Div yield (%) 5.4 5.4 5.4

DPS 0.7 0.7 0.7



5,000

5,500

6,000

6,500

7,000


10

11

1213

14

TASI Saudi Electricity (RHS)

Source: Bloomberg


Government of Saudi Arabia 74.3

ARAMCO 6.9


ENERGY AND UTIL ITIES

Saudi Electricity Also known as

SEC

Saudi Electricity Company (Saudi Electricity) 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. Saudi Electricity was formed through the consolidation of

10 regional electricity companies.

• Business brief: Saudi Electricity retains a monopoly on the transmission

and distribution of electricity in the Kingdom and a near monopoly on

generation. The company also exports and imports energy, and invests in

various Saudi power projects. Saudi Electricity had a total available capacity

of 43,500 MW at the end of 2009.

• Financials: Due to rising demand for electricity, the company’s revenues

increased by 11.7% YoY to SR4.6bn and EBITDA grew by 20.2% YoY to

SR1,046mn in 1Q10. However, the company reported a net loss of SR782mn

in 1Q10 compared to a loss of SR771 in 1Q09. The larger loss was mainly

due to an increase in the cost of purchased of power from independent

producers.

• Recent developments: In June 2010, Saudi Electricity received approval

for a change in power tariffs for the government, commercial and industrial

sectors, which will be implemented from 1 July 2010. The increase in tariff

structure could result in additional revenues of SR3.2bn, according to the

company. NCB Capital expects most of the incremental revenues to flow

straight to the bottom line, resulting in an increase in net income to SR4.2bn

in 2011e, from SR2.3bn in 2010e (which will include 6 months of the

adjusted tariffs) and SR1.2bn in 2009.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)


EBITDA SRmn 7,625 8,327 10,107 12,846 9.2 19.0

Net Income SRmn 1,104 1,170 2,300 4,205 5.9 56.1

Assets SRmn 145,382 166,091 185,409 208,895 14.2 12.8

Equity SRmn 48,553 49,175 50,927 54,585 1.3 4.0

Total Debt SRmn 10,204 19,340 30,517 47,449 89.5 66.9

Cash & Equiv SRmn 1,232 3,883 2,119 2,385 215.2 24.6

EBITDA Mgn % 34.2 34.9 38.2 43.1 - -

Net Mgn % 5.0 4.9 8.7 14.1 - -

ROE % 2.3 2.4 4.6 8.0 - -

ROA % 0.8 0.8 1.3 2.1 - -

Div Payout % 259.3 250.0 127.3 69.3 - -

EPS SR 0.3 0.3 0.6 1.0 3.7 55.2

BVPS SR 11.7 11.8 12.2 13.1 1.3 4.0



Telecom / IT


7010 Saudi Telecom 113

7020 Etihad Etisalat 114

7030 Zain KSA 115

7040 Etihad Atheeb 116


Telecom

VAS, broadband–the next leg of growth The Saudi telecommunication sector continues to grow, with mobile subscriptions

increasing 26% yoy to 45.3mn in 2009. The penetration rate remained strong at

177% in 2009, spurred mainly by increased competition brought on by Zain’s entry

into the market. Favorable demographics (median age of 22) growing at 2-3%

annually and rising per capita income are the key long-term growth drivers that

remain intact despite the tough global business environment. The

Telecommunication sector index in the Tadawul currently includes four companies:

Saudi Telecom Co (STC), Etihad Etisalat Co (Mobily), Mobile Telecommunication Co.

(Zain) and Etihad Atheeb Telecom Co.

Despite being the largest market for mobile services in the GCC, KSA’s penetration

rate of 177% in 2009 is lower than the UAE’s 228%, Qatar’s 203% and Bahrain’s

190%. Going forward, BMI expects mobile penetration in KSA to increase to 205%

by 2013. Internet penetration reached 42% in 2009, while broadband was at a

mere 8%, but is expected to be a catalyst for growth in the telecom sector in the

long term. BMI expects the number of broadband connections to reach 4.4mn by

2013 from an estimated 2mn in 2009.

With mobile penetration rates already touching new highs, further growth is likely

to be at a diminishing rate, implying limited room for mobile subscriber additions.

However, the advent of non-voice services (mainly value-added features), newer

technologies, and introduction of smart phones could add new subscribers as well

as limit the fall in ARPUs.

KSA’s fixed line penetration has stagnated around 16-17% as more users migrated

to mobiles and corporate demand has remain subdued due to the global economic

downturn. Fixed line subscribers grew a meager 1% to an estimated 4.2mn in

2009, and BMI expects growth to remain low going forward. However, fixed line

services could witness some competition-led growth with the launch of Atheeb;

data and broadband in particular should help revenue growth. In addition,

decreasing household size, a rising population and an uptick in the demand from

businesses are expected to drive fixed-line growth over the long term.

Although increasing competition has been beneficial in driving penetration and

revenue growth, it is now beginning to impact margins due to continued pricing

pressure. Going forward, the risk is that margins remain under pressure as further

additions to the subscriber base come at a higher cost associated with growing

marketing expenses. Hence, the key for companies is to shift their focus on value-

added services, providing not just connectivity but also monetizing digital demand,

and thus limiting declines in ARPU. We believe KSA is a relatively more lucrative

market for VAS, given the country’s affluent and young population that is more

open to adopting newer technologies and services. Yet, the true catalyst for growth

is likely to be the largely untapped broadband market; the broadband penetration

rate stood at just 8% in 2009 (well below Bahrain, Qatar and UAE’s more than 50%

rate) versus 42% of internet.

Saudi Arabia’s large young

and growing population

base is a key driver for the

Telecom sector

109


TELECOM

Exhibit 80: Fixed-line and mobile penetration rate

(%)

Exhibit 81: Broadband & internet penetration rate

(%)

15%

16%

16%

16%

17%

2003 2004 2005 2006 2007 2008 2009

0%

40%

80%

120%

160%

200%

Fixed-line Mobile (RHS)

7

0%

3%

6%

9%

2003 2004 2005 2006 2007 2008 2009

0%

10%

20%

30%

40%

50%

Broadband Internet (RHS)

Source: EIU, BMI, ITU Source: EIU, BMI, ITU

KSA telecom companies also are diversifying geographically, selectively targeting low

mobile penetration markets. STC has holdings in a number of foreign subsidiaries

including in the Indian and Indonesian markets. Mobily also has plans to invest

INR700mn (approximately USD15.5mn) in India, where it already has operations, to

capture the country’s growing telecommunication sector. The rapid growth in KSA’s

telecom sector positions it as the largest in the GCC in revenue terms in 2009.

However, in terms of return on equity it occupied 2nd position behind Oman and is

trading at a P/E multiple of 9.1x, a touch above the GCC average of 8.9x.

Exhibit 82: GCC telco’s revenues, 2007–09

(USD mn)

Exhibit 83: GCC Telcos RoE and P/E comparison, 2009

(%)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2007 2008 2009

Oman Bahrain UAE KSA Kuwait Qatar

0

8

16

24

32

40

6 8 10 12

P/E (x)

RO

E (

%)

KSA Qatar UAE Kuwait Oman Bahrain

Source: Reuters The companies list is not exhaustive.

Source: Reuters, NCBC Research Size of the bubble represents market cap. as on 31 Dec 2008

STC is the largest company in KSA’s telecommunication sector with a market cap of

SR88.2bn as of 31 December 2009. Zain’s initial public offering came in 2008 and

the company launched commercial services in August 2008. Atheeb listed in March

2009 and has recently launched commercial services.


% weight in Indexas on Dec 2009

Net margin (%)2009

Avg. RoE(%), 2009*

Saudi Telecom Co (STC) 7.38 21.3 33.8

Etihad Etisalat Co (Mobily) 2.54 23.1 24.3

Mobile Telecommunication Co. (Zain) 1.19 N/M N/M

Atheeb Telecom 0.14 N/A N/A

Source: Bloomberg, Tadawul, Reuters; * start periods may differ based on the availability of data

110


TELECOM

Mobily continued to perform well despite the downturn and intensifying competition in

KSA, with revenues up 21% in 2009 due largely to its aggressive focus on the mobile

and wireless internet markets. Margins improved significantly as a result of the

increasing percentage of high-margin data revenue, and higher efficiency. STC’s top-

line increased 7% in 2009, mainly led by its expansion in Turkey, Kuwait, India and

Indonesia. However, its margins suffered on account of these overseas investments

as well as higher inter-connection charges to other networks. Consequently, net profit

declined 2% in 2009. Although Zain continued to sink deeper into the red, its revenue

jumped 495% in 2009, led by the significant expansion in subscriber base brought

about by aggressive promotional and marketing strategies.

Exhibit 85: Revenue of companies, 2005-2008

(SR mn)


(%)

0

12,000

24,000

36,000

48,000

60,000

72,000

2007 2008 2009

STC Mobily Zain KSA

0

7

14

21

28

35

42

2007 2008 2009

STC Mobily

Source: Reuters Source: Reuters

As of 31 Dec-09, the P/B multiples of STC and Mobily were 2.1x and 2.5x, respectively,

while that of Zain stood at 2.1x. However, the ROEs of STC and Mobily were similar at

around 27.4%. With Zain continuing to report losses, its ROE remains negative.

Exhibit 87: Comparison of P/B and RoE, 2008 (%)

Exhibit 88: Comparison of P/B and RoE, 2009 (%)

STC

Mobily

20

24

28

32

36

40

1 2 3 4

P/B (x)

RO

E (

%)

STC

Mobily

20

24

28

32

36

40

1 2 3 4

P/B (x)

RO

E (

%)

Source: Bloomberg, Tadawul Size of the bubble represents market cap. as on 31 Dec 2008

Source: Bloomberg, Tadawul Size of the bubble represents market cap as on 31 Dec 2009

Zain is the most active stock in the telecom sector with turnover of SR137mn per

day in 2009 followed by Atheeb’s SR110mn per day despite operations only now

just starting. On YTD 2010 basis, Mobily remained the most active stock with

turnover of SR57mn per day with Zain coming second at SR47mn per day.

111


TELECOM

Exhibit 89: Avg. daily turnover, Jan09 – Mar10 (SR mn)

Exhibit 90: Share price movement, Jan09 – Mar10 Rebased to 100 on 1st Jan-09

0

25

50

75

100

125

STC Mobily Zain Atheeb

0

50

100

150

200

Jan-09 Jun-09 Oct-09 Mar-10

STC Mobily Zain Atheeb

Source: Bloomberg, Tadawul Source: Bloomberg, Tadawul

The Saudi Arabia Telecommunication Sector is experiencing intense competition

brought on by the entry of new players. Further reforms will likely attract more new

entrants into the market and add to competition. The drive for market share gains

amongst existing carriers is leading to significant pricing pressure, as reflected in

declining ARPUs, as well as margin pressure. Nevertheless, continued strong

demand for mobiles, reduction in handset prices and tariffs, and increasing

popularity of value-added services offered on mobile platforms, present a

significant growth opportunity. We expect growth in the customer base and

increased usage to somewhat mitigate the decline in ARPU. Moreover, Internet and

broadband services usage are expected to grow, given the expanding young

population and their willingness to adopt new technologies. Although demand for

wired Internet is likely to promote fixed-line connectivity, we believe companies will

focus more on wireless connectivity, especially through mobiles, given their high

penetration. Furthermore, investments in the sector are likely to increase as more

reforms are implemented and new carriers start operations.

Relatively unexplored

broadband and value-

added services are likely

engines for growth

112

JUNE 2010 SAUDI TELECOM COMPANY

Not Covered



Stock details





Absolute (6) (12) (26)

Market (6) (5) 3

Sector (3) (5) (5)


3M 50.2 13.4

12M 40.2 10.7

Raw Beta 6m 3yr

1.05 0.79


Bloomberg code STC AB

Website www.stc.com.sa



Free float 16.29

Valuation multiples

08 09 TTM

P/E (x) 6.9 7.0 7.5

P/B (x) 2.0 1.8 1.8

P/Sales (x) 1.6 1.5 1.5

Div yield (%) 9.9 7.9 7.9



5,000

5,500

6,000

6,500

7,000


30

40

50

60

TASI STC (RHS)

Source: Bloomberg



General Organization for Social Insurance - Saudi Arabia

7.0



TELECOM

Saudi Telecom Also known as

STC

Saudi Telecom (STC) was established in 1998 as Saudi Arabia’s then sole

telecom operator and is a leading national telecom service provider in

the Kingdom. STC mainly provides landline, mobile, and data services.

Apart from Saudi Arabia, the group operates in Kuwait, Indonesia, the

UAE, and Malaysia. STC also holds stakes in telecom operators in Turkey,

South Africa, India and Bahrain.

� Business brief: STC classifies its operating segments in terms of the

service offerings, i.e., GSM, PSTN, and DATA. The GSM segment includes

mobile, 3G, prepaid cards, international roaming and messaging services,

while PSTN services comprise fixed line, card telephones, interconnect and

international call services. DATA services consist of leased data

transmissions, DSL and Internet services.

� Financials: STC has shown continued revenue growth through 2009,

however increasing competition in the Kingdom has led to margin pressure

with net income falling nearly 5% from 2007 to 2009. The weakness has

continued in 1Q10 as EBITDA margins contracted 685 basis points from

46.2% in 1Q09 to 39.4% in 1Q10 due to a decline in international call prices,

rise in fees related to external networks and expenses owing to capital

investments.

� Recent developments: In April 2010, Mr. Ghassan Hasbani, CEO,

announced plans for a series of acquisitions in Africa, India and other Asian

countries as part of the group’s international expansion drive. In May 2010,

STC appointed Cisco Technology Solutions to introduce managed data center

services in the Saudi market.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 16,716 21,743 20,612 4,927 (12.2) 11.0

Net Income SRmn 12,022 11,038 10,863 1,772 (28.8) (4.9)

Assets SRmn 68,811 99,762 109,587 111,116 9.2 26.2

Equity SRmn 35,876 37,638 42,035 42,503 13.7 8.2

Total Debt SRmn 13,580 31,986 31,290 29,829 (3.1) 51.8

Cash & Equiv SRmn 7,618 8,061 7,710 7,257 (19.5) 0.6

EBITDA Mgn % 48.5 45.8 40.6 39.4 - -

Net Mgn % 34.9 23.3 21.4 14.2 - -

ROE % 34.3 30.0 27.3 16.8 - -

ROA % 20.9 13.1 10.4 6.4 - -

Div Payout % 83.2 67.9 55.2 84.6 - -

EPS SR 6.0 5.5 5.4 0.9 (28.8) (4.9)

BVPS SR 17.9 18.8 21.0 21.3 13.7 8.2


113

JUNE 2010 ETIHAD ETISALAT COMPANY 114

Not Covered



Stock details





Absolute (1) 7 46

Market (6) (5) 3

Sector (3) (5) (5)


3M 51.8 13.8

12M 47.1 12.6

Raw Beta 6m 3yr

0.77 0.81


Bloomberg code EEC AB

Website www.mobily.com.sa



Free float 58.48

Valuation multiples

08 09 TTM

P/E (x) 16.7 11.6 10.7

P/B (x) 3.6 2.8 2.9

P/Sales (x) 3.2 2.7 2.5




5,000

5,500

6,000

6,500

7,000


35

45

55

TASI M obily (RHS)

Source: Bloomberg


Etisalat – UAE 27.4


11.2


TELECOM

Etihad Etisalat Also known as

Mobily

UAE based Emirates Telecommunications Corporation (Etisalat)

established Etihad Etisalat Company (Mobily), the second largest mobile

operator in Saudi Arabia, in 2004. Mobily commenced operations in

2005, providing public wireless telecommunication services.

� Business brief: Mobily offers mobile telephony services in the Kingdom

using GSM, 3/3.5G and Wimax technologies. Mobily markets its products

through four functional lines – channel distribution, corporate & VIP sales,

flagship stores, and commercial support. As of December 2009, the

company’s mobile subscriber base stood at 18.2mn.

� Financials: Mobily has shown very strong growth since its operational start

in 2005, with 2009 revenues increasing to SR13bn from SR8.4bn in 2007

(24.4% annual growth). Net income has risen at an even faster pace,

increasing to SR3bn in 2009 from SR1.4bn in 2007 as the company was able

to leverage its growing customer base and built out its mobile network.

Growth in 1Q10 has remained strong with revenues increasing 27.4% YoY to

SR3.6bn and net margins expanded from 17.1% in 1Q09 to 19.9% in 1Q10.

� Recent developments: In June 2010, Mobily announced its plans to spend

SR2.5bn in 2010 on capex with an aim to execute expansion plans and

capture higher market share. The company also announced a new 5-year

strategy aimed at strengthening its leadership position in broadband services

applications across the Middle East and North Africa. On 18 January 2010,

Mobily announced a cash dividend of SR1.25 per share for 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 3,239 3,794 4,837 1,180 29.9 22.2

Net Income SRmn 1,380 2,092 3,014 714 48.7 47.8

Assets SRmn 19,881 27,192 30,926 33,358 18.4 24.7

Equity SRmn 5,913 9,754 12,243 12,082 24.4 43.9

Total Debt SRmn 8,923 9,790 8,595 9,121 (7.5) (1.9)

Cash & Equiv SRmn 703 1,264 933 2,139 228.6 15.2

EBITDA Mgn % 38.4 35.1 37.0 32.9 - -

Net Mgn % 16.3 19.4 23.1 19.9 - -

ROE % 26.4 26.7 27.4 23.5 - -

ROA % 7.3 8.9 10.4 8.9 - -

Div Payout % 18.1 18.8 29.0 - -

EPS SR 2.8 4.0 4.3 1.0 47.8 25.0

BVPS SR 11.8 13.9 17.5 17.3 24.4 21.6


114

JUNE 2010 ZAIN KSA

Not Covered



Stock details



Shares outstanding (mn) 1,400..0


Absolute 3 (8) (32)

Market (6) (5) 3

Sector (3) (5) (5)


3M 67.6 18.0

12M 60.8 16.2

Raw Beta 6m 3yr

0.25 0.81


Bloomberg code EEC AB

Website www.sa.zain.com



Free float 44.99

Valuation multiples

08 09 TTM

P/E (x) NM NM NM

P/B (x) 1.1 1.5 1.6

P/Sales (x) 24.8 4.2 3.6




5,000

5,5006,000

6,5007,000


TASI Zain (RHS)

Source: Bloomberg


Mobile Telecommunications Company

25.0

Faden Commercial & Real Estate Establishment

6.8

Saudi Plastics 6.8



TELECOM

Zain KSA Also known as

ZAIN

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.

� Business brief: ZAIN KSA is the third mobile operator in KSA, offering both

voice and data services. The company launched commercial services in

August 2008 and had 6mn active subscribers by the end of 2009. The

company is targeting to reach 7.5mn subscribers by the end of 2010. ZAIN

KSA plans to build its own network by 2010 and has targeted a positive

EBITDA for the year.

� Financials: ZAIN KSA first recorded revenues in 2008 and has quickly

expanded, reaching SR3bn in 2009. However, high D&A expenses due to the

cost of its telecom license (SR22.9bn) and for its large network build-out

have kept the company in net losses, reaching SR3.1bn in 2009. For 1Q10,

the company recorded revenues of SR1.1bn, however, incurred a loss of

SR70.3mn and SR662.4mn at the EBITDA and net-income levels,

respectively.

� Recent developments: In June 2010, the company announced that it will

be reducing its capital to cover some or all of its accumulated losses which

reached nearly SR6bn by 1Q10. We believe this will ultimately allow the

company to reduce its share count while maintaining par value, with the aim

of eventually raising further capital.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn - 505 3,004 1,094 88.1 -

EBITDA SRmn - (1,265) (990) (70) N/M -

Net Income SRmn - (2,278) (3,099) (662) N/M -

Assets SRmn - 26,665 27,830 27,661 1.7 -

Equity SRmn - 11,722 8,622 7,960 (27.3) -

Total Debt SRmn - 13,176 14,560 14,596 7.4 -

Cash & Equiv SRmn - 583 506 474 62.7 -

EBITDA Mgn % - N/M (33.0) (6.4) - -

Net Mgn % - N/M (103.2) (60.5) - -

ROE % - (19.4) (30.5) (32.0) - -

ROA % - (8.5) (11.4) (9.6) - -

Div Payout % - - - - - -

EPS SR - (1.6) (2.2) (0.5) N/M -

BVPS SR - 8.4 6.2 5.7 (27.3) -


115

JUNE 2010 ETIHAD ATHEEB TELECOMMUNICATIONS COMPANY

Not Covered



Stock details





Absolute (5) (9) (17)

Market (6) (5) 3

Sector (3) (5) (5)


3M 12.2 3.3

12M 31.9 8.5

Raw Beta 6m 3yr

0.841 N/A


Bloomberg code EAT AB

Website www.go.com.sa



Free float 35.0

Valuation multiples

08 09 2010

P/E (x) N/A N/A NM

P/B (x) N/A N/A 2.5


Div yield (%) N/A N/A -



5,000

5,500

6,000

6,500

7,000


15

17

19

TASI Atheeb (RHS)

Source: Bloomberg


Atheeb Group 16.1

Bahrain Telecom 15.0

Al Nahla Group 13.7

Traco Group 5.8


TELECOM

Etihad Atheeb Also known as

ATHEEB

Etihad Atheeb Telecommunications Company (ATHEEB) was established

in 2008 to provide fixed and wireless telecommunications services in

KSA. The company is a joint venture between KSA-based Atheeb Trading

Co., Al-Nahla Trading Co. and Traco Group and Bahrain Telecom.

� Business brief: ATHEEB was set up to build, operate and maintain the

second fixed line telecommunication network in Saudi Arabia. The company

aims to provide innovative and high technology solutions, such as video

services, Internet telephony, and broadband Internet, apart from voice

telephone communications and data services. ATHEEB obtained a fixed

telephony license for SR5mn and a 3.5GHz mobile frequency spectrum for

SR520mn.

� Financials: In 1Q 2010, the company generated SR35.4mn in revenues.

However, high operational costs resulted in a negative EBITDA of SR309mn

and a net loss of SR379mn. As the company has just launched operations,

profitability is likely to suffer as revenues ramp up and the company

establishes its network and customer base.

� Recent developments: On 14 June 2010, ATHEEB announced that it’s CEO,

Raed Kayyal had resigned after it accumulated losses approximately equal to

40% of its capital, in its first year of business. The outgoing CEO will be

replaced by Ahmad Abbas Sindi. On 23 January 2010, ATHEEB officially

expanded its 4G network in the Eastern region to include Al Hafouf City and

Al Qatif City. It had earlier launched its nomadic 4G network in the Kingdom

in November 2009.

Company financials*

2007 2008 2009 2010

YoY

(%)

CAGR (%)

(07-10)

Net Revenues SRmn - - - 35 - -

EBITDA SRmn - - - (309) - -

Net Income SRmn - - - (379) - -

Assets SRmn - - - 2,114 - -

Equity SRmn - - - 621 - -

Total Debt SRmn - - - N/A - -

Cash & Equiv SRmn - - - 77 - -

EBITDA Mgn % - - - N/M - -

Net Mgn % - - - N/M - -

ROE % - - - N/M - -

ROA % - - - N/M - -

Div Payout % - - - - - -

EPS SR - - - (3.8) - -

BVPS SR - - - 6.2 - -

Source: Tadawul, Zawya, Company, NCBC Research *Financial Year End March

116


Industrial Investment


1210 Basic Chemical 120

1211 Saudi Arabian Mining 121

1212 Astra Industrial 122

1213 Al Sorayai Trading 123

1214 Shaker Group 124

2070 Saudi Pharmaceutical 125

2150 National Company for Glass 126

2180 Filling and Packaging 127

2220 National Metal 128

2230 Saudi Chemical 129

2300 Saudi Paper 130

2340 Al Abdullatif Industrial 131

4140 Saudi Industrial Export 132


Industrial Investment

Capacity expansion plans indicate a positive outlook With reduced sales volumes and projects being delayed in KSA post the financial

crisis, the Industrial Investment sector’s revenue fell in 2009, although declining

commodity prices boosted profitability of the sector. Recent capacity expansion

plans are likely to facilitate growth in the sector going forward.

At the listed company level, KSA has a diversified Industrial Investment sector with

strong revenue growth historically, although top lines have suffered in the current

crisis. ROE has been on par with GCC peers with P/E averaging around 12.7x.

Exhibit 91: Revenue of GCC industrial investment



companies, 2009 (%)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2007 2008 2009

KSA Qatar Kuwait

10

20

30

40

50

60

0 4 8 12 16 20

P/E (x)

RO

E (

%)

KSA Qatar Kuwait

Source: Tadawul, Bloomberg, NCBC Research Source: Tadawul, Bloomberg, NCBC Research

The industrial investment sector has a large number of private players, with 12

listed companies.

Sector revenue declined to SR7bn in 2009 due to reduced competitiveness and

lower sales volumes. Maaden reported the largest increase in revenue (from a


Company


Dec 2009Net Margin(%) 2009

ROE (%)2009

Basic Chemical Industries Co. 0.07 12.3 19.0

Saudi Arabian Mining Co. (MAADEN) 1.34 14.9 0.6

Astra Industrial Group (ASTRA) 0.22 19.6 13.6

Al Sorayai Trading & Industrial Group** N/A N/A N/A

Saudi Pharmaceutical Indus. & Medical Appliances Corp. (SPIMACO)

0.20 16.3 8.6

The National Co. for Glass Industries 0.06 37.2 10.3

Filling & Packing Material Mfg. Co. 0.04 14.3 17.8

National Metal Manufacturing & Casting Co. 0.05 4.9 4.5

The Saudi Chemical Co. (SCCO) 0.22 18.3 25.8

Saudi Paper Manufacturing Co. (SPM) 0.14 16.9 19.6

Al-Abdullatif Industrial Investment Co. (ALABDUL)

0.28 16.9 13.0

Saudi Industrial Export Co. 0.03 N/M N/M

Bloomberg, Tadawul: Company data; ** This company was listed in 2010

118


INDUSTRIAL INVESTMENT

lower base), while Saudi Industrial Export Co. reported the steepest decline. Net

profits for the sector grew to SR1.5bn in 2009 from SR1.2bn in 2008, however was

boosted by a SR300mn one off gain at Maaden


(SR mn)


(%)

0

1,500

3,000

4,500

6,000

7,500

2007 2008 2009

SPIMACO SCCO SPM ALABDUL

ASTRA MAADEN Others

-110

-90

-70

-50

-30

-10

10

30

50

2007 2008 2009

SPIMACO SCCO SPM ALABDUL

ASTRA MAADEN Others


As of 31 December 2009, the sector’s P/E and P/BV multiples stood at 12.7x and

2.3x, respectively, compared with 17.5x and 2.0x, respectively, in 2008. As of 31

May 2010, the sector P/E and P/BV multiples were 19.8x and 1.2x, respectively.


(%)


(%)

-5

0

5

10

15

20

25

30

-2 0 2 4 6

P/B (x)

RO

E (

%)

SPIMACO ZOUJAJ NMMCC SCCO

SPM ALABDUL SIECO ASTRA

MAADEN BCI FIPCO

-10

0

10

20

30

40

0 2 4 6

P/B (x)

RO

E (

%)

ZOUJAJ FIPCO NMMCC SCCO

SPM ALABDUL SIECO MAADEN

BCI ASTRA SPIMACO


NCBC Recommendations in the Sector We currently have coverage of Maaden in the sector.



Maaden(1211.SE)

Underweight 15.3 Concerns regarding long term reserves exists despite the higher gold price. Phosphate unit is the main value driver for Maaden and is expected to start in June 2011. High Zakat expense and growing debt levels are a drag on the company's value in the short and medium term. The aluminum project may not be value accretive. We do not include the aluminum project in our valuation until we have further clarity.


119

JUNE 2010 BASIC CHEMICAL INDUSTRIES

Not Covered



Stock details





Absolute 0 (2) 7

Market (6) (5) 3

Sector (9) (8) (4)


3M 8.4 2.2

12M 15.2 4.1

Raw Beta 6m 3yr

0.67 1.09


Bloomberg code BCI AB

Website www.bci.com.sa



Free float 78.6

Valuation multiples

08 09 TTM

P/E (x) 20.7 13.1 12.5

P/B (x) 2.7 2.3 2.2

P/Sales (x) 1.7 1.6 1.6




5,000

5,500

6,000

6,500

7,000


25

30

35

TASI BCI (RHS)

Source: Bloomberg


Ali Al Abdullah Al Tamimi Co. 22.0

Abdul Aziz Muhana Abdul Aziz Almoaibed

9.1

Abdullah Muhana Abdul Aziz Almoaibed

8.4

Mohammed & Abdul Rahman Al Saad Al Buwardi Co.

7.0

Nour Mehanna Abdulaziz Almaibd

5.0



Basic Chemical Also known as

BCI

Basic Chemical Industries (BCI), incorporated in 1973, is engaged in the

production and sale of chemicals through its subsidiaries, which include

Saudi Water Treatment; Arabian Polyol; National Adhesive; Basic

Chemicals National; and Chemical Marketing and Distribution.

� Business brief: BCI produces a variety of chemicals such as liquefied

chlorine gas, hydrochloric acid, caustic soda, polyurethane (polyol),

adhesives, calcium chloride, water treatment chemicals, laundry and

janitorial products. The company’s plant, located in the First Industrial Zone

in Dammam city, has an annual production capacity of 71,560 tons of gases

per year.

� Financials: BCI’s revenues grew 3.6% YoY to SR135mn in 1Q10. The

EBITDA margin expanded to 20.8% in 1Q10 versus 18.6% in 1Q09. In

absolute terms, EBITDA grew 15.9% YoY to SR28mn this quarter. In

addition, net income increased 22.9% YoY to SR16mn.

� Recent developments: In April 2010, BCI’s shareholders approved a cash

dividend of SR1.5 per share for the year 2009. In August 2009, the

shareholders approved a 25% increase of its capital from SR220mn to

SR275mn by issuing one bonus share for every four shares held.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 92 95 112 28 15.9 10.6

Net Income SRmn 48 40 63 16 22.9 13.7

Assets SRmn 516 531 570 614 10.7 5.1

Equity SRmn 285 305 354 370 16.6 11.5

Total Debt SRmn 108 93 60 52 (38.8) (25.7)

Cash & Equiv SRmn 37 35 114 145 115.4 74.5

EBITDA Mgn % 21.6 19.3 22.0 20.8 - -

Net Mgn % 11.4 8.0 12.3 11.8 - -

ROE % 17.8 13.4 19.0 17.6 - -

ROA % 9.7 7.6 11.4 10.7 - -

Div Payout % 0.0 0.0 65.8 0.0 - -

EPS SR 1.8 1.4 2.3 0.6 22.9 1.8

BVPS SR 10.4 11.1 12.9 13.5 16.6 (0.3)


120

JUNE 2010 SAUDI ARABIAN MINING COMPANY 121

Underweight


Price (SR) 17.5


Stock details





Absolute (12) (3) (4)

Market (6) (5) 3

Sector (9) (8) (4)


3M 153.1 40.8

12M 113.4 30.2

Raw Beta 6m 3yr

1.49 NA


Bloomberg code MAADEN AB

Website www.maaden.com.sa



Free float 36.09

Valuation multiples

08 09 10E

P/E (x) 79.4 40.9 32.8

P/B (x) 1.0 1.0 0.9

P/Sales (x) 35.1 25.4 17.8

Div yield (%) - - -



5,000

5,500

6,000

6,500

7,000


15

20

25

TASI M A'ADEN (RHS)

Source: Bloomberg



General Organisation for Social Insurance (GOSI)

8.2




Saudi Arabian Mining Also known as

MAADEN

Saudi Arabian Mining Company (Ma’aden), established in 1997, is

engaged in the exploration and production of metal and non-metal ores.

The company owns five operating precious metal extraction mines and a

number of new projects. In July 2008, Ma’aden went public and raised

SR9.2bn, reducing the government’s holding from 100% to 55%.

• Business brief: Ma’aden currently has 2 business lines, gold mining and

Maaden Phosphate Company (MPC), which is a SR17bn project to set up a

diammonium phosphate (DAP) producer (scheduled to begin trial production

in 4Q10 and commercial in 2Q11). The company is also in the process of

setting up a SR40bn integrated aluminum plant in a JV with Alcoa.

• Financials: In 1Q10, Ma’aden’s revenues declined 4.2% YoY to SR153.5mn.

However, due to the decrease in COGS and increase in prices of commodities

in the quarter, the company posted 7.5% growth in EBITDA to SR44.1mn

over that in 1Q09. Net income grew 11.8% YoY to SR20.6mn. 2009 net

income showed strong growth to SR395mn versus SR203mn in 2008, but we

note that SR300mn of this was due to a non-recurring payment from Alcoa

for setting up the aluminum project.

• Recent developments: In June 2010, Ma’aden and US-based Alcoa

initiated work on construction of the world’s largest fully integrated

aluminum complex. The complex will include a bauxite mine at Ba’aitha and

an alumina refinery, aluminum smelter and rolling mill at Ras Al-Zour. The

smelter and rolling mill are scheduled to commence operations in 2013,

while the mine and refinery are planned to go live in 2014. In April 2010,

Ma’aden increased its share in the joint venture from 60.0% to 74.9%, the

rest being held by Alcoa.

Company financials

2008 2009 2010E 2011E

08-09

(%YoY)

CAGR (%)

(08-11)

Net Revenues SRmn 460 634 906 2,795 37.9 82.5

EBITDA SRmn 1 153 476 1,307 12,363.8 921.3

Net Income SRmn 203 395 492 223 94.1 3.1

Assets SRmn 21,358 29,230 32,579 33,923 36.9 16.7

Equity SRmn 16,188 16,582 17,442 17,726 2.4 3.1

Total Debt SRmn 820 8,783 13,413 14,458 971.1 160.3

Cash & Equiv SRmn 4,145 3,371 3,125 3,424 (18.7) (6.2)

EBITDA Mgn % 0.3 24.1 52.5 46.8 - -

Net Mgn % 44.2 62.2 54.3 8.0 - -

ROE % 1.9 2.4 2.9 5.1 - -

ROA % 1.5 1.6 1.6 2.7 - -

Div Payout % - - - - - -

EPS SR 0.4 0.4 0.5 0.2 13.2 -

BVPS SR 17.5 17.9 18.9 19.2 2.5 -


JUNE 2010 ASTRA INDUSTRIAL GROUP

Not Covered



Stock details





Absolute 10 (5) 22

Market (6) (5) 3

Sector (9) (8) (4)


3M 11.5 3.1

12M 11.7 3.1

Raw Beta 6m 1yr

0.97 0.83


Bloomberg code ASTRA AB

Website www.astraindustrial.com.sa



Free float 31.11

Valuation multiples

08 09 TTM

P/E (x) 15.8 14.3 13.7

P/B (x) 2.0 1.9 1.9

P/Sales (x) 2.9 2.8 2.7

Div yield (%) 1.3 3.2 -



5,000

5,500

6,000

6,500

7,000


30

35

40

45

TASI Astra Indust (RHS)

Source: Bloomberg


Arab Supply and Trading Corporation

43.8

Mohammed Nejir Saqer Al Utaibi

8.0



Astra Industrial Also known as

AIG, Astra

Astra Industrial Group (Astra) operates in the healthcare, chemical,

engineering, agricultural and home furnishing industries. Its subsidiaries

are Tabuk Pharmaceutical Manufacturing Co., Astra Polymer

Compounding, Astra Industrial Complex Co, International Building

Systems Factory Co, and Arabian Co. for Comforts & Pillows.

� Business brief: Astra’s broad product portfolio includes a range of generic

and under-licensed pharmaceutical products; additives and compounds used

in the production of plastic products; fertilizers, agricultural pesticides,

insecticides and fungicides; pillows, bed sheets, and mattress pads. The

group also constructs metal-based pre-engineered industrial buildings and

steel structures.

� Financials: In 1Q10, Astra’s revenues grew 18.6% YoY to SR292mn. The

company’s EBITDA grew a modest 3.2% YoY to SR55mn, a margin of 18.9%.

The company’s net income, however, grew 17.6% YoY to SR58mn. The

strong recovery can be ascribed to growth in other income to SR10.6mn in

1Q10 from SR2.8mn in 1Q09.

� Recent developments: In March 2010, Astra’s shareholders approved a

cash dividend of SR1.25 per share for the year 2009. In November 2009,

Astra completed legal proceedings to buy a 51% stake in Al Maseera

International Co's Jordan-based steel unit for SR225mn. The unit is expected

to commence operations in 2010 and contribute to Astra’s financial earnings

in 2011.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 216 199 197 55 3.2 (4.4)

Net Income SRmn 197 184 205 58 17.6 2.0

Assets SRmn 1,120 1,743 2,076 2,601 50.5 36.1

Equity SRmn 828 1,437 1,570 1,526 3.1 37.7

Total Debt SRmn 44 2 0 480 N/M (100.0)

Cash & Equiv SRmn 43 525 462 50 (91.2) 229.2

EBITDA Mgn % 25.4 20.0 19.0 18.9 - -

Net Mgn % 23.2 18.6 19.7 19.8 - -

ROE % 26.7 16.3 13.6 15.0 - -

ROA % 19.3 12.9 10.7 9.9 - -

Div Payout % - 20.1 45.3 - -

EPS SR 3.1 2.6 2.8 0.8 18.2 (6.1)

BVPS SR 13.1 19.4 21.2 20.6 3.1 27.0


122

JUNE 2010 AL SORAYAI TRADING

Not Covered



Stock details





Absolute (9) (17) N/A

Market (6) (5) 3

Sector (9) (8) (4)


3M 22.7 6.1

12M N/A N/A

Raw Beta 6m 2yr

N/A N/A


Bloomberg code ALSORAYA AB

Website www.al-sorayai.com



Free float 30.0

Valuation multiples

08 09 TTM

P/E (x) 10.6 9.8 9.8

P/B (x) 2.4 2.1 2.1

P/Sales (x) 0.8 0.8 0.8




5,000

6,000

7,000

8,000

Feb-10 M ar-10 M ay-10 Jun-1020

25

30

35

TASI A lsoroyai (RHS)

Source: Bloomberg


Abdulaziz Nasser Abdulaziz Al Sorayai

8.7

Mohammed Nasser Abdulaziz Al Sorayai

8.7

Nafee Nasser Abdulaziz Al Sorayai

8.7

Saleh Nasser Abdulaziz Al Sorayai

8.7



Al Sorayai Trading Also known as

Al Soroyai

Al Sorayai Trading Industrial Group (Al Soroyai), established in 1985, is

engaged in the wholesale and retail trading of carpets, rugs, floorings,

furnitures, blankets, curtain fabrics and related materials. The company

exports products to almost 65 countries, including USA, China, India,

Iraq, Russia, and Poland.

