June 2010

Saudi Factbook 2010 Gateway to the Kingdom

Equity Research Eiji Aono [email protected] Farouk Miah [email protected] Ahmed Al-Qahtani [email protected] Tariq Al-Alaiwat [email protected] Faisal Al Azmeh [email protected]

Economic Research Dr Jarmo T Kotilaine [email protected]

Production Martin K Arokiaraj [email protected]

Please refer to last page for important disclaimer 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 188

APPENDIX 222 Table of Contents

JUNE 2010 THE SAUDI FACTBOOK 2 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.

JUNE 2010 THE SAUDI FACTBOOK 3 NCBC Recommendations

Exhibit 1: Summary of our stock recommendations Company Rating Target Price Comments (SR) Almarai Neutral 193.0 Geographic expansion and Infant Milk venture key drivers for the (2280.SE) 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 Neutral 34.4 Fundamentals remain solid although limited upside remains. (2050.SE) 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 Overweight 79.0 Number 2 food retailer in KSA, well positioned to take increasing (4001.SE) 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 Overweight 170.0 Plans to almost double number of stores coupled with 50% IT market (4190.SE) 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 Neutral 46.5 After rapid expansion through FY07, Al Hokair underwent (4240.SE) 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 estimate 1,242 stores by the end of FY16e Tasnee Overweight 36.2 NIC (Tasnee) is the only titanium pigment producer in the Middle East (2060.SE) 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 Sipchem Overweight 27.9 Acetyls Complex (Phase II expansion) will double Sipchem’s annual (2310.SE) 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 Neutral 20.3 Diversified product mix and strong links with Sabic are positives (2350.SE) however doubts over on-time start of production and lack of revenues until 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 Neutral 27.2 Sahara has one operational plant, one coming on-stream in 2Q 2010 (2260.SE) 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 Neutral 50.7 Yansab has recently started commercial operations in March 2010. (2290.SE) 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 Underweight 15.8 Expected to commence operations in 2012e and will be entering into (2002.SE) 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 Neutral 127.0 The company's high margins, low capital expenditure requirement (2020.SE) 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 Underweight 15.3 Concerns regarding long term reserves exist despite the higher gold (1211.SE) 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

JUNE 2010 THE SAUDI FACTBOOK 4 NCBC RECOMMENDATIONS

Exhibit 1: Summary of our stock recommendations Company Rating Target Price Comments (SR) Saudi Steel Pipes Overweight 40.5 Increasing demand in medium size pipes, and the start of a large (1320.SE) 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 Overweight 18.5 The new tariff structure which will affect industrial, commercial and (5110.SE) 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 Overweight 58.0 Strong demand in Riyadh coupled with highest capacity in the central (3020.SE) 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 Neutral 41.2 Based in the Eastern region, away from most of the key demand (3030.SE) centers. As long as the export ban remains, will hinder growth and profitability. Qassim Cement Neutral 71.3 Lowest cost cement producer in the country with very low inventory (3040.SE) levels. Lack of capacity expansion plans could limit growth.

Southern Cement Underweight 60.0 Well positioned for Jizan Economic City in the South. New facility near (3050.SE) Makkah also helps. However competition is fierce and new capacities will take some time to complete. Yanbu Cement Neutral 39.4 Western region fundamentals remain mixed, volatility in project (3060.SE) 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 Neutral 44.3 Shifting focus to domestic market due to export ban, with limitation (3080.SE) on exports remaining a key downside. Still focused on Eastern region for sales, however lack of major projects limits demand upside.

Source: NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 5 Economy and Nation

Resilience in the face of adversity Saudi Arabia’s positive GDP The performance of the Saudi economy has been characterized by considerable growth during testing resilience in the face of the global economic slowdown. While this show of strength economic times highlights highlights the effectiveness with which the government mobilized its reserves to the strength of its economy 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 (%) (%)

12 6

4 10

2 8

0 6 -2 4 -4

2 -6 2008 2009 2010 2011 0 Japan UK Russia US KSA Brazil India China 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.

JUNE 2010 THE SAUDI FACTBOOK 6 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)

180 40 160 35 140 30 120 25 100 20 80 15

60 (%) 10 40 20 5 0 0 -20 -5 -40 -10 2008 2009 2010 2011 2012 Budget balance mil SAR Public debt mil SAR Budget balance (% of GDP, RHS) Public debt (% of GDP, RHS)

Source: EIU

JUNE 2010 THE SAUDI FACTBOOK 7 KSA – ECONOMY AND NATION

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 %

120

100

80

60

40

20

0 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.

JUNE 2010 THE SAUDI FACTBOOK 8 KSA – ECONOMY AND NATION

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 (%) (%)

120 100% 90% 100 80% 70% 80 60% 50% 60 40% 30% 40 20% 10% 20 0% 2005 2006 2007 2008 (P) 2009 (F) 0 Agriculture Electricity, Gas & Water 2005 2006 2007 2008 2009 Construction Manufacturing (non-oil) Oil 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.

Liberalization of the The government has also implemented various liberalization policies to increase economy has led to a spurt investor confidence in the economy and boost foreign direct investment (FDI). in FDI in KSA, making it the According to the 2009 World Investment Report, Saudi Arabia experienced an highest FDI recipient in inward flow of approximately USD38bn of FDI, the highest in the United Nations 2008 in the ESCWA region 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.

JUNE 2010 THE SAUDI FACTBOOK 9 KSA – ECONOMY AND NATION

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 (%)

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 2002 2005 2008 2009 Oil revenues Other revenues

Source: SAMA, NCBC Research

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

JUNE 2010 THE SAUDI FACTBOOK 10 KSA – ECONOMY AND NATION

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

Source: SAMA, NCBC Research

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)

800

700

600

500

400

300

200

100

0 1Q-08 2Q-08 3Q-08 4Q-08 1Q-09 2Q-09 3Q-09 4Q-09 Private Sector Public Sector

Source: SAMA, NCBC Research

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

JUNE 2010 THE SAUDI FACTBOOK 11 KSA – ECONOMY AND NATION

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 (%)

25

20

15

10

5

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

-5 General Index Food Housing

Source: SAMA, NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 12 KSA – ECONOMY AND NATION

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.

JUNE 2010 THE SAUDI FACTBOOK 13 KSA – ECONOMY AND NATION

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

JUNE 2010 THE SAUDI FACTBOOK 14 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

8,000 25 Nov 2009: 32% rise YTD, however Dubai 7,500 9 March 2009: World debt standstill announcement drives Down 14% for the the market down for the rest of the year 7,000 year and down 6,500 80% from its peak of Feb. 2006 6,000

5,500 26 April 2010: 13% 5,000 June 2009: Saad/Al TASI ends the rise YTD, but worries Gosaibi troubles come year up 27.5%, on the 4,500 to light, impacting the but down 4% from Euro/Greece/etc. 4,000 Saudi as well as its peak in reverse the trend November 3,500 regional markets 3,000 31-Jul-09 31-Jan-09 31-Jan-10 31-Oct-09 30-Jun-09 30-Apr-09 30-Apr-10 28-Feb-09 28-Feb-10 31-Dec-08 31-Mar-09 31-Dec-09 31-Mar-10 30-Sep-09 31-Aug-09 30-Nov-09 31-May-09 31-May-10

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.

JUNE 2010 THE SAUDI FACTBOOK 15 KSA STOCK MARKET

Exhibit 14: 2009 GCC Market Performance Exhibit 15: 2010 YTD GCC Market Performance 2009 performance of GCC markets 2010 YTD performance of GCC markets

30% 5%

20% 0%

10% -5%

0%

-10% -10%

-15% -20%

-30% -20% Bahrain Kuwait Qatar Dubai Abu Oman TASI Dubai Abu Kuwait Oman Bahrain Qatar TASI Dhabi Dhabi

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 Exhibit 17: 2010 YTD performance vs Global Peers 2009 global market performance 2010 global market performance

90% 5%

80% 0% 70% -5% 60% 50% -10%

40% -15% 30% -20% 20% -25% 10% 0% -30% TASI TASI Brazil Brazil 100 100 Nasdaq Nasdaq EuroTop EuroTop Shanghai Shanghai Nikkei 225 Dow Jones Dow Nikkei 225 Dow Jones Dow Hang Seng Hang Hang Seng Hang

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

JUNE 2010 THE SAUDI FACTBOOK 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 Exhibit 20: 2010 YTD Sector Performance 2009 sector performance in % 2010 sector performance in %

70% 20% 60% 15% 10% 50% 5% 40% 0% 30% -5% 20% -10% -15% 10% -20% 0% -25% -10% -30% TASI TASI Retail Retail Cement Cement Agri/Food Transport Agri/Food Transport Insurance Insurance Telecom/IT Real Estate Real Estate Real Telecom/IT Construction Construction Industrial Inv Industrial Inv Petrochemicals Petrochemicals Hotels/Tourism Energy/Utilities Hotels/Tourism Energy/Utilities Media/Publishing Multi-investment Media/Publishing Multi-investment Banking/Financial Banking/Financial

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

JUNE 2010 THE SAUDI FACTBOOK 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 Exhibit 22: Turnover seems to have bottomed Market capitalization of regional markets in USDbn Daily turnover in USDmn from each of the GCC markets

1,200 7,000

6,000 1,000 5,000 800 4,000 600 3,000

400 2,000

1,000 200 - - Feb-07 Feb-08 Feb-09 Feb-10 Nov-07 Nov-08 Nov-09 Aug-07 Aug-08 Aug-09 May-07 May-08 May-09 May-10 Jul-07 Jul-08 Jul-09 Jan-07 Jan-08 Jan-09 Jan-10 Oct-07 Oct-08 Oct-09 Apr-07 Apr-08 Apr-09 Apr-10 Saudi Dubai Abu Dhabi Kuwait Qatar Oman Bahrain 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).

JUNE 2010 THE SAUDI FACTBOOK 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 Abu Saudi Kuwait 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

Source: Zawya, Reuters, NCBC Research

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 (%) Abu Saudi Kuwait 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

Source: Zawya, Reuters, NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 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

Source: Zawya, Reuters, NCBC Research

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)

25,000 60

50 20,000

40 15 , 0 0 0

30

10 , 0 0 0 20

5,000 10

- 0 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-09

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

Source: Zawya, Reuters, NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 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 confidence With 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.

JUNE 2010 THE SAUDI FACTBOOK 21 KSA STOCK MARKET

Exhibit 28: 1Q10 market earnings rebounded 69% Exhibit 29: 2010e mkt earnings could growth 20%+ SR bn SR bn

29 90 SAR7.3bn 80 20%+ 24 70

19 69% 60 -SAR0.5bn

14 50 40 9 30

4 20

10 (1) - 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 1Q09 2Q09 3Q09 4Q09 1Q10

4Q08* 2006 2007 2008* 2009 2010e Banks Petrochems Telecoms Other Banks Petrochems Telecoms Other

Source: Reuters, NCBC Research Source: Reuters, NCBC Research * Not including the SAR30bn write-down at Kingdom Holdings * 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 Exhibit 31: Amounts raised during Saudi vs. GCC IPOs Number of IPOs In SR bn

50 40

45 35 40 30 35 25 30 25 20 20 15

15 10 10 5 5 - 0 2008 2009 2010 YTD 2008 2009 2010 YTD 2010e Saudi IPOs GCC IPOs Saudi GCC

Source: Zawya Source: Zawya

JUNE 2010 THE SAUDI FACTBOOK 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).

JUNE 2010 THE SAUDI FACTBOOK 23 KSA STOCK MARKET

Exhibit 32: Swap Trading Slowly Taking Hold Exhibit 33: Foreign Trading Only About 5.5% of Total Units as stated %

3,500 2.5% 7%

3,000 6% 2.0% 2,500 5%

2,000 1.5% 4%

3% 1,500 1.0% 1,000 2% 0.5% 500 1%

- 0.0% 0% Jul-08 Jul-09 Jul-09 Jan-08 Jan-09 Jan-10 Mar-08 Mar-09 Mar-10 Sep-08 Sep-09 Nov-08 Nov-09 Jan-10 Oct-09 Jun-09 May-08 May-09 May-10 Apr-09 Apr-10 Feb-10 Mar-09 Mar-10 Dec-09 Sep-09 Nov-09 Aug-09 May-09 May-10 Trading volume (SARmn) LHS Trading by all foreigners % of Total trading volumes (RHS) 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.

JUNE 2010 THE SAUDI FACTBOOK 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

JUNE 2010 THE SAUDI FACTBOOK 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

JUNE 2010 THE SAUDI FACTBOOK 2 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

Branches ATMs Loans & Customer Banks (Nos) (Nos) Assets advances deposits 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 Banks Bank AlJazira 48 296 29,977 15,504 22,142 28 Bank Albilad 67 450 17,411 11,014 13,721 (248) Established as Saudi Alinma Bank 13 82 17,306 1,126 1,501 215

Domestic Banks Domestic Banks 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 JV with Foreign Partners 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 GCC Banks Gulf International Bank 2 12* Deutsche Bank 1 Foreign Banks BNP Paribas 1 GCC Non- 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.

Conservative lending policy In 2009, KSA’s total banking assets increased 5.2% YoY to SR1,370.2bn. The top depressed loan growth, four banks’—National Commercial Bank, Samba Financial Group, Riyad Bank, and Al while liquidity remained Rajhi Bank—combined market share increased to 57.7% in 2009 from 55.7% in healthy 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

JUNE 2010 THE SAUDI FACTBOOK 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, Exhibit 36: Comparison of RoE and P/E of GCC banks, 2007–09 2009 USD mn (%)

15,000 25%

12,500 20%

10,000 15%

7,500 10% ROE (%) 5,000

5% 2,500 P/E (x) 0% 0 0204060 2007 2008 2009 KSA Kuwait Qatar UAE Bahrain Oman KSA Kuwait Qatar Oman UAE Bahrain

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

Net interest margins of As on 31 December 2009, Al Rajhi had the largest market capitalization among the Saudi banks declined 11 listed banks constituting the index. Though NCB is one of KSA’s leading banks, it marginally in the range of is not mentioned in the table as it is a privately held entity. 0 to 30bps over 2008

Exhibit 37: Sector details Units as stated % weight in Index NIM (%), Avg. RoE (%), Country as on Dec 2009 2009 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

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

JUNE 2010 THE SAUDI FACTBOOK 28 BANKING & FINANCIALS

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 Exhibit 39: Net Interest Margin of Banks, 2007–09 SRmn (%)

35,000 8.0

28,000 6.0

21,000 4.0

14,000 2.0

7,000 0.0 2007 2008 2009 0 Al Rajhi SAMBA SABB Al Rajhi2007 SAMBA2008 SABB 2009 RIBL Saudi Fransi Arab National RIBL Saudi Fransi Arab National SIBC Saudi Hollandi BJAZ SIBC Saudi Hollandi BJAZ Albilad Alinma 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 Exhibit 41: Comparison of P/B and RoE, 2009 (%) (%)

35 Saudi 30 Hollandi SABB SAMBA 30 Arab Arab SAMBA 25 National National 25 20 Al Rajhi 20 Al Rajhi 15 RIBL SABB ROE (%) 15 Saudi Fransi ROE (%) RIBL Saudi Fransi 10 10 SIBC SIBC BJAZ 5 5 Albilad Alinma Saudi BJAZ Hollandi 0 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 P/B (x) P/B (x)

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

JUNE 2010 THE SAUDI FACTBOOK 29 BANKING & FINANCIALS

Exhibit 42: Avg. daily turnover of stocks Exhibit 43: Share price movement of Saudi banks, Jan 2009–Mar2010 Jan 2009 – Mar 2010 SR‘000s (SR)

140,000 450,000 100 90 400,000 120,000 80 119,202 381,329 350,000 70 100,000 300,000 60 50 80,000 250,000 40 60,000 200,000 30 20 150,000 40,000 10 100,000 22,280 0 14,917 14,153 20,000 12,549 50,000 6,675 6,086 5,214 4,173 2,668

0 0 Jul-09 Jan-10 Jan-09 Oct-09 Jun-09 Apr-09 Feb-10 Feb-09 Mar-10 Mar-09 Dec-09 Sep-09 Nov-09 Aug-09 May-09 RIBL SIBC BJAZ Al Rajhi Samba SABB SABB Albilad Alinma SAMBA

Al Rajhi RIBL Saudi Fransi Arab National SIBC Saudi Hollandi BJAZ

Saudi Fransi Saudi Albilad Alinma Arab National Saudi Hollandi

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

Cut in benchmark rates Interest rates in KSA remained stable in 2H-09, after declining from its peak of reduced interbank rates 4.67% (on 12 October 2008). This was mainly due to declining inflationary pressure from 2.47% at the which enabled the Saudi government to cut key benchmark rates. The government beginning of the year to reduced its repo rate from 2.5% to 2%, and reverse repo rate from 1.5% to 0.25% 0.76% at the end of the during the year. Consequently, SAIBOR rates declined from 2.47% at the beginning year 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 Exhibit 45: Movement in Repo & Reverse Repo rates Units as stated Units in %

5.0 1, 0 0 0 12 4.5 800 4.0 10 3.5 600 8 3.0 2.5 400 6 2.0 200 1. 5 4 1. 0 0 0.5 2 0.0 -200 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 0 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Spreads bps (RHS) SAIBOR (%, LHS) LIBOR (%, LHS) 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.

JUNE 2010 THE SAUDI FACTBOOK 30 BANKS AND FINANCIAL SERVICES

Also known as Not Covered Riyad Bank RIBL

Current Price (SR) 28.0 Riyad Bank (RIBL), established in 1957, is Saudi Arabia’s third largest

Pricing / Valuation as on 13 June 2010 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; Stock details an agency in Houston; and a representative office in Singapore. 52-week range H/L (SR) 31.2/22.5  Business brief: RIBL performs core-banking activities through four Market cap ($mn) 11,197.2 divisions: Personal banking, Corporate banking, Treasury services and Shares outstanding (mn) 1,500.0 Price perf. (%) 1M 3M 12M International banking. The bank offers a range of conventional and Islamic Absolute (3) (1) 19 banking products to its customers. RIBL provides asset management, wealth Market (6) (5) 3 management, corporate finance, and brokerage services through its wholly Sector (3) (2) 2 owned investment banking subsidiary Riyad Capital. Avg daily turn.(mn) SR US$ 3M 17.4 4.6  Financials: RIBL’s financial performance in 1Q10 remained strong as 12M 13.9 3.7 compared to other Saudi banks. During the quarter, the bank’s loan portfolio Raw Beta 6m 3yr and total deposit base grew 6.1% and 3.4% YoY, respectively. However, due 0.91 0.91 to decreased net interest margins, the bank’s net interest income declined Reuters code 1010.SE Bloomberg code RIBL AB 9% YoY to SR1,012mn. Nonetheless, RIBL’s investment portfolio, which Website www.riyadbank.com recorded losses in 1Q09, turned positive in 1Q10, enabling the bank to marginally grow its total operating income to SR1,469mn. Furthermore, the Weighting & free float (%) bank’s loan-loss provisions declined to SR193.9mn compared to SR467.7mn TASI (free float weight) 4.11 Free float 48.71 in 1Q09. Consequently, RIBL’s net income increased 55.2% YoY to SR684mn in 1Q10. Valuation multiples 08 09 TTM  Recent developments: In March 2010, RIBL announced the distribution of a P/E (x) 15.9 13.9 12.8 cash dividend of SR0.7 per share for the six-month period ended 31 P/B (x) 1.6 1.5 1.5 December 2009. In September 2009, Fitch affirmed long-term IDR at ‘A+’ P/Sales (x) 8.0 7.0 7.0 with a stable outlook and short-term IDR of ‘F1’. The $500mn senior Div yield* (%) 5.2 4.6 N/A unsecured notes were affirmed at ‘A+’ and Individual rating of 'B/C'. Source: NCBC Research

Share price performance Company financials YoY CAGR (%) 7,000 35 2007 2008 2009 1Q10 (%) (07-09) 6,500 30 6,000 Net Sp. Com Income SRmn 3,266 3,947 4,347 1,012 (9.0) 15.4 25 5,500 Operating Income SRmn 5,181 5,248 5,960 1,469 0.7 7.3 5,000 20 Net Income SRmn 3,011 2,639 3,030 684 55.2 0.3 Jun-09 Oct-09 Feb-10 Jun-10 Assets SRmn 121,351 159,653 176,399 174,288 4.2 20.6 TASI RIBL (RHS) Equity SRmn 13,187 25,690 28,235 27,806 9.7 46.3 Source: Bloomberg 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 Top 5 shareholders (%) Net Interest Margin % 3.2 2.9 2.7 2.4 - - Public Investment Fund 21.7 Cost/Income % 35 40 37 40 - - General Organization for 21.6 Social Insurance (GOSI) ROE % 23.9 13.6 11.2 9.8 - - Mohd Ibrahim Mohammed Al 9.8 ROA % 2.8 1.9 1.8 1.6 - - Essa Div Payout* % 47.2 71.6 64.4 N/A - - AlNahla Group [AlNahla 9.0 EPS SR 2.9 2.0 2.0 0.5 58.6 N/A Trading and Contracting] BVPS SR 12.8 17.1 18.8 18.5 9.7 N/A SAMA 6.5 Source: Tadawul, Zawya, Company, NCBC Research Source: Tadawul, NCBC Research * Gross dividend is used in div yield calculations for Saudi banking sector

JUNE 2010 RIYAD BANK 31 BANKS AND FINANCIAL SERVICES

Not Covered Also known as Bank Al Jazira BJAZ, BAJ

Current Price (SR) 17.0 Bank Aljazira (BJAZ) specializes in Islamic banking and investment

Pricing / Valuation as on June 13, 2010 products in Saudi Arabia. The bank was established in 1975, following the takeover of the Saudi Arabian branches of National Bank of Pakistan. Stock details The bank is headquartered in Jeddah and operates a network of 48 52-week range H/L (SR) 23.3/16.0 branches and 300 ATMs across KSA. Market cap ($mn) 1,359.7 Shares outstanding (mn) 300.0  Business brief: BJAZ offers Shariah-compliant retail banking, corporate Price perf. (%) 1M 3M 12M banking and treasury services. The bank conducts investment banking Absolute (2) (7) (26) business through its subsidiary AlJazira Capital (AJC). The insurance Market (6) (5) 3 business is managed by ATATC, which is the first financial institution to Sector (3) (2) 2 launch an authorized Islamic life insurance program in Saudi Arabia. Avg daily turn.(mn) SR US$ 3M 15.4 4.1  Financials: The bank’s net special commission income declined 2.4% YoY in 12M 14.5 3.9 1Q10 despite a 6.7% YoY increase in loans, mainly due to contraction in net Raw Beta 6m 3yr interest margins. The bank’s fee income also fell 29.5% YoY; this resulted in 0.44 1.04 Reuters code 1020.SE decreased share in the total operating income from 34.7% in 1Q09 to 22.2% Bloomberg code BJAZ AB in 1Q10. However, due to robust growth in income from investments, its Website www.baj.com.sa total operating income increased 10.3% YoY to SR305mn in 1Q10. In 1Q10,

Weighting & free float (%) the bank posted provisions for credit losses amounting SR110mn, which led TASI (free float weight) 0.69 to a decline in net income by 87.7% YoY to SR13mn.

Free float 67.80  Recent developments: In April 2010, the bank announced a joint venture

Valuation multiples to establish Al Jazira Cooperative Takaful, wherein the bank would own a 08 09 TTM 30% stake, other investors would own 40%, and the remaining 30% would P/E (x) 22.9 N/M N/A be offered to the public. In March 2010, Fitch affirmed the bank’s long-term P/B (x) 1.1 1.1 1.1 IDR at ‘A-‘ with a stable outlook, short-term IDR as ‘F2’ and the Individual P/Sales (x) 4.5 4.4 4.3 rating as ‘C/D’. Div yield* (%) 2.9 N/A N/A

Source: NCBC Research Company financials Share price performance YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) 7,000 25 Net Sp. Com Income SRmn 595 631 668 168 (2.4) 5.9 6,500 23 21 6,000 Operating Income SRmn 1,447 1,137 1,171 305 10.3 (10.0) 19 5,500 17 Net Income SRmn 805 222 28 13 (87.7) (81.5) 5,000 15 Assets SRmn 21,564 27,520 29,977 27,791 2.7 17.9 Jun-09 Oct-09 Feb-10 Jun-10 Equity SRmn 4,698 4,637 4,486 4,499 (7.0) (2.3) TASI BJAZ (RHS) Advances SRmn 9,879 15,133 15,504 16,339 6.7 25.3 Source: Bloomberg Total Deposits SRmn 16,364 22,267 24,833 22,634 4.0 23.2

Top 5 shareholders (%) Net Interest Margin % 3.4 2.7 2.4 2.5 - - Cost/Income % 46 70 62 60 - - Rashed Al Abdul Rahman Al 22.2 Rashid and Sons Company ROE % 17.8 4.7 0.6 1.1 - - Al Okhoah Union for 6.5 ROA % 4.3 0.9 0.1 0.2 - - development Div Payout* % 16.8 67.6 N/A N/A - - National Pakistani Bank 5.8 EPS SR 2.7 0.7 0.1 0.0 (88.2) N/A Saleh Abdullah Mohammed 5.0 BVPS SR 15.6 15.5 15.0 15.0 (4.9) N/A Kamal Source: Tadawul, Zawya, Company, NCBC Research * Gross dividend is used in div yield calculations for Saudi banking sector

Source: Tadawul, NCBC Research

JUNE 2010 BANK ALJAZIRA 32 BANKS AND FINANCIAL SERVICES Also known Not Covered as Saudi Investment Bank SAIB

Current Price (SR) 19.7 The Saudi Investment Bank (SAIB), established in 1976 in Riyadh,

Pricing / Valuation as on June 13, 2010 operates a network of 44 branches and 300 ATMs in KSA. The bank provides banking and other related services through two subsidiaries Stock details and four joint venture associate companies. 52-week range H/L (SR) 21.2/16.7  Market cap ($mn) 2,363.7 Business brief: SAIB provides personal, corporate, investment and Islamic Shares outstanding (mn) 450.0 banking along with treasury services in KSA. The bank offers varied financial Price perf. (%) 1M 3M 12M services through its two subsidiaries, Alistithmar Capital which offers Absolute 3 7 9 brokerage and investment banking services, and BNP Paribas Asset Market (6) (5) 3 Management Co; and four joint venture associate companies: AMEX (Saudi Sector (3) (2) 2 Arabia) Ltd, Saudi Orix Leasing Company, Medgulf KSA, and Amlak Avg daily turn.(mn) SR US$ 3M 4.1 1.1 International. 12M 3.6 1.0  Financials: In 1Q10, the bank’s net interest income grew by 29.5% YoY Raw Beta 6m 3yr mainly due to liability re-pricing, which resulted in a 67% YoY decline in 0.48 0.94 Reuters code 1030.SE interest expense relative to the 26% YoY drop in interest income. The net Bloomberg code SIBC AB interest margin improved 70 basis points over 1Q09. This coupled with Website www.saib.com.sa improved fee and investment income led to 42.1% YoY growth in total

Weighting & free float (%) operating income. However, a significant increase in provisions from SR5mn TASI (free float weight) 0.95 in 1Q09 to SR293mn in 1Q10 resulted in drastic fall in net income from Free float 53.67 SR241mn in 1Q09 to SR21mn in 1Q10.

Valuation multiples  Recent developments: In May 2010, Standard & Poor's upgraded the 08 09 TTM ratings of SAIB from negative to stable and affirmed its long-term and short- P/E (x) 17.3 17.0 29.4 term counterparty credit ratings at ‘A-/A-2’. In March 2010, the Board P/B (x) 1.3 1.2 1.2 appointed Dr.Abdulaziz Al Abdullah Al Ohali as Chairman of the BOD. The P/Sales (x) 4.6 5.8 5.4 bank is one of the 10 major shareholders involved in establishing the world’s Div yield (%) N/A N/A N/A largest Islamic bank in Bahrain in the next 6–12 months as announced in its Source: NCBC Research February 2010 news release. Share price performance Company financials 7,000 23 6,500 21 YoY CAGR (%) 6,000 19 20072008 2009 1Q10 (%) (07-09) 5,500 17 Net Sp. Com Income SRmn 1,056 1,026 1,014 312 29.5 (2.0) 5,000 15 Jun-09 Oct-09 Feb-10 Jun-10 Operating Income SRmn 1,635 1,938 1,517 451 42.1 (3.7)

TASI SIBC (RHS) 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 Source: Bloomberg Equity SRmn 6,770 6,609 7,428 7,658 10.8 4.8

Top 5 shareholders (%) 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 General Organization for 21.5 Social Insurance (GOSI) Net Interest Margin % 2.5 2.1 2.1 2.7 - - Public Pension Authority (PPA) 17.3 Cost/Income % 30 21 36 30 - -

Saudi Oger Ltd. 8.5 ROE % 12.9 7.7 7.4 1.1 - - ROA % 1.9 1.0 1.0 0.2 - - JPMorgan Chase Co. 7.4 Div Payout % N/A N/A N/A N/A - - National Commercial Bank 7.3 EPS SR 1.8 1.1 1.2 0.1 (90.6) N/A (NCB) BVPS SR 15.0 14.6 16.4 17.0 10.8 N/A Source: Tadawul, NCBC Research Source: Tadawul, Zawya, Company, NCBC Research

JUNE 2010 SAUDI INVESTMENT BANK 33 BANKS AND FINANCIAL SERVICES

Not Covered Also known as Saudi Hollandi Bank SHB

Current Price (SR) 34.0 Saudi Hollandi Bank (SHB), headquartered in Riyadh, was established in

Pricing / Valuation as on June 13, 2010 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 Stock details conventional and Islamic products through a network of 44 branches 52-week range H/L (SR) 39.6/29.2 and 225 ATMs across KSA. Market cap ($mn) 2,998.1 Shares outstanding (mn) 330.8  Business brief: SHB’s core banking activities include retail banking, Price perf. (%) 1M 3M 12M corporate banking and treasury services. The bank offers Van Gogh preferred Absolute 3 3 (13) banking services, such as domestic and international share trading services Market (6) (5) 3 and mutual fund portfolios, to high net-worth individuals (HNIs) under its Sector (3) (2) 2 wealth management segment. In September 2007, SHB established a wholly Avg daily turn.(mn) SR US$ 3M 3.0 0.8 owned subsidiary, Saudi Hollandi Capital Company, to offer investment 12M 2.6 0.7 banking solutions. Raw Beta 6m 3yr  Financials: The bank’s total operating income declined 16.9% YoY to 0.44 0.99 Reuters code 1040.SE SR467mn in 1Q10. This was mainly ascribed to lower net special commission Bloomberg code AAAL AB income, which fell 26.7% YoY to SR309mn. However, on a YoY basis, the Website www.shb.com.sa bank’s fee income and exchange income rose 13.7% and 21.9%,

Weighting & free float (%) respectively. Alinma increased its provisions for credit losses by 120% YoY to TASI (free float weight) 0.66 SR42.8mn, but reduced provisions for impaired investments by 95% to Free float 29.3 SR2.7mn in 1Q10. Consequently, SHB’s net income fell 19.1% YoY to SR230mn during the same period. Valuation multiples 08 09 TTM  Recent developments: In March 2010, Fitch affirmed its ratings for the P/E (x) 9.2 130.9 N/M bank’s long-term IDR as ‘A-’, with a stable outlook; short-term IDR as ‘F2’ P/B (x) 2.0 2.0 1.9 and individual rating as ‘C’. In January 2010, SHB appointed a representative P/Sales (x) 5.3 5.2 5.5 of ABN AMRO Bank, Mr. Saymon Pini, to the Board to replace Mr. Mino Di Div yield* (%) 2.1 N/A N/A Yajer. Source: NCBC Research

Share price performance Company financials

7,000 45 YoY CAGR (%) 6,500 40 2007 2008 2009 1Q10 (%) (07-09) 6,000 35 Net Sp. Com Income SRmn 1,200 1,445 1,570 309 (26.7) 14.4 5,500 30 Operating Income SRmn 1,776 2,111 2,147 467 (16.9) 9.9 5,000 25 Jun-09 Oct-09 Feb-10 Jun-10 Net Income SRmn 439 1,224 86 230 (19.1) (55.7) TASI Saudi Hollandi (RHS) 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 Source: Bloomberg Advances SRmn 27,555 38,017 36,023 36,378 (7.5) 14.3 Top 5 shareholders (%) Total Deposits SRmn 43,763 52,298 50,584 50,980 (19.8) 7.5 RBS, Fortis Group and Banco 39.9 Net Interest Margin % 2.5 2.7 2.7 2.1 - - Santander SA (ABN AMRO) Cost/Income % 47 38 38 41 - - Al Olayan Saudi Investment 20.8 ROE % 10.0 23.9 1.5 16.0 - - Co. ROA % 0.9 2.2 0.1 1.5 - - General Organization for 9.6 Social Insurance (GOSI) 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

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

JUNE 2010 SAUDI HOLLANDI BANK 34 BANKS AND FINANCIAL SERVICES

Not Covered Also known as Banque Saudi Fransi BSF

Current Price (SR) 45.2 Banque Saudi Fransi (BSF), an affiliate of Calyon of France, commenced

Pricing / Valuation as on June 13, 2010 operations in December 1977 by taking over the branches of Banque Indosuez. The bank offers conventional and Islamic banking products Stock details through a network of 78 branches and 338 ATMs in Saudi Arabia. 52-week range H/L (SR) 48.5/38.0  Market cap ($mn) 8,714.9 Business brief: The bank’s core banking activities include retail as well as Shares outstanding (mn) 723.2 corporate banking, and treasury services. BSF’s investment banking Price perf. (%) 1M 3M 12M activities are conducted by CAAM Saudi Fransi (60.0% stake), Fransi Absolute (4) (3) 4 Tadawul (99.0% stake), and Calyon Saudi Fransi (45.0% stake). The bank Market (6) (5) 3 also has an insurance JV with Allianz Group under the name Allianz Saudi Sector (3) (2) 2 Fransi Co. (32.5% stake). Sofinco Saudi Fransi manages BSF’s consumer Avg daily turn.(mn) SR US$ 3M 5.4 1.4 finance activities. Furthermore, the bank has 27% stake in Syria-based 12M 4.6 1.2 Banque BEMO Saudi Fransi. Raw Beta 6m 3yr  Financials: BSF reported a 2.1% decline in the loan portfolio and 4.1% drop 1.13 1.08 Reuters code 1050.SE in total deposits, on a YoY basis, in 1Q10. However, its investments grew Bloomberg code BSFR AB 22.6% YoY. The bank’s net interest income fell 5.8% YoY to SR723mn due to Website www.alfransi.com.sa a 10 basis point decline in net interest margins from that in 1Q09 and

Weighting & free float (%) reduced loan books. Furthermore, due to strong fee and trading income, its TASI (free float weight) 3.56 total operating income decreased just 0.6% in 1Q10. However, a rise in Free float 54.66 provisions from SR46mn in 1Q09 to SR54mn in 1Q10 lowered the bank’s net income 3.7% YoY to SR714mn. Valuation multiples 08 09 TTM  Recent developments: In June 2010, BSF announced that it would finance P/E (x) 11.7 13.2 13.4 a SR1.8bn project of Saudi Tabreed Cooling Co. and Saudi Aramco to build a P/B (x) 2.3 2.1 2.1 central district cooling unit. In March 2010, Fitch affirmed the bank’s long- P/Sales (x) 7.4 7.6 7.6 term IDR at ‘A’, with a stable outlook, short-term IDR at ‘F1’ and Individual Div yield* (%) 2.4 3.0 N/A rating at B/C. In December 2009, BSF appointed Mr. Ibrahim Abdulaziz Al Source: NCBC Research Touq as Chairman of the Board, effective 1 January 2010. Share price performance

7,000 50 Company financials 6,500 45 YoY CAGR (%) 6,000 40 20072008 2009 1Q10 (%) (07-09) 5,500 Net Sp. Com Income SRmn 2,289 2,821 3,050 723 (5.8) 15.4 5,000 35 Jun-09 Oct-09 Feb-10 Jun-10 Operating Income SRmn 3,694 4,392 4,295 1,072 (0.6) 7.8

TASI Saudi Fransi (RHS) 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 Source: Bloomberg 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 Top 5 shareholders (%) Total Deposits SRmn 82,130 101,193 96,069 93,656 (4.1) 8.2 Calyon Bank 31.1 Net Interest Margin % 2.7 2.6 2.6 2.5 - - General Organization for 12.8 Social Insurance (GOSI) Cost/Income % 26 25 27 28 - - Rashid Al Abdul Rahman Al 9.8 ROE % 26.3 22.2 16.6 18.1 - - Rashid & Sons ROA % 3.0 2.5 2.0 2.4 - - Mohammed Ibrahim 5.0 Div Payout* % 38.8 27.7 40.0 N/A - - Mohammed Al Essa 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 Source: Tadawul, NCBC Research Source: Tadawul, Zawya, Company, NCBC Research * Gross dividend is used in div yield calculations for Saudi banking sector

JUNE 2010 BANQUE SAUDI FRANSI 35 BANKS AND FINANCIAL SERVICES

Also known as Not Covered The Saudi British SABB Bank

Current Price (SR) 43.3 SABB (formerly The Saudi British Bank) is an affiliate of HSBC Group.

Pricing / Valuation as on June 13, 2010 The bank commenced operations in 1978, offering conventional and Islamic products under the brand name SABB AMANAH. SABB operates Stock details 75 branches, 479 ATMs and 2 separate subsidiaries for investment 52-week range H/L (SR) 56.3/40.0 banking; it also offers insurance services. Market cap ($mn) 8,657.8 Shares outstanding (mn) 750.0  Business brief: SABB offers personal, corporate, private and Islamic Price perf. (%) 1M 3M 12M banking as well as treasury and trade services. The bank also provides Absolute (7) (11) (15) investment banking solutions through HSBC Saudi Arabia Ltd. (40% stake), Market (6) (5) 3 which specializes in asset management, corporate finance services, and debt Sector (3) (2) 2 finance and advisory services. SABB provides brokerage and securities Avg daily turn.(mn) SR US$ 3M 3.9 1.0 services through SABB Securities (100% stake) and Shariah-compliant 12M 5.3 1.4 insurance products through SABB Takaful (32.5% stake). Raw Beta 6m 3yr  Financials: SABB reported a 4.6% YoY decline in loans and an 8.6% YoY 0.84 1.00 Reuters code 1060.SE drop in deposits in 1Q10. Due to this and a decline in net interest margins, Bloomberg code SABB AB the bank’s net special commission income decreased by 12.6% YoY in 1Q10 Website www.sabb.com to SR770mn. Consequently, the total operating income fell 6.3% YoY to

Weighting & free float (%) SR1,205mn. Furthermore, a 52% YoY increase in provision for credit losses TASI (free float weight) 2.14 to SR176.5mn resulted in an 18.3% YoY decline in net income for the Free float 32.87 quarter to SR621mn.

Valuation multiples  Recent developments: In May 2010, SABB signed a one-year MoU with 08 09 TTM Adeem Investment and Wealth Management Company with an aim to create P/E (x) 11.1 16.0 17.2 and manage a number of multi-purpose real estate funds. In the same P/B (x) 2.8 2.5 2.4 month, the bank also announced that Mr. David Dew had assumed duties as P/Sales (x) 6.6 6.3 6.4 SABB’s new MD. Div yield* (%) 2.0 2.0 NA

Source: NCBC Research Company financials Share price performance YoY CAGR (%) 2007 2008 2009 1Q10 (%) (07-09) 7,000 55 Net Sp. Com Income SRmn 3,059 3,207 3,437 770 (12.6) 6.0 6,500 50 6,000 Operating Income SRmn 4,374 4,912 5,160 1,205 (6.3) 8.6 45 5,500 Net Income SRmn 2,607 2,920 2,032 621 (18.3) (11.7) 5,000 40 Jun-09 Oct-09 Feb-10 Jun-10 Assets SRmn 98,213 131,661 126,838 120,531 (9.1) 13.6

TASI SABB (RHS) 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 Source: Bloomberg Total Deposits SRmn 79,893 108,747 102,793 98,469 (8.6) 13.4

Top 5 shareholders (%) Net Interest Margin % 3.6 2.9 2.7 2.6 - - Cost/Income % 33 33 33 34 - - HSBC Holdings Co. 40.0 ROE % 26.3 26.5 16.5 18.5 - - Al Olayan Saudi Investment 16.9 Co. ROA % 3.0 2.5 1.6 2.0 - - General Organization for 9.5 Div Payout* % 57.5 22.6 32.5 - - - Social Insurance (GOSI) 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

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

JUNE 2010 SABB 36 BANKS AND FINANCIAL SERVICES

Not Covered Also known as Arab National Bank ANB

Curent Price (SR) 41.7 Arab National Bank (ANB) commenced operations in KSA in 1980 after

Pricing / Valuation as on June 13, 2010 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% Stock details stake in Arab National Investment Co. and a 20% stake in Saudi 52-week range H/L (SR) 49.1/35.9 Travellers Cheque Co. Market cap ($mn) 7,226.2 Shares outstanding (mn) 650.0  Business brief: ANB offers personal banking, corporate banking, treasury Price perf. (%) 1M 3M 12M services and syndications and corporate finance services to its customers. Absolute (7) (5) (7) Besides core banking activities, ANB also offers investment banking, housing Market (6) (5) 3 finance and heavy equipment leasing services through its subsidiaries. ANB Sector (3) (2) 2 Invest handles investment banking operations, while Saudi Home Loans Avg daily turn.(mn) SR US$ 3M 5.3 1.4 Company deals with housing finance. ANB has also formed joint ventures 12M 5.3 1.4 with Ejara and a Dubai-based company for leasing equipment. Raw Beta 6m 3yr  Financials: ANB recorded a 10% YoY decline in its loan book in 1Q10 and a 0.98 1.22 Reuters code 1080.SE 5.2% YoY decline in total deposits. The bank's net interest income declined Bloomberg code ARNB AB 12% YoY mainly due to a YoY decline in the loan book. The net interest Website www.anb.com.sa margin declined 23bps in 1Q10 compared to the previous year. Non-interest

Weighting & free float (%) income grew a significant 32% YoY mainly due to higher investment income. TASI (free float weight) 2.71 Consequently, total operating income declined a marginal 2.8%. ANB’s Free float 49.10 provisions for loan losses increased 60% YoY to SR97mn, dragging the net income down 8.8% to SR634mn for the 1Q10. Valuation multiples 08 09 TTM  Recent developments: In March 2010, ANB announced it would distribute P/E (x) 10.9 11.4 11.7 a cash dividend of SR1 per share for the year ended 31 December 2009. P/B (x) 2.1 1.9 1.9 P/Sales (x) 6.6 6.0 6.1 Company financials Div yield* (%) 2.7 2.6 NA YoY CAGR (%) Source: NCBC Research 2007 2008 2009 1Q10 (%) (07-09) Net Sp. Com Income SRmn 2,904 3,354 3,456 803 (12.0) 9.1 Share price performance Operating Income SRmn 3,956 4,135 4,493 1,125 (2.8) 6.6 7,000 50 Net Income SRmn 2,461 2,486 2,370 634 (8.8) (1.9) 6,500 45 Assets SRmn 94,468 121,307 110,297 110,057 (2.1) 8.1 6,000 40 5,500 Equity SRmn 10,525 12,671 14,369 14,484 15.8 16.8 5,000 35 Advances SRmn 61,122 74,662 66,811 65,444 (10.1) 4.6 Jun-09 Oct-09 Feb-10 Jun-10 Total Deposits SRmn 78,139 103,253 91,394 89,679 (5.2) 8.1 TASI Arab National (RHS) Net Interest Margin % 3.5 3.2 3.1 3.0 - - Cost/Income % 36 38 36 35 - - Source: Bloomberg ROE % 26.6 21.4 17.5 17.6 - - Top 5 shareholders (%) ROA % 2.9 2.3 2.0 2.3 - - Arab Bank 40.0 Div Payout* % - 29.5 30.0 - - - General Organization for 10.8 EPS SR 3.8 3.8 3.7 1.0 (9.3) NA Social Insurance (GOSI) BVPS SR 16.2 19.5 22.1 22.3 15.8 NA

Rashid Al Abdul Rahman Al 9.9 Source: Tadawul, Zawya, Company, NCBC Research Rashid & Sons * Gross dividend is used in div yield calculations for Saudi banking sector Al Jaber Commercial Co. 5.6

Source: Tadawul, NCBC Research

JUNE 2010 ARAB NATIONAL BANK 37 BANKS AND FINANCIAL SERVICES Also known Not Covered as Samba Financial Group SAMBA

Current Price (SR) 59.0 Samba Financial Group (Samba), the second largest bank in Saudi Arabia

Pricing / Valuation as on June 13, 2010 in terms of total assets, was incorporated in 1980 through the takeover of Citigroup’s branches in the Kingdom. SAMBA operates 67 branches Stock details and 497 ATMs. The bank also operates in the UK, Pakistan and the UAE 52-week range H/L (SR) 64.0/39.7 through its subsidiaries. Market cap ($mn) 14,156.5 Shares outstanding (mn) 900.0  Business brief: Samba’s core banking activities include retail as well as Price perf. (%) 1M 3M 12M corporate banking and treasury services. The bank also offers trade, Islamic Absolute 1 (1) 20 banking and corporate investment services. Samba Capital & Investment Market (6) (5) 3 Management Co, the investment banking division, handles asset Sector (3) (2) 2 management and brokerage services. Avg daily turn.(mn) SR US$ 3M 17.4 4.6  Financials: In 1Q10, Samba’s loan portfolio declined 5.4% YoY, whereas its 12M 15.8 4.2 total deposits grew 10.1% YoY. Consequently, its investments increased Raw Beta 6m 3yr 33.5% in 1Q10 over that in 1Q09. A decline in high yield loans and rise in 1.64 0.96 Reuters code 1090.SE cost bearing deposits reduced net interest margins by 58 basis points to Bloomberg code SAMBA AB 2.6%; as a result, net interest income fell 10.5% YoY. However, Samba’s Website www.samba.com provisions for credit losses decreased from SR203mn in 1Q09 to SR160mn in

Weighting & free float (%) 1Q10, enabling the bank to post a lower decline in net income (4.8% YoY) TASI (free float weight) 5.31 relative to that in net special commission income. The bank reported net Free float 50.59 income of SR1,210.6mn in 1Q10.

Valuation multiples  Recent developments: In April 2010, Samba opened a branch in Doha, 08 09 TTM Qatar. In the same month, the bank also announced entering into a P/E (x) 11.9 11.6 11.8 cooperation agreement with Sejel to introduce an automated payments P/B (x) 2.7 2.4 2.3 solution for the Haj Umrah sector. In January 2010, Samba announced that P/Sales (x) 7.6 7.5 7.6 Mr. Issa Mohammed Al Issa had been appointed Chairman of its Board of Div yield* (%) 3.0 3.0 NA Directors. Source: NCBC Research

Share price performance Company financials YoY CAGR (%) 7,000 65 2007 2008 2009 1Q10 (%) (07-09) 6,500 55 6,000 Net Sp. Com Income SRmn 4,944 5,061 5,070 1,172 (10.5) 1.3 45 5,500 Operating Income SRmn 7,196 7,012 7,110 1,841 (7.4) (0.6) 5,000 35 Jun-09 Oct-09 Feb-10 Jun-10 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 TASI SAMBA (RHS) Equity SRmn 17,845 19,846 22,310 23,167 18.8 11.8

Source: Bloomberg Advances SRmn 80,553 98,147 84,147 85,197 (5.4) 2.2 Total Deposits SRmn 127,236 146,318 154,448 153,614 10.1 10.2 Top 5 shareholders (%) Net Interest Margin % 3.7 3.2 2.9 2.6 - - Public Investment Fund 22.9 Cost/Income % 27 30 27 26 - - Public Pension Authority (PPA) 15.0 ROE % 29.0 23.4 21.4 21.2 - - General Organization for 11.4 ROA % 3.5 2.7 2.5 2.6 - - Social Insurance (GOSI) 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

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

JUNE 2010 SAMBA FINANCIAL 38 BANKS AND FINANCIAL SERVICES

Not Covered Also known as Al Rajhi Bank Al Rajhi

Current Price (SR) 79.0 Al Rajhi Bank (Al Rajhi), the fourth largest bank in Saudi Arabia in terms

Pricing / Valuation as on June 13, 2010 of total assets, was established in 1976. A full-fledged Islamic bank, Al Rajhi offers Shariah-compliant banking and investment products to its Stock details customers through a network of 443 branches and 2,514 ATMs. The 52-week range H/L (SR) 86.5/59.5 bank operates 19 branches in Malaysia and has wholly owned Market cap ($mn) 31,592.1 subsidiaries in the UK, British Virgin Islands and Jersey. Shares outstanding (mn) 1,500.0 Price perf. (%) 1M 3M 12M  Business brief: Al Rajhi offers Shariah-compliant retail as well as corporate Absolute (3) 2 18 banking and treasury services to its customers. The bank’s investment Market (6) (5) 3 banking, asset management and brokerage businesses are managed by its Sector (3) (2) 2 subsidiary Al Rajhi Capital. Al Rajhi has obtained regulatory approvals to Avg daily turn.(mn) SR US$ 3M 127.5 34.0 open a branch in Kuwait and launch banking operations in Jordan. 12M 116.4 31.0  Financials: Al Rajhi recorded a 7% YoY increase in its investment portfolio Raw Beta 6m 3yr and 7.6% YoY growth in total deposits during 1Q10. An enhanced 1.04 1.19 Reuters code 1120.SE investment base along with expanding net interest margins enabled the bank Bloomberg code RJHI AB to post 9.8% YoY growth in net special commission income. Due to its large Website www.alrajhibank.com.sa pool of non-interest bearing deposits and focus on high yield consumer

Weighting & free float (%) loans, the bank’s net interest margin increased by 20 basis points YoY to TASI (free float weight) 11.76 5.3%. Consequently, operating income grew 3.4% YoY to SR2.8bn. Al Rajhi’s Free float 49.43 provisions for loan losses increased 55% YoY to SR359mn in 1Q10, resulting in a 2.7% YoY decline in net income to SR1.7bn. Valuation multiples 08 09 TTM  Recent developments: In May 2010, Al Rajhi announced that it will launch P/E (x) 18.2 17.5 17.6 Shariah-compliant sukuk in June 2010 for investors in Gulf Cooperation P/B (x) 4.4 4.1 4.3 Council (GCC) countries, the European Union, Singapore, Malaysia, Brunei, P/Sales (x) 11.2 10.3 10.2 East Asia and North America. In February 2010, the bank announced plans Div yield** (%) 4.3 3.5 NA to start 90 new branches and expand its network of branches to 546 by Source: NCBC Research 2012-end. Share price performance

7,000 95 Company financials 6,500 85 YoY CAGR (%) 6,000 75 2007 2008 2009 1Q10 (%) (07-09) 5,500 65 5,000 55 Net Sp. Com Income SRmn 7,722 8,494 9,232 2,202.9 9.8 9.3 Jun-09 Oct-09 Feb-10 Jun-10 Operating Income SRmn 9,321 10,575 11,505 2,832 3.4 11.1 TASI Al Rajhi (RHS) 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 Source: Bloomberg Equity SRmn 23,606 27,032 28,741 27,848 8.9 10.3 Top 5 shareholders (%) Advances* SRmn 105,785 143,853 140,909 145,708 7.1 15.4 Sulaiman Abdul Aziz Saleh Al 24.9 Total Deposits SRmn 95,349 128,199 128,964 135,831 7.6 16.3 Rajhi Net Interest Margin % 7.0% 6.1% 6.2% 5.3% - - Saleh Abdul Aziz Saleh Al 14.2 Cost/Income % 26% 26% 26% 28% - - Rajhi ROE % 29.5% 25.8% 24.3% 23.8% - - General Organization for 9.9 Social Insurance (GOSI) ROA % 5.6% 4.5% 4.0% 3.9% - - Abdullah Abdul Aziz Saleh Al 5.9 Div Payout** % 50.4 77.5 61.0 - - - Rajhi 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, NCBC Research Source: Tadawul, Zawya, Company, NCBC Research * Includes investments ** Gross dividend is used in div yield calculations for Saudi banking sector

JUNE 2010 AL RAJHI BANK 39 BANKS AND FINANCIAL SERVICES

Not Covered Also known as Bank AlBilad AlBilad

Current Price (SR) 20.2 Bank AlBilad (AlBilad), headquartered in Riyadh, was established in

Pricing / Valuation as on June 13, 2010 2004 through the merger of eight money-exchange organizations. The bank operates 69 branches and 458 ATMs. AlBilad’s wholly owned Stock details subsidiaries are AlBilad Brokerage & Securities Management Co., AlBilad 52-week range H/L (SR) 25.9/17.9 Investment Co., and AlBilad Real Estate Co. Market cap ($mn) 1,615.6 Shares outstanding (mn) 300.0  Business brief: AlBilad’s consumer services segment offers AlBilad Net, Price perf. (%) 1M 3M 12M AlBilad Tadawul, AlBilad 24, auto financing, personal financing, real estate Absolute (0) 0 (16) financing, local share investment services and credit cards. The corporate Market (6) (5) 3 services segment provides a range of finance solutions such as Murabaha, Sector (3) (2) 2 Musharaka, Istisna’a and securitization finance. The investment services Avg daily turn.(mn) SR US$ 3M 8.4 2.3 segment offers investment avenues in mutual funds, including Akar, Amwal, 12M 11.0 2.9 Asayel, Al-Murabih and Al-Seef. Raw Beta 6m 3yr  Financials: AlBilad’s loan portfolio increased 23% YoY in 1Q10. The bank’s 0.35 0.79 Reuters code 1140.SE deposits also grew 15.3% YoY in the quarter. Expansion in loan portfolio Bloomberg code ALBI AB enabled the bank to increase its net special commission income by 5.7% YoY Website www.bankalbilad.com.sa despite a decline in net interest margins. In addition, strong fee and

Weighting & free float (%) exchange income helped AlBilad post a 27% YoY rise in total operating TASI (free float weight) 0.94 income to SR276mn. Due to these factors, its net income surged 135% YoY Free float 77.18 to SR52.6mn in 1Q10. AlBilad recorded an 84.3% YoY increase in provisions for credit losses to SR43.5mn in 1Q10. Valuation multiples 08 09 TTM  Recent developments: In April 2010, AlBilad announced the appointment P/E (x) 48.5 N/M N/M of Mr. Musaed Bin Mohammed Al Snani as Chairman of the Board of P/B (x) 1.9 2.0 2.0 Directors. The bank also announced its intent to focus on retail banking. P/Sales (x) 6.8 6.7 6.3 Div yield (%) NA NA NA Company financials Source: NCBC Research YoY CAGR (%) Share price performance 2007 2008 2009 1Q10 (%) (07-09) Net Sp. Com Income SRmn 534 578 548 148 5.7 1.3 7,000 30 Operating Income SRmn 779 888 908 276 26.9 8.0 6,500 25 6,000 Net Income SRmn 72 125 (248) 53 135.3 N/M 5,500 20 5,000 15 Assets SRmn 16,636 16,052 17,411 18,978 11.2 2.3 Jun-09 Oct-09 Feb-10 Jun-10 Equity SRmn 3,104 3,213 3,002 3,064 (5.6) (1.7) TASI AL Bilad (RHS) Advances SRmn 6,190 8,276 11,014 11,190 23.1 33.4 Total Deposits SRmn 12,689 12,435 13,919 15,349 15.3 4.7

Source: Bloomberg Net Interest Margin % 4.1 3.7 3.4 3.4 - - Cost/Income % 82 76 87 65 - - Top 5 shareholders (%) ROE % 2.4 4.0 (8.0) 6.9 - - Mohammed Ibrahim 11.6 Mohammed Al Subaei ROA % 0.5 0.8 (1.5) 1.2 - - Abdullah Ibrahim Mohammed 11.1 Div Payout % ------Al Subaei EPS SR 0.2 0.4 (0.8) 0.2 157.1 NA First Investment Company 7.4 BVPS SR 10.4 10.7 10.0 10.2 (5.6) NA

Abdul Rahman Saleh Abdul 6.9 Source: Tadawul, Zawya, Company, NCBC Research Aziz Al Rajhi Abdul Rahman Abdul Aziz 6.5 Saleh Al Rajhi

Source: Tadawul, NCBC Research

JUNE 2010 BANK ALBILAD 40 BANKS AND FINANCIAL SERVICES

Not Covered Also known as Alinma Bank Development Bank

Current Price (SR) 11.2 In March 2006, Alinma Bank (Alinma) was established in accordance

Pricing / Valuation as on June 13, 2010 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 Stock details and corporate banking services as per Shariah-compliant principles and 52-week range H/L (SR) 14.3/10.7 commenced full-fledged operations in 2009. Market cap ($mn) 4,478.9 Shares outstanding (mn) 1,500.0  Business brief: Alinma, an Islamic bank, provides retail and corporate Price perf. (%) 1M 3M 12M products banking. The bank aims to offer asset management and investment Absolute (5) (13) (21) banking services through Alinma Investment Company and insurance Market (6) (5) 3 products through a joint venture insurance company. With this, the bank Sector (3) (2) 2 intends to capitalize on the vast untapped retail market for Shariah- Avg daily turn.(mn) SR US$ 3M 306.4 81.7 compliant insurance options. 12M 318.4 84.9  Financials: Alinma’s loan portfolio increased 10x YoY in 1Q10, primarily due Raw Beta 6m 3yr to a lower base in 1Q09. The bank’s deposits grew 411% YoY. Alinma’s 0.59 NA Reuters code 1150.SE return on investments fell 62% YoY mainly due to a reduction in yields on Bloomberg code ALINMA AB earning assets and net interest margins. Alinma incurred a loss of SR75mn in Website www.alinma.com 1Q10 mainly due to lower return on investments and increasing operating

Weighting & free float (%) costs owing to the launch of its retail banking operations. TASI (free float weight) 2.36  Recent developments: In June 2010, Alinma entered into agreements Free float 69.93 with: (i) Dar Al Tamleek Company to provide Shariah-compliant home

Valuation multiples financing; and (ii) Saudi Basic Industries to offer a SR3,750mn credit facility 08 09 TTM to finance the latter’s projects. In May 2010, Alinma signed a financing P/E (x) 43.1 78.0 N/M agreement with Al-Rajhi Steel Industries to provide Shariah-compliant P/B (x) 1.1 1.1 1.1 financing and banking facilities (worth SR737mn). In April 2010, Alinma P/Sales (x) 49.6 27.3 32.3 formed a joint venture with Tokio Marine & Nichido Fire Insurance Company Div yield (%) NA NA NA (a subsidiary of Tokio Marine Holding and Sabic Industrial Investments Source: NCBC Research Company) to establish a SR200mn cooperative insurance company. In Share price performance January 2010, Alinma Investment Company received approval from the 7,000 15 Capital Market Authority to commence operations in the Kingdom. 6,500 14 13 6,000 12 Company financials 5,500 11 5,000 10 YoY CAGR (%) Jun-09 Oct-09 Feb-10 Jun-10 2007 2008 2009 1Q10 (%) (07-09) TASI Alinma (RHS) Net Sp. Com Income SRmn - 339 607 67 (62.2) 339 Operating Income SRmn - 339 615 82 (53.8) 339 Source: Bloomberg Net Income SRmn - 390 215 (75) (168.7) 390 Top 5 shareholders (%) Assets SRmn - 15,556 17,306 18,833 16.3 15,556 Public Investment Fund 10.0 Equity SRmn - 15,390 15,605 15,530 0.2 15,390 General Organization for 10.0 Advances SRmn - - 1,126 3,596 1095.0 - Social Insurance (GOSI) Total Deposits SRmn - - 1,501 2,975 411.2 - Public Pension Authority (PPA) 10.0 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% Source: Tadawul, NCBC Research 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

Source: Tadawul, Zawya, Company, NCBC Research

JUNE 2010 ALINMA BANK 41 Petrochemicals

Ticker Company Page No.

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

JUNE 2010 THE SAUDI FACTBOOK 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.

Petrochemical sector Historically, robust demand for petrochemical products has helped the sector to underwent difficult times sustain growth. However, the last 18 months have been particularly difficult for the over the past 18 months, global petrochemical sector as the world economy slowed down post the credit due to slowdown caused by crisis, the ripple effects of which were also felt by the KSA petrochemical sector. global credit crisis 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.

With revival of global In the GCC region, KSA operates from a position of significant strength in the economic conditions, petrochemical industry, accounting for the majority of the region’s petrochemical petrochemical demand and production. By 2010-end, KSA, which holds close to 21% of the world’s prices are recovering at a proven oil reserves, is expected to meet around 13% of the global demand moderate pace 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.

JUNE 2010 THE SAUDI FACTBOOK 43 PETROCHEMICALS

Exhibit 46: Sector details % weight in Index as on Net Margin ROE (%), Company Dec 2009 (%)2009 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

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. Since 2H-09, margins of petrochemical players have Sector revenues increased 36.4% YoY and 17.5% QoQ, led by the increase in shown signs of petrochemical prices. The revenue rebound led to a sharp increase in profits as the improvement 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 Exhibit 48: Profitability of companies, 2007-09 (SR mn) (%)

180,000 100

160,000 80

140,000 60

120,000 40

100,000 20

80,000 0

60,000 -20

40,000 -40 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 SABIC SAFCO SIIG Sahara SABIC SAFCO SIIG Nama Sipchem NIC Alujain Sahara Nama Sipchem APPC Rabigh Chemanol NIC Chemanol APPC

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

JUNE 2010 THE SAUDI FACTBOOK 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 Exhibit 50: Comparison of P/B and ROE, 2009 (%) (%)

70 30

60 SAFCO SAFCO 20 50 SABIC 40 10 APC 30 NIC SABIC Sipchem SPC 20 Yanbu P/B (x) ROE (%) Sipchem Kayan SIIG ROE (%) 0 NIC 10 APC Chemanol P/B (x) Nama Petrochem Kayan Yanbu Alujain 0 -10 SIIG SPC -10 Rabigh Rabigh -20 -20 0.5 1.5 2.5 012345

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 Exhibit 52: Share price movement, Jan09 – Mar10 (SR mn) Prices rebased to 100 on 1st Jan-09

500 290

450 497.0 250 400 350 210 300 170 250 200 130 144.5 150 90 100 91.7 55.2 45.9 45.5 41.8 38.7 37.0 50 25.8 24.7 50 23.7 17.7 14.4 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 0 Sipchem NIC Kayan NIC SIIG

APPC Yansab Petrochem Sahara Nama Kayan SABIC Alujain SAFCO Sahara Yansab Petro Rabigh Alujain Chemanol Sipchem Chemanol

Petrochem Nama SAFCO SIIG

Petro Rabigh SABIC APPC

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

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

JUNE 2010 THE SAUDI FACTBOOK 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 Though the oversupply situation could further the medium to long term. Sustained demand and price recovery, as seen in 4Q- depress margins, the low 09 and early 2010, strengthens our outlook for the Saudi Petrochemical sector in cost structure remains a 2010. Moreover, we expect the sector's feedstock advantage and proximity to the strong positive 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 Overweight 27.9 Acetyls Complex (Phase II expansion) will double Sipchem’s annual capacity to (2310.SE) 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) Overweight 36.2 NIC (Tasnee) is the only titanium pigment producer in the Middle East and is (2060.SE) 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 Neutral 27.2 Sahara has one operational plant, on coming on-stream in 2Q 2010 and a (2260.SE) 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 Neutral 50.7 Yansab has recently started commercial operations in March 2010. The timing (2290.SE) 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 Neutral 20.3 Diversified product-mix and strong links with SABIC are positives. However, (2350.SE) 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 Underweight 15.8 Expected to commence operations in 2012e and will be entering into the (2002.SE) 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.

Source: NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 46 PETROCHEMICALS

Not Covered Also known as Methanol Chemicals Chemanol

Current Price (SR) 14.2 Methanol Chemicals Company (Chemanol), established in 1989, is a

Pricing / Valuation as on June 13, 2010 manufacturer of formaldehyde, methanol and derivatives, hexamine, resins and super plasticizers. The company exports about 83% of its Stock details products to more than 50 countries including the UK, France, Germany, 52-week range H/L (SR) 18.8/12.8 South Africa, USA, Canada, and Japan. Market cap ($mn) 456.6 Shares outstanding (mn) 120.6  Business brief: Chemanol produces and supplies methanol formaldehyde Price perf. (%) 1M 3M 12M and its derivatives for use across different industries such as agricultural, Absolute (11) (11) (21) pharmaceutical, paper manufacturing and construction. The company had its Market (6) (5) 3 Initial Public Offering (IPO) on the Saudi Stock Exchange in August 2008 in Sector (13) (6) 12 order to finance an expansion plan involving investment of approximately Avg daily turn.(mn) SR US$ 3M 44.7 11.9 SR2bn. In 2010, Chemanol expects to have total installed capacity of 12M 38.1 10.1 914,000 tons. Raw Beta 6m 2yr  Financials: Chemanol revenues grew by 5.6% YoY to SR111.8mn in 1Q10, 1.06 1.12 Reuters code 2001.SE while net income rose 80% YoY to SR9.1mn. The company’s net margin has Bloomberg code CHEMANOL AB shown improvement of 330 basis points YoY and stood at 8.1% in 1Q10. The Website www.chemanol.com company had a cash balance of SR236mn in 1Q10.