� Business brief: The company, a Saudi joint stock company, was formerly

known as AlSorayai Carpet Factory Company Ltd. AlSorayai opened its first

carpet rugs factory in 1986. The company manufactures carpets, rugs,

curtains and accessories for both the domestic and export markets. It has

the capacity to produce 86mn sq mtr per annum. AlSorayai derives around

75% of its total revenue from the Saudi market and the rest from exports to

over 65 countries across the world. In February 2010, AlSorayai divested

30% of its stake (or 9mn shares) through an IPO and raised SR243mn.

� Financials: AlSorayai’s revenue declined 5.3% YoY to SR199mn in 1Q10.

EBITDA fell 36% during the same period. This was mainly due to increased

operating expenses due to the IPO in 1Q10. However, due to lower interest

expenses and higher other income, the net margin improved 33bps YoY to

6.6% in 1Q10. As such, the net income fell just 0.4% YoY to SR13.1mn

during the quarter.

� Recent developments: AlSorayai went public through an IPO in February 2010

raising SR243mn. In May 2010, the company participated in and sponsored

DOMOTEX Middle East 2010, the region’s largest trade fair for carpets and floor

coverings.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 127 128 136 12 (35.6) 3.8

Net Income SRmn 84 74 80 13 (0.4) (2.5)

Assets SRmn 811 883 945 982 4.5 8.0

Equity SRmn 302 332 373 381 380.7 11.0

Total Debt SRmn 365 348 342 205 (33.0) (3.1)

Cash & Equiv SRmn 19 10 19 21 (30.2) 0.4

EBITDA Mgn % 15.0 14.0 14.0 6.0 - -

Net Mgn % 10.0 8.0 9.0 7.0 - -

ROE % 28.0 22.0 22.0 14.0 - -

ROA % 10.0 8.0 8.0 5.0 - -

Div Payout % - - - - - -

EPS SR N/M 2.0 3.0 2.0 (0.6) (91.7)

BVPS SR N/M 11.0 12.0 13.0 17.0 (90.5)


123

JUNE 2010 AL HASSAN GHAZI IBRAHIM SHAKER COMPANY

Not Covered



Stock details





Absolute N/A N/A N/A

Market (6) (5) 3

Sector (9) (8) (4)


3M N/A N/A

12M N/A N/A

Raw Beta 6m 2yr

N/A N/A


Bloomberg code SHAKER AB

Website www.shaker.com.sa



Free float 30.0

Valuation multiples

08 09 TTM

P/E (x) 19.6 15.3 N/A

P/B (x) 5.5 5.3 N/A

P/Sales (%) 2.2 2.0 N/A




5,7005,9006,1006,3006,5006,700

M ay-10 M ay-10 Jun-10454851545760

TASI Shaker (RHS)

Source: Bloomberg


Ibrahim Abdullah Abunayyan and Brothers

24.4

Hassan Ghazi Ibrahim Shaker 14.0

A K Al Muhaidib and Sons Group

12.2

Lemaa Ismail Faouzi Abu Khadra

10.8

Hussein Ghazi Ibrahim Shaker 5.0



Shaker Group Also known as

SHAKER

Al Hassan Ghazi Ibrahim Shaker Company (Shaker Group), established

in 1994, was converted into a joint stock company on August 18, 2008.

The company is parent of the Shaker Group, which is engaged in the

import and wholesale of air conditioning products and home appliances.

The Shaker Group, which comprises the parent company and three

subsidiaries, is one of the leading companies in its sector in the

Kingdom.

� Business brief: Shaker is involved in the wholesale and retail trade of air

conditioners and home appliances. Its business also includes repairing and

maintenance of electric & electronic home appliances and air conditioners.

The company’s product portfolio comprises more than eight brands with

nationwide presence and strong market hold. The company also sells OEM

products under its label. With exclusive sales outlets, service and display

centers, warehousing facilities and training academies, Shaker has expanded

its presence throughout the Kingdom.

� Financials: Shaker’s net revenue grew 8.7% YoY to SR998mn in 2009. The

company’s operating expenses increased 4.6% YoY to SR845mn in 2009,

primarily due to the 23.8% YoY increase in selling and distribution expenses.

Shaker’s net income grew 28.6% YoY to SR132mn in 2009.

� Recent developments: Shaker launched an initial public offering (IPO) on

May 17, 2010, offering 30% of its shares to raise SR514.5mn. The IPO was

oversubscribed 2.71 times. The company has a monopoly for LG air

conditioners in the Saudi market and has announced the addition of a new

range of air conditioners named Titan II in the Kingdom. Shaker also

announced plans to purchase 29,000 sq mt of land (two plots) to be used for

future expansion.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 750 918 998 - - 15.3

EBITDA SRmn 88 118 163 - - 36.2

Net Income SRmn 78 103 132 - - 30.2

Assets SRmn 524 739 658 - - 12.1

Equity SRmn 231 368 383 - - 28.8

Total Debt SRmn 15 6 4 - - (50.0)

Cash & Equiv SRmn 54 54 25 - - (32.3)

EBITDA Mgn % 11.7 12.9 16.4 - - -

Net Mgn % 10.4 11.2 13.3 - - -

ROE % 40.4 34.4 35.3 - - -

ROA % 16.3 16.3 19.0 - - -

Div Payout % - - - - - -

EPS SR 2.2 2.9 3.8 - - 30.2

BVPS SR 6.6 10.5 10.9 - - 28.8


124

JUNE 2010 SAUDI PHARMACEUTICAL INDUSTRIES & MEDICAL APPLIANCES CORPORATION

Not Covered



Stock details





Absolute (8) (4) 3

Market (6) (5) 3

Sector (9) (8) (4)


3M 6.4 1.7

12M 6.3 1.7

Raw Beta 6m 3yr

0.82 1.01


Bloomberg code SPIMACO AB

Website www.spimaco.com.sa



Free float 65.00

Valuation multiples

08 09 TTM

P/E (x) 18.9 15.7 15.4

P/B (x) 1.7 1.1 1.0

P/Sales (x) 2.8 2.5 2.5

Div yield (%) 4.9 4.9 -



5,000

5,500

6,000

6,500

7,000


25

30

35

40

TASI SPIM ACO (RHS)

Source: Bloomberg


Arab Company for Drug Industries & Medical Appliances

20.0




Saudi PharmaceuticalAlso known

as

SPIMACO

Saudi Pharmaceutical Industries & Medical Appliances Corporation

(SPIMACO) manufactures medicines and medical appliances for local

and international markets. Since its establishment in 1986, SPIMACO

has expanded its annual production capacity to include 3mn liters of

liquid medicines, 550mn tablets, and 12mn tubes of cream and ointment,

aseptic drops and penicillin.

� Business brief: SPIMACO commenced production in 1990 with six products.

The company’s products include Zimax, Formit, Proton, Famocid 10,

Cortimax, Sapofen Plus and Glaze. At the end of 1Q10, the company had the

largest market share among private players in terms of own products as well

as licensors’ products in the country.

� Financials: SPIMACO’s revenues in 1Q10 grew 6.4% YoY to SR274mn

driven by demand for its major brands in the owned and licensed product

segments. The EBITDA margin grew 12.6% YoY to SR60mn, while net

income grew 6.1% YoY to SR45mn.

� Recent developments: In April 2010, SPIMACO approved a cash dividend

of SR1.50 per share for 2009. On 27 January 2010, the company made a

cash bid to purchase all or a part of the shares of an unidentified Egyptian

peer, subject to legal, financial, technical and commercial audits. In

December 2009, SPIMACO entered into a joint venture with Dishman

Pharmaceuticals and Chemicals, Arab Company for Drug Industries & Medical

Appliances (ACDIMA), and Capital Advisory Group, Inc. to manufacture

active pharmaceutical ingredients (API) in Saudi Arabia. SPIMACO holds a

20% stake in the newly formed company.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 129 142 176 60 12.6 16.8

Net Income SRmn 122 128 155 45 6.1 12.7

Assets SRmn 3,357 1,937 2,722 3,158 53.1 (9.9)

Equity SRmn 2,884 1,406 2,179 2,532 76.0 (13.1)


Cash & Equiv SRmn 170 63 107 346 736.7 (20.9)

EBITDA Mgn % 16.2 16.3 18.5 21.9 - -

Net Mgn % 15.3 14.7 16.3 16.5 - -

ROE % 5.0 6.0 8.6 7.7 - -

ROA % 4.2 4.8 6.6 6.2 - -

Div Payout % - 23.4 48.4 - - -

EPS SR 2.0 2.1 2.6 0.6 (18.3) 12.7

BVPS SR 48.1 23.4 36.3 32.3 34.6 (13.1)


125

JUNE 2010 NATIONAL COMPANY FOR GLASS INDUSTRIES

Not Covered



Stock details





Absolute (19) (21) (28)

Market (6) (5) 3

Sector (9) (8) (4)


3M 9.5 2.5

12M 10.9 2.9

Raw Beta 6m 3yr

0.77 0.90


Bloomberg code ZOUJAJ AB

Website www.zoujaj.com



Free float 72.60

Valuation multiples

08 09 TTM

P/E (x) 9.0 13.3 14.3

P/B (x) 1.4 1.3 1.3

P/Sales (x) 5.6 5.0 5.2

Div yield (%) 7.4 2.5 -



5,000

5,500

6,000

6,500

7,000


15

20

25

30

TASI Zoujaj (RHS)

Source: Bloomberg


Riyad Mohammed Abdullah Al Humaidan

25.0



National Co. for Glass Also known

as

ZOUJAJ

National Company for Glass Industries (Zoujaj) owns two glass

container factories, one each in Riyadh and Dammam. Zoujaj has stakes

(45% each) in Saudi Guardian International Float Glass and Guardian

RAK; and a joint venture with Guardian Industries. These facilities

manufacture float glass for automotive and construction applications.

Zoujaj also has a 50% share in Saudi National Lamps & Electrical Co.,

which manufactures lighting products.

� Business brief: Zoujaj’s plants in Riyadh and Dammam, with production

capacity of 92,000 metric tons per year, manufacture glass containers for

the food and beverage industry. Saudi Guardian International Float Glass Co

has a float glass production capacity of 220,000 tons per year, while

Guardian RAK has a capacity of 700 tons per day. In addition, Guardian RAK

has implemented a hi-tech glass coating technology to expand its float glass

offerings to regional customers.

� Financials: In 1Q10, Zoujaj’s revenues declined 16.3% YoY to SR30mn.

EBITDA margin contracted from to 47% in 1Q10 from 57% in 1Q09, mainly

due to an increase in the cost of production. Zoujaj recorded an EBITDA of

SR14mn in 1Q10, 30.0% lower than that in 1Q09. Although the company’s

net margin recovered 61 basis points YoY to 57.7% in 1Q10, due to the drop

in revenues, its net income fell 15.4% YoY to SR17.4mn.

� Recent developments: In May 2010, Zoujaj’s shareholders approved a

20% capital increase to SR300mn by offering one bonus share for every five

shares held. In the same month, a cash dividend of SR0.5 per share was

also approved for 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 46 44 65 14 (30.0) 18.4

Net Income SRmn 80 68 46 17 (15.4) (24.7)

Assets SRmn 501 488 509 534 4.8 0.8

Equity SRmn 443 428 455 478 7.2 1.3

Total Debt SRmn 24 25 21 19 (16.9) (6.5)

Cash & Equiv SRmn 3 17 26 38 0.4 210.9

EBITDA Mgn % 43.6 40.6 53.1 47.4 - -

Net Mgn % 75.6 62.4 37.2 57.7 - -

ROE % 19.9 15.5 10.3 14.9 - -

ROA % 16.8 13.7 9.1 13.4 - -

Div Payout % 31.1 55.4 27.5 - - -

EPS SR 3.2 2.7 1.8 0.7 (14.6) (24.8)

BVPS SR 17.7 17.1 18.2 19.1 7.2 1.3


126

JUNE 2010 FILING & PACKING MATERIALS MANUFACTURING COMPANY

Not Covered



Stock details





Absolute (13) (24) (20)

Market (6) (5) 3

Sector (9) (8) (4)


3M 7.7 2.0

12M 15.0 4.0

Raw Beta 6m 3yr

0.84 0.81


Bloomberg code FIPCO AB

Website www.fipco.com.sa



Free float 85.33

Valuation multiples

08 09 TTM

P/E (x) 18.0 16.0 16.8

P/B (x) 3.3 2.5 2.4

P/Sales (x) 1.8 2.3 2.2

Div yield (%) - - -



5,000

5,500

6,000

6,500

7,000


TASI FIPCO (RHS)

Source: Bloomberg


Falcom Financial Services Co. 14.6



Filling and Packaging Also

known as

FIPCO

Filling and Packing Materials Manufacturing Company (FIPCO) is

engaged in the production of bags and other woven polypropylene

packaging products for industrial and agricultural use. The company’s

production facilities located in Riyadh cover an area of 75,000 square

meters. FIPCO manufactures over two million jumbo bags annually.

� Business brief: FIPCO’s products include jumbo bags with capacities

ranging from 500 to 2,000 kilograms; container liners used in dry cargo

shipping; and sling bags in different sizes. The company also produces leno

bags for packing fresh vegetables and fruits; cable fillers for electric cable

manufacturers; fabrics for fire retardants; tents and lumber protection;

strapping bands used for boxes; agriculture and baler twines for green

houses and grass baling use.

� Financials: In 1Q10, FIPCO’s revenues grew 25.3% YoY to SR43mn. The

EBITDA margin declined to 19.5% in the same period compared to 21.1% in

1Q09. However, net margin sharply declined 644 basis points in 1Q10 to

14.6% due to a drop in other income. In absolute terms, net income dropped

13% YoY to SR6.3mn in the quarter.

� Recent developments: In December 2009, FIPCO’s shareholders approved

a 67.3% capital increase from SR68.75mn to SR115mn by issuing one bonus

share for every 1.4864 shares held.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 22 25 26 8 16.1 9.9

Net Income SRmn 15 18 20 6 (13.0) 16.8

Assets SRmn 121 139 167 170 15.2 17.2

Equity SRmn 90 96 126 132 15.5 18.4

Total Debt SRmn 6 11 17 16 44.0 75.4

Cash & Equiv SRmn 3 18 13 1 (88.6) 126.2

EBITDA Mgn % 14.9 13.9 18.8 19.5 - -

Net Mgn % 10.0 9.9 14.3 14.6 - -

ROE % 17.1 18.8 17.8 19.5 - -

ROA % 12.0 13.5 12.9 14.9 - -

Div Payout % 23.7 - - - - -

EPS SR 2.1 2.6 2.9 0.6 (47.6) 16.8

BVPS SR 13.1 14.0 18.4 11.4 (30.9) 18.4


127

JUNE 2010 NATIONAL METAL MANUFACTURING & CASTING

Not Covered



Stock details





Absolute (10) (12) (34)

Market (6) (5) 3

Sector (9) (8) (4)


3M 8.2 2.2

12M 14.4 3.9

Raw Beta 6m 3yr

0.93 0.96


Bloomberg code NMMCC AB

Website www.natmetalco.com



Free float 64.54

Valuation multiples

08 09 TTM

P/E (x) 12.7 33.0 22.6

P/B (x) 1.5 1.5 1.5

P/Sales (x) 1.0 1.6 1.5

Div yield (%) 2.5 2.5 -



5,000

5,500

6,000

6,500

7,000


15

20

25

30

35

TASI M aadaniyah (RHS)

Source: Bloomberg


National Manufacturing Company

35.4



National Metal Also known as

NATMETAL,MAADANIYAH

National Metal Mfg & Casting (Maadaniyah) is the largest manufacturer

of steel wire and other wire products in Saudi Arabia. The company’s

plants are equipped with modern machinery for wire drawing, stranding,

galvanizing, and the manufacture of fasteners. The plant also hosts

modern testing facilities for chemical, mechanical, and spectrometric

analyses.

� Business brief: Maadaniyah has the capacity to produce 22,000 tons of

castings, 12,000 units of axles, and 80,000 tons of steel wires each year.

The company specializes in the manufacture of low relaxation PC strands,

high/low- galvanized steel, carbon wires & strands, mattress spring wires,

fasteners, welding wires, and steel nails. These products find use in various

sectors, including construction, appliances, electrical cable, building systems,

and steel fabrication.

� Financials: Maadaniyah’s revenues grew 17.7% YoY to SR92.2mn in 1Q10.

EBITDA increased 121.4% YoY to SR13.8mn—the EBITDA margin expanded

to 14.9% compared to 7.9% in 1Q09 due to lower cost of production during

the quarter. The net income also increased 686.1% YoY to SR8.2mn in

1Q10.

� Recent developments: In April 2010, shareholders of the company

approved a cash dividend of SR0.50 per share for the full year 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 58 64 38 14 121.4 (18.9)

Net Income SRmn 21 40 16 8 686.1 (13.3)

Assets SRmn 452 544 483 511 0.4 3.4

Equity SRmn 317 340 345 353 3.4 4.3

Total Debt SRmn 66 44 73 63 69.2 5.4

Cash & Equiv SRmn 12 13 35 44 59.0 71.0

EBITDA Mgn % 15.6 12.9 11.9 14.9 - -

Net Mgn % 5.6 8.0 4.9 8.8 - -

ROE % 6.8 12.2 4.5 9.4 - -

ROA % 4.6 8.1 3.0 6.6 - -

Div Payout % 79.4 25.4 82.0 - - -

EPS SR 1.3 2.0 0.6 0.3 540.0 (30.4)

BVPS SR 19.4 16.6 13.5 13.8 (17.3) (16.6)


128

JUNE 2010 SAUDI CHEMICAL COMPANY

Not Covered



Stock details





Absolute (2) 3 47

Market (6) (5) 3

Sector (9) (8) (4)


3M 12.1 3.2

12M 25.9 6.9

Raw Beta 6m 3yr

0.47 0.85


Bloomberg code SCCO AB

Website www.saudichemical.com



Free float 96.96

Valuation multiples

08 09 TTM

P/E (x) 13.2 8.8 8.6

P/B (x) 2.4 2.1 2.0

P/Sales (x) 1.7 1.6 1.6

Div yield (%) - 9.6 N/A



5,000

5,500

6,000

6,500

7,000


TASI SCC (RHS)

Source: Bloomberg




Saudi Chemical Also known as

SCC

Saudi Chemical Company (SCC) is engaged in blasting services and the

production and sale of explosives and detonators for civil and military

use. In 2004, SCC entered the seismic explosives market serving the oil

and gas exploration sector. Its subsidiary Sitcopharma supplies medical

and surgical equipment to hospitals and medical centers.

� Business brief: SCC's products include Prilex, a blasting agent mainly used

for fissured sedimentary rocks and underground applications; Kemulex, an

emulsion explosive suitable for worksites with wet holes and underwater

blasting; Sanel, a non-electric shock tube designed for bench and trench

blasting; explosives packing; electric detonators; detonating cords and

blasting machines.

� Financials: SCC’s revenues declined 4.4% YoY to SR404mn in 1Q10.

EBITDA and net income, however, improved significantly. EBITDA grew

22.3% YoY to SR85.5mn, while the net income grew 10.8% YoY to

SR74.4mn. Effective cost controls in the manufacturing process enhanced

the company’s profitability during the quarter.

� Recent developments: In May 2010, SCC announced a cash dividend of

SR1.5 per share for 4Q09. (Earlier, in December 2009, it had announced a

cash dividend of SR2.5 per share for 3Q09). In April 2010, SCC announced

that its pharmaceutical affiliate had entered into a three-year agreement

with Germany's Henkel AG & Co to distribute products in Saudi Arabia. SCC’s

Egypt-based subsidiary Suez International Nitrate Co (SINCO) began

commercial production of ammonium nitrate in February 2010. Ammonium

nitrate is the primary material used in explosives. SCC said it would secure

supplies through SINCO.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 1,230 1,537 1,643 404 (4.4) 15.6

EBITDA SRmn 171 225 298 85 22.3 32.1

Net Income SRmn 112 201 301 75 10.8 64.1

Assets SRmn 1,658 2,024 2,382 2,278 7.3 19.9

Equity SRmn 896 1,096 1,239 1,314 12.9 17.6

Total Debt SRmn 138 119 50 - N/A (39.8)

Cash & Equiv SRmn 166 166 375 160 (15.3) 50.3

EBITDA Mgn % 13.9 14.7 18.1 21.1 - -

Net Mgn % 9.1 13.0 18.3 18.5 - -

ROE % 12.8 20.1 25.8 23.4 - -

ROA % 7.2 10.9 13.7 12.8 - -

Div Payout % - - 84.0 N/A - -

EPS SR 1.8 3.2 4.8 1.2 10.3 64.0

BVPS SR 14.2 17.3 19.6 20.8 12.9 17.6


129

JUNE 2010 SAUDI PAPER MANUFACTURING COMPANY

Not Covered



Stock details





Absolute (9) 4 (7)

Market (6) (5) 3

Sector (9) (8) (4)


3M 7.6 2.0

12M 10.2 2.7

Raw Beta 6m 3yr

0.67 0.68


Bloomberg code SPM AB

Website www.saudipaper.com



Free float 49.90

Valuation multiples

08 09 TTM

P/E (x) 18.4 16.5 15.3

P/B (x) 3.5 3.0 2.9

P/Sales (x) 3.1 2.8 2.4

Div yield (%) 1.9 2.4 -



5,000

5,500

6,000

6,500

7,000


45

50

55

60

65

TASI SPM (RHS)

Source: Bloomberg


HH Prince Abdullah Bin Musaed Bin Abdul Aziz Al Saud

50.0

Ra’ed Bin Abdul Rahman Bin Abdul Aziz Al Mesha’al

8.4

Falcom Financial Services Co. 7.7



Saudi PaperAlso known as

SPMC,

Saudi Paper Group

Saudi Paper Manufacturing Company (SPM) is one of the few integrated

paper companies in the MENA region. SPM is engaged in the recycling of

waste paper, production of tissue rolls from recycled paper, and

conversion of rolls into consumer products such as paper napkins,

towels, and facial and toilet paper.

� Business brief: SPM has three paper processing plants with an aggregate

capacity of 125,000 tons of tissue paper, 50,000 of converted paper, and

65,000 tons of de-inked paper per year. The company’s wholly owned

subsidiary Saudi Paper Converting Co. (SPCC) converts tissue rolls into

branded consumables, which are distributed through wholesale and retail

channels. Saudi Recycling Co. (SRC) collects waste paper, which serve as

feed for SPM’s downstream de-inking plants. Al-Madar Trading Co. was set

up in the UAE to collect waste paper from international sources.

� Financials: SPM’s revenues increased 80.5% YoY to SR199mn in 1Q10,

driven mainly by expansion of production capacity at its plant in Jeddah in

June 2009. EBITDA grew 65.3% YoY to SR43mn, while net income grew

31.8% YoY to SR30mn during 1Q10.

� Recent developments: In April 2010, SPM approved a cash dividend of

SR1.25 per share for the year 2009. The company had completed the

acquisition of its 30% stake in Saudi Arabia Global Health Center Company,

which was approved by the AGM held on 6 April 2010.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 117 126 150 43 65.3 13.2

Net Income SRmn 83 84 94 30 31.8 6.7

Assets SRmn 628 1,089 1,374 1,397 8.6 47.9

Equity SRmn 382 447 511 540 15.1 15.6

Total Debt SRmn 192 556 760 771 10.1 98.8

Cash & Equiv SRmn 27 21 37 59 (12.3) 16.8

EBITDA Mgn % 26.5 24.9 26.9 21.6 - -

Net Mgn % 18.6 16.7 16.9 15.0 - -

ROE % 23.9 20.4 19.6 22.7 - -

ROA % 14.3 9.8 7.6 8.6 - -

Div Payout % 21.8 35.6 39.9 - - -

EPS SR 3.4 2.8 3.1 1.0 32.0 (4.6)

BVPS SR 15.9 14.9 17.0 18.0 15.2 3.4


130

JUNE 2010 AL-ABDULLATIF INDUSTRIAL INVESTMENT COMPANY

Not Covered



Stock details





Absolute (14) (30) (23)

Market (6) (5) 3

Sector (9) (8) (4)


3M 18.9 5.0

12M 14.2 3.8

Raw Beta 6m 3yr

0.72 0.41


Bloomberg code ALABDUL AB

Website www.carpets.com



Free float 30.0

Valuation multiples

08 09 TTM

P/E (x) 11.8 14.1 12.9

P/B (x) 2.0 1.7 1.7

P/Sales (x) 2.1 2.4 2.3

Div yield (%) N/A 12.0 N/A



5,000

5,500

6,000

6,500

7,000


30

35

4045

50

TASI AlAbdullatif (RHS)

Source: Bloomberg


Al Abdul Latif Holding Group 60.0

Omar Sulaiman Saleh Al Abdul Latif

6.0



Al Abdullatif IndustrialAlso

known as

AIIC

Al-Abdullatif Industrial Investment Company (Al Abdullatif), established

in 1981, ranks among the largest carpet manufacturers in the world. The

company has fully integrated operations, from fiber extrusion to

finishing.

� Business brief: Al Abdullatif manufactures three kinds of carpets: tufted,

woven, and non-woven, primarily made from synthetic fibers. The company

exports these carpets to more than 25 countries. The color pigment division

provides the various shades required to make carpets and blankets. The

paper tube division provides paper tubes of different sizes and thicknesses

for the winding of carpets and yarn. The company’s five fully owned affiliates

provide backward integration support.

� Financials: In 1Q10, Al Abdullatif recorded 14.9% YoY growth in revenues

to SR266mn, driven by rising domestic and international demand for its

products. EBITDA grew 37.6% YoY to SR69mn as gross margins improved

during the quarter. Net income increased to SR41.5mn in 1Q10, a growth of

59.6% over 1Q09.

� Recent developments: In May 2010, Al Abdullatif announced the

commencement of trial operations by Red Sea Cable Co. in which it owns

27% stake. Commercial operations are expected to begin in a few months.

In March 2010, Al Abdullatif’s shareholders approved a SR3.50 per share

cash dividend for 2009. In January 2010, Al Abdullatif reported in a

statement on the Saudi stock exchange the appointment of Suleiman Al

Abdullatif as deputy chairman and managing director of the company.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 1,066 1,139 996 266 14.9 (3.3)

EBITDA SRmn 288 282 282 69 37.6 (1.2)

Net Income SRmn 200 201 169 42 59.6 (8.2)

Assets SRmn 1,312 1,534 1,596 1,659 9.9 10.3

Equity SRmn 1,111 1,215 1,383 1,425 14.8 11.6

Total Debt SRmn 63 217 112 105 (45.6) 33.1

Cash & Equiv SRmn 75 35 229 263 151.7 74.4

EBITDA Mgn % 27.0 24.8 28.3 25.8 - -

Net Mgn % 18.8 17.7 16.9 15.6 - -

ROE % 19.8 17.3 13.0 11.8 - -

ROA % 16.1 14.1 10.8 10.2 - -

Div Payout % 48.7 - 169.1 - - -

EPS SR 3.1 2.5 2.1 0.5 59.4 (18.0)

BVPS SR 17.1 15.0 17.0 17.5 14.9 (0.2)


131

JUNE 2010 SAUDI INDUSTRIAL EXPORT COMPANY

Not Covered



Stock details





Absolute (17) (26) (47)

Market (6) (5) 3

Sector (9) (8) (4)


3M 9.6 2.6

12M 15.1 4.0

Raw Beta 6m 3yr

0.90 1.08


Bloomberg code SIECO AB

Website www.siec.com.sa



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) 18.1 N/M N/M

P/B (x) 2.2 2.5 2.5

P/Sales (x) 0.4 2.6 2.1

Div yield (%) 4.2 N/M N/M



5,000

5,500

6,000

6,500

7,000


TASI SIECO (RHS)

Source: Bloomberg


Ibrahim Oudah Abdullah Al Oudah

5.9



Saudi Indl Export Also known as

Sadirat, SIEC

Saudi Industrial Export Co (SIEC) is a trading company established in

1990. The company exports, imports and distributes agricultural goods,

industrial products and bulk commodities. SIEC is represented by its

associates across the globe and has exported over 10 million tons of

products to more than 40 markets.

� Business brief: SIEC trades in bulk food products, including rice, maize,

sugar and edible oils; fertilizers, minerals, chemicals and petrochemicals;

iron, steel and other metals; air conditioners, trucks and cables. The

company also provides a number of services to its suppliers and customers,

including guaranteed payments, arms-length marketing, financing, and

logistics for land and sea transport. SIEC is investing in distribution channels

and warehousing facilities to reach more manufacturers and customers.

� Financials: SIEC’s net revenues grew 88.5% YoY to SR45mn in 1Q10.

EBITDA during the quarter was SR1.5mn against a loss of SR1.1mn in 1Q09,

attributable to the decline in costs during the quarter. The company also

earned a profit of SR1mn in 1Q10, while it had lost SR1.4mn in 1Q09.

� Recent developments: SIEC, in its AGM held on 16 June 2010, approved

the election of five directors to its Board for a term of three years. During

the AGM, the company also cancelled the acquisition of a 60% stake in Saudi

Specialized Laboratories Company. The company did not pay any dividend to

its shareholders for the year 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 4 22 (3) 2 N/M N/M

Net Income SRmn 7 14 (6) 1 N/M N/M

Assets SRmn 164 147 128 130 (4.1) (11.8)

Equity SRmn 121 119 103 105 0.1 (7.8)

Total Debt SRmn 16 - - 0 N/A N/M

Cash & Equiv SRmn 80 98 85 73 (24.0) 3.4

EBITDA Mgn % 2.0 3.0 N/M 3.5 - -

Net Mgn % 3.4 2.0 N/M 2.3 - -

ROE % 6.2 11.9 (5.0) 3.9 - -

ROA % 4.5 9.2 (4.0) 3.2 - -

Div Payout % - 71.9 - - - -

EPS SR 0.7 1.4 (0.5) 0.1 N/M N/M

BVPS SR 11.2 11.0 9.5 9.7 0.1 (7.7)


132


Multi Investment


2030 Saudi Arabia Refining 136

2120 Saudi Advanced 137

2140 Al-Ahsa Development 138


4080 Aseer Trading 140

4130 Al-Baha Investment 141

4280 Kingdom Holding 142


Multi Investment

Global crisis acts as an impediment The KSA Multi-Investment sector is comprised of a number of diversified

conglomerates investing in a variety of sectors, including real estate, hospitality,

manufacturing and energy. Kingdom Holding Company (Kingdom) is the largest in

the sector, accounting for about 70% of total revenues in 2009. During 2005-2007,

revenue from the sector increased at a CAGR of 126%, supported by

macroeconomic expansion at a CAGR of 10.5%. However, the past two years have

been particularly difficult for the sector due to the global financial crisis. The Saudi

Multi-Investment sector’s revenues declined 19.9% in 2009, primarily on account of

the excess loss witnessed by its leading players, including Kingdom and Aseer

Trading, Tourism, Mfg., Agri., Real Estate & Contracting Company (ATTMCO). In

2009, the sector‘s ROE stood at 1.9%, below the GCC average ROE of 3.1%.

Exhibit 99: Revenue of GCC multi investment



companies, 2009 (%)

(500)

0

500

1,000

1,500

2,000

2,500

2007 2008 2009

KSA UAE Kuwait Qatar

-50

-30

-10

10

30

50

70

90

-10 0 10 20 30 40 50

P/E (x)

RO

E (

%)


Source: Bloomberg, Gulf Base, NCBC Research Source: Bloomberg, Gulf Base, NCBC Research

Kingdom Holding is the largest company in the sector, having a nearly 2.5%

weighting in the overall market index.

Subdued performance of

the hospitality sector had

an adverse effect on the

multi-investment sector


Company



ROE (%)2009

Saudi Arabian Refineries Co. (SARCO) 0.06 N/A 1.1

Saudi Advanced Industries Co. (SAIC) 0.05 87.4 4.7

Al Ahsa Development Co. (AADC) 0.04 20.7 0.8

Saudi Industrial Services Co. (SISCO) 0.08 0.9 0.2

Aseer Trading, Tourism, Mfg., Agri., Real Estate and Contracting Company (ATTMCO)

0.16 4.7 3.4

Al Baha for Development & Investment Co. (ABDICO)

0.02 N/M N/M

Kingdom Holding Co. ( KINGDOM) 2.48 8.9 1.7

Source: Bloomberg, Tadawul, Company data, NCBC Research

134


MULTI INVESTMENT

In 2009, aggregate revenues for companies in the sector declined 20.9% YoY to

SR6.4bn, primarily due to the 26.6% YoY decline in Kingdom’s revenue, negatively

impacted by the hospitality industry’s weak performance. SAIC’s revenue reported

the highest increase of 71.4% (SR39.8 mn). Further, in terms of profitability, the

sector reported net income of SR0.5 bn in 2009 as against a loss of SR30.3 bn in

2008. The 2008 loss was mainly due to a SR30bn write-down at Kingdom Holdings.

Exhibit 102: Revenue of companies, 2007–2009 (SR mn)

Exhibit 103: Profitability of companies, 2007–2009 (%)

4,200

4,700

5,200

5,700

6,200

6,700

7,200

7,700

8,200

8,700

9,200

2007 2008 2009

KINGDOM ATTMCO AADC SAICSARCO SISCO ABDICO

(600)

(400)

(200)

0

200

400

600

800

1,000

1,200

2007 2008 2009

ATTMCO AADC SAIC

SARCO SISCO KINGDOM


As of 31 December 2009, the sector’s P/E and P/BV multiple stood at 38.4x and

1.43x, respectively, compared to 16.2x and 1.4x in 2008. The KSA multi-

investment sector’s average ROE stood at 1.9% in 2009. As of 31 May 2010, the

sector’s P/E and P/BV multiples were 117.1x and 1.3x, respectively.


(%)


(%)

KINGDOM

AADC

SARCO

ABDICO

ATTMCO SISCO

SAIC

-11

-1

9

19

29

0 1 2 3 4 5

P/B 9x)

RO

E (

%)

.

SAIC

KINGDOM

AADC

SARCO

ABDICO

ATTMCO

SISCO

-1

0

1

2

3

4

5

0 1 2 3 4

P/B (x)

RO

E(%

)


135

JUNE 2010 SAUDI ARABIA REFINERIES COMPANY

Not Covered



Stock details





Absolute (15) (21) (36)

Market (6) (5) 3

Sector (10) (15) (21)


3M 10.1 2.7

12M 17.6 4.7

Raw Beta 6m 3yr

0.45 0.85


Bloomberg code SARCO AB

Website www.almasafi.com.sa



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) 71.3 180.2 148.1

P/B (x) 2.7 1.5 1.5

P/Sales (x) N/M N/M N/M

Div yield (%) 1.3 1.3 -



5,000

5,500

6,000

6,500

7,000


404550

5560

TASI SARCO (RHS)

Source: Bloomberg


HH Mete'eb Bin Abdul Aziz Al Saud

7.3

HH Prince Khalid Turki Abdul Aziz Turki Al Saud

5.0


MULTI- INVESTMENT

Saudi Arabia Refin. Also known as

SARCO

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. SARCO also carries out subordinate activities in an array of

businesses like land reclamation, water projects, marine port and

transportation services.

� Business brief: Currently, SARCO owns stakes in Arabian Salfonates

Company (34%), Arabian Tankers Company (27%), Jeddah Oil Refinery Co,

(25%), Saudi Industrial Investment Group (3.33%), Tabuk Cement and

Riyad Bank. SARCO generates income from: (i) its stakes in the earnings of

other companies; and (ii) capital gains on the sale of its investments.

� Financials: SARCO reports little to no revenues as most of its income comes

from its investments in associates. A positive contribution from its associates

resulted in increased net income for SARCO, registering an 890.8% YoY

growth to SR0.8mn for 1Q10.

� Recent developments: In May 2010, SARCO approved a SR0.5 per share

dividend for the year 2009. The total dividend amounted to SR7.5mn,

representing almost 5.0% of the company’s capital. At the end of 2008, the

company changed its fiscal year end to Dec. 31 from April 30.

Company financials

2007* 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 1 0 0 0 (100.0) 1

EBITDA SRmn (2) (2) (1) (1) 160.7 (2)

Net Income SRmn 99 8 3 1 890.8 99

Assets SRmn 351 229 397 399 55.3 351

Equity SRmn 597 212 385 387 58.5 597

Total Debt SRmn 8 0 0 0 N/M 8

Cash & Equiv SRmn 43 47 31 31 N/M 43

EBITDA Mgn % N/M N/M N/M N/M - N/M

Net Mgn % N/M N/M N/M N/M - N/M

ROE % 18.3 2.0 1.0 0.8 - 18.3

ROA % 23.3 2.7 1.0 0.8 - 23.3

Div Payout % 55.9 95.1 238.1 - - 55.9

EPS SR 1.8 0.5 0.2 0.1 400.0 1.8

BVPS SR 55.1 14.1 25.7 25.8 58.5 55.1

Source: Tadawul, Zawya, Company, NCBC Research *Financials For 12 Months Ended on 30 April 2008

136

JUNE 2010 SAUDI ADVANCED INDUSTRIES COMPANY

Not Covered



Stock details





Absolute (9) (10) (20)

Market (6) (5) 3

Sector (10) (15) (21)


3M 11.4 3.0

12M 13.5 3.6

Raw Beta 6m 3yr

0.83 0.93


Bloomberg code SAIC AB

Website www.saic.com.sa



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) 29.8 15.3 17.1

P/B (x) 0.8 0.7 0.7

P/Sales (x) 21.2 13.4 14.7

Div yield (%) 4.0 - -



5,000

5,500

6,000

6,500

7,000


1112

13

1415

16

TASI SAIC (RHS)

Source: Bloomberg


Khalid Saleh Abdul Rahman AlShethry

11.5


MULTI- INVESTMENT

Saudi Advanced Also known as

SAIC

Saudi Advanced Industries Co. (SAIC) participates in, develops and

promotes industrial projects under The Economic Offset Program

organized by the Ministry of Defense and Aviation. SAIC encourages

firms in the U.S, the U.K and France to collaborate with Saudi companies

to establish high-tech plants in diversified industries.