Weighting & free float (%)  Recent developments: In October 2009, Chemanol started trial operations TASI (free float weight) 0.17 at its methanol plant at Jubail with production capacity of 231,000 metric Free float 50.0 tons and secured a loan of SR326mn from local and Gulf banks to fund its

Valuation multiples projects. In January 2010, Chemanol’s managing director Mazen Khalifa Al 08 09 TTM Laheeq Al Nuaimi resigned. P/E (x) 44.8 77.6 65.7 P/B (x) 1.2 1.2 1.2 Company financials P/Sales (x) 3.0 4.3 4.2 YoY CAGR (%) Div yield (%) N/A N/A N/A 20072008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Revenues SRmn 461 571 402 112 5.6 (6.6) EBITDA SRmn 61 73 59 20 38.1 (1.8) Share price performance Net Income SRmn 25 38 22 9 79.9 (5.5) 7,000 22 Assets SRmn 1,301 2,640 3,033 3,073 12.6 52.7 6,500 18 Equity SRmn 678 1,390 1,411 1,419 1.7 44.2 6,000 14 5,500 Total Debt SRmn 546 1,148 1,448 1,448 26.3 62.8 5,000 10 Cash & Equiv SRmn 13 375 270 236 (2.5) 359.6 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 13.2 12.8 14.6 17.5 - - TASI Chemanol (RHS) Net Mgn % 5.4 6.7 5.5 8.1 - - ROE % 3.7 3.7 1.6 2.6 - - Source: Bloomberg ROA % 2.2 1.9 0.8 1.2 - - Top 5 shareholders (%) Div Payout % ------Abdullah A. Kanoo Co. 11.2 EPS SR 0.41 0.48 0.25 0.08 100.0 (21.9) Zamil Group Holding Co. 11.2 BVPS SR 11.3 11.5 11.7 11.8 1.7 2.0

Mazen Khalifa Al Ahiq Al 7.5 Source: Tadawul, Zawya, Company, NCBC Research Nuaimi & Sons Mohammed Jalal & Sons Co. 5.0

Al Mazrooe Holding Co 5.0

Source: Tadawul, NCBC Research

JUNE 2010 METHANOL CHEMICALS COMPANY 47 PETROCHEMICALS

Also known as Underweight Saudi Petrochem, National Petrochem Petrochem

Target Price (SR) 15.8 National Petrochemical Company (Petrochem) was established in 2008. It is mainly involved in investing in the petrochemical industry through Price (SR) 15.6 its 65% owned company, Saudi Polymers Company. Pricing / Valuation as on June 13, 2010  Business brief: Saudi Polymers Company is a petrochemical project being

Stock details built in Jubail Industrial City. The company targets the project to be 52-week range H/L (SR) 19.7/12.8 completed by the end of 2011, we expect revenues to begin from 2Q12. Market cap ($mn) 1,996.3 Once operational, the project will have annual production capacity of 3.4mn Shares outstanding (mn) 480 mtpa, including ethylene, propylene, HDPE, LDPE, polypropylene, Price perf. (%) 1M 3M 12M polystyrene, and hexane. Petrochem is 47.7% owned by Saudi Industrial Absolute (12) 2 N/A Investment Group (SIIG). Market (6) (5) 3 Sector (13) (6) 12  Financials: We do not expect the company to report revenues until 2012e. Avg daily turn.(mn) SR US$ Until then, the company will likely remain in losses, mainly due to interest 3M 60.5 16.1 12M N/A N/A expenses. The estimated cost of the project is over SR20.8bn, financed Raw Beta 6m 2yr through equity and debt funding. Total debt of SR13.5bn was raised from 0.92 N/A commercial banks, PIF, and SIDF. The equity contribution of SR7.4bn was Reuters code 2002.SE arranged through the IPO and partner contributions. Bloomberg code PETROCH AB  Website www.petrochem.com.sa Recent developments: Petrochem raised SR2.6bn in its IPO in July 2009 by offering 240mn shares to the public and 20mn shares to SIIG. Weighting & free float (%)

TASI (free float weight) 0.26 Company financials Free float 17.5 YoY CAGR (%) 20082009 2010E 2011E (%) (08-11E) Valuation multiples Net Revenues SRmn - - - - N/M N/M 08 09 10E EBITDA SRmn (2) (9) (15) (17) 401.1 (0.5) P/E (x) 420.6 NM NM Net Income SRmn 18 (61) (127) (236) (440.4) (1.4) P/B (x) 3.4 1.6 1.6 Assets SRmn 3,773 14,581 19,228 21,284 286.5 (0.4) P/Sales (x) N/A N/A N/A Equity SRmn 2,218 4,757 4,630 4,394 114.5 (0.2) Div yield (%) N/A N/A N/A Total Debt SRmn 1,219 8,712 9,967 12,259 614.5 (0.5) Source: NCBC Research estimates Cash & Equiv SRmn 1,513 3,272 689 337 116.3 0.6 Share price performance EBITDA Mgn % ------Net Mgn % ------7,000 20 6,500 18 ROE % 0.8 (1.3) (2.8) (5.4) -- 6,000 16 ROA % 0.5 (0.4) (0.7) (1.1) -- 5,500 14 Div Payout % ------5,000 12 Aug-09 Nov-09 M ar-10 Jun-10 EPS SR 0.1 (0.1) (0.3) (0.5) (262.5) (1.5) TASI Petrochem (RHS) BVPS SR 10.1 9.9 9.7 9.2 (1.7) 0.0

Source: Tadawul, Zawya, Company, NCBC Research estimates Source: Bloomberg

Top 5 shareholders (%) Saudi Industrial Investment 50.0 Group Public Pension Agency 16.2

General Organisation for 16.2 Social Insurance

Source: Tadawul, NCBC Research

JUNE 2010 NATIONAL PETROCHEMICAL COMPANY 48 PETROCHEMICALS

Not Covered SABIC

Current Price (SR) 89.0 Saudi Basic Industries Corporation (SABIC), established in 1976, is one

Pricing / Valuation as on June 13, 2010 of the leading petrochemical companies in the world, with 2009 sales of SR103bn (USD27.5bn). The company produces basic chemicals - olefins, Stock details oxygenates and aromatics-intermediates and polymers. SABIC also 52-week range H/L (SR) 108.3/55.3 produces fertilizers (through SAFCO, Ibn Al-Baytar, Al-Bayroni) and Market cap ($mn) 71,182 metals (through Hadeed, ALBA, GARMCO). Shares outstanding (mn) 3,000 Price perf. (%) 1M 3M 12M  Business brief: SABIC has presence across the globe through its Absolute (14) (3) 23 subsidiaries and associates. It operates through its six interlinked divisions – Market (6) (5) 3 Basic Chemicals, Intermediates, Polymers, Specialty Products, Fertilizers, Sector (13) (6) 12 and Metals. The company is targeting an annual total production capacity of Avg daily turn.(mn) SR US$ 3M 484.8 129.2 130mn metric tons by 2020. 12M 418.9 111.7  Financials: 2009 was a tough year for SABIC as the global slowdown Raw Beta 6m 2yr severely impacted its financial performance. Revenues declined 31% and net 1.46 1.27 Reuters code 2010.SE income an even more dramatic 59% in 2009. However, with the rebound in Bloomberg code SABIC AB petrochemical prices, earnings have shown strong growth since 4Q09. In Website www.sabic.com 1Q10, SABIC posted 72.2% YoY revenue growth to reach SR34.1bn and net

Weighting & free float (%) income grew to SR5.4bn compared to loss of SR0.97bn in 1Q09. TASI (free float weight) 12.32  Recent developments: In May 2010, SABIC and Sinopec Corp’s joint Free float 22.57 venture petrochemicals complex began commercial operations with annual

Valuation multiples production capacity of 3mn metric tons. In April 2010, the SABIC and 08 09 TTM Mitsubishi joint venture, Sharq, started commercial operations with annual P/E (x) 12.1 29.4 17.2 production of 5mn metric tons.of petrochemicals. In the same month, SABIC P/B (x) 2.6 2.5 2.3 signed a $400mn deal with Celanese to establish a polyacetal factory with P/Sales (x) 1.8 2.6 2.3 capacity of 50,000 metric tons. Also, SABIC announced its plans to build a Div yield (%) 3.4 1.7 N/A new iron and steel plant in Jubail Industrial city by 2012. DPS 3.00 1.50 N/A

Source: NCBC Research Company financials Share price performance YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) 7,000 110 6,500 Net Revenues SRmn 126,204 150,810 103,062 34,126 72 (10) 90 6,000 EBITDA SRmn 48,653 48,142 29,577 11,906 194 (22) 70 5,500 Net Income SRmn 27,022 22,030 9,074 5,432 N/M (42) 5,000 50 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Assets SRmn 253,731 271,760 296,861 303,186 12 8

TASI SABIC (RHS) 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 Source: Bloomberg Cash & Equiv SRmn 45,877 51,028 56,377 51,525 (1) 11 Top 5 shareholders (%) EBITDA Mgn % 38.6 31.9 28.7 34.9 - - Public Investment Fund 70.0 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)

Source: Tadawul, NCBC Research Source: Tadawul, Zawya, Company, NCBC Research

JUNE 2010 SABIC 49

PETROCHEMICALS

Neutral SAFCO

Target Price (SR) 127 Saudi Arabian Fertilizer Company (SAFCO), established in 1965, produces ammonia and urea nitrogen based fertilizers. The company Price (SR) 125.5 markets its products in Asia, America, Australia, Africa and Middle East Pricing / Valuation as on June 13, 2010 countries. Saudi Basic Industries Corp. (SABIC) holds a 42.9% stake in SAFCO. Stock details 52-week range H/L (SR) 149.5/110.5 • Business brief: SAFCO has a urea production capacity over 2.27mn tons Market cap ($mn) 8,364.6 per annum (tpa), the majority of which is exported. Urea is a key nitrogen- Shares outstanding (mn) 250 based fertilizer across the globe. The company also manufactures 2.1mn tpa Price perf. (%) 1M 3M 12M of ammonia, most of it used as an intermediate raw material for producing Absolute (8) (11) 16 Market (6) (5) 3 urea. Sector (13) (6) 12 • Financials: Revenues in 2009 declined 48% and net income 57% as Avg daily turn.(mn) SR US$ fertilizer pricing declined following peaks reached in 2008 due to the impact 3M 34.2 9.1 12M 31.7 8.4 of the global financial crisis. We expect the financial performance to rebound Raw Beta 6m 2yr in 2010 and have seen strong growth in 1Q10 in revenues (16.8% YoY 0.78 1.09 growth to SR864mn) and net income (40.1% YoY growth to SR698mn). The Reuters code 2020.SE company’s net income margin showed YoY improvement of over 13 Bloomberg code SAFCO AB percentage points and stood at 80.8% in 1Q10. Website www.safco.com.sa • Recent developments: In April 2010, SAFCO announced that it expects to Weighting & free float (%) book a one off gain of SR263.4mn from sale of land in Dammam. In TASI (free float weight) 2.31 Free float 36.88 February 2010, SAFCO announced its plans to cut costs and enter new markets to boost profit for 2010.

Valuation multiples 08 09 TTM Company financials P/E (x) 7.3 17.4 10.9 YoY CAGR (%) P/B (x) 3.9 4.5 4.5 20082009 2010E 2011E (%) (08-11E) P/Sales (x) 6.0 11.4 9.4 Net Revenues SRmn 5,243 2,741 3,354 3,674 (47.7) (11.2) Div yield (%) 10.4 9.6 8.0 EBITDA SRmn 4,594 1,889 2,676 2,690 (58.9) (16.3) DPS 13.0 12.0 10.0 Net Income SRmn 4,280 1,804 2,883 2,645 (57.8) (14.8) Source: NCBC Research 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) Share price performance Total Debt SRmn 826 590 353 116 (28.7) (48.0) 7,000 16 0 Cash & Equiv SRmn 3,918 2,964 2,235 2,247 (24.3) (16.9) 6,500 14 0 6,000 12 0 EBITDA Mgn % 87.6 68.9 79.8 73.2 -- 5,500 10 0 Net Mgn % 81.6 65.8 86.0 72.0 -- 5,000 80 ROE % 60.9 24.0 41.4 38.0 -- Jun-09 Sep-09 Dec-09 M ar-10 Jun-10

TASI SAFCO (RHS) ROA % 47.5 19.3 33.8 31.7 -- Div Payout % 75.9 162.6 87.0 94.3 - -

Source: Bloomberg 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) Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research estimates Saudi Basic Industries 42.9 Corporation

General Org. for Social 16.5

Insurance

Source: Tadawul, NCBC Research

JUNE 2010 SAFCO 50 PETROCHEMICALS

Overweight Also known as Tasnee NIC, Tasnee

Target Price (SR) 36.2 National Industrialization Company (Tasnee) was established in Riyadh in 1985 to support the Kingdom’s industrial development. In 2007, Price (SR) 26.0 Tasnee acquired LyondellBasell’s worldwide titanium dioxide business Pricing / Valuation as on June 13, 2010 and in 2008, it purchased Australia's Bemax Resources Ltd. and International Titanium Powder (ITP). Stock details 52-week range H/L (SR) 32.5/16.4  Business brief: Tasnee’s main businesses are in petrochemicals and Market cap ($mn) 3,512.6 Titanium Dioxide. The company also has smaller business lines in automotive Shares outstanding (mn) 506.7 batteries, carton packaging, and related services. In 2006, Tasnee, in a JV Price perf. (%) 1M 3M 12M with Sahara Olefins and Basell, formed Saudi Ethylene and Polyethylene Co. Absolute (11) 3 33 Market (6) (5) 3 (SEPC) with a capacity of 1mn mtpa ethylene cracker, and 400,000 tpa of Sector (13) (6) 12 low and high density polyethylene each. Avg daily turn.(mn) SR US$  Financials: We expect 2010e financial performance to show strong growth 3M 53.3 14.2 12M 34.5 9.2 as the company benefits from the full year impact of SEPC (which started in Raw Beta 6m 2yr June 2009). Revenues are expected to growth 58% to SR17.1bn and net 1.75 1.35 income 195% to SR1.5bn in 2010e. Performance in the first quarter of 2010 Reuters code 2060.SE indicates the company is on track for strong growth as revenues grew Bloomberg code NIC AB 162.2% YoY to SR4bn and net income grew to SR336.2mn in 1Q10 Website www.tasnee.com compared to a net loss of SR25.7mn in 1Q09. Weighting & free float (%)  Recent developments: In May 2010, Tasnee announced its plans to raise TASI (free float weight) 2.12 Free float 80.52 $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 Valuation multiples Germany’s Evonik Industries AG for USD266.7mn to construct an 80,000 08 09 TTM metric tons a year polymers plant. P/E (x) 21.9 25.4 8.6 P/B (x) 1.8 1.7 1.5 Company financials P/Sales (x) 1.3 1.2 0.8 YoY CAGR (%) Div yield (%) 3.8 2.9 3.8 20082009 2010E 2011E (%) (08-11E) DPS 1.0 0.8 1.0 Net Revenues SRmn 10,037 10,863 17,123 17,506 8.2 20.4 Source: NCBC Research EBITDA SRmn 1,748 2,493 4,963 4,764 42.6 39.7 Share price performance 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 7,000 35 6,500 30 Equity SRmn 7,350 7,790 8,859 9,816 6.0 10.1 25 6,000 20 Total Debt SRmn 15,197 15,316 16,703 15,806 0.8 1.3 5,500 15 Cash & Equiv SRmn 3,613 3,585 4,484 6,233 (0.8) 19.9 5,000 10 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 17.4 22.9 29.0 27.2 - - TASI NIC (RHS) Net Mgn % 6.0 4.8 8.9 8.1 - - ROE % 9.0 6.9 18.4 15.2 - - Source: Bloomberg ROA % 2.2 1.6 4.4 3.8 - -

Top 5 shareholders (%) Div Payout % 147.0 150.7 332.0 308.0 - - EPS SR 1.5 1.1 3.3 3.1 (23.1) 28.0 Shairco for Trading, Industry 9.8 and Contracting BVPS SR 16.0 16.9 19.2 21.3 6.0 10.1

Gulf Investment Corporation 7.9 Source: Tadawul, Zawya, Company, NCBC Research estimates

Kingdom Holding Company 6.2

Swicorp Co. 5.8

Al Olayan Saudi Investment Co. 5.8

Source: Tadawul, NCBC Research

JUNE 2010 TASNEE 51 PETROCHEMICALS

Not Covered Also known as Alujain Corporation Alujain

Current Price (SR) 13.1 Alujain Corporation (Alujain), an industrial investment firm, was

Pricing / Valuation as on June 13, 2010 established in 1991 and promoted by Xenel Industries (one of the oldest conglomerates in the Kingdom). The company’s investments include a Stock details 57.4% stake in National Petrochemical Co. (NatPet) and a 93.1% stake 52-week range H/L (SR) 23.5/11.7 in Arab Pesticide Co. (MOBEED). Market cap ($mn) 240.8 Shares outstanding (mn) 69.2  Business brief: Alujain predominantly invests in the Saudi petrochemical, Price perf. (%) 1M 3M 12M energy, mining and metals sectors. The company transferred its Alfasel Absolute (16) (24) (42) propylene production facility to the Teldene Polypropylene project, promoted Market (6) (5) 3 by associate NatPet, in May 2006. NatPet owns a SR2.3bn propylene and Sector (13) (6) 12 polypropylene plant, with 400,000 tons per annum capacity. The company Avg daily turn.(mn) SR US$ 3M 16.3 4.3 also signed contracts with SABIC and Noble Group for the offtake of 12M 11.5 3.1 production. Raw Beta 6m 2yr  Financials: Alujain does not have its own operating units, instead generates 1.52 1.18 Reuters code 2170.SE its income from investments and its affiliates, therefore, the company does Bloomberg code ALCO AB not report sales revenues. The company has been in losses since 2006 with Website www.alujaincorporation.com 2009 recording a loss of SR26mn. Losses continued in 1Q10 with a reported

Weighting & free float (%) a loss of SR6.7mn compared to a loss of SR10.8m in 1Q09. TASI (free float weight) 1.16  Recent developments: In April 2009, the polypropylene plant owned by Free float 85.09 NatPet started operations. In February 2009, Alujain increased its stake in

Valuation multiples MOBEED to 93.1% from 25% earlier. The company also signed an 08 09 TTM agreement with Safra Co. to maintain and operate MOBEED's facilities. P/E (x) NM NM NM P/B (x) 1.8 1.7 1.8 Company financials P/Sales (x) NM NM NM YoY CAGR (%) Div yield (%) N/A N/A N/A 20072008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Revenues SRmn ------EBITDA SRmn (57) (59) (63) (11) NM NM Share price performance Net Income SRmn (40) (65) (27) (7) NM NM 7,000 25 Assets SRmn 2,747 3,229 3,406 3,476 7.5 11.4 6,500 20 Equity SRmn 651 515 519 507 (1.1) (10.8) 6,000 15 5,500 Total Debt SRmn 1,612 2,123 2,066 2,207 3.9 13.2 5,000 10 Cash & Equiv SRmn 201 113 52 64 21.8 (49.1) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % N/M N/M N/M N/M - - TASI ALCO (RHS) Net Mgn % N/M N/M N/M N/M - - ROE % (5.9) (11.2) (5.3) (5.2) - - Source: Bloomberg ROA % (2.3) (2.2) (0.8) (0.8) - - Top 5 shareholders (%) Div Payout % ------Safra Company 14.9 EPS SR (0.6) (0.9) (0.4) (0.1) NM NM Khalid Abdul Rahman Saleh Al 9.9 BVPS SR 9.4 7.5 7.5 7.3 (1.1) (10.7) Rajhi Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 ALUJAIN CORPORATION 52 PETROCHEMICALS

Not Covered Also known as Nama Chemicals NAMA

Current Price (SR) 9.7 Nama Chemicals Company (NAMA) was established in 1992. The

Pricing / Valuation as on June 13, 2010 company develops, owns, and operates industrial projects within the chemical and petrochemical sectors. NAMA functions via its affiliates - Stock details Arabian Alkali Company (55,000mta capacity) and Jubail Chemical 52-week range H/L (SR) 13.5/9.4 Industries Company (60,000mta capacity). Market cap ($mn) 332.4 Shares outstanding (mn) 128.5  Business brief: Arabian Alkali is one of the largest caustic soda producers in Price perf. (%) 1M 3M 12M the Middle East. JANA produces epoxy resins and markets them under the Absolute (13) (5) (26) brand names of RAZEEN and ARALDITE. NAMA is currently setting up the Market (6) (5) 3 Hassad Petrochemicals Company that will manufacture different types of Sector (13) (6) 12 chemicals to supply both the subsidiaries. Avg daily turn.(mn) SR US$ 3M 33.6 9.0  Financials: In 1Q10, the company’s revenues grew by 27.6% YoY to 12M 23.1 6.2 SR130mn. The company reported net income of SR2.1mn in 1Q10 compared Raw Beta 6m 2yr to a loss of SR32.4mn in 1Q09. EBITDA margin for the quarter stood at 0.47 1.03 Reuters code 2210.SE 5.3% compared to loss during the same period last year.

Bloomberg code NAMA AB  Recent developments: In January 2010, NAMA’s subsidiary, JANA received Website www.nama.com.sa a SR210mn loan from the Saudi Industrial Development Fund. The loan Weighting & free float (%) amount will be used for the expansion of the epoxy factory in order to double TASI (free float weight) 0.25 its production capacity to 120,000 tons per annum by end of 2011. In June Free float 100.0 2009, NAMA Chemicals Board appointed Mr. Saud Abdulaziz Al-Gosaibi as

Valuation multiples the Chairman of the Board. 08 09 TTM P/E (x) N/M N/M N/M Company financials P/B (x) 0.8 0.8 0.8 YoY CAGR (%) P/Sales (x) 2.0 3.1 2.9 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 513 622 398 130 27.6 (12.0) Div yield (%) N/A N/A N/A EBITDA SRmn 50 27 (28) 7 N/M N/M DPS NA NA Net Income SRmn 34 (68) (50) 2 N/M N/M Source: NCBC Research estimates Assets SRmn 1,751 2,545 2,396 2,437 (1.1) 17.0 Share price performance Equity SRmn 921 1,557 1,565 1,581 3.1 30.3

7,000 14 Total Debt SRmn 696 800 702 721 (11.7) 0.5 6,500 12 Cash & Equiv SRmn 81 487 325 327 (17.2) 99.7 6,000 10 EBITDA Mgn % 9.7 4.3 (7.0) 5.3 - - 5,500 5,000 8 Net Mgn % 6.6 (10.9) (12.5) 1.6 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 ROE % 4.0 (5.5) (3.2) 0.1 - - TASI NAMA (RHS) ROA % 2.4 (3.2) (2.0) 0.1 - - Div Payout % ------Source: Bloomberg EPS SR 0.5 (0.7) (0.4) 0.2 N/M N/A Top 5 shareholders (%) BVPS SR 12.1 12.1 12.2 12.3 3.1 N/A Ahmed Hamad Al Gosaibi Co. 7.4 Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 NAMA CHEMICALS 53 PETROCHEMICALS

Not Covered Also known as Saudi Industrial SIIG

Current Price (SR) 18.8 Saudi Industrial Investment Group (SIIG) was established in 1996 in

Pricing / Valuation as on June 13, 2010 Riyadh. The company primarily focuses on investment opportunities in the Kingdom’s petrochemical sector. It operates through two Stock details subsidiaries – Saudi Chevron Phillips and Jubail Chevron Phillips. 52-week range H/L (SR) 26.4/17.0  Market cap ($mn) 2,249.4 Business brief: Saudi Chevron Phillips has an installed capacity of 1.2mn Shares outstanding (mn) 450.0 mtpa); it produces benzene, cyclohexane and motor gas. Jubail Chevron Price perf. (%) 1M 3M 12M Phillips commenced operations in 2H08. The facility produces styrene, Absolute (17) (12) (1) propylene and motor gas. In 2007, SIIG entered into a third joint venture Market (6) (5) 3 with National Chevron Phillips (Chevron) to manufacture adipic acid and Sector (13) (6) 12 nylon. Under this JV, both companies are setting up a SR18bn petrochemical Avg daily turn.(mn) SR US$ 3M 23.7 6.3 complex, which is scheduled to commence operations by 2011. 12M 18.2 4.9  Financials: In 1Q10, the revenues of SIIG grew by 203.1% y-o-y to Raw Beta 6m 2yr SR1,332mn from SR440mn in 1Q09. The company reported net income of 1.14 1.15 Reuters code 2250.SE SR142mn in 1Q10 compared to a net loss of SR50mn in 1Q09 as higher Bloomberg code SIIG AB selling prices drove the stronger revenue and net income figures. Website www.siig.com.sa  Recent developments: In December 2009, SIIG announced that Petchem Weighting & free float (%) (a joint venture between SIIG and Chevron Phillips Chemical Company) is TASI (free float weight) 1.50 scheduled to start operations by 2011. The construction of the project is Free float 88.53 65% complete. The project includes a cracker that will produce 40% ethane

Valuation multiples and 60% propane. SIIG owns 32.5% and Chevron Philips Chemical owns 08 09 TTM 35% in the project. P/E (x) 173.1 27.6 16.9 P/B (x) 1.6 1.5 1.5 Company financials P/Sales (x) 3.9 2.2 6.3 YoY CAGR (%) Div yield (%) N/A 2.7 N/A 20072008 2009 1Q10 (%) (07-09) DPS N/A 0.50 N/A Net Revenues SRmn 1,459 2,139 3,760 1,332 203.1 60.5

Source: NCBC Research EBITDA SRmn 474 168 572 230 2,176.3 9.8 Net Income SRmn 437 49 306 142 N/M (16.4) Share price performance Assets SRmn 4,964 8,649 19,699 20,849 122.2 99.2

7,000 30 Equity SRmn 3,126 5,197 5,503 5,645 9.7 32.7 6,500 25 Total Debt SRmn 1,372 2,731 10,174 11,004 218.9 172.3 6,000 20 5,500 15 Cash & Equiv SRmn 749 2,703 4,586 4,354 44.6 147.4 5,000 10 EBITDA Mgn % 32.5 7.9 15.2 17.3 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 30.0 2.3 8.1 10.7 - - TASI SIIG (RHS) ROE % 14.5 1.2 5.7 10.2 - - ROA % 9.3 0.7 2.2 2.8 - - Source: Bloomberg Div Payout % 25.8 - 73.5 - - - Top 5 shareholders (%) EPS SR 1.9 0.1 0.7 0.3 N/M N/A Public Pension Authority 10.6 BVPS SR 13.9 11.6 12.2 12.6 9.7 N/A

Ali Abdullah Ibrahim Al Jufalli 6.3 Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI INDUSTRIAL INVESTMENT GROUP 54 PETROCHEMICALS

Neutral Also known as Sahara Petrochem Sahara, SPCO

Target Price (SR) 27.2 Sahara Petrochemical Company (Sahara) was established in 2004 by the Al Zamil Group. The company develops, owns and operates production Price (SR) 21.0 facilities through joint ventures with other companies in the Pricing / Valuation as on June 13, 2010 petrochemical sector. SPC has four subsidiaries: Al Waha Petrochemical, Tasnee and Sahara Olefins (TSOC), Saudi Acrylic Acid and Arabian Chlor Stock details Vinyl Company (ACVC). 52-week range H/L (SR) 28.0/13.9

Market cap ($mn) 1,637.8  Business brief: Al Waha has a production capacity of 467k tons per annum Shares outstanding (mn) 292.5 (tpa) of propylene, which is used as an input for production of 450k tpa of Price perf. (%) 1M 3M 12M polypropylene. Trial operations started in May 2009 and commercial Absolute (17) (6) 8 Market (6) (5) 3 production is expected to commence in 2Q10. Saudi Ethylene and Sector (13) (6) 12 Polyethylene Co. (SEPC) has a production capacity of 1mn tpa ethylene and Avg daily turn.(mn) SR US$ 800k tpa of polyethylene. 3M 69.0 18.4  12M 39.7 10.6 Financials: Once the Al Waha plant begins commercial production (expected Raw Beta 6m 2yr 2Q10), Sahara will begin reporting revenues as income in 2009 was mainly 1.45 1.15 due to income from associates from SEPC (24% owned by Sahara). In 1Q10, Reuters code 2260.SE Sahara reported net income of SR116mn compared to a net loss of Bloomberg code SPC AB SR14.1mn in 1Q09 (SEPC began contributing to income from 3Q09). We Website www.saharapcc.com expect revenues and earnings to ramp up quickly in 2010/2011 as the full Weighting & free float (%) year impact of SEPC benefits 2010 figures and Al Waha adds from the 2Q10 TASI (free float weight) 1.12 and for the full year 2011. Free float 90.0  Recent developments: In April 2010, Sahara Petrochemical and its joint Valuation multiples venture National Industrial Corporation signed a deal worth USD266.7mn 08 09 TTM with Germany’s Evonik Industries AG to construct an 80,000 metric tons a P/E (x) NM 80.3 10.2 P/B (x) 3.5 2.1 1.7 year polymers plant in Jubail Industrial City. During the same month, SPCO P/Sales (x) N/A N/A 4.9 announced plans to raise capital for funding its three new projects. The Div yield (%) N/A N/A N/A projects include a caustic soda joint venture with Saudi Arabian Mining Co., DPS N/A N/A N/A and its acrylic acid and butanol ventures. Source: NCBC Research Company financials Share price performance YoY CAGR (%) 7,000 30 20082009 2010E 2011E (%) (08-11E) 6,500 25 6,000 20 Net Revenues SRmn - - 1,242 2,358 N/M N/M 5,500 15 EBITDA SRmn (39) (74) 474 887 N/M N/M 5,000 10 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Income SRmn (41) 76 601 723 N/M N/M

TASI SPC (RHS) 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

Source: Bloomberg 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 Top 5 shareholders (%) EBITDA Mgn % N/M N/M 38.2 37.6 - - Al Zamil Group Holding 7.90 Net Mgn % N/M N/M 48.4 30.7 - - Company 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 Source: Tadawul, NCBC Research BVPS SR 9.4 10.0 15.1 14.5 2.1 15.4

Source: Tadawul, Zawya, Company, NCBC Research estimates

JUNE 2010 SAHARA PETROCHEMICAL COMPANY 55 PETROCHEMICALS

Neutral Yansab

Target Price (SR) 50.7 Yanbu National Petrochemicals Company (YANSAB) was established in 2006 to set up a 4mn tons per annum petrochemical complex in the Price (SR) 39.4 Yanbu Industrial City. Saudi Basic Industries Corporation holds a Pricing / Valuation as on June 13, 2010 majority stake (55%) in Yansab.

Stock details  Business brief: Once fully operational, the approximately SR18bn complex 52-week range H/L (SR) 50.0/24.8 is expected to produce ethylene (1.3mn mtpa), Propylene (400k tpa), Market cap ($mn) 5,908.5 Polypropylene (40.4mn mtpa), Polyethylene—low-density and high-density— Shares outstanding (mn) 562.5 (400k tpa each), Mono, Di and Tri Ethylene Glycol (770k tpa total), Benzene Price perf. (%) 1M 3M 12M (170k tpa), Butene -1 (65k tpa), Butene -2 (50k tpa), Methyl Tertiary Butyl Absolute (14) 1 33 Market (6) (5) 3 Ether (20k tpa) and Benzene Toluene Xylene (70k tpa). Sector (13) (6) 12  Financials: After the commencement of commercial operations in 1Q10, Avg daily turn.(mn) SR US$ Yansab posted revenues of SR688.6mn and net income of SR259.4mn in 3M 160.3 42.7 12M 89.7 23.9 1Q10 compared to the net loss of SR8.2mn recorded in 1Q09. Given that Raw Beta 6m 2yr 1Q10 only had one month of contribution from the start of operations, we 1.90 1.24 expect a rapid rise in revenues and earnings through the year and into Reuters code 2290.SE 2011e. For 2010e, we expect revenues of SR7.5bn from zero in 2009 and Bloomberg code YANSAB AB net income of SR2.9bn from a slight loss in 2009. Website www.yansab.com.sa  Recent developments: Yansab commenced commercial production in Weighting & free float (%) March 2010. TASI (free float weight) 1.79 Free float 39.72 Company financials Valuation multiples YoY CAGR (%) 08 09 TTM 20082009 2010E 2011E (%) (08-11E) P/E (x) N/A N/A 7.7 Net Revenues SRmn - - 7,485 9,771 N/A N/A P/B (x) 3.9 3.9 2.6 EBITDA SRmn (26) (29) 3,902 4,294 N/A N/A P/Sales (x) N/A N/A 3.0 Net Income SRmn (26) (29) 2,874 2,902 N/A N/A Div yield (%) N/A N/A N/A Assets SRmn 18,677 21,124 23,719 25,487 13.1 10.9 DPS N/A N/A N/A 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 Source: NCBC Research Cash & Equiv SRmn 1,033 606 2,339 4,037 (41.4) 57.5 Share price performance EBITDA Mgn % - - 52.1 43.9 - -

7,000 60 Net Mgn % - - 38.4 29.7 - - 6,500 50 ROE % (0.4) (0.5) 40.5 29.9 - - 6,000 40 ROA % (0.2) (0.1) 12.8 11.8 - - 5,500 30 5,000 20 Div Payout % - - - 19.4 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EPS SR (0.1) (0.1) 5.1 5.2 N/A N/A TASI YANSAB (RHS) BVPS SR 10.1 10.1 15.2 19.3 (0.5) 24.0

Source: Tadawul, Zawya, Company, NCBC Research estimates Source: Bloomberg

Top 5 shareholders (%) SABIC 51.0 General Organization for 9.2 Social Insurance (GOSI)

Source: Tadawul, NCBC Research

JUNE 2010 YANSAB 56 PETROCHEMICALS

Overweight Sipchem

Target Price (SR) 29.7 Saudi International Petrochemical Company (Sipchem), established in 1999, was the first company to set up methanol and butanediol plants in Price (SR) 21.7 KSA. Sipchem invests in petrochemical and chemical businesses and Pricing / Valuation as on June 13, 2010 currently operates through its two affiliates, International Methanol Co. (IMC) and International Diol Co. (IDC). Stock details 52-week range H/L (SR) 27.1/17.5  Business brief: IMC produces close to 1mn tpa of methanol, while IDC Market cap ($mn) 1,924.0 manufactures 75,000 tpa of butanediol. The vinyl acetate monomer plant in Shares outstanding (mn) 333.3 Jubail, post completion, is expected to have an annual production capacity of Price perf. (%) 1M 3M 12M 450,000 tons of acetic acid, 330,000 tons of vinyl acetate monomer and Absolute (12) (4) 3 Market (6) (5) 3 345,000 tons of carbon monoxide. Moreover, Sipchem aims to establish a Sector (13) (6) 12 fully integrated Olefins Derivatives Complex in New Jubail-II by 2013. Avg daily turn.(mn) SR US$  Financials: We expect a strong ramp in revenues and earnings for Sipchem 3M 38.4 10.2 12M 26.3 7.0 in 2010e as the commercial start of its phase II expansion is expected to Raw Beta 6m 2yr begin during 2Q10. Earnings from this Acetyl complex will likely boost 2010e 1.18 1.12 net income by over 6x to SR870mn. In 1Q10, Sipchem’s revenue grew Reuters code 2310.SE 91.3% YoY to SR305.6mn from SR160mn in 1Q09. Net income increased Bloomberg code SIPCHEM AB 175.5% to SR81.2mn in 1Q10 from SR29.2mn in 1Q09. The growth can be Website www.sipchem.com ascribed to higher petrochemical prices and profit margins. Weighting & free float (%)  Recent developments: In June 2010, Sipchem commenced commercial TASI (free float weight) 1.20 Free float 82.14 operations at its carbon monoxide and acetic acid plants at its acetyl complex in Jubail industrial City. Valuation multiples 08 09 10E Company financials P/E (x) 13.4 51.2 8.3 YoY CAGR (%) P/B (x) 1.5 1.5 1.3 20082009 2010E 2011E (%) (08-11E) P/Sales (x) 4.2 8.7 2.6 Net Revenues SRmn 1,709 830 2,817 3,741 (51.4) 29.9 Div yield (%) 4.6 4.6 4.6 EBITDA SRmn 1,151 340 1,721 2,269 (70.4) 25.4 DPS 1.0 1.0 1.0 Net Income SRmn 537 141 870 1,171 (73.8) 29.7 Source: NCBC Research estimates 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 Share price performance Total Debt SRmn 3,106 4,241 4,241 3,541 36.5 (2.9) 7,000 30 Cash & Equiv SRmn 2,581 1,831 1,724 1,743 (29.1) (12.3) 6,500 25 EBITDA Mgn % 67.4 41.0 61.1 60.7 - - 6,000 20 5,500 Net Mgn % 31.4 17.0 30.9 31.3 - - 5,000 15 ROE % 13.5 2.8 16.8 19.9 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 ROA % 5.8 1.2 7.2 9.3 - - TASI Sipchem (RHS) Div Payout % 60 238 38 28 - -

Source: Bloomberg 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 Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research estimates Zamil Group Holding 10.1 Company National Manufacturing 8.3 Holding Co. Public Pension Agency 7.7

Al Olayan Financial Company 5.6

Source: Tadawul, NCBC Research

JUNE 2010 SIPCHEM 57 PETROCHEMICALS

Not Covered Also known as Advanced Petrochem APPC

Current Price (SR) 20.5 Advanced Petrochemical Company (APPC), based in Dammam, was

Pricing / Valuation as on June 13, 2010 established in 2005 to develop a SR3bn integrated propane dehydrogenation and polypropylene complex in Jubail Industrial City. The Stock details facility has an annual production capacity of 450,000 tons of 52-week range H/L (SR) 29.0/17.2 polypropylene. It commenced commercial operations in 2008. Market cap ($mn) 772.7 Shares outstanding (mn) 141.4  Business brief: APPC has an annual production capacity of 450,000 tons of Price perf. (%) 1M 3M 12M polypropylene, which is used in several applications such as for Absolute (11) (8) (25) manufacturing fabrics, moldings, pipes and furniture. The company Market (6) (5) 3 appointed Vinmar International (Houston), Mitsubishi Corp. and Domo Sector (13) (6) 12 (Belgium) to offtake the output from this complex. Most of the production Avg daily turn.(mn) SR US$ 3M 41.5 11.1 will be shipped through the ports of Dammam, Jeddah and Jubail. 12M 33.4 8.9  Financials: In 1Q10, APPC’s revenue grew 25.7% YoY to SR464.5mn from Raw Beta 6m 2yr SR369.5m in 1Q09. The net income increased 22.6% YoY to SR52.6mn 1.19 1.12 Reuters code 2330.SE during the same period, largely due to a rise in the prices of APPC’s Bloomberg code APPC AB products.

Website www.advancedpetrochem.  com Recent developments: In April 2010, APPC announced the completion of maintenance of its propylene and polypropylene units, which restarted Weighting & free float (%) TASI (free float weight) 0.56 operations on 31 March 2010. APPC was fined SR50,000 by Saudi Arabia’s Free float 95.72 Capital Market Authority for violating disclosure rules after it delayed the announcement of its maintenance work at its propylene and polypropylene Valuation multiples 08 09 TTM units. P/E (x) 40.2 66.4 61.7 Company financials P/B (x) 5.2 5.1 5.1 YoY CAGR (%) P/Sales (x) 5.8 5.8 5.4 20072008 2009 1Q10 (%) (07-09) Div yield (%) N/A 5.3 4.0 Net Revenues SRmn - 1,459 1,467 464 25.7 - DPS N/A 1.00 0.8 EBITDA SRmn (1) 366 357 108 12.4 NM Source: NCBC Research Net Income SRmn 2 210 127 53 22.6 666.6 Share price performance 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 7,000 30 6,500 Total Debt SRmn 1,070 1,713 1,474 1,434 (16.3) 17.4 25 6,000 Cash & Equiv SRmn 89 216 296 259 (19.0) 82.7 20 5,500 EBITDA Mgn % N/M 25.1 24.3 23.3 - - 5,000 15 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % N/M 14.4 8.7 11.3 - - TASI APPC (RHS) ROE % 0.2 13.9 7.7 12.7 - - ROA % 0.1 6.9 3.7 6.2 - - Source: Bloomberg Div Payout % - - 111.1 202.7 - -

Top 5 shareholders (%) 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 National Polypropylene 7.9 Company [NPPC] Source: Tadawul, Zawya, Company, NCBC Research Abdullah Saad Al-Rahman Al- 5.2 Rashed

Source: Tadawul, NCBC Research

JUNE 2010 ADVANCED PETROCHEM 58 PETROCHEMICALS

Neutral Saudi Kayan

Target Price (SR) 20.3 Saudi Kayan Petrochemical Company (Kayan) was established by SABIC (35% stake) and Al Kayan Petrochemical (20%) in 2007 to set up a Price (SR) 18.5 SR38bn petrochemical complex in Jubail Industrial City. The plant has Pricing / Valuation as on June 13, 2010 the capacity to produce approximately 6mn tons of petrochemical products each year. Stock details 52-week range H/L (SR) 22.9/12.5  Business brief: The complex, believed to be the world's largest integrated Market cap ($mn) 7,378.2 petrochemical plant, will manufacture specialized chemicals such as Shares outstanding (mn) 1,500.0 polycarbonate, bisphenol A, acetone and ethanolamines, besides ethylene, Price perf. (%) 1M 3M 12M polyethylene, propylene and ethylene glycols. Production is expected to Absolute (12) (1) 18 Market (6) (5) 3 commence by 2Q10. Sector (13) (6) 12  Financials: Since Kayan is yet to start operations, the company has limited Avg daily turn.(mn) SR US$ financial history. We assume that commercial operations of its plants will 3M 549.6 146.5 12M 268.3 71.5 begin in 2Q11 thus do not assume any revenue contribution for 2010. Raw Beta 6m 2yr However, once the company does start operations, we expect a quick ramp 1.21 1.14 in revenues and earnings and forecast 2011e revenues of SR12bn and net Reuters code 2350.SE income of SR2.3bn. Bloomberg code KAYAN AB Website www.saudikayan.com  Recent developments: In April 2010, Kayan announced that it would complete the construction of its LDPE plant at its petrochemical complex in Weighting & free float (%) Jubail in the first half of 2012. In line with this, the company signed a TASI (free float weight) 2.28 Free float 40.56 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 Valuation multiples annual production capacity of 300,000 tons. In January 2010, Kayan 08 09 10E awarded a contract for the construction of a 210,000 tons per year amines P/E (x) 56.0 N/A N/A P/B (x) 1.8 1.8 1.8 plant at its mega complex to CTCI Corp of Taiwan. P/Sales (x) N/A N/A N/A Div yield (%) N/A N/A N/A Company financials DPS N/A N/A N/A YoY CAGR (%)

Source: NCBC Research estimates 2008*2009 2010E 2011E (%) (08-11E) Net Revenues SRmn - - - 12,134 - - Share price performance EBITDA SRmn 0 0 5 4,028 - NM 7,000 25 Net Income SRmn 494 (17) (96) 2,279 N/M 66.5 6,500 20 Assets SRmn 22,402 35,808 36,099 38,648 59.8 19.9 6,000 15 5,500 Equity SRmn 15,494 15,477 15,381 17,660 (0.1) 4.5 5,000 10 Total Debt SRmn 5,815 19,113 19,113 17,878 228.7 45.4 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn 3,522 2,472 2,685 1,761 (29.8) (20.6) TASI Kayan (RHS) EBITDA Mgn % - - N/A 33.2 - - Net Mgn % - - N/A 18.8 - - Source: Bloomberg ROE % 3.2 (0.1) (0.6) 13.8 - - Top 5 shareholders (%) ROA % 2.6 (0.1) (0.3) 6.1 - - Saudi Basic Industries 35.0 Div Payout % - - N/A N/A - - Corporation EPS SR 0.3 (0.0) (0.1) 1.5 N/M 66.4 Kayan Petrochemical 20.0 Company 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

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI KAYAN PETROCHEMICAL 59 PETROCHEMICALS

Not Covered Petro Rabigh

Current Price (SR) 27.0 Rabigh Refining and Petrochemical Co. (Petro Rabigh), established at

Pricing / Valuation as on June 13, 2010 Rabigh in 2005, is a joint venture between Saudi Aramco and Sumitomo Chemical, of Japan. The USD10bn project has the capacity to produce Stock details 18.4mn tons of refined petroleum products and 2.4mn tons of 52-week range H/L (SR) 39.5/24.0 petrochemical products each year. Market cap ($mn) 6,305.6 Shares outstanding (mn) 876.0  Business brief: Aramco is expected to supply 400k barrels of crude oil, Price perf. (%) 1M 3M 12M 95mn cubic feet (mcf) of ethane and about 15k barrels of butane on a long- Absolute (14) (22) (15) term, fixed-price basis to Petro Rabigh. Sumitomo provides the technological Market (6) (5) 3 and marketing expertise. The plant is equipped with a sophisticated High Sector (13) (6) 12 Olefins Fluid Catalytic Cracker (HOFCC) and Ethane Cracker. End products Avg daily turn.(mn) SR US$ 3M 103.2 27.5 will be distributed in Saudi Arabia, Europe and Asia (mainly China) through 12M 87.8 23.4 the plant’s deep-water port. Raw Beta 6m 2yr  Financials: Petro Rabigh’s revenues grew 89.7% YoY to SR10.7bn in 1Q10 1.63 1.25 Reuters code 2380.SE from SR5.6bn in 1Q09. The company’s net income increased to SR271.5mn Bloomberg code PETROR AB in 1Q10 compared to the net loss of SR28.6m recorded in 1Q09 due to an Website www.petrorabigh.com increase in the prices of refined and petrochemical products.

Weighting & free float (%)  Recent developments: In May 2010, Petro Rabigh announced plans to shut TASI (free float weight) 0.83 all units at its complex for 45 days during 2Q11 for regular tests and Free float 17.42 inspection. Earlier, in April, Petro Rabigh had announced its expansion plans

Valuation multiples and welcomed bids for construction of the second phase of the giant 08 09 TTM complex. Petro Rabigh intends to add 17 new products through the P/E (x) N/A N/A N/A expansion, which is estimated to cost the company approximately SR25bn. P/B (x) 2.6 3.0 2.9 P/Sales (x) 3.6 0.8 0.7 Company financials Div yield (%) N/A N/A N/A YoY CAGR (%) DPS N/A N/A N/A 20072008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Revenues SRmn - 6,543 29,423 10,676 89.7 N/M EBITDA SRmn (423) (1,029) (144) 447 257.0 N/M Share price performance Net Income SRmn (443) (1,256) (1,433) 272 N/M N/M 7,000 40 Assets SRmn 26,961 47,911 52,146 48,246 (1.7) 39.1 6,500 35 Equity SRmn 5,953 9,264 7,831 8,102 (12.3) 14.7 6,000 30 5,500 25 Total Debt SRmn 19,444 31,569 33,995 28,708 (13.3) 32.2 5,000 20 Cash & Equiv SRmn 186 1,534 1,306 1,882 75.2 165.0 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % N/M (15.7) (0.5) 4.2 - - TASI Petro Rabigh (RHS) Net Mgn % N/M (19.2) (4.9) 2.5 - - ROE % (10.5) (16.5) (16.8) 13.6 - - Source: Bloomberg ROA % (2.3) (3.4) (2.9) 2.2 - - Top 5 shareholders (%) Div Payout % ------Aramco 37.5 EPS SR (0.7) (1.5) (1.6) 0.3 N/M N/A Sumitomo Chemical Company 37.5 BVPS SR 9.1 10.6 8.9 9.3 (12.2) (0.7)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 PETRO RABIGH 60 Cement

Ticker Company Page No.

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

JUNE 2010 THE SAUDI FACTBOOK Cement

Excess supply remains a concern Government backed The Saudi market for cement has remained one of the strongest globally, helped by infrastructure construction continued government support for large infrastructure projects in the country and a to aid cement demand 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.

Expansion by new players However, we believe capacity in the Saudi cement sector will continue to exceed coupled with export ban demand. This concern is exacerbated by the ongoing conditional export ban which resulting in oversupply 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 returns Cost advantage over GCC KSA cement companies’ impressive returns compared to GCC peers are due to their players raise KSA cement significant cost advantages. Cement companies in KSA have access to low cost raw players attractiveness 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, Exhibit 55: Comparison of ROE and P/E of GCC 2007–09 companies, 2009 (USD mn) (%)

2,500 30

25 2,000

20 1,500 15 ROE (%) 1,000 10

500 5 P/E (x) 0 0 5 10152025 2007 2008 2009 KSA UAE Kuwait Oman Qatar KSA UAE Kuwait Oman Qatar

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

JUNE 2010 THE SAUDI FACTBOOK 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.

Exhibit 56: Sector details % weight in Index Net Margin (%) ROE (%) Dividend yield Company as on Dec 2009 2009 2009 (%) 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

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 continue Rise in transportation cost KSA cement companies have experienced a significant rise in transportation costs due to export ban and post the export ban and due to a strengthening of competition. Traditionally, competition impacts cement companies in KSA focused on selling in their immediate regions due to profitability of companies 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.

Exhibit 57: Revenues of companies, 2007–09 Exhibit 58: Profitability of companies, 2007-09 (SR mn) (%)

9,000 75

7,500 65 6,000

4,500 55

3,000 45 1,500

0 35 2007 2008 2009 2007 2008 2009

Saudi Cement Yamama Southern Province Saudi Cement Yamama Southern Province Yanbu Cement Yanbu Cement Qassim Cement Eastern Cement Qassim Cement Eastern Cement Others Others

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

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

JUNE 2010 THE SAUDI FACTBOOK 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.

Exhibit 59: Comparison of P/B and ROE, 2008 Exhibit 60: Comparison of P/B and ROE, 2009 (%) (%) 36 37 33 Southern 34 Qassim Qassim Province Cement 31 30 Cement Yanbu 28 Cement 27 Saudi Southern Yanbu 25 24 Cement Province Cement Saudi 21 22 RoE (%)

RoE (%) Yamamah Cement 19 18 Yamamah Eastern Arabian 16 Cement 15 Cement Eastern Tabuk 13 Cement Arabian Cement 12 P/B (x) Tabuk P/B (x) Cement 10 9 Cement 12312345

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

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 Exhibit 62: Share price movement, Jan09 – Mar10 (SR mn) Rebased to 100 on 1st Jan-09 15 190 13

12 170

150 9 8 8 130 5 6 5 5 110 4 4 3 90

70 0 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 Saudi Tabuk Yanbu Yamama Saudi Eastern Qassim Qassim Eastern Arabian Yamama Southern Yanbu Arabian Southern Tabuk

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

JUNE 2010 THE SAUDI FACTBOOK 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.

Exhibit 63: Coverage stocks details Stock Current Rating PT (SR) Comments Yamama Cement Overweight 58.0 Strong demand in Riyadh coupled with highest capacity in the central (3020.SE) 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 Neutral 44.3 Shifting focus to domestic market due to export, but limitation on exports (3080.SE) remains key downside. Still focused on Eastern region for sales, however lack of major projects limits demand upside. Yanbu Cement Neutral 39.4 Western region fundamentals remain strong, volatility in project progress (3060.SE) 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 Neutral 41.2 Based in the Eastern region, away from most of the key demand centers. (3030.SE) As long as the export ban remains, will hinder growth and profitability. Southern Cement Underweight 60.0 Well positioned for Jizan Economic City in the South. New facility near (3050.SE) Makkah also helps. However competition is fierce and new capacities will take some time to complete. Qassim Cement Neutral 71.3 Lowest cost cement producer in the country with very low inventory (3040.SE) levels. Lack of capacity expansion plans could limit growth.

Source: NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 65 CEMENT

Not Covered Also known as Arabian Cement ACC

Current Price (SR) 36.0 Arabian Cement Company (ACC) was the first company to start cement Pricing / Valuation as on June 13, 2010 production in Saudi Arabia (1958). ACC mainly produces portland cement, portland pozzolan cement, sulfate-resistant cement and ready- Stock details mix concrete. As of 2009, ACC had capacity of 3.5mn tons of cement and 52-week range H/L (SR) 50.0/32.4 3.3mn tons of clinker per year. Market cap ($mn) 767.8 Shares outstanding (mn) 80.0  Business brief: ACC, the oldest cement company in the Kingdom, produced Price perf. (%) 1M 3M 12M 3.0mn tons of cement and clinker in 2009. Its market share dipped from Absolute (6) (17) (23) 9.3% in 2007 to 7.9% in 2009, mainly due increased competition following Market (6) (5) 3 Sector (6) (10) 2 the entry of four new players in the market. Avg daily turn.(mn) SR US$  Financials: ACC’s financial performance suffered in 2009 due to a series of 3M 6.0 1.6 12M 4.0 1.1 write-downs during 4Q09 of approximately SR150mn, which led to a near Raw Beta 6m 2yr halving of net income for the year. For the 1Q10, ACC’s revenues decreased 1.07 0.77 1.0% YoY to SR201.7mn. However, its EBITDA margin declined considerably Reuters code 3010.SE to 56.0% in 1Q10 from 60.3% in 1Q09. ACC’s net margin also declined Bloomberg code ARCCO AB considerably to 40.5% in 1Q10 from 50.9% in 1Q09, leading to its net Website www.arabiancement.com income declining 21.2% YoY to SR 81.7mn in 1Q10. Weighting & free float (%)  Recent developments: In April 2010, ACC obtained a 20-year license to TASI (free float weight) 0.41 operate a quarry in the Thaalaba Mountains in Mecca. Also, ACC’s 1.5mn Free float 71.89 tons per annum cement plant in Hadramout, which had been under Valuation multiples construction for the past three years, commenced operations in early April 08 09 TTM 2010. On 10 February 2010, ACC announced a cash dividend of SR1.25 per P/E (x) 8.9 16.7 19.2 share for the year 2009. P/B (x) 1.3 1.3 1.2 P/Sales (x) 4.0 3.9 3.9 Company financials Div yield (%) 8.3 3.5 NA YoY CAGR (%) DPS 3.0 1.3 NA 20072008 2009 1Q10 (%) (07-09) Source: NCBC Research Net Revenues SRmn 722 721 737 202 (0.9) 1.0 Share price performance EBITDA SRmn 436 389 451 113 (8.1) 1.7 Net Income SRmn 392 324 172 82 (21.2) (33.8) 7,000 50 6,500 45 Assets SRmn 2,366 3,518 3,830 3,972 10.3 27.2 6,000 40 Equity SRmn 1,841 2,244 2,222 2,312 4.6 9.9 5,500 35 Total Debt SRmn 282 1,017 1,296 1,393 20.3 114.3 5,000 30 Cash & Equiv SRmn 117 451 52 152 (24.7) (33.5) Jun-09 Oct-09 Feb-10 Jun-10 TASI Arab Cement (RHS) EBITDA Mgn % 60.4 53.9 61.2 55.9 - - Net Mgn % 54.3 44.9 23.3 40.5 - - Source: Bloomberg ROE % 22.5 15.9 7.7 14.4 - - Top 5 shareholders (%) ROA % 18.8 11.0 4.7 8.4 - - Div Payout % 71.4 74.1 58.1 - - - Sulaiman Abdul Aziz Saleh Al 11.8 Rajhi EPS SR 5.6 4.1 2.2 1.0 (23.1) (38.0) National Commercial Bank 9.9 BVPS SR 26.3 28.1 27.8 28.9 3.8 2.8 (NCB) Source: Tadawul, Bloomberg, Zawya, Company, NCBC Research Abdul Aziz Abdullah Sulaiman 7.5 Al Sulaiman Abdullah Abdul Aziz Saleh Al 5.7 Rajhi Public Pension Authority (PPA) 5.1

Source: Tadawul, NCBC Research

JUNE 2010 ARABIAN CEMENT 66 CEMENT

Overweight Also known as Yamama Cement YSCC

Target Price (SR) 58.0 Yamama Saudi Cement Company (YSCC) was founded in Riyadh in 1961 when it commenced production with a limited capacity of 0.9mn tons per Price (SR) 48.3 year. As of 2009, YSCC’s annual cement and clinker production Pricing / Valuation as on June 13, 2010 capacities have increased to 6.3mn tons and 6.0mn tons, respectively.