� Business brief: SAIC has stakes in Al Obaikan Glass Co. (40.0%), NPS

Bahrain for Oil & Gas Services Co. (20.0%), Gulf Salt Co. (11.2%), Al Salam

Aircraft Co. (10.0%), Industrialization & Energy Services Co. (3.4%),

Arabian Industrial Fibers Co. (0.6%), and Yanbu National Petrochemicals Co.

SAIC also enters into contracts with other firms to develop new technology-

oriented companies.

� Financials: SAIC’s total operating revenue fell 49.0% YoY to SR3.7mn in

1Q10 due to a sharp decline in investment income. Net income in 1Q10

decreased 56.8% YoY to SR2.7mn due to proportionately high operating

expenses resulting in lower operating profits.

� Recent developments: In February 2010, Tareq Abdulrahman bin Rayes

resigned as general manager of SAIC. Board member Mansour al-Yahiyan

was appointed as acting general manager. SAIC has not declared dividend

for the year 2009 to date.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 16 20 36 3 (56.5) 50.0

Net Income SRmn 16 18 35 3 (56.8) 49.3

Assets SRmn 822 892 778 799 10.5 (2.7)

Equity SRmn 820 702 776 796 10.3 (2.7)


Cash & Equiv SRmn 401 1 19 2 451.6 (78.0)

EBITDA Mgn % 72.3 79.3 90.9 74.7 - -

Net Mgn % 70.2 71.3 87.4 72.0 - -

ROE % 3.3 2.4 4.7 1.4 - -

ROA % 3.2 2.1 4.2 1.4 - -

Div Payout % - 122.0 - - - -

EPS SR 0.44 0.41 0.81 0.1 (57.1) -

BVPS SR 19.0 16.3 18.0 18.4 10.3 -


137

JUNE 2010 AL-AHSA DEVELOPMENT COMPANY

Not Covered



Stock details





Absolute (10) (6) (22)

Market (6) (5) 3

Sector (10) (15) (21)


3M 20.9 5.6

12M 14.5 3.9

Raw Beta 6m 3yr

0.91 0.98


Bloomberg code AADC AB

Website www.ahsa-dev.com.sa



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) - - -

P/B (x) N/M 159.0 33.5

P/Sales (x) 1.3 1.3 1.2

Div yield (%) N/M 32.8 18.0



5,000

5,500

6,000

6,500

7,000


10

12

14

16

TASI Al Ahsa for Dev. (RHS)

Source: Bloomberg



MULTI- INVESTMENT

Al-Ahsa DevelopmentAlso known

as

AADC

Al-Ahsa Development Company (AADC) was established in 1993 by

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: AADC’s affiliate Al-Ahsa Medical Services Co. (30% stake)

manages a modern 220-bed hospital in the Al-Ahsa region; Al-Ahsa Food

Services Co. (50% stake), a JV with Eastern Agriculture Development Co,

has a capacity to process 5,000 tons of dates and is engaged in the

production of date molasses vinegar, dates pest and compressed dates. The

company’s affiliate Saudi Japanese Textile Co. (100% stake) produces

synthetic fiber, which is used in the production of dress materials. Currently,

AADC is in the process of setting up an aluminum foil factory, a gypsum

factory and a cement plant.

� Financials: AADC recorded revenues of SR10.3mn in 1Q10. Net income for

the quarter stood at SR6.3mn compared to a loss during same period last

year, primarily due to higher investment income.

� Recent developments: In March 2010, AADC announced that National

Handling Services Co., in which it held 5% stake, signed an agreement to

merge with Saudi Airlines Ground Services Co. and Attar Ground Services

Co. to form a new entity providing ground services to all Saudi Arabian

airports.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 77 (21) 16 10 N/M (54.0)

EBITDA SRmn 53 (27) 12 9.3 N/M (51.6)

Net Income SRmn 34 (56) 3 6.3 N/M (68.8)

Assets SRmn 727 559 571 585 8.2 (11.4)

Equity SRmn 521 397 420 434 11.4 (10.2)

Total Debt SRmn 168 132 126 126 (4.2) (13.5)

Cash & Equiv SRmn 3 6 7 8 52.9 42.6

EBITDA Mgn % 68.9 N/M 76.2 89.6 - -

Net Mgn % 44.9 N/M 20.7 61.1 - -

ROE % 7.1 (12.3) 0.8 5.9 - -

ROA % 4.5 (8.7) 0.6 4.4 - -

Div Payout % - - - - - -

EPS SR 0.8 (1.2) 0.1 0.1 N/M -

BVPS SR 12.1 8.1 8.6 8.9 11.4 -


138

JUNE 2010 SAUDI INDUSTRIAL SERVICES COMPANY

Not Covered



Stock details





Absolute (9) (19) (12)

Market (6) (5) 3

Sector (10) (15) (21)


3M 24.3 6.5

12M 23.7 6.3

Raw Beta 6m 3yr

0.87 0.91


Bloomberg code SISCO AB

Website www.sisco.com.sa



Free float 85.3

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 1.2 1.2 1.2

P/Sales (x) 6.5 6.3 5.5

Div yield (%) - - -



5,000

5,500

6,000

6,500

7,000


12

14

16

18

TASI SISCO (RHS)

Source: Bloomberg


Zainal Industries Co., Ltd 14.6


MULTI- INVESTMENT


SISCO

Saudi Industrial Services Company (SISCO), established in 1988,

undertakes large-scale investments in KSA’s infrastructure sector on a

build-operate-transfer and build-operate-own model. SISCO has

business interests in water desalination and distribution; development of

industrial estates, free zone ports; and support services.

� Business brief: SISCO’s affiliate Support Services Operations Co. (97%

owned) provides ancillary services such as building and car maintenance,

catering, and gas stations in industrial estates. Saudi Trade & Export

Development Co. (76% owned) operates a free zone at Jeddah Islamic

Seaport on a BOT basis. Kindasa Water Services (60% owned) operates a

14,000 cubic meter/day desalination plant and water distribution network.

International Water Distribution Co. (50% owned) is engaged in building and

operating water distribution networks within the KSA.

� Financials: SISCO has reported steady revenue growth over the past few

years, however net income has not responded in kind. However, in 1Q10,

SISCO recorded 57.3% YoY growth in revenues to SR55.2mn and with costs

kept under control, the company managed to increase net income 202.7%

YoY to SR2.1mn.

� Recent developments: In May 2010, SISCO announced that its subsidiary

International Water Distribution Company (TAWZEA) received a SR105.4mn

loan from Saudi Industrial Development Fund (SIDF) to finance water

distribution projects in the industrial zones of Riyadh, Jeddah and Qassim. In

February 2010, SISCO’s board of directors approved a plan to increase the

capital base of its unit Saudi Trade and Export Development Co. (Tusdeer)

from SR80.0mn to SR190.0mn.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 37 34 34 21 108.9 (4.2)

Net Income SRmn (5) (24) 1 2 202.7 N/M

Assets SRmn 703 1,893 2,371 2,368 16.1 83.7

Equity SRmn 426 722 730 736 1.9 30.8

Total Debt SRmn 77 855 1,232 1,233 N/M 301.0

Cash & Equiv SRmn 54 718 441 355 (44.7) 185.9

EBITDA Mgn % 34.2 25.4 24.3 37.7 - -

Net Mgn % (4.9) (17.9) 0.9 3.8 - -

ROE % (1.2) (4.2) 0.2 1.1 - -

ROA % (0.8) (1.9) 0.1 0.4 - -

Div Payout % - - - - - -

EPS SR (0.1) (0.5) 0.0 0.0 N/M -

BVPS SR 53.3 10.6 10.7 10.8 1.9 -


139

JUNE 2010 ASEER TRADING, TOURISM AND MANUFACTURING COMPANY

Not Covered



Stock details





Absolute (12) (9) (20)

Market (6) (5) 3

Sector (10) (15) (21)


3M 16.3 4.3

12M 17.1 4.6

Raw Beta 6m 3yr

0.58 1.06


Bloomberg code ATTMCO AB

Website www.aseercorp.com.sa



Free float 50.08

Valuation multiples

08 09 TTM

P/E (x) N/M 21.3 19.5

P/B (x) 0.7 0.7 0.7

P/Sales (x) 1.0 1.0 1.0

Div yield (%) 3.7 5.6 -



5,000

5,500

6,000

6,500

7,000


12

1416

18

20

TASI Aseer (RHS)

Source: Bloomberg


Dallah Al Baraka Holding Co. 49.9


MULTI- INVESTMENT

Aseer Trading Also known as

Aseer

Aseer Trading, Tourism and Manufacturing Company (Aseer),

established in 1975 and headquartered in Abha (Southwest of Saudi

Arabia), is an investment holding company with interests in five sectors

– food, petrochemicals, real estate, building materials and construction,

and financial services.

� Business brief: Aseer operates in a wide range of businesses and has

investments in diverse projects, including agricultural, cement, printing &

publishing, and energy-related. The company is also engaged in travel and

tourism and has stakes in resorts and hotels. Aseer has investments in

Dallah Industrial Investment Company, Al Ustool Arabia Real Estate

Development Co. Ltd, Al Khawatem Trading & Contracting Co. Ltd., Al

Nasrah International Real Estate Development Co. Ltd., and Al Mawajed

International Real Estate Development Co. The company has a network of

six branches, which are located in Al Madinah, Riyadh, Wadi Dawaser,

Jeddah, Hail and Al Jaouf.

� Financials: In 1Q10, Aseer recorded revenues of SR491.4mn, up 11.7%

YoY. EBITDA increased 34.8% YoY to SR54.8mn, slightly improving margins

from 9.3% in 1Q09 to 11.2% in 1Q10. Net income increased 58.2% YoY to

SR20.4mn during the quarter.

� Recent developments: In May 2010, Aseer approved a per share cash

dividend of SR0.75 for 2010.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 134 158 186 55 34.8 18.0

Net Income SRmn 363 (431) 80 20 58.2 (53.1)

Assets SRmn 4,073 3,309 3,565 3,617 9.8 (6.4)

Equity SRmn 3,356 2,313 2,416 2,450 6.0 (15.2)

Total Debt SRmn 158 246 196 231 236.6 11.3

Cash & Equiv SRmn 132 251 417 407 (10.0) 77.7

EBITDA Mgn % 9.0 9.1 10.9 11.2 - -

Net Mgn % 24.5 (25.0) 4.7 4.1 - -

ROE % 14.4 (15.2) 3.4 3.3 - -

ROA % 10.6 (11.7) 2.3 2.3 - -

Div Payout % 30.9 N/M 119.0 - - -

EPS SR 3.2 (3.0) 0.6 0.2 60.0 -

BVPS SR 26.6 18.3 19.1 19.4 6.1 -


140

JUNE 2010 AL-BAHA INVESTMENT & DEVELOPMENT COMPANY

Not Covered



Stock details





Absolute (12) (14) (38)

Market (6) (5) 3

Sector (10) (15) (21)


3M 18.1 4.8

12M 33.4 8.9

Raw Beta 6m 3yr

0.57 1.00


Bloomberg code ABDICO AB

Website N/A



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 2.1 2.2 2.2

P/Sales (x) 972.3 908.1 908.1

Div yield (%) - - -



5,000

5,500

6,000

6,500

7,000


15

20

25

TASI Al Baha (RHS)

Source: Bloomberg



MULTI- INVESTMENT

Al-Baha Investment Also known as

Al-baha

Al-Baha Investment & Development Co (Al-baha) was established in

1992 to develop and operate projects in the Al-Baha province. Engaged

in a wide range of industrial, commercial and agricultural activities, the

company plans to expand beyond the region. Al-baha’s investments

include a 95% stake in Al-Baha Marble & Granite Company.

� Business brief: Al-baha is engaged in wholesale & retail trading and

industrial projects, including construction. The company also operates

refrigeration stores as well as repairs and maintenance workshops, and

develops animal and agricultural products. In addition, Al-baha owns and

reclaims agricultural land for use in new projects. Furthermore, the company

constructs, maintains, and operates public utilities, including tramways, and

develops recreational and tourist facilities such as parks and tourist villages.

� Financials: In 1Q10, Al-baha did not record any revenues. However, its

EBITDA losses increased 32.6% YoY due to higher expenses. The company

reported a loss of SR3.8mn during the quarter, primarily owing to loss from

investment and provisions made during the quarter.

� Recent developments: Al-baha reported a net loss of SR4.6mn for 2009

compared to SR14.9mn for 2008.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 1.8 0.2 0.2 0 N/M (63.0)

EBITDA SRmn (6) (6) (3) (1) 32.6 (29.7)

Net Income SRmn (13) (15) (5) (3.8) N/M (41.8)

Assets SRmn 147 119 128 124 5.6 (6.6)

Equity SRmn 123 105 102 98 (5.1) (8.9)

Total Debt SRmn 9 0 0 0 N/M (100.0)

Cash & Equiv SRmn 40 28 39 37 38.1 (1.9)

EBITDA Mgn % N/M N/M N/M N/M - -

Net Mgn % N/M N/M N/M N/M - -

ROE % (12.0) (13.1) (4.4) (15.1) - -

ROA % (9.4) (11.2) (3.7) (12.0) - -

Div Payout % - - - - - -

EPS SR (0.9) (1.0) (0.3) (0.3) N/M -

BVPS SR 8.2 7.1 6.8 6.5 (6.4) -


141

JUNE 2010 KINGDOM HOLDING COMPANY

Not Covered



Stock details





Absolute (7) (15) (11)

Market (6) (5) 3

Sector (10) (15) (21)


3M 25.5 6.8

12M 42.6 11.4

Raw Beta 6m 2yr

0.65 0.91


Bloomberg code KINGDOM AB

Website www.kingdom.com.sa



Free float 5.00

Valuation multiples

08 09 TTM

P/E (x) N/M 76.9 72.4

P/B (x) 1.4 1.3 1.2

P/Sales (x) 6.5 7.7 7.5

Div yield (%) - - -



5,000

5,500

6,000

6,500

7,000


TASI Kingdom (RHS)

Source: Bloomberg


HH Prince AlWaleed Talal Abdul Aziz Al Saud

95.0


MULTI- INVESTMENT

Kingdom Holding Also known as

KHC

Kingdom Holding Company (Kingdom) was established in 1996. Kingdom

primarily focuses on banking and financial services, real estate, and

hotels & hotel management sectors. Headquartered in Riyadh, it has

holdings in retail, food & entertainment, healthcare, technology, media &

telecommunications, automotive, and other sectors.

� Business brief: Kingdom, initially engaged in construction, housing

development, and educational projects, enhanced its stake across sectors in

a number of Saudi Arabian, Middle Eastern and international companies. The

company’s portfolio consists of premium brands such as Apple, Time Warner,

Samba, Citigroup, Pepsi, Walt Disney and Hewlett-Packard. Kingdom has

made investments in the domestic health, education and social services

sectors. The company is also a private equity player in Saudi Arabia and in

developing markets in the Middle East, Africa and Asia.

� Financials: Kingdom’s operating revenues increased 8.4% YoY to SR994mn

in 1Q10. The company recorded an EBITDA of SR74.2mn in the quarter, a

decline of 50.9% YoY. Total investment income for 1Q10 grew 30.5% YoY,

leading to a 49.9% YoY increase in net profit to SR75.2mn.

� Recent developments: In May 2010, Kingdom’s USD375mn bid to buy the

remaining shares of Kingdom Hotel Investments was accepted. The company

currently has 56.1% stake in the latter. In April 2010, Kingdom sold its 40%

stake in Fairmont Raffles Holdings International for SR3.2bn to Qatari Diar

Real Estate Co., a wholly-owned unit of the Qatar Investment Authority.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 5,001 4,771 4,032 994 8.4 (10.2)

EBITDA SRmn 888 977 927 74 (50.9) 2.1

Net Income SRmn 1,210 (29,911) 403 75 49.9 (42.3)

Assets SRmn 78,508 50,715 49,990 51,148 13.3 (20.2)

Equity SRmn 51,221 21,615 24,579 25,825 34.5 (30.7)

Total Debt SRmn 18,131 17,614 14,103 14,042 (5.6) (11.8)

Cash & Equiv SRmn 2,309 1,893 2,233 2,028 (24.6) (1.7)

EBITDA Mgn % 17.8 20.5 23.0 7.5 - -

Net Mgn % 24.2 (627.0) 10.0 7.6 - -

ROE % 2.1 (82.1) 1.7 1.2 - -

ROA % 1.4 (46.3) 0.8 0.6 - -

Div Payout % - - - - - -

EPS SR 0.2 (4.8) 0.1 0.0 N/M -

BVPS SR 8.1 3.4 3.9 7.0 128.5 -


142


Building & Construction


1310 Mohammad Al Mojil 146

1320 Saudi Steel Pipes 147

2040 Saudi Ceramics 148

2090 National Gypsum 149

2110 Saudi Cable Company 150


2160 Amiantit Company 152

2200 Arabian Pipes 153

2240 Zamil Industrial 154

2320 Al Babtain Power 155

2360 Saudi Vitrified 156

2370 ME Specialized Cable 157

4230 Red Sea Housing 158


Building & Construction

Strong pipeline, a long-term positive With construction activity declining and projects being delayed in KSA post the

financial turmoil, the building and construction sector revenues were impacted

significantly in 2009. In addition, the increase in operating costs due to higher

inflation impacted the profitability of companies in the sector.

At the listed company level, KSA has a large and diversified construction sector with

strong revenue growth historically, although top lines have suffered in the current

crisis. ROE has been on par with GCC peers with P/E averaging around 20x.

Exhibit 106: Revenues of GCC building and

construction companies, 2007–09 (USD mn)


companies, 2009 (%)

0

1000

2000

3000

4000

5000

6000

2007 2008 2009

KSA UAE Oman Kuwait

5

10

15

20

25

30

35

-20 0 20 40 60 80

P/E (x)

RO

E(%

)

UAE Oman KSA Kuwait


The building and construction sector has a large number of private players with 13

listed companies.

Sector revenue declined to SR17.8 bn in 2009 from SR22.1bn in 2008 due to

reduced construction activity. Additionally, higher costs ate into profitability, with

net profits falling to SR1.3bn in 2009 from SR2.2bn the previous year.


Company



ROE (%)2009

Saudi Ceramic Co 0.23 20.6 23.0

Saudi Arabian Amiantit Co 0.22 6.1 12.3

Zamil Industrial Investment Co 0 .21 5.5 19.3

Middle East Specialized Cables Co 0.12 5.0 8.1

National Gypsum Company 0.10 43.7 18.7

Saudi Vitrified Clay Pipes Co 0.05 17.3 18.0

Saudi Steel Pipe Company 0.15 20.9 17.1

Saudi Cable Company 0.16 4.2 8.0

Arabian Pipes Company 0.08 5.7 3.4

AL-Babtain Power & Telecommunication Co 0.12 9.7 18.8

Red Sea Housing 0.15 14.5 17.8

Saudi Industrial Development Co 0.03 N/A N/A

Mohammad Al Mojil Group 0.25 1.8 2.2

Source: Bloomberg, Tadawul: Company data;

144


BUILDING AND CONSTRUCTION

Exhibit 109: Revenues of companies, 2007–09

(SR mn)


(%)

500

4,500

8,500

12,500

16,500

20,500

2007 2008 2009

Amiantit Zamil Specialized Cables

Saudi Cable Co. Al Babtain Mohamed Al Mojil

Saudi Steel Pipe

0

5

10

15

20

25

30

2007 2008 2009

Amiantit Zamil Specialized Cables Saudi Cable Co. Saudi Steel Pipe Al BabtainMohamed Al Mojil


As of 31 December 2009, the sector’s P/E and P/BV multiple stood at 16.6x and

2.0x, respectively, compared with P/E and P/BV multiples of 10.0x and 1.9x,

respectively, in 2008. While Saudi Ceramics reported the highest RoE, SIDC’s was

the lowest. As of 31 May 2010, the sector P/E and P/BV multiples were 16.5x and

1.8x, respectively.

Exhibit 111: Comparison of P/B and ROE, 2008 (SR mn)

Exhibit 112: Comparison of P/B and ROE, 2009 (%)

SaudiCeramics

Amiantit

Zamil

SpecializedCables

GypsumSaudi

VitrifiedSaudi CableCo.

Arabian pipes

Al Babtain

Redsea

SIDC

-5

0

5

10

15

20

25

30

35

40

1.0 1.8 2.5 3.3 4.0

P/B (x)

RO

E(%

)

Saudi Ceramics

Amiantit

Zamil

SpecializedCables

Gypsum SaudiVitrifiedSaudi Cable

Co.

Arabianpipes

Al Babtain

Redsea

Mohamed AlMojil

SIDC

Saudi SteelPipe

-10

-5

0

5

10

15

20

25

30

35

0.0 1.0 2.0 3.0 4.0

P/B (x)

RO

E(%

)


However, the industry’s prospects look bright in light of the Saudi government

increasing its expenditure on infrastructure development. Revival of the economy

and the improvement in macroeconomic factors are expected to be additional

growth drivers for the KSA building and construction sector.

NCBC Recommendations in the Sector Currently, we have Saudi Steel Pipes stock under our coverage universe.



Saudi Steel Pipes (1320.SE)

Overweight 40.5 Increasing demand in medium size pipes, and the start of a large diameter pipe (which SSP owns 33%) in 2012 to drive robust revenue and earnings growth.


145

JUNE 2010 MOHAMMAD AL MOJIL GROUP

Not Covered



Stock details





Absolute (8) (13) (40)

Market (6) (5) 3

Sector (11) (15) (23)


3M 25.4 6.8

12M 27.4 7.3

Raw Beta 6m 3yr

0.76 1.16


Bloomberg code MMG AB

Website www.almojilgroup.com



Free float 46.16

Valuation multiples

08 09 TTM

P/E (x) 4.2 59.5 52.9

P/B (x) 1.3 1.3 1.3

P/Sales (x) 0.8 1.1 1.4

Div yield (%) 5.2 3.9 NM



5,0005,5006,0006,5007,000

Jun-09Oct-09Feb-10Jun-101520253035

TASI MMG (RHS)

Source: Bloomberg


Mohammad Hamad Abdul Karim Al Mojil

50.0

Adel Mohammed Hamad Al Mojil

5.0

Al Mojil Holding Co. 5.0

Al Mojil Limited Investment Co. 5.0


BUILDING & CONSTRUCTION

Mohammad Al Mojil Also known as

MMG

Mohammad Al Mojil Group Company (MMG) provides construction

services in the Gulf region. The company has undertaken projects mainly

in the oil, gas and petrochemical industries. MMG also offers mechanical,

electrical, civil, structural and maintenance services.

� Business brief: MMG is engaged in various construction and engineering

projects, including onshore services such as civil and structural work, and

mechanical and electrical services. It also conducts offshore activities,

especially in marine projects with the help of various marine vessels. The

company owns heavy machinery and equipment services, including testing

and calibration facilities, and technical and maintenance services for turnkey

projects. Besides this, it offers services in steel fabrication.

� Financials: The company’s revenues declined 57.0% YoY to SR344mn in

1Q10, while net income rose 93.9% YoY to SR10mn. However, 2009 was a

weak year for MMG as the company’s net income significantly declined

compared to previous years, mainly due to higher operating expenses and

provision for doubtful debts in 2009.

� Recent developments: In May 2010, MMG signed a SR96mn contract with

Sepco III Electric Power Construction Corp. to build boilers for the power

plant project in Rabigh. In March 2010, the company signed two MoUs. The

first transaction worth SR75.6mn was with the Bin laden Group to build a

388 unit residential compound that would be linked to the King Abdullah

University for Science and Technology (KAUST). The second deal amounting

SR69mn was signed with Ma’aden Phosphate to supply labor, equipment and

construction materials. The company won a SR165mn contract for the Jubail

refinery project in March 2010.

Company financials

2007 2008* 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 640 850 386 57 (46.2) (22.4)

Net Income SRmn 549 666 40 10 93.9 (72.9)

Assets SRmn 2,225 3,669 3,073 2962 (20.7) 17.5

Equity SRmn 1,295 1,902 1,840 1850 (3.0) 19.2

Total Debt SRmn 0 0 0 440 (2.2) N/M

Cash & Equiv SRmn 63 86 41 50 (5.5) (19.0)

EBITDA Mgn % 32.7 25.4 17.4 16.4 - -

Net Mgn % 28.1 19.9 1.8 3.0 - -

ROE % 50.5 41.7 2.2 2.3 - -

ROA % 31.2 22.6 1.2 1.4 - -

Div Payout % N/M 15.0 234.4 N/M - -

EPS SR 5.5 6.7 0.3 0.1 60.0 (75.9)

BVPS SR 13.0 19.0 14.7 14.8 (22.4) 6.6

Source: Tadawul, Zawya, Company, NCBC Research *2008 Financials are for 14 months

146

JUNE 2010 SAUDI STEEL PIPE COMPANY 147

Overweight


Price (SR) 27.6


Stock details






Market (6) (5) 3

Sector (11) (15) (23)


3M 10.0 2.7

12M N/A N/A

Raw Beta 6m 2yr

0.75 N/A


Bloomberg code SSP AB

Website www.sspipe.com



Free float 43.6

Valuation multiples

08 09 10E

P/E (x) 10.6 12.5 13.2

P/B (x) 3.3 1.8 1.8

P/Sales (%) 1.7 2.6 2.3

Div yield (%) 0.0 7.2 7.2

DPS 0.0 2.0 2.0



5,0005,500

6,000

6,500

7,000

Aug-09 Nov-09 M ar-10 Jun-10252729313335

TASI SSP (RHS)

Source: Bloomberg


Rabuiah and Nassar Company 40.0

Hu Steel Pipe Company 16.3

The sons of Abullah Ibrahim Al Khareef

8.8


BUILDING AND CONTRUCTION

Saudi Steel Pipes Also known as

SSP

Saudi Steel Pipe Company (SSP), established in 1980, manufactures

welded steel pipes, galvanized and non galvanized pipes, carbon steel

tubes and angular tubes. The company sells products in the domestic

market and also exports to approximately 20 countries.

• Business brief: SSP manufactures black and galvanized pipes in the small

and medium diameter sizes which serve the construction, real estate, and oil

and gas markets. The small diameter production capacity is 80,000 tons per

year and the medium diameter is 160,000 tons per year. The company is

also expanding into the large diameter pipes market through a 35% stake in

a plant in Jubail which is under construction. The plant will have capacity of

200,000 tons per year and is expected to start production in 2012e.

• Financials: SSP’s revenues declined 1.5% YoY to 153mn in 1Q10 mainly

due to lower selling prices partially offset by higher volumes during the

quarter. However, its net income declined 40.4% YoY to SR20.0mn due to

less than proportionate decline in COGS as well as higher operating expenses

in 1Q10. We expect financial performance at SSP to strengthen through the

end of 2010e and into 2011e as the medium diameter pipe business grows.

• Recent developments: As a part of its ongoing expansion drive, in

February 2010, SSP announced that it had purchased 811 sq mtr of

industrial land in Dammam’s International Industrial City for a consideration

of SR158mn. The company plans to construct a pipe coating plant and build

its headquarters on the site.

Company financials

2008 2009 2010E 2011E

YoY

(%)

CAGR (%)

(08-11E)


EBITDA SRmn 155 131 127 158 (15.5) 0.2

Reported Net Income*

SRmn 141 113 107 129 (19.9) (0.7)

Assets SRmn 666 981 1,066 1,149 47.3

Equity SRmn 427 793 791 811 85.7

Total Debt SRmn 50 0 79 122 (100.0) 34.5

Cash & Equiv SRmn 70 81 132 277 15.7

EBITDA Mgn % 19.0 24.4 20.8 21.4 28.4 -

Net Mgn % 16.2 20.9 17.5 17.6 29.3 -

ROE % 31.4 17.2 12.7 15.2 (45.2) -

ROA % 21.2 12.8 9.8 11.0 (39.6) -

Div Payout % - 90.3 95.2 80.0 N/A -

EPS SR 3.78 2.2 2.1 2.5 (40.7) (12.9)

BVPS SR 12.2 18.4 15.5 15.9 50.8 -

Source: Tadawul, Zawya, Company, NCBC Research estimates * Company reports net income, pre Zakat and Tax due to the mixed ownership ( Saudi and non-Saudi owners)

JUNE 2010 SAUDI CERAMIC COMPANY

Not Covered

Current Price (SR) 116


Stock details

52-week range H/L (SR) 145.0/108.0





Market (6) (5) 3

Sector (11) (15) (23)


3M 8.6 2.3

12M 8.3 2.2

Raw Beta 6m 3yr

0.43 0.75


Bloomberg code SCERCO AB

Website www.saudiceramics.com



Free float 63.59

Valuation multiples

08 09 TTM

P/E (x) 16.3 14.7 13.5

P/B (x) 4.0 3.4 3.4

P/Sales (x) 3.4 3.0 2.9




5,0005,500

6,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-10100110120130140150

TASI Ceramic (RHS)

Source: Bloomberg



15.9


14.3

Falcom Financial Services Co 6.8




Saudi Ceramic Also known as

SCC

Saudi Ceramic Company, established in 1977 in Riyadh, has five offices

in Saudi Arabia and one in Dubai. The company manufactures and

markets ceramic walls and floor tiles, ceramic road markers, sanitary

ware, and electric water heaters.

� Business brief: Saudi Ceramics has continually developed its production

capacity to meet the growing demand for ceramics and related products. The

company’s factories in Riyadh Industrial City are spread over 450,000 square

meters. Saudi Ceramics also owns two modern tile factories– one for electric

water heaters and the other for sanitary ware. Various products offered by

the company are porcelain, ceramic and decorated tiles, squaring and

chamfering units, sanitary ware, electric water heaters, and ceramic road

markers.

� Financials: Saudi Ceramics reported revenue of SR268mn in 1Q10, a

growth of 15.8% YoY, primarily due to the increase in production capacity.

Net income increased 42% YoY to SR58mn in the same period. The company

has been consistent in the distribution of dividends over last three years, and

announced SR3/share dividends for the year ended 31 December 2009.

� Recent developments: Saudi Ceramics announced it received a loan for

SR71mn from the state-owned Saudi Industrial Development Fund on 12

March 2010 for the expansion of its tile factory. With this expansion, the

company projects annual production capacity to reach 9mn cubic meters.

The new plant is expected to start production in the fourth quarter of 2010.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 178 264 282 82 27.7 25.8

Net Income SRmn 128 178 197 58 42.0 24.4

Assets SRmn 1,288 1,565 1778 1876 13.9 17.5

Equity SRmn 613 724 859 841 19.9 18.4

Total Debt SRmn 479 650 688 739 29.8 19.8

Cash & Equiv SRmn 21 25 36 92 32.4 30.9

EBITDA Mgn % 29.0 30.8 29.5 30.7 - -

Net Mgn % 20.7 20.8 20.6 21.8 - -

ROE % 22.0 26.6 24.9 27.5 - -

ROA % 11.0 12.5 11.8 12.8 - -

Div Payout % 49.0 35.1 38.0 N/M - -

EPS SR 5.1 7.1 7.9 2.3 42.7 24.4

BVPS SR 24.5 29.0 34.4 33.7 19.9 18.4


148

JUNE 2010 NATIONAL GYPSUM

Not Covered



Stock details





Absolute (11) (19) (30)

Market (6) (5) 3

Sector (11) (15) (23)


3M 3.9 1.1

12M 5.2 1.4

Raw Beta 6m 3yr

0.74 0.88


Bloomberg code NGCO AB

Website www.gypsco.com.sa



Free float 53.95

Valuation multiples

08 09 TTM

P/E (x) 8.9 11.3 13.0

P/B (x) 1.9 1.8 2.0

P/Sales (x) 3.8 4.9 5.4




5,0005,500

6,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-10253035404550

TASI Gypsum (RHS)

Source: Bloomberg


Al Manafae Investment & RealEstate Development Co.

34.5

Thunayan Fahed Thunayan Al Thunayan

10.3



National Gypsum Also known as

NGC, Gypsum

National Gypsum Company was established in 1958 and is

headquartered in Riyadh. The company specializes in the production of

gypsum plaster, plaster board and laminated gypsum tiles. National

Gypsum’s manufacturing plants are located in Riyadh and Yanbu, while

branches are situated at Jeddah and Dammam. Also, the company

exports its products worldwide. National Gypsum holds a 33.3% stake in

its subsidiary – Qatar Saudi Gypsum Company.

� Business brief: National Gypsum has an annual production capacity of

450,000 tons of gypsum plaster, 12mn square meters of plaster board,

48,000 tons of spray gypsum and fixing plaster, 0.5mn square meters of

gypsum ceiling tiles and 30,000 tons of gypsum powder.

� Financials: The company’s net income declined 40% YoY to SR17mn in

1Q10, while revenues fell 31% YoY. However, cash and equivalents

increased 18.7% YoY to SR121mn during the same period.

� Recent developments: The company announced a cash dividend of SR2.5 per

share for the year ended 31 December 2009. Over three consecutive years,

National Gypsum distributed a cash dividend of SR2.5 per share.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 113 133 104 23 (31.8) (4.0)

Net Income SRmn 95 112 89 17 (40.0) (3.4)

Assets SRmn 597 602 629 643 2.3 2.6

Equity SRmn 528 539 555 493 1.3 2.5

Total Debt SRmn 39 39 49 45 16.1 11.8

Cash & Equiv SRmn 46 82 106 121 18.7 51.1

EBITDA Mgn % 50.8 51.3 51.5 55.7 - -

Net Mgn % 42.5 43.2 43.7 41.8 - -

ROE % 18.7 21.1 16.2 13.2 - -

ROA % 16.6 18.7 14.4 10.9 - -

Div Payout % 83.3 70.4 89.3 N/A - -

EPS SR 3 3.6 2.8 0.6 (39.6) (3.4)

BVPS SR 16.7 17.0 17.5 15.6 1.2 2.5


149

JUNE 2010 SAUDI CABLE COMPANY

Not Covered



Stock details





Absolute (9) (22) (43)

Market (6) (5) 3

Sector (11) (15) (23)


3M 29.3 7.8

12M 30.7 8.2

Raw Beta 6m 3yr

0.85 1.18


Bloomberg code SCACO AB

Website www.saudicable.com



Free float 81.23

Valuation multiples

08 09 TTM

P/E (x) 6.2 12.6 22.2

P/B (x) 1.3 1.0 1.0

P/Sales (x) 0.4 0.5 0.6




5,0005,500

6,000

6,500

7,000


20

30

40

TASI SCC (RHS)

Source: Bloomberg


Xenel Industrial Co. 16.6



Saudi Cable CompanyAlso known

as

SCC, SCCGroup

Saudi Cable Company, established in 1975, is headquartered in Jeddah,

Saudi Arabia. The company is primarily engaged in the manufacturing

and marketing of cables and related products. The company along with

Saudi Arabia also has operations in Lebanon, United States, Turkey and

Bahrain.

� Business brief: SCC manufactures and markets low, medium and high

voltage wires and cables; building wires; insulated power cables;

telecommunication cables; various conductors used for transmission and

distribution; copper and aluminum rods; and polyvinyl chloride. It also

provides turnkey project services for power and telecom projects, including

systems design, installation, engineering and testing.

� Financials: SCC reported a YoY decline of 23.6% in its revenues in 1Q10

due to intense competition in the company’s major markets. The company’s

net income fell significantly to SR1.1mn in 1Q10 from SR46.3mn in 1Q09

due to the order delays in Turkey. Some of the company’s planned projects

were also delayed.

� Recent developments: In March 2010, SCC received an order for SR85mn

to supply high voltage cables to an eastern European country. In February

2010, the company secured a SR70mn contract to supply and install

underground cables in one of the Middle East countries (not disclosed). SCC

also won a contract worth SR100mn from Saudi Electricity Co. to supply and

install high voltage cables for a project in Jeddah.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 3,143 3,503 2458 493 (23.6) (11.6)

EBITDA SRmn 448 463 243 21 (76.2) (26.4)

Net Income SRmn 283 212 104 1 (97.7) (39.2)

Assets SRmn 2,700 3,420 3,339 3,375 1.4 11.2

Equity SRmn 965 1,050 1,299 1,282 16.7 16.0

Total Debt SRmn 786 1,546 1,367 1,415 (7.7) 31.9

Cash & Equiv SRmn 69 122 109 147 139.5 25.2

EBITDA Mgn % 14.3 13.2 9.9 4.3 - -

Net Mgn % 9.0 6.1 4.2 0.2 - -

ROE % 33.5 21.0 8.9 0.3 - -

ROA % 11.9 6.9 3.1 0.1 - -

Div Payout % 20.2 26.9 54.7 N/M - -

EPS SR 3.7 2.8 1.4 0.0 (98.4) (39.3)

BVPS SR 12.7 13.8 17.1 16.9 16.7 16.0


150

JUNE 2010 SAUDI INDUSTRIAL

Not Covered



Stock details





Absolute (7) (3) (26)

Market (6) (5) 3

Sector (11) (15) (23)


3M 6.6 1.8

12M 7.9 2.1

Raw Beta 6m 3yr

0.60 0.10


Bloomberg code SIDC AB

Website www.sidc.com.sa



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 1.5 1.2 1.1

P/Sales (x) 1.4 1.5 1.5




5,0005,500

6,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-10789101112

TASI SIDC (RHS)

Source: Bloomberg





SIDC

Saudi Industrial Development Company (SIDC), established in 1992,

invests in the industrial sector of KSA. The company is mainly engaged

in the manufacturing and distribution of ceramics, such as bathtubs,

sanitary wares and tiles, home furnishing and mattresses. Over the

years, SIDC has diversified its investments to cover spring mattresses

and polyester fibers.

� Business brief: SIDC operates through its affiliates. Saudi Ceramic Plant

(100% stake) in Yanbu Industrial City produces ceramic sanitary ware

(annual capacity of 500,000 units) as well as acrylic bathtubs and shower

trays (annual capacity of 100,000 units). Arabian Spring and Sponge

Mattresses Mfg. Co. (50% stake), formerly known as Sleep High, is a leading

manufacturer of spring mattresses. SIDC also has a minority stake in

Arabian Industrial Fibers Co. (1.6%) which produces aromatics (725 kilo tons

annually), terephathalic acid (350 KTA), and polyester (150 KTA).

� Financials: SIDC’s revenues increased 1.5% YoY to SR52.6mn in 1Q10. The

company’s EBITDA margins also turned positive YoY at 9.6% due to a

significant reduction in expenses.

� Recent developments: In June 2010, SIDC announced that it had signed a

contract with the Saudi Industrial Development Fund to reschedule and

settle the SR67.9mn loan balance due on the company's porcelain factory.