Stock details Yamama is well located to take advantage of the increased momentum 52-week range H/L (SR) 54.5/37.4 of the construction sector in 2010, particularly in the Central region. A Market cap ($mn) 1,739.0 low cost base and self integrated plant remain key positives for the Shares outstanding (mn) 135.0 stock. Price perf. (%) 1M 3M 12M Absolute (5) (8) 24  Business brief: Yamama is one of the few established cement companies in Market (6) (5) 3 the Kingdom which is successfully competing in the face of the industry Sector (6) (10) 2 excess supply. This is mainly due to its strategic location in Riyadh, where it Avg daily turn.(mn) SR US$ 3M 10.0 2.7 is close to most of the major construction projects currently ongoing in the 12M 7.5 2.0 Kingdom. In 2009, its market share of cement deliveries increased to 14.1% Raw Beta 6m 2yr from 13.6% in 2008. So far in 2010, its share of local cement deliveries 0.62 0.79 increased to 12.8% in 1Q10 compared to 12.6% in 1Q09. Reuters code 3020.SE Bloomberg code YACCO AB  Financials: Despite industry revenues falling in 2009, Yamama increased Website www.yamamacement.com 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 Weighting & free float (%) TASI (free float weight) 1.15 company will be able to maintain cost control in order to return to earnings Free float 87.35 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 Valuation multiples quarter compared to 69.0% in 1Q09, however net income rose 31% YoY due 08 09 10E P/E (x) 10.7 11.6 10.3 to the strong increase in sales. P/B (x) 2.3 2.1 2.0  Recent developments: In January 2010, YSCC announced a SR2.0 per P/Sales (x) 5.8 5.6 5.0 share dividend for the year 2009. Div yield (%) 4.1 6.2 7.2 DPS 2.0 3.0 3.5 Company financials Source: NCBC Research estimates YoY CAGR (%) Share price performance 20082009 2010E 2011E (%) (08-11E)

7,000 60 Net Revenues SRmn 1,123 1,163 1,306 1,331 3.6 5.8

6,500 50 EBITDA SRmn 809 766 822 808 (5.3) (0.0) 6,000 40 Net Income SRmn 611 562 634 623 (8.1) 0.7 5,500 5,000 30 Assets SRmn 3,589 3,694 3,705 3,803 2.9 1.9 Jun-09 Oct-09 Feb-10 Jun-10 Equity SRmn 2,841 3,055 3,214 3,362 7.5 5.8 TASI Yamamah Cement (RHS) Total Debt SRmn 748 639 491 441 (14.5) (16.1) Cash & Equiv SRmn 643 712 708 903 10.8 12.0 Source: Bloomberg EBITDA Mgn % 72.0 65.9 62.9 60.7 - - Top 5 shareholders (%) Net Mgn % 54.4 48.3 48.5 46.8 - - Prince Sultan Mohammed 9.7 ROE % 23.5 19.1 20.2 18.9 - - Saud AlKabeer Al Saud ROA % 17.0 15.4 17.1 16.6 - - General Organization for 7.1 Div Payout % 44.4 71.4 74.5 76.1 - - Social Insurance (GOSI) EPS SR 4.5 4.2 4.7 4.6 (6.7) 0.7 Public Pension Authority (PPA) 5.0 BVPS SR 21.0 22.6 23.8 24.9 7.6 5.8

Source: Tadawul, Zawya, Company, NCBC Research estimates Source: Tadawul, NCBC Research

JUNE 2010 YAMAMA CEMENT 67 CEMENT

Neutral Also known as Saudi Cement SCC

Target Price (SR) 41.2 Saudi Cement Company (SCC) was established in 1955. It currently specializes in the production of ordinary Portland cement, sulphate Price (SR) 44.3 resisting cement and oil well cement. SCC runs two plants, at Hofuf and Pricing / Valuation as on June 13, 2010 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 Stock details high stock levels by meeting demand easily. However, this has not been 52-week range H/L (SR) 53.0/33.0 Market cap ($mn) 1,807.0 met by similar profitability growth due to lower margins from its high Shares outstanding (mn) 153.0 transport costs/low cement prices. Price perf. (%) 1M 3M 12M  Business brief: SCC has been losing ground in the domestic market mainly Absolute (14) (7) 17 Market (6) (5) 3 due to competition from new entrants. It currently has a market share of Sector (6) (10) 2 14.6%, which has been steadily declining over the past 3 years. SCC also Avg daily turn.(mn) SR US$ has a 36% equity stake in United Cement Company, Bahrain, and another 3M 11.1 3.0 33.3% stake in Cement Product Industry Co. Ltd., which meets the cement 12M 8.2 2.2 packaging requirements of SCC and its partner companies. Raw Beta 6m 2yr 1.06 1.07  Financials: SCC’s 2009 revenues grew 6.8%, however net income fell 6.2% Reuters code 3030.SE as the company suffered from a margin squeeze due to continued pricing Bloomberg code SACCO AB pressure. SCC has one of the lowest selling prices in the industry and one of Website www.saudicement.com.sa the highest cost bases, which leads to the lowest relative margins in the Weighting & free float (%) sector amongst the listed companies (2009 gross and net margins of 51% TASI (free float weight) 1.17 and 43.7% respectively). So far in 2010, the company is showing a decent Free float 86.42 rebound with 1Q10 revenues rising 17.2% YoY to SR410.9mn and net Valuation multiples income rising 16.2% YoY to SR165mn. 08 09 10E  Recent developments: In May 2010, SCC increased its capital by issuing P/E (x) 10.9 11.6 10.4 P/B (x) 2.4 2.2 2.0 one bonus share for every two shares held. The bonus issue has led to a P/Sales (x) 5.4 5.0 4.3 50% increase in capital to SR1.53bn made up of 153 million shares with a Div yield (%) 7.9 7.9 5.2 par value of SR10. DPS 3.5 3.5 2.3 Company financials Source: NCBC Research estimates YoY CAGR (%) Share price performance 20082009 2010E 2011E (%) (08-11E)

7,000 55 Net Revenues SRmn 1,260 1,346 1,587 1,506 6.8 6.1 6,500 50 EBITDA SRmn 713 820 887 825 15.0 5.0 45 6,000 Net Income SRmn 621 582 654 609 (6.2) (0.6) 40 5,500 35 Assets SRmn 4,530 4,931 5,078 5,061 8.9 3.8 5,000 30 Equity SRmn 2,848 3,071 3,372 3,621 7.8 8.3 Jun-09 Oct-09 Feb-10 Jun-10 TASI Saudi Cement (RHS) 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 Source: Bloomberg EBITDA Mgn % 56.6 60.9 55.9 54.8 - -

Top 5 shareholders (%) Net Mgn % 49.3 43.3 41.2 40.4 - - ROE % 22.2 19.7 20.3 17.4 - - General Organization for 8.5 Social Insurance (GOSI) ROA % 14.8 12.3 13.1 12.0 - - Khaled Abdul Rahman Saleh 7.9 Div Payout % 57.4 61.3 53.7 57.8 - - Al Rajhi EPS SR 6.1 5.7 4.3 4.0 (6.4) (13.3) Public Pension Authority (PPA) 5.0 BVPS SR 27.9 30.1 33.1 35.5 7.9 8.4

Source: Tadawul, Zawya, Company, NCBC Research estimates

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI CEMENT COMPANY 68 CEMENT

Neutral Also known as Qassim Cement QCC

Target Price (SR) 71.3 Qassim Cement Company (QCC) was founded in 1976 in Buraydah, which lies in the central region of KSA, 330 km northwest of Riyadh. Price (SR) 69.0 Commercial production started in 1981 with the opening of a 2,000 tons Pricing / Valuation as on June 13, 2010 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. Stock details 52-week range H/L (SR) 79.0/55.0  Business brief: QCC has held a steady share in the domestic cement Market cap ($mn) 1,655.6 market for many years. In 2009, the company accounted for 11.2% of the Shares outstanding (mn) 90.0 total cement market in the Kingdom after dropping down to 9.8% in 2008, in Price perf. (%) 1M 3M 12M spite of increased competition in the form of new entrants. QCC is one of the Absolute (3) (6) 26 Market (6) (5) (3) most efficient cement companies in the sector, however, as it is producing at Sector (6) (10) 2 near capacity and has very low levels of inventory, we believe continued Avg daily turn.(mn) SR US$ volume expansion will be limited. 3M 8.2 2.2  12M 12.7 3.4 Financials: 2009 was a decent year for QCC as sales volumes increased Raw Beta 6m 2yr 33%, leading to a 20% increase in revenues. Despite continued pricing and 0.54 0.75 margin pressure, the company was still able to increase net income, even Reuters code 3040.SE when adjusting for a SR82mn non-recurring item. In 1Q10, the company’s Bloomberg code QACCO AB sales increased 12.3% YoY to SR272.5mn as QCC benefitted from increased Website www.qcc.com.sa sales in the Central region. However, net income declined 4% YoY in 1Q10 Weighting & free float (%) as net margins declined to 52.2% during the quarter versus 61% in 1Q09. TASI (free float weight) 0.65  Free float 51.31 Recent developments: At an extraordinary general meeting held on 15 November 2009, shareholders approved an increase in capital from Valuation multiples SR450mn to SR900mn, executed in the form of a 1:1 bonus issue. Retained 08 09 10E earning and legal reserves were used to finance the capital hike, after which P/E (x) 12.0 10.2 11.6 P/B (x) 3.6 3.4 3.4 the company's capital increased to 90mn shares with a par value of SR10. P/Sales (x) 7.6 6.3 6.1 Company financials Div yield (%) 11.6 8.7 7.2 YoY CAGR (%) DPS 8.0 6.0 5.0 20082009 2010E 2011E (%) (08-11E) Source: NCBC Research estimates Net Revenues SRmn 820 987 1,011 994 20.4 6.6 Share price performance EBITDA SRmn 597 629 622 617 5.4 1.1

7,000 80 Net Income SRmn 517 608 534 527 17.6 0.6 6,500 70 Assets SRmn 2,270 2,244 2,195 2,228 (1.1) (0.6) 6,000 60 Equity SRmn 1,724 1,829 1,827 1,903 6.1 3.3 5,500 50 Total Debt SRmn 547 419 368 326 (23.4) (15.8) 5,000 40 Jun-09 Oct-09 Feb-10 Jun-10 Cash & Equiv SRmn 336 16 2 93 (95.2) (34.8) TASI Qassim Cement (RHS) EBITDA Mgn % 72.8 63.7 61.5 62.1 - - Net Mgn % 63.0 61.6 52.8 53.0 - - Source: Bloomberg ROE % 31.8 34.2 29.2 28.3 - - Top 5 shareholders (%) ROA % 23.9 26.9 24.1 23.8 - - Public Investment Fund 23.3 Div Payout % 69.6 89.6 84.3 85.3 - - General Organization for 19.9 EPS SR 11.5 6.7 5.9 5.9 (41.7) (20.1) Social Insurance (GOSI) BVPS SR 38.3 20.3 20.3 21.1 (47.0) (18.0)

Public Pension Authority (PPA) 5.2 Source: Tadawul, Zawya, Company, NCBC Research estimates

Source: Tadawul, NCBC Research

JUNE 2010 QASSIM CEMENT 69 CEMENT

Underweight Also known as Southern Cement SPCC

Target Price (SR) 60.0 Southern Province Cement Company (SPCC) is the largest cement producer in Saudi Arabia in terms of market capitalization and the third Price (SR) 68.0 largest in terms of capacity. Established in 1978, the company operates Pricing / Valuation as on June 13, 2010 three production facilities in Jazan, Bisha and Tuhama, the bulk of the

Stock details production occurring in the first two facilities. In 2009, the company 52-week range H/L (SR) 81.0/59.0 produced 5.2mn tons of cement and 5.8mn tons of clinker. Increased Market cap ($mn) 2,538.0 competition, particularly from its local private peer Najran Cement, is a Shares outstanding (mn) 140.0 key concern for Southern Cement Price perf. (%) 1M 3M 12M Absolute (1) (5) 19  Business brief: In 2009, SPCC’s share in the domestic market stood at Market (6) (5) 3 13.6%, a decline from the 15.2% it held in 2007. The fall has mainly been Sector (6) (10) 2 due to the entry of several new players in the industry, especially in 2008. In Avg daily turn.(mn) SR US$ 3M 3.5 0.9 September 2009, General Organization for Social Insurance (GOSI) 12M 3.0 0.8 increased its stake in SPCC to 14.8%. Raw Beta 6m 2yr  Financials: SPCC was able to increase revenues slightly in 2009 to 0.23 0.60 Reuters code 3050.SE SR1.32bn, however pricing pressure which impacted gross margins led to a Bloomberg code SOCCO AB 7% decline in net income to SR734mn. We believe 2010e will remain difficult Website www.spcc.com.sa 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 Weighting & free float (%) TASI (free float weight) 0.83 and net margins marginally declining to 64.0% and 53.7%, respectively. Free float 43.81  Recent developments: In March 2010, SPCC announced a cash dividend

Valuation multiples of SR2.5 per share for 2H09. On 30 December 2009, SPCC and China's 08 09 10E Sinoma International Engineering Company signed a USD147mn contract for P/E (x) 12.0 13.0 13.6 the construction of a second 5,000 ton per day cement clinker at its third P/B (x) 4.0 3.9 3.9 plant, which is expected to be completed within two years. P/Sales (x) 7.3 7.2 7.3 Div yield (%) 7.4 7.4 7.4 Company financials DPS 5.0 5.0 5.0 YoY CAGR (%) Source: NCBC Research estimates 20082009 2010E 2011E (%) (08-11E)

Share price performance Net Revenues SRmn 1,298 1,318 1,301 1,347 1.5 1.2 EBITDA SRmn 864 859 850 851 (0.6) (0.5) 7,000 80 75 Net Income SRmn 791 734 698 690 (7.2) (4.5) 6,500 70 6,000 65 Assets SRmn 2,749 2,802 2,810 2,837 1.9 1.1 60 5,500 55 Equity SRmn 2,360 2,462 2,458 2,447 4.3 1.2 5,000 50 Total Debt SRmn 389 340 351 391 (12.6) - Jun-09 Oct-09 Feb-10 Jun-10 TASI Southern Cement (RHS) Cash & Equiv SRmn 575 607 555 454 5.6 (7.6) EBITDA Mgn % 66.6 65.2 65.3 63.2 - -

Source: Bloomberg Net Mgn % 60.9 55.7 53.7 51.2 - - ROE % 33.6 30.4 28.4 28.1 - - Top 5 shareholders (%) ROA % 29.3 26.4 24.9 24.4 - - Public Investment Fund 37.4 Div Payout % 87.7 96.2 100.2 101.4 - - General Organization for 14.8 EPS SR 5.7 5.2 5.0 4.9 (8.8) (4.7) Social Insurance (GOSI) BVPS SR 16.9 17.6 17.6 17.5 4.1 1.2

Source: Tadawul, Zawya, Company, NCBC Research estimates

Source: Tadawul, NCBC Research

JUNE 2010 SOUTHERN CEMENT 70 CEMENT

Neutral Also known as Yanbu Cement YCC

Target Price (SR) 39.4 Jeddah-based Yanbu Cement Company (YCC) was established in March 1976 through a plant with an initial production capacity of 3,000 tons of Price (SR) 42.4 clinker per day at Ras Baridi near Yanbu on the west coast of Saudi Pricing / Valuation as on June 13, 2010 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 Stock details slow pace of demand momentum in the Western region 52-week range H/L (SR) 56.8/40.0

Market cap ($mn) 1,187.4  Business brief: YCC was the largest seller of cement in the Saudi market in Shares outstanding (mn) 105.0 2003/2004, but has been losing market share due to rising competition. The Price perf. (%) 1M 3M 12M company’s market share (in terms of sales volumes), in the domestic market Absolute (3) (11) (9) Market (6) (5) 3 has drastically slid to 10.4% in 2009 from 15.3% in 2007. YCC also has a Sector (6) (10) 2 subsidiary (Yanbu Al Shuaiba Paper Products) that produces paper bags for Avg daily turn.(mn) SR US$ the retail sales of cement. 3M 5.2 1.4  12M 4.4 1.2 Financials: Increasing competition leading to market share pressure has Raw Beta 6m 2yr been reducing pricing and market share for YCC. 2009 saw a 13.8% decline 0.45 0.67 in revenues and 13.9% decline in earnings and we believe 2010e will show a Reuters code 3060.SE similar trend. For the 1Q10, revenues fell 13.7% YoY to SR239.5mn. Gross Bloomberg code YNCCO AB margin in 1Q10 was 53.3%, comparatively lower than the 57.6% in 1Q09, Website www.yanbucement.com leading to earnings falling 19% YoY for the quarter. We expect this pressure Weighting & free float (%) to remain for the rest of 2010e with full year earnings expected to decline TASI (free float weight) 0.47 18.8%. Free float 52.51  Recent developments: In February 2010, YCC announced that it would pay Valuation multiples a SR3.0 dividend for 2009. In January 2010, YCC secured a SR300mn loan 08 09 10E from the Saudi Industrial Development Fund to finance its expansion project, P/E (x) 8.0 9.2 10.4 P/B (x) 1.9 1.8 1.8 which includes adding a fifth cement line for approximately SR2.2bn. P/Sales (x) 4.1 4.7 5.2 Company financials Div yield (%) 9.4 7.1 7.1 YoY CAGR (%) DPS 4.0 3.0 3.0 20082009 2010E 2011E (%) (08-11E) Source: NCBC Research estimates Net Revenues SRmn 1,094 943 863 965 (13.8) (4.1) Share price performance EBITDA SRmn 680 586 547 594 (13.8) (4.4)

7,000 55 Net Income SRmn 560 482 428 441 (13.9) (7.7) 6,500 50 Assets SRmn 2,600 2,831 2,954 3,609 8.9 11.6 6,000 45 Equity SRmn 2,356 2,416 2,527 2,650 2.5 4.0 5,500 5,000 40 Total Debt SRmn 227 396 406 934 (74.4) 60.2 Jun-09 Oct-09 Feb-10 Jun-10 Cash & Equiv SRmn 521 295 (364) (506) (43.4) (199.0) TASI Yanbu Cement (RHS) EBITDA Mgn % 62.2 62.1 63.4 61.6 - - Net Mgn % 51.2 51.1 49.6 45.7 - - Source: Bloomberg ROE % 23.9 20.2 17.3 17.0 - - Top 5 shareholders (%) ROA % 21.7 17.7 14.8 13.4 - - Sulaiman Abdul Aziz Saleh Al 23.7 Div Payout % 75.5 65.2 73.5 71.4 - - Rajhi EPS SR 5.3 4.6 4.1 4.2 (13.2) (7.5) General Organization for 11.8 BVPS SR 22.4 23.0 24.1 25.2 2.7 4.0 Social Insurance (GOSI) Source: Tadawul, Zawya, Company, NCBC Research estimates Public Investment Fund 10.0

Abdullah Abdul Aziz Saleh Al 5.8 Rajhi

Source: Tadawul, NCBC Research

JUNE 2010 YANBU CEMENT 71 CEMENT

Neutral Also known as Eastern Cement EPCC

Target Price (SR) 44.3 Eastern Cement Co. (EPCC) was established in 1982 with a capacity of 7,000 tons of clinker per day at Khursaniyah (Dammam). Since then, Price (SR) 42.3 EPCC has expanded its plant capacity to the current 3.5mn tons and Pricing / Valuation as on June 13, 2010 3.45mn tons per year for cement and clinker respectively. Until 2008, EPCC was a regular exporter of cement to neighboring countries. Stock details 52-week range H/L (SR) 53.5/40.0  Business brief: In 2009, EPCC’s market share stood at 8.5%, a decline Market cap ($mn) 969.8 from the 9.5% and 11.5% in 2008 and 2007, respectively. It produced Shares outstanding (mn) 86.0 3.20mn tons of cement and 2.98mn tons of clinker in 2009. EPCC owns a Price perf. (%) 1M 3M 12M 30% stake in Arabian Yemeni Cement Company, Yemen, a 5.4% stake in Absolute (3) (15) (4) Market (6) (5) 3 Industrialization and Energy Services Company and 1.2% stake in Saudi Sector (6) (10) 2 Industrial Investment Group. Avg daily turn.(mn) SR US$  Financials: 2009 was a difficult year for EPCC as the full year impact of the 3M 3.8 1.0 12M 3.7 2.0 export ban affected its performance. While revenues declined just 2.5%, net Raw Beta 6m 2yr income declined by 19% as it shifted its focus back towards sales in the 0.45 0.58 domestic market. We expect the company’s financial performance to stabilize Reuters code 3080.SE in 2010 and so far it is on track. In 1Q10, EPCC was one of the few Bloomberg code EACCO AB companies to record positive revenue growth, registering an 8.8% YoY Website www.eastern-cement.com.sa growth in revenue to SR210.2mn. While the EBITDA margin was maintained Weighting & free float (%) at 57.8% compared to 1Q09, the net margin dropped from 50.2% in 1Q09 TASI (free float weight) 0.50 to 43.9% in 1Q10, leading to a 4.9% decline in net income for the quarter. Free float 68.06  Recent developments: On 30 March 2010, EPCC announced a cash Valuation multiples dividend of SR3.0 per share for the year 2009. In December 2009, EPCC 08 09 10E announced that Saudi Yemeni Cement Co Ltd., in which it holds 30% stake, P/E (x) 8.4 10.4 9.3 P/B (x) 1.9 1.8 1.7 began trial operations at its Mukalla plant in southern Yemen. The plant has P/Sales (x) 4.6 4.7 4.2 a daily capacity to produce 5,200 tons of cement and 400 tons of clinker. Div yield (%) 7.1 7.1 7.1 DPS 3.0 3.0 3.0 Company financials

Source: NCBC Research estimates YoY CAGR (%) 20082009 2010E 2011E (%) (08-11E) Share price performance Net Revenues SRmn 799 779 875 821 (2.5) 0.9

7,000 55 EBITDA SRmn 511 441 481 452 (13.7) (4.0) 6,500 50 Net Income SRmn 434 351 391 370 (19.2) (5.2) 6,000 45 5,500 Assets SRmn 2,201 2,316 2,411 2,488 5.2 4.2 5,000 40 Equity SRmn 1,875 2,028 2,161 2,271 8.2 6.6 Jun-09 Oct-09 Feb-10 Jun-10 Total Debt SRmn 325 286 251 217 (12.0) (12.6) TASI Eastern Cement (RHS) Cash & Equiv SRmn 253 341 238 279 34.8 3.3 EBITDA Mgn % 64.0 56.6 55.0 55.1 - - Source: Bloomberg Net Mgn % 54.3 45.1 44.7 45.1 - - Top 5 shareholders (%) ROE % 21.8 18.0 18.7 16.7 - - Public Pension Authority (PPA) 10.6 ROA % 18.5 15.5 16.5 15.1 - - Public Investment Fund 10.0 Div Payout % 60.0 73.2 66.1 69.8 - -

General Organization for Social 10.0 EPS SR 5.0 4.1 4.5 4.3 (18.0) (4.9) Insurance (GOSI) BVPS SR 21.8 23.6 25.1 26.4 8.3 6.6

Source: Tadawul, Zawya, Company, NCBC Research estimates

Source: Tadawul, NCBC Research

JUNE 2010 EASTERN CEMENT 72 CEMENT

Not Covered Also known as Tabuk Cement TCC

Current Price (SR) 17.6 Founded in 1994, Tabuk Cement Company (TCC) is the smallest cement Pricing / Valuation as on June 13, 2010 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 Stock details located in the north-west region of the country. TCC’s strategic location 52-week range H/L (SR) 22.0/17.0 enables it to cater to the demand for cement in the northern regions. Market cap ($mn) 421.3 Shares outstanding (mn) 90.0  Business brief: TCC held 3.4% market share of the domestic cement Price perf. (%) 1M 3M 12M market in 2009, a decrease from 4.5% in 2007. The company has a 3.37% Absolute (4) (6) (14) stake in Industrialization & Energy Services Company, a support services and Market (6) (5) 3 product manufacturing company catering to the energy sector. It also holds Sector (6) (10) 2 Avg daily turn.(mn) SR US$ a marginal stake in the Saudi Cement Co. 3M 1.9 0.5  Financials: Revenues in 1Q10 increased 8.7% YoY to SR77.1mn, driven by 12M 2.6 0.7 increased domestic demand. However, the EBITDA margin declined to 63.7% Raw Beta 6m 2yr in 1Q10 compared to 65.2% in 1Q09. Net margins also registered a decline 0.28 0.70 Reuters code 3090.SE in 1Q10 to 44.1% compared to 47.2% in 1Q09.

Bloomberg code TACCO AB  Recent developments: In April 2010, TCC shareholders approved a SR1.25 Website www.tcc-sa.com per share dividend for 2009. Weighting & free float (%) TASI (free float weight) 0.30 Company financials Free float 94.69 YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) Valuation multiples Net Revenues SRmn 341 291 267 77 8.5 (11.5) 08 09 TTM EBITDA SRmn 263 196 168 49 5.9 (20.1) P/E (x) 10.5 13.1 13.0 Net Income SRmn 220 151 121 34 1.5 (25.9) P/B (x) 1.5 1.5 1.5 Assets SRmn 1,366 1,226 1,279 1,319 5.1 (3.2) P/Sales (x) 5.4 5.9 5.8 Equity SRmn 1,031 1,044 1,052 1,086 0.7 1.0 Div yield (%) 8.5 7.1 NA Total Debt SRmn ------DPS 1.5 1.3 NA Cash & Equiv SRmn 472 353 427 462 18.3 (4.9)

Source: NCBC Research EBITDA Mgn % 77.1 67.4 62.9 63.6 - - Net Mgn % 64.6 51.9 45.3 44.2 - - Share price performance ROE % 23.6 14.6 11.5 12.7 - - 7,000 21 ROA % 17.5 11.7 9.7 10.5 - - 6,500 19 6,000 Div Payout % 102.0 89.3 92.6 - - - 17 5,500 EPS SR 2.5 1.7 1.4 0.4 2.7 (25.8) 5,000 15 BVPS SR 11.5 11.6 11.7 12.1 0.7 1.0 Jun-09 Oct-09 Feb-10 Jun-10

TASI Tabuk Cement (RHS) Source: Tadawul, Zawya, Company, NCBC Research

Source: Bloomberg

Top 5 shareholders (%) Khaled Saleh Abdul Rahman Al 6.9 Shethri

Source: Tadawul, NCBC Research

JUNE 2010 TABUK CEMENT 73 Retail

Ticker Company Page No.

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

JUNE 2010 THE SAUDI FACTBOOK Retail

Despite slowdown, sector witnessed considerable growth Favorable demographics The Retail sector in Saudi Arabia is largely being driven by the growing population, are driving growth in the higher per capita income and increasing trend of organized retail. The KSA retail Saudi Retail sector 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 Exhibit 65: Profitability of companies, 2007–2009 (SR mn) (%)

10,000 20

8,000

6,000 10

4,000

2,000

0 0 2007 2008 2009 2007 2008 2009 Jarir AlHokair Company Jarir AlHokair Company Al Othaim Others Al Othaim Others

Source: Bloomberg, NCBC Research; Al-Hokair’s FY ended Mar 31, 2010 Source: Tadawul, Bloomberg, NCBC Research

JULY 2010 THE SAUDI FACTBOOK 75 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.

Exhibit 66: Comparison of P/B and ROE, 2008 Exhibit 67: Comparison of P/B and ROE, 2009 (%) (%)

60 70

50 Jarir 60

40 50 AlHokair 30 40 Jarir ROE (%) Alkhaleej 20 30 SASCO Aldrees ROE (%) Alkhaleej 10 20 P/B (x) Aldrees Fitahi Group SASCO 0 10 Al Othaim P/B (x) -20246810 Fitahi Group -10 0 0123456789 -20 National Agri -10 AlHokair National Agri -30 -20

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

Strong demand and rise in investment to drive growth Going 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.

Exhibit 68: Coverage stocks details Stock Current Rating PT (SR) Comments Jarir Overweight 170.0 Plans to almost double number of stores, coupled with 50% IT market share, (4190.SE) 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 Neutral 46.5 After rapid expansion through FY07, Al-Hokair underwent restructuring efforts to (4240.SE) streamline 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 Overweight 79.0 Number 2 food retailer in the KSA, well positioned to increase share as market (4001.SE) shifts to organized retailing. Entrance of foreign players and rising COGS are key risks. Store expansion,is key catalyst for the stock.

Source: NCBC Research

JULY 2010 THE SAUDI FACTBOOK 76

RETAIL

Overweight Al-Othaim

Target Price (SR) 79.0 Abdullah Al-Othaim Markets Company (Al-Othaim), established in 1980, is a subsidiary of Saudi Arabia based Al-Othaim Holding Company. Al- Price (SR) 75.8 Othaim is a retailer and wholesaler of food and consumer products. The Pricing / Valuation as on June 13, 2010 company also holds a 13.7% stake in AlOthaim Real Estate Investment and Development Company. Stock details 52-week range H/L (SR) 78.8/43.5 • Business brief: Al-Othaim primarily operates through four business models: Market cap ($mn) 454.4 hypermarkets, supermarkets, convenience stores, and wholesale stores. It Shares outstanding (mn) 22.5 owns and operates a chain of over 80 stores spread across the Riyadh region Price perf. (%) 1M 3M 12M and Aseer. Absolute 1 39 63 Market (6) (5) 3 • Financials: Al-Othaim has witnessed steady growth in revenues and Sector (3) 5 10 earnings, despite the global economic slowdown, as it is mainly exposed to Avg daily turn.(mn) SR US$ the domestic retail market. The company is expanding by increasing its store 3M 15.4 4.1 12M 23.1 6.2 count, which drove revenues to increase 7.7% in 2009 and net income Raw Beta 6m 2yr 15.7%. Margins have expanded as the company is benefitting from 0.51 0.91 economies of scale as it is now the second largest retail supermarket chain in Reuters code 4001.SE the country. We expect continued growth in 2010e and forecast revenues to Bloomberg code AOTHAIM AB increase 11% and net income to increase 24% for the year. Website www.othaimmarkets.com • Recent developments: In April 2010, the company acquired an 115k Weighting & free float (%) square-meter parcel of land in Al Madinah for SR98.28mn to develop a TASI (free float weight) 0.18 Free float 51.00 commercial complex. Effective 11 May 2010, Mr. Abdulaziz Bin Saleh Al Othaim was appointed the company’s Chief Executive, replacing Mr. Valuation multiples Mohammed Adel. 08 09 10E

P/E (x) 27.5 21.9 17.6 Company financials P/B (x) 5.7 5.0 4.2 YoY CAGR (%) P/Sales (x) 0.6 0.5 0.5 20082009 2010E 2011E (%) (08-11E) Div yield (%) 2.0 3.3 2.0 Net Revenues SRmn 2,915 3,139 3,493 4,018 7.7 11.3 Source: NCBC Research estimates EBITDA SRmn 107 134 149 159 25.2 14.1 Share price performance 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 7,000 80 Equity SRmn 299 343 406 469 14.7 16.2 6,500 70 Total Debt SRmn 285 337 338 325 18.2 4.5 6,000 60

5,500 50 Cash & Equiv SRmn 27 107 189 280 297.3 118.1

5,000 40 EBITDA Mgn % 3.7 4.3 4.3 4.0 -- Jun-09 Oct-09 Feb-10 Jun-10 Net Mgn % 2.1 2.5 2.8 2.4 -- TASI A. Othaim M arkets (RHS) ROE % 23.1 24.3 25.9 21.9 --

Source: Bloomberg ROA % 6.6 6.7 7.5 6.7 -- Div Payout % 53.6 72.5 34.9 34.9 - - Top 5 shareholders (%) EPS SR 2.8 3.5 4.3 4.3 23.2 15.4 Al Othaim Holding Company 27.6 BVPS SR 13.3 15.2 18.1 20.8 14.6 16.1 Abdulaziz Saleh Ali Al Othaim 21.3 Source: Tadawul, Zawya, Company, NCBC Research estimates Abdullah Saleh Ali Al Othaim 6.0

Source: Tadawul, NCBC Research

JUNE 2010 AL-OTHAIM 77 RETAIL

Not Covered Mouwasat

Current Price (SR) 65.5 Mouwasat Medical Services (Mouwasat) owns, manages and operates

Pricing / Valuation as on June 13, 2010 hospitals, dispensaries and pharmacies throughout the Kingdom. The company was incorporated in 1974. Stock details  Business brief: Mouwasat is active in the field of medical services across 52-week range H/L (SR) 70/44 the Kingdom and owns nine pharmacies, two dispensaries and five hospitals Market cap ($mn) 436.6 Shares outstanding (mn) 25 (with a combined capacity of 953 beds). Mouwasat’s medical network covers Price perf. (%) 1M 3M 12M the main cities of Saudi Arabia, including Dammam, Jubail, Qatif, Al Ahsa, Absolute (2) 3 N/A Riyadh and Al Madina. Al Mouwasat converted from a limited liability Market (6) (5) 3 company to a joint stock company in January 2006. Sector (3) 5 10 Avg daily turn.(mn) SR US$  Financials: Mouwasat’s revenues grew 15.4% YoY to SR143.8mn in 1Q10 3M 9.3 2.5 due to the rising patient count driven by an increase in the number of 12M N/A N/A medical facilities. The company added new services, such as an Intensive Raw Beta 6m 2yr Care Unit as its Dammam Hospital, and a Dept. of Gynecology and Obstetrics 0.40 N/A at its Jubail Hospital. Net income grew 21.9% YoY to SR32.4mn in 1Q10. Reuters code 4002.SE Bloomberg code MOUWASAT AB  Recent developments: On 9 May 2009, the company signed an agreement Website www.mouwasat.com to buy 11,600 Sq mt of land for SR30mn in Riyadh. The land, located near Weighting & free float (%) the new hospital project, would be used for future expansion of the hospital. TASI (free float weight) 0.16 The company launched an IPO on August 15, 2009, offering 30% of its Free float 47.5 shares to the public. Proceeds from the IPO aggregated SAR330mn.

Valuation multiples Company financials 08 09 TTM YoY CAGR (%) P/E (x) 16.9 15.3 14.5 20072008 2009 1Q10 (%) (07-09) P/B (x) 4.0 3.4 3.2 Net Revenues SRmn 401 455 518 143.8 15.4 13.7 P/Sales (x) 3.6 3.2 3.1 EBITDA SRmn 125 140 156 40 4.9 11.5 Div yield (%) NA NA NA Net Income SRmn 89 97 107 32.4 21.9 9.8 Source: NCBC Research Assets SRmn 557 622 720 809 20.1 13.7 Share price performance Equity SRmn 354 409 480 512 17.6 16.3 Total Debt SRmn 123 113 116 164 23.8 (2.7) 7,000 70 6,500 65 Cash & Equiv SRmn 15 29 48 136 91.1 77.8 6,000 60 EBITDA Mgn % 31.2 30.8 30.1 27.7 - - 5,500 55 Net Mgn % 22.2 21.4 20.7 22.5 - - 5,000 50 Sep-09 Jan-10 M ay-10 ROE % 25.0 23.7 22.3 25.3 - -

TASI M ouwasat (RHS) ROA % 15.9 15.6 14.9 16.0 - - Div Payout % - - 42.0 - - - Source: Bloomberg EPS SR 3.6 3.9 4.3 5.2 21.9 9.8

Top 5 shareholders (%) BVPS SR 14.2 16.4 19.2 20.5 17.6 16.3 Source: Tadawul, Zawya, Company, NCBC Research Mohammed Sultan Hammad 17.5 Al Subaie Nasser Sultan Fahad Al 17.5 Subaie Suleiman Mohammed 17.5 Suleiman Al Saleem Tala Trading Company 7.0

Company Credit Suisse/Swap 5.8 Agreements

Source: Tadawul, NCBC Research

JUNE 2010 MOUWASAT MEDICAL SERVICES 78 RETAIL

Not Covered Also known as Saudi Automotive SASCO

Current Price (SR) 12.3 Saudi Automotive Services Company (SASCO) is headquartered in

Pricing / Valuation as on June 13, 2010 Riyadh. Established in 1982, the company provides a variety of services and utilities for cars, motorists and travelers. SASCO owns specialized Stock details maintenance workshops in Saudi Arabia. It also owns and manages 52-week range H/L (SR) 17.7/11.5 supermarkets, rest areas and restaurants for travelers. Market cap ($mn) 147.0 Shares outstanding (mn) 45.0  Business brief: SASCO offers services such as car maintenance and repair, Price perf. (%) 1M 3M 12M spare parts, car rescue, first aid, issuance of car test certificates, and Absolute (3) (7) (24) international driving licenses. The company also operates a network of Market (6) (5) 3 Sector (3) 5 10 supermarkets, petrol pumps, housing facilities, rest areas, restaurants and Avg daily turn.(mn) SR US$ other facilities across Saudi Arabia to service motorists and travelers. 3M 4.1 1.1  Financials: SASCO recorded 2.7% YoY growth in revenues to SR45.4mn in 12M 8.3 2.2 Raw Beta 6m 2yr 1Q10. However, the EBITDA margins of the company fell 470 basis points in 0.24 0.89 1Q10 due to higher operating expenses. The company’s net income plunged Reuters code 4050.SE 68.0% YoY to SR2.1mn in 1Q10 from SR6.6mn in 1Q09, mainly due to lower Bloomberg code SACO AB investment income. Website www.sasco.com.sa  Recent developments: In June 2010, the company announced plans to Weighting & free float (%) expand its operations by establishing 20 new sites within KSA before the end TASI (free float weight) 0.11 of 2011 and to renovate its existing sites. Free float 100.0

Valuation multiples Company financials 08 09 TTM YoY CAGR (%) P/E (x) 15.3 17.5 20.4 20072008 2009 1Q10 (%) (07-09) P/B (x) 1.3 1.1 1.1 Net Revenues SRmn 192 214 191 45 2.7 (0.4) P/Sales (x) 2.6 2.9 2.9 EBITDA SRmn 33 33 18 5 (29.7) (25.7) Net Income SRmn 33 36 31 2 (68.0) (2.4) Div yield (%) N/A N/A N/A Assets SRmn 481 469 556 565 19.5 7.6 Source: NCBC Research Equity SRmn 422 413 499 505 20.2 8.8 Share price performance Total Debt SRmn ------

7,000 18 Cash & Equiv SRmn 106 134 129 117 (9.1) 10.4

6,500 16 EBITDA Mgn % 17.2 15.4 9.6 10.2 - -

6,000 14 Net Mgn % 17.2 16.8 16.5 4.6 - -

5,500 12 ROE % 8.3 8.6 6.9 1.7 - -

5,000 10 ROA % 7.2 7.6 6.1 1.5 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Div Payout % ------TASI SASCO (RHS) EPS SR 0.7 0.8 0.7 0.1 (66.7) 0.0 Source: Bloomberg BVPS SR 9.4 9.2 11.1 11.2 20.1 8.6 Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research Ibrahim Mohammed Ibrahim 7.9 Al-Hadithi Nahaz Commercial 7.2 Investments Company

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI AUTOMOTIVE SERVICES COMPANY 79 RETAIL

Not Covered Also known as National Agriculture THIMAR

CurrentPrice (SR) 23.4 National Agriculture Marketing Co (THIMAR), headquartered in Riyadh,

Pricing / Valuation as on June 13, 2010 is engaged in the production, procurement, processing and marketing of agricultural products, accessories, meat and other supplies through its Stock details various dealers. The company, established in 1987, holds a 100% stake 52-week range H/L (SR) 48.1/22.4 in Wasmi Meat. Market cap ($mn) 62.3 Shares outstanding (mn) 10.0  Business brief: THIMAR is primarily involved in the sale of agricultural and Price perf. (%) 1M 3M 12M meat products to clients in sectors such as hotels, restaurants and the Absolute (18) (41) (40) military. In addition, the company provides services for the operation, Market (6) (5) 3 Sector (3) 5 10 management and marketing of agricultural projects. THIMAR is also engaged Avg daily turn.(mn) SR US$ in the wholesale and retail trading of agricultural and meat products. 3M 35.6 9.5  Financials: THIMAR’s net revenues declined 29.1% YoY during 1Q10 to 12M 32.5 8.7 Raw Beta 6m 2yr SR25.2mn from SR35.5mn in 1Q09. It reported a loss of SR1.5mn for 1Q10, 0.73 0.89 similar to the loss for 1Q09. Cash and equivalents stood at SR6mn in 1Q10. Reuters code 4160.SE  Recent developments: In May 2010, the company announced the Bloomberg code THIMAR AB resignation of Mr. Abdulrahman Saleh Al Hadi, the CEO and Chairman of its Website www.thimar.com.sa Board of Directors. Mr. Abdulhamid Bin Mohammed Al Jarbu will be replacing Weighting & free float (%) him. TASI (free float weight) 0.05

Free float 100.0 Company financials

Valuation multiples YoY CAGR (%) 08 09 TTM 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 122 146 132 25 (29.1) 3.8 P/E (x) NM NM NM EBITDA SRmn 1 1 (10) (1) NM NM P/B (x) 2.9 3.3 3.5 Net Income SRmn 3 (10) (10) (2) NM NM P/Sales (x) 1.6 1.8 1.9 Assets SRmn 121 115 100 91 (19.3) (9.3) Div yield (%) 0.0 0.0 0.0 Equity SRmn 91 81 70 67 (14.1) (12.2) Source: NCBC Research Total Debt SRmn 0 - - - - - Share price performance Cash & Equiv SRmn 3 5 8 6 (26.0) 54.3 EBITDA Mgn % 0.8 0.7 (7.3) (3.9) - - 7,000 50 45 Net Mgn % 2.1 (7.0) (7.8) (6.0) - - 6,500 40 6,000 35 ROE % 2.9 (11.9) (13.7) (8.8) - - 30 5,500 ROA % 2.2 (8.7) (9.6) (6.4) - - 25 5,000 20 Div Payout % ------Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EPS SR 0.3 (1.0) (1.0) (0.6) NM NM TASI Thim'ar (RHS) BVPS SR 9.1 8.1 7.0 6.7 (14.1) (12.2)

Source: Bloomberg Source: Tadawul, Zawya, Company, NCBC Research

Top 5 shareholders (%)

Source: Tadawul, NCBC Research

JUNE 2010 NATIONAL AGRICULTURE MARKETING COMPANY 80 RETAIL

Not Covered Also known as Fitaihi Group Holding Fitaihi

Current Price (SR) 12.7 Fitaihi Group Holding Company, established in 1992, is engaged in the

Pricing / Valuation as on June 13, 2010 design, manufacture and wholesale & retail distribution of gems, jewelry and precious stones. The company has two marketing subsidiaries, Stock details Marina B Creation Vados and Marina B Geneve, which market its 52-week range H/L (SR) 22.3/12.0 products worldwide. Market cap ($mn) 169.3 Shares outstanding (mn) 50.0  Business brief: Fitaihi’s product portfolio includes precious stones, jewelry, Price perf. (%) 1M 3M 12M consumer products, beauty products, kitchenware, leather products and Absolute (10) (7) (37) clothing, accessories, perfumes, medical equipment, industrial parts, etc. Market (6) (5) 3 The company has presence in the hospital industry through its 19.3% Sector (3) 5 10 investment in International Medical Center and 5.7% stake in Dar Al Fouad Avg daily turn.(mn) SR US$ 3M 11.8 3.2 Hospital. Fitaihi also has a 20% stake in Fitaihi Junior. The company owns 12M 22.7 6.0 two premium department stores under the brand name FITAIHI in Jeddah Raw Beta 6m 3yr and Riyadh, in addition to other outlets. 0.66 0.86  Reuters code 4180.SE Financials: Fitaihi’s revenues declined 1.9% YoY to SR36mn in 1Q10. The Bloomberg code AHFCO AB company’s EBITDA margins also fell from 18% in 1Q09 to 16% in 1Q10, Website www.fitaihi-group.com primarily due to increase in SG&A expenses. Net income almost doubled

Weighting & free float (%) from SR6.4mn in 1Q09 to SR12.7mn in 1Q10 due to higher investment TASI (free float weight) 0.10 income.

Free float 78.5  Recent developments: In April 2010, the company announced the election

Valuation multiples of Ahmed Hasan Ahmed Fitaihi as Chairman of the Board of Directors. In the 08 09 TTM same month, it also announced the appointment of the following people to P/E (x) 33.1 61.6 38.1 the Board of Directors: Dr. Ibrahim Al Hasan Al Madhoun, Majed Diyaeddine P/B (x) 1.1 1.0 1.0 Karim, Mohammed Ekhwan and others for a three-year term. P/Sales (x) 3.3 4.1 4.2 Div yield (%) NA NA NA Company financials Source: NCBC Research YoY CAGR (%) Share price performance 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 120 194 153 36 (1.9) 13.0 7,000 24 22 EBITDA SRmn 13 34 23 6 (12.8) 32.8 6,500 20 18 6,000 Net Income SRmn 1 19 10 13 99.8 252.5 16 5,500 14 Assets SRmn 765 720 731 750 2.0 (2.2) 12 5,000 10 Equity SRmn 637 560 616 652 11.8 (1.7) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Total Debt SRmn 87 71 55 34 (45.7) (20.5) TASI Fitaihi (RHS) Cash & Equiv SRmn 15 14 10 3 (79.3) (19.7)

Source: Bloomberg EBITDA Mgn % 10.8 17.5 15.0 16.0 - - Net Mgn % 0.7 9.9 6.7 35.2 - - Top 5 shareholders (%) ROE % 0.1 3.2 1.8 8.0 - - Ahmed Hassan Ahmed Fitaihi 22.3 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)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 FITAIHI GROUP HOLDING 81 RETAIL

Overweight Also known as Jarir Marketing JARIR

Target Price (SR) 170.0 Jarir Marketing Company (Jarir) was established in Riyadh in 1979. The company is engaged in the retail and wholesale trading of office & Price (SR) 153.5 school supplies, computers and computer supplies, books, among others. Pricing / Valuation as on June 13, 2010  Product profile: Jarir’s business activities are divided into four broad Stock details segments: School Supplies, Office Supplies, Computer Accessories and 52-week range H/L (SR) 164.3/126.0 Entertainment Products, and Books. The company’s wholly-owned Market cap ($mn) 1,636.9 subsidiaries include Jarir Egypt Financial Leasing Co., United Bookstore Shares outstanding (mn) 40.0 (UAE), Jarir Trading Co. (UAE), United Company for Office Supplies and Price perf. (%) 1M 3M 12M Stationeries (Qatar), and Jarir Bookstore (Kuwait). Absolute (6) 9 23 Market (6) (5) 3  Financials: Sales grew just 1% in 2009 due to a higher proportion of lower Sector (3) 5 10 priced netbooks, however net income grew 12% as margins expanded Avg daily turn.(mn) SR US$ 140bps due to lower cost of merchandise and an increasing proportion of 3M 7.0 1.9 12M 5.7 1.5 sales coming from high margin school supplies and computer accessories. Raw Beta 6m 2yr We expcect sales growth to resume in 2010e and for earnings to continue 0.31 0.51 expanding at a reasonable pace as the company continues opening new Reuters code 4190.SE stores (we forecast 3 new stores in 2010e). Bloomberg code JARIR AB Website www.jarirbookstore.com  Recent developments: In March 2010, the company announced that it has opened a new Jarir Bookstore at Panorama Mall in Riyadh. Furthermore, it Weighting & free float (%) has plans to open two more stores (in Mecca and Kuwait) later during the TASI (free float weight) 1.07 Free float 87.92 year. In May 2009, the company increased its capital from SR300mn to SR400mn through the issue of four bonus shares for every three shares Valuation multiples held. 08 09 10E P/E (x) 18.4 16.4 15.3 Company financials P/B (x) 8.9 8.5 7.7 YoY CAGR (%) P/Sales (x) 2.4 2.4 2.1 20082009 2010E 2011E (%) (08-11E) Div yield (%) 5.2 4.8 5.3 Net Revenues SRmn 2,520 2,555 2,883 3,182 1.4 8.1 Source: NCBC Research estimates EBITDA SRmn 368 408 430 462 10.8 7.9 Share price performance 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 7,000 17 0 16 0 Equity SRmn 687 723 802 882 5.2 8.7 6,500 15 0 Total Debt SRmn 192 137 158 133 (28.6) (11.5) 6,000 14 0 13 0 Cash & Equiv SRmn 24 40 84 100 65.3 60.9 5,500 12 0 5,000 110 EBITDA Mgn % 14.6 16.0 14.9 14.5 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 13.2 14.6 13.9 13.6 - - TASI Jarir (RHS) ROE % 51.4 53.1 52.7 51.4 - -

Source: Bloomberg ROA % 29.8 31.0 30.2 29.5 - - Div Payout % 72.1 79.1 80.7 81.3 - - Top 5 shareholders (%) EPS SR 11.1 9.4 10.0 10.8 (15.8) (0.8) Jarir Commercial Investment 12.0 BVPS SR 22.9 18.1 20.0 22.1 (21.1) (1.2) Mohd Abdul Rahman Nasser 9.0 Al Aqeel Source: Tadawul, Zawya, Company, NCBC Research estimates Nasser Abdulrahman Nasser 9.0 Al Aqeel Abdullah Abdulrahman Nasser 9.0 Al Aqeel Abdul Karim Abdul Rahman 9.0 Nasser Al Aqeel

Source: Tadawul, NCBC Research

JUNE 2010 JARIR MARKETING 82 RETAIL

Not Covered Also known as Aldrees Petroleum APTSCO, Aldrees

Current Price (SR) 38.0 Aldrees Petroleum and Transport Services Co. (Aldrees) has three main

Pricing / Valuation as on June 13, 2010 operations –petroleum, transport and Super 2 division (manages coffee, pastry and car-washing centers). The company has a 98% stake in Stock details Aldrees Sudan, engaged in marine, land and air transportation. 52-week range H/L (SR) 47.0/27.3  Market cap ($mn) 253.3 Business brief: The Aldrees Petroleum division mainly runs a network of Shares outstanding (mn) 25.0 346 gas stations under the brand Petrol. It also services contracts for fuel Price perf. (%) 1M 3M 12M supply to government and private companies. The Aldrees Transportation Absolute (3) 2 27 division operates and maintains a fleet of 1,032 tractor heads with 1,376 Market (6) (5) 3 cargo carriers, ranging from chemical/lubricant tankers, trailers, and bulkers Sector (3) 5 10 to flat beds. The Super 2 division manages coffee and cake stores under the Avg daily turn.(mn) SR US$ 3M 7.8 2.1 brand Super Café and car wash & car detailing under the brand Super Wash 12M 13.1 3.5 located in the company’s gas station network. Raw Beta 6m 2yr  Financials: Aldrees recorded 10.5% YoY growth in revenues during 1Q10 to 0.99 0.77 Reuters code 4200.SE SR343mn. The company’s EBITDA margins also increased 144 basis points Bloomberg code ALDREES AB YoY to 9.5%, primarily due to an increase in prices of petroleum products. Website www.aldrees.com Net income grew 44.4% from SR13.8mn in 1Q09 to SR19.9mn in 1Q10.

Weighting & free float (%)  Recent developments: Aldrees announced a cash dividend of SR1.50 per TASI (free float weight) 0.19 share for the year 2009. Free float 100.00 Company financials Valuation multiples YoY CAGR (%) 08 09 TTM 20072008 2009 1Q10 (%) (07-09) P/E (x) 17.9 13.8 12.7 Net Revenues SRmn 866 1,134 1,310 343 10.5 23.0 P/B (x) 3.0 2.7 2.9 EBITDA SRmn 74 93 118 33 30.2 26.3 P/Sales (x) 0.8 0.7 0.7 Net Income SRmn 50 53 69 20 44.4 17.4 Div yield (%) 3.9 3.9 NA Assets SRmn 531 664 734 719 (0.9) 17.5 Source: NCBC Research Equity SRmn 296 317 347 327 12.3 8.2 Share price performance Total Debt SRmn 76 122 155 134 (37.5) 42.8 Cash & Equiv SRmn 41 38 70 25 (53.5) 31.4 7,000 50 45 EBITDA Mgn % 8.5 8.2 9.0 9.5 - - 6,500 40 Net Mgn % 5.8 4.7 5.3 5.8 - - 6,000 35 30 ROE % 18.5 17.3 20.8 23.6 - - 5,500 25 ROA % 10.6 8.9 9.9 10.9 - - 5,000 20 Div Payout % 59.5 70.8 54.3 - - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10

TASI Aldrees (RHS) 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) Source: Bloomberg Source: Tadawul, Zawya, Company, NCBC Research Top 5 shareholders (%) Abdul Mohsen Mohammed 8.5 Saad Al Drees Hamad Mohammed Saad Al 6.7 Drees

Source: Tadawul, NCBC Research

JUNE 2010 ALDREES PETROLEUM 83 RETAIL

Neutral AlHokair

Target Price (SR) 46.5 Fawaz Abdulaziz AlHokair Company (AlHokair), established in 1990, is the largest fashion retail franchise player in the Saudi market, Price (SR) 43.7 accounting for roughly half of the mid-market fashion retail business in Pricing / Valuation as on June 13, 2010 the country through its 70 plus brands.

Stock details  Business brief: AlHokair operates more than 700 fashion stores and is the 52-week range H/L (SR) 44.8/25.0 retail franchise for over 70 global brands. The company’s product offerings Market cap ($mn) 815.5 include adult apparel, kids & teen fashion, footwear, eyewear, and Shares outstanding (mn) 70.0 accessories. Major brands include Zara, Banana Republic, GAP, Monsoon, Price perf. (%) 1M 3M 12M Marks & Spencers, etc. AlHokair has three subsidiaries – Al Waheeda Absolute 10 22 48 Market (6) (5) 3 Equipment Co. (95% stake), Haifa Badai Al Kalam and Partners International Sector (3) 5 10 Co. for Trading (95% stake) and Saudi Retail Company. Avg daily turn.(mn) SR US$  Financials: AlHokair’s revenues increased 9.9% YoY to SR2.1bn in FY2010 3M 6.8 1.8 12M 10.3 2.7 (ending 31 March), mainly due to the acquisition of Wahba and the opening Raw Beta 6m 2yr of new stores. Net income grew an even faster 14.6% to SR232mn during 0.66 0.95 the year as margins expanded following the restructuring efforts of the past Reuters code 4240.SE few years. We expect continued expansion in revenues and net income in the Bloomberg code ALHOKAIR AB coming years as store counts increase and further efficiencies are Website www.alhokair.com.sa recognized. For FY2011e, we expect 15% revenue growth to SR2,388mn and Weighting & free float (%) 26% net income growth to SR293mn. TASI (free float weight) 0.31  Free float 51.00 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 Valuation multiples the remaining in emerging markets. On March 27, 2010, the company signed 08 09 10E a memorandum of understanding with three retail firms – Retail Group Gulf, P/E (x) 15.1 13.2 10.4 P/B (x) 3.5 2.8 2.4 Retail Group Egypt and Retail Group Jordon – to acquire a stake in each of P/Sales (x) 1.6 1.5 1.3 the companies. Div yield (%) 4.0 4.1 4.1

Source: NCBC Research estimates Company financials YoY CAGR (%) Share price performance 20092010 2011E 2012E (%) (09-12E)

7,000 50 Net Revenues SRmn 1,899 2,074 2,388 2,698 9.2 12.4 45 6,500 40 EBITDA SRmn 260 318 376 421 22.1 17.4 6,000 35 30 Net Income SRmn 202 232 293 319 14.6 16.5 5,500 25 Assets SRmn 1,590 1,897 2,203 2,406 19.3 14.8 5,000 20 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Equity SRmn 863 1,094 1,264 1,461 26.8 19.2 TASI AlHokair (RHS) Total Debt SRmn 370 370 372 324 - - Cash & Equiv SRmn 24 76 122 130 216.7 75.6 Source: Bloomberg EBITDA Mgn % 13.7 15.3 15.7 15.6 - - Top 5 shareholders (%) Net Mgn % 10.6 11.2 12.3 11.8 - - Fawaz Alhokair Group 49.0 ROE % 22.8 23.7 24.8 23.4 - - Fawaz Abdul Aziz Fahd Al ROA % 14.3 13.3 14.3 13.8 - - 7.0 Hokair Div Payout % 60.3 54.4 42.9 39.1 - - Dr Abdulmajeed Abdulaziz 7.0 EPS SR 2.9 3.3 4.2 4.6 14.1 16.6 Fahed Alhokair BVPS SR 12.3 15.6 18.1 20.9 27.1 19.3 Dr Salman Abdulaziz Fahed 7.0 Alhokair Source: Tadawul, Zawya, Company, NCBC Research estimates

Source: Tadawul, NCBC Research

JUNE 2010 ALHOKAIR 84 RETAIL

Not Covered Also known as Alkhaleej Training Alkhaleej

Current Price (SR) 36.9 Alkhaleej Training and Education Company (Alkhaleej), established in

Pricing / Valuation as on June 13, 2010 1992, conducts training programs in the fields of IT, electronics, English language, and administrative and financial services. The company has Stock details more than 81 branches in Saudi Arabia and in more than 17 locations in 52-week range H/L (SR) 55.0/34.0 the Middle East. Market cap ($mn) 147.6 Shares outstanding (mn) 15.0  Business brief: Alkhaleej implements its training programs through its Price perf. (%) 1M 3M 12M various divisions, including New Horizons Computer Learning Centers (the Absolute (7) (11) (29) largest independent IT training company), Direct English Centers, Platinum Market (6) (5) 3 Center for Advanced Training Solutions (provides advanced computer Sector (3) 5 10 courses); Takniat for Training, Business & Professional Development Avg daily turn.(mn) SR US$ 3M 4.8 1.3 (specializes in management training); Kawader (employs the graduates of its 12M 9.5 2.5 programs) and E-Learning (provides more than 2000 courses online). Raw Beta 6m 2yr  Financials: Alkhaleej has reported continued revenue and net income 0.83 0.95 Reuters code 4290.SE growth through 2009 as it proved resilient to the economic downturn. This Bloomberg code ALKHLEEJ AB has continued in the 1Q10 as revenues increased 5.5% YoY to SR93.3mn Website www.alkhaleej.com.sa and net income increased 15% from SR10.2mn in 1Q09 to SR11.8mn in

Weighting & free float (%) 1Q10. TASI (free float weight) 0.05  Recent developments: In February 2010, the company announced that it Free float 44.6 had signed two five-year Murabaha contracts with Amlak International

Valuation multiples Finance for a total value of SR32.3mn to fund its expansion projects. 08 09 TTM Alkhaleej announced a cash dividend of SR0.50 per share for the year 2009. P/E (x) 13.5 13.2 12.7 P/B (x) 2.8 2.4 2.3 Company financials P/Sales (x) 1.6 1.6 1.6 YoY CAGR (%) Div yield (%) 2.0 1.4 NA 20072008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Revenues SRmn 301 346 350 93 5.5 7.8 EBITDA SRmn 60 70 70 18 18.1 7.6 Share price performance Net Income SRmn 38 41 42 12 15.0 5.2 7,000 55 Assets SRmn 302 357 425 444 22.6 18.6 50 6,500 Equity SRmn 154 195 228 239 17.9 21.6 45 6,000 40 Total Debt SRmn 45 89 111 118 34.3 57.4 5,500 35 Cash & Equiv SRmn 26 34 31 20 (30.4) 8.5 5,000 30 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 19.9 20.2 19.9 19.2 - - TASI Alkhaleej Trng (RHS) Net Mgn % 12.6 11.8 12.0 12.6 - - ROE % 28.3 23.5 19.9 20.2 - - Source: Bloomberg ROA % 14.1 12.4 10.8 10.8 - - Top 5 shareholders (%) Div Payout % - 18.3 17.9 - - - Abdul Aziz Rashid Abdul 20.3 EPS SR 4.7 4.1 2.8 0.8 14.7 (22.8) Rahman Al Rashid BVPS SR 19.3 19.5 15.2 16.0 (21.4) (11.2) Ahmed Ali Ahmed Al Shedwy 13.3 Source: Tadawul, Zawya, Company, NCBC Research AlWaleed Abdul Razzaq Saleh 11.8 Al Duraian Abdul-Aziz Hammad Nasser Al 10.0 Buleihid Ahmed Mohammed Salem Al 6.3 Sirry

Source: Tadawul, NCBC Research

JUNE 2010 ALKHALEEJ TRAINING 85 Agriculture & Food

Ticker Company Page No.

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

JUNE 2010 THE SAUDI FACTBOOK Agriculture & Food

Stepping up to fill the supply gap Saudi Arabia is the largest Saudi Arabia is one of the largest food markets in the Middle East growing at a market for agricultural CAGR of 8% in the past five years to an estimated SR115bn in 2010, as healthy products in the MENA population growth and rising per capita income drives demand, and is estimated to region 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 Exhibit 70: Comparison of ROE & P/E of GCC cos, 2009 (USD mn) (%)

500 8,000 30

7,000 25 400 6,000 20 5,000 300 15 4,000 10

200 3,000 ROE (%) 5 2,000 100 0 1,000 P/E (x) -5 0 0 0 5 10 15 20 25 2007 2008 2009

Oman Qatar UAE Kuwait KSA* 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%.

Exhibit 71: Revenue of companies, 2007–2009 Exhibit 72: Profitability of companies, 2007–2009 (USD mn) (%)

30,000 24

24,000

12 18,000

12,000

0 6,000 2007 2008 2009

0 2007 2008 2009 (12)

Savola Almarai Others Savola Almarai Others

Source: Tadawul, Bloomberg, NCBC Research; * Plotted on secondary axis Source: Tadawul, Bloomberg, NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 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.

Exhibit 73: Coverage stocks details Stock Current Rating PT (SR) Comments Savola Neutral 34.4 Fundamentals remain solid although we believe this is fully reflected in the current price. (2050.SE) Integration of Geant and provisions in non-core businesses are possible risks. Expansion in Food business acts as a potential positive catalyst Almarai Neutral 193.0 Geographic expansion and Infant Milk venture key drivers for the stock. With start of (2280.SE) 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

Source: NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 88

AGRICULTURE & FOOD INDUSTRIES

Also known as Neutral Savola Group Savola

Target Price (SR) 34.4 Savola Group Company is a leading retailer of foods in the Middle East region, with operations extending as far as North Africa and Central Price (SR) 35.0 Asia. The group’s business interests are divided into four segments: Pricing / Valuation as on June 13, 2010 Savola Foods (edible oils, sugar and foods), Savola Retail (Panda and Hyper Panda), Real Estate (Kinan International) and Savola Plastic. Stock details 52-week range H/L (SR) 38.3/21.4 • Business brief: Savola enjoys a leading position in edible oils and sugar, Market cap ($mn) 4,665.5 and retailing through its 113 outlets across the Kingdom. Savola has major Shares outstanding (mn) 500 investments in Almarai Dairy Company (30%), Herfy Foods Company (47%), Price perf. (%) 1M 3M 12M Jordanian Tameer Company (5%), besides being one of the founding Absolute 3 (3) 47 shareholders of Knowledge Economic City in Madinah and a founding Market (6) (5) 3 Sector 0 (2) 23 shareholder of King Abdullah Economic City in Rabigh, Saudi Arabia. Avg daily turn.(mn) SR US$ • Financials: We expect Savola to continue reporting steady revenue and 3M 17.4 4.6 12M 18.2 4.9 underlying net income growth over 2010e and 2011e, mainly driven by its Raw Beta 6m 3yr Food and Retail businesses (adjusting for the SR196mn capital gain from the 1.05 1.06 IPO of Herfy in 1Q10). In 1Q10, Savola’s revenues grew 31% YoY to SR4.8bn. Reuters code 2050.SE Net income rose by 104.6% YoY to SR394mn in 1Q10 from SR193mn in 1Q09, Bloomberg code SAVOLA AB including the SR196mn capital gain in 1Q10. For 2010, the company has guided Website www.savola.com for an adjusted net income level of SR920mn (before one-off itmes), which we Weighting & free float (%) believe is conservative. TASI (free float weight) 2.55 • Recent developments: In April 2010, Savola said its current CEO Sami Free float 73.52 Baroum will step down by the end of June and Abdu-Raouf Manaa, the Valuation multiples current head of its edible oil firm Afia, will take over. In December 2009, 08 09 10E Savola pulled out of the bidding process for six sugar mills being sold by the P/E (x) 86.5 18.4 14.4 Turkish government, citing that country’s sugar pricing policy. The company P/B (x) 2.7 2.5 2.3 P/Sales (x) 1.3 1.0 0.8 has indicated it is looking for acquisition opportunities in Sudan and Egypt.

Div yield (%) 2.9 2.9 3.7 Company financials DPS 1.0 1.0 1.3 YoY CAGR (%) Source: NCBC Research estimates 20082009 2010E 2011E (%) (08-11E) Share price performance Net Revenues SRmn 13,821 17,917 21,425 23,172 29.6 18.8

8,000 40 EBITDA SRmn 1,481 2,074 2,106 2,245 40.1 14.9 35 6,000 Net Income SRmn 202 952 1,216 1,085 370.2 75.0 30 4,000 Assets SRmn 14,546 17,257 19,117 20,036 18.6 11.3 25 2,000 20 Equity SRmn 6,389 6,961 7,552 8,136 8.9 8.4 Jun-09 Oct-09 Feb-10 Jun-10 Total Debt SRmn 4,550 5,018 5,570 5,559 10.3 6.9 TASI SAVOLA Group (RHS) Cash & Equiv SRmn 604 1,001 283 306 65.8 (20.3) EBITDA Mgn % 10.7 11.6 9.8 9.7 -- Source: Bloomberg Net Mgn % 1.5 5.3 5.7 4.7 -- Top 5 shareholders (%) ROE % 3.0 14.3 16.8 13.8 -- Mohammed Ibrahim 11.9 ROA % 1.5 6.0 6.7 5.5 -- Mohammed Al Essa Div Payout % 250.0 52.6 54.2 46.1 - - General Organization for 10.9 EPS SR 0.4 1.9 2.4 2.2 375.0 75.7 Social Insurance BVPS SR 12.8 13.9 15.1 16.3 8.9 8.4 Abdullah Mohammed Abdullah 8.7 Al Rabeah Source: Tadawul, Zawya, Company, NCBC Research estimates Abdul Qader Al Muhaidib and 8.4 Sons Co.

Source: Tadawul, NCBC Research

JUNE 2010 SAVOLA GROUP 89 AGRICULTURE & FOOD INDUSTRIES

Also known as Not Covered Wafra, Food Warfa Food Products Company

Current Price (SR) 17.3 Riyadh-based Food Products Company was established in 1989 to

Pricing / Valuation as on June 13, 2010 provide Saudi families with high quality food products. It is one of the country’s leading food manufacturing companies, concentrating on the Stock details processing, marketing, distribution, and export of value added 52-week range H/L (SR) 25.0/16.3 foodstuffs. The company’s target markets include Asia and the Middle Market cap ($mn) 92.2 East. Shares outstanding (mn) 20 Price perf. (%) 1M 3M 12M  Business brief: The Company operates under the brand name WAFRA and Absolute (10) (15) (28) has a 10% stake in Jannat Agricultural Investment Co. The company Market (6) (5) 3 classifies its operations under four business segments: meat factory (offers Sector 0 (2) 23 beef and chicken burgers, kebabs, frankfurters), vegetable factory (offers Avg daily turn.(mn) SR US$ 3M 13.0 3.5 frozen French fries, potato wedges, and a variety of peanuts), pasta factory 12M 18.6 5.0 (produces a wide range of pasta under its various brands), and breakfast Raw Beta 6m 3yr cereals (supplies corn flakes, frosted flakes, and rice crispies). 0.41 1.01  Financials: The Company’s net revenues increased 7.5% YoY to SR19mn in Reuters code 2100.SE Bloomberg code FPCO AB 1Q10 compared to SR17.9mn in 1Q09. Gross margin improved by 515 basis Website www.wafrah.com 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 Weighting & free float (%) SR7.3mn. TASI (free float weight) 0.07 Free float 100.00  Recent developments: In April 2010, Jamal Bin Trad Al Saadoun, general

Valuation multiples manager of Food Products Co., resigned. 08 09 TTM Company financials P/E (x) 24.7 60.2 57.3 P/B (x) 2.0 2.0 1.9 YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) P/Sales (x) 4.6 4.9 4.8 Net Revenues SRmn 65 76 71 19 7.5 4.7 Div yield (%) N/A N/A N/A EBITDA SRmn 19 18 14 5 8.4 (14.4) DPS N/A N/A N/A Net Income SRmn 8 14 6 3 10.4 (15.2) Source: NCBC Research Assets SRmn 182 185 200 200 7.2 4.6 Share price performance Equity SRmn 158 170 177 180 4.1 5.8 Total Debt SRmn 3 0 0 0 - - 7,000 26 6,500 24 Cash & Equiv SRmn 7 5 5 7 103.1 (13.5) 22 6,000 20 EBITDA Mgn % 29.2 23.7 19.5 26.0 - - 5,500 18 5,000 16 Net Mgn % 12.3 18.4 8.1 15.8 - - Jun-09 Oct-09 Feb-10 Jun-10 ROE % 5.2 8.5 3.3 6.8 - - TASI Food (RHS) ROA % 4.5 7.6 3.0 6.1 - - Div Payout % 0.0 0.0 0.0 - - - Source: Bloomberg EPS SR 0.4 0.7 0.3 0.2 7.1 (14.9) Top 5 shareholders (%) BVPS SR 7.9 8.5 8.8 9.0 4.1 5.7 Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 WARFA FOOD 90 AGRICULTURE & FOOD INDUSTRIES

Not Covered SADAFCO

Current Price (SR) 45.3 Jeddah-based Saudia Dairy and Foodstuff Company (SADAFCO)

Pricing / Valuation as on June 13, 2010 commenced operations in 1977 and focuses on dairy products. The company later diversified its product line by entering into joint ventures Stock details with other food companies. SADAFCO’s portfolio comprises more than 52-week range H/L (SR) 55.3/30.4 100 products sold under the SAUDIA brand. Market cap ($mn) 392.5  Business brief: The company operates through five main segments—milk, Shares outstanding (mn) 32.5 juices, snacks, ice cream, and other foodstuffs. Under the milk segment, Price perf. (%) 1M 3M 12M Absolute 2 1 39 SADAFCO offers customers a wide range of milk packs and milk shakes. The Market (6) (5) 3 ice cream segment sells a number of ice cream flavors. The other foodstuffs Sector 0 (2) 23 segment produces tomato paste and hummus. Avg daily turn.(mn) SR US$ 3M 12.2 3.3  Financials: SADAFCO‘s revenue grew 10.9% YoY to SAR1,023mn in 2010 12M 12.7 3.4 compared to SR922mn in 2009. Both gross and operating margin expanded Raw Beta 6m 3yr by 500 basis points to 35.7% and 12.4%, respectively. The company’s net 0.71 0.90 income grew by 610.6% YoY to SR204mn in 2010 compared to SR29m in Reuters code 2270.SE 2009. Net income growth was driven mainly by investment income of Bloomberg code SADAFCO AB Website www.sadafco.com SR119mn in 2010 compared to an investment loss of SR26mn in 2009.  Weighting & free float (%) Recent developments: In December 2009, SADAFCO sold its 51% stake in TASI (free float weight) 0.17 Saudi New Zealand Milk products to Fonterra of New Zealand for Free float 58.21 SR135.2mn. For the fiscal year 2010, SADAFCO has paid an annual dividend of SR3.00 per share. Valuation multiples 08 09 10 Company financials* P/E (x) 25.2 52.0 7.2 YoY CAGR (%) P/B (x) 2.9 2.9 2.2 20072008 2009 2010 (%) (07-10) P/Sales (x) 1.7 1.6 1.4 Net Revenues SRmn 769 878 922 1,023 10.9 10.0 Div yield (%) 2.2 0.0 6.6 EBITDA SRmn 93 104 103 163 57.7 20.6 DPS 1.0 0.0 3.0 Net Income SRmn 33 58 28 203 617.8 83.2 Source: NCBC Research Assets SRmn 732 764 719 964 34.0 9.6 Share price performance Equity SRmn 488 515 502 667 32.8 11.0 Total Debt SRmn 22 6 1 0 - - 7,000 55 6,500 Cash & Equiv SRmn 104 83 50 323 546.5 45.7 45 6,000 EBITDA Mgn % 12.1 11.8 11.2 15.9 - - 35 5,500 Net Mgn % 4.3 6.7 3.1 19.9 - - 5,000 25 Jun-09 Oct-09 Feb-10 Jun-10 ROE % 7.0 11.7 5.6 139.1 - -

TASI SADAFCO (RHS) ROA % 4.4 7.8 3.8 96.6 - - Div Payout % 0.0 55.6 0.0 - - - Source: Bloomberg 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 Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research United Industries Company 30.1 * Financial Year End March Al Samih Trading Company 11.6

Global Investment House 8.9

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI DAIRY & FOODSTUFF 91 AGRICULTURE & FOOD INDUSTRIES

Also known as Neutral Almarai Company Almarai

Target Price (SR) 193 Almarai Company, based in Riyadh, is the leading milk and dairy products company in the region and is also expanding into the related Price (SR) 190.5 juices and food markets. Almarai is regarded as one of the best Pricing / Valuation as on June 13, 2010 companies in the region in terms of investor openness and disclosure levels. Stock details 52-week range H/L (SR) 202.3/145  Business brief: Almarai’s portfolio includes fresh and long-life dairy Market cap ($mn) 5,840.5 products (such as milk, natural and fruit yoghurts, cream and evaporated Shares outstanding (mn) 115.0 milk), several fruit juice flavors, cheese and butter, bakery products, and Price perf. (%) 1M 3M 12M other items such as tomato paste and jams. The company is also expanding Absolute (3) 8 31 into the chicken market through HADCO, which it purchased in Oct. 2009 for Market (6) (5) 3 SR950mn. In addition, the company is targeting the infant milk market Sector 0 (2) 23 Avg daily turn.(mn) SR US$ through its recently formed JV with Mead Johnson. 3M 30.8 8.2  Financials: Almarai has recorded steady revenue and earnings growth over 12M 23.4 6.2 Raw Beta 6m 3yr the years as it has expanded its product offering and due to the demographic 0.69 0.70 growth in its end markets. We expect earnings to continue growing by about Reuters code 2280.SE 20% annually in 2010e and 2011e. In 1Q10, Almarai’s revenue grew 17.6% Bloomberg code ALMARAI AB YoY to SR1.6bn. Net profit grew 18.6% YoY to SR234mn. Gross margin were Website www.almarai.com weak in the quarter due to investments in some of its new business areas, Weighting & free float (%) although this was offset by lower bank charges and G&A expenses TASI (free float weight) 1.82  Recent developments: In March 2010, Almarai entered into a 50:50 joint Free float 41.35 venture with Mead Johnson Nutrition Co. to produce, market and distribute Valuation multiples infant nutrition products in the GCC. In January 2010, Almarai announced 08 09 10E the transfer of its 100% stake in International Company for Agro Industrial P/E (x) 24.1 20.0 16.5 Projects (Beyti) to International Dairy and Juice Limited (IDJ). IDJ is a joint P/B (x) 6.1 4.1 3.5 venture between Pepsi Co. and Almarai holds a 48% stake in IDJ. P/Sales (x) 4.4 3.7 3.2 Div yield (%) 1.8 2.1 2.4 Company financials DPS 3.5 4.0 4.5 YoY CAGR (%) Source: NCBC Research estimates 20082009 2010E 2011E (%) (08-11E) Share price performance Net Revenues SRmn 5,030 5,869 6,867 7,873 16.7 16.1 EBITDA SRmn 1,440 1,642 1,942 2,256 14.0 16.1 7,000 210 6,500 19 0 Net Income SRmn 910 1,097 1,330 1,580 20.5 20.2 6,000 17 0 Assets SRmn 8,181 10,987 12,318 13,402 34.3 17.9 5,500 15 0 Equity SRmn 3,617 5,383 6,253 7,315 48.8 26.5 5,000 13 0 Jun-09 Oct-09 Feb-10 Jun-10 Total Debt SRmn 3,644 4,377 4,345 4,254 20.1 5.3

TASI Almarai (RHS) Cash & Equiv SRmn 247 508 433 302 105.9 7.0 EBITDA Mgn % 28.6 28.0 28.3 28.7 - - Source: Bloomberg Net Mgn % 18.1 18.7 19.4 20.1 - - Top 5 shareholders (%) ROE % 27.3 24.4 22.9 23.3 - - ROA % 12.5 11.4 11.4 12.3 - - Savola Group 29.9 Div Payout % 41.9 41.9 38.8 40.1 - - HH Prince Sultan Mohammed 28.6 Saud Al Kabir Al Saud EPS SR 8.4 9.5 11.6 13.7 14.3 17.9 Omran Mohammed Al Omran 5.7 BVPS SR 33.2 46.8 54.4 63.6 41.0 24.2 and Company Source: Tadawul, Zawya, Company, NCBC Research estimates

Source: Tadawul, NCBC Research

JUNE 2010 ALMARAI COMPANY 92 AGRICULTURE & FOOD INDUSTRIES

Also known as Not Covered Anaam International Anaam

Current Price (SR) 44.2 Anaam International, headquartered in Jeddah, Saudi Arabia, was

Pricing / Valuation as on June 13, 2010 established in 1982. The company is engaged in the import and wholesale trade of frozen food, production of animal feed, investment in Stock details industrial projects and trade of livestock. The company has factories and 52-week range H/L (SR) 84.5/32.2 plants at Jouf and Qassim Market cap ($mn) 128.4  Business brief: Anaam International is involved in the import, export, Shares outstanding (mn) 10.9 supply, trade, transportation and breeding of livestock in Saudi Arabia. The Price perf. (%) 1M 3M 12M Absolute (12) (28) (4) company also trades in marine equipment. Other activities include the Market (6) (5) 3 production and transportation of meat; management and operation of Sector 0 (2) 23 slaughter houses; processing of meat imports; wholesale trade of frozen Avg daily turn.(mn) SR US$ food; production of animal feed; and investment in industrial projects. The 3M 10.5 2.8 company has the capacity to produce a total of 66,000 tons of animal feed 12M 20.5 5.5 Raw Beta 6m 3yr per year.

0.88 1.04  Financials: In 1Q10, Annam’s revenue fell 11% YoY to SR15.8mn compared Reuters code 4061.SE to SR17.8mn in 1Q09. However, other operating income of SR2.8mn Bloomberg code ANAAM AB recorded by the company in 1Q10 narrowed its net loss to SR1.7mn for the Website www.anaam.com.sa quarter versus a net loss of SR2.7mn in 1Q09. As of 31 March 2010, the Weighting & free float (%) company has outstanding debt and cash balance of SR18.9mn and TASI (free float weight) 0.10 SR21.6mn, respectively Free float 100.00  Recent developments: In December 2009, Anaam appointed Hassan Al Valuation multiples Yamini as the CEO. In February 2010, Anaam said it plans to focus on the 08 09 TTM P/E (x) 96.4 (59.7) (68.5) real estate, food and industry sectors and triple its sales to more than P/B (x) 4.0 4.3 4.3 SR150mn in next three years. P/Sales (x) 4.7 7.7 7.9 Company financials Div yield (%) NA NA NA DPS NA NA NA YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) Source: NCBC Research Net Revenues SRmn 88 103 63 16 (11.0) (15.5) Share price performance EBITDA SRmn 9 9 6 0 (69.2) (15.7)

7,000 90 Net Income SRmn 6 5 (8) (2) (37.8) - 6,500 70 Assets SRmn 247 248 233 244 (0.3) (2.9) 6,000 50 Equity SRmn 115 120 112 112 (4.3) (1.5) 5,500 5,000 30 Total Debt SRmn 25 22 19 19 (13.5) (13.1) Jun-09 Jan-10 Apr-10 Cash & Equiv SRmn 22 14 21 12 (15.0) (3.8) TASI Anaam Holding (RHS) EBITDA Mgn % 10.2 8.4 10.2 0.2 - - Net Mgn % 6.8 4.9 (12.8) (10.8) - - Source: Bloomberg ROE % 5.4 4.3 (7.0) (6.1) - - Top 5 shareholders (%) ROA % 2.4 2.0 (3.4) (2.9) - - HH Prince Abdullah Turki 9.7 Div Payout % 0.0 0.0 0.0 - - - Abdul Aziz Al Saud 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)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 ANAAM INTERNATIONAL 93 AGRICULTURE & FOOD INDUSTRIES

Also known as Not Covered Halwani Brothers Halwani, HB

Current Price (SR) 39.7 Halwani Brothers Company (HB), headquartered in Jeddah, Saudi

Pricing / Valuation as on June 13, 2010 Arabia, was established in 1952. The company is engaged in the production, marketing and distribution of food products within and Stock details outside Saudi Arabia. HB has over 26 brands and 15 factories and plants 52-week range H/L (SR) 41.0/30.1 in Saudi Arabia and Egypt. Market cap ($mn) 302.4  Business brief: HB is engaged in the production of cheese, ice-cream, Shares outstanding (mn) 28.6 frozen and processed meat, jams, grains, juices, dates and halawa and Price perf. (%) 1M 3M 12M Absolute 11 28 10 manufacture of tissues. It has the capacity to produce 12,200 tons of Tahina, Market (6) (5) 3 20,100 tons of Halwa, 22,950 tons of meat, 3,000 tons of cheese, 3,348 tons Sector 0 (2) 23 of Arabic sweets, 4,500 tons of dairy products, and 9,996 tons of jam per Avg daily turn.(mn) SR US$ year. 3M 22.0 5.9 12M 21.4 5.7  Financials: In 1Q10, HB’s revenues grew 2.9% YoY to SR173mn compared Raw Beta 6m 2yr to SR168mn in 1Q09. The company’s total expenses declined 3.3% YoY to 0.43 1.08 SR147mn in 1Q10. The increase in revenues and lower costs led to HB’s net Reuters code 6001.SE income growing 68% YoY to SR21mn in 1Q10 compared to SR12.4mn in Bloomberg code HB AB Website www.halwani.com.sa 1Q09.  Weighting & free float (%) Recent developments: In February 2010, HB declared a dividend of SR1 TASI (free float weight) 0.10 per share for 2009. In December 2009, HB obtained a SR165mn loan from Free float 44.49 Saudi Industrial Development Fund in order to finance half its SAR330mn production plant in Jeddah, which will bring all production units, including the Valuation multiples 08 09 TTM confectionaries, meat, dairy production and packaging plants, under one P/E (x) 19.4 26.6 22.2 roof. P/B (x) 2.3 2.4 2.3 P/Sales (x) 1.7 1.8 1.8 Company financials Div yield (%) 1.9 2.5 0.0 YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) DPS 0.8 1.0 0.0 Net Revenues SRmn 551 664 617 173 2.9 5.8 Source: NCBC Research EBITDA SRmn 61 71 89 30 46.3 21.0 Share price performance Net Income SRmn 33 58 43 21 68.0 13.7

7,000 45 Assets SRmn 438 646 570 612 (2.9) 14.0 6,500 40 Equity SRmn 267 485 463 484 6.7 31.7 6,000 35 Total Debt SRmn 51 66 0 0 (100.0) (100.0) 5,500 30 5,000 25 Cash & Equiv SRmn 15 188 144 165 (8.4) 210.1 Jun-09 Oct-09 Feb-10 Jun-10 EBITDA Mgn % 11.1 10.8 14.5 17.6 - - TASI H B (RHS) Net Mgn % 6.0 8.8 6.9 12.1 - - ROE % 12.7 15.5 9.0 17.7 - - Source: Bloomberg ROA % 7.7 10.8 7.0 14.2 - - Top 5 shareholders (%) Div Payout % 89.8 30.7 67.1 - - - Dalat Industrial Investment 55.5 EPS SR 1.7 2.4 1.5 0.7 65.9 (5.5) Co BVPS SR 13.4 17.0 16.2 16.9 6.7 10.0 Mohammed Abdulhamid 6.9 Source: Tadawul, Zawya, Company, NCBC Research Mahmoud Halwani

Source: Tadawul, NCBC Research

JUNE 2010 HALWANI BROTHERS COMPANY 94 AGRICULTURE & FOOD INDUSTRIES

Also known as Not Covered Herfy Food Services Herfy

Current Price (SR) 74.0 Herfy Food Services Company (Herfy), established in 1981, has a chain

Pricing / Valuation as on June 13, 2010 of fast food restaurants as well as pastry, bakery and chocolate showrooms all over the Kingdom. Herfy is KSA’s largest food chain with

Stock details over 180 fast food restaurants, 16 pastry & chocolate showrooms, and 1 52-week range H/L (SR) 76.3/51.0 meat-processing plant. Market cap ($mn) 532.7  Business brief: Herfy operates fast food restaurants, food retail outlets, Shares outstanding (mn) 27 bakeries and chocolate showrooms. The company is also into meat Price perf. (%) 1M 3M 12M Absolute 17 23 N/A processing. Herfy’s combined production capacity of sweets and bakery Market (6) (5) 3 products stands at 13,400 tons per annum. Sector 0 (2) 23  Financials: Herfy continued its recent steady revenue and net income Avg daily turn.(mn) SR US$ 3M 10.4 2.8 growth performance in the first quarter when it posted 11% YoY growth in 12M N/A N/A revenues to SR136mn in 1Q10 driven by expansion of its outlets as well as Raw Beta 6m 2yr increasing consumer expenditure on restaurants. Net income grew 18.5% N/A N/A YoY to SR28mn on higher sales and increased asset utilization aided by Reuters code 6002.SE enhanced operational efficiency. Bloomberg code HERFY AB Website www.herfy.com  Recent developments: In January 2010, Herfy opened three new branches, one

Weighting & free float (%) each in Ras-Tanura, Panorama Mall (Riyadh) and Darren Mall (Dammam), which TASI (free float weight) 0.12 boosted its top line. The company raised SR413mn in capital in an IPO that Free float 30.0 took place on 2 February 2010.

Valuation multiples Company financials 08 09 TTM YoY CAGR (%) P/E (x) 21.9 17.4 16.8 20072008 2009 1Q10 (%) (07-09) P/B (x) 7.6 6.3 5.8 Net Revenues SRmn 375 466 518 136 11.2 17.5 P/Sales (x) 4.3 3.9 3.8 EBITDA SRmn 84 118 142 29 N/A 30.2 Div yield (%) NA NA NA Net Income SRmn 62 91 115 28 18.3 36.4 DPS NA NA NA Assets SRmn 325 355 411 446 N/A 12.3 Source: NCBC Research Equity SRmn 231 262 317 345 N/A 17.1

Share price performance Total Debt SRmn 42 30 18 18 N/A (34.3) Cash & Equiv SRmn 20 21 20 49 N/A (0.9) 7,000 75 EBITDA Mgn % 22.0 25.0 27.0 21.0 - 6,500 70 65 6,000 Net Mgn % 16.0 20.0 22.0 21.0 - 60 5,500 55 ROE % 27.0 35.0 36.0 33.0 - 5,000 50 ROA % 19.0 26.0 28.0 25.0 - F e b - 10 M a y - 10

TASI Herfy Foods (RHS) Div Payout % - - 70.0 - - EPS SR 6.0 9.0 4.0 4.0 (16.9)

Source: Bloomberg BVPS SR 23.0 26.0 12.0 13.0 N/A (28.7)

Source: Tadawul, Zawya, Company, NCBC Research Top 5 shareholders (%) Savola Group Company 47.6 Ahmad Hamad Mohammed Al 20.3 Saeed

Source: Tadawul, NCBC Research

JUNE 2010 HERFY FOOD SERVICES COMPANY 95 AGRICULTURE & FOOD INDUSTRIES

Also known as Not Covered National Agriculture NADEC

Current Price (SR) 26.1 National Agriculture Development Company (NADEC) commenced operations in 1981 with a 20% government stake. The company focuses Pricing / Valuation as on June 13, 2010 on agricultural production, food processing and distribution. NADEC

Stock details operates in three business segments – agricultural, dairy and juice 52-week range H/L (SR) 42.9/24.0 products – all sold under the NADEC brand. Market cap ($mn) 417.5  Business brief: The company offers a wide range of products under each of Shares outstanding (mn) 60 its operating segments. Under its agricultural segment, NADEC offers Price perf. (%) 1M 3M 12M Absolute (7) (12) (34) manufactured products such as tomato paste, grains, vegetables, fruits, Market (6) (5) 3 fodder, olives and honey. The dairy products segment offers long-life Sector 0 (2) 23 products (including cheese and milk), desserts and special products. The Avg daily turn.(mn) SR US$ juice segment offers a range of fresh and long-life juices in containers of 3M 4.7 1.2 various sizes. NADEC has the capacity to annually produce 120,000 tons of 12M 3.9 1.0 Raw Beta 6m 3yr potatoes, 150,000 tons of wheat, 20,000 tons of wheat seeds, 30,000 liters 0.59 0.80 of olive oil, 300,000 tons of alfalfa, 40,000 tons of onion, 5,402 tons of Reuters code 6010.SE dates, 60,000 tons of maize, 300,000 liters of dairy products, 9 tons of Bloomberg code NADEC AB honey and 3,000 tons of grain maize. Website www.nadec.com.sa  Financials: In 1Q10, NADEC’s revenues grew 14.4% YoY to SR319.7mn Weighting & free float (%) compared with SR279.4mn in 1Q09. NADEC’s operating profit increased TASI (free float weight) 0.15 112.3% YoY due to robust revenue growth and lower operating expenses. Free float 48.81 Consequently, the company’s net income grew to SR3.8mn in 1Q10 Valuation multiples compared to the net loss of SR4.3mn recorded in 1Q09. 08 09 TTM  P/E (x) 22.8 (40.8) (51.8) Recent developments: In February 2010, a court ordered ARAMCO to P/B (x) 1.5 1.6 1.6 vacate the land that it was using to lay pipes and conduct excavations, as it P/Sales (x) 1.2 1.2 1.1 belonged to NADEC. The latter demanded a compensation of SR3.5bn from Div yield (%) 2.9 0.0 0.0 ARAMCO for occupying its land for years. DPS 0.8 0.0 0.0 Source: NCBC Research Company financials

Share price performance YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) 7,000 45 Net Revenues SRmn 1,083 1,339 1,335 320 14.4 11.0 6,500 40 35 6,000 EBITDA SRmn 208 260 212 63 20.3 1.0 30 5,500 25 Net Income SRmn 72 69 (38) 4 N/M N/M 5,000 20 Assets SRmn 1,828 2,442 2,510 2,495 0.9 17.2 Jun-09 Oct-09 Feb-10 Jun-10 Equity SRmn 990 1,059 975 979 (3.0) (0.7) TASI NADEC (RHS) Total Debt SRmn 448 922 1,103 1,046 5.7 56.9

Source: Bloomberg Cash & Equiv SRmn 20 18 35 28 1.3 33.5 EBITDA Mgn % 19.2 19.4 15.9 19.7 - - Top 5 shareholders (%) Net Mgn % 6.6 5.1 (2.9) 1.2 - - Public Investment Fund 20.0 ROE % 7.3 6.7 (3.8) 1.6 - - Suleiman Abdul Aziz Saleh Al 19.7 ROA % 4.5 3.2 (1.6) 0.6 - - Rajhi Div Payout % 0.0 65.2 0.0 - - - Saleh Abdul Aziz Saleh Al 11.4 Rajhi EPS SR 1.8 1.2 (0.6) 0.1 N/M N/M Abdullah Abdul Aziz Saleh Al 8.3 BVPS SR 24.8 17.7 16.3 16.3 (3.0) (18.9) Rajhi Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 NATIONAL AGRICULTURE 96 AGRICULTURE & FOOD INDUSTRIES

Also known as Not Covered Qassim Agriculture GACO

Current Price (SR) 8.6 Qassim Agriculture Co. (GACO), established in 1985, is headquartered in

Pricing / Valuation as on June 13, 2010 Qassim. The company invests in agricultural businesses and livestock, and is also expanding into the poultry business through a SR250mn

Stock details investment with a target of 1million birds/year. 52-week range H/L (SR) 13.5/8.3  Business brief: GACO’s main business line involves investment in Market cap ($mn) 114.0 agricultural products and livestock. The company produces 2,500 tons of Shares outstanding (mn) 50 dates, 25,000 tons of corn, and 42,000 tons of wheat annually. It is also a Price perf. (%) 1M 3M 12M Absolute (7) (12) (30) distributor of dates and dairy products. To meet its internal requirements, Market (6) (5) 3 the company invests in the construction of cooling stores; transportation; Sector 0 (2) 23 and import of fodder, cereals and agricultural equipments. GACO has Avg daily turn.(mn) SR US$ invested approximately SR20mn in Saudi-based companies 3M 7.4 2.0 12M 13.7 3.6  Financials: In 1Q10, GACO’s revenues fell by 46% YoY to SR14mn Raw Beta 6m 3yr compared to SR26.5mn in 1Q09. However, the company’s net income rose 0.62 0.87 to SR1.3mn in 1Q10 compared to SR0.1mn in 1Q09, primarily due to other Reuters code 6020.SE income of SR5mn. Bloomberg code QAACO AB Website www.gaco.com.sa  Recent developments: In March 2010, GACO announced the sale of

Weighting & free float (%) properties in Medina, realizing a profit of SR4mn. In April 2010, the company TASI (free float weight) 0.09 announced the appointment of MR. Abdulaziz Bin Mohammed Al Talas as the Free float 100.0 company’s General Manager.

Valuation multiples Company financials 08 09 TTM YoY CAGR (%) P/E (x) 1,489.5 (61.5) (74.8) 20072008 2009 1Q10 (%) (07-09) P/B (x) 1.1 1.1 1.1 Net Revenues SRmn 49 88 84 14 (46.4) 31.1 P/Sales (x) 4.9 5.1 5.9 EBITDA SRmn 13 14 6 (4) N/A (29.6) Div yield (%) 0.0 0.0 0.0 Net Income SRmn (3) 0 (7) 1 1149.5 N/M DPS 0.0 0.0 0.0 Assets SRmn 498 574 562 565 (1.4) 6.3 Source: NCBC Research Equity SRmn 404 405 399 400 (0.0) (0.7)

Share price performance Total Debt SRmn 6 7 17 2 (36.8) 65.9 Cash & Equiv SRmn 12 2 0 4 444.3 (86.0) 7,000 15 EBITDA Mgn % 26.3 15.5 7.6 (25.0) - - 6,500 13 6,000 11 Net Mgn % (5.8) 0.3 (8.2) 9.4 - - 5,500 9 ROE % (0.7) 0.1 (1.7) 1.3 - - 5,000 7 Jun-09 Oct-09 Feb-10 Jun-10 ROA % (0.6) 0.1 (1.2) 0.9 - - TASI Qassim Agriculture (RHS) Div Payout % 0.0 0.0 0.0 - - - EPS SR (0.1) 0.0 (0.1) 0.0 (72.0) N/M

Source: Bloomberg BVPS SR 8.1 8.1 8.0 8.0 0.0 (0.8)

Source: Tadawul, Zawya, Company, NCBC Research Top 5 shareholders (%)

Source: Tadawul, NCBC Research

JUNE 2010 QASSIM AGRICULTURE COMPANY 97 AGRICULTURE & FOOD INDUSTRIES

Also known as Not Covered Tabuk Agriculture TADCO

Current Price (SR) 21.1 Tabuk Agriculture Development Company (TADCO), established in 1983

Pricing / Valuation as on June 13, 2010 and headquartered in Tabuk, is an agricultural company. TADCO’s products include fruits, vegetables, forage products, grains and seeds, Stock details and processed products, such as olive oil and honey.

52-week range H/L (SR) 31.2/20.9  Business brief: TADCO produces 20,000 MT of onions, 150,000 MT of table Market cap ($mn) 112.2 potatoes, 58,000 MT of wheat and more than 1mn MT of alfalfa each year. Shares outstanding (mn) 20.0 The company also grows 7,000 MT of grapes, peaches, apricots, pears and Price perf. (%) 1M 3M 12M Absolute (14) (16) (28) plums annually. TADCO is actively involved in environment protection and Market (6) (5) 3 water resource management. Sector 0 (2) 23  Financials: In 1Q10, TADCO’s revenues fell by 81% YoY to SR9.8mn Avg daily turn.(mn) SR US$ 3M 12.2 3.3 compared to SR51.8mn in 1Q09. TADCO posted a net loss of SR2.5mn in 12M 16.3 4.3 1Q10 compared to SR10.2mn of net profit in 1Q09. The company suffered a Raw Beta 6m 3yr loss mainly due to the large reduction in revenues and its fixed cost base. 0.21 0.91  Reuters code 6040.SE Recent developments: In April 2010, TADCO announced that its Chairman, Bloomberg code TAACO AB Abdullah Abdulaziz Saleh Al Rajhi, resigned for personal reasons and will be Website www.tadco-agri.com replaced by Mohammed Abdullah Al Rajhi. In June 2009, TADCO signed a

Weighting & free float (%) memorandum of understanding (MoU) with the Food Products Company to TASI (free float weight) 0.06 establish a new olive firm. Free float 72.50 Company financials Valuation multiples YoY CAGR (%) 08 09 TTM 20072008 2009 1Q10 (%) (07-09) P/E (x) 17.9 59.8 (76.5) Net Revenues SRmn 146 172 168 10 (81.1) 7.2 P/B (x) 1.1 1.2 1.2 EBITDA SRmn 47 51 35 4 (76.1) (13.8) P/Sales (x) 2.4 2.5 3.3 Net Income SRmn 20 24 7 (3) N/M (40.9) Div yield (%) 0.0 2.4 0.0 Assets SRmn 448 435 423 421 (4.3) (2.8) DPS 0.0 0.5 0.0 Equity SRmn 390 369 359 364 (5.6) (4.2)

Source: NCBC Research Total Debt SRmn 5 4 3 2 (50.0) (22.5) Cash & Equiv SRmn 6 4 10 28 60.7 34.7 Share price performance EBITDA Mgn % 32.2 29.7 20.8 40.9 - - 7,000 30 Net Mgn % 13.8 13.7 4.2 (25.9) - - 6,500 25 ROE % 5.2 6.2 1.9 (2.8) - - 6,000 20 5,500 ROA % 4.5 5.3 1.6 (2.4) - - 5,000 15 Div Payout % 0.0 0.0 142.9 - - - Jun-09 Oct-09 Feb-10 Jun-10

TASI Tabuk Agriculture (RHS) 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)

Source: Tadawul, Zawya, Company, NCBC Research Source: Bloomberg

Top 5 shareholders (%) Abdullah Abdul Aziz Saleh Al 25.0 Rajhi

Source: Tadawul, NCBC Research

JUNE 2010 TABUK AGRICULTURE 98 AGRICULTURE & FOOD INDUSTRIES

Also known as Not Covered Saudi Fisheries Alasmak, SFC

Curent Price (SR) 47.0 Saudi Fisheries Company, based in Dammam, commenced operations in 1981. The company has national as well as international recognition in Pricing / Valuation as on 13 June, 2010 seafood manufacturing and distribution, with ALASMAK as its flagship

Stock details brand. Saudi Fisheries manufactures products at its processing plants 52-week range H/L (SR) 70.3/40.6 and delivers them using its own fleet. Market cap ($mn) 250.6  Business brief: Saudi Fisheries generates revenues from four operating Shares outstanding (mn) 20 segments: value-added products (production capacity of 2,000 tons); Price perf. (%) 1M 3M 12M Absolute (1) (10) (17) individually quick frozen or IQF products (capacity of 1,000 tons); fish Market (6) (5) 3 products; and a new product Alasmak Tuna. The value-added products Sector 0 (2) 23 segment comprises fish sticks, fish burgers, shrimp nuggets, king shrimp Avg daily turn.(mn) SR US$ and golden crispy shrimp, while the IQF segment offers IQF shrimp in retail 3M 19.7 5.2 packs. Fish products are offered in fresh, frozen whole, gutted, steak, chunk, 12M 42.6 11.4 Raw Beta 6m 3yr and fillet forms. The company-owned chain of retail shops and fish service 0.18 1.07 counters handles the distribution process. Reuters code 6050.SE  Financials: In 1Q10, the company’s revenues fell 24.5% YoY to SR25.8mn Bloomberg code SFICO AB from SR34.1mn in 1Q09. Saudi Fisheries posted a net loss of SR5.5mn in Website www.saudi-fisheries.com 1Q10 compared to SR3.9mn in 1Q09, continuing its trend of losses of the Weighting & free float (%) past few years. TASI (free float weight) 0.07 Free float 38.49  Recent developments: In January 2010, Saudi Fisheries and NCB signed a two year SR50mn Islamic credit facility to finance the company’s expansion Valuation multiples project in the Asir area. In December 2009, the company received a loan 08 09 TTM P/E (x) (36.4) (32.8) (31.1) from the Agricultural Development Fund to finance the company’s shrimp P/B (x) 5.7 6.9 7.2 farm project in the Asir area. P/Sales (x) 7.6 8.0 8.6 Div yield (%) 0.0 0.0 0.0 Company financials DPS 0.0 0.0 0.0 YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) Source: NCBC Research Net Revenues SRmn 106 123 118 26 (24.5) 5.5 Share price performance EBITDA SRmn (23) (12) (11) (3) N/M N/M

7,000 75 Net Income SRmn (31) (26) (29) (6) N/M N/M 6,500 60 Assets SRmn 227 200 187 194 (4.0) (9.3) 6,000 45 Equity SRmn 190 164 136 130 (18.8) (15.5) 5,500 5,000 30 Total Debt SRmn - 2 9 23 1137.3 N/M Jun-09 Oct-09 Feb-10 Jun-10 Cash & Equiv SRmn 3 2 2 4 95.9 (29.1) TASI Saudi Fisheries (RHS) EBITDA Mgn % (21.7) (9.8) (9.4) (10.3) - - Net Mgn % (29.2) (21.0) (24.3) (21.4) - - Source: Bloomberg ROE % (15.1) (14.6) (19.1) (16.6) - - Top 5 shareholders (%) ROA % (12.7) (12.1) (14.8) (11.6) - - Public investment Fund 40.0 Div Payout % 0.0 0.0 0.0 - - - HH Sheikh Mete’eb Bin Abdul 21.5 EPS SR (1.5) (1.3) (1.4) (0.3) N/M N/M Aziz Al Saud BVPS SR 9.5 8.2 6.8 6.5 (18.8) (15.5)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI FISHERIES COMPANY 99 AGRICULTURE & FOOD INDUSTRIES

Not Covered Also known as Ash-Sharqiyah SHADCO

Current Price (SR) 34.1 Ash-Sharqiyah Development Company (Ash-Sharqiyah) was established

Pricing / Valuation as on June 13, 2010 in 1986. The company provides meat and agricultural products. It also undertakes agricultural projects, rehabilitation of land and irrigation Stock details works. Ash-Sharqiyah owns stakes in Al Hassa Food Industries, United 52-week range H/L (SR) 60.3/32.7 Dairy Farms and Pure Breed Poultry. Market cap ($mn) 68.2  Shares outstanding (mn) 7.5 Business brief: Ash-Sharqiyah is involved in the production and marketing Price perf. (%) 1M 3M 12M of wheat, barley, fodder crops such as alfalfa and Rhodes grass, wheat and Absolute (6) 1 (31) barley straw, and potatoes. It has annual production capacity of 14.5 million Market (6) (5) 3 tones of milk, 14,000 tones of wheat and 550 kilograms of honey. Other Sector 0 (2) 23 projects undertaken by the company include calf and sheep breeding, and Avg daily turn.(mn) SR US$ 3M 13.1 3.5 production of bio-fertilizers and honey. 12M 18.8 5.0  Financials: Ash-Sharqiyah’s revenue fell by 3.6% YoY to SR8.6mn in 1Q10 Raw Beta 6m 3yr compared to SR8.9mn in 1Q09. Furthermore, the company recorded a net 0.23 1.00 loss of SR3.0mn in 1Q10 compared to a net profit of SR0.4mn in 1Q09. Reuters code 6060.SE Bloomberg code ASACO AB Company financials Website www.asharqiyah.com.sa YoY CAGR (%) Weighting & free float (%) 20072008 2009 1Q10 (%) (07-09) TASI (free float weight) 0.05 Net Revenues SRmn 53 51 32 9 (3.6) (22.4) Free float 99.98 EBITDA SRmn 17 21 7 0 (261.2) (35.3) Net Income SRmn 3 (12) (5) (3) (708.0) N/M Valuation multiples Assets SRmn 144 133 115 114 (13.1) (10.6) 09 TTM 08 Equity SRmn 117 104 85 82 (21.6) (14.9) P/E (x) (21.3) (53.2) (30.7) Total Debt SRmn 10 11 8 7 N/M N/M P/B (x) 2.5 3.0 3.1 Cash & Equiv SRmn 1 1 0 0 (86.5) (56.7) P/S (x) 5.0 7.9 8.0 EBITDA Mgn % 31.8 41.2 22.0 4.5 - - Div yield (%) NA NA NA Net Mgn % 6.4 (23.5) (14.9) (35.1) - - DPS NA NA NA ROE % 3.0 (10.9) (5.1) (14.5) - - Source: NCBC Research ROA % 2.4 (8.7) (3.9) (10.6) - - Div Payout % 0.0 0.0 0.0 - - - Share price performance EPS SR 0.5 (1.7) (0.6) (0.4) N/M N/M 7,000 70 BVPS SR 15.7 13.8 11.3 10.9 (21.7) (15.2) 6,500 60 50 6,000 Source: Tadawul, Zawya, Company, NCBC Research 40 5,500 30 5,000 20 Jun-09 Oct-09 Feb-10 Jun-10

TASI Ash Shariqiyah Dev. Co. (RHS

Source: Bloomberg

Top 5 shareholders (%)

Source: Tadawul, NCBC Research

JUNE 2010 ASHARQIYAH AGRICULTURE DEVELOPMENT COMPANY 100 AGRICULTURE & FOOD INDUSTRIES

Not Covered Also known as Al-Jouf Agriculture Al Jouf, JADCO

Current Price (SR) 28.2 Al-Jouf Agriculture Development Co. (Al Jouf) was established in 1988.

Pricing / Valuation as on June 13, 2010 The company, headquartered in Al Jouf, is engaged in the processing and selling of agricultural as well as livestock products. Al Jouf sells its Stock details products across Saudi Arabia and in the neighboring states through its 52-week range H/L (SR) 39.6/26.7 network and marketing outlets. Market cap ($mn) 150.4  Shares outstanding (mn) 20 Business brief: Al Jouf’s core activities include processing and marketing of Price perf. (%) 1M 3M 12M agricultural and animal products. The company’s product portfolio includes Absolute (1) (20) 0 potatoes (table and manufacturing) and potato seeds, onion and onion Market (6) (5) 3 seeds, and fruits such as peaches, plums, apples and almonds. Its offering Sector 0 (2) 23 also includes products such as olive oil, bee honey, wheat and barley, and Avg daily turn.(mn) SR US$ 3M 5.6 1.5 alfalfa fodder for livestock and fodder dealers. Al Jouf’s other projects include 12M 7.5 2.0 milk production and processing (under the brand AL-SAFWA DAIRIES), and Raw Beta 6m 3yr sheep breeding & fattening. 0.40 0.83  Financials: In 1Q10, Al Jouf’s revenues fell by 35% YoY to SR33.8mn Reuters code 6070.SE Bloomberg code JADCO AB compared to SR51.9mn in 1Q09. Net income dropped by 48.2% YoY to Website www.aljouf.com.sa SR7.1mn in 1Q10 compared to SR13.8mn in 1Q09.

Weighting & free float (%)  Recent developments: In March 2010 the company approved a cash TASI (free float weight) 0.11 dividend of SR2 per share for the financial year 2009. Free float 95.20 Company financials Valuation multiples YoY CAGR (%) 08 09 TTM 20072008 2009 1Q10 (%) (07-09) P/E (x) 10.4 9.0 10.0 Net Revenues SRmn 189 213 266 34 (34.9) 18.6 P/B (x) 1.2 1.1 1.1 EBITDA SRmn 95 96 107 16 (51.7) 6.1 P/S(x) 2.6 2.1 2.3 Net Income SRmn 50 54 63 7 (48.2) 12.6 Div yield (%) 1.8 7.1 0.0 Assets SRmn 507 545 578 546 (1.6) 6.7 DPS 0.5 2.0 0.0 Equity SRmn 430 472 535 499 2.8 11.5 Source: NCBC Research Total Debt SRmn 1 6 1 1 (88.1) (18.3)

Share price performance Cash & Equiv SRmn 12 28 94 73 60.1 177.1 EBITDA Mgn % 50.3 45.1 40.2 48.3 - - 7,000 40 Net Mgn % 26.3 25.5 23.7 21.1 - - 6,500 35 6,000 ROE % 12.3 12.1 12.5 5.5 - - 30 5,500 ROA % 10.0 10.3 11.2 5.1 - - 5,000 25 Jun-09 Oct-09 Feb-10 Jun-10 Div Payout % 0.0 18.4 63.5 - - -

TASI Jouff Agriculture (RHS) 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

Source: Bloomberg Source: Tadawul, Zawya, Company, NCBC Research

Top 5 shareholders (%)

Source: Tadawul, NCBC Research

JUNE 2010 AL-JOUF AGRICULTURE 101 AGRICULTURE & FOOD INDUSTRIES

Also known as Not Covered Jazan Development JAZADCO

Current Price (SR) 13.8 Jazan Development Co. (JAZADCO), headquartered in Jazan, was

Pricing / Valuation as on June 13, 2010 established in 1993 to conduct agriculture and aquaculture activities in KSA. JAZADCO’s subsidiaries include Selonda Aquaculture – UK (50%

Stock details stake), Jannat Agricultural Investment Company (25% stake) and Tabuk 52-week range H/L (SR) 16.1/10.0 Fisheries Company (20% stake). Market cap ($mn) 183.3  Business brief: JAZADCO’s principal activities include ownership and Shares outstanding (mn) 50.0 operation of fish, shrimps and fruit farms; investment in the real estate and Price perf. (%) 1M 3M 12M Absolute (5) (4) 5 agriculture sectors; production of mineral water and seafood; distribution of Market (6) (5) 3 industrial, electrical and food retail equipments; and real estate Sector 0 (2) 23 development. JAZADCO sells its products across Saudi Arabia and also Avg daily turn.(mn) SR US$ exports them to other Gulf Cooperation Council (GCC) and European 3M 4.3 1.1 countries. It has total annual production capacity of 3,000 tons of shrimps, 12M 8.1 2.1 Raw Beta 6m 3yr 46 million liters of mineral water, and 800 tons of mango fruits.

1.55 0.76  Financials: In 1Q10, JAZADCO’s revenues grew 347.3% YoY to SR22.6mn Reuters code 6090.SE compared to SR5.0mn in 1Q09. The company’s net profit grew to SR3mn in Bloomberg code GIZACO AB 1Q10 compared to SR0.06mn in 1Q09, mainly due to the growth in Website www.jazadco.com.sa revenues. Weighting & free float (%)  TASI (free float weight) 0.13 Recent developments: In April 2010, JAZADCO commenced test Free float 98.79 operations at its second water purifying plant. The plant has capability of processing 12 liter bottles and can process six million bottles per annum. Valuation multiples 08 09 TTM Company financials P/E (x) 34.4 (23.8) (26.5) YoY CAGR (%) P/B (x) 1.0 1.1 1.1 20072008 2009 1Q10 (%) (07-09) P/S(x) 16.4 16.4 11.6 Net Revenues SRmn 27 42 42 23 347.3 24.6 Div yield (%) 3.6 0.0 0.0 EBITDA SRmn 4 0 11 7 274.9 66.2 DPS 0.5 0.0 0.0 Net Income SRmn 14 20 (29) 3 4,403.0 N/M Source: NCBC Research Assets SRmn 795 723 730 731 1.6 (4.2) Share price performance Equity SRmn 769 675 649 650 0.7 (8.1) Total Debt SRmn - 20 20 18 (10.0) N/M 7,000 16 6,500 Cash & Equiv SRmn 110 83 42 19 (82.6) (38.2) 14 6,000 EBITDA Mgn % 14.8 1.0 26.4 30.4 - - 12 5,500 Net Mgn % 51.9 47.6 (69.0) 13.3 - - 5,000 10 Jun-09 Oct-09 Feb-10 Jun-10 ROE % 1.8 2.8 (4.4) 1.9 - - TASI Jazan Development (RHS) ROA % 1.7 2.6 (4.0) 1.7 - - Div Payout % 166.7 125.0 0.0 - - -

Source: Bloomberg 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) Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research Suleiman Saleh Suleiman 5.0 Omary

Source: Tadawul, NCBC Research

JUNE 2010 JAZAN DEVELOPMENT COMPANY 102 Energy & Utilities

Ticker Company Page No.

2080 GASCO 106

5110 Saudi Electricity 107

JUNE 2010 THE SAUDI FACTBOOK 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.

GCC countries are expected To step up to the rising demand, the Saudi Government has planned over 24 to spend almost USD217 bn power projects ranging from 20-30MW and a massive expansion programme of five on electricity projects, of independent power projects (IPPs) with investments of around USD20bn, which is which almost 80% will be expected to be completed by 2019. In its 2010 budget, Saudi Arabia boosted the by KSA and the UAE 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 Exhibit 75: Comparison of RoE and P/E of GCC companies, 2007–2009 companies, 2009 (USD mn) (%)

8,000 30

7,000 20

6,000 10

5,000 0

4,000 0 5 10 15 20 25 30 35 40 45 50 -10

3,000 ROE (%) -20 P/E (x) 2,000 -30 1,000 -40 0 2007 2008 2009 -50 KSA Kuwait Qatar UAE KSA Kuwait Qatar UAE

Source: Zawya, NCBC Research Source: Zawya, NCBC Research The companies list is not exhaustive. Size of the bubble represents market cap. as on 31 Dec 2009

KSA will need to increase The Energy and Utilities sector currently constitutes two listed companies — Saudi its power generating Electricity Company (SEC) and National Gas and Industrialization Co. (NGIC). Saudi capacity from 38 GW in Electricity is one of the heavyweights in the overall market, SEC comprises 2% of 2009 to 60 GW in 2023, free float. according to ECRA 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.

Exhibit 76: Sector details % weight in index Net margin Avg. ROE (%), Stock as on Dec 2009* (%), 2009 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

JUNE 2010 THE SAUDI FACTBOOK 104 ENERGY & UTILITIES

Exhibit 77: Revenues of companies, 2007-09 Exhibit 78: Profitability of companies, 2007-2009 (SR mn) (%)

26,000 1,600 14%

11% 1,500 24,000 8% 1,400 22,000 5% 1,300 2%

20,000 1,200 -1%

-4% 18,000 1,100 2007 2008 2009 2007 2008 2009 SECO NGIC (RHS) SECO NGIC

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

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.

Exhibit 79: Coverage stocks details Stock Current Rating PT (SR) Comments Saudi Electricity Overweight 18.5 The change in tariffs for certain end customer segments will generate an (5110.SE) 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.

Source: NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 105 ENERGY AND UTILITIES

Not Covered GASCO

Current Price (SR) 20.1 National Gas & Industrialization Company (GASCO) was established in

Pricing / Valuation as on June 13, 2010 1963 through the merger of two companies. GASCO is engaged in various activities, including filling, refilling and distributing liquefied Stock details petroleum gas (LPG); designing and executing gas networks; and selling 52-week range H/L (SR) 24.8/19.0 and installing gas tanks and cylinders. Market cap ($mn) 401.9  Shares outstanding (mn) 75.0 Business brief: GASCO sells LPG gas cylinders across KSA (in sizes of 26.5 Price perf. (%) 1M 3M 12M and 52.5 liters). The company also provides various types of gas tanks and Absolute (6) (9) (14) related accessories. About 350 carriers of GASCO have a capacity of 40,000 Market (6) (5) 3 liters each, while the remaining 42 have a capacity ranging from 11,000– Sector 15 4 24 23,000 liters. The filling plants of the company are located in Riyadh, Avg daily turn.(mn) SR US$ 3M 1.8 0.5 Jeddah, Dammam, Al Madinah, Taif, Bureidah, and Khamis Mushait. The 12M 2.6 0.7 company also designs and implements gas networks for retail and industrial Raw Beta 6m 2yr customers. 0.32 0.68  Financials: On a YoY basis, GASCO’s sales increased 4.2% in 1Q10, while Reuters code 2080.SE Bloomberg code NGIC AB net income rose 29.6% on account of a rise in investment income. However, Website www.gasco.com.sa 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 Weighting & free float (%) 1Q10. TASI (free float weight) 0.21 Free float 68.19  Recent developments: On 31 January 2010, GASCO announced that it had

Valuation multiples signed contracts worth SR149mn, which would raise production by 10% at 08 09 TTM its seven plants. These contracts have a term of three years. P/E (x) 10.1 N/M N/M P/B (x) 1.6 1.5 1.5 Company financials P/Sales (x) 1.0 1.0 1.0 YoY CAGR (%) Div yield (%) 7.5 2.5 N/M 20072008 2009 1Q10 (%) (07-09) DPS 1.5 0.5 N/M Net Revenues SRmn 1,392 1,471 1,546 406 4.2 5.4 EBITDA SRmn Source: NCBC Research 151 115 136 28.5 (12.8) (5.2) Net Income SRmn 139 149 -59 16 29.6 N/M Share price performance Assets SRmn 1,494 1,297 1,344 1,401 1.7 (5.1) 7,000 25 Equity SRmn 1,101 941 991 1,030 19.3 (5.1) 23 6,500 Total Debt SRmn ----N/MN/M 21 6,000 Cash & Equiv SRmn 19 133 262 262 (0.7) 268.3 19 5,500 17 EBITDA Mgn % 10.8 7.8 8.8 7.0 - - 5,000 15 Net Mgn % 10.0 10.1 (3.8) 4.0 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 ROE % 13.3 14.6 (6.1) 6.4 - - TASI Gas&Industrialization (RHS) ROA % 10.0 10.7 (4.5) 4.7 - - Source: Bloomberg Div Payout % 83.3 75.4 N/M - - Top 5 shareholders (%) EPS SR 1.8 2.0 (0.8) 0.2 29.4 N/M BVPS SR Saeed Ali Ghadran Al Ghamdi 11.9 14.6 12.6 13.2 13.7 19.3 (4.8) Public Investment Fund 10.9 Source: Tadawul, Zawya, Company, NCBC Research

General Organization for 6.1 Social Insurance

Source: Tadawul, NCBC Research

JUNE 2010 NATIONAL GAS & INDUSTRIALIZATION COMPANY 106

ENERGY AND UTILITIES

Overweight Also known as Saudi Electricity SEC

Target Price (SR) 18.5 Saudi Electricity Company (Saudi Electricity) is the largest power generator in Saudi Arabia. Established in 2000, the company is engaged Price (SR) 13.1 in the generation, transmission and distribution of electric power across Pricing / Valuation as on June 13, 2010 the Kingdom. Saudi Electricity was formed through the consolidation of 10 regional electricity companies. Stock details 52-week range H/L (SR) 13.9/9.3 • Business brief: Saudi Electricity retains a monopoly on the transmission Market cap ($mn) 14,496.1 and distribution of electricity in the Kingdom and a near monopoly on Shares outstanding (mn) 4,166.6 generation. The company also exports and imports energy, and invests in Price perf. (%) 1M 3M 12M various Saudi power projects. Saudi Electricity had a total available capacity Absolute 18 12 39 of 43,500 MW at the end of 2009. Market (6) (5) 3 Sector 15 424 • Financials: Due to rising demand for electricity, the company’s revenues Avg daily turn.(mn) SR US$ increased by 11.7% YoY to SR4.6bn and EBITDA grew by 20.2% YoY to 3M 51.5 13.7 12M 31.5 8.4 SR1,046mn in 1Q10. However, the company reported a net loss of SR782mn Raw Beta 6m 2yr in 1Q10 compared to a loss of SR771 in 1Q09. The larger loss was mainly 0.24 0.49 due to an increase in the cost of purchased of power from independent Reuters code 5110.SE producers. Bloomberg code SECO AB Website www.se.com.sa • Recent developments: In June 2010, Saudi Electricity received approval for a change in power tariffs for the government, commercial and industrial Weighting & free float (%) sectors, which will be implemented from 1 July 2010. The increase in tariff TASI (free float weight) 1.9 structure could result in additional revenues of SR3.2bn, according to the Free float 17.18 company. NCB Capital expects most of the incremental revenues to flow Valuation multiples straight to the bottom line, resulting in an increase in net income to SR4.2bn 08 09 10E in 2011e, from SR2.3bn in 2010e (which will include 6 months of the P/E (x) 49.2 46.5 23.6 adjusted tariffs) and SR1.2bn in 2009. P/B (x) 1.1 1.1 1.1

P/Sales (x) 2.4 2.3 2.1 Company financials Div yield (%) 5.4 5.4 5.4 YoY CAGR (%) DPS 0.7 0.7 0.7 20082009 2010E 2011E (%) (08-11E) Source: NCBC Research estimates Net Revenues SRmn 22,289 23,851 26,486 29,811 7.0 10.2 Share price performance EBITDA SRmn 7,625 8,327 10,107 12,846 9.2 19.0

7,000 14 Net Income SRmn 1,104 1,170 2,300 4,205 5.9 56.1 13 6,500 Assets SRmn 145,382 166,091 185,409 208,895 14.2 12.8 12 6,000 11 Equity SRmn 48,553 49,175 50,927 54,585 1.3 4.0 10 5,500 9 Total Debt SRmn 10,204 19,340 30,517 47,449 89.5 66.9 5,000 8 Cash & Equiv SRmn 1,232 3,883 2,119 2,385 215.2 24.6 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10

TASI Saudi Electricity (RHS) EBITDA Mgn % 34.2 34.9 38.2 43.1 - - Net Mgn % 5.0 4.9 8.7 14.1 - - Source: Bloomberg ROE % 2.3 2.4 4.6 8.0 - - Top 5 shareholders (%) ROA % 0.8 0.8 1.3 2.1 - - Div Payout % 259.3 250.0 127.3 69.3 - - Government of Saudi Arabia 74.3 EPS SR 0.3 0.3 0.6 1.0 3.7 55.2 ARAMCO 6.9 BVPS SR 11.7 11.8 12.2 13.1 1.3 4.0

Source: Tadawul, Zawya, Company, NCBC Research estimates

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI ELECTRICITY COMPANY 107 Telecom / IT

Ticker Company Page No.

7010 Saudi Telecom 113

7020 Etihad Etisalat 114

7030 Zain KSA 115

7040 Etihad Atheeb 116

JUNE 2010 THE SAUDI FACTBOOK 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.

Saudi Arabia’s large young KSA’s fixed line penetration has stagnated around 16-17% as more users migrated and growing population to mobiles and corporate demand has remain subdued due to the global economic base is a key driver for the downturn. Fixed line subscribers grew a meager 1% to an estimated 4.2mn in Telecom sector 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.

JUNE 2010 THE SAUDI FACTBOOK 109 TELECOM

Exhibit 80: Fixed-line and mobile penetration rate Exhibit 81: Broadband & internet penetration rate (%) (%)

17% 200% 9% 50%

160% 40% 16% 6% 120% 30% 16% 80% 20% 7 3% 16% 40% 10%

15% 0% 0% 0% 2003 2004 2005 2006 2007 2008 2009 2003 2004 2005 2006 2007 2008 2009

Fixed-line Mobile (RHS) 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 Exhibit 83: GCC Telcos RoE and P/E comparison, 2009 (USD mn) (%)

16,000 40

14,000 32 12,000

10,000 24 8,000 16

6,000 ROE (%)

4,000 8 2,000 P/E (x) 0 0 2007 2008 2009 6 8 10 12

Oman Bahrain UAE KSA Kuwait Qatar KSA Qatar UAE Kuwait Oman Bahrain

Source: Reuters Source: Reuters, NCBC Research The companies list is not exhaustive. 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.

Exhibit 84: Sector details % weight in Index Net margin (%) Avg. RoE as on Dec 2009 2009 (%), 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

JUNE 2010 THE SAUDI FACTBOOK 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 Exhibit 86: Profitability of companies, 2005-2008 (SR mn) (%)

72,000 42

60,000 35

48,000 28

36,000 21

24,000 14

12,000 7

0 0 2007 2008 2009 2007 2008 2009 STC Mobily Zain KSA 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 (%) (%)

40 40

36 36

Mobily 32 32 STC ROE (%)

28 ROE (%) 28

STC 24 Mobily 24 P/B (x) P/B (x) 20 20 12341234

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

JUNE 2010 THE SAUDI FACTBOOK 111 TELECOM

Exhibit 89: Avg. daily turnover, Jan09 – Mar10 Exhibit 90: Share price movement, Jan09 – Mar10 (SR mn) Rebased to 100 on 1st Jan-09

125 200

100 150

75 100

50 50

25 0 Jan-09 Jun-09 Oct-09 Mar-10 0 STC Mobily Zain Atheeb STC Mobily Zain Atheeb

Source: Bloomberg, Tadawul Source: Bloomberg, Tadawul

The Saudi Arabia Telecommunication Sector is experiencing intense competition Relatively unexplored broadband and value- brought on by the entry of new players. Further reforms will likely attract more new added services are likely entrants into the market and add to competition. The drive for market share gains engines for growth 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.

JUNE 2010 THE SAUDI FACTBOOK 112 TELECOM

Not Covered Also known as Saudi Telecom STC

Current Price (SR) 38.0 Saudi Telecom (STC) was established in 1998 as Saudi Arabia’s then sole

Pricing / Valuation as on June 13, 2010 telecom operator and is a leading national telecom service provider in the Kingdom. STC mainly provides landline, mobile, and data services. Stock details Apart from Saudi Arabia, the group operates in Kuwait, Indonesia, the 52-week range H/L (SR) 57.3/34.0 UAE, and Malaysia. STC also holds stakes in telecom operators in Turkey, Market cap ($mn) 20,261.6 South Africa, India and Bahrain. Shares outstanding (mn) 2,000.0 Price perf. (%) 1M 3M 12M  Business brief: STC classifies its operating segments in terms of the Absolute (6) (12) (26) service offerings, i.e., GSM, PSTN, and DATA. The GSM segment includes Market (6) (5) 3 mobile, 3G, prepaid cards, international roaming and messaging services, Sector (3) (5) (5) while PSTN services comprise fixed line, card telephones, interconnect and Avg daily turn.(mn) SR US$ 3M 50.2 13.4 international call services. DATA services consist of leased data 12M 40.2 10.7 transmissions, DSL and Internet services. Raw Beta 6m 3yr  Financials: STC has shown continued revenue growth through 2009, 1.05 0.79 Reuters code 7010.SE however increasing competition in the Kingdom has led to margin pressure Bloomberg code STC AB with net income falling nearly 5% from 2007 to 2009. The weakness has Website www.stc.com.sa continued in 1Q10 as EBITDA margins contracted 685 basis points from

Weighting & free float (%) 46.2% in 1Q09 to 39.4% in 1Q10 due to a decline in international call prices, TASI (free float weight) 2.48 rise in fees related to external networks and expenses owing to capital Free float 16.29 investments.

Valuation multiples  Recent developments: In April 2010, Mr. Ghassan Hasbani, CEO, 08 09 TTM announced plans for a series of acquisitions in Africa, India and other Asian P/E (x) 6.9 7.0 7.5 countries as part of the group’s international expansion drive. In May 2010, P/B (x) 2.0 1.8 1.8 STC appointed Cisco Technology Solutions to introduce managed data center P/Sales (x) 1.6 1.5 1.5 services in the Saudi market. Div yield (%) 9.9 7.9 7.9

Source: NCBC Research Company financials Share price performance YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) 7,000 60 Net Revenues SRmn 34,458 47,469 50,780 12,520 3.1 21.4 6,500 50 6,000 40 EBITDA SRmn 16,716 21,743 20,612 4,927 (12.2) 11.0 5,500 30 Net Income SRmn 12,022 11,038 10,863 1,772 (28.8) (4.9) 5,000 20 Assets SRmn 68,811 99,762 109,587 111,116 9.2 26.2 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 TASI STC (RHS) 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 Source: Bloomberg Cash & Equiv SRmn 7,618 8,061 7,710 7,257 (19.5) 0.6

Top 5 shareholders (%) EBITDA Mgn % 48.5 45.8 40.6 39.4 - - Net Mgn % 34.9 23.3 21.4 14.2 - - Public Investment Fund 70.0 ROE % 34.3 30.0 27.3 16.8 - - General Organization for 7.0 Social Insurance - Saudi ROA % 20.9 13.1 10.4 6.4 - - Arabia Div Payout % 83.2 67.9 55.2 84.6 - - Public Pension Authority 6.6 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

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI TELECOM COMPANY 113 TELECOM

Not Covered Also known as Etihad Etisalat Mobily

Current Price (SR) 49.8 UAE based Emirates Telecommunications Corporation (Etisalat)

Pricing / Valuation as on June 13, 2010 established Etihad Etisalat Company (Mobily), the second largest mobile operator in Saudi Arabia, in 2004. Mobily commenced operations in Stock details 2005, providing public wireless telecommunication services. 52-week range H/L (SR) 53.3/33.1  Market cap ($mn) 9,293.7 Business brief: Mobily offers mobile telephony services in the Kingdom Shares outstanding (mn) 700.0 using GSM, 3/3.5G and Wimax technologies. Mobily markets its products Price perf. (%) 1M 3M 12M through four functional lines – channel distribution, corporate & VIP sales, Absolute (1) 7 46 flagship stores, and commercial support. As of December 2009, the Market (6) (5) 3 company’s mobile subscriber base stood at 18.2mn. Sector (3) (5) (5) Avg daily turn.(mn) SR US$  Financials: Mobily has shown very strong growth since its operational start 3M 51.8 13.8 in 2005, with 2009 revenues increasing to SR13bn from SR8.4bn in 2007 12M 47.1 12.6 (24.4% annual growth). Net income has risen at an even faster pace, Raw Beta 6m 3yr increasing to SR3bn in 2009 from SR1.4bn in 2007 as the company was able 0.77 0.81 Reuters code 7020.SE to leverage its growing customer base and built out its mobile network. Bloomberg code EEC AB Growth in 1Q10 has remained strong with revenues increasing 27.4% YoY to Website www.mobily.com.sa SR3.6bn and net margins expanded from 17.1% in 1Q09 to 19.9% in 1Q10.

Weighting & free float (%)  Recent developments: In June 2010, Mobily announced its plans to spend TASI (free float weight) 4.07 SR2.5bn in 2010 on capex with an aim to execute expansion plans and Free float 58.48 capture higher market share. The company also announced a new 5-year

Valuation multiples strategy aimed at strengthening its leadership position in broadband services 08 09 TTM applications across the Middle East and North Africa. On 18 January 2010, P/E (x) 16.7 11.6 10.7 Mobily announced a cash dividend of SR1.25 per share for 2009. P/B (x) 3.6 2.8 2.9 P/Sales (x) 3.2 2.7 2.5 Company financials Div yield (%) 1.5 2.5 NA YoY CAGR (%) Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 8,440 10,795 13,058 3,581 27.4 24.4 Share price performance EBITDA SRmn 3,239 3,794 4,837 1,180 29.9 22.2 7,000 55 Net Income SRmn 1,380 2,092 3,014 714 48.7 47.8 6,500 45 Assets SRmn 19,881 27,192 30,926 33,358 18.4 24.7 6,000 35 5,500 Equity SRmn 5,913 9,754 12,243 12,082 24.4 43.9 5,000 25 Total Debt SRmn 8,923 9,790 8,595 9,121 (7.5) (1.9) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn 703 1,264 933 2,139 228.6 15.2 TASI M obily (RHS) EBITDA Mgn % 38.4 35.1 37.0 32.9 - -

Source: Bloomberg Net Mgn % 16.3 19.4 23.1 19.9 - - ROE % 26.4 26.7 27.4 23.5 - - Top 5 shareholders (%) ROA % 7.3 8.9 10.4 8.9 - - Etisalat – UAE 27.4 Div Payout % 18.1 18.8 29.0 - - General Organization for 11.2 EPS SR 2.8 4.0 4.3 1.0 47.8 25.0 Social Insurance - Saudi Arabia BVPS SR 11.8 13.9 17.5 17.3 24.4 21.6

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 ETIHAD ETISALAT COMPANY 114114 TELECOM

Not Covered Also known as Zain KSA ZAIN

Current Price (SR) 9.0 Mobile Telecommunications Company Saudi Arabia (ZAIN KSA), a

Pricing / Valuation as on June 13, 2010 member of Mobile Telecommunications Group (Zain), Kuwait, was established in 2007 in Saudi Arabia to provide wireless Stock details telecommunications services. 52-week range H/L (SR) 13.3/8.5  Market cap ($mn) 3,340.5 Business brief: ZAIN KSA is the third mobile operator in KSA, offering both Shares outstanding (mn) 1,400..0 voice and data services. The company launched commercial services in Price perf. (%) 1M 3M 12M August 2008 and had 6mn active subscribers by the end of 2009. The Absolute 3 (8) (32) company is targeting to reach 7.5mn subscribers by the end of 2010. ZAIN Market (6) (5) 3 KSA plans to build its own network by 2010 and has targeted a positive Sector (3) (5) (5) EBITDA for the year. Avg daily turn.(mn) SR US$ 3M 67.6 18.0  Financials: ZAIN KSA first recorded revenues in 2008 and has quickly 12M 60.8 16.2 expanded, reaching SR3bn in 2009. However, high D&A expenses due to the Raw Beta 6m 3yr cost of its telecom license (SR22.9bn) and for its large network build-out 0.25 0.81 Reuters code 7030.SE have kept the company in net losses, reaching SR3.1bn in 2009. For 1Q10, Bloomberg code EEC AB the company recorded revenues of SR1.1bn, however, incurred a loss of Website www.sa.zain.com SR70.3mn and SR662.4mn at the EBITDA and net-income levels,

Weighting & free float (%) respectively. TASI (free float weight) 1.12  Recent developments: In June 2010, the company announced that it will Free float 44.99 be reducing its capital to cover some or all of its accumulated losses which

Valuation multiples reached nearly SR6bn by 1Q10. We believe this will ultimately allow the 08 09 TTM company to reduce its share count while maintaining par value, with the aim P/E (x) NM NM NM of eventually raising further capital. P/B (x) 1.1 1.5 1.6 P/Sales (x) 24.8 4.2 3.6 Company financials Div yield (%) NA NA NA YoY CAGR (%) Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn - 505 3,004 1,094 88.1 - Share price performance EBITDA SRmn - (1,265) (990) (70) N/M - 7,000 15 Net Income SRmn - (2,278) (3,099) (662) N/M - 6,500 13 11 Assets SRmn - 26,665 27,830 27,661 1.7 - 6,000 9 5,500 7 Equity SRmn - 11,722 8,622 7,960 (27.3) - 5,000 5 Total Debt SRmn - 13,176 14,560 14,596 7.4 - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn - 583 506 474 62.7 - TASI Zain (RHS) EBITDA Mgn % - N/M (33.0) (6.4) - -

Source: Bloomberg Net Mgn % - N/M (103.2) (60.5) - - ROE % - (19.4) (30.5) (32.0) - - Top 5 shareholders (%) ROA % - (8.5) (11.4) (9.6) - - Mobile Telecommunications 25.0 Div Payout % ------Company EPS SR - (1.6) (2.2) (0.5) N/M - Faden Commercial & Real 6.8 Estate Establishment BVPS SR - 8.4 6.2 5.7 (27.3) - Saudi Plastics 6.8 Source: Tadawul, Zawya, Company, NCBC Research

Public Pension Authority 5.0

Source: Tadawul, NCBC Research

JUNE 2010 ZAIN KSA 115 TELECOM

Not Covered Also known as Etihad Atheeb ATHEEB

Current Price (SR) 15.8 Etihad Atheeb Telecommunications Company (ATHEEB) was established

Pricing / Valuation as on June 13, 2010 in 2008 to provide fixed and wireless telecommunications services in KSA. The company is a joint venture between KSA-based Atheeb Trading Stock details Co., Al-Nahla Trading Co. and Traco Group and Bahrain Telecom. 52-week range H/L (SR) 20.5/14.4  Market cap ($mn) 419.9 Business brief: ATHEEB was set up to build, operate and maintain the Shares outstanding (mn) 100.0 second fixed line telecommunication network in Saudi Arabia. The company Price perf. (%) 1M 3M 12M aims to provide innovative and high technology solutions, such as video Absolute (5) (9) (17) services, Internet telephony, and broadband Internet, apart from voice Market (6) (5) 3 telephone communications and data services. ATHEEB obtained a fixed Sector (3) (5) (5) telephony license for SR5mn and a 3.5GHz mobile frequency spectrum for Avg daily turn.(mn) SR US$ 3M 12.2 3.3 SR520mn. 12M 31.9 8.5  Financials: In 1Q 2010, the company generated SR35.4mn in revenues. Raw Beta 6m 3yr However, high operational costs resulted in a negative EBITDA of SR309mn 0.841 N/A Reuters code 7040.SE and a net loss of SR379mn. As the company has just launched operations, Bloomberg code EAT AB profitability is likely to suffer as revenues ramp up and the company Website www.go.com.sa establishes its network and customer base.

Weighting & free float (%)  Recent developments: On 14 June 2010, ATHEEB announced that it’s CEO, TASI (free float weight) 0.11 Raed Kayyal had resigned after it accumulated losses approximately equal to Free float 35.0 40% of its capital, in its first year of business. The outgoing CEO will be

Valuation multiples replaced by Ahmad Abbas Sindi. On 23 January 2010, ATHEEB officially 08 09 2010 expanded its 4G network in the Eastern region to include Al Hafouf City and P/E (x) N/A N/A NM Al Qatif City. It had earlier launched its nomadic 4G network in the Kingdom P/B (x) N/A N/A 2.5 in November 2009. P/Sales (x) N/A N/A 44.4

Div yield (%) N/A N/A - Company financials* Source: NCBC Research YoY CAGR (%) Share price performance 20072008 2009 2010 (%) (07-10) Net Revenues SRmn - - - 35 - - 7,000 19 EBITDA SRmn - - - (309) - - 6,500 17 6,000 Net Income SRmn - - - (379) - - 5,500 15 Assets SRmn - - - 2,114 - - 5,000 13 Equity SRmn - - - 621 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Total Debt SRmn - - - N/A - - TASI Atheeb (RHS) Cash & Equiv SRmn - - - 77 - -

Source: Bloomberg EBITDA Mgn % - - - N/M - - Net Mgn % - - - N/M - - Top 5 shareholders (%) ROE % - - - N/M - - Atheeb Group 16.1 ROA % - - - N/M - - Bahrain Telecom 15.0 Div Payout % ------Al Nahla Group 13.7 EPS SR - - - (3.8) - - Traco Group 5.8 BVPS SR - - - 6.2 - -

Source: Tadawul, Zawya, Company, NCBC Research *Financial Year End March Source: Tadawul, NCBC Research

JUNE 2010 ETIHAD ATHEEB TELECOMMUNICATIONS COMPANY 116 Industrial Investment

Ticker Company Page No.

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

JUNE 2010 THE SAUDI FACTBOOK 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 Exhibit 92: Comparison of ROE and P/E of GCC companies, 2007–09 companies, 2009 (USD mn) (%)

7,000 60

6,000 50 5,000 40 4,000

3,000 30 ROE (%) 2,000 20 1,000 P/E (x) 10 0 0 4 8 12 16 20 2007 2008 2009

KSA Qatar Kuwait 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.

Exhibit 93: Sector details % weight in Index as on Net Margin ROE (%) Company Dec 2009 (%) 2009 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 0.20 16.3 8.6 Appliances Corp. (SPIMACO) 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. 0.28 16.9 13.0 (ALABDUL) Saudi Industrial Export Co. 0.03 N/M N/M

Bloomberg, Tadawul: Company data; ** This company was listed in 2010

Sector revenue declined to SR7bn in 2009 due to reduced competitiveness and lower sales volumes. Maaden reported the largest increase in revenue (from a

JUNE 2010 THE SAUDI FACTBOOK 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

Exhibit 94: Revenue of companies, 2007–2009 Exhibit 95: Profitability of companies, 2007–2009 (SR mn) (%)

7,500 50 30 6,000 10 -10 4,500 2007 2008 2009 -30 3,000 -50 -70 1,500 -90 0 -110 2007 2008 2009 SPIMACO SCCO SPM ALABDUL SPIMACO SCCO SPM ALABDUL ASTRA MAADEN Others ASTRA MAADEN Others

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

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.