During the same month, the company said that a court ruled in favor of Al-

Birr Organization in a lawsuit filed by Al-Birr challenging SIDC’s ownership of

800,000 shares in Yanbu National Petrochemicals Company (YANSAB).

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 17 18 15 5 NM (6.6)

Net Income SRmn 12 (6) (4) 0 NM NM

Assets SRmn 618 480 503 521 10.6 (9.8)

Equity SRmn 362 234 291 308 25.6 (10.5)

Total Debt SRmn 120 112 105 104 (6.1) (6.3)

Cash & Equiv SRmn 21 23 10 11 (19.9) (31.5)

EBITDA Mgn % 7.4 7.3 6.7 9.6 - -

Net Mgn % 5.1 (2.2) (1.6) 0.3 - -

ROE % 4.1 (1.9) (1.4) 0.2 - -

ROA % 1.9 (1.0) (0.7) 0.1 - -

Div Payout % - - - - - -

EPS SR 0.3 (0.1) (0.1) 0.0 NM NM

BVPS SR 9.1 5.9 7.3 7.7 25.6 (10.5)


151

JUNE 2010 AMIANTIT COMPANY

Not Covered



Stock details





Absolute (20) (23) (24)

Market (6) (5) 3

Sector (11) (15) (23)


3M 18.2 4.9

12M 19.1 5.1

Raw Beta 6m 3yr

1.38 1.24


Bloomberg code SAAC AB

Website www.amiantit.com



Free float 87.5

Valuation multiples

08 09 TTM

P/E (x) 8.6 10.0 9.9

P/B (x) 1.4 1.2 1.2

P/Sales (x) 0.5 0.6 0.6




5,0005,500

6,000

6,500

7,000


20

25

30

TASI Amiantit (RHS)

Source: Bloomberg


Al Mawarid Investment Co Ltd 10.2

HH Prince Khalid Abdullah Abdul Rahman Al Saud

7.4

Abdullah Saleh Abdullah Al Bassam

5.8



Amiantit Company Also known as

Amiantit Group,SAAC

Saudi Arabian Amiantit Company (SAAC) was established in 1968 to

manufacture pipes for the local market. The company’s core business

activities are the manufacture and sale of pipe systems; ownership and

sale of pipe technologies; water management consultancy and

engineering services; and manufacture and supply of polymer products.

� Business brief: SAAC has 30 pipe system manufacturing plants, 6

technology companies, 4 materials suppliers and 8 supply and engineering

subsidiaries. The company serves municipal, civil engineering, industrial,

energy and agricultural markets worldwide, supporting global infrastructure

development through an extensive sales and service network in more than

70 countries.

� Financials: SAAC’s revenues decreased 13.5% YoY in 1Q10 to SR733mn.

However, EBITDA margin increased from 22.4% in 1Q09 to 27.4% in 1Q10

due to a decline in operating expenses. Net income increased by 4.1% YoY

to SR50mn in 1Q10.

� Recent developments: In May 2010, International Water Distribution

Company, a 50% owned subsidiary of SAAC, signed a SR105mn, 10-year

agreement with Saudi Industrial Development Fund. The aim of the deal is to

execute distribution projects in Jeddah, Riyadh and Qassim. In April 2010,

the company finalized to sell its 51% stake in Composite Pipe Industries

(Oman) for USD4.5mn. In January 2010, SAAC announced plans to set up a

USD60mn facility to manufacture pipes in Bahrain.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 498 827 827 201 5.8 28.8

Net Income SRmn 64 235 202 50 4.1 77.7

Assets SRmn 4,060 4,504 4,056 4,034 (7.3) (0.1)

Equity SRmn 1,320 1,487 1,652 1,685 12.4 11.9

Total Debt SRmn 1,527 1,609 1,072 921 (36.6) (16.2)

Cash & Equiv SRmn 202 329 425 404 23.2 45.3

EBITDA Mgn % 16.1 20.5 25.1 27.4 - -

Net Mgn % 2.1 5.8 6.1 6.82 - -

ROE % 5.1 16.8 12.9 12.0 - -

ROA % 1.7 5.5 4.7 4.9 - -

Div Payout % - 24.5 57.1 - - -

EPS SR 0.6 2.0 1.8 0.4 2.4 78.4

BVPS SR 11.4 12.9 14.3 14.6 12.4 11.9


152

JUNE 2010 ARABIAN PIPES

Not Covered



Stock details





Absolute (6) (14) (24)

Market (6) (5) 3

Sector (11) (15) (23)


3M 9.4 2.5

12M 14.2 3.8

Raw Beta 6m 3yr

0.68 1.15


Bloomberg code APCO AB

Website www.arabian-pipes.com



Free float 85.82

Valuation multiples

08 09 TTM

P/E (x) 7.8 36.6 44.5

P/B (x) 1.3 1.2 1.2

P/Sales (x) 1.1 2.1 2.5




5,000

5,500

6,000

6,500

7,000


25

30

35

40

TASI APC (RHS)

Source: Bloomberg


Abdul Qader Al Muhaidib and Sons Group

13.8



Arabian Pipes Also known as

AC, APC, Anabib

Arabian Pipes Company (APC) is the largest manufacturer of medium

range High Frequency Welded (HFW) steel pipes in the Middle East. The

company makes anti-corrosion coating HFW pipes for the oil & gas,

petrochemical, agricultural and construction industries. APC, established

in 1991, has its manufacturing facility in Riyadh. APC exports to most of

the regional countries.

� Business brief: APC’s product line includes line-pipe applications (for long

distance transportation of oil & gas), structural applications (for

construction), general purpose applications (industrial water and irrigation),

standard pressure applications and casting applications. The company's

products are coated with anti-corrosives. APC’s total production capacity is

160,000 tons of steel pipes per year.

� Financials: APC’s revenues declined by 57% YoY to SR56mn in 1Q10. The

company’s EBITDA also fell by 65.8% YoY to SR8.1mn in 1Q10 as EBITDA

margins contracted by 355 basis points to 14.4%. Net income declined from

SR5.6mn in 1Q09 to SR1.2mn in 1Q10.

� Recent developments: In June 2010, APC acquired the remaining 50%

that it did not own in Arabian Yadong Coating Company from Yadong

International. In March 2010, the company received a SR8.3mn contract

from a local company to supply longitudinal submerged arc welded pipes

(LSAW) for the Jubail Export Refinery project. In January 2010, the company

started commercial operations at its new steel pipes production facility in Al

Jubail Industrial City.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 640 817 439 56.2 (57.4) (17.2)

EBITDA SRmn 158 160 91 8.1 (65.8) (24.3)

Net Income SRmn 126 117 25 1.2 (79.4) (55.3)

Assets SRmn 1,474 1,635 1,393 1,334 (14.9) (2.8)

Equity SRmn 642 712 737 738 2.9 7.2

Total Debt SRmn 749 883 625 567 (30.3) (8.6)

Cash & Equiv SRmn 17 19 21 14 34.5 11.6

EBITDA Mgn % 24.7 19.5 20.7 14.4 - -

Net Mgn % 19.6 14.4 5.7 2.1 - -

ROE % 21.7 17.3 3.5 0.6 - -

ROA % 9.2 7.5 1.7 0.3 - -

Div Payout % 37.6 - - - - -

EPS SR 4.0 3.72 0.8 0.04 (77.8) (55.2)

BVPS SR 20.4 22.6 23.4 23.4 2.9 7.2


153

JUNE 2010 ZAMIL INDUSTRIAL

Not Covered



Stock details





Absolute (16) (12) (7)

Market (6) (5) 3

Sector (11) (15) (23)


3M 13.9 3.7

12M 11.3 3.0

Raw Beta 6m 3yr

0.75 1.12


Bloomberg code ZIIC AB

Website www.ziic.com



Free float 75.65

Valuation multiples

08 09 TTM

P/E (x) 11.1 10.9 10.8

P/B (x) 2.4 2.1 2.1

P/Sales (x) 0.6 0.6 0.6




5,0005,500

6,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-10354045505560

TASI ZIIC (RHS)

Source: Bloomberg


Zamil Group Holding Company

19.9

Al Amanah Saudi Equity Fund 5.0



Zamil Industrial Also known as

ZIIC

Zamil Industrial Investment Co. (ZIIC), established in 1998 and

headquartered in Dammam, is a manufacturing and fabrication group

which supplies the construction industry. The company mainly operates

in five sectors – steel, HVAC, glass, insulation and concrete.

� Business brief: ZIIC exports to over 80 markets globally and has

manufacturing plants and offices in 55 countries. The company offers a

range of products—air conditioning, pre-engineered steel buildings, process

equipment, transmission towers, processed architectural glass, and other

solutions—to the global construction industry. ZIIC operates through Zamil

Air Conditioners (ZAC), Zamil Steel Inds (ZSI), Zamil Glass Industries (ZGI),

and Arabian Fiberglass Insulation Co. Ltd (AFICO).

� Financials: ZIIC reported an 18.8% YoY decline in revenues to SR927mn

during 1Q10. However, the company’s EBITDA margin rose by 40 basis

points to 10.3% in 1Q10. Net income grew from SR52.5mn in 1Q09 to

SR55mn in 1Q10 due to reduced interest expense and higher other income.

� Recent developments: In February 2010, the company announced plans to

build a SR300mn plant to produce insulation materials, which is expected to

commence commercial operations in 2012. In January 2010, the company’s

eastern cooling district unit signed a SR206mn financing facility with National

Commercial Bank (NCB) for thirteen-and-a-half years. During the same

month, Bank AlJazira signed an agreement with ZIIC to purchase steel pre-

constructed buildings and air conditioners at a value of SR75mn for Darfur

Fund for Reconstruction and Development (Sudan).

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 361 454 441 96 (15.3) 10.6

Net Income SRmn 207 225 230 55 4.9 5.6

Assets SRmn 3,965 5,370 4,663 4,628 (12.6) 8.5

Equity SRmn 892 1,028 1,195 1,189 17.8 15.7

Total Debt SRmn 1,975 2,860 2,028 1,962 74.7 1.3

Cash & Equiv SRmn 187 201 354 411 85.3 37.7

EBITDA Mgn % 9.8 10.0 10.5 10.3 - -

Net Mgn % 5.6 4.9 5.5 5.9 - -

ROE % 25.3 23.4 20.7 18.5 - -

ROA % 6.0 4.8 4.6 4.7 - -

Div Payout % 32.7 30.0 29.4 - - -

EPS SR 4.6 5.0 5.1 0.9 (21.4) 5.5

BVPS SR 19.8 22.9 26.6 19.8 (11.6) 15.8


154

JUNE 2010 AL-BABTAIN POWER

Not Covered



Stock details






Market (6) (5) 3

Sector (11) (15) 23


3M 10.2 2.7

12M 13.5 3.6

Raw Beta 6m 3yr

1.1 0.98


Bloomberg code ALBABTAI AB

Website www.al-babtain.com.sa



Free float 100

Valuation multiples

08 09 TTM

P/E (x) 11.7 14.0 15.0

P/B (x) 3.1 2.6 2.8

EV/EBITDA (%) 1.5 1.4 1.5




5,0005,500

6,000

6,500

7,000


35

40

45

TASI AL Babtain (RHS)

Source: Bloomberg




Al Babtain Power Also known as

Al Babtain

Al-Babtain Power and Telecommunication Company (Al-Babtain)

provides outdoor lighting, transmission & distribution (T&D), and testing

station services to the power sector. Additionally, it designs,

manufactures, and installs steel towers for the telecommunications

sector. Al-Babtain was established in 1955 in Riyadh.

� Business brief: Al-Babtain’s T&D portfolio comprises transmission towers

up to 500 kV, monopoles up to 230 kV, and distribution poles up to 33 kV.

The company’s subsidiary Al-Babtain LeBLANC Telecommunication (51%

stake) is a joint venture with LeBLANC that provides engineering,

manufacturing and installation services for communication towers of various

types in Saudi Arabia, neighboring Arab countries and North African nations.

Al-Babtain operates in the Petrochemicals, Oil & Gas, Cement, Industrial,

and Commercial segments of structural steel, providing engineering and

manufacturing solutions for varied applications. The company has

manufacturing facilities in Riyadh and Cairo.

� Financials: Al-Babtain’s revenue fell 24.7% YoY to SR230mn in 1Q10. Net

profit declined to SR24mn in 1Q10 compared to SR31mn in 1Q09.

� Recent developments: In December 2009, Al-Babtain LeBlanc

Telecommunication signed an agreement with CME of Portugal to set up a

SR2mn venture to design and install wired networks and information

systems. The company expects the venture to increase sales by SAR19.8mn.

Al-Babtain announced a dividend of SR1.50 per share for 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 836 1,013 1,123 230 (24.7) 15.9

EBITDA SRmn 149 210 192 38 (26.7) 13.6

Net Income SRmn 96 131 109 24 (22.1) 6.8

Assets SRmn 991 1,416 1,138 1,133 (17.8) 7.2

Equity SRmn 423 499 580 543 8.6 17.1

Total Debt SRmn 328 602 291 292 (51.0) (5.9)

Cash & Equiv SRmn 20 68 51 58 (10.8) 60.3

EBITDA Mgn % 17.8 20.7 17.1 16.7 - -

Net Mgn % 11.5 12.9 9.7 10.5 - -

ROE % 24.6 28.4 20.3 17.2 - -

ROA % 10.4 10.9 8.6 8.5 - -

Div Payout % 55.6 20.8 55.6 - - -

EPS SR 3.6 4.8 2.7 0.6 (22.1) (13.4)

BVPS SR 15.7 18.4 14.3 13.4 8.6 (4.6)


155

JUNE 2010 SAUDI VITRIFIED CLAY PIPE COMPANY

Not Covered



Stock details





Absolute 7 31 45

Market (6) (5) 3

Sector (11) (15) (23)


3M 9.4 2.5

12M 10.2 2.7

Raw Beta 6m 3yr

0.32 0.95


Bloomberg code SVCP AB

Website www.svcp-sa.com



Free float 56.01

Valuation multiples

08 09 TTM

P/E (x) 20.1 22.8 18.4

P/B (x) 4.6 4.5 4.8

P/Sales (x) 3.8 4.3 4.3




5,0005,500

6,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-103040

50

60

70

TASI SVCP (RHS)

Source: Bloomberg


Abdul Latif Al Essa Co 15.6

HH Prince Faisal Bin Abdul Aziz Faisal Al Saud

15.0

Saad Saud Ibrahim Al Sayari 13.3

Al Riyadh Investment Co 5.5



Saudi Vitrified Also known as

Saudi Vitrified, SVCP

Saudi Vitrified Clay Pipe Company (SVCP), established in 1977 and

headquartered in Riyadh, manufactures vitrified clay pipes and fittings,

and jacking pipes; its annual production capacity is 100,000 tons. Along

with the local Saudi market, SVCP has presence in international markets,

including Arab countries, the Far East and Europe.

� Business brief: SVCP manufactures vitrified clay pipes (ranging from 100–

1200mm) and jacking pipes (150–1000mm). These pipes are used in the

domestic and industrial sewage systems as well as for storm water disposal.

The main features of these pipes are their strength, durability, and

resistance to chemicals contained in sewage and drainage water. The

company has a state of the art 56,000 square meter facility in Riyadh with

an annual production capacity of 100,000 tons.

� Financials: SVCP’s revenue increased by 4.4% YoY to SR60mn in 1Q10. The

EBITDA margin grew to 39.6% in 1Q10 from 22.3% in 1Q09 due to a decline

in operating expenses. Net income rose to SR19mn in 1Q10 from SR9.2mn

in 1Q09.

� Recent developments: The company announced the distribution of cash

dividend of SR2.25 per share for 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 49 53 68 24 85.0 17.6

Net Income SRmn 43 48 43 19 109.5 (0.7)

Assets SRmn 333 450 478 480 0.2 19.8

Equity SRmn 196 211 217 201 8.6 5.2

Total Debt SRmn 61 156 206 205 27.6 83.7

Cash & Equiv SRmn 11 15 45 46 135.6 106.7

EBITDA Mgn % 22.8 20.5 30.1 39.6 - -

Net Mgn % 20.1 18.7 18.9 31.9 - -

ROE % 24.6 23.7 19.9 37.0 - -

ROA % 14.7 12.3 9.2 16.1 - -

Div Payout % 69.4 70.1 79.2 N/A - -

EPS SR 2.9 3.2 2.8 1.3 111.5 (0.7)

BVPS SR 13.1 14.1 14.4 13.4 8.6 5.2


156

JUNE 2010 ME SPECIALIZED CABLE

Not Covered



Stock details





Absolute (10) (34) (45)

Market (6) (5) 3

Sector (11) (15) (23)


3M 19.0 5.1

12M 15.1 4.0

Raw Beta 6m 3yr

0.83 0.96


Bloomberg code MESC AB

Website www.mesc.com.sa



Free float 47.98

Valuation multiples

08 09 TTM

P/E (x) 9.4 16.3 29.3

P/B (x) 1.6 1.7 1.8

P/Sales (x) 0.6 0.8 0.8




5,000

5,500

6,000

6,500

7,000


20

30

40

50

TASI M ESC (RHS)

Source: Bloomberg


Abdul Aziz Mohammed Sulaiman Al Namlah

26.6

Mohamad Ali Abdullah Al Suwailem

15.3

Lama Ismail Fawzi Abu Khadhra

10.0

Mansoor Adbul Aziz Mohamad Ka’aky

8.4



ME Specialized Cable Also known as

MESC

Middle East Specialized Cables Co. (MESC) began as a local manufacturer

in 1993 at Riyadh. In 2003, it acquired Jordan New Cable Company

(JNC) and in 2007 entered into a joint venture with Fujikura Company to

expand its product range to low and medium voltage power cables.

� Business brief: MESC’s products are categorized into instrumentation and

process control cables. These are used in indoor, outdoor and control room

applications, system cables (data and telephone cables), and power cables

(used in applications requiring greater electrical or electromagnetic

protection). Additionally, MESC markets specialized cables for harsh

environment applications, such as in the hydrocarbon industry. The

company’s production capacity is about 10,000 tons of copper annually.

Along with its regional operations, MESC has presence in 14 countries.

� Financials: The company’s revenues grew by 21.4% YoY to SR289mn in

1Q10. However, the EBITDA margin declined to 6.9% in 1Q10 from 17.9% in

1Q09, mainly due to higher operating expenses. Net income decreased by

88.0% YoY to SR3mn in 1Q10.

� Recent developments: In May 2010, MESC announced that it had

extended its joint venture with Fujikura Company for a period of five years

and increased its stake in MESC Fujikura Cable Co. from 46% to 57.5%. In

April 2010, the company signed a contract for SR15mn with Switzerland-

based BUSS AV Company to purchase PVC units. In October 2009, it had

signed a MoU to acquire United Transformers Electric Co; the acquisition is

expected to be complete by June 2010.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 235 245 152 20 (53.6) (19.5)

Net Income SRmn 150 88 51 3 (88.0) (41.5)

Assets SRmn 1,246 1,615 1,710 1,711 3.9 17.2

Equity SRmn 435 507 504 467 (3.2) 7.7

Total Debt SRmn 470 836 780 833 1.0 28.8

Cash & Equiv SRmn 85 54 35 36 (74.2) (36.2)

EBITDA Mgn % 21.3 18.7 14.7 6.9 - -

Net Mgn % 13.6 6.8 5.0 1.1 - -

ROE % 39.6 18.8 10.2 2.6 - -

ROA % 14.4 6.2 3.1 0.7 - -

Div Payout % 10.7 54.3 78.1 N/A - -

EPS SR 4.7 2.2 1.3 0.1 (87.7) (47.8)

BVPS SR 13.6 12.7 12.6 11.7 (3.2) (3.6)


157

JUNE 2010 RED SEA HOUSING

Not Covered



Stock details





Absolute (6) (5) (18)

Market (6) (5) 3

Sector (11) (15) (23)


3M 5.1 1.4

12M 14.1 3.8

Raw Beta 6m 3yr

0.43 1.05


Bloomberg code REDSEA AB

Website www.rsh.com.sa



Free float 30.0

Valuation multiples

08 09 TTM

P/E (x) 7.6 13.2 18.2

P/B (x) 2.4 2.3 2.3

P/Sales (x) 1.4 1.9 2.4




5,000

5,500

6,000

6,500

7,000


60

70

80

TASI Red Sea (RHS)

Source: Bloomberg


Al Dabbagh Holding Co. 51.0

Mumtaz Foods Co 5.0

The National Scientific Company LTD

5.0

Tejariah for Marketing Services and Agencies

5.0



Red Sea Housing Also known as

RSH, Red Sea

Red Sea Housing Services Company was established in Jeddah in 1967.

The objective was to replicate the American manufactured housing

model in Saudi Arabia. The company later diversified into manufacturing

and property management, setting up its first manufacturing facility in

1983. Red Sea Housing manufactures, sells and leases all types of

modular buildings.

� Business brief: With three manufacturing facilities, one each in Dubai,

Jubail, and Accra (Ghana), Red Sea Housing has the capability to

manufacture 920 square meters of quality housing a day; this represents an

annual production capacity of 335,000 square meters. The company serves

all types of housing requirements – commercial and residential, temporary

and permanent. Red Sea Housing offers special services to oil & gas, and

mining companies. The company’s market area covers Africa, the Middle

East, Asia and South America.

� Financials: Red Sea’s revenues declined by 52.2% YoY in 1Q10 to

SR147mn. However, the company’s EBITDA margin increased by 250 basis

points YoY to 26.8% in this period due to reduced operating expenses. The

company’s net income fell 58% YoY from SR58mn to SR24mn in 1Q10.

� Recent developments: In April 2010, Red Sea Housing received a

SR480mn contract from Chiyoda-JGC Joint Venture to engineer, manufacture

and construct a major housing facility for Papua New Guinea’s Liquefied

Natural Gas Project (PNG LNG). The company announced a cash dividend of

SR2.0 per share for 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 690 1,139 852 147 (52.2) 11.1

EBITDA SRmn 158 279 178 39 (47.4) 6.1

Net Income SRmn 117 214 124 24 (58.3) 2.6

Assets SRmn 772 1,003 921 963 (2.7) 9.2

Equity SRmn 529 682 701 725 (2.0) 15.2

Total Debt SRmn 36 99 102 118 45.4 68.8

Cash & Equiv SRmn 37 120 47 97 (27.8) 12.2

EBITDA Mgn % 23.0 24.5 20.9 26.8 - -

Net Mgn % 17.0 18.8 14.5 16.4 - -

ROE % 23.8 35.4 17.9 13.5 - -

ROA % 17.7 24.1 12.8 10.3 - -

Div Payout % 51.2 49.1 48.5 - - -

EPS SR 3.9 7.1 4.1 0.8 (58.5) 2.7

BVPS SR 17.6 22.7 23.4 24.2 (2.0) 15.2


158


Real Estate


4020 Saudi Real Estate 162

4090 Taiba Holding 163

4100 Makkah Construction 164

4150 Arriyadh Development 165

4220 Emaar Economic City 166

4250 Jabal Omar 167

4300 Dar Al Arkan 168


Real Estate

Government backed growth The Saudi real estate sector, although shaken by the current global meltdown,

continues to grow steadily, benefiting from increasing demand for residential and

commercial properties. Rising population, changing demographics, a growing hotel

and tourism industry and higher personal disposable incomes are fuelling demand

in the Kingdom’s residential markets.

Historically, companies in the real estate sector in KSA compare well on revenue

terms with their GCC peers, although UAE has been the leader in the region. ROE

levels of KSA companies are lower than other GCC nations, although they trade at

relatively higher P/Es.

Exhibit 114: Revenue of GCC real estate companies,

2007–09(USD mn)


companies, 2009 (%)

0

750

1,500

2,250

3,000

3,750

4,500

5,250

6,000

6,750

7,500

2007 2008 2009


-30

-20

-10

0

10

20

30

-10 0 10 20 30 40

P/E (x)

RO

E (

%)

KSA UAE Qatar Kuwait

Source: Tadawul, Bloomberg, NCBC Research Source: Tadawul, Bloomberg, NCBC Research

The Real Estate sector has a large number of private players with 7 listed

companies

Sector revenue declined 1% to SR6.6bn in 2009, due to the slower pace of

construction activity and reduced rentals. Sales were largely boosted by

government stimulus packages for economic cities and other infrastructure

projects. Dar AlArkan is by far the dominant company in the sector, accounting for


Company


Dec 2009Net Margin(%), 2009

ROE (%),2009

Saudi Real Estate Co. 0.26 54.1 3.0

Taiba Holding Co. 0.21 31.0 2.5

Makkah Construction & Development Co. 0.37 76.4 6.0

Arriyadh Development Co. 0.10 59.6 6.5

Emaar The Economic City 0.68 38.8 15.0

Jabal Omar Development Company 1.06 N/M N/M

Dar Alarkan Real Estate Development Co 1.27 N/M N/M

Source: Bloomberg, Tadawul: Company data;

160


REAL ESTATE

over 80% of the overall revenues and over 90% of the overall profits of the sector

in 2009.


(SR mn)


(%)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2007 2008 2009

Saudi Real Estate Taiba Makkah Arriyadh Dar alarkan

0

20

40

60

80

100

2007 2008 2009

Saudi Real Est Taiba Makkah

Arriyadh Dar alarkan


As of 31 December 2009, the sector’s P/E and P/BV multiple stood at 19.9.x and

1.14x, respectively, compared with P/E and P/BV multiples of 10.1x and 1.09x,

respectively, in 2008. Arriyadh reported the highest RoE, and Emaar EC the lowest.

As of 31 May 2010, the sector P/E and P/BV multiples were 20.3x and 1.1x,

respectively.


(%)


(%)

Taiba

Makkah

Arriyadh

Dar alarkan

Emaar

Jabal

Saudi RealEstate

-10

-5

0

5

10

15

20

25

30

-0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0

P/B (x)

RO

E(%

)

Makkah

Dar alarkanTaiba

Emaar

Jabal

Arriyadh

Saudi RealEstate

-15

-10

-5

0

5

10

15

20

25

30

35

0.0 0.5 1.0 1.5 2.0 2.5 3.0

P/B (x)

RO

E(%

)


We expect government-backed construction activity, favorable demographics and

growing tourism in KSA to drive construction activity and boost demand for real

estate development. Additionally, the expected approval of the mortgage law will

boost housing demand by easing access to mortgage financing. These factors are

likely to contribute to the sector’s growth, going forward.

161

JUNE 2010 SAUDI REAL ESTATE COMPANY

Not Covered



Stock details





Absolute (2) (6) (11)

Market (6) (5) 3

Sector (3) (3) (13)


3M 3.6 1.0

12M 7.1 1.9

Raw Beta 6m 3yr

0.54 0.99


Bloomberg code SRECO AB

Website www.al-akaria.com



Free float 30.64

Valuation multiples

08 09 TTM

P/E (x) 20.2 30.6 30.7

P/B (x) 0.9 0.9 0.9

P/Sales (x) 12.6 16.5 16.0


DPS 1.0 0.8 N/A



5,0005,500

6,0006,500

7,000


TASI Real Estate (RHS)

Source: Bloomberg




REAL ESTATE DEVELOPMENT

Saudi Real Estate Also known as

Real Estate, AKARIA

In 1976, Saudi Real Estate (AKARIA) was established in Riyadh. The

company specializes in development, management, property investment

and civil contracting for commercial and residential properties. AKARIA also

engages in the trading, sale and lease of construction materials.

� Business brief: AKARIA is one of the pioneers in shopping center

construction in the GCC. The company has constructed a number of shopping

centers in Riyadh and Dammam. It also develops housing and office

complexes, and has executed a number of projects, such as Saudi

embassies, in some GCC countries. The company’s principal investment

holdings include a 25% stake in Saudi Company for Al Muaiqliah Commercial

Centre, 15% stake in United Glass Company, and 10% stake in Dar Al

Tamleek Company.

� Financials: 1Q10 sales rose 13.9% YoY to SR50.0mn. The company’s EBIT

increased 11.5% YoY to SR30.6mn due to higher occupancy rates and the

launch of a commercial plaza. However, EBIT margins declined one

percentage point to 61.1% primarily owing to higher depreciation expenses

(SR6.1mn) in 1Q10. Net profit contracted 1.1% YoY to SR30.6mn mainly due

to lower income from Murabaha payments.

� Recent developments: On 12 April 2010, the company’s Board approved the

distribution of the proposed cash dividend of SR0.75 per share for the year

ended 31 December 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 153 133 115 37 31.0 (13.2)

Net Income SRmn 173 140 93 31 (1.1) (26.8)

Assets SRmn 3,269 3,235 3,237 3,269 1.7 (0.5)

Equity SRmn 3,120 3,085 3,067 3,106 0.1 (0.9)

Total Debt SRmn 0 0 0 0 N/A N/A

Cash & Equiv SRmn 619 61 644 691 634.3 2.0

EBITDA Mgn % 63.1 59.2 67.4 74.1 - -

Net Mgn % 71.2 62.2 54.1 61.3 - -

ROE % 5.6 4.5 3.0 4.0 - -

ROA % 5.4 4.3 2.9 3.8 - -

Div Payout % 69.4 105.3 97.4 N/A - -

EPS SR 1.4 1.0 0.8 0.3 0.0 (26.9)

BVPS SR 26.0 25.7 25.6 25.9 0.2 (0.9)


162

JUNE 2010 TAIBA HOLDING COMPANY

Not Covered



Stock details





Absolute 0 0 (2)

Market (6) (5) 3

Sector (3) (3) (13)


3M 3.3 0.9

12M 6.0 1.6

Raw Beta 6m 3yr

0.25 0.82


Bloomberg code TIRECO AB

Website www.taiba.com.sa



Free float 69.0

Valuation multiples

08 09 TTM

P/E (x) 15.4 35.9 35.7

P/B (x) 0.9 0.9 0.9

P/Sales (x) 8.9 11.2 11.6

Div yield (%) 9.1 7.3 7.3

DPS 1.5 1.2 1.2



5,0005,5006,0006,5007,000


TASI Taiba (RHS)

Source: Bloomberg


Mohammed Ibrahim Mohammed Al Issa

16.6


6.9



Taiba Holding Also known as

Taiba

Taiba Holding Co (Taiba) owns, manages, and invests in real estate,

hotels, hospitals, and resorts. The company also constructs, manages,

and markets properties. Taiba undertakes electromechanical,

agricultural, industrial, architectural and mining projects. The company

was established in September 1988 and is headquartered in Medina.

� Business brief: Taiba’s core focus is on the real estate sector and it is a

major developer in the central area surrounding the Holy Prophet's mosque.

Taiba’s subsidiaries and associate companies include TACOMA (involved in

projects in the central area), ARAC (tourism activities), Al Aqeeq Real Estate

Dev. Co (AQEEQ), TAWD (property management and marketing), and

Arabian Resort Areas and Quality Horizons. The company also operates in

the agriculture industry through Al Madinah Dates Company, and Taiba

Agricultural Development Company. As of December 2009, Taiba owns a

20% stake in the Knowledge Economic City, Medina.

� Financials: The company’s revenues declined at a compounded annual rate

of 33.7% during 2007–09. On a YoY basis, revenues decreased 17.3% to

SR14.3mn in 1Q10. Net profit moved up 3.2% YoY to SR14.3mn in 1Q10 due

to higher other income and lower Zakat.

� Recent developments: On 21 March 2010, Taiba announced a dividend of

SR0.3 per share for 1Q10; the company paid a dividend of SR1.20 per share

for full year 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 413 164 105 19 (0.6) (49.5)

Net Income SRmn 393 160 69 14 3.2 (58.2)

Assets SRmn 3,632 3,568 3,527 3,574 0.4 (1.5)

Equity SRmn 2,980 2,899 2,799 2,813 (3.3) (3.1)

Total Debt SRmn 34 5 4 4 (25.0) (67.0)

Cash & Equiv SRmn 66 287 70 57 45.6 2.3

EBITDA Mgn % 81.9 59.2 47.6 48.5 - -

Net Mgn % 78.0 57.8 31.0 35.7 - -

ROE % 13.5 5.4 2.4 2.0 - -

ROA % 11.7 4.4 1.9 1.6 - -

Div Payout % 57.3 140.2 260.9 300.0 - -

EPS SR 2.6 1.1 0.5 0.1 11.1 (58.1)

BVPS SR 19.9 19.3 18.7 18.8 (3.3) (3.1)


163

JUNE 2010 MAKKAH CONSTRUCTION AND DEVELOPMENT COMPANY

Not Covered



Stock details





Absolute (2) 0 11

Market (6) (5) 3

Sector (3) (3) (13)


3M 6.5 1.7

12M 7.1 1.9

Raw Beta 6m 3yr

0.36 0.66


Bloomberg code MCDCO AB

Website www.mcdc.com.sa



Free float 83.50

Valuation multiples

08 09 10

P/E (x) 27.2 21.7 22.6

P/B (x) 1.1 1.3 1.3

P/Sales (%) 17.7 16.5 17.3

Div yield (%) 4.1 5.1 5.1

DPS 1.2 1.5 1.5



5,0005,5006,0006,5007,000


25

30

35

TASI M akkah (RHS)

Source: Bloomberg


Saudi Binladin Group 10.9

Mohammed Saleh Hamza Sayrafi

7.2



Makkah Construction Also known as

Makkah, MCDC

Makkah Construction & Development Co. (MCDC) was established in

1989 to develop areas around the Holy Mosque in Makkah. The company

is engaged in redevelopment of the Holy Haram Area. MCDC has

established a residential and commercial complex including the Jabal

Omar and Jabal Khandama Project.

� Business brief: MCDC is involved in real estate (investment, construction

and development), property management, and hotel management. The

company holds 100% stake in Makkah Hilton & Towers (the 1,400-room

hotel) and Makkah Shopping Center (a three-storied 451 unit shopping

center). In 2006, MCDC was a founding member of the Jabal Omar

Development Company (21% stake) that was established with a capital of

SR5bn. The Jabal Omar Project is spread across an area of 230,000 sq m

and includes hotels, commercial centers and prayer facilities for over

200,000 people.

� Financials: For the year ended 14 April 2010, the company’s revenues

declined 4.2% YoY to SR279mn due to lower hotel occupancy rates. MCDC’s

full year operating income fell 4.0% YoY to SR221mn. The company’s full-

year profit decreased at a relatively lower rate of 3.9% YoY (to SR213mn)

primarily due to an investment income of SR2.6mn in fiscal year 2010.

� Recent developments: On 05 May 2010, MCDC announced a cash dividend

of SR1.5 per share for fiscal year ended 14 April 2010.

Company financials*

2007 2008 2009 2010

YoY

(%)

CAGR (%)

(07-10)


EBITDA SRmn 210 237 261 250 (4.5) 6.0

Net Income SRmn 173 177 222 213 (3.9) 7.3

Assets SRmn 3,460 4,618 4,124 4,170 1.1 6.4

Equity SRmn 3,157 4,234 3,709 3,750 1.1 5.9


Cash & Equiv SRmn 125 114 189 131 (30.7) 1.5

EBITDA Mgn % 76.5 87.1 89.8 89.6 - -

Net Mgn % 63.0 65.1 76.3 76.5 - -

ROE % 6.5 4.8 5.6 5.7 - -

ROA % 5.7 4.4 5.1 5.1 - -

Div Payout % - 112.1 111.1 116.3 - -

EPS SR 1.1 1.1 1.4 1.3 (4.4) 7.1

BVPS SR 19.2 25.7 22.5 22.8 1.1 5.9

Source: Tadawul, Zawya, Company, NCBC Research * Financial year ending April

164

JUNE 2010 ARRIYADH DEVELOPMENT COMPANY

Not Covered



Stock details





Absolute 3 6 9

Market (6) (5) 3

Sector (3) (3) (13)


3M 15.1 4.0

12M 13.2 3.5

Raw Beta 6m 3yr

0.32 0.96


Bloomberg code ADCO AB

Website www.ardco.com.sa



Free float 99.94

Valuation multiples

08 09 TTM

P/E (x) 17.7 15.3 15.1

P/B (x) 1.0 1.0 1.0

EV/EBITDA (%) 10.1 9.1 9.0


DPS 0.5 0.75



5,000

5,5006,0006,500

7,000


121314

15

TASI Arriyadh Development (RHS)

Source: Bloomberg


Emar Arabian Shield for Investment

9.6

Development & Investment Services

6.4

Monasteries Holding Company.

5.8



Arriyadh DevelopmentAlso

known as

Arriyadh,ARDCO

Arriyadh Development Company is engaged in the construction of

commercial, office and residential buildings and complexes. The

company also develops public parks, tourist compounds and parking

lots. ARDCO, headquartered in Riyadh, was established in 1994.

� Business brief: Arriyadh has been involved in residential projects such as

Sunrise Cities and commercial projects like Attameer Trading Center,

Arriyadh Transportation Center, Technical Service City, Riyadh Hills and

Riyadh Car Auction (for the sale of used cars). The company has also been

engaged in the development of market areas such as Batha Meat &

Vegetable Market, Riyadh Wholesale & Retail Market and Riyadh Vegetable &

Fruits Market.

� Financials: Arriyadh’s revenues increased 3.0% YoY to SR38.6mn in 1Q10.

The company’s operating income grew 7.2% YoY to SR23.2mn during the

quarter and net income rose 3.5% YoY to SR22.8mn in 1Q10 from

SR22.0mn in 1Q09. Net margins improved 30 basis points to 59.1%

compared to the same quarter of the previous year.

� Recent developments: On 26 May 2010, Arriyadh unveiled an urban

redevelopment plan for Riyadh at a cost of SR13bn, to be constructed in nine

stages over 15 years. The project is yet to receive approval from the Saudi

government. The government and investment partners are expected to fund

a majority of the project expenditure. On 23 February 2010, Arriyadh

announced a cash dividend of SR0.75 per share for the fiscal year 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 83 94 110 27 5.8 15.1

Net Income SRmn 71 80 93 23 3.5 14.5

Assets SRmn 1,577 1,593 1,589 1,604 0.5 0.4

Equity SRmn 1,377 1,405 1,422 1,445 5.0 1.6

Total Debt SRmn - - - - N/A N/A

Cash & Equiv SRmn 148 163 8 26 (21.7) (77.1)

EBITDA Mgn % 65.0 67.1 70.6 71.2 - -

Net Mgn % 55.5 57.0 59.6 59.1 - -

ROE % 5.2 5.7 6.6 6.4 - -

ROA % 4.5 5.0 5.8 5.7 - -

Div Payout % 70.4 62.5 80.6 N/A - -

EPS SR 0.7 0.8 0.9 0.2 4.5 14.4

BVPS SR 13.8 14.1 14.2 14.5 5.0 1.6


165

JUNE 2010 EMAAR ECONOMIC CITY

Not Covered



Stock details





Absolute (5) (14) (29)

Market (6) (5) 3

Sector (3) (3) (13)


3M 40.9 10.9

12M 60.5 16.1

Raw Beta 6m 3yr

0.61 1.03


Bloomberg code EMAAR AB

Website www.kingabdullahcity.com



Free float 30.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 0.9 0.9 0.9

P/Sales (%) 72.0 28.1 32.7


DPS N/A N/A N/A



5,000

5,500

6,000

6,500

7,000


7

9

11

13

TASI Emaar E .C (RHS)

Source: Bloomberg


Dayem Modern Company for Real Estate Management

20.0

M E Royal Capital Company 9.4

Emaar Middle East 5.8

M E Holdings 5.8

M E Strategic Investments 5.8



Emaar Economic CityAlso known as

EEC,Emaar EC

In September 2006, Emaar the Economic City (Emaar EC) was set up by

Emaar Properties through a joint venture with Saudi investors to

undertake the development of the SR187.6bn King Abdullah Economic

City (KAEC). The mega project 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 (168mn

sq m) in the GCC region, has six key components – seaport, industrial zone,

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

resort.

� Financials: Emaar EC’s revenues declined 45.1% YoY to SR45.2mn in 1Q10.

During the same period, the company incurred a net loss of SR53.5mn

compared to a net loss of SR62.3mn in 1Q09. Emaar EC continues to post

losses as the project is still in development phase and revenue generation

through land and property sales has been limited. In 1Q10, the company

generated an investment income of SR0.8mn relative to SR7.7mn in 1Q09.

� Recent developments: On 18 June 2010, Emaar EC entered into a development

and license agreement with Al Ahlam Marine Tourism Group to develop a marina

and yacht club facility inside KAEC. On 2 June 2010, Saudi Total Lubricants

Company Ltd signed an agreement with the company to establish a lubricants

manufacturing facility (with an annual capacity of 25,000 MT of lubricants per

year) on approximately 65,000 sq m of a leased plot in the Industrial Valley of

KAEC. In addition, on 11 March 2010, Emaar EC signed a deal with

Singapore's Jurong International to develop the second phase of the

Industrial Valley at KAEC.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 0 102 261 45 (45.1) N/A

EBITDA SRmn (157) (375) (214) (41) (29.4) 16.7

Net Income SRmn 26 (292) (309) (53) 14.2 N/A

Assets SRmn 8,747 9,532 9,305 9,297 (3.5) 3.1

Equity SRmn 8,483 8,191 7,882 7,828 (3.7) (3.6)


Cash & Equiv SRmn 640 2,219 864 655 (59.7) 16.2

EBITDA Mgn % N/A N/A (82.1) (91.2) - -

Net Mgn % N/A N/A (118.5) (118.2) - -

ROE % 0.3 (3.5) (3.8) (2.7) - -

ROA % 0.3 (3.2) (3.3) (2.3) - -


EPS SR 0.0 (0.3) (0.4) (0.1) 14.3 N/A

BVPS SR 10.0 9.6 9.3 9.2 (3.7) (3.6)


166

JUNE 2010 JABAL OMAR DEVELOPMENT COMPANY

Not Covered



Stock details





Absolute (10) (9) (6)

Market (6) (5) 3

Sector (3) (3) (13)


3M 32.3 8.6

12M 25.8 6.9

Raw Beta 6m 2yr

0.50 0.64


Bloomberg code JOMAR AB

Website www.jabalomar.com.sa



Free float 41.56

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 1.8 1.8 1.8

P/Sales (%) N/A N/A N/A


DPS N/A N/A N/A



5,000

5,5006,000

6,5007,000


1719

2123

TASI Jabal Omar (RHS)

Source: Bloomberg


Founders of Jabal Omar Development Co.

37.1

Makkah Construction and Dev. Co

9.1

General Organisation for Social Insurance

9.1



Jabal Omar Also known as

Jabal Omar,JODC

Jabal Omar Development Company (Jabal Omar) is engaged in real

estate development in the Jabal Omar area. In cooperation with local

and international subcontractors, the company buys, builds, develops,

manages, rents, leases and sells land and properties. Jabal Omar,

headquartered in Mecca, was established in October 2006.

� Business brief: Jabal Omar builds residential towers, hotels, commercial

centers as well as roads and parking facilities for pilgrims visiting Mecca. The

company’s major project, Jabal Omar project (also known as the Western

Gate Road Development), is scheduled for completion in 2011. The project is

a 230,000 square meter mixed-use development located around the Grand

Mosque of Makkah. Post completion, the project will feature 38 residential

towers, hotels, a retail concourse, a prayer area, public parks, a central

transportation station, a conference hall and other related facilities.

� Financials: Jabal Omar’s net loss widened to SR8.9mn in 1Q10 from

SR4.1mn a year earlier as its projects are still in the development phase. The

company’s SG&A expenses increased 34% YoY to SR8.9mn in 1Q10.

� Recent developments: In October 2009, Jabal Omar announced plans to

finance 14% of its ongoing project in Makkah through a USD447.6mn rights

issue.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn - 0 0 0 N/M -

EBITDA SRmn - (93) (26) (8) N/M -

Net Income SRmn - (53) (23) (9) N/M -

Assets SRmn - 6,704 6,879 6,809 1.5 -

Equity SRmn - 6,661 6,638 6,630 (0.4) -

Total Debt SRmn - 0 0 44 N/A -

Cash & Equiv SRmn - 946 27 53 (93.4) -

EBITDA Mgn % - N/A N/A N/A - -

Net Mgn % - N/A N/A N/A - -

ROE % - (0.8) (0.4) (0.5) - -

ROA % - (0.8) (0.3) (0.5) - -

Div Payout % - N/A N/A N/A - -

EPS SR - (0.1) (0.0) (0.0) (117.5) -

BVPS SR - 9.9 9.9 9.9 (0.4) -


167

JUNE 2010 DAR AL ARKAN REAL ESTATE DEVELOPMENT COMPANY

Not Covered



Stock details





Absolute (1) 1 (21)

Market (6) (5) 3

Sector (3) (3) (13)


3M 36.0 9.6

12M 54.5 14.5

Raw Beta 6m 2yr

0.25 0.78


Bloomberg code ALARKAN AB

Website www.alarkan.com



Free float 61.06

Valuation multiples

08 09 TTM

P/E (x) 6.3 6.9 7.0

P/B (x) 1.3 1.1 1.0

P/Sales (x) 2.6 2.7 2.7

Div yield (%) 0.0 7.3 7.3

DPS 0.0 1.0 1.0



5,0005,500

6,0006,5007,000


TASI Dar Al Arkan (RHS)

Source: Bloomberg


Khalid Bin Abdullah Shelash AlShelash

9.1

Yusuf Abdullah Shelash Al Shelash

7.7

Hethloul Saleh Mohammed Al hethloul

6.9

Majed Bin Abdulrahman Abdulaziz Al Qassem

5.3



Dar Al Arkan Also known as

DAAR, Dar Al Arkan

Dar Al Arkan Real Estate (Dar Al Arkan) is one of the largest real estate

developers in the Kingdom. DAAR specializes in residential real estate

property investment, development and management. Headquartered in

Riyadh, the company was established in December 1994.

� Business brief: Dar Al Arkan has constructed more than 2,300 residential

units and developed 9mn square meters of land since inception. The

company is currently developing a number of residential projects such as

Shams Alriyadh, Al Qasr, and Al-Tilal. Dar Al Arkan also offers pre-sales,

after-sales, and funding services to its customers. To complement its core

business, DAAR established the SR2bn Saudi Home Loans Company in

December 2007 to provide Shariah-compliant home loans.

� Financials: Dar Al Arkan’s top line fell 7.5% YoY to SR1.1bn in 1Q10 from

SR1.2bn in 1Q09. Gross margins declined to 41.8% in 1Q10 from 45.9% in

4Q09 due to higher contribution of apartment sales at Al Qasr. In 1Q10, net

profit fell 6.1% YoY to SR398.6mn owing to lower profit margins on property

sales. The decline in net profit was primarily led by the decrease in average

margins on sales in certain geographic locations.

� Recent developments On 23 June 2010, DAAR entered into a fixed-to-

floating rate swap agreement for half the recently issued USD450mn Sukuk.

On 19 May 2010, the company approved a dividend of SR1 per share for the

year ended 31 December 2009. In Feb. 2010, DAAR issued a USD450mn

Sukuk, and in March 2010, the company redeemed its USD600mn Sukuk

initially launched in March 2007.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 4,926 5,611 5,464 1,145 (7.5) 5.3

EBITDA SRmn 2,313 2,694 2,361 445 (7.9) 1.1

Net Income SRmn 2,009 2,356 2,123 399 (6.1) 2.8

Assets SRmn 18,374 20,164 23,597 23,465 14.8 13.3

Equity SRmn 11,000 11,736 13,859 14,258 17.2 12.2

Total Debt SRmn 6,400 7,635 8,355 7,799 (6.7) N/A

Cash & Equiv SRmn 3,347 716 2,223 1,353 596.6 (18.5)

EBITDA Mgn % 46.9 48.0 43.2 38.9 - -

Net Mgn % 40.8 42.0 38.8 34.8 - -

ROE % 18.6 20.7 16.6 11.3 - -

ROA % 13.4 12.2 9.7 6.8 - -

Div Payout % 107.5 N/A 50.8 0 - -

EPS SR 2.79 3.27 1.97 0.37 (37.3) (16.0)

BVPS SR 20.4 16.3 12.8 13.2 (21.8) (20.6)


168


Transportation


4030 National Shipping 172

4040 SAPTCO 173

4110 Mubarrad 174

4260 United International 175


Transport

Improved demand, coupled with government support, aids prospects The Saudi transportation sector faced a weak 2009, primarily due to subdued

demand, lower freight rates and reduced demand for crude oil (a major export

commodity). A rise in expenses such as ground handling costs and interest and

financing expenses impacted sector profits during the year. Nevertheless, with

improved macroeconomic conditions, KSA stands to gain from its proximity to

Europe, Asia and Africa compared to other GCC countries.

KSA’s transport sector is an emerging one when compared with those of other GCC

countries. The Kingdom’s transport sector RoE stood at 8.5% in 2009, below the

GCC’s average ROE of 9.3% in 2009.

Exhibit 121: Revenues of GCC transport companies,

2007–09(USD mn)


companies, 2009 (%)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2007 2008 2009


7

9

11

13

15

17

19

21

0 9 18 27

P/E (x)

RO

E (

%)

KSA UAE Qatar Kuwait Oman


The KSA transport sector has a large number of private players, with only four

listed companies. Amongst listed players, National Shipping Co. of Saudi Arabia has

the highest average traded value in the sector at about SR40mn/day.

In 2009, sector revenue declined 23.6% YoY to SR2.96bn, primarily due to reduced

demand in the transportation sector. Revenues for Saudi Land Transport Company,

the smallest player in the industry, increased the most (6.6% YoY in 2009). On the

other hand, National Shipping Company, which contributes around 56% of the

Lower demand for crude oil

to have an adverse effect

on transportation sector


Company% weight in Index

as on Dec 2009Net Margin(%) 2009

ROE (%)2009

United International Transportation Co.Ltd. (BUDGET)

0.09 22.2 21.1

Saudi Public Transport Co ( SAPTCO) 0.09 4.3 2.3

National Shipping Co.of Saudi Arabia (NSCSA)

0.47 10.0 7.4

Saudi Land Transport Company (SLTCO)

0.03 17.7 3.1

Source: Bloomberg, Tadawul, Company data

Contribution of National

Shipping Co. to the sector

revenue declined from

67% in 2008 to 56.5% in

2009.

170


TRANSPORT

sector’s total revenue, reported the steepest decline in revenue (35.6% YoY fall in

2009). On profitability, the sector reported a 43.1% YoY fall in net profits. United

International Transport Company Limited reported the highest increase in net

profits, while Saudi Land Transport Company reported the steepest decline.


(SR mn)


(%)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2007 2008 2009

NSCSA SAPTCO SLTCO BUDGET

0

5

10

15

20

25

30

35

2007 2008 2009

SLTCO BUDGET NSCSA SAPTCO


As of 31 December 2009, the sector’s P/E and P/BV multiples stood at 33.9x and

1.73x, respectively, compared to 16.2x and 1.24x in 2008. The KSA transportation

sector’s average ROE stood at 8.5% in 2009. United International Transport

Company Limited reported the highest ROE of 21.1%, while Saudi Public Transport

Company reported the lowest ROE of 2.3% in 2009. As of 31 May 2010, the

sector’s P/E and P/BV were 19.1x and 1.5x, respectively.



NSCSA

SAPTCO

SLTCO

BUDGET

0

6

12

18

24

30

36

0 1 2 3

P/B (x)

RO

E (

%)

NSCSA

SAPTCO

SLTCO

BUDGET

0

5

10

15

20

25

0 1 2 3

P/B(x)

RO

E (

%)


We are optimistic about the KSA transportation sector, buoyed by the Kingdom’s

status as the largest oil producer and by expansion projects in the oil and gas

sector that are expected to support local freight industry rates. The KSA

government’s strong emphasis on reforming and improving its transportation sector

is expected to boost revenue growth further. Additionally, the number of

infrastructure projects planned in the country is expected to increase transportation

capacity and facilitate cargo demand.

171

JUNE 2010 NATIONAL SHIPPING COMPANY

Not Covered



Stock details





Absolute (7) 3 1

Market (6) (5) 3

Sector (7) (6) (10)


3M 20.8 5.5

12M 26.2 7.0

Raw Beta 6m 2yr

1.15 1.00


Bloomberg code NSCSA AB

Website www.nscsa.com



Free float 66.37

Valuation multiples

08 09 TTM

P/E (x) 7.8 15.8 16.7

P/B (x) 1.1 1.2 1.1

P/Sales (X) 2.2 3.5 3.4

Div yield (%) 8.1 5.4 5.4



5,000

5,5006,0006,500

7,000


171921

23

TASI Shipping (RHS)

Source: Bloomberg



Abdullah Saad Al-Rahman Al-Rashed

5.3


TRANSPORT

National Shipping Also known asNSCSA

National Shipping Company of Saudi Arabia (NSCSA), established in

1979, provides marine transport services, primarily to the oil & gas and

chemical sectors. Additionally, NSCSA offers liner (general cargo), ship

management and container storage & repair services.

� Business brief: As of 31 December 2009, NSCSA had a fleet of 34 ships

(17 oil tankers, 13 chemical tankers and 4 general cargos). The company is

likely to add up to 16 chemical carriers to its existing fleet during 2010–

2011. NSCSA operates its chemical tankers through its 80% subsidiary,

National Chemical Carriers (NCC). The company is expected to have a total

of about 50 VLCCs and chemical tankers by 2011. Along with transportation,

the company offers ship management services for its own vessels through its

wholly owned subsidiary, Mideast Ship Management.

� Financials: In 1Q10, NSCSA’s sales increased 9.2% YoY to SR512mn. The

company’s operating profit rose 21.7% to reach SR114mn, while net income

declined 13.7% during the same period. Sales improved due to the addition

of new fleet during 2009, while net income declined as the 1Q09 profit

included a capital gain of SR30mn.

� Recent developments: Due to the delay in delivery of chemical carriers,

NSCSA on 19 May 2010 decided to cancel the construction of two new

chemical carrier contracts awarded to SLS in 2006. The company has leased

one of its VLCCs to RWE AG in Germany for a total consideration of

SAR151mn for a period of three years.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 634 1,188 638 204 9.8 0.3

Net Income SRmn 423 750 369 130 (13.7) (6.5)

Assets SRmn 7,797 9,819 10,339 10,443 1.5 15.2

Equity SRmn 4,660 5,091 4,988 5,119 7.4 3.5

Total Debt SRmn 2,432 4,007 4,763 4,707 8.1 39.9

Cash & Equiv SRmn 851 1,059 762 797 (31.7) (5.4)

EBITDA Mgn % 37.2 45.8 38.2 39.8 - -

Net Mgn % 24.8 28.9 22.1 25.4 - -

ROE % 11.0 15.4 7.3 10.3 - -

ROA % 6.1 8.5 3.7 1.3 - -

Div Payout % 67.6 63.8 85.5 N/A - -

EPS SR 1.5 2.4 1.2 0.4 (14.6) (11.1)

BVPS SR 14.8 16.2 15.8 16.3 7.4 3.5


172

JUNE 2010 SAUDI PUBLIC TRANSPORTATION COMPANY

Not Covered



Stock details





Absolute (4) (7) (17)

Market (6) (5) (3)

Sector (7) (6) (10)


3M 9.1 2.4

12M 12.5 3.3

Raw Beta 6m 2yr

0.36 0.69


Bloomberg code SAPTCO AB

Website www.saptco.com.sa



Free float 83.63

Valuation multiples

08 09 TTM

P/E (x) 32.0 30.1 29.7

P/B (x) 0.7 0.7 0.7

P/Sales (X) 1.3 1.3 1.3

Div yield (%) 6.5 N/A N/A



5,000

5,500

6,000

6,500

7,000


6

7

8

9

10

TASI SAPTCO (RHS)

Source: Bloomberg




TRANSPORT

SAPTCOSaudi Public Transportation Company (SAPTCO) provides bus transport

services for domestic and international travel to neighboring countries

such as Egypt, Syria, Jordan, Kuwait, Qatar, UAE, Bahrain, Yeman, Sudan

and Lebanon. The company, headquartered in Riyadh, has about 161

local and international agents.

� Business brief: SAPTCO has a fleet of around 3,000 buses. Its operations

include nearly 600 daily scheduled trips that connect 600 cities, towns and

villages across the Kingdom. The company provides intra-city and inter-city

transport services across Saudi Arabia, besides international transport

services to 10 neighboring countries. The company provides contract and

charter transportation services to schools, colleges and other groups.

SAPTCO also offers VIP services on select routes and special transport

services to Mecca and Medina during the Hajj and Umrah seasons.

Additionally, the company provides advertising space on its buses.

� Financials: Despite revenues contracting slightly in 2009, earnings

increased to SR29mn from SR24mn in 2008. So far in 2010, revenues

decreased 5.8% YoY from SR145.4mn in 1Q09 to SR136.9mn in 1Q10.

However, the company reported EBITDA of SR27.6mn, registering a YoY

increase of 38.7% in 1Q10.

� Recent developments: SAPTCO has signed a strategic cooperation

agreement with the French transportation company, Regie Autonome des

Transports Parisiens, for the operation and maintenance of tram and metro

networks in the Kingdom of Saudi Arabia.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 189 180 158 28 38.7 (8.4)

Net Income SRmn 101 30 32 (9) (5.1) (43.7)

Assets SRmn 1,909 1,788 1,816 1,801 1.7 (2.5)

Equity SRmn 1,488 1,414 1,387 1,385 (1.2) (3.5)

Total Debt SRmn 114 63 108 90 61.5 (2.7)

Cash & Equiv SRmn 668 410 311 261 (30.9) (31.8)

EBITDA Mgn % 25.8 23.5 21.1 20.1 - -

Net Mgn % 13.8 3.9 4.2 (6.2) - -

ROE % 6.9 2.1 2.3 (2.5) - -

ROA % 5.5 1.6 1.8 (1.9) - -

Div Payout % 61.7 208.3 N/A N/A - -

EPS SR 0.8 0.2 0.3 (0.1) 14.3 (43.3)

BVPS SR 11.9 11.3 11.1 11.1 (1.2) (3.5)


173

JUNE 2010 MUBARRAD

Not Covered



Stock details





Absolute (19) (23) (38)

Market (6) (5) 3

Sector (7) (6) (10)


3M 9.4 2.5

12M 15.7 4.2

Raw Beta 6m 2yr

0.81 0.96


Bloomberg code SLTCO AB

Website www.mubarrad.com.sa



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) 24.8 53.4 N/M

P/B (x) 1.7 1.6 1.7

P/Sales (X) 5.7 5.3 5.5




5,000

5,500

6,000

6,500

7,000


15

20

25

30

TASI M ubarrad (RHS)

Source: Bloomberg



TRANSPORT

MubarradSaudi Transport and Investment Company (Mubarrad) is engaged in the

land transport business across Saudi Arabia and other Gulf Cooperation

Council (GCC) countries. Recently, Mubarrad also entered into

businesses such as the purchase and sale of land, and construction,

management and operation of buildings.

� Business brief: Mubarrad owns a fleet of more than 1,000 vehicles

(including truck heads, reefer trailers, reefer trucks, flat trucks for dry

transport, and trailers for bulk transport) for carrying all types of general and

industrial cargo. It also operates the Express Parcel Services throughout

Saudi Arabia. Furthermore, the company constructs, manages and leases

cold stores and trailers.

� Financials: Mubarrad’s top line declined in 1Q10 by 13.4% YoY to

SR10.1mn. In 1Q10, Mubarrad generated a net loss of SR8.9mn compared

to a net profit of SR0.4mn in 1Q09. The main reason behind the decline in

profitability was investment loss, which was SR9.2mn in 1Q10. However, the

company reported an EBITDA margin of 35.7% in 1Q10 compared to 28.6%

in 1Q09.


appointment of new board member Badr Al Shuhaili, replacing Yasser Al

Lehidan.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 15 15 15 4 7.9 2.1

Net Income SRmn 13 11 5 (9) N/M (37.9)

Assets SRmn 219 225 217 208 (6.0) (0.4)

Equity SRmn 188 166 169 163 (1.1) (5.3)

Total Debt SRmn 0 32 19 16 (44.4) N/M

Cash & Equiv SRmn 4 6 12 20 116.9 70.9

EBITDA Mgn % 31.9 31.7 29.8 35.7 - -

Net Mgn % 28.9 22.9 10.0 N/M - -

ROE % 7.7 6.3 3.1 (21.6) - -

ROA % 6.5 5.0 2.3 (4.2) - -


EPS SR 0.8 0.6 0.3 (0.5) N/M (37.8)

BVPS SR 10.5 9.2 9.4 9.0 (1.1) (5.4)


174

JUNE 2010 UNITED INTERNATIONAL

Not Covered



Stock details





Absolute (7) (15) (7)

Market (6) (5) 3

Sector (7) (6) (10)


3M 4.3 1.2

12M 7.7 2.1

Raw Beta 6m 2yr

0.38 0.87


Bloomberg code BUDGET AB

Website www.budgetsaudi.com



Free float 43.6

Valuation multiples

08 09 TTM

P/E (x) 11.5 11.2 10.9

P/B (x) 2.7 2.4 2.5

P/Sales (X) 2.0 2.0 2.0




5,0005,5006,0006,5007,000


TASI Budget Saudi (RHS)

Source: Bloomberg


Al Zahid Holding Group 39.5

Abdul Elah Abdullah MahmoodAli Zahid

14.2

Mohammed Abdullah Mahmood Zahid

9.2


TRANSPORT

United International Also known asBUDGET SAUDI,UniTrans, UITC

United International Transportation Co. (Budget Saudi) is the largest car

rental company in the MENA region. The company, a franchisee of

Budget International, operates more than 14,500 vehicles that include

luxury, 4x4, full size, intermediate, compact and economy cars.

� Business brief: Budget Saudi provides various services such as short term

and long term car rentals; chauffeur driven cars; CorpRate Program (a

corporate client-oriented service with preferential rates and value additions

such as faster reservations and flexible billing); and Budget Express (a

loyalty program for members). The company also provides Hajj & Umrah

services for visitors and pilgrims; Lodge and Drive (accommodation along

with car rental); Premier Limousine Service (chauffeur driven luxury

vehicles); and automotive maintenance (maintenance facilities including

satellite workshops). Budget Saudi is also engaged in the sales of used cars.

� Financials: Budget Saudi has displayed consistent performance with

revenues and net profit growing at a CAGR of 9.3% and 6.2%, respectively,

during 2005–2009. In 1Q10, revenues grew 4.6% to SR123.8mn from

SR118.4mn in 1Q09. Net profit margins were 18.2%; they improved 140

basis points compared to 1Q09.

� Recent developments: In September 2009, Budget Saudi signed an

agreement with Abdul Latif Jameel to purchase 5,000 Toyota cars during the

financial year 2010. For the fiscal year 2009, the company paid an annual

dividend of SR2.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 251 320 332 84 5.4 15.1

Net Income SRmn 78 84 86 23 13.3 4.7

Assets SRmn 683 729 761 781 6.9 5.5

Equity SRmn 303 356 406 392 14.2 15.8

Total Debt SRmn 241 247 224 229 4.8 (3.5)

Cash & Equiv SRmn 16 10 28 22 58.6 32.9

EBITDA Mgn % 63.2 67.7 68.6 68.1 - -

Net Mgn % 19.7 17.8 17.7 18.2 - -

ROE % 28.1 25.5 22.5 22.6 - -

ROA % 12.7 11.9 11.5 2.9 - -

Div Payout % 35.5 38.2 42.6 N/A - -

EPS SR 4.2 4.6 4.7 1.2 12.8 5.3

BVPS SR 16.6 19.4 22.2 21.4 14.1 15.8


175


Media & Publishing


4070 Tihama 179

4210 SRMG 180

4270 SPPC 181


Media & Publishing

Outlook bleak for conventional print mediaIn 2009, the Media and Publishing sector’s performance deteriorated as the global

downturn resulted in companies curtailing their spending on advertisement. While

print media still accounts for the lion’s share of advertisement revenue, the

increasing inclination of companies to opt for less expensive web advertisements

limits the print media’s prospects. Although a pick up in advertising activity as the

global economy recovers should aid growth, increased competition from the

Internet and stringent government regulations dampen the outlook.

KSA’s media sector is significantly larger than its GCC peers on the revenue front,

despite declining over 2007-09. The sector traded at a higher P/E multiple despite

lower ROE as compared to its regional peers (Exhibit 2).

Exhibit 128: Revenues of GCC print/media


Exhibit 129: Comparison of ROE and P/B of GCC

companies, 2009 (%)

0

100

200

300

400

500

2007 2008 2009

KSA Kuwait Qatar Bahrain

0

5

10

15

20

0 15 30 45 60 75

P/E (x)

RO

E (

%)

KSA Kuwait Qatar Bahrain

Source: Bloomberg, NCBC Research Revenue of Qatar is USD 4.76mn in 2009

Source: Bloomberg, NCBC Research Size of the bubble represents market cap. as on 31 March 2010.

The Saudi media and publishing sector comprises the following three listed

companies. SRMG has the highest weight in the index. The sector overall comprises

less than 0.5% of the TASI.

In 2009, the sector’s overall revenue declined by 26.2% YoY to SR1.4bn. SRMG’s

revenue fell the steepest, contracting 27.8% YoY to SR969mn. This, coupled with

higher expenses, led to the company’s net income declining 79.8% YoY to SR45mn.

The company’s margins fell significantly from 32.9% in 2007 to just 4.7% in 2009.

SPPC and Tihama, also reported steep decline in net income in 2009, resulting in a

71.5% decline in the sector’s net income to SR116mn

Companies shifting to less

expensive modes of

advertisement due to the

global downturn decreases

print media revenue



Dec 2009Net margin(%), 2009

Avg. RoE(%),

2009*

Saudi Research And Marketing Group (SRMG) 0.19 4.7 3.9

Saudi Printing & Packaging Co. (SPPC) 0.08 18.2 8.4

Tihama Advertising & Public Relations Co. (Tihama) 0.03 4.8 2.4

Source: Bloomberg, Tadawul, Gulfbase, NCBC Research * start periods may differ based on availability of data

177


MEDIA & PUBLISHING


(SR mn)


(%)

0

500

1000

1500

2000

2500

2007 2008 2009

SRMG SPPC Tihama*

0

10

20

30

40

2007 2008 2009

SRMG SPPC Tihama*

Source: Bloomberg, Tadawul, NCBC Research Note: Tihama’s revenues are adjusted for calendar year ending. The company’s financial year end is 31 March.

Source: Bloomberg, Tadawul, NCBC Research Note: Tihama’s margins are adjusted for calendar year ending. The company’s financial year end is 31 March.

In 2009, the sector’s average PE and P/BV multiples increased to 30.5x and 1.6x

from 14.6x and 1.4x, respectively, in 2008, mainly due to sharp declines in

profitability. The sector’s ROE declined to 5.0% in 2009 from 17.2% in 2008.


(%)


(%)

SPPC

Tihama

SRMG

10

15

20

25

0.5 1.0 1.5 2.0

P/B (x)

RO

E (

%)

SRMG

SPPC

Tihama

0

2

4

6

8

10

12

0.5 1.0 1.5 2.0 2.5

P/B (x)

RO

E (

%)

Source: Bloomberg, Tadawul, Reuters, NCBC Research Size of the bubble represents market cap. as on 31 Dec 2009

Source: Bloomberg, Tadawul, Reuters, NCBC Research Size of the bubble represents market cap. as on 31 Dec 2009

Trading turnover for the sector averaged SR45.6mn per day in 2009 and has so far

averaged only SR6.9mn per day in 2010. Tihama is the most traded stock in the

sector with average daily turnover of SR4.5mn to date in 2010.

178

JUNE 2010 TIHAMA ADVERTISING & PUBLIC RELATIONS CO.

Not Covered



Stock details





Absolute (1) 2 24

Market (6) (5) 3

Sector (14) (21) (36)


3M 6.5 1.7

12M 13.9 3.7

Raw Beta 6m 3yr

0.32 0.98


Bloomberg code TAPRCO AB

Website www.tihama.com



Free float 100.0

Valuation multiples

08 09 10

P/E (x) 12.9 12.0 48.3

P/B (x) 1.6 1.5 1.6

P/Sales (x) 2.6 2.5 3.1




5,000

5,500

6,000

6,500

7,000


25

30

35

40

TASI Tihama (RHS)

Source: Bloomberg


Badr Fahd Ibrahim Al Dawood 17.7


MEDIA AND PUBLISHING

TihamaTihama Advertising & Public Relations Co., established in 1983, operates

Egyptian Satellite Channel, Al-Hayat newspaper and Kolness magazine.

Tihama operates through its subsidiaries – Tihama Distribution

Company, United Journalists, Star Media Co., Saudi Signs Supply Co.,

Intermarkets Riyadh, and Ad Art Medyan.

� Business brief: Tihama has three business segments – media, public

relations (PR), and other services. The media segment comprises

newspapers, magazines, outdoor advertising and a satellite television

channel. The PR segment includes press files and promotional information

services. Other services segment includes video production and distribution

of Arabic and American films in the Middle East. The company also operates

in Cairo, Dubai, London, and Paris.

� Financials: Tihama’s revenues decreased 17.0% YoY in FY2010. Higher

costs and reduced income from associates drove down net income 75% YoY

to SR7.5mn in 2010, resulting in a net margin of 6.4% from 21% in 2009.

� Recent developments: In December 2009, Tihama’s BOD approved the

establishment of a real estate investment company and conversion of some

of its operations in the fields of road banners, libraries and public relations to

limited liability companies.

Company financials*

2007 2008 2009 2010

YoY

(%)

CAGR (%)

(07-10)


EBITDA SRmn 17 22 21 (1) N/M N/M

Net Income SRmn 19 28 30 7 (75.1) (27.0)

Assets SRmn 298 335 339 324 (4.4) 2.8

Equity SRmn 211 226 239 227 (5.0) 2.4

Total Debt SRmn 3 1 0 1 NM (29.2)

Cash & Equiv SRmn 36 85 84 46 (45.2) 8.4

EBITDA Mgn % 14.2 16.0 14.7 (1.0) - -

Net Mgn % 16.1 20.5 21.2 6.4 - -

ROE % 9.5 12.8 13.0 3.2 - -

ROA % 6.7 8.8 8.9 2.3 - -

Div Payout % 58.6 53.5 59.7 - - -

EPS SR 1.28 1.87 2.01 0.5 (75.1) (26.9)

BVPS SR 14.1 15.0 15.9 15.1 (5.0) 2.5

Source: Tadawul, Zawya, Company, NCBC Research * Financial Year End March 31

179

JUNE 2010 SAUDI RESEARCH

Not Covered



Stock details





Absolute (19) (27) (41)

Market (6) (5) 3

Sector (14) (21) (36)


3M 1.8 0.5

12M 1.7 0.5

Raw Beta 6m 3yr

1.14 0.86


Bloomberg code RESEARCH AB

Website www.srmg.com



Free float 60.4

Valuation multiples

08 09 TTM

P/E (x) 6.6 32.8 37.5

P/B (x) 1.1 1.2 1.2

P/Sales (x) 1.1 1.5 1.5




5,000

5,500

6,000

6,500

7,000


20

25

30

35

TASI SRM G (RHS)

Source: Bloomberg


Kingdom Holding Company 29.9

HH Prince Faisal Ahmad Bin Salman Al Saud

6.8

Mohammed Hussain Ali Al Amudy

5.6

GOSI 5.2



SRMGSaudi Research and Marketing Group (SRMG), established in 1988, is a

leading publishing group based in Riyadh. SRMG’s subsidiaries include

Saudi Research and Publishing Company, Saudi Distribution Company,

Saudi Specialized Publishing Company (SSPC), and Al Khaleejiah

Advertising and Public Relations Company.

� Business brief: SRMG is engaged in four key activities – publishing,

advertising, printing, and distribution. The publishing segment is engaged in

research and marketing, while the advertising segment mainly deals with

production and marketing of audiovisual media. The printing segment prints

newspapers, magazines, books and journals in various languages.

� Financials: SRMG’s revenues decreased 1.5% YoY during 1Q10. EBITDA

margin also contracted from 14.2% in 1Q09 to 10.6% in 1Q10 mainly due to

an increase in SG&A expenses. In addition, other income declined

significantly. Consequently, net income fell 27.8% from SR20.5mn in 1Q09

to SR14.8mn in 1Q10.

� Recent developments: In May 2010, SRMG entered into an agreement

with Egypt's Al-Ahram Establishment to cooperate in the fields of printing,

publishing, digital publishing, media activities, distribution, and organizing

conferences. SRMG announced a cash dividend of SR0.50 per share for the

year 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Revenues SRmn 1,113 1,342 969 256 (1.5) (6.7)

EBITDA SRmn 285 306 109 27 (26.4) (38.1)

Net Income SRmn 367 224 45 15 (27.8) (64.8)

Assets SRmn 2,187 2,259 2,153 2,131 (8.0) (0.8)

Equity SRmn 1,401 1,376 1,264 1,271 3.1 (5.0)

Total Debt SRmn 114 210 281 257 (11.4) 56.8

Cash & Equiv SRmn 461 141 66 46 (81.0) (62.0)

EBITDA Mgn % 25.6 22.8 11.3 10.6 - -

Net Mgn % 32.9 16.7 4.7 5.8 - -

ROE % 28.2 16.2 3.4 4.7 - -

ROA % 18.5 10.1 2.1 2.8 - -

Div Payout % 65.5 71.2 87.7 - - -

EPS SR 4.6 2.8 0.6 0.2 (30.8) (64.7)

BVPS SR 17.5 17.2 15.8 15.9 3.1 (5.0)


180

JUNE 2010 SAUDI PRINTING AND PACKAGING COMPANY

Not Covered



Stock details





Absolute (10) (17) (28)

Market (6) (5) 3

Sector (14) (21) (36)


3M 1.0 0.3

12M 1.8 0.5

Raw Beta 6m 3yr

0.37 0.78


Bloomberg code SPPC AB

Website www.sppc.com.sa



Free float 47.5

Valuation multiples

08 09 TTM

P/E (x) 5.2 12.1 13.9

P/B (x) 1.0 1.0 1.0

P/Sales (x) 1.7 2.2 2.2

Div yield (%) 11.5 NA NA



5,0005,5006,000

6,5007,000


TASI SPPC (RHS)

Source: Bloomberg


Saudi Research and MarketingGroup

42.0

Intellectual Holding Company for Advertising and Publicity

10.5

Saudi Research and Publishing Company

7.0

Scientific Works Holding Company

7.0



SPPCSaudi Printing and Packaging Company (SPPC), formerly Madina Printing

and Publishing Company, was established in 1963. A subsidiary of Saudi

Research and Marketing Group, SPPC is engaged in various commercial

and package printing and production activities. The company has five

printing houses and a production area of 1.0mn sq m.

� Business brief: SPPC offers integrated print production solutions from pre-

press designing and printing to post-printing binding and packaging. The

company has a capacity of 5,000 magazine copies/hour; 150,000 newspaper

copies/hour; book printing capacity of 6.5 copies/hour; and 10 carton

sheets/hour. SPPC also has exclusive printing rights for its parent company

and Saudi Research and Publishing Company. SPPC’s publications include

Sayidaty, Arrajol, Al Eqtisadiah, Almajalla, and Arab News.

� Financials: SPPC’s revenues rose 2.2% YoY to SR102.6mn in 1Q10.

However, EBITDA margins declined by 560 basis points to 14.7% in the

same period, primarily due to increase in operating expenses. The company’s

net income decreased 54.3% from SR15.7mn in 1Q09 to SR7.2mn in 1Q10.

� Recent developments: In November 2009, SPCC established Taiba Printing

and Publication Company, a state-of-the-art press in Madina.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 118 126 57 15 (25.9) (30.4)

Net Income SRmn 137 151 65 7 (54.3) (31.2)

Assets SRmn 858 1,068 1,021 993 (6.2) 9.1

Equity SRmn 701 792 765 772 7.6 4.4


Cash & Equiv SRmn 22 16 19 13 153.9 (8.7)

EBITDA Mgn % 31.8 27.0 16.0 14.7 - -

Net Mgn % 37.1 32.4 18.2 7.0 - -

ROE % 20.8 20.2 8.4 3.7 - -

ROA % 16.4 15.6 6.2 2.8 - -

Div Payout % 43.7 59.8 - - - -

EPS SR 2.3 2.5 1.1 0.1 (53.8) (31.3)

BVPS SR 11.7 13.2 12.8 12.9 7.6 4.4


181


Hotels & Tourism


4010 Saudi Hotels 185

4170 Tourism Enterprises 186


Hotel & Tourism

Conservative tourismThe year 2009 had been a challenging one for Saudi Arabia’s Hotel and Tourism

sector, as the global downturn impacted tourist inflow as well as revenue generated

per tourist owing to falling income levels. Tourist arrivals declined by 41% in the

first half of 2009, but a revival in the second half helped the Kingdom keep 12mn

tourists intact in 2009. Occupancy rates declined to 41.4% in 2009 from 50.6% in

2008. RevPAR (revenue per available room) also fell 2.8% YoY to SR300.6 in 2009.

The sector’s revenue grew a reported 142%, from SR308mn in 2008 to SR746mn

in 2009, however, we note that the increase was driven entirely by real estate

activity at SHARCO, which added SR486mn to revenues in 2009. ROE stood at

24.2% as against the GCC average of 10.9% and the sector traded at a P/E

multiple of 6.7x compared to the GCC’s 9.5x.