Exhibit 96: Comparison of P/B and ROE, 2008 Exhibit 97: Comparison of P/B and RoE, 2009 (%) (%)

30 40

25 30 20 20 15 ROE (%)

10 ROE (%) 10 5 P/B (x) P/B (x) 0 0 0246 -20246 -5 -10

SPIMACO ZOUJAJ NMMCC SCCO ZOUJAJ FIPCO NMMCC SCCO SPM ALABDUL SIECO ASTRA SPM ALABDUL SIECO MAADEN MAADEN BCI FIPCO BCI ASTRA SPIMACO

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

NCBC Recommendations in the Sector We currently have coverage of Maaden in the sector.

Exhibit 98: Coverage stocks details Stock Current Rating PT (SR) Comments Maaden Underweight 15.3 Concerns regarding long term reserves exists despite the higher gold price. (1211.SE) 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.

Source: NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 119 INDUSTRIAL INVESTMENT

Not Covered Also known as Basic Chemical BCI

Current Price (SR) 29.9 Basic Chemical Industries (BCI), incorporated in 1973, is engaged in the

Pricing / Valuation as on June 13, 2010 production and sale of chemicals through its subsidiaries, which include Saudi Water Treatment; Arabian Polyol; National Adhesive; Basic Stock details Chemicals National; and Chemical Marketing and Distribution. 52-week range H/L (SR) 33.9/25.2  Market cap ($mn) 219.2 Business brief: BCI produces a variety of chemicals such as liquefied Shares outstanding (mn) 27.5 chlorine gas, hydrochloric acid, caustic soda, polyurethane (polyol), Price perf. (%) 1M 3M 12M adhesives, calcium chloride, water treatment chemicals, laundry and Absolute 0 (2) 7 janitorial products. The company’s plant, located in the First Industrial Zone Market (6) (5) 3 in Dammam city, has an annual production capacity of 71,560 tons of gases Sector (9) (8) (4) per year. Avg daily turn.(mn) SR US$ 3M 8.4 2.2  Financials: BCI’s revenues grew 3.6% YoY to SR135mn in 1Q10. The 12M 15.2 4.1 EBITDA margin expanded to 20.8% in 1Q10 versus 18.6% in 1Q09. In Raw Beta 6m 3yr absolute terms, EBITDA grew 15.9% YoY to SR28mn this quarter. In 0.67 1.09 Reuters code 1210.SE addition, net income increased 22.9% YoY to SR16mn.

Bloomberg code BCI AB  Recent developments: In April 2010, BCI’s shareholders approved a cash Website www.bci.com.sa dividend of SR1.5 per share for the year 2009. In August 2009, the Weighting & free float (%) shareholders approved a 25% increase of its capital from SR220mn to TASI (free float weight) 0.13 SR275mn by issuing one bonus share for every four shares held. Free float 78.6 Company financials Valuation multiples YoY CAGR (%) 08 09 TTM 20072008 2009 1Q10 (%) (07-09) P/E (x) 20.7 13.1 12.5 Net Revenues SRmn 424 494 509 135 3.6 9.5 P/B (x) 2.7 2.3 2.2 EBITDA SRmn 92 95 112 28 15.9 10.6 P/Sales (x) 1.7 1.6 1.6 Net Income SRmn 48 40 63 16 22.9 13.7 Div yield (%) 1.7 3.3 N/A Assets SRmn 516 531 570 614 10.7 5.1 Source: NCBC Research Equity SRmn 285 305 354 370 16.6 11.5 Share price performance Total Debt SRmn 108 93 60 52 (38.8) (25.7) Cash & Equiv SRmn 37 35 114 145 115.4 74.5 7,000 35 EBITDA Mgn % 21.6 19.3 22.0 20.8 - - 6,500 30 6,000 Net Mgn % 11.4 8.0 12.3 11.8 - - 25 5,500 ROE % 17.8 13.4 19.0 17.6 - - 5,000 20 ROA % 9.7 7.6 11.4 10.7 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Div Payout % 0.0 0.0 65.8 0.0 - - TASI BCI (RHS) EPS SR 1.8 1.4 2.3 0.6 22.9 1.8 Source: Bloomberg BVPS SR 10.4 11.1 12.9 13.5 16.6 (0.3)

Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research Ali Al Abdullah Al Tamimi Co. 22.0 Abdul Aziz Muhana Abdul Aziz 9.1 Almoaibed Abdullah Muhana Abdul Aziz 8.4 Almoaibed Mohammed & Abdul Rahman 7.0 Al Saad Al Buwardi Co. Nour Mehanna Abdulaziz 5.0 Almaibd

Source: Tadawul, NCBC Research

JUNE 2010 BASIC CHEMICAL INDUSTRIES 120

INDUSTRIAL INVESTMENT

Underweight Also known as Saudi Arabian Mining MAADEN

Target Price (SR) 15.3 Saudi Arabian Mining Company (Ma’aden), established in 1997, is engaged in the exploration and production of metal and non-metal ores. Price (SR) 17.5 The company owns five operating precious metal extraction mines and a Pricing / Valuation as on June 13, 2010 number of new projects. In July 2008, Ma’aden went public and raised SR9.2bn, reducing the government’s holding from 100% to 55%. Stock details 52-week range H/L (SR) 21.8/13.9 • Business brief: Ma’aden currently has 2 business lines, gold mining and Market cap ($mn) 4,303.3 Maaden Phosphate Company (MPC), which is a SR17bn project to set up a Shares outstanding (mn) 925.0 diammonium phosphate (DAP) producer (scheduled to begin trial production Price perf. (%) 1M 3M 12M in 4Q10 and commercial in 2Q11). The company is also in the process of Absolute (12) (3) (4) Market (6) (5) 3 setting up a SR40bn integrated aluminum plant in a JV with Alcoa. Sector (9) (8) (4) • Financials: In 1Q10, Ma’aden’s revenues declined 4.2% YoY to SR153.5mn. Avg daily turn.(mn) SR US$ However, due to the decrease in COGS and increase in prices of commodities 3M 153.1 40.8 12M 113.4 30.2 in the quarter, the company posted 7.5% growth in EBITDA to SR44.1mn Raw Beta 6m 3yr over that in 1Q09. Net income grew 11.8% YoY to SR20.6mn. 2009 net 1.49 NA income showed strong growth to SR395mn versus SR203mn in 2008, but we Reuters code 1211.SE note that SR300mn of this was due to a non-recurring payment from Alcoa Bloomberg code MAADEN AB for setting up the aluminum project. Website www.maaden.com.sa • Recent developments: In June 2010, Ma’aden and US-based Alcoa Weighting & free float (%) initiated work on construction of the world’s largest fully integrated TASI (free float weight) 1.18 Free float 36.09 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 Valuation multiples smelter and rolling mill are scheduled to commence operations in 2013, 08 09 10E while the mine and refinery are planned to go live in 2014. In April 2010, P/E (x) 79.4 40.9 32.8 P/B (x) 1.0 1.0 0.9 Ma’aden increased its share in the joint venture from 60.0% to 74.9%, the P/Sales (x) 35.1 25.4 17.8 rest being held by Alcoa. Div yield (%) -- -

Source: NCBC Research estimates Company financials 08-09 CAGR (%) Share price performance 20082009 2010E 2011E (%YoY) (08-11)

7,000 25 Net Revenues SRmn 460 634 906 2,795 37.9 82.5 6,500 20 EBITDA SRmn 1 153 476 1,307 12,363.8 921.3 6,000 Net Income SRmn 203 395 492 223 94.1 3.1 15 5,500 Assets SRmn 21,358 29,230 32,579 33,923 36.9 16.7 5,000 10 Jun-09 Oct-09 Feb-10 Jun-10 Equity SRmn 16,188 16,582 17,442 17,726 2.4 3.1

TASI MA'ADEN (RHS) 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) Source: Bloomberg EBITDA Mgn % 0.3 24.1 52.5 46.8 - - Top 5 shareholders (%) Net Mgn % 44.2 62.2 54.3 8.0 - - Public Investment Fund 50.0 ROE % 1.9 2.4 2.9 5.1 - - General Organisation for 8.2 ROA % 1.5 1.6 1.6 2.7 - - Social Insurance (GOSI) Div Payout % ------Public Pension Agency 6.0 EPS SR 0.4 0.4 0.5 0.2 13.2 - BVPS SR 17.5 17.9 18.9 19.2 2.5 -

Source: Tadawul, Zawya, Company, NCBC Research estimates

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI ARABIAN MINING COMPANY 121 INDUSTRIAL INVESTMENT

Not Covered Also known as Astra Industrial AIG, Astra

Current Price (SR) 39.4 Astra Industrial Group (Astra) operates in the healthcare, chemical,

Pricing / Valuation as on June 13, 2010 engineering, agricultural and home furnishing industries. Its subsidiaries are Tabuk Pharmaceutical Manufacturing Co., Astra Polymer Stock details Compounding, Astra Industrial Complex Co, International Building 52-week range H/L (SR) 43.0/30.7 Systems Factory Co, and Arabian Co. for Comforts & Pillows. Market cap ($mn) 778.5 Shares outstanding (mn) 74.1  Business brief: Astra’s broad product portfolio includes a range of generic Price perf. (%) 1M 3M 12M and under-licensed pharmaceutical products; additives and compounds used Absolute 10 (5) 22 in the production of plastic products; fertilizers, agricultural pesticides, Market (6) (5) 3 insecticides and fungicides; pillows, bed sheets, and mattress pads. The Sector (9) (8) (4) group also constructs metal-based pre-engineered industrial buildings and Avg daily turn.(mn) SR US$ 3M 11.5 3.1 steel structures. 12M 11.7 3.1  Financials: In 1Q10, Astra’s revenues grew 18.6% YoY to SR292mn. The Raw Beta 6m 1yr company’s EBITDA grew a modest 3.2% YoY to SR55mn, a margin of 18.9%. 0.97 0.83 Reuters code 1212.SE The company’s net income, however, grew 17.6% YoY to SR58mn. The Bloomberg code ASTRA AB strong recovery can be ascribed to growth in other income to SR10.6mn in Website www.astraindustrial.com.sa 1Q10 from SR2.8mn in 1Q09.

Weighting & free float (%)  Recent developments: In March 2010, Astra’s shareholders approved a TASI (free float weight) 0.18 cash dividend of SR1.25 per share for the year 2009. In November 2009, Free float 31.11 Astra completed legal proceedings to buy a 51% stake in Al Maseera

Valuation multiples International Co's Jordan-based steel unit for SR225mn. The unit is expected 08 09 TTM to commence operations in 2010 and contribute to Astra’s financial earnings P/E (x) 15.8 14.3 13.7 in 2011. P/B (x) 2.0 1.9 1.9 P/Sales (x) 2.9 2.8 2.7 Company financials Div yield (%) 1.3 3.2 - YoY CAGR (%) Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 850 991 1042 292 18.6 10.7 Share price performance EBITDA SRmn 216 199 197 55 3.2 (4.4) 7,000 45 Net Income SRmn 197 184 205 58 17.6 2.0 6,500 40 Assets SRmn 1,120 1,743 2,076 2,601 50.5 36.1 6,000 35 Equity SRmn 828 1,437 1,570 1,526 3.1 37.7 5,500 30 5,000 25 Total Debt SRmn 44 2 0 480 N/M (100.0) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn 43 525 462 50 (91.2) 229.2 TASI A stra Indust (RHS) EBITDA Mgn % 25.4 20.0 19.0 18.9 - -

Source: Bloomberg Net Mgn % 23.2 18.6 19.7 19.8 - - ROE % 26.7 16.3 13.6 15.0 - - Top 5 shareholders (%) ROA % 19.3 12.9 10.7 9.9 - - Arab Supply and Trading 43.8 Div Payout % - 20.1 45.3 - - Corporation EPS SR 3.1 2.6 2.8 0.8 18.2 (6.1) Mohammed Nejir Saqer Al 8.0 Utaibi BVPS SR 13.1 19.4 21.2 20.6 3.1 27.0

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 ASTRA INDUSTRIAL GROUP 122 INDUSTRIAL INVESTMENT

Not Covered Also known as Al Sorayai Trading Al Soroyai

Current Price (SR) 26.1 Al Sorayai Trading Industrial Group (Al Soroyai), established in 1985, is

Pricing / Valuation as on June 13, 2010 engaged in the wholesale and retail trading of carpets, rugs, floorings, furnitures, blankets, curtain fabrics and related materials. The company Stock details exports products to almost 65 countries, including USA, China, India, 52-week range H/L (SR) 36.5/24.8 Iraq, Russia, and Poland. Market cap ($mn) 208.7  Shares outstanding (mn) 30 Business brief: The company, a Saudi joint stock company, was formerly Price perf. (%) 1M 3M 12M known as AlSorayai Carpet Factory Company Ltd. AlSorayai opened its first Absolute (9) (17) N/A carpet rugs factory in 1986. The company manufactures carpets, rugs, Market (6) (5) 3 curtains and accessories for both the domestic and export markets. It has Sector (9) (8) (4) the capacity to produce 86mn sq mtr per annum. AlSorayai derives around Avg daily turn.(mn) SR US$ 3M 22.7 6.1 75% of its total revenue from the Saudi market and the rest from exports to 12M N/A N/A over 65 countries across the world. In February 2010, AlSorayai divested Raw Beta 6m 2yr 30% of its stake (or 9mn shares) through an IPO and raised SR243mn. N/A N/A  Financials: AlSorayai’s revenue declined 5.3% YoY to SR199mn in 1Q10. Reuters code 1213.SE Bloomberg code ALSORAYA AB EBITDA fell 36% during the same period. This was mainly due to increased Website www.al-sorayai.com 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 Weighting & free float (%) 6.6% in 1Q10. As such, the net income fell just 0.4% YoY to SR13.1mn TASI (free float weight) 0.05 Free float 30.0 during the quarter.  Valuation multiples Recent developments: AlSorayai went public through an IPO in February 2010 08 09 TTM raising SR243mn. In May 2010, the company participated in and sponsored P/E (x) 10.6 9.8 9.8 DOMOTEX Middle East 2010, the region’s largest trade fair for carpets and floor P/B (x) 2.4 2.1 2.1 coverings. P/Sales (x) 0.8 0.8 0.8 Div yield (%) NA NA NA Company financials Source: NCBC Research YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) Share price performance Net Revenues SRmn 841 937 943 199 (5.3) 5.9 8,000 35 EBITDA SRmn 127 128 136 12 (35.6) 3.8 7,000 30 Net Income SRmn 84 74 80 13 (0.4) (2.5) 6,000 25 Assets SRmn 811 883 945 982 4.5 8.0 5,000 20 Equity SRmn 302 332 373 381 380.7 11.0 Feb-10 M ar-10 M ay-10 Jun-10 TASI Alsoroyai (RHS) Total Debt SRmn 365 348 342 205 (33.0) (3.1) Cash & Equiv SRmn 19 10 19 21 (30.2) 0.4

Source: Bloomberg EBITDA Mgn % 15.0 14.0 14.0 6.0 - - Net Mgn % 10.0 8.0 9.0 7.0 - - Top 5 shareholders (%) ROE % 28.0 22.0 22.0 14.0 - - Abdulaziz Nasser Abdulaziz Al 8.7 ROA % 10.0 8.0 8.0 5.0 - - Sorayai Div Payout % ------Mohammed Nasser Abdulaziz 8.7 Al Sorayai EPS SR N/M 2.0 3.0 2.0 (0.6) (91.7) Nafee Nasser Abdulaziz Al 8.7 BVPS SR N/M 11.0 12.0 13.0 17.0 (90.5) Sorayai Source: Tadawul, Zawya, Company, NCBC Research Saleh Nasser Abdulaziz Al 8.7 Sorayai

Source: Tadawul, NCBC Research

JUNE 2010 AL SORAYAI TRADING 123 INDUSTRIAL INVESTMENT

Not Covered Also known as Shaker Group SHAKER

Current Price (SR) 57.8 Al Hassan Ghazi Ibrahim Shaker Company (Shaker Group), established Pricing / Valuation as on June 13, 2010 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 Stock details import and wholesale of air conditioning products and home appliances. 52-week range H/L (SR) 60.5/48.4 The Shaker Group, which comprises the parent company and three Market cap ($mn) 538.9 subsidiaries, is one of the leading companies in its sector in the Shares outstanding (mn) 35 Kingdom. Price perf. (%) 1M 3M 12M Absolute N/A N/A N/A  Business brief: Shaker is involved in the wholesale and retail trade of air Market (6) (5) 3 conditioners and home appliances. Its business also includes repairing and Sector (9) (8) (4) maintenance of electric & electronic home appliances and air conditioners. Avg daily turn.(mn) SR US$ 3M N/A N/A The company’s product portfolio comprises more than eight brands with 12M N/A N/A nationwide presence and strong market hold. The company also sells OEM Raw Beta 6m 2yr products under its label. With exclusive sales outlets, service and display N/A N/A centers, warehousing facilities and training academies, Shaker has expanded Reuters code 1214.SE its presence throughout the Kingdom. Bloomberg code SHAKER AB Website www.shaker.com.sa  Financials: Shaker’s net revenue grew 8.7% YoY to SR998mn in 2009. The

Weighting & free float (%) company’s operating expenses increased 4.6% YoY to SR845mn in 2009, TASI (free float weight) 0.12 primarily due to the 23.8% YoY increase in selling and distribution expenses. Free float 30.0 Shaker’s net income grew 28.6% YoY to SR132mn in 2009.

Valuation multiples  Recent developments: Shaker launched an initial public offering (IPO) on 08 09 TTM May 17, 2010, offering 30% of its shares to raise SR514.5mn. The IPO was P/E (x) 19.6 15.3 N/A oversubscribed 2.71 times. The company has a monopoly for LG air P/B (x) 5.5 5.3 N/A conditioners in the Saudi market and has announced the addition of a new P/Sales (%) 2.2 2.0 N/A range of air conditioners named Titan II in the Kingdom. Shaker also Div yield (%) N/A N/A N/A announced plans to purchase 29,000 sq mt of land (two plots) to be used for Source: NCBC Research future expansion. Share price performance Company financials 6,700 60 6,500 57 YoY CAGR (%) 6,300 54 6,100 51 20072008 2009 1Q10 (%) (07-09) 5,900 48 Net Revenues SRmn 750 918 998 - - 15.3 5,700 45 M a y - 10 M a y - 10 J u n - 10 EBITDA SRmn 88 118 163 - - 36.2 TASI Shaker (RHS) Net Income SRmn 78 103 132 - - 30.2 Assets SRmn 524 739 658 - - 12.1 Source: Bloomberg Equity SRmn 231 368 383 - - 28.8 Top 5 shareholders (%) Total Debt SRmn 15 6 4 - - (50.0) Cash & Equiv SRmn 54 54 25 - - (32.3) Ibrahim Abdullah Abunayyan 24.4 and Brothers EBITDA Mgn % 11.7 12.9 16.4 - - - Hassan Ghazi Ibrahim Shaker 14.0 Net Mgn % 10.4 11.2 13.3 - - -

A K Al Muhaidib and Sons 12.2 ROE % 40.4 34.4 35.3 - - - Group ROA % 16.3 16.3 19.0 - - - Lemaa Ismail Faouzi Abu 10.8 Div Payout % ------Khadra EPS SR 2.2 2.9 3.8 - - 30.2 Hussein Ghazi Ibrahim Shaker 5.0 BVPS SR 6.6 10.5 10.9 - - 28.8 Source: Tadawul, NCBC Research Source: Tadawul, Zawya, Company, NCBC Research

JUNE 2010 AL HASSAN GHAZI IBRAHIM SHAKER COMPANY 124 INDUSTRIAL INVESTMENT

Also known Not Covered as Saudi Pharmaceutical SPIMACO

Current Price (SR) 30.9 Saudi Pharmaceutical Industries & Medical Appliances Corporation

Pricing / Valuation as on June 13, 2010 (SPIMACO) manufactures medicines and medical appliances for local and international markets. Since its establishment in 1986, SPIMACO Stock details has expanded its annual production capacity to include 3mn liters of 52-week range H/L (SR) 37.6/27.6 liquid medicines, 550mn tablets, and 12mn tubes of cream and ointment, Market cap ($mn) 646.2 aseptic drops and penicillin. Shares outstanding (mn) 78.4 Price perf. (%) 1M 3M 12M  Business brief: SPIMACO commenced production in 1990 with six products. Absolute (8) (4) 3 The company’s products include Zimax, Formit, Proton, Famocid 10, Market (6) (5) 3 Cortimax, Sapofen Plus and Glaze. At the end of 1Q10, the company had the Sector (9) (8) (4) largest market share among private players in terms of own products as well Avg daily turn.(mn) SR US$ 3M 6.4 1.7 as licensors’ products in the country. 12M 6.3 1.7  Financials: SPIMACO’s revenues in 1Q10 grew 6.4% YoY to SR274mn Raw Beta 6m 3yr driven by demand for its major brands in the owned and licensed product 0.82 1.01 Reuters code 2070.SE segments. The EBITDA margin grew 12.6% YoY to SR60mn, while net Bloomberg code SPIMACO AB income grew 6.1% YoY to SR45mn. Website www.spimaco.com.sa  Recent developments: In April 2010, SPIMACO approved a cash dividend Weighting & free float (%) of SR1.50 per share for 2009. On 27 January 2010, the company made a TASI (free float weight) 0.32 cash bid to purchase all or a part of the shares of an unidentified Egyptian Free float 65.00 peer, subject to legal, financial, technical and commercial audits. In

Valuation multiples December 2009, SPIMACO entered into a joint venture with Dishman 08 09 TTM Pharmaceuticals and Chemicals, Arab Company for Drug Industries & Medical P/E (x) 18.9 15.7 15.4 Appliances (ACDIMA), and Capital Advisory Group, Inc. to manufacture P/B (x) 1.7 1.1 1.0 active pharmaceutical ingredients (API) in Saudi Arabia. SPIMACO holds a P/Sales (x) 2.8 2.5 2.5 20% stake in the newly formed company. Div yield (%) 4.9 4.9 -

Source: NCBC Research Company financials Share price performance YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) 7,000 40

6,500 35 Net Revenues SRmn 798 872 951 274 6.4 9.2

6,000 30 EBITDA SRmn 129 142 176 60 12.6 16.8

5,500 25 Net Income SRmn 122 128 155 45 6.1 12.7 5,000 20 Assets SRmn 3,357 1,937 2,722 3,158 53.1 (9.9) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 TASI SPIMACO (RHS) Equity SRmn 2,884 1,406 2,179 2,532 76.0 (13.1) Total Debt SRmn 0 0 60 25 N/M N/M Source: Bloomberg Cash & Equiv SRmn 170 63 107 346 736.7 (20.9)

Top 5 shareholders (%) EBITDA Mgn % 16.2 16.3 18.5 21.9 - - Net Mgn % 15.3 14.7 16.3 16.5 - - Arab Company for Drug 20.0 Industries & Medical ROE % 5.0 6.0 8.6 7.7 - - Appliances ROA % 4.2 4.8 6.6 6.2 - - Public Pension Authority (PPA) 13.0 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)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI PHARMACEUTICAL INDUSTRIES & MEDICAL APPLIANCES CORPORATION 125 INDUSTRIAL INVESTMENT

Also known Not Covered as National Co. for Glass ZOUJAJ

Current Price (SR) 20.3 National Company for Glass Industries (Zoujaj) owns two glass

Pricing / Valuation as on June 13, 2010 container factories, one each in Riyadh and Dammam. Zoujaj has stakes (45% each) in Saudi Guardian International Float Glass and Guardian Stock details RAK; and a joint venture with Guardian Industries. These facilities 52-week range H/L (SR) 29.9/19.3 manufacture float glass for automotive and construction applications. Market cap ($mn) 162.0 Zoujaj also has a 50% share in Saudi National Lamps & Electrical Co., Shares outstanding (mn) 30.0 which manufactures lighting products. Price perf. (%) 1M 3M 12M Absolute (19) (21) (28)  Business brief: Zoujaj’s plants in Riyadh and Dammam, with production Market (6) (5) 3 capacity of 92,000 metric tons per year, manufacture glass containers for Sector (9) (8) (4) the food and beverage industry. Saudi Guardian International Float Glass Co Avg daily turn.(mn) SR US$ 3M 9.5 2.5 has a float glass production capacity of 220,000 tons per year, while 12M 10.9 2.9 Guardian RAK has a capacity of 700 tons per day. In addition, Guardian RAK Raw Beta 6m 3yr has implemented a hi-tech glass coating technology to expand its float glass 0.77 0.90 offerings to regional customers. Reuters code 2150.SE Bloomberg code ZOUJAJ AB  Financials: In 1Q10, Zoujaj’s revenues declined 16.3% YoY to SR30mn. Website www.zoujaj.com EBITDA margin contracted from to 47% in 1Q10 from 57% in 1Q09, mainly

Weighting & free float (%) due to an increase in the cost of production. Zoujaj recorded an EBITDA of TASI (free float weight) 0.09 SR14mn in 1Q10, 30.0% lower than that in 1Q09. Although the company’s Free float 72.60 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. Valuation multiples 08 09 TTM  Recent developments: In May 2010, Zoujaj’s shareholders approved a P/E (x) 9.0 13.3 14.3 20% capital increase to SR300mn by offering one bonus share for every five P/B (x) 1.4 1.3 1.3 shares held. In the same month, a cash dividend of SR0.5 per share was P/Sales (x) 5.6 5.0 5.2 also approved for 2009. Div yield (%) 7.4 2.5 -

Source: NCBC Research Company financials Share price performance YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) 7,000 30 Net Revenues SRmn 106 109 122 30 (16.3) 7.3 6,500 25

6,000 20 EBITDA SRmn 46 44 65 14 (30.0) 18.4

5,500 15 Net Income SRmn 80 68 46 17 (15.4) (24.7)

5,000 10 Assets SRmn 501 488 509 534 4.8 0.8 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 TASI Zoujaj (RHS) Equity SRmn 443 428 455 478 7.2 1.3 Total Debt SRmn 24 25 21 19 (16.9) (6.5) Source: Bloomberg Cash & Equiv SRmn 3 17 26 38 0.4 210.9

Top 5 shareholders (%) EBITDA Mgn % 43.6 40.6 53.1 47.4 - - Net Mgn % 75.6 62.4 37.2 57.7 - - Riyad Mohammed Abdullah Al 25.0 Humaidan 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

Source: Tadawul, Zawya, Company, NCBC Research Source: Tadawul, NCBC Research

JUNE 2010 NATIONAL COMPANY FOR GLASS INDUSTRIES 126 INDUSTRIAL INVESTMENT

Also Not Covered known as Filling and Packaging FIPCO

Current Price (SR) 27.5 Filling and Packing Materials Manufacturing Company (FIPCO) is

Pricing / Valuation as on June 13, 2010 engaged in the production of bags and other woven polypropylene packaging products for industrial and agricultural use. The company’s Stock details production facilities located in Riyadh cover an area of 75,000 square 52-week range H/L (SR) 45.7/25.0 meters. FIPCO manufactures over two million jumbo bags annually. Market cap ($mn) 84.3 Shares outstanding (mn) 11.5  Business brief: FIPCO’s products include jumbo bags with capacities Price perf. (%) 1M 3M 12M ranging from 500 to 2,000 kilograms; container liners used in dry cargo Absolute (13) (24) (20) shipping; and sling bags in different sizes. The company also produces leno Market (6) (5) 3 bags for packing fresh vegetables and fruits; cable fillers for electric cable Sector (9) (8) (4) manufacturers; fabrics for fire retardants; tents and lumber protection; Avg daily turn.(mn) SR US$ 3M 7.7 2.0 strapping bands used for boxes; agriculture and baler twines for green 12M 15.0 4.0 houses and grass baling use. Raw Beta 6m 3yr  Financials: In 1Q10, FIPCO’s revenues grew 25.3% YoY to SR43mn. The 0.84 0.81 Reuters code 2180.SE EBITDA margin declined to 19.5% in the same period compared to 21.1% in Bloomberg code FIPCO AB 1Q09. However, net margin sharply declined 644 basis points in 1Q10 to Website www.fipco.com.sa 14.6% due to a drop in other income. In absolute terms, net income dropped

Weighting & free float (%) 13% YoY to SR6.3mn in the quarter. TASI (free float weight) 0.05  Recent developments: In December 2009, FIPCO’s shareholders approved Free float 85.33 a 67.3% capital increase from SR68.75mn to SR115mn by issuing one bonus

Valuation multiples share for every 1.4864 shares held. 08 09 TTM P/E (x) 18.0 16.0 16.8 Company financials P/B (x) 3.3 2.5 2.4 YoY CAGR (%) P/Sales (x) 1.8 2.3 2.2 20072008 2009 1Q10 (%) (07-09) Div yield (%) - - - Net Revenues SRmn 145 178 138 43 25.3 (2.4) EBITDA SRmn 22 25 26 8 16.1 9.9 Source: NCBC Research Net Income SRmn 15 18 20 6 (13.0) 16.8 Share price performance Assets SRmn 121 139 167 170 15.2 17.2

7,000 50 Equity SRmn 90 96 126 132 15.5 18.4 45 6,500 Total Debt SRmn 6 11 17 16 44.0 75.4 40 6,000 35 Cash & Equiv SRmn 3 18 13 1 (88.6) 126.2 30 5,500 25 EBITDA Mgn % 14.9 13.9 18.8 19.5 - - 5,000 20 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 10.0 9.9 14.3 14.6 - - TASI FIPCO (RHS) ROE % 17.1 18.8 17.8 19.5 - - ROA % 12.0 13.5 12.9 14.9 - - Source: Bloomberg Div Payout % 23.7 - - - - - Top 5 shareholders (%) EPS SR 2.1 2.6 2.9 0.6 (47.6) 16.8 Falcom Financial Services Co. 14.6 BVPS SR 13.1 14.0 18.4 11.4 (30.9) 18.4

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 FILING & PACKING MATERIALS MANUFACTURING COMPANY 127 INDUSTRIAL INVESTMENT

Also known as Not Covered NATMETAL, National Metal MAADANIYAH

Current Price (SR) 20.1 National Metal Mfg & Casting (Maadaniyah) is the largest manufacturer

Pricing / Valuation as on June 13, 2010 of steel wire and other wire products in Saudi Arabia. The company’s plants are equipped with modern machinery for wire drawing, stranding, Stock details galvanizing, and the manufacture of fasteners. The plant also hosts 52-week range H/L (SR) 32.4/18.3 modern testing facilities for chemical, mechanical, and spectrometric Market cap ($mn) 136.6 analyses. Shares outstanding (mn) 25.6 Price perf. (%) 1M 3M 12M  Business brief: Maadaniyah has the capacity to produce 22,000 tons of Absolute (10) (12) (34) castings, 12,000 units of axles, and 80,000 tons of steel wires each year. Market (6) (5) 3 The company specializes in the manufacture of low relaxation PC strands, Sector (9) (8) (4) high/low- galvanized steel, carbon wires & strands, mattress spring wires, Avg daily turn.(mn) SR US$ 3M 8.2 2.2 fasteners, welding wires, and steel nails. These products find use in various 12M 14.4 3.9 sectors, including construction, appliances, electrical cable, building systems, Raw Beta 6m 3yr and steel fabrication. 0.93 0.96  Reuters code 2220.SE Financials: Maadaniyah’s revenues grew 17.7% YoY to SR92.2mn in 1Q10. Bloomberg code NMMCC AB EBITDA increased 121.4% YoY to SR13.8mn—the EBITDA margin expanded Website www.natmetalco.com to 14.9% compared to 7.9% in 1Q09 due to lower cost of production during

Weighting & free float (%) the quarter. The net income also increased 686.1% YoY to SR8.2mn in TASI (free float weight) 0.07 1Q10.

Free float 64.54  Recent developments: In April 2010, shareholders of the company

Valuation multiples approved a cash dividend of SR0.50 per share for the full year 2009. 08 09 TTM P/E (x) 12.7 33.0 22.6 Company financials P/B (x) 1.5 1.5 1.5 YoY CAGR (%) P/Sales (x) 1.0 1.6 1.5 20072008 2009 1Q10 (%) (07-09) Div yield (%) 2.5 2.5 - Net Revenues SRmn 369 500 319 92 17.7 (7.0) EBITDA SRmn 58 64 38 14 121.4 (18.9) Source: NCBC Research Net Income SRmn 21 40 16 8 686.1 (13.3) Share price performance Assets SRmn 452 544 483 511 0.4 3.4

7,000 35 Equity SRmn 317 340 345 353 3.4 4.3 6,500 30 Total Debt SRmn 66 44 73 63 69.2 5.4 25 6,000 20 Cash & Equiv SRmn 12 13 35 44 59.0 71.0 5,500 15 EBITDA Mgn % 15.6 12.9 11.9 14.9 - - 5,000 10 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 5.6 8.0 4.9 8.8 - -

TASI M aadaniyah (RHS) ROE % 6.8 12.2 4.5 9.4 - - ROA % 4.6 8.1 3.0 6.6 - - Source: Bloomberg Div Payout % 79.4 25.4 82.0 - - - Top 5 shareholders (%) EPS SR 1.3 2.0 0.6 0.3 540.0 (30.4) National Manufacturing 35.4 BVPS SR 19.4 16.6 13.5 13.8 (17.3) (16.6) Company Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 NATIONAL METAL MANUFACTURING & CASTING 128 INDUSTRIAL INVESTMENT

Not Covered Also known as Saudi Chemical SCC

Current Price (SR) 41.8 Saudi Chemical Company (SCC) is engaged in blasting services and the

Pricing / Valuation as on June 13, 2010 production and sale of explosives and detonators for civil and military use. In 2004, SCC entered the seismic explosives market serving the oil Stock details and gas exploration sector. Its subsidiary Sitcopharma supplies medical 52-week range H/L (SR) 46.6/26.9 and surgical equipment to hospitals and medical centers. Market cap ($mn) 704.7 Shares outstanding (mn) 63.2  Business brief: SCC's products include Prilex, a blasting agent mainly used Price perf. (%) 1M 3M 12M for fissured sedimentary rocks and underground applications; Kemulex, an Absolute (2) 3 47 emulsion explosive suitable for worksites with wet holes and underwater Market (6) (5) 3 blasting; Sanel, a non-electric shock tube designed for bench and trench Sector (9) (8) (4) blasting; explosives packing; electric detonators; detonating cords and Avg daily turn.(mn) SR US$ 3M 12.1 3.2 blasting machines. 12M 25.9 6.9  Financials: SCC’s revenues declined 4.4% YoY to SR404mn in 1Q10. Raw Beta 6m 3yr EBITDA and net income, however, improved significantly. EBITDA grew 0.47 0.85 Reuters code 2230.SE 22.3% YoY to SR85.5mn, while the net income grew 10.8% YoY to Bloomberg code SCCO AB SR74.4mn. Effective cost controls in the manufacturing process enhanced Website www.saudichemical.com the company’s profitability during the quarter.

Weighting & free float (%)  Recent developments: In May 2010, SCC announced a cash dividend of TASI (free float weight) 0.51 SR1.5 per share for 4Q09. (Earlier, in December 2009, it had announced a Free float 96.96 cash dividend of SR2.5 per share for 3Q09). In April 2010, SCC announced

Valuation multiples that its pharmaceutical affiliate had entered into a three-year agreement 08 09 TTM with Germany's Henkel AG & Co to distribute products in Saudi Arabia. SCC’s P/E (x) 13.2 8.8 8.6 Egypt-based subsidiary Suez International Nitrate Co (SINCO) began P/B (x) 2.4 2.1 2.0 commercial production of ammonium nitrate in February 2010. Ammonium P/Sales (x) 1.7 1.6 1.6 nitrate is the primary material used in explosives. SCC said it would secure Div yield (%) - 9.6 N/A supplies through SINCO. Source: NCBC Research

Share price performance Company financials

7,000 50 YoY CAGR (%) 45 6,500 20072008 2009 1Q10 (%) (07-09) 40 6,000 35 Net Revenues SRmn 1,230 1,537 1,643 404 (4.4) 15.6 30 5,500 25 EBITDA SRmn 171 225 298 85 22.3 32.1 5,000 20 Net Income SRmn 112 201 301 75 10.8 64.1 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Assets SRmn 1,658 2,024 2,382 2,278 7.3 19.9 TASI SCC (RHS) Equity SRmn 896 1,096 1,239 1,314 12.9 17.6 Source: Bloomberg Total Debt SRmn 138 119 50 - N/A (39.8)

Top 5 shareholders (%) 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

Source: Tadawul, NCBC Research BVPS SR 14.2 17.3 19.6 20.8 12.9 17.6 Source: Tadawul, Zawya, Company, NCBC Research

JUNE 2010 SAUDI CHEMICAL COMPANY 129 INDUSTRIAL INVESTMENT

Also known as Not Covered SPMC, Saudi Paper Saudi Paper Group

Current Price (SR) 51.8 Saudi Paper Manufacturing Company (SPM) is one of the few integrated

Pricing / Valuation as on June 13, 2010 paper companies in the MENA region. SPM is engaged in the recycling of waste paper, production of tissue rolls from recycled paper, and Stock details conversion of rolls into consumer products such as paper napkins, 52-week range H/L (SR) 62.0/49.7 towels, and facial and toilet paper. Market cap ($mn) 413.9 Shares outstanding (mn) 30.0  Business brief: SPM has three paper processing plants with an aggregate Price perf. (%) 1M 3M 12M capacity of 125,000 tons of tissue paper, 50,000 of converted paper, and Absolute (9) 4 (7) 65,000 tons of de-inked paper per year. The company’s wholly owned Market (6) (5) 3 subsidiary Saudi Paper Converting Co. (SPCC) converts tissue rolls into Sector (9) (8) (4) branded consumables, which are distributed through wholesale and retail Avg daily turn.(mn) SR US$ 3M 7.6 2.0 channels. Saudi Recycling Co. (SRC) collects waste paper, which serve as 12M 10.2 2.7 feed for SPM’s downstream de-inking plants. Al-Madar Trading Co. was set Raw Beta 6m 3yr up in the UAE to collect waste paper from international sources. 0.67 0.68  Reuters code 2300.SE Financials: SPM’s revenues increased 80.5% YoY to SR199mn in 1Q10, Bloomberg code SPM AB driven mainly by expansion of production capacity at its plant in Jeddah in Website www.saudipaper.com June 2009. EBITDA grew 65.3% YoY to SR43mn, while net income grew

Weighting & free float (%) 31.8% YoY to SR30mn during 1Q10. TASI (free float weight) 0.16  Recent developments: In April 2010, SPM approved a cash dividend of Free float 49.90 SR1.25 per share for the year 2009. The company had completed the

Valuation multiples acquisition of its 30% stake in Saudi Arabia Global Health Center Company, 08 09 TTM which was approved by the AGM held on 6 April 2010. P/E (x) 18.4 16.5 15.3 P/B (x) 3.5 3.0 2.9 Company financials P/Sales (x) 3.1 2.8 2.4 YoY CAGR (%) Div yield (%) 1.9 2.4 - 20072008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Revenues SRmn 444 506 558 199 80.5 12.1 EBITDA SRmn 117 126 150 43 65.3 13.2 Share price performance Net Income SRmn 83 84 94 30 31.8 6.7 7,000 65 Assets SRmn 628 1,089 1,374 1,397 8.6 47.9 60 6,500 Equity SRmn 382 447 511 540 15.1 15.6 55 6,000 50 Total Debt SRmn 192 556 760 771 10.1 98.8 5,500 45 Cash & Equiv SRmn 27 21 37 59 (12.3) 16.8 5,000 40 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 26.5 24.9 26.9 21.6 - - TASI SPM (RHS) Net Mgn % 18.6 16.7 16.9 15.0 - - ROE % 23.9 20.4 19.6 22.7 - - Source: Bloomberg ROA % 14.3 9.8 7.6 8.6 - - Top 5 shareholders (%) Div Payout % 21.8 35.6 39.9 - - - HH Prince Abdullah Bin 50.0 EPS SR 3.4 2.8 3.1 1.0 32.0 (4.6) Musaed Bin Abdul Aziz Al Saud BVPS SR 15.9 14.9 17.0 18.0 15.2 3.4 Ra’ed Bin Abdul Rahman Bin 8.4 Source: Tadawul, Zawya, Company, NCBC Research Abdul Aziz Al Mesha’al Falcom Financial Services Co. 7.7

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI PAPER MANUFACTURING COMPANY 130 INDUSTRIAL INVESTMENT

Also Not Covered known as Al Abdullatif Industrial AIIC

Current Price (SR) 29.2 Al-Abdullatif Industrial Investment Company (Al Abdullatif), established

Pricing / Valuation as on June 13, 2010 in 1981, ranks among the largest carpet manufacturers in the world. The company has fully integrated operations, from fiber extrusion to Stock details finishing. 52-week range H/L (SR) 51.0/28.0  Market cap ($mn) 632.5 Business brief: Al Abdullatif manufactures three kinds of carpets: tufted, Shares outstanding (mn) 81.3 woven, and non-woven, primarily made from synthetic fibers. The company Price perf. (%) 1M 3M 12M exports these carpets to more than 25 countries. The color pigment division Absolute (14) (30) (23) provides the various shades required to make carpets and blankets. The Market (6) (5) 3 paper tube division provides paper tubes of different sizes and thicknesses Sector (9) (8) (4) for the winding of carpets and yarn. The company’s five fully owned affiliates Avg daily turn.(mn) SR US$ 3M 18.9 5.0 provide backward integration support. 12M 14.2 3.8  Financials: In 1Q10, Al Abdullatif recorded 14.9% YoY growth in revenues Raw Beta 6m 3yr to SR266mn, driven by rising domestic and international demand for its 0.72 0.41 Reuters code 2340.SE products. EBITDA grew 37.6% YoY to SR69mn as gross margins improved Bloomberg code ALABDUL AB during the quarter. Net income increased to SR41.5mn in 1Q10, a growth of Website www.carpets.com 59.6% over 1Q09.

Weighting & free float (%)  Recent developments: In May 2010, Al Abdullatif announced the TASI (free float weight) 0.14 commencement of trial operations by Red Sea Cable Co. in which it owns Free float 30.0 27% stake. Commercial operations are expected to begin in a few months.

Valuation multiples In March 2010, Al Abdullatif’s shareholders approved a SR3.50 per share 08 09 TTM cash dividend for 2009. In January 2010, Al Abdullatif reported in a P/E (x) 11.8 14.1 12.9 statement on the Saudi stock exchange the appointment of Suleiman Al P/B (x) 2.0 1.7 1.7 Abdullatif as deputy chairman and managing director of the company. P/Sales (x) 2.1 2.4 2.3

Div yield (%) N/A 12.0 N/A Company financials Source: NCBC Research YoY CAGR (%) Share price performance 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 1,066 1,139 996 266 14.9 (3.3) 7,000 50 EBITDA SRmn 288 282 282 69 37.6 (1.2) 6,500 45 40 Net Income SRmn 200 201 169 42 59.6 (8.2) 6,000 35 Assets SRmn 1,312 1,534 1,596 1,659 9.9 10.3 5,500 30 5,000 25 Equity SRmn 1,111 1,215 1,383 1,425 14.8 11.6 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Total Debt SRmn 63 217 112 105 (45.6) 33.1 TASI AlAbdullatif (RHS) Cash & Equiv SRmn 75 35 229 263 151.7 74.4

Source: Bloomberg EBITDA Mgn % 27.0 24.8 28.3 25.8 - - Net Mgn % 18.8 17.7 16.9 15.6 - - Top 5 shareholders (%) ROE % 19.8 17.3 13.0 11.8 - - Al Abdul Latif Holding Group 60.0 ROA % 16.1 14.1 10.8 10.2 - - Omar Sulaiman Saleh Al 6.0 Div Payout % 48.7 - 169.1 - - - Abdul Latif 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)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 AL-ABDULLATIF INDUSTRIAL INVESTMENT COMPANY 131 INDUSTRIAL INVESTMENT

Not Covered Also known as Saudi Indl Export Sadirat, SIEC

Current Price (SR) 24.0 Saudi Industrial Export Co (SIEC) is a trading company established in

Pricing / Valuation as on June 13, 2010 1990. The company exports, imports and distributes agricultural goods, industrial products and bulk commodities. SIEC is represented by its Stock details associates across the globe and has exported over 10 million tons of 52-week range H/L (SR) 46.6/22.9 products to more than 40 markets. Market cap ($mn) 69.0 Shares outstanding (mn) 10.8  Business brief: SIEC trades in bulk food products, including rice, maize, Price perf. (%) 1M 3M 12M sugar and edible oils; fertilizers, minerals, chemicals and petrochemicals; Absolute (17) (26) (47) iron, steel and other metals; air conditioners, trucks and cables. The Market (6) (5) 3 company also provides a number of services to its suppliers and customers, Sector (9) (8) (4) including guaranteed payments, arms-length marketing, financing, and Avg daily turn.(mn) SR US$ 3M 9.6 2.6 logistics for land and sea transport. SIEC is investing in distribution channels 12M 15.1 4.0 and warehousing facilities to reach more manufacturers and customers. Raw Beta 6m 3yr  Financials: SIEC’s net revenues grew 88.5% YoY to SR45mn in 1Q10. 0.90 1.08 Reuters code 4140.SE EBITDA during the quarter was SR1.5mn against a loss of SR1.1mn in 1Q09, Bloomberg code SIECO AB attributable to the decline in costs during the quarter. The company also Website www.siec.com.sa earned a profit of SR1mn in 1Q10, while it had lost SR1.4mn in 1Q09.

Weighting & free float (%)  Recent developments: SIEC, in its AGM held on 16 June 2010, approved TASI (free float weight) 0.05 the election of five directors to its Board for a term of three years. During Free float 100.0 the AGM, the company also cancelled the acquisition of a 60% stake in Saudi

Valuation multiples Specialized Laboratories Company. The company did not pay any dividend to 08 09 TTM its shareholders for the year 2009. P/E (x) 18.1 N/M N/M P/B (x) 2.2 2.5 2.5 Company financials P/Sales (x) 0.4 2.6 2.1 YoY CAGR (%) Div yield (%) 4.2 N/M N/M 20072008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Revenues SRmn 220 709 101 45 88.5 (32.1) EBITDA SRmn 4 22 (3) 2 N/M N/M Share price performance Net Income SRmn 7 14 (6) 1 N/M N/M 7,000 50 Assets SRmn 164 147 128 130 (4.1) (11.8) 45 6,500 40 Equity SRmn 121 119 103 105 0.1 (7.8) 6,000 35 Total Debt SRmn 16 - - 0 N/A N/M 30 5,500 25 Cash & Equiv SRmn 80 98 85 73 (24.0) 3.4 5,000 20 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 2.0 3.0 N/M 3.5 - -

TASI SIECO (RHS) Net Mgn % 3.4 2.0 N/M 2.3 - - ROE % 6.2 11.9 (5.0) 3.9 - - Source: Bloomberg ROA % 4.5 9.2 (4.0) 3.2 - - Top 5 shareholders (%) Div Payout % - 71.9 - - - - Ibrahim Oudah Abdullah Al 5.9 EPS SR 0.7 1.4 (0.5) 0.1 N/M N/M Oudah BVPS SR 11.2 11.0 9.5 9.7 0.1 (7.7)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI INDUSTRIAL EXPORT COMPANY 132 Multi Investment

Ticker Company Page No.

2030 Saudi Arabia Refining 136

2120 Saudi Advanced 137

2140 Al-Ahsa Development 138

2190 Saudi Industrial 139

4080 Aseer Trading 140

4130 Al-Baha Investment 141

4280 Kingdom Holding 142

JUNE 2010 THE SAUDI FACTBOOK Multi Investment

Global crisis acts as an impediment Subdued performance of The KSA Multi-Investment sector is comprised of a number of diversified the hospitality sector had conglomerates investing in a variety of sectors, including real estate, hospitality, an adverse effect on the manufacturing and energy. Kingdom Holding Company (Kingdom) is the largest in multi-investment sector 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 Exhibit 100: Comparison of ROE and P/E of GCC companies, 2007–09 companies, 2009 (USD mn) (%)

2,500 90

70 2,000 50 1,500 30 ROE (%) 1,000 10 P/E (x)

-10 500

-30 0 2007 2008 2009 -50 -100 1020304050 (500) KSA UAE Kuwait Qatar KSA UAE Kuwait Qatar

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.

Exhibit 101: Sector details % weight in Index as on Net Margin ROE (%) Company Dec 2009 (%) 2009 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 0.16 4.7 3.4 and Contracting Company (ATTMCO) Al Baha for Development & Investment Co. 0.02 N/M N/M (ABDICO) Kingdom Holding Co. ( KINGDOM) 2.48 8.9 1.7

Source: Bloomberg, Tadawul, Company data, NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 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 Exhibit 103: Profitability of companies, 2007–2009 (SR mn) (%)

9,200 1,200

8,700 1,000 8,200 800 7,700 600 7,200 400 6,700 6,200 200 5,700 0 2007 2008 2009 5,200 (200) 4,700 (400) 4,200 (600) 2007 2008 2009 ATTMCO AADC SAIC KINGDOM ATTMCO AADC SAIC SARCO SISCO ABDICO SARCO SISCO KINGDOM

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

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.

Exhibit 104: Comparison of P/B and ROE, 2008 Exhibit 105: Comparison of P/B and ROE, 2009 (%) (%)

29 5 SARCO SAIC

4 ATTMCO 19 3 KINGDOM

9 2 KINGDOM ROE(%) ROE (%) SAIC . AADC AADC P/B 9x) 1 SARCO ABDICO -1 P/B (x) ATTMCO SISCO 0 SISCO ABDICO -11 -1 012345 01234

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

JUNE 2010 THE SAUDI FACTBOOK 135 MULTI-INVESTMENT

Not Covered Also known as Saudi Arabia Refin. SARCO

Current Price (SR) 37.5 Saudi Arabia Refineries Company (SARCO), established in Jeddah in

Pricing / Valuation as on 13 June, 2010 1959, invests in commercial and industrial projects in and outside Saudi Arabia. The company is principally involved in the purchase, refining, Stock details transportation, sale, import and export of crude oil and petroleum 52-week range H/L (SR) 61.3/35.1 products. SARCO also carries out subordinate activities in an array of Market cap ($mn) 150.0 businesses like land reclamation, water projects, marine port and Shares outstanding (mn) 15.0 transportation services. Price perf. (%) 1M 3M 12M Absolute (15) (21) (36)  Business brief: Currently, SARCO owns stakes in Arabian Salfonates Market (6) (5) 3 Company (34%), Arabian Tankers Company (27%), Jeddah Oil Refinery Co, Sector (10) (15) (21) (25%), Saudi Industrial Investment Group (3.33%), Tabuk Cement and Avg daily turn.(mn) SR US$ 3M 10.1 2.7 Riyad Bank. SARCO generates income from: (i) its stakes in the earnings of 12M 17.6 4.7 other companies; and (ii) capital gains on the sale of its investments. Raw Beta 6m 3yr  Financials: SARCO reports little to no revenues as most of its income comes 0.45 0.85 Reuters code 2030.SE from its investments in associates. A positive contribution from its associates Bloomberg code SARCO AB resulted in increased net income for SARCO, registering an 890.8% YoY Website www.almasafi.com.sa growth to SR0.8mn for 1Q10.

Weighting & free float (%)  Recent developments: In May 2010, SARCO approved a SR0.5 per share TASI (free float weight) 0.11 dividend for the year 2009. The total dividend amounted to SR7.5mn, Free float 100.0 representing almost 5.0% of the company’s capital. At the end of 2008, the

Valuation multiples company changed its fiscal year end to Dec. 31 from April 30. 08 09 TTM P/E (x) 71.3 180.2 148.1 Company financials P/B (x) 2.7 1.5 1.5 YoY CAGR (%) P/Sales (x) N/M N/M N/M 2007*2008 2009 1Q10 (%) (07-09) Net Revenues SRmn 1 0 0 0 (100.0) 1 Div yield (%) 1.3 1.3 - EBITDA SRmn (2) (2) (1) (1) 160.7 (2) Source: NCBC Research Net Income SRmn 99 8 3 1 890.8 99 Share price performance Assets SRmn 351 229 397 399 55.3 351

7,000 60 Equity SRmn 597 212 385 387 58.5 597 55 6,500 50 Total Debt SRmn 8 0 0 0 N/M 8 6,000 45 Cash & Equiv SRmn 43 47 31 31 N/M 43 40 5,500 35 EBITDA Mgn % N/M N/M N/M N/M - N/M 5,000 30 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % N/M N/M N/M N/M - N/M TASI SARCO (RHS) ROE % 18.3 2.0 1.0 0.8 - 18.3 ROA % 23.3 2.7 1.0 0.8 - 23.3 Source: Bloomberg Div Payout % 55.9 95.1 238.1 - - 55.9 Top 5 shareholders (%) EPS SR 1.8 0.5 0.2 0.1 400.0 1.8 HH Mete'eb Bin Abdul Aziz Al 7.3 BVPS SR 55.1 14.1 25.7 25.8 58.5 55.1 Saud Source: Tadawul, Zawya, Company, NCBC Research HH Prince Khalid Turki Abdul 5.0 *Financials For 12 Months Ended on 30 April 2008 Aziz Turki Al Saud

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI ARABIA REFINERIES COMPANY 136 MULTI-INVESTMENT

Not Covered Also known as Saudi Advanced SAIC

Current Price (SR) 12.4 Saudi Advanced Industries Co. (SAIC) participates in, develops and

Pricing / Valuation as on 13 June, 2010 promotes industrial projects under The Economic Offset Program organized by the Ministry of Defense and Aviation. SAIC encourages Stock details firms in the U.S, the U.K and France to collaborate with Saudi companies 52-week range H/L (SR) 16.0/11.3 to establish high-tech plants in diversified industries. Market cap ($mn) 142.2 Shares outstanding (mn) 43.2  Business brief: SAIC has stakes in Al Obaikan Glass Co. (40.0%), NPS Price perf. (%) 1M 3M 12M Bahrain for Oil & Gas Services Co. (20.0%), Gulf Salt Co. (11.2%), Al Salam Absolute (9) (10) (20) Aircraft Co. (10.0%), Industrialization & Energy Services Co. (3.4%), Market (6) (5) 3 Arabian Industrial Fibers Co. (0.6%), and Yanbu National Petrochemicals Co. Sector (10) (15) (21) SAIC also enters into contracts with other firms to develop new technology- Avg daily turn.(mn) SR US$ 3M 11.4 3.0 oriented companies. 12M 13.5 3.6  Financials: SAIC’s total operating revenue fell 49.0% YoY to SR3.7mn in Raw Beta 6m 3yr 1Q10 due to a sharp decline in investment income. Net income in 1Q10 0.83 0.93 Reuters code 2120.SE decreased 56.8% YoY to SR2.7mn due to proportionately high operating Bloomberg code SAIC AB expenses resulting in lower operating profits. Website www.saic.com.sa  Recent developments: In February 2010, Tareq Abdulrahman bin Rayes Weighting & free float (%) resigned as general manager of SAIC. Board member Mansour al-Yahiyan TASI (free float weight) 0.10 was appointed as acting general manager. SAIC has not declared dividend Free float 100.0 for the year 2009 to date.

Valuation multiples Company financials 08 09 TTM YoY CAGR (%) P/E (x) 29.8 15.3 17.1 20072008 2009 1Q10 (%) (07-09) P/B (x) 0.8 0.7 0.7 Net Revenues SRmn 22 25 40 4 (49.0) 33.8 P/Sales (x) 21.2 13.4 14.7 EBITDA SRmn 16 20 36 3 (56.5) 50.0 Div yield (%) 4.0 - - Net Income SRmn 16 18 35 3 (56.8) 49.3 Source: NCBC Research Assets SRmn 822 892 778 799 10.5 (2.7) Share price performance Equity SRmn 820 702 776 796 10.3 (2.7)

7,000 16 Total Debt SRmn 0 0 0 0 N/M N/M 15 6,500 Cash & Equiv SRmn 401 1 19 2 451.6 (78.0) 14 6,000 13 EBITDA Mgn % 72.3 79.3 90.9 74.7 - - 12 5,500 Net Mgn % 70.2 71.3 87.4 72.0 - - 11 5,000 10 ROE % 3.3 2.4 4.7 1.4 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 TASI SAIC (RHS) ROA % 3.2 2.1 4.2 1.4 - - Div Payout % - 122.0 - - - - Source: Bloomberg EPS SR 0.44 0.41 0.81 0.1 (57.1) - Top 5 shareholders (%) BVPS SR 19.0 16.3 18.0 18.4 10.3 - Khalid Saleh Abdul Rahman Al 11.5 Source: Tadawul, Zawya, Company, NCBC Research Shethry

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI ADVANCED INDUSTRIES COMPANY 137 MULTI-INVESTMENT

Also known Not Covered as Al-Ahsa Development AADC

Current Price (SR) 10.9 Al-Ahsa Development Company (AADC) was established in 1993 by

Pricing / Valuation as on 13 June, 2010 Royal decree to undertake investment activities in the industrial and service sectors of Saudi Arabia, particularly in the region of Al-Ahsa. Stock details AADC has business interests in foods, textiles, and medical services. 52-week range H/L (SR) 15.3/10.0  Market cap ($mn) 142.4 Business brief: AADC’s affiliate Al-Ahsa Medical Services Co. (30% stake) Shares outstanding (mn) 49.0 manages a modern 220-bed hospital in the Al-Ahsa region; Al-Ahsa Food Price perf. (%) 1M 3M 12M Services Co. (50% stake), a JV with Eastern Agriculture Development Co, Absolute (10) (6) (22) has a capacity to process 5,000 tons of dates and is engaged in the Market (6) (5) 3 production of date molasses vinegar, dates pest and compressed dates. The Sector (10) (15) (21) company’s affiliate Saudi Japanese Textile Co. (100% stake) produces Avg daily turn.(mn) SR US$ 3M 20.9 5.6 synthetic fiber, which is used in the production of dress materials. Currently, 12M 14.5 3.9 AADC is in the process of setting up an aluminum foil factory, a gypsum Raw Beta 6m 3yr factory and a cement plant. 0.91 0.98  Reuters code 2140.SE Financials: AADC recorded revenues of SR10.3mn in 1Q10. Net income for Bloomberg code AADC AB the quarter stood at SR6.3mn compared to a loss during same period last Website www.ahsa-dev.com.sa year, primarily due to higher investment income.

Weighting & free float (%)  Recent developments: In March 2010, AADC announced that National TASI (free float weight) 0.11 Handling Services Co., in which it held 5% stake, signed an agreement to Free float 100.0 merge with Saudi Airlines Ground Services Co. and Attar Ground Services

Valuation multiples Co. to form a new entity providing ground services to all Saudi Arabian 08 09 TTM airports. P/E (x) --- P/B (x) N/M 159.0 33.5 Company financials P/Sales (x) 1.3 1.3 1.2 YoY CAGR (%) Div yield (%) N/M 32.8 18.0 20072008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Revenues SRmn 77 (21) 16 10 N/M (54.0) EBITDA SRmn 53 (27) 12 9.3 N/M (51.6) Share price performance Net Income SRmn 34 (56) 3 6.3 N/M (68.8) 7,000 16 Assets SRmn 727 559 571 585 8.2 (11.4) 6,500 14 Equity SRmn 521 397 420 434 11.4 (10.2) 6,000 12 Total Debt SRmn 168 132 126 126 (4.2) (13.5) 5,500 10 Cash & Equiv SRmn 3 6 7 8 52.9 42.6 5,000 8 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 68.9 N/M 76.2 89.6 - - TASI Al Ahsa for Dev. (RHS) Net Mgn % 44.9 N/M 20.7 61.1 - - ROE % 7.1 (12.3) 0.8 5.9 - - Source: Bloomberg ROA % 4.5 (8.7) 0.6 4.4 - - Top 5 shareholders (%) 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 -

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 AL-AHSA DEVELOPMENT COMPANY 138 MULTI-INVESTMENT

Not Covered Also known as Saudi Industrial SISCO

Current Price (SR) 13.0 Saudi Industrial Services Company (SISCO), established in 1988,

Pricing / Valuation as on 13 June, 2010 undertakes large-scale investments in KSA’s infrastructure sector on a build-operate-transfer and build-operate-own model. SISCO has Stock details business interests in water desalination and distribution; development of 52-week range H/L (SR) 16.9/12.0 industrial estates, free zone ports; and support services. Market cap ($mn) 234.8 Shares outstanding (mn) 68.0  Business brief: SISCO’s affiliate Support Services Operations Co. (97% Price perf. (%) 1M 3M 12M owned) provides ancillary services such as building and car maintenance, Absolute (9) (19) (12) catering, and gas stations in industrial estates. Saudi Trade & Export Market (6) (5) 3 Development Co. (76% owned) operates a free zone at Jeddah Islamic Sector (10) (15) (21) Seaport on a BOT basis. Kindasa Water Services (60% owned) operates a Avg daily turn.(mn) SR US$ 3M 24.3 6.5 14,000 cubic meter/day desalination plant and water distribution network. 12M 23.7 6.3 International Water Distribution Co. (50% owned) is engaged in building and Raw Beta 6m 3yr operating water distribution networks within the KSA. 0.87 0.91  Reuters code 2190.SE Financials: SISCO has reported steady revenue growth over the past few Bloomberg code SISCO AB years, however net income has not responded in kind. However, in 1Q10, Website www.sisco.com.sa SISCO recorded 57.3% YoY growth in revenues to SR55.2mn and with costs

Weighting & free float (%) kept under control, the company managed to increase net income 202.7% TASI (free float weight) 0.15 YoY to SR2.1mn.

Free float 85.3  Recent developments: In May 2010, SISCO announced that its subsidiary

Valuation multiples International Water Distribution Company (TAWZEA) received a SR105.4mn 08 09 TTM loan from Saudi Industrial Development Fund (SIDF) to finance water P/E (x) N/M N/M N/M distribution projects in the industrial zones of Riyadh, Jeddah and Qassim. In P/B (x) 1.2 1.2 1.2 February 2010, SISCO’s board of directors approved a plan to increase the P/Sales (x) 6.5 6.3 5.5 capital base of its unit Saudi Trade and Export Development Co. (Tusdeer) Div yield (%) --- from SR80.0mn to SR190.0mn. Source: NCBC Research

Share price performance Company financials

7,000 18 YoY CAGR (%) 6,500 16 20072008 2009 1Q10 (%) (07-09) 6,000 14 Net Revenues SRmn 108 135 139 55 57.3 13.5 5,500 12 EBITDA SRmn 37 34 34 21 108.9 (4.2) 5,000 10 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Income SRmn (5) (24) 1 2 202.7 N/M

TASI SISCO (RHS) Assets SRmn 703 1,893 2,371 2,368 16.1 83.7 Equity SRmn 426 722 730 736 1.9 30.8 Source: Bloomberg Total Debt SRmn 77 855 1,232 1,233 N/M 301.0 Top 5 shareholders (%) Cash & Equiv SRmn 54 718 441 355 (44.7) 185.9 Zainal Industries Co., Ltd 14.6 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 -

Source: Tadawul, NCBC Research BVPS SR 53.3 10.6 10.7 10.8 1.9 -

Source: Tadawul, Zawya, Company, NCBC Research

JUNE 2010 SAUDI INDUSTRIAL SERVICES COMPANY 139 MULTI-INVESTMENT

Not Covered Also known as Aseer Trading Aseer

Current Price (SR) 13.5 Aseer Trading, Tourism and Manufacturing Company (Aseer),

Pricing / Valuation as on June 13, 2010 established in 1975 and headquartered in Abha (Southwest of Saudi Arabia), is an investment holding company with interests in five sectors Stock details – food, petrochemicals, real estate, building materials and construction, 52-week range H/L (SR) 19.0/12.9 and financial services. Market cap ($mn) 453.2 Shares outstanding (mn) 126.4  Business brief: Aseer operates in a wide range of businesses and has Price perf. (%) 1M 3M 12M investments in diverse projects, including agricultural, cement, printing & Absolute (12) (9) (20) publishing, and energy-related. The company is also engaged in travel and Market (6) (5) 3 tourism and has stakes in resorts and hotels. Aseer has investments in Sector (10) (15) (21) Dallah Industrial Investment Company, Al Ustool Arabia Real Estate Avg daily turn.(mn) SR US$ 3M 16.3 4.3 Development Co. Ltd, Al Khawatem Trading & Contracting Co. Ltd., Al 12M 17.1 4.6 Nasrah International Real Estate Development Co. Ltd., and Al Mawajed Raw Beta 6m 3yr International Real Estate Development Co. The company has a network of 0.58 1.06 six branches, which are located in Al Madinah, Riyadh, Wadi Dawaser, Reuters code 4080.SE Jeddah, Hail and Al Jaouf. Bloomberg code ATTMCO AB Website www.aseercorp.com.sa  Financials: In 1Q10, Aseer recorded revenues of SR491.4mn, up 11.7%

Weighting & free float (%) YoY. EBITDA increased 34.8% YoY to SR54.8mn, slightly improving margins TASI (free float weight) 0.17 from 9.3% in 1Q09 to 11.2% in 1Q10. Net income increased 58.2% YoY to Free float 50.08 SR20.4mn during the quarter.