Exhibit 135: Revenues of GCC hotel and tourism


Exhibit 136: Comparison of ROE and P/B of GCC

companies, 2009 (%)

0

100

200

300

400

500

600

2007 2008 2009

Kuwait Oman Bahrain UAE KSA

0

10

20

30

5 7 9 11 13

P/E (x)

RO

E (

%)

UAE KSA Kuwait Bahrain Oman


The KSA hotel & tourism sector comprises the following two companies. As of 31

Dec 2009, SHARCO, with a market cap of SR2.1bn was the largest company in the

sector.

In 2009, SHARCO’s reported revenue grew 150% YoY to SR733.3mn and net

income 209% YoY to SR380.6mn. However, the core hotel revenue declined 18.7%

YoY to SR211mn as a result of lower tourist inflow and lower RevPAR. The

difference was made up by real estate activity, which added SR485.9mn to

SHARCO’s revenue during the year. TECO’s revenue declined 5.1% YoY to

SR13.9mn and the company reported a loss of SR3.4mn in 2009 as compared to a

profit of SR0.2mn in 2008

Developing tourism has

been a part of the Saudi

government’s long-term

objective of diversifying its

economy away from oil


% weight in Indexas on Dec 2009

Net Margin(%), 2009

Avg. RoE(%), 2009

Saudi Hotels& Resort Areas Co (SHARCO) 0.18 51.9 25.6

Tourism Enterprises Co. (TECO) 0.03 (24.5) (4.8)

Source: Bloomberg, Tadawul, Gulfbase, NCBC Research

183


HOTEL & TOURISM


(SR mn)


(%)

0

100

200

300

400

500

600

700

800

2007 2008 2009

SHARCO TECO

-35

-10

15

40

65

2007 2008 2009

SHARCO TECO


In 2009, Saudi Hotels’ ROE of 25.6% and P/B multiple of 1.3x compared with

TECO’s negative ROE of 4.8% and a higher P/B multiple of 5.1x. Here as well,

SHARCO’s figures for 2009 are somewhat skewed by its real estate activity in 2009.



SHARCO

TECO

(4)

0

4

8

12

16

0 1 2 3

PB (x)

RO

E (

%)

SHARCO

TECO-10

-5

0

5

10

15

20

25

30

35

40

0 2 4 6

PB (x)

RO

E (

%)


TECO, however, topped the average trading value chart. TECO’s price volatility is

also higher compared to SHARCO.

Exhibit 142: Avg. daily turnover, Jan09 – Mar10 (SR mn)

Exhibit 143: Share price movement, Jan09 – Mar10 Prices rebased to 100 on 1st Jan-09

13

49

0

10

20

30

40

50

60

SHARCO TECO

0

50

100

150

200

250

300

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10

TECO SHARCO


184

JUNE 2010 SAUDI HOTELS AND RESORTS

Not Covered



Stock details






Market (6) (5) 3

Sector (6) (13) (19)


3M 2.4 0.6

12M 7.7 2.1

Raw Beta 6m 3yr

0.60 0.81


Bloomberg code SHARCO AB

Website www.saudi-hotels.com.sa



Free float 52.68

Valuation multiples

08 09 TTM

P/E (x) 15.7 5.1 5.0

P/B (x) 1.4 1.2 1.2

P/Sales (x) 6.6 2.7 2.6


DPS 1.2 1.5 N/A



5,0005,500

6,000

6,500

7,000


TASI Hotels (RHS)

Source: Bloomberg



22.4

Public Investment fund 16.6


6.5


HOTELS AND TOURISM

Saudi Hotels Also known as

SHARCO

Saudi Hotels & Resorts Areas Co. (SHARCO), founded in 1979, is based in

Riyadh, Saudi Arabia. The company owns and operates many resorts as

well as hotels, independently and through its subsidiaries Al Khaleej

Resorts Co. Ltd., Riyadh Hotels Co. Ltd., Makkah Hotels Co. Ltd.,

Annakheel Village Resort Co. Ltd., Tabuk Hotels Co. Ltd., and Al Madina

Hotels Co. Ltd.

� Business brief: SHARCO engages in activities such as construction,

ownership, investment and management of hotels, real estate, resorts and

entertainment centers, travel & tourism. The company reports revenues

under the following business lines – hospitality, real estate, resorts, and

entertainment.

� Financials: In 2Q 2009, the company finalized the sale of land in Gulf

Village in the Eastern region for SR486mn, recording a gain of nearly

SR300mn. So far in 2010, revenue increased 3.7% YoY in 1Q10 and EBITDA

margin improved 385 basis points in 1Q10 to 53.5%. Net income grew

10.3% to SR31.1mn in 1Q10.

� Recent developments: On 12 April 2010, SHARCO announced it had

purchased land for SR10.2mn to build a residential complex in Riyadh. In the

same month, the company appointed Mr. Bader Bin Abdullah Mohammad Al

Issa as a member of the Board of Directors. On 22 February 2010, SHARCO

announced a cash dividend of SR0.9 for the second half of 2009, taking the

full-year dividend to SR1.50.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 123 141 398 37 11.8 80.3

Net Income SRmn 78 123 381 31 10.3 121.4

Assets SRmn 1,535 1,953 1,839 1,894 (6.8) 9.5

Equity SRmn 820 1,348 1,625 1,668 29.3 40.7

Total Debt SRmn 58 53 50 48 (8.6) (6.9)

Cash & Equiv SRmn 39 26 33 115 (14.2) (8.9)

EBITDA Mgn % 46.4 48.1 55.0 53.5 - -

Net Mgn % 29.4 41.9 52.5 45.1 - -

ROE % 9.8 11.3 25.6 7.6 - -

ROA % 5.2 7.1 20.1 6.7 - -

Div Payout % 64.5 67.4 27.2 N/A - -

EPS SR 1.6 1.8 5.5 0.5 12.2 88.5

BVPS SR 16.4 19.5 23.5 24.2 29.3 19.8


185

JUNE 2010 TOURISM ENTERPRISE CO

Not Covered



Stock details





Absolute (14) (20) (40)

Market (6) (5) 3

Sector (6) (13) (19)


3M 17.4 4.6

12M 29.2 7.8

Raw Beta 6m 3yr

0.84 0.94


Bloomberg code TECO AB

Website www.palmbeach-resort.com



Free float 100.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 3.5 3.6 3.6

P/Sales (x) 17.2 18.2 20.3

Div yield (%) N/M N/M N/M

DPS N/M N/M N/M



5,0005,500

6,000

6,500

7,000


30

40

50

TASI Shams (RHS)

Source: Bloomberg



HOTELS AND TOURISM

Tourism Enterprises Also known as

Shams

Tourism Enterprises Co. was established in 1991 to construct and

manage tourist projects. Headquartered in Dammam, Saudi Arabia,

TECO’s principal activity is ownership and management of the Palm

Beach Resort®. The company offers visitors sports and recreational

facilities, conference facilities, cabanas and suites.

� Business brief: The Palm Beach Resort stretches up to 1,300 meters with

165 chalets, more than 100 suites and cabanas overlooking the Arabian Gulf.

The sports and the recreational facilities include a ladies sports club with

swimming pool; men's sports and fitness center; football, tennis, basketball

and squash courts; a sauna and steam bath; and catering services such as

coffee shops, a swimming pool for children, gardens for families, and a 24-

hour security service.

� Financials: In 1Q10, the company’s revenue declined 35% YoY. The

company reported a net profit of SR0.04mn in 1Q10 compared to a profit of

SR0.1mn in 1Q09.

� Recent developments: In November 2009, Shams announced the

appointment of Dr. Adel Bin Abdulaziz Boudy as the company’s Chairman.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


EBITDA SRmn 5 3 1 1 (0.6) (57.0)

Net Income SRmn 2 0 (3) 0 (64.5) NM

Assets SRmn 79 78 74 75 (3.0) (3.4)

Equity SRmn 73 73 69 69 (4.8) (2.5)


Cash & Equiv SRmn 3 4 5 14 298.7 23.2

EBITDA Mgn % 36.0 22.7 6.3 42.3 - -

Net Mgn % 16.0 1.2 (24.5) 1.5 - -

ROE % 2.9 0.2 (4.8) 0.2 - -

ROA % 2.5 0.2 (4.5) 0.2 - -

Div Payout % - - - - - -

EPS SR 0.2 0.0 (0.3) 0.0 NM NM

BVPS SR 7.2 7.2 6.8 6.8 (4.7) (2.5)


186


Insurance


8010 Tawuniya 190

8020 Malath Cooperative 191

8030 MEDGULF 192

8040 Allianz Saudi Fransi 193

8050 Saudi IAIC 194

8060 Saudi United 195

8070 Arabian Shield 196

8080 SABB Takaful 197

8090 Sanad Insurance 198

8100 Saudi Arabian Cooperative 199

8110 Saudi Indian 200

8120 Gulf Union Cooperative 201

8130 AlAhli Takaful 202

8140 Al-Ahlia Insurance 203

8150 Allied Co-operative 204

8160 Arabia Insurance 205

8170 Trade Union Cooperative 206

8180 Al Sagr Company 207

8190 United Cooperative 208

8200 Saudi Reinsurance 209

8210 BUPA Arabia 210

8220 Weqaya Takaful 211

8230 Al Rajhi Cooperative 212

8240 ACE Arabia 213

8250 AXA Cooperative 214

8260 Gulf General 215

8270 Buruj Cooperative 216

8280 Al Alamiya 217

8290 Solidarity Saudi 218

8300 Wataniya Insurance 219

8310 Amana Cooperative 220


Insurance

Favorable demographics driving growth The Insurance sector in KSA has seen a sustained growth in activity since 2005.

The gross written premiums (GWP) grew at a CAGR of 28.4% in 2005-08 to

SR10.9bn in 2008, and Business Monitor International (BMI) estimates it to reach

SR17.5bn for 2009. Growth in this sector is largely being driven by an

underpenetrated market, favorable demographics, and a positive shift in regulatory

patterns. Low penetration in terms of premium to GDP ratio of 0.67% as compared

to 2% for the UAE highlights the sector’s significant growth potential. BMI expects

GWP to expand at a CAGR of 25.6% to SR42.9bn in 2014. Furthermore, the Saudi

government plans to make health insurance, having 40% market share, mandatory

for private sector employees, in line with the move initiated for expatriates in 2006.

KSA’s Insurance sector revenues tripled from SR1.8bn in 2008 to SR5.9bn in 2009.

On valuations, KSA trades at a higher P/B multiple of 3.3x compared to the GCC

average of 2.0x, moreover ROE of KSA players is 4.4% compared to the GCC

average of 8.0%, reflecting the largely start-up nature of the sector in the

Kingdom.

Exhibit 144: Revenues of GCC insurance companies,

2007–09(USD mn)


companies, 2009 (%)

0

200

400

600

800

1,000

1,200

1,400

1,600

2007 2008 2009

KSA Kuwait Qatar Bahrain UAE Oman

0

4

8

12

16

20

24

0 1 2 3 4

P/B(x)

RO

E (

%)

KSA Kuwait Qatar Bahrain UAE Oman

Source: Bloomberg, Tadawul, NCBC Research The list of companies taken is not exhaustive.

Source: Bloomberg, Tadawul, NCBC Research Note: P/B multiple is considered as most of the KSA companies posted losses and P/E ratio was not meaningful to evaluate. The list of companies taken is not exhaustive. Size of the bubble represents market cap. as on 31 Dec 2009.

Tawuniya continued to hold a dominant position in KSA’s Insurance sector with a

0.3% weight by market capitalization. The company also ranks highest in terms of

NPM and ROE. Many companies in the sector are still in start up mode and thus

suffering low profitability or losses. Despite this, trading volumes for the Insurance

sector is very high as many of the smaller and loss making companies consistently

have high turnover, due we believe to the speculative nature of this portion of the

market.

Low insurance penetration

and favorable

demographics indicate

strong growth potential

188


INSURANCE

The high number of start-ups resulted in the sector recording a loss in 2009.

Tawuniya’s revenue grew 35.9% YoY and its net margin increased to 13.6% versus

losses in 2008. Med Gulf and Bupa Arabia showed high revenue of SR1.3bn and

SR1.2bn respectively in 2009 from no revenue generated in 2008, as the

companies became fully operational.



0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2007 2008 2009

Tawuniya Medgulf Bupa Arabia Others

-6

-1

4

9

14

19

24

2007 2008 2009

Tawuniya Medgulf Bupa Arabia

Source: Bloomberg, Tadawul, NCBC Research The list of companies is not exhaustive

Source: Bloomberg, Tadawul, NCBC Research; Net margins for Medgulf and Bupa Arabia are calculated on operating income, since these companies did not report revenues in 2007 and 2008.; The list of companies is not exhaustive


Company

% weight inIndex as on Dec

2009

Net margin(%)

2009

Avg. ROE(%)

2009*

The Company for Co-operative Insurance (Tawuniya) 0.3 13.7 23.8

Malath Co-operative Insurance and Reinsurance Co. (Malath) 0.1 4.3 3.0

The Mediterranean & Gulf Insurance and Reinsurance Co. 0.2 10.7 17.1

Saudi Fransi Co-operative Insurance Co. (Allianz SF) 0.1 (15.5) (41.1)

Islamic Arab Insurance Co. (SALAMA) 0.0 5.5 17.1

Saudi United Cooperative Insurance Co. (Walaa) 0.0 (50.2) (15.0)

Arabian Shield Co-operative Insurance Co. 0.0 4.4 4.0

SABB Takaful 0.1 (23.5) (8.7)

Sanad Insurance and Reinsurance Co-operative Co. 0.0 (17.1) (9.3)

The Saudi Arabian Cooperative Insurance Co. (SAICO) 0.1 (60.3) (9.8)

Saudi Indian Company for Cooperative Insurance 0.0 (63.3) (40.2)

Gulf Union Co-operative Insurance Co. 0.1 N/M (1.0)

Alahli Takaful Company (ATC) 0.1 (10.0) (6.5)

Al-Ahlia Insurance Co. 0.1 N/M (46.2)

Allied Co-operative insurance group (ACIG) 0.0 N/M (40.2)

Arabia Insurance Co-operative Co. (AICC) 0.0 N/M (7.2)

Trade Union Co-operative Insurance 0.1 0.0 0.0

Al-Sagr Cooperative Insurance Co. 0.1 0.9 0.1

United Co-operative Assurance (UCA) 0.1 N/M (7.8)

Saudi Re for Co-operative Reinsurance Co. 0.1 N/M (6.1)

Bupa Arabia for Co-operative Insurance Co. 0.1 4.6 13.5

Weqaya Takaful insurance & reinsurance Co. (Weqaya) 0.1 N/M (6.1)

Al-Rajhi Company for Cooperative Insurance (ARCCI) 0.1 N/M (16.7)

ACE Arabia Cooperative Insurance Co. (ACE) 0.0 N/M (10.6)

AXA Cooperative Insurance Co. (AXA-Cooperative) 0.1 2.1 0.1

Al Alamiya for Cooperative Insurance Company 0.1 N/A N/A

189

JUNE 2010 TAWUNIYA

Not Covered



Stock details





Absolute (7) 5 104

Market (6) (5) 3

Sector (16) (18) (18)


3M 22.8 6.1

12M 22.2 5.9

Raw Beta 6m 3yr

1.31 1.10


Bloomberg code TAWUNIYA AB

Website www.tawuniya.com.sa



Free float 53.37

Valuation multiples

08 09 TTM

P/E (x) N/M 14.0 11.0

P/B (x) 4.0 2.9 3.1

P/S(x) 2.6 1.9 1.7




5,000

5,500

6,000

6,500

7,000


50

70

90

110

TASI Tawuniya (RHS)

Source: Bloomberg




22.8


INSURANCE

TawuniyaThe Company for Cooperative Insurance (NCCI), widely known as

Tawuniya, was established in Riyadh in 1986. Tawuniya provides Islamic

as well as conventional general and family insurance services. The

company’s subsidiaries include United Insurance Company and

Cooperative Real Estate Investment Company.

� Business brief: Tawuniya’s product portfolio falls under two broad

categories: retail and corporate. The retail segment includes motor vehicle,

medical, fire & property and miscellaneous & accident insurance, while the

corporate segment offers motor vehicle, medical, fire & property, casualty,

engineering, marine, aviation and energy insurance services. To aid its

insurance services, NCCI has entered into agreements with international re-

insurers such as Munich Re.

� Financials: In 1Q10, Tawuniya’s net premium earned increased 48.7% YoY

to SR651mn from SR438mn in 1Q09. Furthermore, reinsurance commission

grew 30.8% YoY. Consequently, total revenues rose by 49.3% YoY in 1Q10

to SR689mn. Higher top-line growth enabled the company to grow its profits

four times in 1Q10 to SR106mn over 1Q09, despite a 57.0% YoY increase in

net claims caused by floods in Jeddah in November 2009.

� Recent developments: In April 2010, S&P affirmed its ‘A’ rating for

Tawuniya on the basis of its strong underwriting performance and lead

competitive position. In January 2010, Tawuniya declared estimated losses

of approximately SR30mn from the Jeddah floods. In February 2010,

Tawuniya announced a dividend of SR4 per share for financial year 2009, a

100% increase over 2008.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn 1,095 1,487 2,064 651 48.7 37.3

Total Revenues SRmn 1,564 1,601 2,175 689 49.3 17.9

Net Income SRmn 525 (54) 296 106 307.4 (24.9)

Assets SRmn 5,308 5,599 7,227 7,256 0.4 16.7

Equity SRmn 1,847 1,048 1,416 1,341 (5.3) (12.4)

Investments SRmn 1,863 1,081 1,407 1,413 37.8 (13.1)

Technical Reserves SRmn 2,392 2,783 1,838 1,903 (22.1) (12.3)

Combined Ratio % 101.0 96.0 88.4 89.6 - -

Net Mgn % 33.6 (3.3) 13.6 15.4 - -

ROE % 29.1 (3.7) 24.1 30.7 - -

ROA % 11.0 (1.0) 4.6 5.8 - -

Div Payout % 95.2 N/M 67.5 - - -

EPS SR 10.5 (1.1) 5.9 2.1 307.7 N/A

BVPS SR 36.9 21.0 28.3 26.8 (5.3) N/A


190

JUNE 2010 MALATH COOPERATIVE

Not Covered



Stock details





Absolute (23) (31) (50)

Market (6) (5) 3

Sector (16) (18) (18)


3M 8.8 2.3

12M 16.9 4.5

Raw Beta 6m 3yr

1.27 0.70


Bloomberg code MALATH AB

Website www.malath.com.sa



Free float 47.48

Valuation multiples

08 09 TTM

P/E (x) N/M 67.7 50.9

P/B (x) 2.1 1.9 1.9

P/S(x) 11.1 3.0 2.2




5,000

5,5006,000

6,500

7,000


TASI M alath Insurance (RHS)

Source: Bloomberg



INSURANCE

MalathCooperative Also known as

Malath

Malath Cooperative Insurance and Reinsurance Company (Malath) was

established in 2007. Headquartered in Riyadh, Malath was the second

insurance company (after Tawuniya) to be listed on the Saudi Stock

Exchange. Besides general insurance, it provides facultative reinsurance

products.

� Business brief: Malath is engaged in general insurance, medical care

insurance and facultative inward reinsurance activities. The company derives

its premium income mainly from motor, medical, property, aviation, marine

cargo & hull, energy, and engineering.

� Financials: In 1Q10, Malath’s net insurance premium grew 241.5% YoY to

SR62mn compared to SR18mn in 1Q09. The company’s reinsurance

premium and underwriting income also increased by 69% and 323.4% YoY.

Consequently, the company’s revenues grew 203.7% YoY to SR78mn in

1Q10 compared to SR26mn in 1Q09. This enabled Malath to post net income

growth of 113.5% YoY to SR4.4mn in 1Q10, despite the four-fold increase in

net claims paid.

� Recent developments: In May 2010, S&P assigned ‘BBB’ long-term

counterparty credit and insurer financial strength ratings to Malath

Cooperative, citing strong overall capitalization and risk based capital ratios.

In January 2010, Malath announced its intention to quadruple the number of

branches in the Kingdom by end of 2010.

Company financials

2007 2008* 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn 2 27 131 62 241.5 708.5

Total Revenues SRmn 3 44 166 78 203.7 643.2

Net Income SRmn (17) (33) 7 4 113.5 NM

Assets SRmn 330 447 697 858 73.1 45.3

Equity SRmn 283 232 252 259 9.7 (5.6)

Investments SRmn 275 114 217 224 120.9 (11.2)

Technical Reserves SRmn 12 121 321 444 161.3 407.0

Combined Ratio % NM 256.0 118.2 116.8 - -

Net Mgn % NM NM 4.4 5.7 - -

ROE % (6.1) (15.0) 3.0 7.0 - -

ROA % (5.2) (19.9) 1.3 2.3 - -

Div Payout % NA NA NA - - -

EPS SR (0.6) (1.9) 0.2 0.2 114.3 N/A

BVPS SR 9.4 7.8 8.4 8.6 9.7 N/A

Source: Tadawul, Zawya, Company, NCBC Research * Financials of 2008 for 21 Months

191

JUNE 2010 MEDITERANEAN & GULF INSURANCE

Not Covered



Stock details





Absolute (20) (18) (8)

Market (6) (5) 3

Sector (16) (18) (18)


3M 18.8 5.0

12M 18.6 5.0

Raw Beta 6m 3yr

1.73 0.94


Bloomberg code MEDGULF AB

Website www.medgulf.com.



Free float 25.00

Valuation multiples

08 09 TTM

P/E (x) 333.5 12.1 11.4

P/B (x) 2.3 1.9 1.9

P/S(x) NA 1.3 1.2

Div yield (%) NA 3.4 NA



5,0005,500

6,000

6,5007,000


25

30

35

TASI M EDGULF (RHS)

Source: Bloomberg


Mediterranean and Gulf Insurance and Reinsurance – Bahrain

32.0

Saudi Investment Bank 19.0


INSURANCE

Medgulf Also known as

Medgulf Saudi

Mediterranean & Gulf Insurance & Reinsurance Co. (MEDGULF) is a

subsidiary of the Medgulf Group, a leading insurance and reinsurance

company in the Middle East operating in Saudi Arabia, Bahrain, Lebanon,

Turkey, Jordan, UAE, and UK. Established in 2006, it currently operates

through its offices in Riyadh, Jeddah and Khobar.

� Business brief: MEDGULF offers various insurance products including

aviation insurance, banker’s blanket bonds, burglary insurance, contractor’s

all risk insurance, credit insurance, employer’s liability insurance, fidelity

guarantee insurance, marine cargo and hull insurance, and motor insurance.

MEDGULF offers a one-stop solution by providing insurance and reinsurance

services along with risk management and third party administration.

� Financials: Net insurance premium, which contributes about 95% of

MEDGULF’s total revenue, grew by 43.8% YoY in 1Q10 to SR407mn.

Consequently, its total revenue grew by 44.5% YoY to SR425mn in 1Q10.

Although the company’s net claims paid increased 87% YoY, the net claim

ratio of 78% and combined ratio of 95% enabled the company to grow its

net income 33.2% YoY to SR37mn in 1Q10. MEDGULF’s technical reserves

also rose by 57% YoY

� Recent developments: In March 2010, MEDGULF announced a cash

dividend of SR0.75 per share for the financial year 2009.

Company financials

2007 2008* 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn NA NA 1,300 407 43.8 NA

Total Revenues SRmn NA NA 1,354 425 44.5 NA

Net Income SRmn 7 5 147 37 33.2 362.6

Assets SRmn 807 807 2,961 3,463 28.7 91.5

Equity SRmn 807 788 925 958 18.0 7.1

Investments SRmn 758 773 576 579 (25.2) (12.8)

Technical Reserves SRmn NA NA 1,411 1,822 57.1 NM

Combined Ratio % NA NA 92 95 - -

Net Mgn % NA NA 10.8 8.6 - -

ROE % 0.8 0.7 17.1 15.6 - -

ROA % 0.8 0.7 7.8 4.6 - -

Div Payout % NA NA 41.0 - - -

EPS SR 0.1 0.1 1.8 0.5 2,200.0 N/A

BVPS SR 10.1 9.9 11.6 12.0 21.8 N/A


192

JUNE 2010 SAUDI FRANSI COOPERATIVE INSURANCE

Not Covered



Stock details





Absolute (21) (47) (50)

Market (6) (5) 3

Sector (16) (18) (18)


3M 19.5 5.2

12M 28.6 7.6

Raw Beta 6m 2yr

1.98 1.16


Bloomberg code ALLIANZ AB

Website www.allianzsf.com



Free float 31.00

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 7.1 11.0 12.0

P/S(x) 121.2 3.3 3.0




5,000

5,500

6,000

6,500

7,000


TASI ALLIANZ SF (RHS)

Source: Bloomberg


Banque Saudi Fransi 32.5

AGF International Co. 16.2

SNI Holding Co. 16.2


INSURANCE

AllianzSaudiFransiSaudi Fransi Cooperative Insurance Company (Allianz Saudi Fransi), was

established in 2007 in Riyadh. The Company is a subsidiary of Banque

Saudi Fransi (a member of the Calyon Group) and Assurances Generales

de France (a member of the Allianz Group).

� Business brief: ALLIANZ SF offers multiple insurance solutions through two

main segments: individual and corporate. Under the individual solutions

segment, the company provides Shariah compliant insurance products

including individual financial planning (for education, protection, and

retirement), family income protection, life and disability insurance, and

corporate solutions assurance. The corporate solutions segment offers

insurance cover against fire, general accident, construction/engineering,

marine cargo and employee compensation.

� Financials: ALLIANZ SF’s remained in losses in 1Q10. The company’s gross

and net insurance premium grew 74% YoY and 40% YoY in 1Q10 to

SR113mn and SR43mn, respectively. Consequently, total revenues increased

38.1% YoY to SR46mn. However, total costs and expenses grew 31% mainly

due to the 86% increase in net claims. As a result, ALLIANZ SF recorded a

net loss of SR3.6mn in 1Q10. The company’s shareholders’ equity,

investments and technical reserves also declined significantly.

� Recent developments: In April 2010, ALLIANZ SF raised SR125mn through

a rights issue with a total coverage of 133% by value. The rights issue was

limited to the shareholders registered in the shareholder register at the close

of trading on the extraordinary general assembly day.

Company financials

2007 2008* 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn NA 4 127 43 40.3 NA

Total Revenues SRmn NA 4 144 46 38.1 NA

Net Income SRmn (16) (33) (22) (4) NA 19.2

Assets SRmn 104 239 443 489 22.0 106.5

Equity SRmn 84 66 43 39 (37.3) (28.6)


Technical Reserves SRmn NA 58 156 37 (78.1) NA

Combined Ratio % NA 797.2 128.2 111.2 - -

Net Mgn % NA (862.4) (15.5) (8.0) - -

ROE % (18.8) (44.6) (41.2) (35.6) - -

ROA % (15.2) (19.5) (6.6) (3.1) - -


EPS SR (1.6) (1.7) (2.2) (0.4) NA N/A

BVPS SR 8.4 6.6 4.3 3.9 (37.3) N/A


193

JUNE 2010 SAUDI SALAMA

Not Covered



Stock details





Absolute (25) (35) (51)

Market (6) (5) 3

Sector (16 (18) (18)


3M 5.0 1.3

12M 16.5 4.4

Raw Beta 6m 3yr

1.48 1.80


Bloomberg code SALAMA AB

Website www.salama.com.sa



Free float 40.00

Valuation multiples

08 09 TTM

P/E (x) (8.1) 26.4 28.6

P/B (x) 5.1 4.1 4.0

P/S(x) 4.1 1.5 1.5

Div yield (%) NA Na NA



5,000

5,500

6,000

6,500

7,000


40

60

80

TASI SALAM A (RHS)

Source: Bloomberg


Arab Islamic Insurance Company

30.0

Bin Dawood & sons Commercial Co.

5.0

Al Sha'er Trade, Industries and Construction

5.0

Cooperative Group Company for Trade & Construction

5.0


INSURANCE

Saudi IAIC Also known as

Saudi Salama

Saudi IAIC Cooperative Insurance Company (Saudi Salama), established

in 2006, is a Jeddah-based insurance company which markets its

products under the SALAMA brand. SALAMA, a subsidiary of the UAE-

based Islamic Arab Insurance Co, provides Shariah compliant general

insurance solutions.

� Business brief: SALAMA’s products are broadly classified into three

segments—health, motor and general insurance. The health insurance

segment offers individual and corporate health care cover. The motor

insurance segment provides comprehensive and third party liability insurance

cover. The general insurance segment offers cover for fire & property,

personal accident, marine, engineering, and aviation.

� Financials: The company’s net insurance premium declined 8.4% YoY to

SR42.4mn compared to SR46.3mn in 1Q09. SALAMA’s reinsurance premium

also contracted by 14.9% YoY. As a result, total revenues fell by 8.6% YoY

to SR44mn in 1Q10 from SR48.1mn in 1Q09. Gross claims paid by the

company grew 18.87% YoY to SR35.5mn in 1Q10. Thus, net income fell by

56.5% YoY to SR0.7mn in 1Q10 from SR1.6mn in 1Q09.

� Recent developments: In May 2010, Saudi Salama announced its intention

to focus on expanding in the region by opening two new branches. In

November 2009, Saudi Salama tied up with Allfunds Bank (AFB) to offer

Takaful and Sharia-compliant funds across the Middle East.

Company financials

2007 2008* 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn NA 72 210 42 (8.4) NA

Total Revenues SRmn NA 76 214 44 (8.6) NM

Net Income SRmn (13) (38) 12 1 (56.5) NM

Assets SRmn 111 257 255 260 (13.8) 51.5

Equity SRmn 83 61 76 78 23.1 (4.4)

Investments SRmn 103 64 76 68 6.8 (13.8)

Technical Reserves SRmn NA 134 127 130 (26.0) NM

Combined Ratio % NA 119.5 92.0 100.0 - -

Net Mgn % NA (50.6) 5.5 1.6 - -

ROE % (15.7) (53.4) 17.2 3.6 - -

ROA % (11.7) (20.9) 4.6 1.1 - -


EPS SR (1.3) (3.8) 1.2 0.1 (56.3) N/A

BVPS SR 8.3 6.1 7.6 7.8 23.1 N/A

Source: Tadawul, Zawya, Company, NCBC Research * Financials of 2008 for 19 months

194

JUNE 2010 SAUDI UNITED

Not Covered



Stock details





Absolute (22) (29) (42)

Market (6) (5) 3

Sector (16) (18) (18)


3M 8.3 2.2

12M 10.8 2.9

Raw Beta 6m 2yr

0.94 1.35


Bloomberg code WALAA AB

Website www.walaa.com



Free float 40.00

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 2.0 2.3 2.3

P/S(x) 2.4 7.5 5.7




5,000

5,500

6,000

6,500

7,000


20

30

40

TASI Walaa Insurance (RHS)

Source: Bloomberg


International General Insurance Co

10.5

Abdullah Mohammed Taleb Hakim

5.0


INSURANCE

Saudi United Also known as

Wala’a

Saudi United Cooperative Insurance Company (Wala’a Insurance),

established in Al-Khobar in 2006, specializes in business risks and

government agencies. The company markets its products and services

under the WALAA brand and operates through its branches in Riyadh,

Jeddah, Hofouf, and Makah.

� Business brief: Wala’a offers its products through four broad categories.

The assets & earnings insurance segment covers property & business

interruption. The liabilities segment covers employers, public, products, &

professional risks. Through the employees segment, the company offers life,

personal accident, and healthcare insurance products, while the goods-on-

the-move segment covers ocean cargo and inland transit insurance products.

� Financials: In 1Q10, net insurance premium, which contributes 89% to

Walaa’s total revenues, grew by 234.8% YoY to SR19.3mn from SR5.7mn in

1Q09. Reinsurance commission increased by 422% YoY to SR2.4mn in 1Q10.

Consequently, the company’s total revenues rose by 247.5% YoY to

SR21.8mn in 1Q10 from SR6.2mn in 1Q09. Net claims paid increased by

253.5% YoY in 1Q10, thereby pushing Walaa’s total expenses higher by

160.6% YoY in 1Q10. As a result, the company’s net loss widened in 1Q10 to

SR4.3mn from SR2.3mn in 1Q09.

� Recent developments: In February 2010, Wala’a said it received a

temporary approval from Saudi Arabian Monetary Agency for the sale and

marketing of comprehensive public liability and loss of profits from broken

machine insurance products.

Company financials

2007 2008* 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn NA NA 42 19 234.8 NA

Total Revenues SRmn NA NA 47 22 247.5 NA

Net Income SRmn (13) (15) (25) (4) NA NA

Assets SRmn 188 187 361 362 55.6 38.7

Equity SRmn 187 181 154 153 (13.8) (9.2)

Investments SRmn 186 182 190 116 (36.8) 1.0

Technical Reserves SRmn NA NA 123 NA NA NA

Combined Ratio % NA NA 175.1 134.6 - -

Net Mgn % NA NA (53.2) (20.0) - -

ROE % (6.9) (8.0) (15.0) (11.3) - -

ROA % (6.8) (7.9) (9.2) (4.8) - -

Div Payout % - - - - - -

EPS SR (0.6) (0.7) (0.8) (0.2) NA N/A

BVPS SR 9.4 9.1 8.2 7.7 (13.7) (6.6)

Source: Tadawul, Zawya, Company, NCBC Research *Financials of 2008 For 18 Months

195

JUNE 2010 ARABIAN SHIELD

Not Covered



Stock details





Absolute (23) (20) (31)

Market (6) (5) 3

Sector (16) (18) (18)


3M 6.7 1.8

12M 13.8 3.7

Raw Beta 6m 2yr

0.94 0.95


Bloomberg code SHIELD AB

Website www.arabianshield.com



Free float 40.00

Valuation multiples

08 09 TTM

P/E (x) 265 49.2 47.8

P/B (x) 2.0 1.9 1.9

P/S(x) NA 4.2 3.6




5,000

5,5006,000

6,500

7,000


2030

40

50

TASI Arabian Shield (RHS)

Source: Bloomberg


Arabian Shield Insurance Company

30.0

Bahrain National Holding Company

15.0

Yamama Saudi Cement Company

5.0

Al Obaikan Group for Investment

5.0


INSURANCE

Arabian ShieldArabian Shield Cooperative Insurance Company (Arabian Shield),

headquartered in Riyadh and established in 2007, commenced

operations in January 2008. Arabian Shield is engaged in cooperative

insurance and reinsurance activities. The company is a subsidiary of

Bahrain-based Arabian Shield Insurance Company.

� Business brief: Arabian Shield provides a variety of insurance products and

services, including general insurance (property, motor, marine, engineering,

liability, accident, and airplane), medical insurance (for individuals,

companies and establishments), and energy insurance.

� Financials: In 1Q10, the company’s net insurance premium grew by

118.5% YoY to SR26.2mn compared to SR12mn in 1Q09. Reinsurance

commission grew by 33% YoY to SR7.3mn in 1Q10. Consequently, Arabian

Shield’s total revenues increased by 91.5% YoY to SR33.6mn in 1Q10 from

SR17.5mn in 1Q09. Net claims paid in 1Q10 rising by 138.1% YoY to

SR21.7mn resulted in total expenses increasing by 97.2% YoY in 1Q10. The

company’s net surplus grew by 55.7% YoY in 1Q10, taking the net income to

SR1.9mn, an increase of 12.7% YoY.

Company financials

2007 2008* 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn NA NA 68 26 118.5 NA

Total Revenues SRmn NA Na 95 34 91.5 NA

Net Income SRmn (5) (4) 8 2 12.7 NM

Assets SRmn 204 202 448 541 29.5 48.1

Equity SRmn 195 196 204 206 4.2 2.4

Investments SRmn 204 202 256 286 26.3 12.0

Technical Reserves SRmn NA NA 125 174 49.1 NM

Combined Ratio % NA NA 116.6 113.7 - -

Net Mgn % NA NA 8.5 5.9 - -

ROE % (2.7) (1.9) 4.0 3.9 - -

ROA % (2.6) (1.8) 2.5 1.6 - -

Div Payout % - - - - - -

EPS SR NA (0.2) 0.4 0.1 400.0 N/A

BVPS SR NA 9.8 10.2 10.3 5.0 N/A

Source: Tadawul, Zawya, Company, NCBC Research * Financials of 2008 for 19 months

196

JUNE 2010 SABB TAKAFUL

Not Covered



Stock details





Absolute (10) (24) (39)

Market (6) (5) 3

Sector (16) (18) (18)


3M 10.4 2.8

12M 31.2 8.3

Raw Beta 6m 3yr

1.72 1.04


Bloomberg code SABBT AB

Website www.sabbtakaful.com



Free float 35.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 13.9 2.2 2.2

P/S (x) 14.0 10.2 8.2




5,0005,500

6,000

6,500

7,000


TASI SABB Takaful (RHS)

Source: Bloomberg


SABB 32.5

HSBC Holding Co. 31.0


INSURANCE

SABB Takaful Also known as

Saudi British BankTakaful

SABB Takaful was established in 2007 in Riyadh as an associate

company of SABB and HSBC. SABB Takaful conducts its business through

SABB’s established distribution network (more than 70 branches) and

direct sales team across Saudi Arabia. All of SABB’s insurance products

are Shariah compliant.

� Business brief: SABB Takaful offers family, general, corporate and group

Takaful products. Under the Family Takaful segment, the company covers

education, savings, single contribution, retirement to provide individuals with

financial support. General Takaful covers everyday travel, home, and

personal accident risks. Corporate Takaful provides cover for marine cargo,

commercial fire protection, and solutions for SMEs.

� Financials: In 1Q10, SABB Takaful’s net earned premium, which contributes

95% of total revenues, grew 147.6% YoY to SR29mn from SR11.7mn in

1Q09. Consequently, total revenues increased 130.5% YoY to SR 30.6mn. As

a result, the company’s net loss narrowed to SR2.4mn in 1Q10 from

SR5.6mn in 1Q09, despite total expenses rising by 80.6% YoY to SR30.7mn.

� Recent developments: In February 2010, SABB was fined SR50,000 by the

CMA for violating disclosure rules by failing to disclose management changes. In

September 2009, SABB appointed Mr. Philip Head as the company’s new CEO. In

August 2009, SABB raised SR343.4mn through a rights issue.

Company financials

2007 2008* 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn 5 46 63 29 147.6 256.6

Total Revenues SRmn 6 51 70 31 130.5 237.4

Net Income SRmn (45) (48) (16) (2) N/A N/A

Assets SRmn 79 209 793 818 272.5 217.7

Equity SRmn 55 51 330 326 618.2 143.9

Investments SRmn 59 28 287 313 1,071.3 120.2

Technical Reserves SRmn 6 115 403 443 315.1 727.4

Combined Ratio % 352.7 127.8 125.1 106.0 - -

Net Mgn % (728.1) (95.0) (23.6) (7.9) - -

ROE % (80.4) (90.5) (8.6) (2.9) - -

ROA % (56.7) (33.5) (3.3) (1.2) - -

Div Payout % - - - - - -

EPS SR (4.5) (1.4) (0.5) (0.1) N/A N/A

BVPS SR 5.5 5.1 9.7 9.6 111.5 N/A

Source: Tadawul, Zawya, Company, NCBC Research * Financials of 2008 For 20 Months

197

JUNE 2010 SANAD INSURANCE

Not Covered


Pricing / Valuation as on 13-June-2010

Stock details





Absolute (25) (27) (43)

Market (6) (5) 3

Sector (16) (18) (18)


3M 4.5 1.2

12M 11.5 3.1

Raw Beta 6m 2yr

1.12 1.02


Bloomberg code SANAD AB

Website www.sanad.com.sa



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 2.1 2.3 2.3

P/S (x) N/M 4.4 2.8




5,0005,500

6,000

6,500

7,000


25

30

35

TASI SANAD (RHS)

Source: Bloomberg


Al Khazna Insurance Co. 15.0

Saudi Continental Insurance Co.

10.0

Ramat Marketing and Distribution Co.

5.0


INSURANCE

Sanad Insurance Also known as

SANAD

Sanad Insurance & Reinsurance Cooperative Company (SANAD) was

established in 2006. The company provides a range of car, general,

health, property, and marine insurance as well as reinsurance services.

SANAD also plans to expand its product portfolio to cover insurance for

agriculture, airlines, ships, petrol and power.

� Business brief: SANAD provides fire, travel, medical, motor, property,

marine, and engineering insurance products. The company also offers

insurance against general accidents. In addition, SANAD provides life

insurance products and reinsurance services.

� Financials: The company’s net insurance premium grew 483.4% YoY to

SR51.7mn in 1Q10 from SR8.8mn in 1Q09. SANAD’s reinsurance

commissions rose 332% YoY to SR2.6mn. Consequently, total revenues

increased 470.3% YoY to SR54.4mn in 1Q10 from SR9.5mn in 1Q09. The

company reported net claims of SR30.8mn; this coupled with other expenses

raised total expenses to SR64.7mn in 1Q10 compared to SR5.7mn in 1Q09.

SANAD posted a net profit of SR1mn in 1Q10, due to a net surplus of

SR11.1mn, as against a net loss of SR4.7mn in 1Q09.

� Recent developments: In January 2010, Azmir Firoz Daya, CEO of SANAD

Insurance, tendered his resignation.

Company financials

2007* 2008** 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn N/A 3 77 52 483.4 N/A

Total Revenues SRmn N/A 3 83 54 470.3 N/A

Net Income SRmn (9) (15) (15) 1 NA 27.3

Assets SRmn 191 199 415 464 65.0 47.3

Equity SRmn 191 175 157 161 (4.7) (9.3)


Technical Reserves SRmn 0 1 171 206 240.1 N/M

Combined Ratio % N/A 369.8 104.8 125.2 - -

Net Mgn % N/A (520.0) (17.5) 1.8 - -

ROE % (4.7) (8.3) (8.8) 2.5 - -

ROA % (4.7) (7.7) (4.8) 0.9 - -

Div Payout % - - - - - -

EPS SR (0.5) (0.8) (0.7) 0.1 N/A N/A

BVPS SR 9.6 8.8 7.9 8.1 (4.7) N/A

Source: Tadawul, Zawya, Company, NCBC Research *Financials of 2007 for 6 months ** Financials adjusted for 12 months

198

JUNE 2010 SAUDI ARABIA COOPERATIVE INSURANCE

Not Covered



Stock details





Absolute (21) (30) (47)

Market (6) (5) 3

Sector (16) (18) (18)


3M 9.6 2.6

12M 21.8 5.8

Raw Beta 6m 2yr

1.94 1.47


Bloomberg code SAICO AB

Website www.saico.com.sa



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 4.2 4.6 4.5

P/S (x) N/A 27.2 7.7




5,0005,500

6,000

6,500

7,000


60

80

100

TASI SAICO (RHS)

Source: Bloomberg


Saudi Arabian Insurance Co 30.0

Al Wa'lan Car Co. 5.0

Erad Holding Limited Co 5.0


INSURANCE

Saudi Arabian Also known as

SAICO Saudi

Saudi Arabian Cooperative Insurance Company (SAICO), established in

2007, offers Shariah-compliant insurance services across Saudi Arabia.

SAICO is a subsidiary of Bahrain-based Saudi Arabian Cooperative

Insurance Company, which holds 30% stake in the company.

� Business brief: SAICO provides insurance services in two categories,

business and personal. Under business insurance, the company covers

liabilities like fire and property, aviation, marine cargo, engineering, energy,

life and health, and motor vehicle. Whereas under personal insurance, the

company provides insurance for home, car, boat, life and health and

accidents.

� Financials: In 1Q10, SAICO earned a net insurance premium of SR27.8mn,

or 79% of its total revenues. The reinsurance commission aggregated

SR5.6mn, taking total revenues to SR35.2mn in 1Q10. The combination of

net claims paid, policy acquisition costs and other expenses lifted total

expenses to SR32.3mn. However, the net surplus of SR2.6mn in 1Q10

helped SAICO post a net profit of SR1.9mn in 1Q10 compared to the net loss

of SR2.2mn recorded in 1Q09.

� Recent developments: In June 2010, Saudi Arabian Monetary Agency

granted SAICO an extended approval for the sale of thirty-four insurance

products. In June 2010, SAICO announced its intention to buy a stake in

Najm Company for Insurance Services from Arab Commercial Projects

Company’s.

Company financials

2007* 2008** 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn N/A N/A 12 28 N/A N/A

Total Revenues SRmn 2 N/A 14 35 N/A 187.1

Net Income SRmn (6) (10) (8) 2 N/A 14.7

Assets SRmn N/A 94 204 338 257.8 N/A

Equity SRmn 94 90 82 84 (4.8) (6.7)


Technical Reserves SRmn N/A N/A 64 158 N/A N/A

Combined Ratio % N/A N/A 149.4 116.3 - -

Net Mgn % N/M N/A (60.3) 5.6 - -

ROE % (6.8) (11.0) (9.8) 9.6 - -

ROA % N/A (10.7) (5.6) 2.9 - -

Div Payout % - - - - - -

EPS SR (0.6) (1.0) (0.8) 0.2 N/A N/A

BVPS SR 9.4 9.0 8.2 8.4 (4.8) N/A

Source: Tadawul, Zawya, Company, NCBC Research *Financials of 2007 for 5 months **Financials of 2008 for 17 months

199

JUNE 2010 SAUDI INDIAN COMPANY FOR CO-OPERATIVE INSURANCE

Not Covered



Stock details





Absolute (27) (35) (47)

Market (6) (5) 3

Sector (16) (18) (18)


3M 6.6 1.8

12M 19.5 5.2

Raw Beta 6m 3yr

1.43 1.29


Bloomberg code SINDIAN AB

Website www.sicci-ksa.com



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 3.9 5.9 6.6

P/Sales (x) N/M 8.1 4.0


DPS N/A N/A N/A



5,0005,500

6,000

6,500

7,000


50

70

90

TASI Saudi Indian (RHS)

Source: Bloomberg


New India Insurance Co 10.6

Life Insurance Corp of India 10.2

Life Insurance Corp (Int’l) 10.2

Khaled Abdulaziz Bin Salmah Trading Establishment

5.0

Saleh Saad Al Khariji Establishment

5.0


I NS U R A N CE

Saudi Indian Also known as

SIICI, SAUDIINDIAN

In 2007, Saudi Indian Company for Co-operative Insurance (Saudi

Indian) was established by New India Assurance Company, Life

Insurance Corporation of India (Intl) and Fawaz Abdulaziz Al Hokair and

Company. Saudi Indian is headquartered in Riyadh and provides

financial security to individuals and commercial establishments.

� Business brief: Saudi Indian’s product profile is segregated into two broad

categories – life insurance and non-life insurance. Under the life insurance

segment, the company offers various plans related to protection and savings

such as Takaful Insurance Plan, Participating Endowment Plan, Cash Back

Plan, and Money Back & Protect Lifelong. Under the non-life insurance

segment, Saudi Indian provides fire insurance, motor insurance, engineering

insurance, health insurance and other miscellaneous products including

personal accident, burglary and fidelity guarantee.

� Financials: SIICI’s net insurance premium more than doubled from

SR5.1mn in 1Q09 to SR11.0mn in 1Q10. The company incurred a net loss of

SR5.4mn in 1Q10 compared to SR4.9mn in 1Q09 as net claims paid

increased from SR3.6mn to SR9.8mn during the same period. Saudi Indian’s

total assets aggregated SR172.4mn, while shareholders’ equity totaled

SR46.6mn at the end of 1Q10.


appointment of Mr. Fouad Hanoun as the company's Acting Chief Executive

Officer to replace Mr. Harish Shandra Mishra.

Company financials

2007* 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Ins. Premium SRmn - 1 38 11 116.5 N/M

Total Revenues SRmn - 1 42 13 132.7 N/M


Assets SRmn 96 104 183 172 15.3 38.3

Equity SRmn 88 79 52 47 (37.3) (23.0)


Technical Reserves SRmn - 13 79 82 78.3 N/M

Combined Ratio % N/A N/M 176.3 160.2 - -

Net Mgn % N/A N/A N/A N/A - -

ROE % (14.0) (10.4) (41.9) (44.1) - -

ROA % (12.8) (8.7) (19.1) (12.2) - -


EPS SR (1.2) (0.7) (2.6) (0.5) N/M N/M

BVPS SR 8.8 7.9 5.2 4.7 (37.3) (23.0)

Source: Tadawul, Zawya Company, NCBC Research * 14 months Financials reported for 2007

200

JUNE 2010 GULF UNION CO-OPERATIVE INSURANCE COMPANY

Not Covered



Stock details





Absolute (13) (20) (22)

Market (6) (5) 3

Sector (16) (18) (18)


3M 6.0 1.6

12M 12.7 3.4

Raw Beta 6m 2yr

0.95 1.24


Bloomberg code GULFUNI AB

Website www.gulfunion.com.sa



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 2.6 2.7 2.7



DPS N/A N/A N/A



5,0005,500

6,000

6,500

7,000


20

30

40

TASI Gulf Union (RHS)

Source: Bloomberg


Gulf Union Insurance and Projects Management Holding Company

23.5


INSURANCE

Gulf Union CooperativeAlso

knownas

GulfUnion

In August 2007, Gulf Union Cooperative Insurance Company (Gulf

Union) was established by Gulf Union Insurance and Projects

Management Holding Company. Gulf Union offers Shariah-compliant

insurance products which caters to clients in Saudi Arabia as well as

customers of its sister company – Gulf Union Insurance and Risk

Management Company.

� Business brief: Gulf Union is engaged in cooperative insurance and

reinsurance activities, excluding protection and savings insurance. The

company’s product portfolio comprises insurance for property, liability,

motor, individual, health, and other related cooperative insurance activities.

Apart from Dammam, Gulf Union has branches in Jeddah, Khobar and

Riyadh.

� Financials: Gulf Union incurred a net loss of SR0.6mn in 1Q10 as against a

net profit of SR0.03mn in 1Q09. The company’s total assets aggregated

SR195.8mn, while shareholders’ equity totaled SR186.9mn at the end of

1Q10. Gulf Union’s investments and cash at banks stood at SR6.1mn in

1Q10.

Company financials

2007* 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Ins. Premium SRmn - - - - N/A N/M

Total Revenues SRmn - - - - N/A N/M

Net Income SRmn (22) 2 (2) (1) N/M N/M

Assets SRmn 208 205 196 196 (3.0) (2.9)

Equity SRmn 198 195 189 187 (3.7) (2.4)


Technical Reserves SRmn - - - - N/A N/M

Combined Ratio % N/A N/A N/A N/A - -

Net Mgn % N/A N/A N/A N/A - -

ROE % (11.0) 0.9 (1.0) (1.3) - -

ROA % (10.5) 0.9 (0.9) (1.3) - -


EPS SR (1.0) 0.1 (0.1) (0.0) N/M N/M

BVPS SR 9.0 8.9 8.6 8.5 (3.6) (2.4)

Source: Tadawul, Zawya, Company, NCBC Research *4 months Financials reported for 2007

201

JUNE 2010 ALAHLI TAKAFUL COMPANY

Not Covered



Stock details

52-week range H/L (SR) 247.0/71.0




Absolute (20) (28) (45)

Market (6) (5) 3

Sector (16) (18) (18)


3M 13.6 3.6

12M 32.7 8.7

Raw Beta 6m 2yr

1.00 0.83


Bloomberg code ATC AB

Website www.alahlitakaful.com



Free float 26.5

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 8.9 9.6 10.0



DPS N/A N/A N/A



5,0005,500

6,000

6,500

7,000


140

190

240

TASI ATC (RHS)

Source: Bloomberg


National Commercial Bank 30.0

FWU Group 13.1

International Finance Corporation

13.1

VHV Vermogensanlage 7.5


INSURANCE

AlAhli Takaful Also known as

ATC

AlAhli Takaful Company (ATC), established in 2006, is a joint venture

between National Commercial Bank, FWU AG, VHV, International

Financial Corporation and a small share owned by local investors.

Headquartered in Jeddah, the company provides a range of insurance

products and services based on Islamic principles.

� Business brief: ATC’s insurance products include special programs for

savings, retirement and education. The company’s “AlAhli Takaful and

Savings Program” targets saving requirements for various purposes such as

retirement, children’s education, marriage, etc. The scheme provides

maturity as well as death benefits.

� Financials: The company’s revenues increased to SR1mn in 1Q10 from

SR0.3mn in 1Q09. Despite the increase, ATC posted a net loss of SR2.9mn in

the quarter compared to SR0.6mn in 1Q09 owing to a rise in net claims

incurred and a decline in investment and management fee income. ATC’s

assets aggregated to SR200.8mn at the end of 1Q10. However,

shareholders’ equity decreased to SR73.8mn due to an increase in losses in

the period.

� Recent developments: On 19 January 2010, the company announced plans

to increase capital by SR150mn (USD40mn) through a rights issue to fund

its expansion plans. The approval for the plan is still awaited. On 20 January

2009, Saudi Monetary Agency granted approval to AlAhli to sell and market

its “Group Life Product”.

Company financials

2007* 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Ins. Premium SRmn - 0 1 1 231.1 N/M

Total Revenues SRmn - (0) 1 1 229.9 N/M


Assets SRmn 95 95 158 201 86.7 28.6

Equity SRmn 94 83 77 74 (10.3) (9.7)


Technical Reserves SRmn - 2 67 105 1,228.0 N/M

Combined Ratio % N/A N/A 131.2 N/M - -

Net Mgn % N/A N/A N/M N/M - -

ROE % (2.0) (11.4) (6.5) (15.3) - -

ROA % (2.0) (10.6) (4.1) (6.4) - -


EPS SR (0.2) (1.0) (0.5) (0.3) N/M N/M

BVPS SR 9.4 8.3 7.7 7.4 (10.3) (9.6)

Source: Tadawul, Zawya, Company, NCBC Research * 6 Months Financial reported for 2007

202

JUNE 2010 AL-AHLIA INSURANCE COMPANY

Not Covered



Stock details

52-week range H/L (SR) 110.0/

45.9




Absolute (26) (34) (13)

Market (6) (5) 3

Sector (16) (18) (18)


3M 16.7 4.5

12M 28.9 7.7

Raw Beta 6m 2yr

0.61 1.38


Bloomberg code ALAHLIA AB

Website www.alahlia.com.sa



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 6.1 9.8 11.1

P/Sales (x) N/A 32.3 17.2


DPS N/A N/A N/A



5,0005,500

6,000

6,500

7,000


70

90

110

TASI A l-Ahlia (RHS)

Source: Bloomberg


National Insurance Co. of Egypt

18.0


INSURANCE

Al-Ahlia InsuranceIn 2007, Al-Ahlia Insurance Company (Al-Ahlia) was established by the

National Insurance Company of Egypt and several Saudi investors. Al-

Ahlia is headquartered in Riyadh and offers Shariah-compliant

cooperative insurance and reinsurance services in the Kingdom.

� Business brief: Al-Ahlia offers a range of general insurance products

including fire insurance, property insurance, marine insurance, motor

insurance, money insurance, engineering insurance, medical insurance,

medical malpractice insurance, fidelity insurance and liability insurance.

� Financials: The Company generated SR13.6mn in revenues in 1Q10. Al-

Ahlia’s financials are not comparable for the previous quarter as it had begun

operations as the Al Ahlia Co-Operative Insurance Company on 1 April 2009.

However, the company posted a net loss of SR5.7mn as it incurred a net

claim of SR6.9mn in 1Q10. Al-Ahlia’s assets aggregated SR231mn, while

shareholders’ equity stood at SR45mn as of 31 March 2010.

� Recent developments: On 26 May 2010, the company’s Board of Directors

approved the acquisition of a 5% stake in Najm Insurance Services Company. On

13 February 2010, Al-Ahlia announced its Board of Directors had approved a

200% rights issue.

Company financials

2007 2008* 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Ins. Premium SRmn - - 16 14 N/A N/M

Total Revenues SRmn - - 17 15 N/A N/M

Net Income SRmn - (15) (31) (6) N/M N/M

Assets SRmn 113 107 182 231 114.2 27.1

Equity SRmn 100 83 51 45 (42.8) (28.5)


Technical Reserves SRmn - - 61 94 N/A N/M

Combined Ratio % N/A N/A 277.9 153.9 - -

Net Mgn % N/A N/A N/M N/M - -

ROE % - (16.7) (46.2) (47.5) - -

ROA % - (13.9) (21.4) (11.1) - -


EPS SR - (1.5) (1.1) (0.6) N/M N/M

BVPS SR 10.0 8.3 5.1 4.5 (42.7) (28.5)

Source: Tadawul, Zawya, Company, NCBC Research * Financials reported for 2008 is for 18 months

203

JUNE 2010 ALLIED COOPERATIVE INSURANCE GROUP

Not Covered



Stock details





Absolute (27) (31) (50)

Market (6) (5) 3

Sector (16) (18) (18)


3M 6.8 1.8

12M 20.7 5.5

Raw Beta 6m 2yr

1.74 1.37


Bloomberg code ACIG AB

Website www.acig.com.sa



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 4.9 6.9 7.7



DPS N/A N/A N/A



5,0005,500

6,000

6,500

7,000


40

60

80

TASI ACIG (RHS)

Source: Bloomberg


Allied Cooperative Insurance Group

20.0

Islamic Development Bank 20.0


INSURANCE

Allied Co-operative Also known as

ACIG, SaudiACIG

Allied Cooperative Insurance Group (ACIG) was incorporated in 2007

through the acquisition of the Saudi assets and client portfolio of its

parent company, ACIG Bahrain. ACIG, based in Jeddah, offers Islamic

Shariah-compliant insurance and reinsurance products in Saudi Arabia.

� Business brief: ACIG offers Islamic general insurance services including

marine, medical, motor, general accident, and engineering insurance. Under

its Marine Insurance segment, the company offers marine cargo and inland

transit insurances. The Motor Insurance segment provides third-party liability

protection, personal accident cover (for drivers and passengers) and

comprehensive ‘own damage’ options; while the General Insurance segment

provides money, fidelity, personal accident, public liability, workmen’s

compensation, and medical malpractice insurance.

� Financials: ACIG’s net loss declined from SR5.6mn in 1Q09 to SR5mn in

1Q10. The company’s assets totaled SR92mn in 1Q10, while shareholders’

equity was SR45mn in 1Q10.

� Recent developments: On 26 April 2010, the CMA fined ACIG SR100,000 for

violating registration and listing regulations. The company was fined

SR50,000 each for failing to inform the regulator about changes in senior

management and announcing earning results. On 31 October 2009, ACIG

announced plans to increase capital by SR150mn to finance an expansion in

reinsurance activities.

Company financials

2007* 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Ins. Premium SRmn - - 1 1 N/A N/M

Total Revenues SRmn - - 1 1 N/A N/M


Assets SRmn 94 78 91 92 36.3 (2.0)

Equity SRmn 92 70 50 45 (30.0) (26.4)


Technical Reserves SRmn - - 30 26 N/A N/M

Combined Ratio % N/A N/A N/M N/M - -

Net Mgn % N/A N/A N/M N/A - -

ROE % (5.1) (28.1) (40.3) (42.1) - -

ROA % (5.0) (26.4) (28.7) (21.8) - -


EPS SR (0.5) (2.3) (2.4) (0.5) N/M N/M

BVPS SR 9.2 7.0 5.0 4.5 (30.0) (26.4)

Source: Tadawul, Zawya, Company, NCBC Research * 5 month financial reported for 2007

204

JUNE 2010 ARABIA INSURANCE COOPERATIVE COMPANY

Not Covered



Stock details





Absolute (21) (27) (39)

Market (6) (5) 3

Sector (16) (18) (18)


3M 9.0 2.4

12M 10.5 2.8

Raw Beta 6m 2yr

0.95 1.06


Bloomberg code AICC AB

Website N/A



Free float 40.00

Valuation multiples

08 09 TTM

P/E (x) (13.4) (30.5) (30.4)

P/B (x) 2.1 2.3 2.3



DPS N/A N/A N/A



5,000

5,5006,000

6,500

7,000


TASI AICC (RHS)

Source: Bloomberg


Arab Holding Co. 19.2

Jordanian Insurance Co. 12.2

Arab Supply and Trading (ASTRA)

5.0


INSURANCE

Arabia Insurance Also known as

AICC

Arabia Insurance Cooperative Company (AICC) was established in 2007

and is headquartered in Riyadh. AICC has been able to issue insurance

policies from January 2009.

� Business brief: AICC is engaged in insurance as well as reinsurance

activities and services across Saudi Arabia. The company offers several

insurance products, including motor, property, marine, medical, and general

accident insurance. The company also plans to expand the market for

Takaful life policies and investment products.

� Financials: In 1Q10, AICC did not generate any revenues from operations.

Gross premium written and net premium earned for 2009 were nil. However,

operational costs, mainly, general and administrative expenses of SR3.8mn

incurred during the quarter, led to a net loss of SR2.9mn.

� Recent developments: In January 2010, AICC announced a net loss of

SR11.8mn for 2009 compared to SR26.8mn for 2008.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn - - - - - -

Total Revenues SRmn - - - - - -

Net Income SRmn - (27) (12) (3) 0.8 -

Assets SRmn - 177 212 215 23.3 -

Equity SRmn - 171 156 153 (8.7) -

Investments SRmn - 169 193 195 27.2 -

Technical Reserves SRmn - - - - - -

Combined Ratio % - - - - - -

Net Mgn % - - - - - -

ROE % - (15.7) (7.2) (7.5) - -

ROA % - (15.1) (6.1) (5.4) - -


EPS SR - (1.3) (0.6) (0.1) (71.1) -

BVPS SR - 8.5 7.8 7.7 3.1 -


205

JUNE 2010 TRADE UNION COOPERATIVE INSURANCE

Not Covered



Stock details





Absolute (22) (28) (33)

Market (6) (5) 3

Sector (16) (18) (18)


3M 9.1 2.4

12M 17.9 4.8

Raw Beta 6m 2yr

1.14 1.33


Bloomberg code TRDUNION AB

Website www.tui-sa.com



Free float 42.00

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 1.7 1.7 1.7

P/Sales (x) 59.7 41.7 41.7


DPS N/A N/A N/A



5,000

5,5006,000

6,500

7,000


2030

40

50

TASI Trade Union (RHS)

Source: Bloomberg


United Commercial Insurance Co

22.3

Al Ahlia Insurance Company 10.0


INSURANCE

Trade Union Co-op Also known as

TUCIC, TUCI

Trade Union Cooperative Insurance & Reinsurance Company (Trade

Union) was established in 2007 as a Saudi-based insurance company.

The company is headquartered in Al Khobar and registered with the

Council of Cooperative Health Insurance (CCHI).

� Business brief: Trade Union’s product portfolio includes property insurance

(fire and allied perils), liability insurance (general and product), marine

insurance (hull, cargo and land transit), crime insurance (burglary, computer

fraud), engineering insurance (machinery breakdown, contractor’s risks),

motor insurance (commercial or heavy vehicles), and personal lines

(household comprehensive, personal accident, new vehicle warranty).

Additionally, Trade Union provides medical and life insurance products as

well as reinsurance services led by Swiss Reinsurance Co. The company’s

medical treaty is secured by Munich Re.

� Financials: In 1Q10, Trade Union did not register any revenues either

through premiums or investment income & other income. The company

derived Investment & Management Fee Income totaling SR0.3mn in 1Q10

compared to SR2.4mn in 1Q09. The company also incurred general and

administrative expenses of SR0.9mn during the quarter compared to

SR1.6mn in 1Q09. Trade Union bore a net loss of SR0.6mn in 1Q10

compared to a net profit of SR0.7mn in 1Q09.

� Recent developments: In February 2010, Trade Union announced an

audited net loss of SR2.1mn for the year 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)


Total Revenues SRmn - 7 10 - - -

Net Income SRmn - - - (1) (182.6) -

Assets SRmn - 262 263 264 1.8 -

Equity SRmn - 248 244 242 (2.1) -




Net Mgn % - - - - - -

ROE % - - - (1.0) - -

ROA % - - - (0.9) - -

Div Payout % - - - - - -

EPS SR - - - (0.0) (182.6) -

BVPS SR - 9.9 9.8 9.7 (2.1) -


206

JUNE 2010 AL SAGR COMPANY FOR COOPERATIVE INSURANCE

Not Covered



Stock details





Absolute (18) (1) 2

Market (6) (5) 3

Sector (16) (18) (18)


3M 42.5 11.3

12M 38.8 10.3

Raw Beta 6m 2yr

1.54 0.88


Bloomberg code SAGR AB

Website www.alsagrsaudi.com



Free float 42.00

Valuation multiples

08 09 TTM

P/E (x) 410.2 7,671.8 N/M

P/B (x) 5.0 5.0 5.1



DPS N/M N/M N/M



5,000

5,5006,000

6,500

7,000


50

70

90

TASI Sagr Insurance (RHS)

Source: Bloomberg


Al Saqar National Insurance Co.

26.0

Arabian Red Land Industrial Services

5.0

Abdullah Rasheed Al Rasheed & Sons Co.

5.0


INSURANCE

Al Sagr Company Also known as

Al Sagr Saudi

Al Sagr Company for Cooperative Insurance (Al Sagr Saudi) started

operations in Saudi Arabia in 1983 as a branch of Al Sagr National

Insurance Co. (ASNIC), Dubai. Headquartered in Al Khobar, Sagr

Insurance operates through its three branches in Dammam, Riyadh and

Jeddah.

� Business brief: Sagr Insurance offers a wide range of insurance products to

its customers: fire and general (property, engineering, liability and

miscellaneous), marine (cargo and hull), motor, life and medical insurance

services. The company also provides jewelry merchant insurance and

hotel/furnished apartments-blanket insurance. In addition, Sagr Insurance

provides reinsurance services—the company has reinsurance treaties with 10

re-insurers in the Middle East and Europe including ALLIANZ RE and

CONVERIUM (Germany), ODYSSEY RE (France), TAKAFUL RE (UAE), and

B.E.S.T. RE (Tunis).

� Financials: In 1Q10, Sagr Insurance did not generate any revenues from its

operations. The company’s investment & management fee income totaled

SR0.4mn in 1Q10 compared to SR2.4mn in 1Q09. However, operational

expenses incurred during the quarter, mainly general and administrative,

resulted in a net loss of SR1.6mn as against a net profit of SR0.7mn in

1Q09.

� Recent developments: In February 2010, Sagr Insurance announced a

95% YoY decline in its audited net profit to SR0.1mn for 2009. In January

2010, Al Sagr’s Board of Directors appointed Omar Hamza as General

Manager of the company, effective 1 January 2010.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)



Net Income SRmn - 2 0 (2) (316.2) -

Assets SRmn - 208 215 215 1.9 -

Equity SRmn - 202 200 199 (2.3) -




Net Mgn % - - - - - -

ROE % - 1.2 0.1 (3.2) - -

ROA % - 1.2 0.1 (3.0) - -


EPS SR - 0.1 0.0 (0.1) (316.2) -

BVPS SR - 10.1 10.0 9.9 (2.3) -


207

JUNE 2010 UNITED COOPERATIVE ASSURANCE COMPANY

Not Covered



Stock details





Absolute (20) (37) (15)

Market (6) (5) 3

Sector (16) (18) (18)


3M 26.9 7.2

12M 26.3 7.0

Raw Beta 6m 2yr

-0.15 0.84


Bloomberg code UCA AB

Website www.uca.com.sa



Free float 40.00

Valuation multiples

08 09 TTM

P/E (x) (49.5) (45.0) (44.4)

P/B (x) 2.7 2.9 2.9



DPS N/M N/M N/M



5,000

5,5006,000

6,500

7,000


30

40

50

TASI U C A (RHS)

Source: Bloomberg


UCA Insurance Co. 32.5

Al Faisaliah Group Holding 5.0

Civil Woks Co. 5.0


INSURANCE

United Cooperative Also known as

UCA

United Cooperative Assurance Company (UCA) is engaged in the

insurance business in KSA. In 2007, the company was established in

Jeddah as a separate entity from UCA Insurance Co. of Bahrain. In March

2008, UCA initiated a public offering selling a 40% stake (or eight

million shares) at SR10.0 per share. The stock was listed on the Tadawul

in June 2008.

� Business brief: UCA offers a wide range of insurance products such as

engineering (contractor’s risks, machinery, and plant & equipment used for

construction), medical, personal accident and protection, motor insurance,

and marine cargo. The company’s 220 employees cater to clients through

offices in 3 major cities in the Kingdom.

� Financials: Investment & management fee income declined 50.7% YoY to

SR0.4mn in 1Q10. UCA’s general and administrative expenses stood at

SR0.1mn in 1Q10 compared to SR0.4mn in 1Q09. The company’s net income

fell 33.0% YoY to SR0.3mn during the quarter.

� Recent developments: In February 2010, UCA announced an audited net

loss of SR11.2mn in 2009, compared to a loss of SR10.2mn in 2008.

Company financials

2007 2008 2009* 1Q10

YoY

(%)

CAGR (%)

(07-09)



Net Income SRmn - (10) (11) 0 (33.0) -

Assets SRmn - 207 190 190 0.0 -

Equity SRmn - 190 175 175 (8.3) -




Net Mgn % - - - - - -

ROE % - (5.4) (6.1) 0.7 - -

ROA % - (4.9) (5.6) 0.6 - -


EPS SR - (0.5) (0.6) 0.0 (33.0) -

BVPS SR - 9.5 8.7 8.7 (8.3) -

Source: Tadawul, Zawya, Company, NCBC Research * For the 20 months to end 2009

208

JUNE 2010 ARABIA INSURANCE COOPERATIVE COMPANY

Not Covered



Stock details





Absolute (10) (10) (20)

Market (6) (5) 3

Sector (16) (18) (18)


3M 6.9 1.8

12M 13.7 3.7

Raw Beta 6m 2yr

0.45 0.76


Bloomberg code SAUDIRE AB

Website www.saudi-re.com



Free float 40.00

Valuation multiples

08 09 TTM

P/E (x) N/M N/M N/M

P/B (x) 1.0 1.0 1.0

P/Sales (x) 6226.4 75.3 47.5


DPS N/A N/A N/A



5,000

5,500

6,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-10579111315

TASI Saudi Re (RHS)

Source: Bloomberg


Jordan Islamic Finance Bank 5.0

Ahmad Hamad AlGosaibi & Bros. Co.

5.0


INSURANCE

Saudi Reinsurance Also known as

Saudi Re

Saudi Reinsurance Co (Saudi Re), established in May 2008, is the first

cooperative reinsurance company of Saudi Arabia; it is headquartered in

Riyadh. The company provides life and non-life Shariah-compliant

reinsurance products. Its products cover treaty and facultative types of

reinsurance in all classes of business within the Kingdom as well as in

other countries of the MENA region.

� Business brief: Saudi Re offers a wide range of reinsurance-related

products such as fire, marine (hull and cargo), general accident, engineering

(machinery breakdown and contractor’s risks), aviation, motor, third-party

liability as well as life and medical insurances.

� Financials: Saudi Re recorded a 440% growth in gross premiums written to

SR43.5mn during 1Q10. As a result, net premiums earned surged 11-fold

from SR0.5mn in 1Q09 to SR5.3mn in 1Q10. As a percentage of total

revenues, net premiums earned contributed 60.9% and 62.9% in 1Q09 and

1Q10, respectively. The company also registered a 9.6-fold growth in total

revenues to SR8.5mn in 1Q10. However, profitability of the company was

strained as total costs and expenses increased to SR16.7mn in 1Q10, a

189.5% YoY increase. Also, absence of other income during the quarter

compared to the SR11.3mn in 1Q09, led to a net loss of SR5.7mn in 1Q10 as

against a net profit of SR6.3mn in 1Q09

� Recent developments: In March 2010, Saudi Re announced that Standard

and Poor's had reaffirmed its BBB+ rating with a stable outlook.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn - 0 8 5 N/M N/M

Total Revenues SRmn - 0 13 8 N/M N/M

Net Income SRmn - 26 5 (6) (189.6) N/M

Assets SRmn - 1,033 1,094 1,198 14.4 -

Equity SRmn - 1,026 1,006 994 (3.1) -

Investments SRmn - 1,012 1,035 1,038 2.4 -

Technical Reserves SRmn - 1 15 96 N/M N/M

Combined Ratio % - N/M 403.9 312.1 - -

Net Mgn % - N/M 36.7 (66.8) - -

ROE % - 2.5 0.5 (2.3) - -

ROA % - 2.5 0.5 (2.0) - -


EPS SR - 0.3 0.0 (0.1) (189.6) N/M

BVPS SR - 10.3 10.1 9.9 (3.1) -


209

JUNE 2010 BUPA ARABIA

Not Covered



Stock details





Absolute (16) (22) (4)

Market (6) (5) 3

Sector (16) (18) (18)


3M 13.5 3.6

12M 13.1 3.5

Raw Beta 6m 2yr

1.54 1.17


Bloomberg code BUPA AB

Website www.bupa.com.sa



Free float 40.00

Valuation multiples

08 09 TTM

P/E (x) (466.1) 14.2 16.4

P/B (x) 2.0 1.8 1.9

P/Sales (x) - 0.7 0.6


DPS N/A N/A N/A



5,000

5,5006,000

6,500

7,000

Jun-09 Oct-09 Feb-10 Jun-10101520253035

TASI Bupa Arabia (RHS)

Source: Bloomberg


Bupa Middle East Holdings 22.5

Bupa Investments Limited 15.0

Modern Software Solutions Co 5.0

Nazer Group Holding Co 5.0

Assas Company for Healthcare

5.0


INSURANCE

Bupa ArabiaBupa Arabia for Cooperative Insurance, a medical insurance company,

was established in Jeddah in 2008. Prior to being publicly listed, Bupa

Arabia conducted its business as a joint venture between Nazer Group

and the UK-based BUPA Group.

� Business brief: The company offers medical insurance cover to companies,

businesses and families. Bupa Arabia’s corporate services include customized

healthcare plans, which have been divided into BUPA Direct and BUPA

Corporate Health Care Scheme. BUPA Direct targets companies having 10–

50 employees with three main schemes: Executive, Classic and Essential.

BUPA Corporate Health Care Scheme targets companies with over 50

employees.

� Financials: Bupa Arabia’s gross premium increased 46.6% YoY to

SR637mn, while net premium grew 39.8% YoY to SR368mn in 1Q10. The

company’s revenues totaled SR369mn in 1Q10 compared to SR265mn in

1Q09. Bupa Arabia incurred a loss in 1Q10 as expenses rose 40.3% YoY to

SR381mn. During the same period, the company’s net loss was SR12.9mn

from SR5.6mn in 1Q09.

� Recent developments: In June 2010, Bupa Arabia signed a SR2.6mn

partnership agreement with Human Resources Development Fund (HRDF) to

recruit and train 94 employees.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn - - 1,205 368 39.8 N/M

Total Revenues SRmn - - 1,208 369 39.2 N/M

Net Income SRmn - (2) 56 (13) 131.3 N/M

Assets SRmn - 392 1,403 1,649 25.2 -

Equity SRmn - 390 437 420 9.9 -

Investments SRmn - 352 309 310 (12.5) -

Technical Reserves SRmn - - 798 1,068 37.1 N/M

Combined Ratio % - - 95.3 103.4 - -

Net Mgn % - - 4.6 (3.5) - -

ROE % - (0.4) 13.5 (12.0) - -

ROA % - (0.4) 6.2 (3.4) - -


EPS SR - (0.0) 1.4 (0.3) 131.3 N/M

BVPS SR - 9.7 10.9 10.5 9.9 -


210

JUNE 2010 WEQAYA TAKAFUL INSURANCE & REINSURANCE COMPANY

Not Covered



Stock details





Absolute (23) (33) NA

Market (6) (5) 3

Sector (16) (18) (18)


3M 12.1 3.2

12M 47.5 12.7

Raw Beta 6m 3yr

0.57 N/A


Bloomberg code WEQAYA AB

Website www.weqaya.com.sa



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/A NM NM

P/B (x) N/A 2.1 2.1





5,0005,5006,0006,5007,000

Jun-10Mar-10Dec-09Sep-09Jun-091929394959

TASI Weqaya (RHS

Source: Bloomberg


Al Oula Insurance Company 20.0

Beit Al Mal Investments 5.0

The sons of Abdulaziz Ajlan Al Ajlan Company

5.0

Al Suhaili Trading and Development

5.0

Rana Investments Company 5.0


INSURANCE

Weqaya Takaful Also known as

Weqaya

Weqaya Takaful Insurance & Reinsurance Company (Weqaya),

established in May 2009 in Riyadh, offers insurance products in

healthcare, general insurance and reinsurance.