Valuation multiples  Recent developments: In May 2010, Aseer approved a per share cash 08 09 TTM dividend of SR0.75 for 2010. P/E (x) N/M 21.3 19.5 P/B (x) 0.7 0.7 0.7 Company financials P/Sales (x) 1.0 1.0 1.0 YoY CAGR (%) Div yield (%) 3.7 5.6 - 20072008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Revenues SRmn 1,482 1,727 1,713 491 11.7 7.5 EBITDA SRmn 134 158 186 55 34.8 18.0 Share price performance Net Income SRmn 363 (431) 80 20 58.2 (53.1) 7,000 20 Assets SRmn 4,073 3,309 3,565 3,617 9.8 (6.4) 18 6,500 Equity SRmn 3,356 2,313 2,416 2,450 6.0 (15.2) 16 6,000 14 Total Debt SRmn 158 246 196 231 236.6 11.3 5,500 12 Cash & Equiv SRmn 132 251 417 407 (10.0) 77.7 5,000 10 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 9.0 9.1 10.9 11.2 - - TASI Aseer (RHS) Net Mgn % 24.5 (25.0) 4.7 4.1 - - ROE % 14.4 (15.2) 3.4 3.3 - - Source: Bloomberg ROA % 10.6 (11.7) 2.3 2.3 - - Top 5 shareholders (%) Div Payout % 30.9 N/M 119.0 - - - Dallah Al Baraka Holding Co. 49.9 EPS SR 3.2 (3.0) 0.6 0.2 60.0 - BVPS SR 26.6 18.3 19.1 19.4 6.1 -

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 ASEER TRADING, TOURISM AND MANUFACTURING COMPANY 140 MULTI-INVESTMENT

Not Covered Also known as Al-Baha Investment Al-baha

Current Price (SR) 14.7 Al-Baha Investment & Development Co (Al-baha) was established in

Pricing / Valuation as on June 13, 2010 1992 to develop and operate projects in the Al-Baha province. Engaged in a wide range of industrial, commercial and agricultural activities, the Stock details company plans to expand beyond the region. Al-baha’s investments 52-week range H/L (SR) 24.4/14.1 include a 95% stake in Al-Baha Marble & Granite Company. Market cap ($mn) 58.6 Shares outstanding (mn) 15.0  Business brief: Al-baha is engaged in wholesale & retail trading and Price perf. (%) 1M 3M 12M industrial projects, including construction. The company also operates Absolute (12) (14) (38) refrigeration stores as well as repairs and maintenance workshops, and Market (6) (5) 3 develops animal and agricultural products. In addition, Al-baha owns and Sector (10) (15) (21) reclaims agricultural land for use in new projects. Furthermore, the company Avg daily turn.(mn) SR US$ 3M 18.1 4.8 constructs, maintains, and operates public utilities, including tramways, and 12M 33.4 8.9 develops recreational and tourist facilities such as parks and tourist villages. Raw Beta 6m 3yr  Financials: In 1Q10, Al-baha did not record any revenues. However, its 0.57 1.00 Reuters code 4130.SE EBITDA losses increased 32.6% YoY due to higher expenses. The company Bloomberg code ABDICO AB reported a loss of SR3.8mn during the quarter, primarily owing to loss from Website N/A investment and provisions made during the quarter.

Weighting & free float (%)  Recent developments: Al-baha reported a net loss of SR4.6mn for 2009 TASI (free float weight) 0.04 compared to SR14.9mn for 2008. Free float 100.0 Company financials Valuation multiples YoY CAGR (%) 08 09 TTM 20072008 2009 1Q10 (%) (07-09) P/E (x) N/M N/M N/M Net Revenues SRmn 1.8 0.2 0.2 0 N/M (63.0) P/B (x) 2.1 2.2 2.2 EBITDA SRmn (6) (6) (3) (1) 32.6 (29.7) P/Sales (x) 972.3 908.1 908.1 Net Income SRmn (13) (15) (5) (3.8) N/M (41.8) Div yield (%) --- Assets SRmn 147 119 128 124 5.6 (6.6) Source: NCBC Research Equity SRmn 123 105 102 98 (5.1) (8.9) Share price performance Total Debt SRmn 9 0 0 0 N/M (100.0) Cash & Equiv SRmn 40 28 39 37 38.1 (1.9) 7,000 25 EBITDA Mgn % N/M N/M N/M N/M - - 6,500 20 6,000 Net Mgn % N/M N/M N/M N/M - - 15 5,500 ROE % (12.0) (13.1) (4.4) (15.1) - - 5,000 10 ROA % (9.4) (11.2) (3.7) (12.0) - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Div Payout % ------TASI Al Baha (RHS) EPS SR (0.9) (1.0) (0.3) (0.3) N/M - Source: Bloomberg BVPS SR 8.2 7.1 6.8 6.5 (6.4) -

Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 AL-BAHA INVESTMENT & DEVELOPMENT COMPANY 141 MULTI-INVESTMENT

Not Covered Also known as Kingdom Holding KHC

Current Price (SR) 8.4 Kingdom Holding Company (Kingdom) was established in 1996. Kingdom

Pricing / Valuation as on June 13, 2010 primarily focuses on banking and financial services, real estate, and hotels & hotel management sectors. Headquartered in Riyadh, it has Stock details holdings in retail, food & entertainment, healthcare, technology, media & 52-week range H/L (SR) 13.4/7.3 telecommunications, automotive, and other sectors. Market cap ($mn) 8,249.7 Shares outstanding (mn) 3,705.8  Business brief: Kingdom, initially engaged in construction, housing Price perf. (%) 1M 3M 12M development, and educational projects, enhanced its stake across sectors in Absolute (7) (15) (11) a number of Saudi Arabian, Middle Eastern and international companies. The Market (6) (5) 3 company’s portfolio consists of premium brands such as Apple, Time Warner, Sector (10) (15) (21) Samba, Citigroup, Pepsi, Walt Disney and Hewlett-Packard. Kingdom has Avg daily turn.(mn) SR US$ 3M 25.5 6.8 made investments in the domestic health, education and social services 12M 42.6 11.4 sectors. The company is also a private equity player in Saudi Arabia and in Raw Beta 6m 2yr developing markets in the Middle East, Africa and Asia. 0.65 0.91  Reuters code 4280.SE Financials: Kingdom’s operating revenues increased 8.4% YoY to SR994mn Bloomberg code KINGDOM AB in 1Q10. The company recorded an EBITDA of SR74.2mn in the quarter, a Website www.kingdom.com.sa decline of 50.9% YoY. Total investment income for 1Q10 grew 30.5% YoY,

Weighting & free float (%) leading to a 49.9% YoY increase in net profit to SR75.2mn. TASI (free float weight) 0.31  Recent developments: In May 2010, Kingdom’s USD375mn bid to buy the Free float 5.00 remaining shares of Kingdom Hotel Investments was accepted. The company

Valuation multiples currently has 56.1% stake in the latter. In April 2010, Kingdom sold its 40% 08 09 TTM stake in Fairmont Raffles Holdings International for SR3.2bn to Qatari Diar P/E (x) N/M 76.9 72.4 Real Estate Co., a wholly-owned unit of the Qatar Investment Authority. P/B (x) 1.4 1.3 1.2 P/Sales (x) 6.5 7.7 7.5 Company financials Div yield (%) --- YoY CAGR (%) Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 5,001 4,771 4,032 994 8.4 (10.2) Share price performance EBITDA SRmn 888 977 927 74 (50.9) 2.1 7,000 15 Net Income SRmn 1,210 (29,911) 403 75 49.9 (42.3) 6,500 13 11 Assets SRmn 78,508 50,715 49,990 51,148 13.3 (20.2) 6,000 9 Equity SRmn 51,221 21,615 24,579 25,825 34.5 (30.7) 5,500 7 5,000 5 Total Debt SRmn 18,131 17,614 14,103 14,042 (5.6) (11.8) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn 2,309 1,893 2,233 2,028 (24.6) (1.7) TASI Kingdom (RHS) EBITDA Mgn % 17.8 20.5 23.0 7.5 - -

Source: Bloomberg Net Mgn % 24.2 (627.0) 10.0 7.6 - - ROE % 2.1 (82.1) 1.7 1.2 - - Top 5 shareholders (%) ROA % 1.4 (46.3) 0.8 0.6 - - HH Prince AlWaleed Talal 95.0 Div Payout % ------Abdul Aziz Al Saud EPS SR 0.2 (4.8) 0.1 0.0 N/M - BVPS SR 8.1 3.4 3.9 7.0 128.5 -

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 KINGDOM HOLDING COMPANY 142 Building & Construction

Ticker Company Page No.

1310 Mohammad Al Mojil 146

1320 Saudi Steel Pipes 147

2040 Saudi Ceramics 148

2090 National Gypsum 149

2110 Saudi Cable Company 150

2130 Saudi Industrial 151

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

JUNE 2010 THE SAUDI FACTBOOK 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 Exhibit 107: Comparison of ROE and P/E of GCC construction companies, 2007–09 companies, 2009 (USD mn) (%)

6000 35

5000 30

4000 25

3000 20 ROE(%)

2000 15

1000 10 P/E (x) 0 5 2007 2008 2009 -200 20406080 KSA UAE Oman Kuwait UAE Oman KSA Kuwait

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

The building and construction sector has a large number of private players with 13 listed companies.

Exhibit 108: Sector details % weight in Index as on Net Margin ROE (%) Company Dec 2009 (%) 2009 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;

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.

JUNE 2010 THE SAUDI FACTBOOK 144 BUILDING AND CONSTRUCTION

Exhibit 109: Revenues of companies, 2007–09 Exhibit 110: Profitability of companies, 2007-09 (SR mn) (%)

20,500 30

25 16,500 20 12,500 15 8,500 10

4,500 5

500 0 2007 2008 2009 2007 2008 2009

Amiantit Zamil Specialized Cables Amiantit Zamil Specialized Cables Saudi Cable Co. Saudi Cable Co. Al Babtain Mohamed Al Mojil Saudi Steel Pipe Al Babtain Saudi Steel Pipe Mohamed Al Mojil

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

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 Exhibit 112: Comparison of P/B and ROE, 2009 (SR mn) (%)

40 35 Redsea Al Babtain 30 35 Saudi Redsea Gypsum Zamil Vitrified 30 Saudi Cable 25 Saudi Steel Saudi Co. Pipe Ceramics 20 25 Zamil Amiantit Al Babtain 20 15

Saudi ROE(%) Gypsum Saudi Amiantit ROE(%) Saudi Cable 15 Ceramics 10 Vitrified Co. 10 Specialized 5 Arabian pipes Arabian Specialized Cables pipes P/B (x) 5 0 Cables SIDC P/B (x) 0.01.02.03.04.0 0 -5 Mohamed Al 1.01.82.53.34.0 SIDC -5 -10 Mojil

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

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.

Exhibit 113: Coverage stocks details Stock Current Rating PT (SR) Comments Saudi Steel Pipes Overweight 40.5 Increasing demand in medium size pipes, and the start of a large (1320.SE) diameter pipe (which SSP owns 33%) in 2012 to drive robust revenue and earnings growth.

Source: NCBC Research

JUNE 2010 THE SAUDI FACTBOOK 145 BUILDING & CONSTRUCTION

Not Covered Also known as Mohammad Al Mojil MMG

Current Price (SR) 19.1 Mohammad Al Mojil Group Company (MMG) provides construction

Pricing / Valuation as on June 13, 2010 services in the Gulf region. The company has undertaken projects mainly in the oil, gas and petrochemical industries. MMG also offers mechanical, Stock details electrical, civil, structural and maintenance services. 52-week range H/L (SR) 35.7/18.5  Market cap ($mn) 634.8 Business brief: MMG is engaged in various construction and engineering Shares outstanding (mn) 125 projects, including onshore services such as civil and structural work, and Price perf. (%) 1M 3M 12M mechanical and electrical services. It also conducts offshore activities, Absolute (8) (13) (40) especially in marine projects with the help of various marine vessels. The Market (6) (5) 3 company owns heavy machinery and equipment services, including testing Sector (11) (15) (23) and calibration facilities, and technical and maintenance services for turnkey Avg daily turn.(mn) SR US$ 3M 25.4 6.8 projects. Besides this, it offers services in steel fabrication. 12M 27.4 7.3  Financials: The company’s revenues declined 57.0% YoY to SR344mn in Raw Beta 6m 3yr 1Q10, while net income rose 93.9% YoY to SR10mn. However, 2009 was a 0.76 1.16 Reuters code 1310.SE weak year for MMG as the company’s net income significantly declined Bloomberg code MMG AB compared to previous years, mainly due to higher operating expenses and Website www.almojilgroup.com provision for doubtful debts in 2009.

Weighting & free float (%)  Recent developments: In May 2010, MMG signed a SR96mn contract with TASI (free float weight) 0.22 Sepco III Electric Power Construction Corp. to build boilers for the power Free float 46.16 plant project in Rabigh. In March 2010, the company signed two MoUs. The

Valuation multiples first transaction worth SR75.6mn was with the Bin laden Group to build a 08 09 TTM 388 unit residential compound that would be linked to the King Abdullah P/E (x) 4.2 59.5 52.9 University for Science and Technology (KAUST). The second deal amounting P/B (x) 1.3 1.3 1.3 SR69mn was signed with Ma’aden Phosphate to supply labor, equipment and P/Sales (x) 0.8 1.1 1.4 construction materials. The company won a SR165mn contract for the Jubail Div yield (%) 5.2 3.9 NM refinery project in March 2010. Source: NCBC Research

Share price performance Company financials YoY CAGR (%) 7,000 35 6,500 30 20072008* 2009 1Q10 (%) (07-09) 6,000 25 Net Revenues SRmn 1,955 3,345 2,216 344 (57.0) 6.5 5,500 20 5,000 15 EBITDA SRmn 640 850 386 57 (46.2) (22.4) Jun-09Oct-09Feb-10Jun-10 Net Income SRmn 549 666 40 10 93.9 (72.9) TASI MMG (RHS) 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 Source: Bloomberg Total Debt SRmn 0 0 0 440 (2.2) N/M Top 5 shareholders (%) Cash & Equiv SRmn 63 86 41 50 (5.5) (19.0) Mohammad Hamad Abdul 50.0 EBITDA Mgn % 32.7 25.4 17.4 16.4 - - Karim Al Mojil Net Mgn % 28.1 19.9 1.8 3.0 - - Adel Mohammed Hamad Al 5.0 ROE % 50.5 41.7 2.2 2.3 - - Mojil ROA % 31.2 22.6 1.2 1.4 - - Al Mojil Holding Co. 5.0 Div Payout % N/M 15.0 234.4 N/M - - Al Mojil Limited Investment Co. 5.0 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, NCBC Research Source: Tadawul, Zawya, Company, NCBC Research *2008 Financials are for 14 months

JUNE 2010 MOHAMMAD AL MOJIL GROUP 146

BUILDING AND CONTRUCTION

Overweight Also known as Saudi Steel Pipes SSP

Target Price (SR) 40.5 Saudi Steel Pipe Company (SSP), established in 1980, manufactures welded steel pipes, galvanized and non galvanized pipes, carbon steel Price (SR) 27.6 tubes and angular tubes. The company sells products in the domestic Pricing / Valuation as on June 13, 2010 market and also exports to approximately 20 countries.

Stock details • Business brief: SSP manufactures black and galvanized pipes in the small 52-week range H/L (SR) 36.7/25.5 and medium diameter sizes which serve the construction, real estate, and oil Market cap ($mn) 375.3 and gas markets. The small diameter production capacity is 80,000 tons per Shares outstanding (mn) 51 year and the medium diameter is 160,000 tons per year. The company is Price perf. (%) 1M 3M 12M also expanding into the large diameter pipes market through a 35% stake in Absolute (10) (19) N/A Market (6) (5) 3 a plant in Jubail which is under construction. The plant will have capacity of Sector (11) (15) (23) 200,000 tons per year and is expected to start production in 2012e. Avg daily turn.(mn) SR US$ 3M 10.0 2.7 • Financials: SSP’s revenues declined 1.5% YoY to 153mn in 1Q10 mainly 12M N/A N/A due to lower selling prices partially offset by higher volumes during the Raw Beta 6m 2yr quarter. However, its net income declined 40.4% YoY to SR20.0mn due to 0.75 N/A less than proportionate decline in COGS as well as higher operating expenses Reuters code 1320.SE in 1Q10. We expect financial performance at SSP to strengthen through the Bloomberg code SSP AB end of 2010e and into 2011e as the medium diameter pipe business grows. Website www.sspipe.com • Recent developments: As a part of its ongoing expansion drive, in Weighting & free float (%) February 2010, SSP announced that it had purchased 811 sq mtr of TASI (free float weight) 0.12 Free float 43.6 industrial land in Dammam’s International Industrial City for a consideration of SR158mn. The company plans to construct a pipe coating plant and build Valuation multiples its headquarters on the site. 08 09 10E

P/E (x) 10.6 12.5 13.2 Company financials P/B (x) 3.3 1.8 1.8 YoY CAGR (%) P/Sales (%) 1.7 2.6 2.3 20082009 2010E 2011E (%) (08-11E) Div yield (%) 0.0 7.2 7.2 Net Revenues SRmn 817 539 613 737 (34.1) (3.4) DPS 0.0 2.0 2.0 EBITDA SRmn 155 131 127 158 (15.5) 0.2 Source: NCBC Research estimates Reported Net SRmn Income* 141 113 107 129 (19.9) (0.7) Share price performance Assets SRmn 666 981 1,066 1,149 47.3 7,000 35 Equity SRmn 427 793 791 811 85.7 6,500 33 31 Total Debt SRmn 50 0 79 122 (100.0) 34.5 6,000 29 5,500 27 Cash & Equiv SRmn 70 81 132 277 15.7 5,000 25 EBITDA Mgn % 19.0 24.4 20.8 21.4 28.4 - Aug-09 Nov-09 M ar-10 Jun-10 Net Mgn % 16.2 20.9 17.5 17.6 29.3 - TASI SSP (RHS) ROE % 31.4 17.2 12.7 15.2 (45.2) - ROA % 21.2 12.8 9.8 11.0 (39.6) - Source: Bloomberg Div Payout % - 90.3 95.2 80.0 N/A - Top 5 shareholders (%) EPS SR 3.78 2.2 2.1 2.5 (40.7) (12.9) Rabuiah and Nassar Company 40.0 BVPS SR 12.2 18.4 15.5 15.9 50.8 -

Hu Steel Pipe Company 16.3 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) The sons of Abullah Ibrahim 8.8 Al Khareef

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI STEEL PIPE COMPANY 147 BUILDING & CONSTRUCTION

Not Covered Also known as Saudi Ceramic SCC

Current Price (SR) 116 Saudi Ceramic Company, established in 1977 in Riyadh, has five offices

Pricing / Valuation as on 13 June, 2010 in Saudi Arabia and one in Dubai. The company manufactures and markets ceramic walls and floor tiles, ceramic road markers, sanitary Stock details ware, and electric water heaters. 52-week range H/L (SR) 145.0/108.0  Market cap ($mn) 773.1 Business brief: Saudi Ceramics has continually developed its production Shares outstanding (mn) 25 capacity to meet the growing demand for ceramics and related products. The Price perf. (%) 1M 3M 12M company’s factories in Riyadh Industrial City are spread over 450,000 square Absolute (9) (4) (5) meters. Saudi Ceramics also owns two modern tile factories– one for electric Market (6) (5) 3 water heaters and the other for sanitary ware. Various products offered by Sector (11) (15) (23) the company are porcelain, ceramic and decorated tiles, squaring and Avg daily turn.(mn) SR US$ 3M 8.6 2.3 chamfering units, sanitary ware, electric water heaters, and ceramic road 12M 8.3 2.2 markers. Raw Beta 6m 3yr  Financials: Saudi Ceramics reported revenue of SR268mn in 1Q10, a 0.43 0.75 Reuters code 2040.SE growth of 15.8% YoY, primarily due to the increase in production capacity. Bloomberg code SCERCO AB Net income increased 42% YoY to SR58mn in the same period. The company Website www.saudiceramics.com has been consistent in the distribution of dividends over last three years, and

Weighting & free float (%) announced SR3/share dividends for the year ended 31 December 2009. TASI (free float weight) 0.37  Recent developments: Saudi Ceramics announced it received a loan for Free float 63.59 SR71mn from the state-owned Saudi Industrial Development Fund on 12

Valuation multiples March 2010 for the expansion of its tile factory. With this expansion, the 08 09 TTM company projects annual production capacity to reach 9mn cubic meters. P/E (x) 16.3 14.7 13.5 The new plant is expected to start production in the fourth quarter of 2010. P/B (x) 4.0 3.4 3.4 P/Sales (x) 3.4 3.0 2.9 Company financials Div yield (%) 2.2 2.6 NM YoY CAGR (%) Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 615 857 958 268 15.8 24.8 Share price performance EBITDA SRmn 178 264 282 82 27.7 25.8 7,000 15 0 Net Income SRmn 128 178 197 58 42.0 24.4 6,500 14 0 13 0 Assets SRmn 1,288 1,565 1778 1876 13.9 17.5 6,000 12 0 5,500 110 Equity SRmn 613 724 859 841 19.9 18.4 5,000 10 0 Total Debt SRmn 479 650 688 739 29.8 19.8 Jun-09 Oct-09 Feb-10 Jun-10 Cash & Equiv SRmn 21 25 36 92 32.4 30.9 TASI Ceramic (RHS) EBITDA Mgn % 29.0 30.8 29.5 30.7 - -

Source: Bloomberg Net Mgn % 20.7 20.8 20.6 21.8 - - ROE % 22.0 26.6 24.9 27.5 - - Top 5 shareholders (%) ROA % 11.0 12.5 11.8 12.8 - - General Organization for 15.9 Div Payout % 49.0 35.1 38.0 N/M - - Social Insurance EPS SR 5.1 7.1 7.9 2.3 42.7 24.4 Saleh Abdul Aziz Saleh Al 14.3 Rajhi BVPS SR 24.5 29.0 34.4 33.7 19.9 18.4 Falcom Financial Services Co 6.8 Source: Tadawul, Zawya, Company, NCBC Research

Public Investment Fund 5.4

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI CERAMIC COMPANY 148 BUILDING & CONSTRUCTION

Also known as Not Covered National Gypsum NGC, Gypsum

Current Price (SR) 31.5 National Gypsum Company was established in 1958 and is

Pricing / Valuation as on June 13, 2010 headquartered in Riyadh. The company specializes in the production of gypsum plaster, plaster board and laminated gypsum tiles. National Stock details Gypsum’s manufacturing plants are located in Riyadh and Yanbu, while 52-week range H/L (SR) 49.8/30.1 branches are situated at Jeddah and Dammam. Also, the company Market cap ($mn) 265.9 exports its products worldwide. National Gypsum holds a 33.3% stake in Shares outstanding (mn) 31.7 its subsidiary – Qatar Saudi Gypsum Company. Price perf. (%) 1M 3M 12M Absolute (11) (19) (30)  Business brief: National Gypsum has an annual production capacity of Market (6) (5) 3 450,000 tons of gypsum plaster, 12mn square meters of plaster board, Sector (11) (15) (23) 48,000 tons of spray gypsum and fixing plaster, 0.5mn square meters of Avg daily turn.(mn) SR US$ gypsum ceiling tiles and 30,000 tons of gypsum powder. 3M 3.9 1.1 12M 5.2 1.4  Financials: The company’s net income declined 40% YoY to SR17mn in Raw Beta 6m 3yr 1Q10, while revenues fell 31% YoY. However, cash and equivalents 0.74 0.88 increased 18.7% YoY to SR121mn during the same period. Reuters code 2090.SE Bloomberg code NGCO AB  Recent developments: The company announced a cash dividend of SR2.5 per Website www.gypsco.com.sa share for the year ended 31 December 2009. Over three consecutive years, Weighting & free float (%) National Gypsum distributed a cash dividend of SR2.5 per share. TASI (free float weight) 0.11 Free float 53.95 Company financials YoY CAGR (%) Valuation multiples 20072008 2009 1Q10 (%) (07-09) 08 09 TTM Net Revenues SRmn 223 260 203 41 (31.3) (4.7) P/E (x) 8.9 11.3 13.0 EBITDA SRmn 113 133 104 23 (31.8) (4.0) P/B (x) 1.9 1.8 2.0 Net Income SRmn 95 112 89 17 (40.0) (3.4) P/Sales (x) 3.8 4.9 5.4 Assets SRmn 597 602 629 643 2.3 2.6 Div yield (%) 7.9 7.9 N/A Equity SRmn 528 539 555 493 1.3 2.5

Source: NCBC Research Total Debt SRmn 39 39 49 45 16.1 11.8 Cash & Equiv SRmn 46 82 106 121 18.7 51.1 Share price performance EBITDA Mgn % 50.8 51.3 51.5 55.7 - - 7,000 50 Net Mgn % 42.5 43.2 43.7 41.8 - - 6,500 45 40 ROE % 18.7 21.1 16.2 13.2 - - 6,000 35 5,500 30 ROA % 16.6 18.7 14.4 10.9 - - 5,000 25 Div Payout % 83.3 70.4 89.3 N/A - - Jun-09 Oct-09 Feb-10 Jun-10 EPS SR 3 3.6 2.8 0.6 (39.6) (3.4) TASI Gypsum (RHS) BVPS SR 16.7 17.0 17.5 15.6 1.2 2.5

Source: Bloomberg Source: Tadawul, Zawya, Company, NCBC Research

Top 5 shareholders (%) Al Manafae Investment & Real 34.5 Estate Development Co. Thunayan Fahed Thunayan Al 10.3 Thunayan

Source: Tadawul, NCBC Research

JUNE 2010 NATIONAL GYPSUM 149 BUILDING & CONSTRUCTION Also known as Not Covered SCC, SCC Saudi Cable Company Group

Current Price (SR) 17.3 Saudi Cable Company, established in 1975, is headquartered in Jeddah,

Pricing / Valuation as on June 13, 2010 Saudi Arabia. The company is primarily engaged in the manufacturing and marketing of cables and related products. The company along with Stock details Saudi Arabia also has operations in Lebanon, United States, Turkey and 52-week range H/L (SR) 36.3/16.3 Bahrain. Market cap ($mn) 350.5 Shares outstanding (mn) 76.0  Business brief: SCC manufactures and markets low, medium and high Price perf. (%) 1M 3M 12M voltage wires and cables; building wires; insulated power cables; Absolute (9) (22) (43) telecommunication cables; various conductors used for transmission and Market (6) (5) 3 distribution; copper and aluminum rods; and polyvinyl chloride. It also Sector (11) (15) (23) provides turnkey project services for power and telecom projects, including Avg daily turn.(mn) SR US$ 3M 29.3 7.8 systems design, installation, engineering and testing. 12M 30.7 8.2  Financials: SCC reported a YoY decline of 23.6% in its revenues in 1Q10 Raw Beta 6m 3yr due to intense competition in the company’s major markets. The company’s 0.85 1.18 Reuters code 2110.SE net income fell significantly to SR1.1mn in 1Q10 from SR46.3mn in 1Q09 Bloomberg code SCACO AB due to the order delays in Turkey. Some of the company’s planned projects Website www.saudicable.com were also delayed.

Weighting & free float (%)  Recent developments: In March 2010, SCC received an order for SR85mn TASI (free float weight) 0.21 to supply high voltage cables to an eastern European country. In February Free float 81.23 2010, the company secured a SR70mn contract to supply and install

Valuation multiples underground cables in one of the Middle East countries (not disclosed). SCC 08 09 TTM also won a contract worth SR100mn from Saudi Electricity Co. to supply and P/E (x) 6.2 12.6 22.2 install high voltage cables for a project in Jeddah. P/B (x) 1.3 1.0 1.0 P/Sales (x) 0.4 0.5 0.6 Company financials Div yield (%) 4.3 4.3 N/A YoY CAGR (%) Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 3,143 3,503 2458 493 (23.6) (11.6) Share price performance EBITDA SRmn 448 463 243 21 (76.2) (26.4) 7,000 40 Net Income SRmn 283 212 104 1 (97.7) (39.2) 6,500 30 Assets SRmn 2,700 3,420 3,339 3,375 1.4 11.2 6,000 20 5,500 Equity SRmn 965 1,050 1,299 1,282 16.7 16.0 5,000 10 Total Debt SRmn 786 1,546 1,367 1,415 (7.7) 31.9 Jun-09 Oct-09 Feb-10 Jun-10 Cash & Equiv SRmn 69 122 109 147 139.5 25.2 TASI SCC (RHS) EBITDA Mgn % 14.3 13.2 9.9 4.3 - -

Source: Bloomberg Net Mgn % 9.0 6.1 4.2 0.2 - - ROE % 33.5 21.0 8.9 0.3 - - Top 5 shareholders (%) ROA % 11.9 6.9 3.1 0.1 - - Xenel Industrial Co. 16.6 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

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI CABLE COMPANY 150 BUILDING & CONSTRUCTION

Not Covered Also known as Saudi Industrial SIDC

Current Price (SR) 8.6 Saudi Industrial Development Company (SIDC), established in 1992,

Pricing / Valuation as on June 13, 2010 invests in the industrial sector of KSA. The company is mainly engaged in the manufacturing and distribution of ceramics, such as bathtubs, Stock details sanitary wares and tiles, home furnishing and mattresses. Over the 52-week range H/L (SR) 11.9/8.2 years, SIDC has diversified its investments to cover spring mattresses Market cap ($mn) 91.7 and polyester fibers. Shares outstanding (mn) 40.0 Price perf. (%) 1M 3M 12M  Business brief: SIDC operates through its affiliates. Saudi Ceramic Plant Absolute (7) (3) (26) (100% stake) in Yanbu Industrial City produces ceramic sanitary ware Market (6) (5) 3 (annual capacity of 500,000 units) as well as acrylic bathtubs and shower Sector (11) (15) (23) trays (annual capacity of 100,000 units). Arabian Spring and Sponge Avg daily turn.(mn) SR US$ 3M 6.6 1.8 Mattresses Mfg. Co. (50% stake), formerly known as Sleep High, is a leading 12M 7.9 2.1 manufacturer of spring mattresses. SIDC also has a minority stake in Raw Beta 6m 3yr Arabian Industrial Fibers Co. (1.6%) which produces aromatics (725 kilo tons 0.60 0.10 annually), terephathalic acid (350 KTA), and polyester (150 KTA). Reuters code 2130.SE Bloomberg code SIDC AB  Financials: SIDC’s revenues increased 1.5% YoY to SR52.6mn in 1Q10. The Website www.sidc.com.sa company’s EBITDA margins also turned positive YoY at 9.6% due to a

Weighting & free float (%) significant reduction in expenses. TASI (free float weight) 0.07  Recent developments: In June 2010, SIDC announced that it had signed a Free float 100.0 contract with the Saudi Industrial Development Fund to reschedule and

Valuation multiples settle the SR67.9mn loan balance due on the company's porcelain factory. 08 09 TTM During the same month, the company said that a court ruled in favor of Al- P/E (x) N/M N/M N/M Birr Organization in a lawsuit filed by Al-Birr challenging SIDC’s ownership of P/B (x) 1.5 1.2 1.1 800,000 shares in Yanbu National Petrochemicals Company (YANSAB). P/Sales (x) 1.4 1.5 1.5

Div yield (%) N/A N/A N/A Company financials Source: NCBC Research YoY CAGR (%) Share price performance 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 232 250 223 53 1.5 (2.0) 7,000 12 EBITDA SRmn 17 18 15 5 NM (6.6) 6,500 11 10 6,000 Net Income SRmn 12 (6) (4) 0 NM NM 9 5,500 8 Assets SRmn 618 480 503 521 10.6 (9.8) 5,000 7 Jun-09 Oct-09 Feb-10 Jun-10 Equity SRmn 362 234 291 308 25.6 (10.5)

TASI SIDC (RHS) Total Debt SRmn 120 112 105 104 (6.1) (6.3) Cash & Equiv SRmn 21 23 10 11 (19.9) (31.5)

Source: Bloomberg EBITDA Mgn % 7.4 7.3 6.7 9.6 - - Net Mgn % 5.1 (2.2) (1.6) 0.3 - - Top 5 shareholders (%) 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)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI INDUSTRIAL 151 BUILDING & CONSTRUCTION

Also known as Not Covered Amiantit Group, Amiantit Company SAAC

Current Price (SR) 17.6 Saudi Arabian Amiantit Company (SAAC) was established in 1968 to

Pricing / Valuation as on June 13, 2010 manufacture pipes for the local market. The company’s core business activities are the manufacture and sale of pipe systems; ownership and Stock details sale of pipe technologies; water management consultancy and 52-week range H/L (SR) 27.1/16.9 engineering services; and manufacture and supply of polymer products. Market cap ($mn) 541.9 Shares outstanding (mn) 115.5  Business brief: SAAC has 30 pipe system manufacturing plants, 6 Price perf. (%) 1M 3M 12M technology companies, 4 materials suppliers and 8 supply and engineering Absolute (20) (23) (24) subsidiaries. The company serves municipal, civil engineering, industrial, Market (6) (5) 3 energy and agricultural markets worldwide, supporting global infrastructure Sector (11) (15) (23) development through an extensive sales and service network in more than Avg daily turn.(mn) SR US$ 3M 18.2 4.9 70 countries. 12M 19.1 5.1  Financials: SAAC’s revenues decreased 13.5% YoY in 1Q10 to SR733mn. Raw Beta 6m 3yr However, EBITDA margin increased from 22.4% in 1Q09 to 27.4% in 1Q10 1.38 1.24 Reuters code 2160.SE due to a decline in operating expenses. Net income increased by 4.1% YoY Bloomberg code SAAC AB to SR50mn in 1Q10. Website www.amiantit.com  Recent developments: In May 2010, International Water Distribution Weighting & free float (%) Company, a 50% owned subsidiary of SAAC, signed a SR105mn, 10-year TASI (free float weight) 0.36 agreement with Saudi Industrial Development Fund. The aim of the deal is to Free float 87.5 execute distribution projects in Jeddah, Riyadh and Qassim. In April 2010,

Valuation multiples the company finalized to sell its 51% stake in Composite Pipe Industries 08 09 TTM (Oman) for USD4.5mn. In January 2010, SAAC announced plans to set up a P/E (x) 8.6 10.0 9.9 USD60mn facility to manufacture pipes in Bahrain. P/B (x) 1.4 1.2 1.2 P/Sales (x) 0.5 0.6 0.6 Company financials Div yield (%) 2.8 5.7 NA YoY CAGR (%) Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 3,102 4,026 3,293 733 (13.5) 3.0 Share price performance EBITDA SRmn 498 827 827 201 5.8 28.8 7,000 30 Net Income SRmn 64 235 202 50 4.1 77.7 6,500 25 Assets SRmn 4,060 4,504 4,056 4,034 (7.3) (0.1) 6,000 20 5,500 Equity SRmn 1,320 1,487 1,652 1,685 12.4 11.9 5,000 15 Total Debt SRmn 1,527 1,609 1,072 921 (36.6) (16.2) Jun-09 Oct-09 Feb-10 Jun-10 Cash & Equiv SRmn 202 329 425 404 23.2 45.3 TASI Amiantit (RHS) EBITDA Mgn % 16.1 20.5 25.1 27.4 - -

Source: Bloomberg Net Mgn % 2.1 5.8 6.1 6.82 - - ROE % 5.1 16.8 12.9 12.0 - - Top 5 shareholders (%) ROA % 1.7 5.5 4.7 4.9 - - Al Mawarid Investment Co Ltd 10.2 Div Payout % - 24.5 57.1 - - - HH Prince Khalid Abdullah 7.4 EPS SR 0.6 2.0 1.8 0.4 2.4 78.4 Abdul Rahman Al Saud BVPS SR 11.4 12.9 14.3 14.6 12.4 11.9 Abdullah Saleh Abdullah Al 5.8 Bassam Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 AMIANTIT COMPANY 152 BUILDING & CONSTRUCTION

Not Covered Also known as Arabian Pipes AC, APC, Anabib

Current Price (SR) 29.1 Arabian Pipes Company (APC) is the largest manufacturer of medium

Pricing / Valuation as on June 13, 2010 range High Frequency Welded (HFW) steel pipes in the Middle East. The company makes anti-corrosion coating HFW pipes for the oil & gas, Stock details petrochemical, agricultural and construction industries. APC, established 52-week range H/L (SR) 39.7/27.3 in 1991, has its manufacturing facility in Riyadh. APC exports to most of Market cap ($mn) 244.4 the regional countries. Shares outstanding (mn) 31.5 Price perf. (%) 1M 3M 12M  Business brief: APC’s product line includes line-pipe applications (for long Absolute (6) (14) (24) distance transportation of oil & gas), structural applications (for Market (6) (5) 3 construction), general purpose applications (industrial water and irrigation), Sector (11) (15) (23) standard pressure applications and casting applications. The company's Avg daily turn.(mn) SR US$ 3M 9.4 2.5 products are coated with anti-corrosives. APC’s total production capacity is 12M 14.2 3.8 160,000 tons of steel pipes per year. Raw Beta 6m 3yr  Financials: APC’s revenues declined by 57% YoY to SR56mn in 1Q10. The 0.68 1.15 Reuters code 2200.SE company’s EBITDA also fell by 65.8% YoY to SR8.1mn in 1Q10 as EBITDA Bloomberg code APCO AB margins contracted by 355 basis points to 14.4%. Net income declined from Website www.arabian-pipes.com SR5.6mn in 1Q09 to SR1.2mn in 1Q10.

Weighting & free float (%)  Recent developments: In June 2010, APC acquired the remaining 50% TASI (free float weight) 0.16 that it did not own in Arabian Yadong Coating Company from Yadong Free float 85.82 International. In March 2010, the company received a SR8.3mn contract

Valuation multiples from a local company to supply longitudinal submerged arc welded pipes 08 09 TTM (LSAW) for the Jubail Export Refinery project. In January 2010, the company P/E (x) 7.8 36.6 44.5 started commercial operations at its new steel pipes production facility in Al P/B (x) 1.3 1.2 1.2 Jubail Industrial City. P/Sales (x) 1.1 2.1 2.5 Div yield (%) NA NA NA Company financials Source: NCBC Research YoY CAGR (%) Share price performance 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 640 817 439 56.2 (57.4) (17.2) 7,000 40 EBITDA SRmn 158 160 91 8.1 (65.8) (24.3) 6,500 35 Net Income SRmn 126 117 25 1.2 (79.4) (55.3) 6,000 30 Assets SRmn 1,474 1,635 1,393 1,334 (14.9) (2.8) 5,500 25 Equity SRmn 642 712 737 738 2.9 7.2 5,000 20 Jun-09 Oct-09 Feb-10 Jun-10 Total Debt SRmn 749 883 625 567 (30.3) (8.6)

TASI APC (RHS) Cash & Equiv SRmn 17 19 21 14 34.5 11.6 EBITDA Mgn % 24.7 19.5 20.7 14.4 - - Source: Bloomberg Net Mgn % 19.6 14.4 5.7 2.1 - - ROE % 21.7 17.3 3.5 0.6 - - Top 5 shareholders (%) ROA % 9.2 7.5 1.7 0.3 - - Abdul Qader Al Muhaidib and 13.8 Sons Group 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

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 ARABIAN PIPES 153 BUILDING & CONSTRUCTION

Not Covered Also known as Zamil Industrial ZIIC

Current Price (SR) 41.8 Zamil Industrial Investment Co. (ZIIC), established in 1998 and

Pricing / Valuation as on June 13, 2010 headquartered in Dammam, is a manufacturing and fabrication group which supplies the construction industry. The company mainly operates Stock details in five sectors – steel, HVAC, glass, insulation and concrete. 52-week range H/L (SR) 55.3/39.8  Market cap ($mn) 668.6 Business brief: ZIIC exports to over 80 markets globally and has Shares outstanding (mn) 60.0 manufacturing plants and offices in 55 countries. The company offers a Price perf. (%) 1M 3M 12M range of products—air conditioning, pre-engineered steel buildings, process Absolute (16) (12) (7) equipment, transmission towers, processed architectural glass, and other Market (6) (5) 3 solutions—to the global construction industry. ZIIC operates through Zamil Sector (11) (15) (23) Air Conditioners (ZAC), Zamil Steel Inds (ZSI), Zamil Glass Industries (ZGI), Avg daily turn.(mn) SR US$ 3M 13.9 3.7 and Arabian Fiberglass Insulation Co. Ltd (AFICO). 12M 11.3 3.0  Financials: ZIIC reported an 18.8% YoY decline in revenues to SR927mn Raw Beta 6m 3yr during 1Q10. However, the company’s EBITDA margin rose by 40 basis 0.75 1.12 Reuters code 2240.SE points to 10.3% in 1Q10. Net income grew from SR52.5mn in 1Q09 to Bloomberg code ZIIC AB SR55mn in 1Q10 due to reduced interest expense and higher other income. Website www.ziic.com  Recent developments: In February 2010, the company announced plans to Weighting & free float (%) build a SR300mn plant to produce insulation materials, which is expected to TASI (free float weight) 0.39 commence commercial operations in 2012. In January 2010, the company’s Free float 75.65 eastern cooling district unit signed a SR206mn financing facility with National

Valuation multiples Commercial Bank (NCB) for thirteen-and-a-half years. During the same 08 09 TTM month, Bank AlJazira signed an agreement with ZIIC to purchase steel pre- P/E (x) 11.1 10.9 10.8 constructed buildings and air conditioners at a value of SR75mn for Darfur P/B (x) 2.4 2.1 2.1 Fund for Reconstruction and Development (Sudan). P/Sales (x) 0.6 0.6 0.6 Div yield (%) 3.6 3.6 NA Company financials Source: NCBC Research YoY CAGR (%) Share price performance 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 3,681 4,550 4,204 927 (18.8) 6.9 7,000 60 EBITDA SRmn 361 454 441 96 (15.3) 10.6 6,500 55 50 6,000 Net Income SRmn 207 225 230 55 4.9 5.6 45 5,500 40 Assets SRmn 3,965 5,370 4,663 4,628 (12.6) 8.5 5,000 35 Jun-09 Oct-09 Feb-10 Jun-10 Equity SRmn 892 1,028 1,195 1,189 17.8 15.7

TASI ZIIC (RHS) 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

Source: Bloomberg EBITDA Mgn % 9.8 10.0 10.5 10.3 - - Net Mgn % 5.6 4.9 5.5 5.9 - - Top 5 shareholders (%) ROE % 25.3 23.4 20.7 18.5 - - Zamil Group Holding 19.9 Company ROA % 6.0 4.8 4.6 4.7 - - Al Amanah Saudi Equity Fund 5.0 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

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 ZAMIL INDUSTRIAL 154 BUILDING & CONSTRUCTION

Not Covered Also known as Al Babtain Power Al Babtain

Current Price (SR) 37.9 Al-Babtain Power and Telecommunication Company (Al-Babtain)

Pricing / Valuation as on June 13, 2010 provides outdoor lighting, transmission & distribution (T&D), and testing station services to the power sector. Additionally, it designs, Stock details manufactures, and installs steel towers for the telecommunications 52-week range H/L (SR) 45.4/33.3 sector. Al-Babtain was established in 1955 in Riyadh. Market cap ($mn) 409.2  Shares outstanding (mn) 40.5 Business brief: Al-Babtain’s T&D portfolio comprises transmission towers Price perf. (%) 1M 3M 12M up to 500 kV, monopoles up to 230 kV, and distribution poles up to 33 kV. Absolute (7) (3) (6) The company’s subsidiary Al-Babtain LeBLANC Telecommunication (51% Market (6) (5) 3 stake) is a joint venture with LeBLANC that provides engineering, Sector (11) (15) 23 manufacturing and installation services for communication towers of various Avg daily turn.(mn) SR US$ 3M 10.2 2.7 types in Saudi Arabia, neighboring Arab countries and North African nations. 12M 13.5 3.6 Al-Babtain operates in the Petrochemicals, Oil & Gas, Cement, Industrial, Raw Beta 6m 3yr and Commercial segments of structural steel, providing engineering and 1.1 0.98 manufacturing solutions for varied applications. The company has Reuters code 2320.SE manufacturing facilities in Riyadh and Cairo. Bloomberg code ALBABTAI AB Website www.al-babtain.com.sa  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. Weighting & free float (%) TASI (free float weight) 0.31  Recent developments: In December 2009, Al-Babtain LeBlanc Free float 100 Telecommunication signed an agreement with CME of Portugal to set up a

Valuation multiples SR2mn venture to design and install wired networks and information 08 09 TTM systems. The company expects the venture to increase sales by SAR19.8mn. P/E (x) 11.7 14.0 15.0 Al-Babtain announced a dividend of SR1.50 per share for 2009. P/B (x) 3.1 2.6 2.8 EV/EBITDA (%) 1.5 1.4 1.5 Company financials Div yield (%) 2.6 4.0 NM YoY CAGR (%)

Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 836 1,013 1,123 230 (24.7) 15.9 Share price performance EBITDA SRmn 149 210 192 38 (26.7) 13.6 7,000 45 Net Income SRmn 96 131 109 24 (22.1) 6.8 6,500 40 Assets SRmn 991 1,416 1,138 1,133 (17.8) 7.2 6,000 35 5,500 Equity SRmn 423 499 580 543 8.6 17.1 5,000 30 Total Debt SRmn 328 602 291 292 (51.0) (5.9) Jun-09 Oct-09 Feb-10 Jun-10 Cash & Equiv SRmn 20 68 51 58 (10.8) 60.3 TASI AL Babtain (RHS) EBITDA Mgn % 17.8 20.7 17.1 16.7 - - Net Mgn % 11.5 12.9 9.7 10.5 - - Source: Bloomberg ROE % 24.6 28.4 20.3 17.2 - - Top 5 shareholders (%) 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)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 AL-BABTAIN POWER 155 BUILDING & CONSTRUCTION

Also known as Not Covered Saudi Vitrified Saudi Vitrified, SVCP

Current Price (SR) 64.8 Saudi Vitrified Clay Pipe Company (SVCP), established in 1977 and

Pricing / Valuation as on June 13, 2010 headquartered in Riyadh, manufactures vitrified clay pipes and fittings, and jacking pipes; its annual production capacity is 100,000 tons. Along Stock details with the local Saudi market, SVCP has presence in international markets, 52-week range H/L (SR) 66.3/37.5 including Arab countries, the Far East and Europe. Market cap ($mn) 258.9 Shares outstanding (mn) 15.0  Business brief: SVCP manufactures vitrified clay pipes (ranging from 100– Price perf. (%) 1M 3M 12M 1200mm) and jacking pipes (150–1000mm). These pipes are used in the Absolute 7 31 45 domestic and industrial sewage systems as well as for storm water disposal. Market (6) (5) 3 The main features of these pipes are their strength, durability, and Sector (11) (15) (23) resistance to chemicals contained in sewage and drainage water. The Avg daily turn.(mn) SR US$ 3M 9.4 2.5 company has a state of the art 56,000 square meter facility in Riyadh with 12M 10.2 2.7 an annual production capacity of 100,000 tons. Raw Beta 6m 3yr  Financials: SVCP’s revenue increased by 4.4% YoY to SR60mn in 1Q10. The 0.32 0.95 Reuters code 2360.SE EBITDA margin grew to 39.6% in 1Q10 from 22.3% in 1Q09 due to a decline Bloomberg code SVCP AB in operating expenses. Net income rose to SR19mn in 1Q10 from SR9.2mn Website www.svcp-sa.com in 1Q09.

Weighting & free float (%)  Recent developments: The company announced the distribution of cash TASI (free float weight) 0.11 dividend of SR2.25 per share for 2009. Free float 56.01 Company financials Valuation multiples YoY CAGR (%) 08 09 TTM 20072008 2009 1Q10 (%) (07-09) P/E (x) 20.1 22.8 18.4 Net Revenues SRmn 215 258 225 60 4.4 2.4 P/B (x) 4.6 4.5 4.8 EBITDA SRmn 49 53 68 24 85.0 17.6 P/Sales (x) 3.8 4.3 4.3 Net Income SRmn 43 48 43 19 109.5 (0.7) Div yield (%) 3.5 3.5 N/A Assets SRmn 333 450 478 480 0.2 19.8 Source: NCBC Research Equity SRmn 196 211 217 201 8.6 5.2 Share price performance Total Debt SRmn 61 156 206 205 27.6 83.7 Cash & Equiv SRmn 11 15 45 46 135.6 106.7 7,000 70 6,500 60 EBITDA Mgn % 22.8 20.5 30.1 39.6 - - 6,000 50 Net Mgn % 20.1 18.7 18.9 31.9 - - 5,500 40 ROE % 24.6 23.7 19.9 37.0 - - 5,000 30 Jun-09 Oct-09 Feb-10 Jun-10 ROA % 14.7 12.3 9.2 16.1 - -

TASI SVCP (RHS) Div Payout % 69.4 70.1 79.2 N/A - - EPS SR 2.9 3.2 2.8 1.3 111.5 (0.7) Source: Bloomberg BVPS SR 13.1 14.1 14.4 13.4 8.6 5.2

Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research Abdul Latif Al Essa Co 15.6 HH Prince Faisal Bin Abdul 15.0 Aziz Faisal Al Saud Saad Saud Ibrahim Al Sayari 13.3

Al Riyadh Investment Co 5.5

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI VITRIFIED CLAY PIPE COMPANY 156 BUILDING & CONSTRUCTION

Not Covered Also known as ME Specialized Cable MESC

Current Price (SR) 20.9 Middle East Specialized Cables Co. (MESC) began as a local manufacturer

Pricing / Valuation as on June 13, 2010 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 Stock details expand its product range to low and medium voltage power cables. 52-week range H/L (SR) 46.8/19.7  Market cap ($mn) 222.3 Business brief: MESC’s products are categorized into instrumentation and Shares outstanding (mn) 40.0 process control cables. These are used in indoor, outdoor and control room Price perf. (%) 1M 3M 12M applications, system cables (data and telephone cables), and power cables Absolute (10) (34) (45) (used in applications requiring greater electrical or electromagnetic Market (6) (5) 3 protection). Additionally, MESC markets specialized cables for harsh Sector (11) (15) (23) environment applications, such as in the hydrocarbon industry. The Avg daily turn.(mn) SR US$ 3M 19.0 5.1 company’s production capacity is about 10,000 tons of copper annually. 12M 15.1 4.0 Along with its regional operations, MESC has presence in 14 countries. Raw Beta 6m 3yr  Financials: The company’s revenues grew by 21.4% YoY to SR289mn in 0.83 0.96 Reuters code 2370.SE 1Q10. However, the EBITDA margin declined to 6.9% in 1Q10 from 17.9% in Bloomberg code MESC AB 1Q09, mainly due to higher operating expenses. Net income decreased by Website www.mesc.com.sa 88.0% YoY to SR3mn in 1Q10.

Weighting & free float (%)  Recent developments: In May 2010, MESC announced that it had TASI (free float weight) 0.08 extended its joint venture with Fujikura Company for a period of five years Free float 47.98 and increased its stake in MESC Fujikura Cable Co. from 46% to 57.5%. In

Valuation multiples April 2010, the company signed a contract for SR15mn with Switzerland- 08 09 TTM based BUSS AV Company to purchase PVC units. In October 2009, it had P/E (x) 9.4 16.3 29.3 signed a MoU to acquire United Transformers Electric Co; the acquisition is P/B (x) 1.6 1.7 1.8 expected to be complete by June 2010. P/Sales (x) 0.6 0.8 0.8 Div yield (%) 5.7 4.8 N/A Company financials Source: NCBC Research YoY CAGR (%) Share price performance 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 1,103 1,308 1,034 289 21.4 (3.2) 7,000 50 EBITDA SRmn 235 245 152 20 (53.6) (19.5) 6,500 40 6,000 30 Net Income SRmn 150 88 51 3 (88.0) (41.5) 5,500 20 Assets SRmn 1,246 1,615 1,710 1,711 3.9 17.2 5,000 10 Equity SRmn 435 507 504 467 (3.2) 7.7 Jun-09 Oct-09 Feb-10 Jun-10

TASI MESC (RHS) Total Debt SRmn 470 836 780 833 1.0 28.8 Cash & Equiv SRmn 85 54 35 36 (74.2) (36.2)

Source: Bloomberg EBITDA Mgn % 21.3 18.7 14.7 6.9 - - Net Mgn % 13.6 6.8 5.0 1.1 - - Top 5 shareholders (%) ROE % 39.6 18.8 10.2 2.6 - - Abdul Aziz Mohammed 26.6 Sulaiman Al Namlah ROA % 14.4 6.2 3.1 0.7 - - Mohamad Ali Abdullah Al 15.3 Div Payout % 10.7 54.3 78.1 N/A - - Suwailem EPS SR 4.7 2.2 1.3 0.1 (87.7) (47.8) Lama Ismail Fawzi Abu 10.0 BVPS SR 13.6 12.7 12.6 11.7 (3.2) (3.6) Khadhra Source: Tadawul, Zawya, Company, NCBC Research Mansoor Adbul Aziz Mohamad 8.4 Ka’aky

Source: Tadawul, NCBC Research

JUNE 2010 ME SPECIALIZED CABLE 157 BUILDING & CONSTRUCTION

Not Covered Also known as Red Sea Housing RSH, Red Sea

Current Price (SR) 54.5 Red Sea Housing Services Company was established in Jeddah in 1967.

Pricing / Valuation as on June 13, 2010 The objective was to replicate the American manufactured housing model in Saudi Arabia. The company later diversified into manufacturing Stock details and property management, setting up its first manufacturing facility in 52-week range H/L (SR) 80.3/53.5 1983. Red Sea Housing manufactures, sells and leases all types of Market cap ($mn) 435.9 modular buildings. Shares outstanding (mn) 30.0 Price perf. (%) 1M 3M 12M  Business brief: With three manufacturing facilities, one each in Dubai, Absolute (6) (5) (18) Jubail, and Accra (Ghana), Red Sea Housing has the capability to Market (6) (5) 3 manufacture 920 square meters of quality housing a day; this represents an Sector (11) (15) (23) annual production capacity of 335,000 square meters. The company serves Avg daily turn.(mn) SR US$ 3M 5.1 1.4 all types of housing requirements – commercial and residential, temporary 12M 14.1 3.8 and permanent. Red Sea Housing offers special services to oil & gas, and Raw Beta 6m 3yr mining companies. The company’s market area covers Africa, the Middle 0.43 1.05 East, Asia and South America. Reuters code 4230.SE Bloomberg code REDSEA AB  Financials: Red Sea’s revenues declined by 52.2% YoY in 1Q10 to Website www.rsh.com.sa SR147mn. However, the company’s EBITDA margin increased by 250 basis

Weighting & free float (%) points YoY to 26.8% in this period due to reduced operating expenses. The TASI (free float weight) 0.10 company’s net income fell 58% YoY from SR58mn to SR24mn in 1Q10.

Free float 30.0  Recent developments: In April 2010, Red Sea Housing received a

Valuation multiples SR480mn contract from Chiyoda-JGC Joint Venture to engineer, manufacture 08 09 TTM and construct a major housing facility for Papua New Guinea’s Liquefied P/E (x) 7.6 13.2 18.2 Natural Gas Project (PNG LNG). The company announced a cash dividend of P/B (x) 2.4 2.3 2.3 SR2.0 per share for 2009. P/Sales (x) 1.4 1.9 2.4 Div yield (%) 6.4 3.7 NA Company financials Source: NCBC Research YoY CAGR (%) Share price performance 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 690 1,139 852 147 (52.2) 11.1 EBITDA SRmn 158 279 178 39 (47.4) 6.1 7,000 80 6,500 Net Income SRmn 117 214 124 24 (58.3) 2.6 70 6,000 Assets SRmn 772 1,003 921 963 (2.7) 9.2 60 5,500 Equity SRmn 529 682 701 725 (2.0) 15.2 5,000 50 Jun-09 Oct-09 Feb-10 Jun-10 Total Debt SRmn 36 99 102 118 45.4 68.8 TASI Red Sea (RHS) Cash & Equiv SRmn 37 120 47 97 (27.8) 12.2 EBITDA Mgn % 23.0 24.5 20.9 26.8 - - Source: Bloomberg Net Mgn % 17.0 18.8 14.5 16.4 - - Top 5 shareholders (%) ROE % 23.8 35.4 17.9 13.5 - - Al Dabbagh Holding Co. 51.0 ROA % 17.7 24.1 12.8 10.3 - - Mumtaz Foods Co 5.0 Div Payout % 51.2 49.1 48.5 - - -

The National Scientific 5.0 EPS SR 3.9 7.1 4.1 0.8 (58.5) 2.7 Company LTD BVPS SR 17.6 22.7 23.4 24.2 (2.0) 15.2

Tejariah for Marketing 5.0 Source: Tadawul, Zawya, Company, NCBC Research Services and Agencies

Source: Tadawul, NCBC Research

JUNE 2010 RED SEA HOUSING 158 Real Estate

Ticker Company Page No.

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

JUNE 2010 THE SAUDI FACTBOOK 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, Exhibit 115: Comparison of ROE and P/E of GCC 2007–09 companies, 2009 (USD mn) (%)

7,500 30 6,750 6,000 20 5,250 10 4,500 3,750 P/E (x) 0 3,000 -10 0 10 20 30 40 ROE (%) 2,250 -10 1,500

750 -20 0 2007 2008 2009 -30 KSA UAE Kuwait Qatar 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

Exhibit 116: Sector details % weight in Index as on Net Margin ROE (%), Company Dec 2009 (%), 2009 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;

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

JUNE 2010 THE SAUDI FACTBOOK 160 REAL ESTATE

over 80% of the overall revenues and over 90% of the overall profits of the sector in 2009.

Exhibit 117: Revenues of companies, 2007–09 Exhibit 118: Profitability of companies, 2007-09 (SR mn) (%)

7,000 100

6,000 80 5,000 60 4,000

3,000 40

2,000 20

1,000 0 0 2007 2008 2009 2007 2008 2009 Saudi Real Est Taiba Makkah Saudi Real Estate Taiba Makkah Arriyadh Dar alarkan Arriyadh Dar alarkan

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

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.

Exhibit 119: Comparison of P/B and ROE, 2008 Exhibit 120: Comparison of P/B and ROE, 2009 (%) (%)

30 35

25 30 25 20 Dar alarkan 20 Dar alarkan 15 Arriyadh Taiba 15 Taiba Makkah 10 10 Arriyadh

ROE(%) Makkah

ROE(%) 5 5 Saudi Real P/B (x) Estate P/B (x) 0 Jabal 0 Jabal -5 Saudi Real Emaar Emaar -5 Estate -10

-10 -15 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0

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

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.

JUNE 2010 THE SAUDI FACTBOOK 161 REAL ESTATE DEVELOPMENT

Not Covered Also known as Saudi Real Estate Real Estate, AKARIA

Current Price (SR) 23.6 In 1976, Saudi Real Estate (AKARIA) was established in Riyadh. The

Pricing / Valuation as on June 13, 2010 company specializes in development, management, property investment and civil contracting for commercial and residential properties. AKARIA also Stock details engages in the trading, sale and lease of construction materials. 52-week range H/L (SR) 29.9/21.0  Market cap ($mn) 755.0 Business brief: AKARIA is one of the pioneers in shopping center Shares outstanding (mn) 120.0 construction in the GCC. The company has constructed a number of shopping Price perf. (%) 1M 3M 12M centers in Riyadh and Dammam. It also develops housing and office Absolute (2) (6) (11) complexes, and has executed a number of projects, such as Saudi Market (6) (5) 3 embassies, in some GCC countries. The company’s principal investment Sector (3) (3) (13) holdings include a 25% stake in Saudi Company for Al Muaiqliah Commercial Avg daily turn.(mn) SR US$ 3M 3.6 1.0 Centre, 15% stake in United Glass Company, and 10% stake in Dar Al 12M 7.1 1.9 Tamleek Company. Raw Beta 6m 3yr  Financials: 1Q10 sales rose 13.9% YoY to SR50.0mn. The company’s EBIT 0.54 0.99 Reuters code 4020.SE increased 11.5% YoY to SR30.6mn due to higher occupancy rates and the Bloomberg code SRECO AB launch of a commercial plaza. However, EBIT margins declined one Website www.al-akaria.com percentage point to 61.1% primarily owing to higher depreciation expenses

Weighting & free float (%) (SR6.1mn) in 1Q10. Net profit contracted 1.1% YoY to SR30.6mn mainly due TASI (free float weight) 0.17 to lower income from Murabaha payments.