� Business brief: Weqaya’s insurance portfolio consists of products such as

protection and savings, health, and general insurances; and reinsurance

services.

� Financials: Weqaya reported a net loss of SR1.9mn in 1Q10 mainly due to

the initial stage of its operations. The company did not yield any sales;

however, generated SR1.9mn as investment and management fee. Owing to

the newly started operations, operating expenses stood at SR3.7mn,

resulting in a net loss for the quarter.

� Recent developments: In June 2010, the company received approval for the

interim sale of 19 of its insurance products. In April 2010, Weqaya received

final approval from SAMA to conduct its business in Saudi Arabia and for the

sale and marketing of its products.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn NA NA NA NA NA NA

Total Revenues SRmn NA NA NA NA NA NA

Net Income SRmn NA NA (11) (2) NA NA

Assets SRmn NA NA 190 188 NA NA

Equity SRmn NA NA 181 178 NA NA

Investments SRmn NA NA 182 180 NA NA

Technical Reserves SRmn NA NA NA NA NA NA

Combined Ratio % NA NA NA NA NA NA

Net Mgn % NA NA NA NA NA NA

ROE % NA NA NA NA NA NA

ROA % NA NA NA NA NA NA

Div Payout % NA NA NA NA NA NA

EPS SR NA NA (1.6) (0.6) NA NA

BVPS SR NA NA 9.1 8.9 NA NA


211

JUNE 2010 AL RAJHI COMPANY FOR COOPERATIVE INSURANCE

Not Covered



Stock details





Absolute (23) (31) NA

Market (6) (5) 3

Sector (16) (18) (18)


3M 5.3 1.4

12M 40.9 10.9

Raw Beta 6m 3yr

1.07 N/A


Bloomberg code ARCCI AB

Website www.alrajhitakaful.com



Free float 30.0

Valuation multiples

08 09 TTM

P/E (x) N/A NM NM

P/B (x) N/A 4.06 4.26





5,000

6,000

7,000

Jul-09 Sep-09Dec-09Feb-10May-101030507090110

TASI ARCCI (RHS)

Source: Bloomberg


Al Rajhi Banking and Investment

22.5

Al Rajhi Insurance Co. Ltd. 22.5

Oman Insurance Company 10

Company Summit Alramtan Alrmtan

5


INSURANCE

Al Rajhi Cooperative Also known as

ARCCI

Al Rajhi Company for Cooperative Insurance (ARCCI), established in

1990 in Bahrain, is an Islamic insurance company. The company set up

operations in Saudi Arabia in July 2008. ARCCI provides cooperative

insurance and reinsurance services in compliance with Shariah principles

to individuals and corporate customers in and around KSA.

� Business brief: ARCCI’s product portfolio consists of property, marine (hull

and cargo) & aviation, engineering, liability, casualty, life, health, travel,

motor and other miscellaneous insurances. The company operates through a

network of three branches in Riyadh, Jeddah and Dammam; its head office is

located in Riyadh.

� Financials: ARCCI’s gross written premium for 1Q10 was SR30mn and

revenue was SR3mn. However, as the company is in its initial stage, the

operating expenses were high, resulting in a net loss of SR8.2mn. ARCCI’s

total assets expanded to SR250mn in 1Q10 from SR193mn in 2009. Its

shareholder equity stood at SR164mn during the quarter.

� Recent developments: On 18 April 2009, ARCCI launched its IPO, offering

6mn shares (30% share capital), which was oversubscribed by 747 times.

The company also received approval from SAMA in February 2010 to offer

additional insurance products.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn NA NA NA 3 NA NA

Total Revenues SRmn NA NA NA 3 NA NA

Net Income SRmn NA NA (29) (8) NA NA

Assets SRmn NA NA 193 250 NA NA

Equity SRmn NA NA 173 164 NA NA

Investments SRmn NA NA 187 154 NA NA

Technical Reserves SRmn NA NA NA 28 NA NA

Combined Ratio % NA NA NA 505.9 NA NA

Net Mgn % NA NA NA (262.7) NA NA

ROE % NA NA (16.6) (19.5) NA NA

ROA % NA NA (14.9) (14.8) NA NA

Div Payout % NA NA NA NA NA NA

EPS SR NA NA (1.4) (0.4) NA NA

BVPS SR NA NA 8.6 8.2 NA NA


212

JUNE 2010 ACE ARABIA COOPERATIVE INSURANCE COMPANY

Not Covered



Stock details






Market (6) (5) 3

Sector (16) (18) (18)


3M 7.3 1.9

12M 26.1 7.0

Raw Beta 6m 3yr

0.84 N/A


Bloomberg code ACE AB

Website www.ace-mena.com



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/A NM NM

P/B (x) N/A 3.8 3.8





5,000

6,000

7,000

Jul-09 Oct-09 Dec-09 Mar-10 May-10324252627282

TASI ACE (RHS)

Source: Bloomberg


Company that AT ACE International Holding Limit

30.0

General Company for the development of technology

5.0

Wahdan Lalla Investment Commercial Co.

5.0

Lalla Investment Commercial 5.0

Mediterranean & Arab Investment Commercial Lalla

5.0


INSURANCE

ACE Arabia ACE Arabia Cooperative Insurance Company (ACE), headquartered in Al

Khobar, is an associate company of ACE Limited and has a joint venture

with Saudi partners. The company was established in July 2009. ACE

provides customized property, casualty, financial, health and personal

insurance products to a diverse range of clients in Saudi Arabia.

� Business brief: ACE provides an array of customized insurance products

including health, fire & property, engineering, accidents, liability, car,

marine, aviation, energy and collective insurance. The company operates

through offices in Khobar, Riyadh, Jeddah and Al Hassan.

� Financials: ACE’s assets totaled SR90.8mn, while its shareholders’ equity

stood at SR89.8mn at the end of 1Q10. The company posted a net loss of

SR0.6mn mainly due to its early stage of operations.

� Recent developments: In February 2010, ACE received approval from

SAMA for a majority of the insurance products it wishes to provide. In

January 2010, SAMA granted the company the license to conduct insurance

business in Saudi Arabia. ACE had its IPO, offering 4mn shares (40% of

company shares) in April 2009, and was listed on Tadawul in July 2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Ins. Premium SRmn N/A N/A N/A N/A N/A N/A

Total Revenues SRmn N/A N/A N/A N/A N/A N/A

Net Income SRmn N/A N/A (9) (1) N/A N/A

Assets SRmn N/A N/A 100 91 N/A N/A

Equity SRmn N/A N/A 90 90 N/A N/A

Investments SRmn N/A N/A 98 80 N/A N/A

Technical Reserves SRmn N/A N/A N/A N/A N/A N/A

Combined Ratio % N/A N/A N/A N/A N/A N/A

Net Mgn % N/A N/A N/A N/A N/A N/A

ROE % N/A N/A (10.6) (2.7) N/A N/A

ROA % N/A N/A (9.5) (2.5) N/A N/A

Div Payout % N/A N/A N/A N/A N/A N/A

EPS SR N/A N/A (0.9) (0.1) N/A N/A

BVPS SR N/A N/A 9.0 9.0 N/A N/A


213

JUNE 2010 AXA COOPERATIVE INSURANCE COMPANY

Not Covered



Stock details






Market (6) (5) 3

Sector (16) (18) (18)


3M 7.2 1.9

12M 33.4 8.9

Raw Beta 6m 3yr

1.15 N/A


Bloomberg code AXA AB

Website www.axa-gulf.com



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/A N/A N/A

P/B (x) N/A 1.9 1.9

EV/EBITDA (%) N/A N/A N/A




5,000

6,000

7,000

Jul-09 Oct-09 Dec-09 Mar-10 May-1010

20

30

40

50

TASI AXA (RHS)

Source: Bloomberg


AXA Insurance Gulf 32.0

AXA Mediterranean Sea Holding

18.0


INSURANCE

AXA Cooperative AXA Cooperative Insurance Company (AXA Cooperative) is a part of the

AXA Group headquartered in France. AXA Cooperative, established in

July 2008, is engaged in providing various insurance and reinsurance

services for individual and institutional clients in Saudi Arabia.

� Business brief: The Company provides Motor Insurance, Property

Insurance, Golf Insurance, Relocation Insurance, Marine Insurance, and

Healthcare Insurance through its offices in Riyadh, Jeddah and Dammam in

KSA. AXA Group’s operations in Saudi Arabia can be traced back to 1985.

� Financials: The Company reported a net loss of SR1.7mn in 1Q10. Gross

Written Premium for 1Q10 stood at SR10.5mn. AXA Cooperative commenced

operations in February 2010. In 1Q 10, AXA Cooperatives’ assets were worth

SR 216.mm, while its equity stood at SR193mn.

� Recent developments: In February 2010, AXA Cooperative received its

license from SAMA to practice cooperative insurance activities in Saudi

Arabia. It also received a license for selling and marketing several insurance

products. Trading of AXA Cooperative‘s stock started in June 2009 after an

IPO.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)

Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A


Net Income SRmn N/A N/A N/A (2) N/A N/A

Assets SRmn N/A N/A 204 216 N/A N/A

Equity SRmn N/A N/A 195 193 N/A N/A

Investments SRmn N/A N/A 204 205 N/A N/A

Technical Reserves SRmn N/A N/A N/A 11 N/A N/A

Combined Ratio % N/A N/A N/A 251.0 N/A N/A

Net Mgn % N/A N/A N/A N/M N/A N/A

ROE % N/A N/A 0.05 (3.5) N/A N/A

ROA % N/A N/A 0.05 (3.2) N/A N/A


EPS SR N/A N/A 0.1 (0.1) N/A N/A

BVPS SR N/A N/A 9.7 9.7 N/A N/A


214

JUNE 2010 GULF GENERAL COOPERATIVE INSURANCE COMPANY

Not Covered



Stock details





Absolute (15) 15 N/A

Market (6) (5) 3

Sector (16) (18) (18)


3M 39.4 10.5

12M N/A N/A

Raw Beta 6m 3yr

0.85 N/A


Bloomberg code GGCI AB

Website www.ggi-sa.com



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/A N/A N/A

P/B (x) N/A N/A N/A





5,000

6,000

7,000

Feb-10 Mar-10 Apr-10 May-1020

25

30

35

TASI Gulf General (RHS)

Source: Bloomberg


Saudi General Insurance Co. 15.0

Gulf Company for CooperativeInsurance

15.0

Al Fadel Investments 5.0

Mohammad Al Said for Commercial Investment

5.0

Ibla International Real Estate Development

5.0


INSURANCE

Gulf General Also known as

GGI, GGCI

Gulf General Cooperative Insurance Company (Gulf General), the entity

created through the merger of Saudi General Insurance Co. (SGI) and

Gulf Cooperation Insurance Co. (GCI) was established in December

2009. The company, headquartered in Jeddah, provides various general

insurance services in Saudi Arabia.

� Business brief: Gulf General Cooperative Insurance Co. will provide

insurance services in various segments, including Fire, Accidents, Property,

Engineering , Vehicle, Marine (Cargo and Hull), Health, Aviation as well as

Energy. Its offices are located in Jeddah, Riyadh and Dammam.

� Financials: Gulf General does not report financials since it is yet to

commence operations.

� Recent developments: In April 2010, Gulf General received a license from

the SAMA to proceed with activities in the general & health insurance sector,

the personal and commercial vehicle sector, and temporary sale of medical

insurance products. The company had won a license to conduct insurance

business in Saudi Arabia in January 2010. Gulf General announced an IPO in

October 2009 offering 40% (8mn shares) at a price of SAR 10 per share. The

stock commenced trading in the stock exchange on 8 February 2010.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)



Net Income SRmn N/A N/A N/A N/A N/A N/A

Assets SRmn N/A N/A N/A N/A N/A N/A

Equity SRmn N/A N/A N/A N/A N/A N/A

Investments SRmn N/A N/A N/A N/A N/A N/A




ROE % N/A N/A N/A N/A N/A N/A

ROA % N/A N/A N/A N/A N/A N/A


EPS SR N/A N/A N/A N/A N/A N/A

BVPS SR N/A N/A N/A N/A N/A N/A


215

JUNE 2010 BURUJ COOPERATIVE INSURANCE COMPANY

Not Covered



Stock details






Market (6) (5) 3

Sector (16) (18) (18)


3M 25.4 6.8

12M N/A N/A

Raw Beta 6m 3yr

1.01 N/A


Bloomberg code BURUJ AB

Website www.burujinsurance.com



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/A N/A N/A

P/B (x) N/A N/A N/A





5,000

6,000

7,000

Feb-10 Mar-10 Apr-10 May-1010

20

30

40

TASI Buruj (RHS)

Source: Bloomberg


Gulf Insurance Co. KSC 22.5

Yousef Mohammed Abdel Wahab Nagy Nations

5.0

Gulf Medical Co., Ltd. 5.0

Batterji Industrial Group Co. 5.0


INSURANCE

Buruj Cooperative Also known as

Buruj

Buruj Cooperative Insurance Company (Buruj), a part of Kuwait’s Gulf

Insurance Group, was established in October 2008 in Riyadh. Formerly

known as Saudi Pearl Insurance Company, it was re-established as Buruj

Cooperative Insurance Company due to the regulatory changes in KSA’s

insurance sector.

� Business brief: Buruj has not yet started its operations. However, it is likely

to mainly deal with insurance segments such as Motor, Property and Fire,

Marine, Engineering, Fidelity, and Money Insurance and Liability Insurance.

� Financials: The Company did not report financials as it has not yet

commenced operations.

� Recent developments: Buruj received SAMA’s approval to sell insurance

products in KSA in June 2010. The company had its IPO in October 2009; it

had offered 5.2mn shares (40% of its capital) at a price of SAR 10 per share.

Buruj’s shares started trading on the stock exchange on 15 Feb 2010.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)
















216

JUNE 2010 AL ALAMIYA COOPERATIVE INSURANCE COMPANY

Not Covered



Stock details






Market (6) (5) 3

Sector (16) (18) (18)


3M 16.0 4.3

12M N/A N/A

Raw Beta 6m 3yr

0.84 N/A


Bloomberg code ALALAMIY AB

Website www.alamiyainsurance.com.sa



Free float 30.0

Valuation multiples

08 09 TTM

P/E (x) N/A N/A N/A

P/B (x) N/A N/A N/A





5,000

5,500

6,000

6,500

7,000

Dec-09 Feb-10 Mar-10 May-1010

20

30

40

TASI Al Alamiya (RHS)

Source: Bloomberg


Royal & Sun Alliance Insurance

50.0

Riyad Bank 19.9


INSURANCE

Al Alamiya Al Alamiya Cooperative Insurance Company (Al Alamiya) was

established in Riyadh in June 2009. Al Alamiya is expected to provide

insurance services in various segments, including commercial, personal,

reinsurance, agency activities, representation, and correspondence.

� Business brief: Al Alamiya Cooperative Insurance Co. has received approval

for conducting operations as well as selling insurance products in KSA. The

company intends to acquire the insurance business of Royal & Sun Alliance

Insurance Co. and assets of Al Alamiya Trading & Services Co.

� Financials: The company did not report financials as it has not yet

commenced operations.

� Recent developments: In April 2010, Managing Director and CEO of Al

Alamiya resigned from the membership of Board of Directors. On 14 Feb

2010, the company received approval from SAMA to launch 23 insurance

products for a period of six months. Al Alamiya had its IPO in October 2009;

it offered 6mn shares, i.e., 30% of the company’s capital at the price of SAR

10 per share. Al Alamiya started trading on the stock exchange on 8 Dec

2009.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)
















217

JUNE 2010 SOLIDARITY SAUDI TAKAFUL COMPANY

Not Covered



Stock details

52-week range H/L (SR) N/A





Market (6) (5) 3

Sector (16) (18) (18)


3M N/A N/A

12M N/A N/A

Raw Beta 6m 3yr

N/A N/A


Bloomberg code SOLIDARI AB

Website www.sstc.com.sa



Free float 40.00

Valuation multiples

08 09 TTM

P/E (x) N/A N/A N/A

P/B (x) N/A N/A N/A





5,0005,5006,0006,5007,000

8-Jun-10 9-Jun-10 12-Jun-10

13-Jun-10

10

11

12

13

TASI Soliraity (RHS)

Source: Bloomberg


Solidarity Company 27.5


INSURANCE

Solidarity Saudi Also known as

SSTC, SOLIDARITY

Solidarity Saudi Takaful Company (Solidarity) was listed on TASI on 8

June 2010. The company intends to provide insurance services in

segments like property, medical, marine (cargo and hull), general

accident and motor. Solidarity is headquartered in Riyadh and has

offices in Jeddah and Khobar.

� Business brief: Solidarity, with a paid up capital base of SR555mn, plans to

offer insurance products in the KSA in various categories, including property,

medical, marine (cargo and hull), general accident, and motor. The company

was listed on the stock exchange in June 2010.

� Financials: Solidarity does not report financials as it is yet to commence

operations.

� Recent developments: Solidarity launched an IPO in March 2010, offering

22.5mn shares at SR10 each. Approximately 1.25mn investors subscribed to

the IPO, which was oversubscribed three times. The company’s stock started

trading in stock exchange from 8 June 2010 at the opening price of SR 12.5.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)
















218

JUNE 2010 WATANIYA INSURANCE COMPANY

Not Covered



Stock details






Market (6) (5) 3

Sector (16) (18) (18)


3M N/A N/A

12M N/A N/A

Raw Beta 6m 3yr

N/A N/A


Bloomberg code WATANIYA AB

Website www.wataniya.com.sa

Weighting& free float (%)


Free float 30.0

Valuation multiples

08 09 TTM

P/E (x) N/A N/A N/A

P/B (x) N/A N/A N/A





5,000

5,500

6,000

6,500

7,000

6-Jun-10 8-Jun-10 12-Jun-1010

20

30

40

50

TASI Wataniya (RHS)

Source: Bloomberg


Saudi National Insurance Co. 27.5

Saudi Hollandi Bank 20.0

New Rianshor Limited Company 10.0

Ibrahim Al Juffali & Bros. Co. 5.0


INSURANCE

Wataniya Insurance Also known as

Wataniya

Wataniya Insurance Company (Wataniya) was listed on the TASI on 6

June 2010. The company is expected to provide a range of insurance

services in segments such as property, medical, marine, aviation,

engineering, fire, general accident, motor and liability insurance. The

company has offices in Jeddah, Riyadh and Khobar.

� Business brief: Wataniya, a newly started company, intends to offer a wide

range of insurance products in KSA. It has strategic partnerships with New

Re Company (Part of Munich Re Group) and Saudi Hollandi Bank, which will

help the company sell its insurance products. Wataniya was recently listed in

the stock exchange.

� Financials: Wataniya does not report financials as it is yet to commence

operations.

� Recent developments: The Company’ stock began trading on the stock

exchange on 6 June 2010. Wataniya announced its IPO in March 2010,

offering 3mn shares (30% of its capital) at SR10 each. The IPO was twenty

times oversubscribed and 1.14mn investors subscribed for it.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)
















219

JUNE 2010 AMANA COOPERATIVE INSURANCE COMPANY

Not Covered



Stock details






Market (6) (5) 3

Sector (16) (18) (18)


3M N/A N/A

12M N/A N/A

Raw Beta 6m 3yr

N/A N/A


Bloomberg code AMANA AB

Website www.amana-coop.com.sa



Free float 40.0

Valuation multiples

08 09 TTM

P/E (x) N/A N/A N/A

P/B (x) N/A N/A N/A





Amana Gulf Insurance Co. 18.3


INSURANCE

Amana Cooperative Also known as

Amana

Amana Cooperative Insurance Company (Amana), listed on 13 June

2010 on the TASI, is expected to provide various insurance products for

corporates as well as individuals. The company, headquartered in

Riyadh, also has branches in Jeddah and Khobar.

� Business brief: Amana provides insurance services in segments like Health,

Fire, Car, Property, Marine and Land Shipments, and Engineering, besides

other Miscellaneous Insurance. The company was recently listed on the stock

exchange. The company’s equity paid up capital stands at SR320mn.

� Financials: Amana does not report financials since it is yet to commence

operations.

� Recent developments: The Company’s stock started trading on the stock

exchange on 13 June 2010. The company had its IPO in March 2010 and

offered 12.8mn shares (40% of its capital) at SR10 each. The IPO was

oversubscribed by 4.5 times and 1.01mn investors subscribed for the IPO.

Company financials

2007 2008 2009 1Q10

YoY

(%)

CAGR (%)

(07-09)
















220

THIS PAGE IS INTENTIONALLY LEFT BLANK

221


Appendix

Saudi equities fact sheet – performance and valuation

Exhibit 149: Performance and valuation

Exchg Close Avg YTD Mkt cap FF Price chg TTM (%) Valuation (x) Div yld

code Company name (SR) T/O (SR mn) (SR mn) Wt (%) %YTD ROE ROA P/E-TTM PBV# 09 (%)

Banking/Financial 1010 RIBL 28.7 14.4 43,050 4.2 6.7 12.3 1.9 13.1 1.5 4.5 1020 BJAZ 17 12.7 5,085 0.7 (11.5) (1.3) (0.2) nm 1.1 - 1030 Saudi Investment 19.6 3.4 8,820 0.9 8.9 4.2 0.6 29.2 1.2 - 1040 Saudi Hollandi 32.9 2.9 10,882 0.6 9.7 0.5 0.0 - 1.9 - 1050 Saudi Fransi 44.3 5.2 32,038 3.5 8.8 15.9 2.0 13.1 2.0 2.3 1060 SABB 43.3 5 32,475 2.1 (0.2) 14.4 1.5 17.2 2.4 1.9 1080 Arab National 41.7 5.4 27,105 2.7 (1.7) 17.1 2.1 11.7 1.9 2.4 1090 SAMBA 58.3 15.2 52,425 5.3 15.3 21.2 2.5 11.7 2.3 2.8 1120 Al Rajhi 77 110.3 115,500 11.4 8.1 25.2 4.0 17.2 4.1 3.6 1140 Al Bilad 20.6 7.8 6,165 1 (1.7) (7.0) (1.2) nm 2.0 - 1150 Al Inma Bank 11.2 324.7 16,725 2.3 (12.2) 0.2 0.2 - 1.1 - Petrochemicals 2001 Chemanol 14.4 29.1 1,731 0.2 (6.8) 1.9 0.9 66.4 1.2 - 2002 Petrochem 15.5 42.1 7,416 0.3 (0.6) - - nm 1.6 - 2010 SABIC 90.5 372.0 271,500 12.3 9.7 14.3 5.4 17.6 2.4 1.7 2020 SAFCO 134 30.5 33,500 2.5 10.7 30.7 24.9 17.0 5.6 9.0 2060 Industrialization 25.3 45.3 11,655 1.9 (1.0) 11.4 2.8 13.1 1.4 3.0 2170 Alujain 13.7 13.9 948 0.2 (20.1) (4.5) (0.7) nm 1.9 - 2210 Nama Chemicals 9.7 24.1 1,247 0.2 (10.2) 0.0 0.0 - 0.8 - 2250 SIIG 18.6 21.4 8,370 1.5 (14.5) 8.9 3.2 17.5 1.5 2.7 2260 Sahara Petrochemical 21 51.7 6,143 1.1 (0.7) 8.5 3.6 29.7 2.0 - 2290 YANSAB 41.4 131.6 23,288 1.8 24.0 4.1 1.2 97.6 3.9 - 2310 Sipchem 21.9 27.7 7,300 1.2 (8.2) 4.0 1.7 37.5 1.6 4.6 2330 APPC 21 30.7 2,962 0.6 (15.9) 8.3 4.0 21.6 1.8 4.8 2350 Saudi Kayan 18.7 375.0 27,975 2.3 2.5 (0.1) 0.0 nm 1.8 - 2380 Petro Rabigh 28.8 88.8 25,229 0.9 (18.9) (13.1) (2.3) nm 3.1 - Cement 3010 Arab Cement 36.7 5.3 2,936 0.4 (15.6) 6.6 4.0 19.6 1.3 3.4 3020 Yamamah Cement 50.5 8.9 6,818 1.2 6.5 21.3 17.5 11.4 2.3 5.9 3030 Saudi Cement 45.7 10.2 6,992 1.2 18.7 22.2 12.3 11.4 2.4 5.1 3040 Qassim Cement 71.5 8.1 6,435 0.7 2.9 33.6 25.8 10.7 3.8 8.4 3050 Southern Cement 68.3 3.0 9,555 0.8 1.9 31.6 27.6 13.2 4.2 7.3 3060 Yanbu Cement 43.7 5.1 4,589 0.5 (9.9) 21.1 16.7 10.1 2.1 6.9 3080 Eastern Cement 44.2 4.1 3,801 0.5 (11.2) 19.3 14.9 11.0 2.0 6.8 3090 Tabuk Cement 18.8 2.1 1,692 0.3 (2.8) 11.2 9.5 13.9 1.6 6.6 Retail 4001 Al Othaim 77.5 14.0 1,744 0.2 52.7 29.3 7.3 18.8 5.5 3.2 4002 Mouwasat 66 8.9 1,650 0.2 7.8 - - 14.6 3.2 1.5 4050 SASCO 12.4 4.5 558 0.1 (7.5) 6.4 5.7 18.9 1.1 - 4160 Thim'ar 24.3 25.8 243 0 (43.3) (14.1) (10.2) nm 3.6 - 4180 Fitaihi Group 12.9 10.3 645 0.1 (12.8) 2.7 2.3 38.1 1.0 - 4190 Jarir 154 5.5 6,160 1.1 15.1 54.7 31.5 16.0 8.2 4.8 4200 Aldrees 41.3 6.2 1,033 0.2 9.3 24.1 10.3 13.9 3.2 3.6 4240 AlHokair 42.2 6.7 2,954 0.3 14.4 23.7 13.3 12.8 2.7 4.7 4290 Alkhaleej Trng 39.7 5.2 596 0.1 (2.9) 19.8 10.8 13.6 2.5 1.3 Agriculture/Food 2050 Savola Group 35.3 17.3 17,650 2.6 16.9 16.7 7.1 15.3 2.4 2.8 2100 Wafra Food 17.4 11.4 347 0.1 (13.0) 3.4 3.1 57.8 1.9 - 2270 SADAFCO 42.1 10.9 1,368 0.2 (0.2) 34.8 24.1 6.7 2.1 3.6 2280 Almarai 190 27.6 21,850 1.8 15.2 25.2 11.5 19.3 3.9 2.1 4061 Anaam Holding 43.5 15.8 474 0.1 (27.5) (4.3) (2.0) nm 4.2 - 6001 Halwani Bros 38.5 15.7 1,100 0.1 21.5 11.1 8.4 21.2 2.3 2.6 6002 Herfy Foods 72 24.1 1,944 0.1 41.2 - - - 5.6 1.0 6010 NADEC 26.3 3.9 1,578 0.2 (22.0) (3.0) (1.2) nm 1.6 - 6020 Qassim Agriculture 8.6 6.3 429 0.1 (16.5) (1.4) (1.0) nm 1.1 - 6040 Tabuk Agriculture 21.1 10.5 421 0.1 (21.2) (1.5) (1.3) nm 1.2 2.4 6050 Saudi Fisheries 47 21.3 940 0.1 (10.5) (20.8) (15.2) nm 7.2 - 6060 Sharqiya Dev Co. 35.1 12.1 263 0.1 (7.4) (9.0) (6.8) nm 3.2 - 6070 Jouff Agriculture 28.7 6.3 574 0.1 (20.5) 11.4 10.2 10.2 1.1 7.0 6090 Jazan Development 13.6 4.8 680 0.1 1.1 1.1 1.0 91.4 1.0 - Energy & Utilities 2080 GASCO 20.0 1.7 1,500 0.2 (14.5) 10.1 6.9 15.7 1.5 2.5 5110 Saudi Electricity 13.4 53.8 55,832 1.9 18.1 2.4 0.7 48.4 1.2 5.2


APPENDIX




Telecom / IT 7010 STC 38.4 42.3 76,800 2.5 (12.9) 25.3 9.5 7.6 1.8 7.8 7020 Etihad Etisalat 50.0 52.4 35,000 4.1 15.2 29.8 10.6 10.8 2.9 2.5 7030 Zain KSA 8.7 57.9 12,180 1.1 (14.3) (31.7) (10.9) nm 1.5 - 7040 Atheeb Telecom 15.2 10.7 1,520 0.1 (5.9) - - - - - Industrial Investment 1210 BCI 29.1 7.8 800 0.1 (3.6) 17.9 10.5 13.0 2.2 4.8 1211 MA'ADEN 18.6 111.9 17,205 1.2 7.5 2.5 1.4 42.4 1.0 - 1212 Astra Ind 38.3 9.7 2,839 0.2 8.5 14.2 9.9 13.3 1.9 3.3 1213 AlSorayai Group 26.4 28.7 792 0.0 (2.2) - - - 2.1 - 1214 Shaker Group 58 79.0 2,030 0.1 18.4 - - - 4.9 - 2070 SPIMACO 31.4 6.0 2,463 0.3 4.3 8.2 6.3 15.0 1.0 4.6 2150 ZOUJAJ 22.1 8.6 663 0.1 (13.0) 9.2 8.1 15.7 1.4 1.9 2180 FIPCO 27.7 8.4 319 0.1 (33.6) 15.4 11.9 16.9 2.4 - 2220 Maadaniyah 20.6 7.2 525 0.1 (18.8) 6.6 4.5 23.0 1.5 2.4 2230 Saudi Chemical 42.1 10.8 2,662 0.5 1.7 24.9 14.0 8.6 2.0 9.5 2300 SPM 53.3 7.1 1,598 0.2 (1.4) 20.1 7.5 15.8 3.0 2.3 2340 AlAbdullatif 29.6 14.0 2,405 0.1 (28.5) 13.8 11.6 13.1 1.7 11.8 4140 Saudi Export 27.9 8.4 301 0.1 (23.1) (2.9) (2.3) nm 2.9 - Multi-Investment 2030 SARCO 37.2 8.6 558 0.1 (25.3) 1.2 1.2 - 1.4 1.3 2120 Saudi Advanced 12.5 10.2 538 0.1 (11.1) 4.2 4.2 17.0 0.7 - 2140 Al Ahsa for Dev. 11.1 15.1 544 0.1 2.8 3.9 2.8 34.1 1.3 - 2190 SISCO 13.2 20.9 894 0.2 (11.4) 0.3 0.1 - 1.2 - 4080 Assir 13.6 14.6 1,713 0.2 (10.9) 3.7 2.5 19.7 0.7 5.5 4130 Al Baha 14.7 18.4 220 0.0 (18.6) (8.2) (6.8) nm 2.2 - 4280 Kingdom Holding 8.3 68.1 30,574 0.3 3.3 1.9 0.9 71.5 1.2 - Construction 1310 MMG 18.9 20.7 2,363 0.2 (21.3) 2.4 1.4 52.1 1.3 4.0 1320 SSP 27.7 13.1 1,411 0.1 (18.8) 15.7 12.7 14.2 1.7 7.2 2040 Saudi Ceramics 123 9.3 3,075 0.4 9.6 27.8 12.2 14.3 3.7 2.4 2090 National Gypsum 33 4.5 1,045 0.1 (13.8) 15.7 12.1 13.6 2.1 7.6 2110 Saudi Cables 17.5 25.4 1,326 0.2 (28.8) 5.0 1.8 22.4 1.0 4.3 2130 SIDC 8.9 5.2 354 0.1 (3.3) (0.3) (0.1) nm 1.1 - 2160 Amiantit 18.5 17.4 2,137 0.4 (19.7) 12.8 4.9 10.5 1.3 5.4 2200 Arabian Pipes 29.6 8.1 932 0.2 (2.3) 2.8 1.4 46.0 1.3 - 2240 Zamil Ind 45.7 11.8 2,742 0.4 8.8 21.2 4.7 11.8 2.3 2.5 2320 Al Babtain 38.6 9.8 1,563 0.3 11.9 19.8 8.2 15.1 2.9 3.9 2360 SVCP 64.8 9.1 971 0.1 57.2 27.3 11.0 18.4 4.8 3.5 2370 MESC 21.3 13.4 850 0.1 (39.6) 5.9 1.7 30.1 1.8 4.7 4230 Red Sea Housing 54.5 5.7 1,635 0.1 (11.0) 12.3 9.2 18.1 2.3 3.7 Real Estate 4020 Al Akaria 24.1 3.7 2,886 0.2 (6.8) 2.9 2.8 31.6 0.9 3.1 4090 Taiba 16.2 3.2 2,423 0.3 (3.9) 2.4 2.0 34.6 0.9 7.4 4100 Makkah 29.8 5.6 4,912 0.8 10.8 5.4 5.1 23.0 1.2 5.0 4150 Arriyadh Dev 15.1 14.3 1,505 0.3 25.4 6.6 5.8 16.1 1.0 5.0 4220 Emaar E .C 8.8 39.5 7,438 0.4 (8.9) (3.8) (3.2) nm 1.0 - 4250 Jabal Omar 19 30.8 12,757 1.1 0.8 (0.4) (0.4) nm 1.9 - 4300 Dar Al Arkan 12.5 46.5 13,500 1.6 (11.0) 15.9 9.6 6.4 0.9 8.0 Transport 4030 NSCSA 18.7 20.3 5,891 0.8 5.4 7.1 3.4 16.9 1.2 5.3 4040 SAPTCO 7.7 10.0 956 0.2 (6.7) 2.3 1.8 30.0 0.7 - 4110 Mubarrad 15.3 8.1 275 0.1 (30.0) (2.3) (1.8) nm 1.7 - 4260 Budget Saudi 54.3 4.1 993 0.1 (10.0) 24.1 11.7 11.2 2.5 3.7 Media & Publishing 4070 Tihama 22.9 5.7 344 0.1 (7.8) 1.1 0.8 - 1.5 5.2 4210 SRMG 18.4 1.4 1,472 0.2 (34.3) 3.4 1.9 34.7 1.2 2.7 4270 SPPC 13.2 1.0 792 0.1 (20.0) (1.0) (0.7) nm 1.0 - Hotel & Tourism 4010 SHARCO 28.5 3.6 1,967 0.2 (6.9) 25.9 19.5 5.1 1.2 5.3 4170 Shams 25.2 14.5 256 0.1 (27.0) (3.5) (3.2) nm 3.7 -


APPENDIX




Insurance 8010 Tawuniya 81.5 23.2 4,075 0.4 13.6 32.3 6.2 10.8 3.0 4.9 8020 Malath Insurance 17.9 40.6 536 0.1 (32.1) 3.9 1.4 55.8 2.1 - 8030 MEDGULF 23.4 16.1 1,868 0.1 (4.7) 17.8 5.1 12.0 2.0 3.2 8040 ALLIANZ SF 25.2 7.9 504 0.0 (45.5) (44.9) (5.1) nm 12.9 - 8050 Saudi Salama 34.8 6.6 348 0.0 (33.7) 16.0 4.0 30.9 4.5 - 8060 Walaa Insurance 20 81.3 400 0.0 (25.4) (10.3) (5.7) nm 2.6 - 8070 Arabian Shield 21.4 5.7 428 0.0 (21.9) 4.1 1.7 51.4 2.1 - 8080 SABB Takaful 22.7 65.2 770 0.1 (32.6) (4.5) (1.6) nm 2.4 - 8090 SANAD 20.7 20.0 413 0.0 (24.4) (4.7) (2.1) nm 2.6 - 8100 SAICO 37.1 8.1 371 0.0 (47.0) (4.9) (1.9) nm 4.4 - 8110 Saudi Indian 34.5 7.6 345 0.0 (34.3) (35.2) (13.2) nm 7.4 - 8120 Gulf Union 21.3 8.6 468 0.0 (25.7) (1.3) (1.3) nm 2.5 - 8130 ATC 90.5 15.9 905 0.0 (8.6) (9.3) (4.7) nm 12.3 - 8140 Al-Ahlia 62.5 8.4 625 0.0 (17.5) (54.1) (19.8) nm 13.8 - 8150 ACIG 37.1 12.9 371 0.0 (31.3) (42.6) (29.0) nm 8.3 - 8160 AICC 20.6 5.3 412 0.0 (26.2) (7.4) (6.1) nm 2.7 - 8170 Trade Union 18.4 74.1 460 0.0 (23.5) 0.0 0.0 nm 1.9 - 8180 Sagr Insurance 48.9 37.9 978 0.1 (8.6) (2.3) (2.2) nm 4.9 - 8190 U C A 25.8 35.0 516 0.0 (21.8) (0.6) (0.6) nm 2.8 - 8200 Saudi Re 9.8 7.1 975 0.1 (16.3) (0.7) (0.6) nm 1.0 - 8210 BUPA Arabia 21.5 12.3 860 0.1 (15.0) 12.7 3.4 16.9 2.0 - 8220 Weqaya Takaful 21.3 8.5 425 0.0 (57.2) - - - 2.4 - 8230 ARCCI 43.8 12.4 876 0.1 (32.1) - - - 5.3 - 8240 ACE Arabia 37.9 7.8 379 0.0 (31.1) - - - 4.2 - 8250 AXA-Cooperative 21.3 19.9 425 0.0 (30.8) - - - 2.2 - 8260 Gulf General 30.3 17.2 606 0.0 203.0 - - - - - 8270 Buruj Insurance 29.5 18.0 384 0.0 195.0 - - - - - 8280 Al Alamiya 26.6 8.8 532 0.0 (24.0) - - - - - 8290 Solidarity 11.8 5.9 652 0.1 17.5 - - - - - 8300 Wataniya Insurance 51.3 29.2 513 0.0 412.5 - - - - - 8310 AMANA Insurance 14.7 12.4 470 0.0 47.0 - - - - -

Source: Tadawul, NCBC Research Note: YTD – indicates change in price from close at end of 2009 or the issue price during the IPO if listed in this year; # - based on latest available book value


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saudi factbook 2010 - gulfbase.com(2020.se) neutral 127.0 the company's high margins, low...

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