Free float 30.64  Recent developments: On 12 April 2010, the company’s Board approved the

Valuation multiples distribution of the proposed cash dividend of SR0.75 per share for the year 08 09 TTM ended 31 December 2009. P/E (x) 20.2 30.6 30.7 P/B (x) 0.9 0.9 0.9 Company financials P/Sales (x) 12.6 16.5 16.0 YoY CAGR (%) Div yield (%) 4.2 3.2 N/A 20072008 2009 1Q10 (%) (07-09) DPS 1.0 0.8 N/A Net Revenues SRmn 243 225 171 50 13.9 (16.0)

Source: NCBC Research EBITDA SRmn 153 133 115 37 31.0 (13.2) Net Income SRmn 173 140 93 31 (1.1) (26.8) Share price performance Assets SRmn 3,269 3,235 3,237 3,269 1.7 (0.5) 7,000 30 Equity SRmn 3,120 3,085 3,067 3,106 0.1 (0.9) 6,500 28 26 Total Debt SRmn 0 0 0 0 N/A N/A 6,000 24 Cash & Equiv SRmn 619 61 644 691 634.3 2.0 5,500 22 EBITDA Mgn % 63.1 59.2 67.4 74.1 - - 5,000 20 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 71.2 62.2 54.1 61.3 - - TASI Real Estate (RHS) ROE % 5.6 4.5 3.0 4.0 - - ROA % 5.4 4.3 2.9 3.8 - - Source: Bloomberg Div Payout % 69.4 105.3 97.4 N/A - - Top 5 shareholders (%) EPS SR 1.4 1.0 0.8 0.3 0.0 (26.9) Public Investment Fund 64.5 BVPS SR 26.0 25.7 25.6 25.9 0.2 (0.9)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI REAL ESTATE COMPANY 162 REAL ESTATE DEVELOPMENT

Not Covered Also known as Taiba Holding Taiba

Current Price (SR) 16.5 Taiba Holding Co (Taiba) owns, manages, and invests in real estate,

Pricing / Valuation as on June 13, 2010 hotels, hospitals, and resorts. The company also constructs, manages, and markets properties. Taiba undertakes electromechanical, Stock details agricultural, industrial, architectural and mining projects. The company 52-week range H/L (SR) 18.7/16.0 was established in September 1988 and is headquartered in Medina. Market cap ($mn) 657.8  Shares outstanding (mn) 150.0 Business brief: Taiba’s core focus is on the real estate sector and it is a Price perf. (%) 1M 3M 12M major developer in the central area surrounding the Holy Prophet's mosque. Absolute 0 0 (2) Taiba’s subsidiaries and associate companies include TACOMA (involved in Market (6) (5) 3 projects in the central area), ARAC (tourism activities), Al Aqeeq Real Estate Sector (3) (3) (13) Dev. Co (AQEEQ), TAWD (property management and marketing), and Avg daily turn.(mn) SR US$ 3M 3.3 0.9 Arabian Resort Areas and Quality Horizons. The company also operates in 12M 6.0 1.6 the agriculture industry through Al Madinah Dates Company, and Taiba Raw Beta 6m 3yr Agricultural Development Company. As of December 2009, Taiba owns a 0.25 0.82 20% stake in the Knowledge Economic City, Medina. Reuters code 4090.SE  Bloomberg code TIRECO AB Financials: The company’s revenues declined at a compounded annual rate Website www.taiba.com.sa 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 Weighting & free float (%) to higher other income and lower Zakat. TASI (free float weight) 0.34

Free float 69.0  Recent developments: On 21 March 2010, Taiba announced a dividend of

Valuation multiples SR0.3 per share for 1Q10; the company paid a dividend of SR1.20 per share 08 09 TTM for full year 2009. P/E (x) 15.4 35.9 35.7 P/B (x) 0.9 0.9 0.9 Company financials P/Sales (x) 8.9 11.2 11.6 YoY CAGR (%) Div yield (%) 9.1 7.3 7.3 20072008 2009 1Q10 (%) (07-09) DPS 1.5 1.2 1.2 Net Revenues SRmn 504 277 221 40 (17.3) (33.7) EBITDA SRmn 413 164 105 19 (0.6) (49.5) Source: NCBC Research Net Income SRmn 393 160 69 14 3.2 (58.2) Share price performance Assets SRmn 3,632 3,568 3,527 3,574 0.4 (1.5)

7,000 18 Equity SRmn 2,980 2,899 2,799 2,813 (3.3) (3.1) 6,500 17 Total Debt SRmn 34 5 4 4 (25.0) (67.0) 6,000 16 Cash & Equiv SRmn 66 287 70 57 45.6 2.3 5,500 15 5,000 14 EBITDA Mgn % 81.9 59.2 47.6 48.5 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 78.0 57.8 31.0 35.7 - - TASI Taiba (RHS) ROE % 13.5 5.4 2.4 2.0 - - ROA % 11.7 4.4 1.9 1.6 - - Source: Bloomberg Div Payout % 57.3 140.2 260.9 300.0 - - Top 5 shareholders (%) EPS SR 2.6 1.1 0.5 0.1 11.1 (58.1) Mohammed Ibrahim 16.6 BVPS SR 19.9 19.3 18.7 18.8 (3.3) (3.1) Mohammed Al Issa Source: Tadawul, Zawya, Company, NCBC Research General Organization for 6.9 Social Insurance - Saudi Arabia

Source: Tadawul, NCBC Research

JUNE 2010 TAIBA HOLDING COMPANY 163 REAL ESTATE DEVELOPMENT

Not Covered Also known as Makkah Construction Makkah, MCDC

Current Price (SR) 29.2 Makkah Construction & Development Co. (MCDC) was established in

Pricing / Valuation as on June 13, 2010 1989 to develop areas around the Holy Mosque in Makkah. The company is engaged in redevelopment of the Holy Haram Area. MCDC has Stock details established a residential and commercial complex including the Jabal 52-week range H/L (SR) 34.7/26.0 Omar and Jabal Khandama Project. Market cap ($mn) 1,283.0  Shares outstanding (mn) 164.8 Business brief: MCDC is involved in real estate (investment, construction Price perf. (%) 1M 3M 12M and development), property management, and hotel management. The Absolute (2) 0 11 company holds 100% stake in Makkah Hilton & Towers (the 1,400-room Market (6) (5) 3 hotel) and Makkah Shopping Center (a three-storied 451 unit shopping Sector (3) (3) (13) center). In 2006, MCDC was a founding member of the Jabal Omar Avg daily turn.(mn) SR US$ 3M 6.5 1.7 Development Company (21% stake) that was established with a capital of 12M 7.1 1.9 SR5bn. The Jabal Omar Project is spread across an area of 230,000 sq m Raw Beta 6m 3yr and includes hotels, commercial centers and prayer facilities for over 0.36 0.66 200,000 people. Reuters code 4100.SE  Bloomberg code MCDCO AB Financials: For the year ended 14 April 2010, the company’s revenues Website www.mcdc.com.sa 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- Weighting & free float (%) year profit decreased at a relatively lower rate of 3.9% YoY (to SR213mn) TASI (free float weight) 0.80 Free float 83.50 primarily due to an investment income of SR2.6mn in fiscal year 2010.  Valuation multiples Recent developments: On 05 May 2010, MCDC announced a cash dividend 08 09 10 of SR1.5 per share for fiscal year ended 14 April 2010. P/E (x) 27.2 21.7 22.6 P/B (x) 1.1 1.3 1.3 Company financials* P/Sales (%) 17.7 16.5 17.3 YoY CAGR (%) Div yield (%) 4.1 5.1 5.1 20072008 2009 2010 (%) (07-10) DPS 1.2 1.5 1.5 Net Revenues SRmn 274 272 291 279 (4.2) 0.5 EBITDA SRmn 210 237 261 250 (4.5) 6.0 Source: NCBC Research Net Income SRmn 173 177 222 213 (3.9) 7.3 Share price performance Assets SRmn 3,460 4,618 4,124 4,170 1.1 6.4

7,000 35 Equity SRmn 3,157 4,234 3,709 3,750 1.1 5.9

6,500 30 Total Debt SRmn 0 0 0 0 N/A N/A 6,000 Cash & Equiv SRmn 125 114 189 131 (30.7) 1.5 5,500 25 5,000 20 EBITDA Mgn % 76.5 87.1 89.8 89.6 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 63.0 65.1 76.3 76.5 - - TASI Makkah (RHS) ROE % 6.5 4.8 5.6 5.7 - - ROA % 5.7 4.4 5.1 5.1 - - Source: Bloomberg Div Payout % - 112.1 111.1 116.3 - - Top 5 shareholders (%) EPS SR 1.1 1.1 1.4 1.3 (4.4) 7.1 Saudi Binladin Group 10.9 BVPS SR 19.2 25.7 22.5 22.8 1.1 5.9 Mohammed Saleh Hamza 7.2 Source: Tadawul, Zawya, Company, NCBC Research Sayrafi * Financial year ending April

Source: Tadawul, NCBC Research

JUNE 2010 MAKKAH CONSTRUCTION AND DEVELOPMENT COMPANY 164 REAL ESTATE DEVELOPMENT Also known as Not Covered Arriyadh, Arriyadh Development ARDCO

Current Price (SR) 14.2 Arriyadh Development Company is engaged in the construction of

Pricing / Valuation as on June 13, 2010 commercial, office and residential buildings and complexes. The company also develops public parks, tourist compounds and parking Stock details lots. ARDCO, headquartered in Riyadh, was established in 1994. 52-week range H/L (SR) 14.5/11.6  Business brief: Arriyadh has been involved in residential projects such as Market cap ($mn) 377.2 Shares outstanding (mn) 100.0 Sunrise Cities and commercial projects like Attameer Trading Center, Price perf. (%) 1M 3M 12M Arriyadh Transportation Center, Technical Service City, Riyadh Hills and Absolute 3 6 9 Riyadh Car Auction (for the sale of used cars). The company has also been Market (6) (5) 3 engaged in the development of market areas such as Batha Meat & Sector (3) (3) (13) Vegetable Market, Riyadh Wholesale & Retail Market and Riyadh Vegetable & Avg daily turn.(mn) SR US$ 3M 15.1 4.0 Fruits Market. 12M 13.2 3.5  Financials: Arriyadh’s revenues increased 3.0% YoY to SR38.6mn in 1Q10. Raw Beta 6m 3yr The company’s operating income grew 7.2% YoY to SR23.2mn during the 0.32 0.96 quarter and net income rose 3.5% YoY to SR22.8mn in 1Q10 from Reuters code 4150.SE Bloomberg code ADCO AB SR22.0mn in 1Q09. Net margins improved 30 basis points to 59.1% Website www.ardco.com.sa compared to the same quarter of the previous year.

Weighting & free float (%)  Recent developments: On 26 May 2010, Arriyadh unveiled an urban TASI (free float weight) 0.29 redevelopment plan for Riyadh at a cost of SR13bn, to be constructed in nine Free float 99.94 stages over 15 years. The project is yet to receive approval from the Saudi

Valuation multiples government. The government and investment partners are expected to fund 08 09 TTM a majority of the project expenditure. On 23 February 2010, Arriyadh P/E (x) 17.7 15.3 15.1 announced a cash dividend of SR0.75 per share for the fiscal year 2009. P/B (x) 1.0 1.0 1.0 EV/EBITDA (%) 10.1 9.1 9.0 Company financials Div yield (%) 3.5 5.3 NA YoY CAGR (%) DPS 0.5 0.75 20072008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Revenues SRmn 127 140 155 39 3.0 10.4 EBITDA SRmn 83 94 110 27 5.8 15.1 Share price performance Net Income SRmn 71 80 93 23 3.5 14.5 7,000 15 Assets SRmn 1,577 1,593 1,589 1,604 0.5 0.4 6,500 14 Equity SRmn 1,377 1,405 1,422 1,445 5.0 1.6 6,000 13 5,500 12 Total Debt SRmn - - - - N/A N/A 5,000 11 Cash & Equiv SRmn 148 163 8 26 (21.7) (77.1) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EBITDA Mgn % 65.0 67.1 70.6 71.2 - - TASI Arriyadh Development (RHS) Net Mgn % 55.5 57.0 59.6 59.1 - - ROE % 5.2 5.7 6.6 6.4 - - Source: Bloomberg ROA % 4.5 5.0 5.8 5.7 - - Top 5 shareholders (%) Div Payout % 70.4 62.5 80.6 N/A - - Emar Arabian Shield for 9.6 EPS SR 0.7 0.8 0.9 0.2 4.5 14.4 Investment BVPS SR 13.8 14.1 14.2 14.5 5.0 1.6 Development & Investment 6.4 Services Source: Tadawul, Zawya, Company, NCBC Research Monasteries Holding 5.8 Company.

Source: Tadawul, NCBC Research

JUNE 2010 ARRIYADH DEVELOPMENT COMPANY 165 REAL ESTATE DEVELOPMENT

Also known as Not Covered EEC, Emaar Economic City Emaar EC

Current Price (SR) 8.6 In September 2006, Emaar the Economic City (Emaar EC) was set up by

Pricing / Valuation as on June 13, 2010 Emaar Properties through a joint venture with Saudi investors to undertake the development of the SR187.6bn King Abdullah Economic Stock details City (KAEC). The mega project is part of the government’s initiatives to 52-week range H/L (SR) 12.4/8.3 diversify the economy and establish new economic, educational, and Market cap ($mn) 1,948.8 technology hubs. Shares outstanding (mn) 850.0 Price perf. (%) 1M 3M 12M  Business brief: KAEC, the single largest private sector-led project (168mn Absolute (5) (14) (29) sq m) in the GCC region, has six key components – seaport, industrial zone, Market (6) (5) 3 residential district, a financial island, an educational zone and a waterside Sector (3) (3) (13) resort. Avg daily turn.(mn) SR US$ 3M 40.9 10.9  Financials: Emaar EC’s revenues declined 45.1% YoY to SR45.2mn in 1Q10. 12M 60.5 16.1 During the same period, the company incurred a net loss of SR53.5mn Raw Beta 6m 3yr compared to a net loss of SR62.3mn in 1Q09. Emaar EC continues to post 0.61 1.03 losses as the project is still in development phase and revenue generation Reuters code 4220.SE Bloomberg code EMAAR AB through land and property sales has been limited. In 1Q10, the company Website www.kingabdullahcity.com generated an investment income of SR0.8mn relative to SR7.7mn in 1Q09.

Weighting & free float (%)  Recent developments: On 18 June 2010, Emaar EC entered into a development TASI (free float weight) 0.44 and license agreement with Al Ahlam Marine Tourism Group to develop a marina Free float 30.0 and yacht club facility inside KAEC. On 2 June 2010, Saudi Total Lubricants

Valuation multiples Company Ltd signed an agreement with the company to establish a lubricants 08 09 TTM manufacturing facility (with an annual capacity of 25,000 MT of lubricants per P/E (x) N/M N/M N/M year) on approximately 65,000 sq m of a leased plot in the Industrial Valley of P/B (x) 0.9 0.9 0.9 KAEC. In addition, on 11 March 2010, Emaar EC signed a deal with P/Sales (%) 72.0 28.1 32.7 Singapore's Jurong International to develop the second phase of the Div yield (%) N/A N/A N/A Industrial Valley at KAEC. DPS N/A N/A N/A

Source: NCBC Research Company financials Share price performance YoY CAGR (%) 20072008 2009 1Q10 (%) (07-09) 7,000 13 Net Revenues SRmn 0 102 261 45 (45.1) N/A 6,500 11 6,000 9 EBITDA SRmn (157) (375) (214) (41) (29.4) 16.7 5,500 7 Net Income SRmn 26 (292) (309) (53) 14.2 N/A 5,000 5 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Assets SRmn 8,747 9,532 9,305 9,297 (3.5) 3.1

TASI Emaar E .C (RHS) Equity SRmn 8,483 8,191 7,882 7,828 (3.7) (3.6) Total Debt SRmn 0 0 0 0 N/A N/A Source: Bloomberg Cash & Equiv SRmn 640 2,219 864 655 (59.7) 16.2 Top 5 shareholders (%) EBITDA Mgn % N/A N/A (82.1) (91.2) - - Dayem Modern Company for 20.0 Net Mgn % N/A N/A (118.5) (118.2) - - Real Estate Management ROE % 0.3 (3.5) (3.8) (2.7) - - M E Royal Capital Company 9.4 ROA % 0.3 (3.2) (3.3) (2.3) - - Emaar Middle East 5.8 Div Payout % N/A N/A N/A N/A - -

M E Holdings 5.8 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) M E Strategic Investments 5.8 Source: Tadawul, Zawya, Company, NCBC Research Source: Tadawul, NCBC Research

JUNE 2010 EMAAR ECONOMIC CITY 166 REAL ESTATE DEVELOPMENT

Also known as Not Covered Jabal Omar, Jabal Omar JODC

Current Price (SR) 18.0 Jabal Omar Development Company (Jabal Omar) is engaged in real

Pricing / Valuation as on June 13, 2010 estate development in the Jabal Omar area. In cooperation with local and international subcontractors, the company buys, builds, develops, Stock details manages, rents, leases and sells land and properties. Jabal Omar, 52-week range H/L (SR) 21.7/17.3 headquartered in Mecca, was established in October 2006. Market cap ($mn) 3213.0  Shares outstanding (mn) 671.4 Business brief: Jabal Omar builds residential towers, hotels, commercial Price perf. (%) 1M 3M 12M centers as well as roads and parking facilities for pilgrims visiting Mecca. The Absolute (10) (9) (6) company’s major project, Jabal Omar project (also known as the Western Market (6) (5) 3 Gate Road Development), is scheduled for completion in 2011. The project is Sector (3) (3) (13) a 230,000 square meter mixed-use development located around the Grand Avg daily turn.(mn) SR US$ 3M 32.3 8.6 Mosque of Makkah. Post completion, the project will feature 38 residential 12M 25.8 6.9 towers, hotels, a retail concourse, a prayer area, public parks, a central Raw Beta 6m 2yr transportation station, a conference hall and other related facilities. 0.50 0.64  Financials: Jabal Omar’s net loss widened to SR8.9mn in 1Q10 from Reuters code 4250.SE Bloomberg code JOMAR AB SR4.1mn a year earlier as its projects are still in the development phase. The Website www.jabalomar.com.sa company’s SG&A expenses increased 34% YoY to SR8.9mn in 1Q10.

Weighting & free float (%)  Recent developments: In October 2009, Jabal Omar announced plans to TASI (free float weight) 1.00 finance 14% of its ongoing project in Makkah through a USD447.6mn rights Free float 41.56 issue.

Valuation multiples Company financials 08 09 TTM YoY CAGR (%) P/E (x) N/M N/M N/M 20072008 2009 1Q10 (%) (07-09) P/B (x) 1.8 1.8 1.8 Net Revenues SRmn - 0 0 0 N/M - P/Sales (%) N/A N/A N/A EBITDA SRmn - (93) (26) (8) N/M - Div yield (%) N/A N/A N/A Net Income SRmn - (53) (23) (9) N/M - DPS N/A N/A N/A Assets SRmn - 6,704 6,879 6,809 1.5 - Source: NCBC Research Equity SRmn - 6,661 6,638 6,630 (0.4) - Share price performance Total Debt SRmn - 0 0 44 N/A - Cash & Equiv SRmn - 946 27 53 (93.4) - 7,000 23 EBITDA Mgn % - N/A N/A N/A - - 6,500 21 6,000 19 Net Mgn % - N/A N/A N/A - - 5,500 17 ROE % - (0.8) (0.4) (0.5) - - 5,000 15 ROA % - (0.8) (0.3) (0.5) - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Div Payout % - N/A N/A N/A - - TASI Jabal Omar (RHS) EPS SR - (0.1) (0.0) (0.0) (117.5) - Source: Bloomberg BVPS SR - 9.9 9.9 9.9 (0.4) -

Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research Founders of Jabal Omar 37.1 Development Co. Makkah Construction and 9.1 Dev. Co General Organisation for 9.1 Social Insurance

Source: Tadawul, NCBC Research

JUNE 2010 JABAL OMAR DEVELOPMENT COMPANY 167 REAL ESTATE DEVELOPMENT

Not Covered Also known as Dar Al Arkan DAAR, Dar Al Arkan

Current Price (SR) 13.7 Dar Al Arkan Real Estate (Dar Al Arkan) is one of the largest real estate

Pricing / Valuation as on June 13, 2010 developers in the Kingdom. DAAR specializes in residential real estate property investment, development and management. Headquartered in Stock details Riyadh, the company was established in December 1994. 52-week range H/L (SR) 19.0/13.1  Business brief: Dar Al Arkan has constructed more than 2,300 residential Market cap ($mn) 3,930.2 Shares outstanding (mn) 1,080.0 units and developed 9mn square meters of land since inception. The Price perf. (%) 1M 3M 12M company is currently developing a number of residential projects such as Absolute (1) 1 (21) Shams Alriyadh, Al Qasr, and Al-Tilal. Dar Al Arkan also offers pre-sales, Market (6) (5) 3 after-sales, and funding services to its customers. To complement its core Sector (3) (3) (13) business, DAAR established the SR2bn Saudi Home Loans Company in Avg daily turn.(mn) SR US$ 3M 36.0 9.6 December 2007 to provide Shariah-compliant home loans. 12M 54.5 14.5  Financials: Dar Al Arkan’s top line fell 7.5% YoY to SR1.1bn in 1Q10 from Raw Beta 6m 2yr SR1.2bn in 1Q09. Gross margins declined to 41.8% in 1Q10 from 45.9% in 0.25 0.78 4Q09 due to higher contribution of apartment sales at Al Qasr. In 1Q10, net Reuters code 4300.SE Bloomberg code ALARKAN AB profit fell 6.1% YoY to SR398.6mn owing to lower profit margins on property Website www.alarkan.com sales. The decline in net profit was primarily led by the decrease in average margins on sales in certain geographic locations. Weighting & free float (%) TASI (free float weight) 1.80  Recent developments On 23 June 2010, DAAR entered into a fixed-to- Free float 61.06 floating rate swap agreement for half the recently issued USD450mn Sukuk.

Valuation multiples On 19 May 2010, the company approved a dividend of SR1 per share for the 08 09 TTM year ended 31 December 2009. In Feb. 2010, DAAR issued a USD450mn P/E (x) 6.3 6.9 7.0 Sukuk, and in March 2010, the company redeemed its USD600mn Sukuk P/B (x) 1.3 1.1 1.0 initially launched in March 2007. P/Sales (x) 2.6 2.7 2.7 Div yield (%) 0.0 7.3 7.3 Company financials DPS 0.0 1.0 1.0 YoY CAGR (%) Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 4,926 5,611 5,464 1,145 (7.5) 5.3 Share price performance EBITDA SRmn 2,313 2,694 2,361 445 (7.9) 1.1 7,000 20 Net Income SRmn 2,009 2,356 2,123 399 (6.1) 2.8 6,500 18 16 6,000 Assets SRmn 18,374 20,164 23,597 23,465 14.8 13.3 14 5,500 12 Equity SRmn 11,000 11,736 13,859 14,258 17.2 12.2 5,000 10 Total Debt SRmn 6,400 7,635 8,355 7,799 (6.7) N/A Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn 3,347 716 2,223 1,353 596.6 (18.5) TASI Dar Al Arkan (RHS) EBITDA Mgn % 46.9 48.0 43.2 38.9 - -

Source: Bloomberg Net Mgn % 40.8 42.0 38.8 34.8 - - ROE % 18.6 20.7 16.6 11.3 - - Top 5 shareholders (%) ROA % 13.4 12.2 9.7 6.8 - - Khalid Bin Abdullah Shelash Al 9.1 Div Payout % 107.5 N/A 50.8 0 - - Shelash EPS SR 2.79 3.27 1.97 0.37 (37.3) (16.0) Yusuf Abdullah Shelash Al 7.7 Shelash BVPS SR 20.4 16.3 12.8 13.2 (21.8) (20.6)

Hethloul Saleh Mohammed Al 6.9 Source: Tadawul, Zawya, Company, NCBC Research hethloul Majed Bin Abdulrahman 5.3 Abdulaziz Al Qassem

Source: Tadawul, NCBC Research

JUNE 2010 DAR AL ARKAN REAL ESTATE DEVELOPMENT COMPANY 168 Transportation

Ticker Company Page No.

4030 National Shipping 172

4040 SAPTCO 173

4110 Mubarrad 174

4260 United International 175

JUNE 2010 THE SAUDI FACTBOOK Transport

Improved demand, coupled with government support, aids prospects Lower demand for crude oil The Saudi transportation sector faced a weak 2009, primarily due to subdued to have an adverse effect demand, lower freight rates and reduced demand for crude oil (a major export on transportation sector 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, Exhibit 122: Comparison of ROE and P/E of GCC 2007–09 companies, 2009 (USD mn) (%)

7,000 21

6,000 19

5,000 17

4,000 15

3,000 13 ROE (%)

2,000 11

1,000 9 0 P/E (x) 7 2007 2008 2009 091827 KSA UAE Kuwait Oman Qatar KSA UAE Qatar Kuwait Oman

Source: Bloomberg, Gulf Base, NCBC Research Source: Bloomberg, Gulf Base, NCBC Research

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.

Exhibit 123: Sector details

% weight in Index Net Margin ROE (%) Company as on Dec 2009 (%) 2009 2009 United International Transportation 0.09 22.2 21.1 Co.Ltd. (BUDGET) Saudi Public Transport Co ( SAPTCO) 0.09 4.3 2.3 National Shipping Co.of Saudi Arabia 0.47 10.0 7.4 (NSCSA) Saudi Land Transport Company 0.03 17.7 3.1 (SLTCO)

Source: Bloomberg, Tadawul, Company data

Contribution of National In 2009, sector revenue declined 23.6% YoY to SR2.96bn, primarily due to reduced Shipping Co. to the sector demand in the transportation sector. Revenues for Saudi Land Transport Company, revenue declined from the smallest player in the industry, increased the most (6.6% YoY in 2009). On the 67% in 2008 to 56.5% in other hand, National Shipping Company, which contributes around 56% of the 2009.

JUNE 2010 THE SAUDI FACTBOOK 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.

Exhibit 124: Revenue of companies, 2007–09 Exhibit 125: Profitability of companies, 2007–09 (SR mn) (%)

4,500 35

4,000 30

3,500 25 3,000 20 2,500

2,000 15

1,500 10 1,000 5 500 0 0 2007 2008 2009 2007 2008 2009 NSCSA SAPTCO SLTCO BUDGET SLTCO BUDGET NSCSA SAPTCO

Source: Bloomberg, Gulf Base, NCBC Research Source: Bloomberg, Gulf Base, NCBC Research

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.

Exhibit 126: Comparison of P/B and ROE, 2008 Exhibit 127: Comparison of P/B and ROE, 2009 (%) (%)

36 25

BUDGET 30 20

BUDGET 24 NSCSA 15 NSCSA 18 ROE (%) ROE (%) 10 12

5 SLTCO 6 SLTCO SAPTCO SAPTCO P/B(x) P/B (x) 0 0 0123 0123

Source: Bloomberg, Gulf Base, NCBC Research Source: Bloomberg, Gulf Base, NCBC Research

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.

JUNE 2010 THE SAUDI FACTBOOK 171 TRANSPORT

Not Covered Also known as National Shipping NSCSA

Current Price (SR) 18.5 National Shipping Company of Saudi Arabia (NSCSA), established in

Pricing / Valuation as on June 13, 2010 1979, provides marine transport services, primarily to the oil & gas and chemical sectors. Additionally, NSCSA offers liner (general cargo), ship Stock details management and container storage & repair services. 52-week range H/L (SR) 22.0/16.2  Market cap ($mn) 1,553.6 Business brief: As of 31 December 2009, NSCSA had a fleet of 34 ships Shares outstanding (mn) 315 (17 oil tankers, 13 chemical tankers and 4 general cargos). The company is Price perf. (%) 1M 3M 12M likely to add up to 16 chemical carriers to its existing fleet during 2010– Absolute (7) 3 1 2011. NSCSA operates its chemical tankers through its 80% subsidiary, Market (6) (5) 3 National Chemical Carriers (NCC). The company is expected to have a total Sector (7) (6) (10) of about 50 VLCCs and chemical tankers by 2011. Along with transportation, Avg daily turn.(mn) SR US$ 3M 20.8 5.5 the company offers ship management services for its own vessels through its 12M 26.2 7.0 wholly owned subsidiary, Mideast Ship Management. Raw Beta 6m 2yr  Financials: In 1Q10, NSCSA’s sales increased 9.2% YoY to SR512mn. The 1.15 1.00 Reuters code 4030.SE company’s operating profit rose 21.7% to reach SR114mn, while net income Bloomberg code NSCSA AB declined 13.7% during the same period. Sales improved due to the addition Website www.nscsa.com of new fleet during 2009, while net income declined as the 1Q09 profit

Weighting & free float (%) included a capital gain of SR30mn. TASI (free float weight) 0.78  Recent developments: Due to the delay in delivery of chemical carriers, Free float 66.37 NSCSA on 19 May 2010 decided to cancel the construction of two new

Valuation multiples chemical carrier contracts awarded to SLS in 2006. The company has leased 08 09 TTM one of its VLCCs to RWE AG in Germany for a total consideration of P/E (x) 7.8 15.8 16.7 SAR151mn for a period of three years. P/B (x) 1.1 1.2 1.1 P/Sales (X) 2.2 3.5 3.4 Company financials Div yield (%) 8.1 5.4 5.4 YoY CAGR (%) Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 1,703 2,595 1,672 512 9.2 (0.9) Share price performance EBITDA SRmn 634 1,188 638 204 9.8 0.3 7,000 23 Net Income SRmn 423 750 369 130 (13.7) (6.5) 6,500 21 Assets SRmn 7,797 9,819 10,339 10,443 1.5 15.2 6,000 19 5,500 17 Equity SRmn 4,660 5,091 4,988 5,119 7.4 3.5 5,000 15 Total Debt SRmn 2,432 4,007 4,763 4,707 8.1 39.9 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn 851 1,059 762 797 (31.7) (5.4) TASI Shipping (RHS) EBITDA Mgn % 37.2 45.8 38.2 39.8 - - Net Mgn % 24.8 28.9 22.1 25.4 - - Source: Bloomberg ROE % 11.0 15.4 7.3 10.3 - - Top 5 shareholders (%) ROA % 6.1 8.5 3.7 1.3 - - Public Investment Fund 28.1 Div Payout % 67.6 63.8 85.5 N/A - - Abdullah Saad Al-Rahman Al- 5.3 EPS SR 1.5 2.4 1.2 0.4 (14.6) (11.1) Rashed BVPS SR 14.8 16.2 15.8 16.3 7.4 3.5

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 NATIONAL SHIPPING COMPANY 172 TRANSPORT

Not Covered SAPTCO

Current Price (SR) 7.7 Saudi Public Transportation Company (SAPTCO) provides bus transport

Pricing / Valuation as on June 13, 2010 services for domestic and international travel to neighboring countries such as Egypt, Syria, Jordan, Kuwait, Qatar, UAE, Bahrain, Yeman, Sudan Stock details and Lebanon. The company, headquartered in Riyadh, has about 161 52-week range H/L (SR) 9.7/7.5 local and international agents. Market cap ($mn) 256.6 Shares outstanding (mn) 125  Business brief: SAPTCO has a fleet of around 3,000 buses. Its operations Price perf. (%) 1M 3M 12M include nearly 600 daily scheduled trips that connect 600 cities, towns and Absolute (4) (7) (17) villages across the Kingdom. The company provides intra-city and inter-city Market (6) (5) (3) transport services across Saudi Arabia, besides international transport Sector (7) (6) (10) services to 10 neighboring countries. The company provides contract and Avg daily turn.(mn) SR US$ 3M 9.1 2.4 charter transportation services to schools, colleges and other groups. 12M 12.5 3.3 SAPTCO also offers VIP services on select routes and special transport Raw Beta 6m 2yr services to Mecca and Medina during the Hajj and Umrah seasons. 0.36 0.69 Additionally, the company provides advertising space on its buses. Reuters code 4040.SE Bloomberg code SAPTCO AB  Financials: Despite revenues contracting slightly in 2009, earnings Website www.saptco.com.sa increased to SR29mn from SR24mn in 2008. So far in 2010, revenues

Weighting & free float (%) decreased 5.8% YoY from SR145.4mn in 1Q09 to SR136.9mn in 1Q10. TASI (free float weight) 0.16 However, the company reported EBITDA of SR27.6mn, registering a YoY Free float 83.63 increase of 38.7% in 1Q10.

Valuation multiples  Recent developments: SAPTCO has signed a strategic cooperation 08 09 TTM agreement with the French transportation company, Regie Autonome des P/E (x) 32.0 30.1 29.7 Transports Parisiens, for the operation and maintenance of tram and metro P/B (x) 0.7 0.7 0.7 networks in the Kingdom of Saudi Arabia. P/Sales (X) 1.3 1.3 1.3 Div yield (%) 6.5 N/A N/A Company financials Source: NCBC Research YoY CAGR (%) Share price performance 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 732 766 752 137 (5.8) 1.4 7,000 10 EBITDA SRmn 189 180 158 28 38.7 (8.4) 6,500 9 8 Net Income SRmn 101 30 32 (9) (5.1) (43.7) 6,000 7 Assets SRmn 1,909 1,788 1,816 1,801 1.7 (2.5) 5,500 6 5,000 5 Equity SRmn 1,488 1,414 1,387 1,385 (1.2) (3.5) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Total Debt SRmn 114 63 108 90 61.5 (2.7) TASI SAPTCO (RHS) Cash & Equiv SRmn 668 410 311 261 (30.9) (31.8)

Source: Bloomberg EBITDA Mgn % 25.8 23.5 21.1 20.1 - - Net Mgn % 13.8 3.9 4.2 (6.2) - - Top 5 shareholders (%) ROE % 6.9 2.1 2.3 (2.5) - - Public Investment Fund 15.7 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)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI PUBLIC TRANSPORTATION COMPANY 173 TRANSPORT

Not Covered Mubarrad

Current Price (SR) 15.4 Saudi Transport and Investment Company (Mubarrad) is engaged in the

Pricing / Valuation as on June 13, 2010 land transport business across Saudi Arabia and other Gulf Cooperation Council (GCC) countries. Recently, Mubarrad also entered into Stock details businesses such as the purchase and sale of land, and construction, 52-week range H/L (SR) 26.8/15.0 management and operation of buildings. Market cap ($mn) 73.9 Shares outstanding (mn) 18  Business brief: Mubarrad owns a fleet of more than 1,000 vehicles Price perf. (%) 1M 3M 12M (including truck heads, reefer trailers, reefer trucks, flat trucks for dry Absolute (19) (23) (38) transport, and trailers for bulk transport) for carrying all types of general and Market (6) (5) 3 industrial cargo. It also operates the Express Parcel Services throughout Sector (7) (6) (10) Saudi Arabia. Furthermore, the company constructs, manages and leases Avg daily turn.(mn) SR US$ 3M 9.4 2.5 cold stores and trailers. 12M 15.7 4.2  Financials: Mubarrad’s top line declined in 1Q10 by 13.4% YoY to Raw Beta 6m 2yr SR10.1mn. In 1Q10, Mubarrad generated a net loss of SR8.9mn compared 0.81 0.96 Reuters code 4110.SE to a net profit of SR0.4mn in 1Q09. The main reason behind the decline in Bloomberg code SLTCO AB profitability was investment loss, which was SR9.2mn in 1Q10. However, the Website www.mubarrad.com.sa company reported an EBITDA margin of 35.7% in 1Q10 compared to 28.6%

Weighting & free float (%) in 1Q09.

TASI (free float weight) 0.06  Recent developments: In May 2010, the company announced the Free float 100.0 appointment of new board member Badr Al Shuhaili, replacing Yasser Al

Valuation multiples Lehidan. 08 09 TTM P/E (x) 24.8 53.4 N/M Company financials P/B (x) 1.7 1.6 1.7 YoY CAGR (%) P/Sales (X) 5.7 5.3 5.5 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 47 49 52 10 (13.4) 5.7 Div yield (%) N/A N/A N/A EBITDA SRmn 15 15 15 4 7.9 2.1 Source: NCBC Research Net Income SRmn 13 11 5 (9) N/M (37.9) Share price performance Assets SRmn 219 225 217 208 (6.0) (0.4)

7,000 30 Equity SRmn 188 166 169 163 (1.1) (5.3) 6,500 25 Total Debt SRmn 0 32 19 16 (44.4) N/M 6,000 20 Cash & Equiv SRmn 4 6 12 20 116.9 70.9 5,500 15 EBITDA Mgn % 31.9 31.7 29.8 35.7 - - 5,000 10 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % 28.9 22.9 10.0 N/M - -

TASI M ubarrad (RHS) ROE % 7.7 6.3 3.1 (21.6) - - ROA % 6.5 5.0 2.3 (4.2) - - Source: Bloomberg Div Payout % N/A N/A N/A N/A - - Top 5 shareholders (%) 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)

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 MUBARRAD 174 TRANSPORT

Also known as Not Covered BUDGET SAUDI, United International UniTrans, UITC

Current Price (SR) 52.5 United International Transportation Co. (Budget Saudi) is the largest car

Pricing / Valuation as on June 13, 2010 rental company in the MENA region. The company, a franchisee of Budget International, operates more than 14,500 vehicles that include Stock details luxury, 4x4, full size, intermediate, compact and economy cars. 52-week range H/L (SR) 75.5/49.0  Market cap ($mn) 256.1 Business brief: Budget Saudi provides various services such as short term Shares outstanding (mn) 18.3 and long term car rentals; chauffeur driven cars; CorpRate Program (a Price perf. (%) 1M 3M 12M corporate client-oriented service with preferential rates and value additions Absolute (7) (15) (7) such as faster reservations and flexible billing); and Budget Express (a Market (6) (5) 3 loyalty program for members). The company also provides Hajj & Umrah Sector (7) (6) (10) services for visitors and pilgrims; Lodge and Drive (accommodation along Avg daily turn.(mn) SR US$ 3M 4.3 1.2 with car rental); Premier Limousine Service (chauffeur driven luxury 12M 7.7 2.1 vehicles); and automotive maintenance (maintenance facilities including Raw Beta 6m 2yr satellite workshops). Budget Saudi is also engaged in the sales of used cars. 0.38 0.87  Reuters code 4260.SE Financials: Budget Saudi has displayed consistent performance with Bloomberg code BUDGET AB revenues and net profit growing at a CAGR of 9.3% and 6.2%, respectively, Website www.budgetsaudi.com during 2005–2009. In 1Q10, revenues grew 4.6% to SR123.8mn from

Weighting & free float (%) SR118.4mn in 1Q09. Net profit margins were 18.2%; they improved 140 TASI (free float weight) 0.08 basis points compared to 1Q09.

Free float 43.6  Recent developments: In September 2009, Budget Saudi signed an

Valuation multiples agreement with Abdul Latif Jameel to purchase 5,000 Toyota cars during the 08 09 TTM financial year 2010. For the fiscal year 2009, the company paid an annual P/E (x) 11.5 11.2 10.9 dividend of SR2. P/B (x) 2.7 2.4 2.5 P/Sales (X) 2.0 2.0 2.0 Company financials Div yield (%) 3.3 3.8 N/A YoY CAGR (%) Source: NCBC Research 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 397 473 484 124 4.6 10.5 Share price performance EBITDA SRmn 251 320 332 84 5.4 15.1 7,000 80 Net Income SRmn 78 84 86 23 13.3 4.7 6,500 70 Assets SRmn 683 729 761 781 6.9 5.5 6,000 60 5,500 50 Equity SRmn 303 356 406 392 14.2 15.8 5,000 40 Total Debt SRmn 241 247 224 229 4.8 (3.5) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn 16 10 28 22 58.6 32.9 TASI Budget Saudi (RHS) EBITDA Mgn % 63.2 67.7 68.6 68.1 - -

Source: Bloomberg Net Mgn % 19.7 17.8 17.7 18.2 - - ROE % 28.1 25.5 22.5 22.6 - - Top 5 shareholders (%) ROA % 12.7 11.9 11.5 2.9 - - Al Zahid Holding Group 39.5 Div Payout % 35.5 38.2 42.6 N/A - - Abdul Elah Abdullah Mahmood 14.2 EPS SR 4.2 4.6 4.7 1.2 12.8 5.3 Ali Zahid BVPS SR 16.6 19.4 22.2 21.4 14.1 15.8 Mohammed Abdullah 9.2 Mahmood Zahid Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 UNITED INTERNATIONAL 175 Media & Publishing

Ticker Company Page No.

4070 Tihama 179

4210 SRMG 180

4270 SPPC 181

JUNE 2010 THE SAUDI FACTBOOK Media & Publishing

Outlook bleak for conventional print media Companies shifting to less In 2009, the Media and Publishing sector’s performance deteriorated as the global expensive modes of downturn resulted in companies curtailing their spending on advertisement. While advertisement due to the print media still accounts for the lion’s share of advertisement revenue, the global downturn decreases increasing inclination of companies to opt for less expensive web advertisements print media revenue 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, 2007–09 companies, 2009 (USD mn) (%)

500 20

400 15

300 10 ROE (%) 200

5 100 P/E (x) 0 0 0 1530456075 2007 2008 2009 KSA Kuwait Qatar Bahrain KSA Kuwait Qatar Bahrain

Source: Bloomberg, NCBC Research Source: Bloomberg, NCBC Research Revenue of Qatar is USD 4.76mn in 2009 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.

Exhibit 130: Sector details % weight in Avg. RoE Index as on Net margin (%), Dec 2009 (%), 2009 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

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

JUNE 2010 THE SAUDI FACTBOOK 177 MEDIA & PUBLISHING

Exhibit 131: Revenues of companies, 2007–09 Exhibit 132: Profitability of companies, 2007-09 (SR mn) (%)

2500 40

2000 30

1500

20

1000

10 500

0 0 2007 2008 2009 2007 2008 2009 SRMG SPPC Tihama* SRMG SPPC Tihama*

Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research Note: Tihama’s revenues are adjusted for calendar year ending. The company’s Note: Tihama’s margins are adjusted for calendar year ending. The company’s financial year end is 31 March. 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.

Exhibit 133: Comparison of P/B and ROE, 2008 Exhibit 134: Comparison of P/B and ROE, 2009 (%) (%)

25 12

10 SPPC

8 20 SRMG SPPC 6 ROE (%) ROE (%) 4 SRMG 15 Tihama 2 Tihama P/B (x) 0 P/B (x) 10 0.5 1.0 1.5 2.0 2.5 0.5 1.0 1.5 2.0

Source: Bloomberg, Tadawul, Reuters, NCBC Research Source: Bloomberg, Tadawul, Reuters, NCBC Research Size of the bubble represents market cap. as on 31 Dec 2009 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.

JUNE 2010 THE SAUDI FACTBOOK 178 MEDIA AND PUBLISHING

Not Covered Tihama

Current Price (SR) 24.0 Tihama Advertising & Public Relations Co., established in 1983, operates

Pricing / Valuation as on 13 June, 2010 Egyptian Satellite Channel, Al-Hayat newspaper and Kolness magazine. Tihama operates through its subsidiaries – Tihama Distribution Stock details Company, United Journalists, Star Media Co., Saudi Signs Supply Co., 52-week range H/L (SR) 37.6/21.0 Intermarkets Riyadh, and Ad Art Medyan. Market cap ($mn) 96.0 Shares outstanding (mn) 15.0  Business brief: Tihama has three business segments – media, public Price perf. (%) 1M 3M 12M relations (PR), and other services. The media segment comprises Absolute (1) 2 24 newspapers, magazines, outdoor advertising and a satellite television Market (6) (5) 3 channel. The PR segment includes press files and promotional information Sector (14) (21) (36) services. Other services segment includes video production and distribution Avg daily turn.(mn) SR US$ 3M 6.5 1.7 of Arabic and American films in the Middle East. The company also operates 12M 13.9 3.7 in Cairo, Dubai, London, and Paris. Raw Beta 6m 3yr  Financials: Tihama’s revenues decreased 17.0% YoY in FY2010. Higher 0.32 0.98 Reuters code 4070.SE costs and reduced income from associates drove down net income 75% YoY Bloomberg code TAPRCO AB to SR7.5mn in 2010, resulting in a net margin of 6.4% from 21% in 2009. Website www.tihama.com  Recent developments: In December 2009, Tihama’s BOD approved the Weighting & free float (%) establishment of a real estate investment company and conversion of some TASI (free float weight) 0.07 of its operations in the fields of road banners, libraries and public relations to Free float 100.0 limited liability companies.

Valuation multiples Company financials* 08 09 10 YoY CAGR (%) P/E (x) 12.9 12.0 48.3 20072008 2009 2010 (%) (07-10) P/B (x) 1.6 1.5 1.6 Net Revenues SRmn 120 137 142 118 (17.0) (0.6) P/Sales (x) 2.6 2.5 3.1 EBITDA SRmn 17 22 21 (1) N/M N/M Div yield (%) 4.2 5.0 NA Net Income SRmn 19 28 30 7 (75.1) (27.0) Source: NCBC Research Assets SRmn 298 335 339 324 (4.4) 2.8 Share price performance Equity SRmn 211 226 239 227 (5.0) 2.4 Total Debt SRmn 3 1 0 1 NM (29.2) 7,000 40 Cash & Equiv SRmn 36 85 84 46 (45.2) 8.4 6,500 35 EBITDA Mgn % 14.2 16.0 14.7 (1.0) - - 6,000 30 Net Mgn % 16.1 20.5 21.2 6.4 - - 5,500 25 ROE % 9.5 12.8 13.0 3.2 - - 5,000 20 ROA % 6.7 8.8 8.9 2.3 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 TASI Tihama (RHS) Div Payout % 58.6 53.5 59.7 - - - EPS SR 1.28 1.87 2.01 0.5 (75.1) (26.9) Source: Bloomberg BVPS SR 14.1 15.0 15.9 15.1 (5.0) 2.5 Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research * Financial Year End March 31 Badr Fahd Ibrahim Al Dawood 17.7

Source: Tadawul, NCBC Research

JUNE 2010 TIHAMA ADVERTISING & PUBLIC RELATIONS CO. 179 MEDIA AND PUBLISHING

Not Covered SRMG

Current Price (SR) 18.6 Saudi Research and Marketing Group (SRMG), established in 1988, is a

Pricing / Valuation as on 13 June, 2010 leading publishing group based in Riyadh. SRMG’s subsidiaries include Saudi Research and Publishing Company, Saudi Distribution Company, Stock details Saudi Specialized Publishing Company (SSPC), and Al Khaleejiah 52-week range H/L (SR) 33.6/17.8 Advertising and Public Relations Company. Market cap ($mn) 396.7 Shares outstanding (mn) 80.0  Business brief: SRMG is engaged in four key activities – publishing, Price perf. (%) 1M 3M 12M advertising, printing, and distribution. The publishing segment is engaged in Absolute (19) (27) (41) research and marketing, while the advertising segment mainly deals with Market (6) (5) 3 production and marketing of audiovisual media. The printing segment prints Sector (14) (21) (36) newspapers, magazines, books and journals in various languages. Avg daily turn.(mn) SR US$ 3M 1.8 0.5  Financials: SRMG’s revenues decreased 1.5% YoY during 1Q10. EBITDA 12M 1.7 0.5 margin also contracted from 14.2% in 1Q09 to 10.6% in 1Q10 mainly due to Raw Beta 6m 3yr an increase in SG&A expenses. In addition, other income declined 1.14 0.86 Reuters code 4210.SE significantly. Consequently, net income fell 27.8% from SR20.5mn in 1Q09 Bloomberg code RESEARCH AB to SR14.8mn in 1Q10. Website www.srmg.com  Recent developments: In May 2010, SRMG entered into an agreement Weighting & free float (%) with Egypt's Al-Ahram Establishment to cooperate in the fields of printing, TASI (free float weight) 0.18 publishing, digital publishing, media activities, distribution, and organizing Free float 60.4 conferences. SRMG announced a cash dividend of SR0.50 per share for the

Valuation multiples year 2009. 08 09 TTM P/E (x) 6.6 32.8 37.5 Company financials P/B (x) 1.1 1.2 1.2 YoY CAGR (%) P/Sales (x) 1.1 1.5 1.5 20072008 2009 1Q10 (%) (07-09) Net Revenues SRmn 1,113 1,342 969 256 (1.5) (6.7) Div yield (%) 10.8 2.7 NA EBITDA SRmn 285 306 109 27 (26.4) (38.1) Source: NCBC Research Net Income SRmn 367 224 45 15 (27.8) (64.8) Share price performance Assets SRmn 2,187 2,259 2,153 2,131 (8.0) (0.8)

7,000 35 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 6,500 30 Cash & Equiv SRmn 461 141 66 46 (81.0) (62.0) 6,000 25 EBITDA Mgn % 25.6 22.8 11.3 10.6 - - 5,500 20 Net Mgn % 32.9 16.7 4.7 5.8 - - 5,000 15 ROE % 28.2 16.2 3.4 4.7 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 ROA % 18.5 10.1 2.1 2.8 - - TASI SRMG (RHS) Div Payout % 65.5 71.2 87.7 - - -

Source: Bloomberg 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) Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research Kingdom Holding Company 29.9 HH Prince Faisal Ahmad Bin 6.8 Salman Al Saud Mohammed Hussain Ali Al 5.6 Amudy GOSI 5.2

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI RESEARCH 180 MEDIA AND PUBLISHING

Not Covered SPPC

Current Price (SR) 13.1 Saudi Printing and Packaging Company (SPPC), formerly Madina Printing

Pricing / Valuation as on 13 June, 2010 and Publishing Company, was established in 1963. A subsidiary of Saudi Research and Marketing Group, SPPC is engaged in various commercial Stock details and package printing and production activities. The company has five 52-week range H/L (SR) 18.4/13.0 printing houses and a production area of 1.0mn sq m. Market cap ($mn) 209.5 Shares outstanding (mn) 60.0  Business brief: SPPC offers integrated print production solutions from pre- Price perf. (%) 1M 3M 12M press designing and printing to post-printing binding and packaging. The Absolute (10) (17) (28) company has a capacity of 5,000 magazine copies/hour; 150,000 newspaper Market (6) (5) 3 copies/hour; book printing capacity of 6.5 copies/hour; and 10 carton Sector (14) (21) (36) sheets/hour. SPPC also has exclusive printing rights for its parent company Avg daily turn.(mn) SR US$ 3M 1.0 0.3 and Saudi Research and Publishing Company. SPPC’s publications include 12M 1.8 0.5 Sayidaty, Arrajol, Al Eqtisadiah, Almajalla, and Arab News. Raw Beta 6m 3yr  Financials: SPPC’s revenues rose 2.2% YoY to SR102.6mn in 1Q10. 0.37 0.78 Reuters code 4270.SE However, EBITDA margins declined by 560 basis points to 14.7% in the Bloomberg code SPPC AB same period, primarily due to increase in operating expenses. The company’s Website www.sppc.com.sa net income decreased 54.3% from SR15.7mn in 1Q09 to SR7.2mn in 1Q10.

Weighting & free float (%)  Recent developments: In November 2009, SPCC established Taiba Printing TASI (free float weight) 0.07 and Publication Company, a state-of-the-art press in Madina. Free float 47.5 Company financials Valuation multiples YoY CAGR (%) 08 09 TTM 20072008 2009 1Q10 (%) (07-09) P/E (x) 5.2 12.1 13.9 Net Revenues SRmn 370 465 357 103 2.2 (1.7) P/B (x) 1.0 1.0 1.0 EBITDA SRmn 118 126 57 15 (25.9) (30.4) P/Sales (x) 1.7 2.2 2.2 Net Income SRmn 137 151 65 7 (54.3) (31.2) Div yield (%) 11.5 NA NA Assets SRmn 858 1,068 1,021 993 (6.2) 9.1 Source: NCBC Research Equity SRmn 701 792 765 772 7.6 4.4 Share price performance Total Debt SRmn 35 198 181 148 N/M N/M Cash & Equiv SRmn 22 16 19 13 153.9 (8.7) 7,000 20 EBITDA Mgn % 31.8 27.0 16.0 14.7 - - 6,500 18 16 6,000 Net Mgn % 37.1 32.4 18.2 7.0 - - 14 5,500 12 ROE % 20.8 20.2 8.4 3.7 - - 5,000 10 ROA % 16.4 15.6 6.2 2.8 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Div Payout % 43.7 59.8 - - - - TASI SPPC (RHS) 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 Source: Bloomberg Source: Tadawul, Zawya, Company, NCBC Research Top 5 shareholders (%) Saudi Research and Marketing 42.0 Group Intellectual Holding Company 10.5 for Advertising and Publicity Saudi Research and 7.0 Publishing Company Scientific Works Holding 7.0 Company

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI PRINTING AND PACKAGING COMPANY 181 Hotels & Tourism

Ticker Company Page No.

4010 Saudi Hotels 185

4170 Tourism Enterprises 186

JUNE 2010 THE SAUDI FACTBOOK Hotel & Tourism

Conservative tourism Developing tourism has The year 2009 had been a challenging one for Saudi Arabia’s Hotel and Tourism been a part of the Saudi sector, as the global downturn impacted tourist inflow as well as revenue generated government’s long-term per tourist owing to falling income levels. Tourist arrivals declined by 41% in the objective of diversifying its first half of 2009, but a revival in the second half helped the Kingdom keep 12mn economy away from oil 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, 2007–09 companies, 2009 (USD mn) (%)

600 30

500

400 20

300 ROE (%) 10 200

100 P/E (x) 0 0 5791113 2007 2008 2009 UAE KSA Kuwait Bahrain Oman Kuwait Oman Bahrain UAE KSA

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

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.

Exhibit 137: Sector details % weight in Index Net Margin Avg. RoE as on Dec 2009 (%), 2009 (%), 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

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

JUNE 2010 THE SAUDI FACTBOOK 183 HOTEL & TOURISM

Exhibit 138: Revenues of companies, 2007–09 Exhibit 139: Profitability of companies, 2007-09 (SR mn) (%)

800 65

700

600 40

500

400 15

300

200 -10

100

0 -35 2007 2008 2009 2007 2008 2009

SHARCO TECO SHARCO TECO

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

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.

Exhibit 140: Comparison of P/B and ROE, 2008 Exhibit 141: Comparison of P/B and ROE, 2009 (%) (%)

16 40 SHARCO 35 SHARCO 12 30 25 8 20 15

4 ROE (%) ROE (%) 10 TECO PB (x) 5 0 PB (x) 0 0246 (4) -5 0123-10 TECO

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

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 Exhibit 143: Share price movement, Jan09 – Mar10 (SR mn) Prices rebased to 100 on 1st Jan-09

60 300

49 50 250

200 40

150 30 100 20 13 50

10 0 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 0 TECO SHARCO SHARCO TECO

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

JUNE 2010 THE SAUDI FACTBOOK 184 HOTELS AND TOURISM

Also known as Not Covered Saudi Hotels SHARCO

Current Price (SR) 27.9 Saudi Hotels & Resorts Areas Co. (SHARCO), founded in 1979, is based in Pricing / Valuation as on June 13, 2010 Riyadh, Saudi Arabia. The company owns and operates many resorts as well as hotels, independently and through its subsidiaries Al Khaleej Stock details Resorts Co. Ltd., Riyadh Hotels Co. Ltd., Makkah Hotels Co. Ltd., 52-week range H/L (SR) 35.2/26.0 Annakheel Village Resort Co. Ltd., Tabuk Hotels Co. Ltd., and Al Madina Market cap ($mn) 513.3 Shares outstanding (mn) 69.0 Hotels Co. Ltd. Price perf. (%) 1M 3M 12M  Business brief: SHARCO engages in activities such as construction, Absolute (3) (9) (7) ownership, investment and management of hotels, real estate, resorts and Market (6) (5) 3 entertainment centers, travel & tourism. The company reports revenues Sector (6) (13) (19) Avg daily turn.(mn) SR US$ under the following business lines – hospitality, real estate, resorts, and 3M 2.4 0.6 entertainment. 12M 7.7 2.1  Financials: In 2Q 2009, the company finalized the sale of land in Gulf Raw Beta 6m 3yr 0.60 0.81 Village in the Eastern region for SR486mn, recording a gain of nearly Reuters code 4010.SE SR300mn. So far in 2010, revenue increased 3.7% YoY in 1Q10 and EBITDA Bloomberg code SHARCO AB margin improved 385 basis points in 1Q10 to 53.5%. Net income grew Website www.saudi-hotels.com.sa 10.3% to SR31.1mn in 1Q10. Weighting & free float (%)  Recent developments: On 12 April 2010, SHARCO announced it had TASI (free float weight) 0.20 purchased land for SR10.2mn to build a residential complex in Riyadh. In the Free float 52.68 same month, the company appointed Mr. Bader Bin Abdullah Mohammad Al Valuation multiples Issa as a member of the Board of Directors. On 22 February 2010, SHARCO 08 09 TTM announced a cash dividend of SR0.9 for the second half of 2009, taking the P/E (x) 15.7 5.1 5.0 full-year dividend to SR1.50. P/B (x) 1.4 1.2 1.2

P/Sales (x) 6.6 2.7 2.6 Company financials Div yield (%) 4.3 5.4 N/A YoY CAGR (%) DPS 1.2 1.5 N/A 20072008 2009 1Q10 (%) (07-09) Source: NCBC Research Net Revenues SRmn 264 294 725 69 3.7 65.7 Share price performance EBITDA SRmn 123 141 398 37 11.8 80.3 Net Income SRmn 78 123 381 31 10.3 121.4 7,000 35 Assets SRmn 1,535 1,953 1,839 1,894 (6.8) 9.5 6,500 33 31 6,000 Equity SRmn 820 1,348 1,625 1,668 29.3 40.7 29 5,500 27 Total Debt SRmn 58 53 50 48 (8.6) (6.9) 5,000 25 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Cash & Equiv SRmn 39 26 33 115 (14.2) (8.9)

TASI Hotels (RHS) EBITDA Mgn % 46.4 48.1 55.0 53.5 - - Net Mgn % 29.4 41.9 52.5 45.1 - -

Source: Bloomberg ROE % 9.8 11.3 25.6 7.6 - - ROA % 5.2 7.1 20.1 6.7 - - Top 5 shareholders (%) Div Payout % 64.5 67.4 27.2 N/A - - Mohammed Ibrahim 22.4 Mohammed Al Essa EPS SR 1.6 1.8 5.5 0.5 12.2 88.5 Public Investment fund 16.6 BVPS SR 16.4 19.5 23.5 24.2 29.3 19.8 Source: Tadawul, Zawya, Company, NCBC Research General Organization for 6.5 Social Insurance

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI HOTELS AND RESORTS 185 HOTELS AND TOURISM

Not Covered Also known as Tourism Enterprises Shams

Current Price (SR) 24.9 Tourism Enterprises Co. was established in 1991 to construct and

Pricing / Valuation as on June 13, 2010 manage tourist projects. Headquartered in Dammam, Saudi Arabia, TECO’s principal activity is ownership and management of the Palm Stock details Beach Resort®. The company offers visitors sports and recreational 52-week range H/L (SR) 45.9/23.7 facilities, conference facilities, cabanas and suites. Market cap ($mn) 67.4  Shares outstanding (mn) 10.2 Business brief: The Palm Beach Resort stretches up to 1,300 meters with Price perf. (%) 1M 3M 12M 165 chalets, more than 100 suites and cabanas overlooking the Arabian Gulf. Absolute (14) (20) (40) The sports and the recreational facilities include a ladies sports club with Market (6) (5) 3 swimming pool; men's sports and fitness center; football, tennis, basketball Sector (6) (13) (19) and squash courts; a sauna and steam bath; and catering services such as Avg daily turn.(mn) SR US$ 3M 17.4 4.6 coffee shops, a swimming pool for children, gardens for families, and a 24- 12M 29.2 7.8 hour security service. Raw Beta 6m 3yr  Financials: In 1Q10, the company’s revenue declined 35% YoY. The 0.84 0.94 company reported a net profit of SR0.04mn in 1Q10 compared to a profit of Reuters code 4170.SE Bloomberg code TECO AB SR0.1mn in 1Q09. Website www.palmbeach-resort.com  Recent developments: In November 2009, Shams announced the Weighting & free float (%) appointment of Dr. Adel Bin Abdulaziz Boudy as the company’s Chairman. TASI (free float weight) 0.05 Free float 100.0 Company financials YoY CAGR (%) Valuation multiples 20072008 2009 1Q10 (%) (07-09) 08 09 TTM Net Revenues SRmn 13 15 14 3 (35.0) 2.4 P/E (x) N/M N/M N/M EBITDA SRmn 5 3 1 1 (0.6) (57.0) P/B (x) 3.5 3.6 3.6 Net Income SRmn 2 0 (3) 0 (64.5) NM P/Sales (x) 17.2 18.2 20.3 Assets SRmn 79 78 74 75 (3.0) (3.4) Div yield (%) N/M N/M N/M Equity SRmn 73 73 69 69 (4.8) (2.5) DPS N/M N/M N/M Total Debt SRmn ------

Source: NCBC Research Cash & Equiv SRmn 3 4 5 14 298.7 23.2 EBITDA Mgn % 36.0 22.7 6.3 42.3 - - Share price performance Net Mgn % 16.0 1.2 (24.5) 1.5 - - 7,000 50 ROE % 2.9 0.2 (4.8) 0.2 - - 6,500 40 ROA % 2.5 0.2 (4.5) 0.2 - - 6,000 30 5,500 Div Payout % ------5,000 20 EPS SR 0.2 0.0 (0.3) 0.0 NM NM Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 BVPS SR 7.2 7.2 6.8 6.8 (4.7) (2.5) TASI Shams (RHS) Source: Tadawul, Zawya, Company, NCBC Research

Source: Bloomberg

Top 5 shareholders (%)

Source: Tadawul, NCBC Research

JUNE 2010 TOURISM ENTERPRISE CO 186 Insurance

Ticker Company Page No.

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

JUNE 2010 THE SAUDI FACTBOOK Insurance

Favorable demographics driving growth Low insurance penetration The Insurance sector in KSA has seen a sustained growth in activity since 2005. and favorable The gross written premiums (GWP) grew at a CAGR of 28.4% in 2005-08 to demographics indicate SR10.9bn in 2008, and Business Monitor International (BMI) estimates it to reach strong growth potential 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, Exhibit 145: Comparison of ROE and P/E of GCC 2007–09 companies, 2009 (USD mn) (%)

1,600 24

1,400 20 1,200 16 1,000

800 12 ROE (%) 600 8

400 4 200 P/B(x) 0 0 01234 2007 2008 2009 KSA Kuwait Qatar Bahrain UAE Oman KSA Kuwait Qatar Bahrain UAE Oman

Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research The list of companies taken is not exhaustive. 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.

JUNE 2010 THE SAUDI FACTBOOK 188 INSURANCE

Exhibit 146: Sector details % weight in Net margin Avg. ROE Index as on Dec (%) (%) Company 2009 2009 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

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.

Exhibit 147: Revenues of companies, 2007–09 Exhibit 148: Profitability of companies, 2007-09 (SR mn) (%)

7,000 24

6,000 19 5,000 14 4,000 9 3,000

2,000 4

1,000 -1 2007 2008 2009 0 -6 2007 2008 2009 Tawuniya Medgulf Bupa Arabia Tawuniya Medgulf Bupa Arabia Others

Source: Bloomberg, Tadawul, NCBC Research Source: Bloomberg, Tadawul, NCBC Research; Net margins for Medgulf and The list of companies is not exhaustive 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

JUNE 2010 THE SAUDI FACTBOOK 189 INSURANCE

Not Covered Tawuniya

Current Price (SR) 83.0 The Company for Cooperative Insurance (NCCI), widely known as

Pricing / Valuation as on June 13, 2010 Tawuniya, was established in Riyadh in 1986. Tawuniya provides Islamic as well as conventional general and family insurance services. The Stock details company’s subsidiaries include United Insurance Company and 52-week range H/L (SR) 102.5/40 Cooperative Real Estate Investment Company. Market cap ($mn) 1,106.4  Business brief: Tawuniya’s product portfolio falls under two broad Shares outstanding (mn) 50 categories: retail and corporate. The retail segment includes motor vehicle, Price perf. (%) 1M 3M 12M Absolute (7) 5 104 medical, fire & property and miscellaneous & accident insurance, while the Market (6) (5) 3 corporate segment offers motor vehicle, medical, fire & property, casualty, Sector (16) (18) (18) engineering, marine, aviation and energy insurance services. To aid its Avg daily turn.(mn) SR US$ insurance services, NCCI has entered into agreements with international re- 3M 22.8 6.1 insurers such as Munich Re. 12M 22.2 5.9 Raw Beta 6m 3yr  Financials: In 1Q10, Tawuniya’s net premium earned increased 48.7% YoY 1.31 1.10 to SR651mn from SR438mn in 1Q09. Furthermore, reinsurance commission Reuters code 8010.SE grew 30.8% YoY. Consequently, total revenues rose by 49.3% YoY in 1Q10 Bloomberg code TAWUNIYA AB Website www.tawuniya.com.sa 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 Weighting & free float (%) net claims caused by floods in Jeddah in November 2009. TASI (free float weight) 0.44 Free float 53.37  Recent developments: In April 2010, S&P affirmed its ‘A’ rating for Tawuniya on the basis of its strong underwriting performance and lead Valuation multiples 08 09 TTM competitive position. In January 2010, Tawuniya declared estimated losses P/E (x) N/M 14.0 11.0 of approximately SR30mn from the Jeddah floods. In February 2010, P/B (x) 4.0 2.9 3.1 Tawuniya announced a dividend of SR4 per share for financial year 2009, a P/S(x) 2.6 1.9 1.7 100% increase over 2008. Div yield (%) 2.4 4.8 NA

Source: NCBC Research Company financials YoY CAGR (%) Share price performance 2007 2008 2009 1Q10 (%) (07-09) 7,000 110 Net Insurance Premium SRmn 1,095 1,487 2,064 651 48.7 37.3 6,500 90 6,000 70 Total Revenues SRmn 1,564 1,601 2,175 689 49.3 17.9 5,500 50 Net Income SRmn 525 (54) 296 106 307.4 (24.9) 5,000 30 Assets SRmn 5,308 5,599 7,227 7,256 0.4 16.7 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 TASI Tawuniya (RHS) 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)

Source: Bloomberg 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 - - Top 5 shareholders (%) Net Mgn % 33.6 (3.3) 13.6 15.4 - - Public Pension Authority 23.7 ROE % 29.1 (3.7) 24.1 30.7 - - General Organization for 22.8 ROA % 11.0 (1.0) 4.6 5.8 - - Social Insurance 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

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 TAWUNIYA 190 INSURANCE

Also known as Not Covered Malath Cooperative Malath

Current Price (SR) 16.3 Malath Cooperative Insurance and Reinsurance Company (Malath) was

Pricing / Valuation as on June 13, 2010 established in 2007. Headquartered in Riyadh, Malath was the second insurance company (after Tawuniya) to be listed on the Saudi Stock Stock details Exchange. Besides general insurance, it provides facultative reinsurance 52-week range H/L (SR) 33.0/15.8 products. Market cap ($mn) 130.4  Business brief: Malath is engaged in general insurance, medical care Shares outstanding (mn) 30 insurance and facultative inward reinsurance activities. The company derives Price perf. (%) 1M 3M 12M Absolute (23) (31) (50) its premium income mainly from motor, medical, property, aviation, marine Market (6) (5) 3 cargo & hull, energy, and engineering. Sector (16) (18) (18)  Financials: In 1Q10, Malath’s net insurance premium grew 241.5% YoY to Avg daily turn.(mn) SR US$ 3M 8.8 2.3 SR62mn compared to SR18mn in 1Q09. The company’s reinsurance 12M 16.9 4.5 premium and underwriting income also increased by 69% and 323.4% YoY. Raw Beta 6m 3yr Consequently, the company’s revenues grew 203.7% YoY to SR78mn in 1.27 0.70 1Q10 compared to SR26mn in 1Q09. This enabled Malath to post net income Reuters code 8020.SE growth of 113.5% YoY to SR4.4mn in 1Q10, despite the four-fold increase in Bloomberg code MALATH AB Website www.malath.com.sa net claims paid.  Weighting & free float (%) Recent developments: In May 2010, S&P assigned ‘BBB’ long-term TASI (free float weight) 0.05 counterparty credit and insurer financial strength ratings to Malath Free float 47.48 Cooperative, citing strong overall capitalization and risk based capital ratios. In January 2010, Malath announced its intention to quadruple the number of Valuation multiples 08 09 TTM branches in the Kingdom by end of 2010. P/E (x) N/M 67.7 50.9 Company financials P/B (x) 2.1 1.9 1.9 YoY CAGR (%) P/S(x) 11.1 3.0 2.2 2007 2008* 2009 1Q10 (%) (07-09) Div yield (%) NA NA NA Net Insurance Premium SRmn 2 27 131 62 241.5 708.5 Source: NCBC Research Total Revenues SRmn 3 44 166 78 203.7 643.2 Share price performance Net Income SRmn (17) (33) 7 4 113.5 NM Assets SRmn 330 447 697 858 73.1 45.3 7,000 35 6,500 30 Equity SRmn 283 232 252 259 9.7 (5.6) 25 6,000 20 Investments SRmn 275 114 217 224 120.9 (11.2) 5,500 15 5,000 10 Technical Reserves SRmn 12 121 321 444 161.3 407.0 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Combined Ratio % NM 256.0 118.2 116.8 -- TASI M alath Insurance (RHS) Net Mgn %NMNM4.45.7-- ROE % (6.1) (15.0) 3.0 7.0 -- Source: Bloomberg ROA % (5.2) (19.9) 1.3 2.3 -- Top 5 shareholders (%) Div Payout %NANANA-- - 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

Source: Tadawul, NCBC Research

JUNE 2010 MALATH COOPERATIVE 191 INSURANCE

Also known as Not Covered Medgulf Medgulf Saudi

Current Price (SR) 22.3 Mediterranean & Gulf Insurance & Reinsurance Co. (MEDGULF) is a

Pricing / Valuation as on June 13, 2010 subsidiary of the Medgulf Group, a leading insurance and reinsurance company in the Middle East operating in Saudi Arabia, Bahrain, Lebanon, Stock details Turkey, Jordan, UAE, and UK. Established in 2006, it currently operates 52-week range H/L (SR) 34.5/21.1 through its offices in Riyadh, Jeddah and Khobar. Market cap ($mn) 474.5  Business brief: MEDGULF offers various insurance products including Shares outstanding (mn) 80 Price perf. (%) 1M 3M 12M aviation insurance, banker’s blanket bonds, burglary insurance, contractor’s Absolute (20) (18) (8) all risk insurance, credit insurance, employer’s liability insurance, fidelity Market (6) (5) 3 guarantee insurance, marine cargo and hull insurance, and motor insurance. Sector (16) (18) (18) MEDGULF offers a one-stop solution by providing insurance and reinsurance Avg daily turn.(mn) SR US$ services along with risk management and third party administration. 3M 18.8 5.0 12M 18.6 5.0  Financials: Net insurance premium, which contributes about 95% of Raw Beta 6m 3yr MEDGULF’s total revenue, grew by 43.8% YoY in 1Q10 to SR407mn. 1.73 0.94 Consequently, its total revenue grew by 44.5% YoY to SR425mn in 1Q10. Reuters code 8030.SE Although the company’s net claims paid increased 87% YoY, the net claim Bloomberg code MEDGULF AB Website www.medgulf.com. 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 Weighting & free float (%) also rose by 57% YoY TASI (free float weight) 0.09 Free float 25.00  Recent developments: In March 2010, MEDGULF announced a cash dividend of SR0.75 per share for the financial year 2009. Valuation multiples 08 09 TTM Company financials P/E (x) 333.5 12.1 11.4 YoY CAGR (%) P/B (x) 2.3 1.9 1.9 2007 2008* 2009 1Q10 (%) (07-09) P/S(x) NA 1.3 1.2 Net Insurance Premium SRmn NA NA 1,300 407 43.8 NA Div yield (%) NA 3.4 NA Total Revenues SRmn NA NA 1,354 425 44.5 NA Source: NCBC Research Net Income SRmn 7 5 147 37 33.2 362.6 Share price performance Assets SRmn 807 807 2,961 3,463 28.7 91.5 Equity SRmn 807 788 925 958 18.0 7.1 7,000 35 6,500 30 Investments SRmn 758 773 576 579 (25.2) (12.8) 6,000 25 Technical Reserves SRmn NA NA 1,411 1,822 57.1 NM 5,500 5,000 20 Combined Ratio % NA NA 92 95 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % NA NA 10.8 8.6 - - TASI MEDGULF (RHS) ROE % 0.8 0.7 17.1 15.6 - - ROA % 0.8 0.7 7.8 4.6 - - Source: Bloomberg Div Payout % NA NA 41.0 - - -

Top 5 shareholders (%) 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 Mediterranean and Gulf Insurance and Reinsurance – 32.0 Source: Tadawul, Zawya, Company, NCBC Research Bahrain * Financials of 2008 for 18 Months Saudi Investment Bank 19.0

Source: Tadawul, NCBC Research

JUNE 2010 MEDITERANEAN & GULF INSURANCE 192 INSURANCE

Not Covered Allianz Saudi Fransi

Current Price (SR) 23.5 Saudi Fransi Cooperative Insurance Company (Allianz Saudi Fransi), was

Pricing / Valuation as on June 13, 2010 established in 2007 in Riyadh. The Company is a subsidiary of Banque Saudi Fransi (a member of the Calyon Group) and Assurances Generales Stock details de France (a member of the Allianz Group). 52-week range H/L (SR) 59.6/21.1  Business brief: ALLIANZ SF offers multiple insurance solutions through two Market cap ($mn) 125.3 main segments: individual and corporate. Under the individual solutions Shares outstanding (mn) 20 Price perf. (%) 1M 3M 12M segment, the company provides Shariah compliant insurance products Absolute (21) (47) (50) including individual financial planning (for education, protection, and Market (6) (5) 3 retirement), family income protection, life and disability insurance, and Sector (16) (18) (18) corporate solutions assurance. The corporate solutions segment offers Avg daily turn.(mn) SR US$ insurance cover against fire, general accident, construction/engineering, 3M 19.5 5.2 12M 28.6 7.6 marine cargo and employee compensation.

Raw Beta 6m 2yr  Financials: ALLIANZ SF’s remained in losses in 1Q10. The company’s gross 1.98 1.16 and net insurance premium grew 74% YoY and 40% YoY in 1Q10 to Reuters code 8040.SE SR113mn and SR43mn, respectively. Consequently, total revenues increased Bloomberg code ALLIANZ AB Website www.allianzsf.com 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 Weighting & free float (%) net loss of SR3.6mn in 1Q10. The company’s shareholders’ equity, TASI (free float weight) 0.03 investments and technical reserves also declined significantly. Free float 31.00  Recent developments: In April 2010, ALLIANZ SF raised SR125mn through Valuation multiples 08 09 TTM a rights issue with a total coverage of 133% by value. The rights issue was P/E (x) N/M N/M N/M limited to the shareholders registered in the shareholder register at the close P/B (x) 7.1 11.0 12.0 of trading on the extraordinary general assembly day. P/S(x) 121.2 3.3 3.0 Div yield (%) N/A N/A N/A Company financials

Source: NCBC Research YoY CAGR (%) 2007 2008* 2009 1Q10 (%) (07-09) Share price performance Net Insurance Premium SRmn NA 4 127 43 40.3 NA 7,000 60 Total Revenues SRmn NA 4 144 46 38.1 NA 6,500 50 40 Net Income SRmn (16) (33) (22) (4) NA 19.2 6,000 30 5,500 20 Assets SRmn 104 239 443 489 22.0 106.5 5,000 10 Equity SRmn 84 66 43 39 (37.3) (28.6) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10

TASI ALLIANZ SF (RHS) Investments SRmn 100 72 46 46 (43.8) (32.5) Technical Reserves SRmn NA 58 156 37 (78.1) NA Combined Ratio % NA 797.2 128.2 111.2 - - Source: Bloomberg Net Mgn % NA (862.4) (15.5) (8.0) - - Top 5 shareholders (%) ROE % (18.8) (44.6) (41.2) (35.6) - - Banque Saudi Fransi 32.5 ROA % (15.2) (19.5) (6.6) (3.1) - - AGF International Co. 16.2 Div Payout % NA NA NA - - -

SNI Holding Co. 16.2 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

Source: Tadawul, Zawya, Company, NCBC Research * Financials of 2008 for 18 Months

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI FRANSI COOPERATIVE INSURANCE 193 INSURANCE

Also known as Not Covered Saudi IAIC Saudi Salama

Current Price (SR) 31.0 Saudi IAIC Cooperative Insurance Company (Saudi Salama), established

Pricing / Valuation as on June 13, 2010 in 2006, is a Jeddah-based insurance company which markets its products under the SALAMA brand. SALAMA, a subsidiary of the UAE- Stock details based Islamic Arab Insurance Co, provides Shariah compliant general 52-week range H/L (SR) 75.8/28.0 insurance solutions. Market cap ($mn) 82.6  Business brief: SALAMA’s products are broadly classified into three Shares outstanding (mn) 10 Price perf. (%) 1M 3M 12M segments—health, motor and general insurance. The health insurance Absolute (25) (35) (51) segment offers individual and corporate health care cover. The motor Market (6) (5) 3 insurance segment provides comprehensive and third party liability insurance Sector (16 (18) (18) cover. The general insurance segment offers cover for fire & property, Avg daily turn.(mn) SR US$ personal accident, marine, engineering, and aviation. 3M 5.0 1.3 12M 16.5 4.4  Financials: The company’s net insurance premium declined 8.4% YoY to Raw Beta 6m 3yr SR42.4mn compared to SR46.3mn in 1Q09. SALAMA’s reinsurance premium 1.48 1.80 also contracted by 14.9% YoY. As a result, total revenues fell by 8.6% YoY Reuters code 8050.SE to SR44mn in 1Q10 from SR48.1mn in 1Q09. Gross claims paid by the Bloomberg code SALAMA AB Website www.salama.com.sa 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. Weighting & free float (%) TASI (free float weight) 0.03  Recent developments: In May 2010, Saudi Salama announced its intention Free float 40.00 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 Valuation multiples 08 09 TTM Takaful and Sharia-compliant funds across the Middle East. P/E (x) (8.1) 26.4 28.6 Company financials P/B (x) 5.1 4.1 4.0 P/S(x) 4.1 1.5 1.5 YoY CAGR (%) 2007 2008* 2009 1Q10 (%) (07-09) Div yield (%) NA Na NA Net Insurance Premium SRmn NA 72 210 42 (8.4) NA Source: NCBC Research Total Revenues SRmn NA 76 214 44 (8.6) NM Share price performance Net Income SRmn (13) (38) 12 1 (56.5) NM

7,000 80 Assets SRmn 111 257 255 260 (13.8) 51.5 6,500 60 Equity SRmn 83 61 76 78 23.1 (4.4) 6,000 40 Investments SRmn 103 64 76 68 6.8 (13.8) 5,500 5,000 20 Technical Reserves SRmn NA 134 127 130 (26.0) NM Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Combined Ratio % NA 119.5 92.0 100.0 - - TASI SALAM A (RHS) Net Mgn % NA (50.6) 5.5 1.6 - -

Source: Bloomberg ROE % (15.7) (53.4) 17.2 3.6 - - ROA % (11.7) (20.9) 4.6 1.1 - - Top 5 shareholders (%) Div Payout % NA NA NA - - - Arab Islamic Insurance 30.0 EPS SR (1.3) (3.8) 1.2 0.1 (56.3) N/A Company BVPS SR 8.3 6.1 7.6 7.8 23.1 N/A Bin Dawood & sons 5.0 Commercial Co. Source: Tadawul, Zawya, Company, NCBC Research * Financials of 2008 for 19 months Al Sha'er Trade, Industries 5.0 and Construction Cooperative Group Company 5.0 for Trade & Construction

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI SALAMA 194 INSURANCE

Also known as Not Covered Saudi United Wala’a

Current Price (SR) 17.8 Saudi United Cooperative Insurance Company (Wala’a Insurance),

Pricing / Valuation as on June 13, 2010 established in Al-Khobar in 2006, specializes in business risks and government agencies. The company markets its products and services Stock details under the WALAA brand and operates through its branches in Riyadh, 52-week range H/L (SR) 34.3/16.6 Jeddah, Hofouf, and Makah. Market cap ($mn) 94.9  Business brief: Wala’a offers its products through four broad categories. Shares outstanding (mn) 20 The assets & earnings insurance segment covers property & business Price perf. (%) 1M 3M 12M Absolute (22) (29) (42) interruption. The liabilities segment covers employers, public, products, & Market (6) (5) 3 professional risks. Through the employees segment, the company offers life, Sector (16) (18) (18) personal accident, and healthcare insurance products, while the goods-on- Avg daily turn.(mn) SR US$ the-move segment covers ocean cargo and inland transit insurance products. 3M 8.3 2.2 12M 10.8 2.9  Financials: In 1Q10, net insurance premium, which contributes 89% to Raw Beta 6m 2yr Walaa’s total revenues, grew by 234.8% YoY to SR19.3mn from SR5.7mn in 0.94 1.35 1Q09. Reinsurance commission increased by 422% YoY to SR2.4mn in 1Q10. Reuters code 8060.SE Consequently, the company’s total revenues rose by 247.5% YoY to Bloomberg code WALAA AB Website www.walaa.com 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 Weighting & free float (%) 160.6% YoY in 1Q10. As a result, the company’s net loss widened in 1Q10 to TASI (free float weight) 0.03 SR4.3mn from SR2.3mn in 1Q09. Free float 40.00  Recent developments: In February 2010, Wala’a said it received a Valuation multiples 08 09 TTM temporary approval from Saudi Arabian Monetary Agency for the sale and P/E (x) N/M N/M N/M marketing of comprehensive public liability and loss of profits from broken P/B (x) 2.0 2.3 2.3 machine insurance products. P/S(x) 2.4 7.5 5.7 Div yield (%) N/A N/A N/A Company financials

Source: NCBC Research YoY CAGR (%) 2007 2008* 2009 1Q10 (%) (07-09) Share price performance Net Insurance Premium SRmn NA NA 42 19 234.8 NA 7,000 40 Total Revenues SRmn NA NA 47 22 247.5 NA 6,500 30 Net Income SRmn (13) (15) (25) (4) NA NA 6,000 20 5,500 Assets SRmn 188 187 361 362 55.6 38.7 5,000 10 Equity SRmn 187 181 154 153 (13.8) (9.2) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Investments SRmn 186 182 190 116 (36.8) 1.0 TASI Walaa Insurance (RHS) Technical Reserves SRmn NA NA 123 NA NA NA Combined Ratio % NA NA 175.1 134.6 - - Source: Bloomberg Net Mgn % NA NA (53.2) (20.0) - - Top 5 shareholders (%) ROE % (6.9) (8.0) (15.0) (11.3) - - International General 10.5 ROA % (6.8) (7.9) (9.2) (4.8) - - Insurance Co Div Payout % ------Abdullah Mohammed Taleb 5.0 Hakim 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

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI UNITED 195 INSURANCE

Not Covered Arabian Shield

Current Price (SR) 19.9 Arabian Shield Cooperative Insurance Company (Arabian Shield),

Pricing / Valuation as on June 13, 2010 headquartered in Riyadh and established in 2007, commenced operations in January 2008. Arabian Shield is engaged in cooperative Stock details insurance and reinsurance activities. The company is a subsidiary of 52-week range H/L (SR) 41.3/18.5 Bahrain-based Arabian Shield Insurance Company. Market cap ($mn) 106.1  Business brief: Arabian Shield provides a variety of insurance products and Shares outstanding (mn) 20 services, including general insurance (property, motor, marine, engineering, Price perf. (%) 1M 3M 12M Absolute (23) (20) (31) liability, accident, and airplane), medical insurance (for individuals, Market (6) (5) 3 companies and establishments), and energy insurance. Sector (16) (18) (18)  Financials: In 1Q10, the company’s net insurance premium grew by Avg daily turn.(mn) SR US$ 3M 6.7 1.8 118.5% YoY to SR26.2mn compared to SR12mn in 1Q09. Reinsurance 12M 13.8 3.7 commission grew by 33% YoY to SR7.3mn in 1Q10. Consequently, Arabian Raw Beta 6m 2yr Shield’s total revenues increased by 91.5% YoY to SR33.6mn in 1Q10 from 0.94 0.95 SR17.5mn in 1Q09. Net claims paid in 1Q10 rising by 138.1% YoY to Reuters code 8070.SE SR21.7mn resulted in total expenses increasing by 97.2% YoY in 1Q10. The Bloomberg code SHIELD AB Website www.arabianshield.com company’s net surplus grew by 55.7% YoY in 1Q10, taking the net income to SR1.9mn, an increase of 12.7% YoY. Weighting & free float (%)

TASI (free float weight) 0.03 Company financials Free float 40.00 YoY CAGR (%) 2007 2008* 2009 1Q10 (%) (07-09) Valuation multiples Net Insurance Premium SRmn NA NA 68 26 118.5 NA 08 09 TTM Total Revenues SRmn NA Na 95 34 91.5 NA P/E (x) 265 49.2 47.8 Net Income SRmn (5) (4) 8 2 12.7 NM P/B (x) 2.0 1.9 1.9 Assets SRmn 204 202 448 541 29.5 48.1 P/S(x) NA 4.2 3.6 Equity SRmn 195 196 204 206 4.2 2.4 Div yield (%) N/A N/A N/A Investments SRmn 204 202 256 286 26.3 12.0 Source: NCBC Research Technical Reserves SRmn NA NA 125 174 49.1 NM Share price performance Combined Ratio % NA NA 116.6 113.7 - - Net Mgn % NA NA 8.5 5.9 - - 7,000 50 6,500 40 ROE % (2.7) (1.9) 4.0 3.9 - - 6,000 30 ROA % (2.6) (1.8) 2.5 1.6 - - 5,500 20 Div Payout % ------5,000 10 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EPS SR NA (0.2) 0.4 0.1 400.0 N/A TASI Arabian Shield (RHS) BVPS SR NA 9.8 10.2 10.3 5.0 N/A

Source: Tadawul, Zawya, Company, NCBC Research Source: Bloomberg * Financials of 2008 for 19 months

Top 5 shareholders (%) Arabian Shield Insurance 30.0 Company Bahrain National Holding 15.0 Company Yamama Saudi Cement 5.0 Company Al Obaikan Group for 5.0 Investment

Source: Tadawul, NCBC Research

JUNE 2010 ARABIAN SHIELD 196 INSURANCE

Also known as Saudi British Bank Not Covered SABB Takaful Takaful

Current Price (SR) 21.0 SABB Takaful was established in 2007 in Riyadh as an associate

Pricing / Valuation as on June 13, 2010 company of SABB and HSBC. SABB Takaful conducts its business through SABB’s established distribution network (more than 70 branches) and Stock details direct sales team across Saudi Arabia. All of SABB’s insurance products 52-week range H/L (SR) 73.8/13.7 are Shariah compliant. Market cap ($mn) 189.9  Shares outstanding (mn) 34.0 Business brief: SABB Takaful offers family, general, corporate and group Price perf. (%) 1M 3M 12M Takaful products. Under the Family Takaful segment, the company covers Absolute (10) (24) (39) education, savings, single contribution, retirement to provide individuals with Market (6) (5) 3 financial support. General Takaful covers everyday travel, home, and Sector (16) (18) (18) personal accident risks. Corporate Takaful provides cover for marine cargo, Avg daily turn.(mn) SR US$ commercial fire protection, and solutions for SMEs. 3M 10.4 2.8 12M 31.2 8.3  Financials: In 1Q10, SABB Takaful’s net earned premium, which contributes Raw Beta 6m 3yr 95% of total revenues, grew 147.6% YoY to SR29mn from SR11.7mn in 1.72 1.04 1Q09. Consequently, total revenues increased 130.5% YoY to SR 30.6mn. As Reuters code 8080.SE Bloomberg code SABBT AB a result, the company’s net loss narrowed to SR2.4mn in 1Q10 from Website www.sabbtakaful.com SR5.6mn in 1Q09, despite total expenses rising by 80.6% YoY to SR30.7mn.

Weighting & free float (%)  Recent developments: In February 2010, SABB was fined SR50,000 by the TASI (free float weight) 0.05 CMA for violating disclosure rules by failing to disclose management changes. In Free float 35.0 September 2009, SABB appointed Mr. Philip Head as the company’s new CEO. In

Valuation multiples August 2009, SABB raised SR343.4mn through a rights issue. 08 09 TTM Company financials P/E (x) N/M N/M N/M YoY CAGR (%) P/B (x) 13.9 2.2 2.2 2007 2008* 2009 1Q10 (%) (07-09) P/S (x) 14.0 10.2 8.2 Net Insurance Premium SRmn 5 46 63 29 147.6 256.6 Div yield (%) N/A N/A N/A Total Revenues SRmn 6 51 70 31 130.5 237.4 Source: NCBC Research Net Income SRmn (45) (48) (16) (2) N/A N/A Share price performance Assets SRmn 79 209 793 818 272.5 217.7 Equity SRmn 55 51 330 326 618.2 143.9 7,000 70 60 6,500 Investments SRmn 59 28 287 313 1,071.3 120.2 50 6,000 40 Technical Reserves SRmn 6 115 403 443 315.1 727.4 30 5,500 20 5,000 10 Combined Ratio % 352.7 127.8 125.1 106.0 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % (728.1) (95.0) (23.6) (7.9) - - TASI SABB Takaful (RHS) ROE % (80.4) (90.5) (8.6) (2.9) - - ROA % (56.7) (33.5) (3.3) (1.2) - - Source: Bloomberg Div Payout % ------Top 5 shareholders (%) EPS SR (4.5) (1.4) (0.5) (0.1) N/A N/A SABB 32.5 BVPS SR 5.5 5.1 9.7 9.6 111.5 N/A Source: Tadawul, Zawya, Company, NCBC Research HSBC Holding Co. 31.0 * Financials of 2008 For 20 Months

Source: Tadawul, NCBC Research

JUNE 2010 SABB TAKAFUL 197 INSURANCE

Also known as Not Covered Sanad Insurance SANAD

Current Price (SR) 18.2 Sanad Insurance & Reinsurance Cooperative Company (SANAD) was

Pricing / Valuation as on 13-June-2010 established in 2006. The company provides a range of car, general, health, property, and marine insurance as well as reinsurance services. Stock details SANAD also plans to expand its product portfolio to cover insurance for 52-week range H/L (SR) 34.8/17.0 agriculture, airlines, ships, petrol and power. Market cap ($mn) 96.8  Business brief: SANAD provides fire, travel, medical, motor, property, Shares outstanding (mn) 20.0 marine, and engineering insurance products. The company also offers Price perf. (%) 1M 3M 12M Absolute (25) (27) (43) insurance against general accidents. In addition, SANAD provides life Market (6) (5) 3 insurance products and reinsurance services. Sector (16) (18) (18)  Financials: The company’s net insurance premium grew 483.4% YoY to Avg daily turn.(mn) SR US$ 3M 4.5 1.2 SR51.7mn in 1Q10 from SR8.8mn in 1Q09. SANAD’s reinsurance 12M 11.5 3.1 commissions rose 332% YoY to SR2.6mn. Consequently, total revenues Raw Beta 6m 2yr increased 470.3% YoY to SR54.4mn in 1Q10 from SR9.5mn in 1Q09. The 1.12 1.02 company reported net claims of SR30.8mn; this coupled with other expenses Reuters code 8090.SE raised total expenses to SR64.7mn in 1Q10 compared to SR5.7mn in 1Q09. Bloomberg code SANAD AB SANAD posted a net profit of SR1mn in 1Q10, due to a net surplus of Website www.sanad.com.sa SR11.1mn, as against a net loss of SR4.7mn in 1Q09. Weighting & free float (%)  TASI (free float weight) 0.03 Recent developments: In January 2010, Azmir Firoz Daya, CEO of SANAD Free float 40.0 Insurance, tendered his resignation.

Valuation multiples Company financials 08 09 TTM YoY CAGR (%) P/E (x) N/M N/M N/M 2007* 2008** 2009 1Q10 (%) (07-09) P/B (x) 2.1 2.3 2.3 Net Insurance Premium SRmn N/A 3 77 52 483.4 N/A P/S (x) N/M 4.4 2.8 Total Revenues SRmn N/A 3 83 54 470.3 N/A Div yield (%) N/A N/A N/A Net Income SRmn (9) (15) (15) 1 NA 27.3 Source: NCBC Research Assets SRmn 191 199 415 464 65.0 47.3 Equity SRmn 191 175 157 161 (4.7) (9.3) Share price performance Investments SRmn 186 173 28 28 (82.6) (61.4) 7,000 35 Technical Reserves SRmn 0 1 171 206 240.1 N/M 6,500 30 6,000 25 Combined Ratio % N/A 369.8 104.8 125.2 - - 5,500 20 Net Mgn % N/A (520.0) (17.5) 1.8 - - 5,000 15 ROE % (4.7) (8.3) (8.8) 2.5 - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10

TASI SANAD (RHS) ROA % (4.7) (7.7) (4.8) 0.9 - - Div Payout % ------

Source: Bloomberg 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 Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research Al Khazna Insurance Co. 15.0 *Financials of 2007 for 6 months ** Financials adjusted for 12 months Saudi Continental Insurance 10.0 Co. Ramat Marketing and 5.0 Distribution Co.

Source: Tadawul, NCBC Research

JUNE 2010 SANAD INSURANCE 198 INSURANCE

Also known as Not Covered Saudi Arabian SAICO Saudi

Current Price (SR) 37.8 Saudi Arabian Cooperative Insurance Company (SAICO), established in

Pricing / Valuation as on June 13, 2010 2007, offers Shariah-compliant insurance services across Saudi Arabia. SAICO is a subsidiary of Bahrain-based Saudi Arabian Cooperative Stock details Insurance Company, which holds 30% stake in the company. 52-week range H/L (SR) 98.0/30.8  Business brief: SAICO provides insurance services in two categories, Market cap ($mn) 100.8 Shares outstanding (mn) 10.0 business and personal. Under business insurance, the company covers Price perf. (%) 1M 3M 12M liabilities like fire and property, aviation, marine cargo, engineering, energy, Absolute (21) (30) (47) life and health, and motor vehicle. Whereas under personal insurance, the Market (6) (5) 3 company provides insurance for home, car, boat, life and health and Sector (16) (18) (18) accidents. Avg daily turn.(mn) SR US$ 3M 9.6 2.6  Financials: In 1Q10, SAICO earned a net insurance premium of SR27.8mn, 12M 21.8 5.8 or 79% of its total revenues. The reinsurance commission aggregated Raw Beta 6m 2yr SR5.6mn, taking total revenues to SR35.2mn in 1Q10. The combination of 1.94 1.47 net claims paid, policy acquisition costs and other expenses lifted total Reuters code 8100.SE Bloomberg code SAICO AB expenses to SR32.3mn. However, the net surplus of SR2.6mn in 1Q10 Website www.saico.com.sa helped SAICO post a net profit of SR1.9mn in 1Q10 compared to the net loss of SR2.2mn recorded in 1Q09. Weighting & free float (%) TASI (free float weight) 0.03  Recent developments: In June 2010, Saudi Arabian Monetary Agency Free float 40.0 granted SAICO an extended approval for the sale of thirty-four insurance

Valuation multiples products. In June 2010, SAICO announced its intention to buy a stake in 08 09 TTM Najm Company for Insurance Services from Arab Commercial Projects P/E (x) N/M N/M N/M Company’s. P/B (x) 4.2 4.6 4.5 P/S (x) N/A 27.2 7.7 Company financials Div yield (%) N/A N/A N/A YoY CAGR (%)

Source: NCBC Research 2007* 2008** 2009 1Q10 (%) (07-09) Net Insurance Premium SRmn N/A N/A 12 28 N/A N/A Share price performance Total Revenues SRmn 2 N/A 14 35 N/A 187.1 7,000 10 0 Net Income SRmn (6) (10) (8) 2 N/A 14.7 6,500 80 Assets SRmn N/A 94 204 338 257.8 N/A 6,000 60 5,500 40 Equity SRmn 94 90 82 84 (4.8) (6.7) 5,000 20 Investments SRmn 102 91 69 59 (35.2) (18.0) Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Technical Reserves SRmn N/A N/A 64 158 N/A N/A TASI SAICO (RHS) Combined Ratio % N/A N/A 149.4 116.3 - - Net Mgn % N/M N/A (60.3) 5.6 - - Source: Bloomberg ROE % (6.8) (11.0) (9.8) 9.6 - - Top 5 shareholders (%) ROA % N/A (10.7) (5.6) 2.9 - - Saudi Arabian Insurance Co 30.0 Div Payout % ------

Al Wa'lan Car Co. 5.0 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 Erad Holding Limited Co 5.0 Source: Tadawul, Zawya, Company, NCBC Research *Financials of 2007 for 5 months **Financials of 2008 for 17 months

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI ARABIA COOPERATIVE INSURANCE 199 INSURANCE

Also known as Not Covered SIICI, SAUDI Saudi Indian INDIAN

Current Price (SR) 30.7 In 2007, Saudi Indian Company for Co-operative Insurance (Saudi

Pricing / Valuation as on June 13, 2010 Indian) was established by New India Assurance Company, Life Insurance Corporation of India (Intl) and Fawaz Abdulaziz Al Hokair and Stock details Company. Saudi Indian is headquartered in Riyadh and provides 52-week range H/L (SR) 71.8/28.0 financial security to individuals and commercial establishments. Market cap ($mn) 81.8  Shares outstanding (mn) 10.0 Business brief: Saudi Indian’s product profile is segregated into two broad Price perf. (%) 1M 3M 12M categories – life insurance and non-life insurance. Under the life insurance Absolute (27) (35) (47) segment, the company offers various plans related to protection and savings Market (6) (5) 3 such as Takaful Insurance Plan, Participating Endowment Plan, Cash Back Sector (16) (18) (18) Plan, and Money Back & Protect Lifelong. Under the non-life insurance Avg daily turn.(mn) SR US$ 3M 6.6 1.8 segment, Saudi Indian provides fire insurance, motor insurance, engineering 12M 19.5 5.2 insurance, health insurance and other miscellaneous products including Raw Beta 6m 3yr personal accident, burglary and fidelity guarantee. 1.43 1.29  Financials: SIICI’s net insurance premium more than doubled from Reuters code 8110.SE Bloomberg code SINDIAN AB SR5.1mn in 1Q09 to SR11.0mn in 1Q10. The company incurred a net loss of Website www.sicci-ksa.com 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 Weighting & free float (%) total assets aggregated SR172.4mn, while shareholders’ equity totaled TASI (free float weight) 0.03 Free float 40.0 SR46.6mn at the end of 1Q10.  Valuation multiples Recent developments: In May 2010, the company announced the 08 09 TTM appointment of Mr. Fouad Hanoun as the company's Acting Chief Executive P/E (x) N/M N/M N/M Officer to replace Mr. Harish Shandra Mishra. P/B (x) 3.9 5.9 6.6 P/Sales (x) N/M 8.1 4.0 Company financials Div yield (%) N/A N/A N/A YoY CAGR (%) DPS N/A N/A N/A 2007*2008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Ins. Premium SRmn - 1 38 11 116.5 N/M Total Revenues SRmn - 1 42 13 132.7 N/M Share price performance Net Income SRmn (12) (9) (27) (5) N/M N/M 7,000 90 Assets SRmn 96 104 183 172 15.3 38.3 6,500 70 Equity SRmn 88 79 52 47 (37.3) (23.0) 6,000 50 5,500 30 Investments SRmn 93 68 68 59 (15.2) (14.3) 5,000 10 Technical Reserves SRmn - 13 79 82 78.3 N/M Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Combined Ratio % N/A N/M 176.3 160.2 - - TASI Saudi Indian (RHS) Net Mgn % N/A N/A N/A N/A - - ROE % (14.0) (10.4) (41.9) (44.1) - - Source: Bloomberg ROA % (12.8) (8.7) (19.1) (12.2) - - Top 5 shareholders (%) Div Payout % N/A N/A N/A N/A - - New India Insurance Co 10.6 EPS SR (1.2) (0.7) (2.6) (0.5) N/M N/M Life Insurance Corp of India 10.2 BVPS SR 8.8 7.9 5.2 4.7 (37.3) (23.0)

Life Insurance Corp (Int’l) 10.2 Source: Tadawul, Zawya Company, NCBC Research * 14 months Financials reported for 2007 Khaled Abdulaziz Bin Salmah 5.0 Trading Establishment Saleh Saad Al Khariji 5.0 Establishment

Source: Tadawul, NCBC Research

JUNE 2010 SAUDI INDIAN COMPANY FOR CO-OPERATIVE INSURANCE 200 INSURANCE Also known as Not Covered Gulf Gulf Union Cooperative Union

Current Price (SR) 21.0 In August 2007, Gulf Union Cooperative Insurance Company (Gulf

Pricing / Valuation as on June 13, 2010 Union) was established by Gulf Union Insurance and Projects Management Holding Company. Gulf Union offers Shariah-compliant Stock details insurance products which caters to clients in Saudi Arabia as well as 52-week range H/L (SR) 33.1/18.4 customers of its sister company – Gulf Union Insurance and Risk Market cap ($mn) 122.9 Management Company. Shares outstanding (mn) 22.0 Price perf. (%) 1M 3M 12M  Business brief: Gulf Union is engaged in cooperative insurance and Absolute (13) (20) (22) reinsurance activities, excluding protection and savings insurance. The Market (6) (5) 3 company’s product portfolio comprises insurance for property, liability, Sector (16) (18) (18) motor, individual, health, and other related cooperative insurance activities. Avg daily turn.(mn) SR US$ 3M 6.0 1.6 Apart from Dammam, Gulf Union has branches in Jeddah, Khobar and 12M 12.7 3.4 Riyadh. Raw Beta 6m 2yr  Financials: Gulf Union incurred a net loss of SR0.6mn in 1Q10 as against a 0.95 1.24 net profit of SR0.03mn in 1Q09. The company’s total assets aggregated Reuters code 8120.SE Bloomberg code GULFUNI AB SR195.8mn, while shareholders’ equity totaled SR186.9mn at the end of Website www.gulfunion.com.sa 1Q10. Gulf Union’s investments and cash at banks stood at SR6.1mn in 1Q10. Weighting & free float (%) TASI (free float weight) 0.04 Company financials Free float 40.0 YoY CAGR (%) Valuation multiples 2007* 2008 2009 1Q10 (%) (07-09) 08 09 TTM Net Ins. Premium SRmn - - - - N/A N/M P/E (x) N/M N/M N/M Total Revenues SRmn - - - - N/A N/M P/B (x) 2.6 2.7 2.7 Net Income SRmn (22) 2 (2) (1) N/M N/M Assets SRmn 208 205 196 196 (3.0) (2.9) P/Sales (x) N/A N/A N/A Equity SRmn 198 195 189 187 (3.7) (2.4) Div yield (%) N/A N/A N/A Investments SRmn 203 175 161 6 (96.4) (11.1) DPS N/A N/A N/A Technical Reserves SRmn - - - - N/A N/M Source: NCBC Research Combined Ratio % N/A N/A N/A N/A - - Share price performance Net Mgn % N/A N/A N/A N/A - -

7,000 40 ROE % (11.0) 0.9 (1.0) (1.3) - - 6,500 30 ROA % (10.5) 0.9 (0.9) (1.3) - - 6,000 20 Div Payout % N/A N/A N/A N/A - - 5,500 5,000 10 EPS SR (1.0) 0.1 (0.1) (0.0) N/M N/M Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 BVPS SR 9.0 8.9 8.6 8.5 (3.6) (2.4) TASI Gulf Union (RHS) Source: Tadawul, Zawya, Company, NCBC Research *4 months Financials reported for 2007

Source: Bloomberg

Top 5 shareholders (%) Gulf Union Insurance and 23.5 Projects Management Holding Company

Source: Tadawul, NCBC Research

JUNE 2010 GULF UNION CO-OPERATIVE INSURANCE COMPANY 201 INSURANCE

Not Covered Also known as AlAhli Takaful ATC

Current Price (SR) 74.0 AlAhli Takaful Company (ATC), established in 2006, is a joint venture

Pricing / Valuation as on 13 June 2010 between National Commercial Bank, FWU AG, VHV, International Financial Corporation and a small share owned by local investors. Stock details Headquartered in Jeddah, the company provides a range of insurance 52-week range H/L (SR) 247.0/71.0 products and services based on Islamic principles. Market cap ($mn) 197.3  Shares outstanding (mn) 10.0 Business brief: ATC’s insurance products include special programs for Price perf. (%) 1M 3M 12M savings, retirement and education. The company’s “AlAhli Takaful and Absolute (20) (28) (45) Savings Program” targets saving requirements for various purposes such as Market (6) (5) 3 retirement, children’s education, marriage, etc. The scheme provides Sector (16) (18) (18) maturity as well as death benefits. Avg daily turn.(mn) SR US$ 3M 13.6 3.6  Financials: The company’s revenues increased to SR1mn in 1Q10 from 12M 32.7 8.7 SR0.3mn in 1Q09. Despite the increase, ATC posted a net loss of SR2.9mn in Raw Beta 6m 2yr the quarter compared to SR0.6mn in 1Q09 owing to a rise in net claims 1.00 0.83 incurred and a decline in investment and management fee income. ATC’s Reuters code 8130.SE Bloomberg code ATC AB assets aggregated to SR200.8mn at the end of 1Q10. However, Website www.alahlitakaful.com shareholders’ equity decreased to SR73.8mn due to an increase in losses in the period. Weighting & free float (%) TASI (free float weight) 0.04  Recent developments: On 19 January 2010, the company announced plans Free float 26.5 to increase capital by SR150mn (USD40mn) through a rights issue to fund

Valuation multiples its expansion plans. The approval for the plan is still awaited. On 20 January 08 09 TTM 2009, Saudi Monetary Agency granted approval to AlAhli to sell and market P/E (x) N/M N/M N/M its “Group Life Product”. P/B (x) 8.9 9.6 10.0 P/Sales (x) N/A N/A N/A Company financials Div yield (%) N/A N/A N/A YoY CAGR (%) DPS N/A N/A N/A 2007*2008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Ins. Premium SRmn - 0 1 1 231.1 N/M Total Revenues SRmn - (0) 1 1 229.9 N/M Share price performance Net Income SRmn (2) (10) (5) (3) N/M N/M 7,000 240 Assets SRmn 95 95 158 201 86.7 28.6 6,500 19 0 Equity SRmn 94 83 77 74 (10.3) (9.7) 6,000 14 0 5,500 90 Investments SRmn 94 72 66 64 (8.3) (16.5) 5,000 40 Technical Reserves SRmn - 2 67 105 1,228.0 N/M Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Combined Ratio % N/A N/A 131.2 N/M - - TASI ATC (RHS) Net Mgn % N/A N/A N/M N/M - - ROE % (2.0) (11.4) (6.5) (15.3) - - Source: Bloomberg ROA % (2.0) (10.6) (4.1) (6.4) - - Top 5 shareholders (%) Div Payout % N/A N/A N/A N/A - - National Commercial Bank 30.0 EPS SR (0.2) (1.0) (0.5) (0.3) N/M N/M FWU Group 13.1 BVPS SR 9.4 8.3 7.7 7.4 (10.3) (9.6)

International Finance 13.1 Source: Tadawul, Zawya, Company, NCBC Research Corporation * 6 Months Financial reported for 2007 VHV Vermogensanlage 7.5

Source: Tadawul, NCBC Research

JUNE 2010 ALAHLI TAKAFUL COMPANY 202 INSURANCE

Not Covered Al-Ahlia Insurance

Current Price (SR) 50.3 In 2007, Al-Ahlia Insurance Company (Al-Ahlia) was established by the Pricing / Valuation as on June 13, 2010 National Insurance Company of Egypt and several Saudi investors. Al- Ahlia is headquartered in Riyadh and offers Shariah-compliant Stock details cooperative insurance and reinsurance services in the Kingdom. 110.0/ 52-week range H/L (SR) 45.9  Business brief: Al-Ahlia offers a range of general insurance products Market cap ($mn) 134.0 including fire insurance, property insurance, marine insurance, motor Shares outstanding (mn) 10.0 insurance, money insurance, engineering insurance, medical insurance, Price perf. (%) 1M 3M 12M medical malpractice insurance, fidelity insurance and liability insurance. Absolute (26) (34) (13) Market (6) (5) 3  Financials: The Company generated SR13.6mn in revenues in 1Q10. Al- Sector (16) (18) (18) Ahlia’s financials are not comparable for the previous quarter as it had begun Avg daily turn.(mn) SR US$ operations as the Al Ahlia Co-Operative Insurance Company on 1 April 2009. 3M 16.7 4.5 However, the company posted a net loss of SR5.7mn as it incurred a net 12M 28.9 7.7 Raw Beta 6m 2yr claim of SR6.9mn in 1Q10. Al-Ahlia’s assets aggregated SR231mn, while 0.61 1.38 shareholders’ equity stood at SR45mn as of 31 March 2010. Reuters code 8140.SE  Recent developments: On 26 May 2010, the company’s Board of Directors Bloomberg code ALAHLIA AB Website www.alahlia.com.sa 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 Weighting & free float (%) 200% rights issue. TASI (free float weight) 0.04

Free float 40.0 Company financials

Valuation multiples YoY CAGR (%) 08 09 TTM 20072008* 2009 1Q10 (%) (07-09) Net Ins. Premium SRmn - - 16 14 N/A N/M P/E (x) N/M N/M N/M Total Revenues SRmn - - 17 15 N/A N/M P/B (x) 6.1 9.8 11.1 Net Income SRmn - (15) (31) (6) N/M N/M P/Sales (x) N/A 32.3 17.2 Assets SRmn 113 107 182 231 114.2 27.1 Div yield (%) N/A N/A N/A Equity SRmn 100 83 51 45 (42.8) (28.5) DPS N/A N/A N/A Investments SRmn 100 101 16 13 (86.8) (60.3) Source: NCBC Research Technical Reserves SRmn - - 61 94 N/A N/M Share price performance Combined Ratio % N/A N/A 277.9 153.9 - - Net Mgn % N/A N/A N/M N/M - - 7,000 110 6,500 90 ROE % - (16.7) (46.2) (47.5) - - 6,000 70 ROA % - (13.9) (21.4) (11.1) - - 5,500 50 5,000 30 Div Payout % N/A N/A N/A N/A - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 EPS SR - (1.5) (1.1) (0.6) N/M N/M TASI Al-Ahlia (RHS) BVPS SR 10.0 8.3 5.1 4.5 (42.7) (28.5)

Source: Tadawul, Zawya, Company, NCBC Research Source: Bloomberg * Financials reported for 2008 is for 18 months

Top 5 shareholders (%) National Insurance Co. of 18.0 Egypt

Source: Tadawul, NCBC Research

JUNE 2010 AL-AHLIA INSURANCE COMPANY 203 INSURANCE

Also known as Not Covered ACIG, Saudi Allied Co-operative ACIG

Current Price (SR) 34.5 Allied Cooperative Insurance Group (ACIG) was incorporated in 2007

Pricing / Valuation as on 13 June 2010 through the acquisition of the Saudi assets and client portfolio of its parent company, ACIG Bahrain. ACIG, based in Jeddah, offers Islamic Stock details Shariah-compliant insurance and reinsurance products in Saudi Arabia. 52-week range H/L (SR) 74.0/30.9  Business brief: ACIG offers Islamic general insurance services including Market cap ($mn) 92.0 Shares outstanding (mn) 10.0 marine, medical, motor, general accident, and engineering insurance. Under Price perf. (%) 1M 3M 12M its Marine Insurance segment, the company offers marine cargo and inland Absolute (27) (31) (50) transit insurances. The Motor Insurance segment provides third-party liability Market (6) (5) 3 protection, personal accident cover (for drivers and passengers) and Sector (16) (18) (18) comprehensive ‘own damage’ options; while the General Insurance segment Avg daily turn.(mn) SR US$ 3M 6.8 1.8 provides money, fidelity, personal accident, public liability, workmen’s 12M 20.7 5.5 compensation, and medical malpractice insurance. Raw Beta 6m 2yr  Financials: ACIG’s net loss declined from SR5.6mn in 1Q09 to SR5mn in 1.74 1.37 1Q10. The company’s assets totaled SR92mn in 1Q10, while shareholders’ Reuters code 8150.SE Bloomberg code ACIG AB equity was SR45mn in 1Q10. Website www.acig.com.sa  Recent developments: On 26 April 2010, the CMA fined ACIG SR100,000 for Weighting & free float (%) violating registration and listing regulations. The company was fined TASI (free float weight) 0.03 SR50,000 each for failing to inform the regulator about changes in senior Free float 40.0 management and announcing earning results. On 31 October 2009, ACIG

Valuation multiples announced plans to increase capital by SR150mn to finance an expansion in 08 09 TTM reinsurance activities. P/E (x) N/M N/M N/M P/B (x) 4.9 6.9 7.7 Company financials P/Sales (x) N/A N/A N/A YoY CAGR (%) Div yield (%) N/A N/A N/A 2007*2008 2009 1Q10 (%) (07-09) DPS N/A N/A N/A Net Ins. Premium SRmn - - 1 1 N/A N/M Total Revenues SRmn - - 1 1 N/A N/M Source: NCBC Research Net Income SRmn (5) (23) (24) (5) N/M N/M Share price performance Assets SRmn 94 78 91 92 36.3 (2.0)

7,000 80 Equity SRmn 92 70 50 45 (30.0) (26.4) 6,500 60 Investments SRmn 91 74 48 47 (25.1) (27.2) 6,000 40 Technical Reserves SRmn - - 30 26 N/A N/M 5,500 5,000 20 Combined Ratio % N/A N/A N/M N/M - - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Net Mgn % N/A N/A N/M N/A - - TASI ACIG (RHS) ROE % (5.1) (28.1) (40.3) (42.1) - - ROA % (5.0) (26.4) (28.7) (21.8) - - Source: Bloomberg Div Payout % N/A N/A N/A N/A - - Top 5 shareholders (%) EPS SR (0.5) (2.3) (2.4) (0.5) N/M N/M Allied Cooperative Insurance 20.0 BVPS SR 9.2 7.0 5.0 4.5 (30.0) (26.4) Group Source: Tadawul, Zawya, Company, NCBC Research Islamic Development Bank 20.0 * 5 month financial reported for 2007

Source: Tadawul, NCBC Research

JUNE 2010 ALLIED COOPERATIVE INSURANCE GROUP 204 INSURANCE

Not Covered Also known as Arabia Insurance AICC

Current Price (SR) 18.0 Arabia Insurance Cooperative Company (AICC) was established in 2007

Pricing / Valuation as on June 13, 2010 and is headquartered in Riyadh. AICC has been able to issue insurance policies from January 2009. Stock details  Business brief: AICC is engaged in insurance as well as reinsurance 52-week range H/L (SR) 33.5/16.9 Market cap ($mn) 95.7 activities and services across Saudi Arabia. The company offers several Shares outstanding (mn) 20.0 insurance products, including motor, property, marine, medical, and general Price perf. (%) 1M 3M 12M accident insurance. The company also plans to expand the market for Absolute (21) (27) (39) Takaful life policies and investment products. Market (6) (5) 3  Sector (16) (18) (18) Financials: In 1Q10, AICC did not generate any revenues from operations. Avg daily turn.(mn) SR US$ Gross premium written and net premium earned for 2009 were nil. However, 3M 9.0 2.4 operational costs, mainly, general and administrative expenses of SR3.8mn 12M 10.5 2.8 incurred during the quarter, led to a net loss of SR2.9mn. Raw Beta 6m 2yr 0.95 1.06  Recent developments: In January 2010, AICC announced a net loss of Reuters code 8160.SE SR11.8mn for 2009 compared to SR26.8mn for 2008. Bloomberg code AICC AB Website N/A Company financials YoY CAGR (%) Weighting & free float (%) 2007 2008 2009 1Q10 (%) (07-09) TASI (free float weight) 0.03 Net Insurance Premium SRmn ------Free float 40.00 Total Revenues SRmn ------Valuation multiples Net Income SRmn - (27) (12) (3) 0.8 - 08 09 TTM Assets SRmn - 177 212 215 23.3 - P/E (x) (13.4) (30.5) (30.4) Equity SRmn - 171 156 153 (8.7) - Investments SRmn - 169 193 195 27.2 - P/B (x) 2.1 2.3 2.3 Technical Reserves SRmn ------P/Sales (x) N/A N/A N/A Combined Ratio % ------Div yield (%) N/A N/A N/A Net Mgn % ------DPS N/A N/A N/A ROE % - (15.7) (7.2) (7.5) - - Source: NCBC Research ROA % - (15.1) (6.1) (5.4) - - Share price performance Div Payout % - N/A N/A N/A - -

7,000 35 EPS SR - (1.3) (0.6) (0.1) (71.1) - 6,500 30 BVPS SR - 8.5 7.8 7.7 3.1 - 25 6,000 20 Source: Tadawul, Zawya, Company, NCBC Research 5,500 15 5,000 10 Jun-09 Sep-09 Dec-09 M ar-10 Jun-10

TASI AICC (RHS)

Source: Bloomberg

Top 5 shareholders (%) Arab Holding Co. 19.2 Jordanian Insurance Co. 12.2

Arab Supply and Trading 5.0 (ASTRA)

Source: Tadawul, NCBC Research

JUNE 2010 ARABIA INSURANCE COOPERATIVE COMPANY 205 INSURANCE

Not Covered Also known as Trade Union Co-op TUCIC, TUCI

Current Price (SR) 16.5 Trade Union Cooperative Insurance & Reinsurance Company (Trade

Pricing / Valuation as on June 13, 2010 Union) was established in 2007 as a Saudi-based insurance company. The company is headquartered in Al Khobar and registered with the Stock details Council of Cooperative Health Insurance (CCHI). 52-week range H/L (SR) 40.7/15.6  Market cap ($mn) 110.0 Business brief: Trade Union’s product portfolio includes property insurance Shares outstanding (mn) 25.0 (fire and allied perils), liability insurance (general and product), marine Price perf. (%) 1M 3M 12M insurance (hull, cargo and land transit), crime insurance (burglary, computer Absolute (22) (28) (33) fraud), engineering insurance (machinery breakdown, contractor’s risks), Market (6) (5) 3 motor insurance (commercial or heavy vehicles), and personal lines Sector (16) (18) (18) (household comprehensive, personal accident, new vehicle warranty). Avg daily turn.(mn) SR US$ 3M 9.1 2.4 Additionally, Trade Union provides medical and life insurance products as 12M 17.9 4.8 well as reinsurance services led by Swiss Reinsurance Co. The company’s Raw Beta 6m 2yr medical treaty is secured by Munich Re. 1.14 1.33  Reuters code 8170.SE Financials: In 1Q10, Trade Union did not register any revenues either Bloomberg code TRDUNION AB through premiums or investment income & other income. The company Website www.tui-sa.com derived Investment & Management Fee Income totaling SR0.3mn in 1Q10

Weighting & free float (%) compared to SR2.4mn in 1Q09. The company also incurred general and TASI (free float weight) 0.04 administrative expenses of SR0.9mn during the quarter compared to Free float 42.00 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. Valuation multiples 08 09 TTM  Recent developments: In February 2010, Trade Union announced an P/E (x) N/M N/M N/M audited net loss of SR2.1mn for the year 2009. P/B (x) 1.7 1.7 1.7 P/Sales (x) 59.7 41.7 41.7 Company financials Div yield (%) N/A N/A N/A YoY CAGR (%) DPS N/A N/A N/A 2007 2008 2009 1Q10 (%) (07-09)

Source: NCBC Research Net Insurance Premium SRmn ------Total Revenues SRmn - 7 10 - - - Share price performance Net Income SRmn - - - (1) (182.6) - 7,000 50 Assets SRmn - 262 263 264 1.8 - 6,500 40 Equity SRmn - 248 244 242 (2.1) - 6,000 30 5,500 20 Investments SRmn - 257 257 258 1.1 - 5,000 10 Technical Reserves SRmn ------Jun-09 Sep-09 Dec-09 M ar-10 Jun-10 Combined Ratio % ------TASI Trade Union (RHS) Net Mgn % ------ROE % - - - (1.0) - - Source: Bloomberg ROA % - - - (0.9) - - Top 5 shareholders (%) Div Payout % ------United Commercial Insurance 22.3 EPS SR - - - (0.0) (182.6) - Co BVPS SR - 9.9 9.8 9.7 (2.1) - Al Ahlia Insurance Company 10.0 Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 TRADE UNION COOPERATIVE INSURANCE 206 INSURANCE

Not Covered Also known as Al Sagr Company Al Sagr Saudi

Current Price (SR) 50.3 Al Sagr Company for Cooperative Insurance (Al Sagr Saudi) started

Pricing / Valuation as on June 13, 2010 operations in Saudi Arabia in 1983 as a branch of Al Sagr National Insurance Co. (ASNIC), Dubai. Headquartered in Al Khobar, Sagr Stock details Insurance operates through its three branches in Dammam, Riyadh and 52-week range H/L (SR) 85.0/40.1 Jeddah. Market cap ($mn) 267.9 Shares outstanding (mn) 20.0  Business brief: Sagr Insurance offers a wide range of insurance products to Price perf. (%) 1M 3M 12M its customers: fire and general (property, engineering, liability and Absolute (18) (1) 2 miscellaneous), marine (cargo and hull), motor, life and medical insurance Market (6) (5) 3 services. The company also provides jewelry merchant insurance and Sector (16) (18) (18) hotel/furnished apartments-blanket insurance. In addition, Sagr Insurance Avg daily turn.(mn) SR US$ 3M 42.5 11.3 provides reinsurance services—the company has reinsurance treaties with 10 12M 38.8 10.3 re-insurers in the Middle East and Europe including ALLIANZ RE and Raw Beta 6m 2yr CONVERIUM (Germany), ODYSSEY RE (France), TAKAFUL RE (UAE), and 1.54 0.88 B.E.S.T. RE (Tunis). Reuters code 8180.SE Bloomberg code SAGR AB  Financials: In 1Q10, Sagr Insurance did not generate any revenues from its Website www.alsagrsaudi.com operations. The company’s investment & management fee income totaled

Weighting & free float (%) SR0.4mn in 1Q10 compared to SR2.4mn in 1Q09. However, operational TASI (free float weight) 0.08 expenses incurred during the quarter, mainly general and administrative, Free float 42.00 resulted in a net loss of SR1.6mn as against a net profit of SR0.7mn in 1Q09. Valuation multiples 08 09 TTM  Recent developments: In February 2010, Sagr Insurance announced a P/E (x) 410.2 7,671.8 N/M 95% YoY decline in its audited net profit to SR0.1mn for 2009. In January P/B (x) 5.0 5.0 5.1 2010, Al Sagr’s Board of Directors appointed Omar Hamza as General P/Sales (x) N/M N/M N/M Manager of the company, effective 1 January 2010. Div yield (%) N/M N/M N/M DPS N/M N/M N/M Company financials Source: NCBC Research estimates YoY CAGR (%) Share price performance 2007 2008 2009 1Q10 (%) (07-09) Net Insurance Premium SRmn ------7,000 90 6,500 Total Revenues SRmn ------70 6,000 Net Income SRmn - 2 0 (2) (316.2) - 50 5,500 Assets SRmn - 208 215 215 1.9 - 5,000 30 Equity SRmn - 202 200 199 (2.3) - Jun-09 Sep-09 Dec-09 M ar-10 Jun-10

TASI Sagr Insurance (RHS) Investments SRmn - 185 212 212 13.9 - Technical Reserves SRmn ------Source: Bloomberg Combined Ratio % ------

Top 5 shareholders (%) Net Mgn % ------ROE % - 1.2 0.1 (3.2) - - Al Saqar National Insurance 26.0 Co. ROA % - 1.2 0.1 (3.0) - - Arabian Red Land Industrial 5.0 Div Payout % - N/A N/A N/A - - Services EPS SR - 0.1 0.0 (0.1) (316.2) - Abdullah Rasheed Al Rasheed 5.0 BVPS SR - 10.1 10.0 9.9 (2.3) - & Sons Co. Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 AL SAGR COMPANY FOR COOPERATIVE INSURANCE 207 INSURANCE

Not Covered United Cooperative Also known as UCA

Current Price (SR) 25.2 United Cooperative Assurance Company (UCA) is engaged in the

Pricing / Valuation as on June 13, 2010 insurance business in KSA. In 2007, the company was established in Jeddah as a separate entity from UCA Insurance Co. of Bahrain. In March Stock details 2008, UCA initiated a public offering selling a 40% stake (or eight 52-week range H/L (SR) 44.4/24.9 million shares) at SR10.0 per share. The stock was listed on the Tadawul Market cap ($mn) 134.4 in June 2008. Shares outstanding (mn) 20.0 Price perf. (%) 1M 3M 12M  Business brief: UCA offers a wide range of insurance products such as Absolute (20) (37) (15) engineering (contractor’s risks, machinery, and plant & equipment used for Market (6) (5) 3 construction), medical, personal accident and protection, motor insurance, Sector (16) (18) (18) and marine cargo. The company’s 220 employees cater to clients through Avg daily turn.(mn) SR US$ 3M 26.9 7.2 offices in 3 major cities in the Kingdom. 12M 26.3 7.0  Financials: Investment & management fee income declined 50.7% YoY to Raw Beta 6m 2yr SR0.4mn in 1Q10. UCA’s general and administrative expenses stood at -0.15 0.84 Reuters code 8190.SE SR0.1mn in 1Q10 compared to SR0.4mn in 1Q09. The company’s net income Bloomberg code UCA AB fell 33.0% YoY to SR0.3mn during the quarter. Website www.uca.com.sa  Recent developments: In February 2010, UCA announced an audited net Weighting & free float (%) loss of SR11.2mn in 2009, compared to a loss of SR10.2mn in 2008. TASI (free float weight) 0.04 Free float 40.00 Company financials YoY CAGR (%) Valuation multiples 2007 2008 2009* 1Q10 (%) (07-09) 08 09 TTM Net Insurance Premium SRmn ------P/E (x) (49.5) (45.0) (44.4) Total Revenues SRmn ------P/B (x) 2.7 2.9 2.9 Net Income SRmn - (10) (11) 0 (33.0) - P/Sales (x) N/M N/M N/M Assets SRmn - 207 190 190 0.0 - Div yield (%) N/M N/M N/M Equity SRmn - 190 175 175 (8.3) - DPS N/M N/M N/M Investments SRmn - 206 189 190 0.2 - Source: NCBC Research Technical Reserves SRmn ------

Share price performance Combined Ratio % ------Net Mgn % ------7,000 50 ROE % - (5.4) (6.1) 0.7 - - 6,500 40 6,000 ROA % - (4.9) (5.6) 0.6 - - 30 5,500 Div Payout % - N/A N/A N/A - - 5,000 20 EPS SR - (0.5) (0.6) 0.0 (33.0) - Jun-09 Oct-09 Feb-10 Jun-10 BVPS SR - 9.5 8.7 8.7 (8.3) - TASI U C A (RHS) Source: Tadawul, Zawya, Company, NCBC Research * For the 20 months to end 2009 Source: Bloomberg

Top 5 shareholders (%) UCA Insurance Co. 32.5 Al Faisaliah Group Holding 5.0

Civil Woks Co. 5.0

Source: Tadawul, NCBC Research

JUNE 2010 UNITED COOPERATIVE ASSURANCE COMPANY 208 INSURANCE

Not Covered Saudi Reinsurance Also known as Saudi Re

Current Price (SR) 9.9 Saudi Reinsurance Co (Saudi Re), established in May 2008, is the first

Pricing / Valuation as on June 13, 2010 cooperative reinsurance company of Saudi Arabia; it is headquartered in Riyadh. The company provides life and non-life Shariah-compliant Stock details reinsurance products. Its products cover treaty and facultative types of 52-week range H/L (SR) 14.6/9.3 reinsurance in all classes of business within the Kingdom as well as in Market cap ($mn) 263.9 other countries of the MENA region. Shares outstanding (mn) 100.0 Price perf. (%) 1M 3M 12M  Business brief: Saudi Re offers a wide range of reinsurance-related Absolute (10) (10) (20) products such as fire, marine (hull and cargo), general accident, engineering Market (6) (5) 3 (machinery breakdown and contractor’s risks), aviation, motor, third-party Sector (16) (18) (18) liability as well as life and medical insurances. Avg daily turn.(mn) SR US$ 3M 6.9 1.8  Financials: Saudi Re recorded a 440% growth in gross premiums written to 12M 13.7 3.7 SR43.5mn during 1Q10. As a result, net premiums earned surged 11-fold Raw Beta 6m 2yr from SR0.5mn in 1Q09 to SR5.3mn in 1Q10. As a percentage of total 0.45 0.76 Reuters code 8200.SE revenues, net premiums earned contributed 60.9% and 62.9% in 1Q09 and Bloomberg code SAUDIRE AB 1Q10, respectively. The company also registered a 9.6-fold growth in total Website www.saudi-re.com revenues to SR8.5mn in 1Q10. However, profitability of the company was

Weighting & free float (%) strained as total costs and expenses increased to SR16.7mn in 1Q10, a TASI (free float weight) 0.08 189.5% YoY increase. Also, absence of other income during the quarter Free float 40.00 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 Valuation multiples 08 09 TTM  Recent developments: In March 2010, Saudi Re announced that Standard P/E (x) N/M N/M N/M and Poor's had reaffirmed its BBB+ rating with a stable outlook. P/B (x) 1.0 1.0 1.0 P/Sales (x) 6226.4 75.3 47.5 Company financials Div yield (%) N/A N/A N/A YoY CAGR (%) DPS N/A N/A N/A 2007 2008 2009 1Q10 (%) (07-09) Source: NCBC Research Net Insurance Premium SRmn - 0 8 5 N/M N/M Total Revenues SRmn - 0 13 8 N/M N/M Share price performance Net Income SRmn - 26 5 (6) (189.6) N/M 7,000 15 Assets SRmn - 1,033 1,094 1,198 14.4 - 6,500 13 11 Equity SRmn - 1,026 1,006 994 (3.1) - 6,000 9 Investments SRmn - 1,012 1,035 1,038 2.4 - 5,500 7 5,000 5 Technical Reserves SRmn - 1 15 96 N/M N/M Jun-09 Oct-09 Feb-10 Jun-10 Combined Ratio % - N/M 403.9 312.1 - - TASI Saudi Re (RHS) Net Mgn % - N/M 36.7 (66.8) - -

Source: Bloomberg ROE % - 2.5 0.5 (2.3) - - ROA % - 2.5 0.5 (2.0) - - Top 5 shareholders (%) Div Payout % - N/A N/A N/A - - Jordan Islamic Finance Bank 5.0 EPS SR - 0.3 0.0 (0.1) (189.6) N/M Ahmad Hamad AlGosaibi & 5.0 BVPS SR - 10.3 10.1 9.9 (3.1) - Bros. Co. Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 ARABIA INSURANCE COOPERATIVE COMPANY 209 INSURANCE

Not Covered Bupa Arabia

Current Price (SR) 20.0 Bupa Arabia for Cooperative Insurance, a medical insurance company,

Pricing / Valuation as on June 13, 2010 was established in Jeddah in 2008. Prior to being publicly listed, Bupa Arabia conducted its business as a joint venture between Nazer Group Stock details and the UK-based BUPA Group. 52-week range H/L (SR) 32.6/16.1  Business brief: The company offers medical insurance cover to companies, Market cap ($mn) 212.7 Shares outstanding (mn) 40.0 businesses and families. Bupa Arabia’s corporate services include customized Price perf. (%) 1M 3M 12M healthcare plans, which have been divided into BUPA Direct and BUPA Absolute (16) (22) (4) Corporate Health Care Scheme. BUPA Direct targets companies having 10– Market (6) (5) 3 50 employees with three main schemes: Executive, Classic and Essential. Sector (16) (18) (18) BUPA Corporate Health Care Scheme targets companies with over 50 Avg daily turn.(mn) SR US$ 3M 13.5 3.6 employees. 12M 13.1 3.5  Financials: Bupa Arabia’s gross premium increased 46.6% YoY to Raw Beta 6m 2yr SR637mn, while net premium grew 39.8% YoY to SR368mn in 1Q10. The 1.54 1.17 company’s revenues totaled SR369mn in 1Q10 compared to SR265mn in Reuters code 8210.SE Bloomberg code BUPA AB 1Q09. Bupa Arabia incurred a loss in 1Q10 as expenses rose 40.3% YoY to Website www.bupa.com.sa SR381mn. During the same period, the company’s net loss was SR12.9mn from SR5.6mn in 1Q09. Weighting & free float (%) TASI (free float weight) 0.06  Recent developments: In June 2010, Bupa Arabia signed a SR2.6mn Free float 40.00 partnership agreement with Human Resources Development Fund (HRDF) to

Valuation multiples recruit and train 94 employees. 08 09 TTM Company financials P/E (x) (466.1) 14.2 16.4 P/B (x) 2.0 1.8 1.9 YoY CAGR (%) 2007 2008 2009 1Q10 (%) (07-09) P/Sales (x) -0.70.6 Net Insurance Premium SRmn - - 1,205 368 39.8 N/M Div yield (%) N/A N/A N/A Total Revenues SRmn - - 1,208 369 39.2 N/M DPS N/A N/A N/A Net Income SRmn - (2) 56 (13) 131.3 N/M Source: NCBC Research estimates Assets SRmn - 392 1,403 1,649 25.2 - Share price performance Equity SRmn - 390 437 420 9.9 - Investments SRmn - 352 309 310 (12.5) - 7,000 35 6,500 30 Technical Reserves SRmn - - 798 1,068 37.1 N/M 25 6,000 20 Combined Ratio % - - 95.3 103.4 - - 5,500 15 Net Mgn % - - 4.6 (3.5) - - 5,000 10 Jun-09 Oct-09 Feb-10 Jun-10 ROE % - (0.4) 13.5 (12.0) - -

TASI Bupa Arabia (RHS) ROA % - (0.4) 6.2 (3.4) - - Div Payout % - N/A N/A N/A - - Source: Bloomberg EPS SR - (0.0) 1.4 (0.3) 131.3 N/M Top 5 shareholders (%) BVPS SR - 9.7 10.9 10.5 9.9 - Bupa Middle East Holdings 22.5 Source: Tadawul, Zawya, Company, NCBC Research Bupa Investments Limited 15.0

Modern Software Solutions Co 5.0

Nazer Group Holding Co 5.0

Assas Company for 5.0 Healthcare

Source: Tadawul, NCBC Research

JUNE 2010 BUPA ARABIA 210 INSURANCE

Not Covered Also known as Weqaya Takaful Weqaya

Current Price (SR) 19.0 Weqaya Takaful Insurance & Reinsurance Company (Weqaya),

Pricing / Valuation as on 13 June 2010 established in May 2009 in Riyadh, offers insurance products in healthcare, general insurance and reinsurance. Stock details  Business brief: Weqaya’s insurance portfolio consists of products such as 52-week range H/L (SR) 54.8/17.5 Market cap ($mn) 101.3 protection and savings, health, and general insurances; and reinsurance Shares outstanding (mn) 20 services.

Price perf. (%) 1M 3M 12M  Financials: Weqaya reported a net loss of SR1.9mn in 1Q10 mainly due to Absolute (23) (33) NA the initial stage of its operations. The company did not yield any sales; Market (6) (5) 3 Sector (16) (18) (18) however, generated SR1.9mn as investment and management fee. Owing to Avg daily turn.(mn) SR US$ the newly started operations, operating expenses stood at SR3.7mn, 3M 12.1 3.2 resulting in a net loss for the quarter. 12M 47.5 12.7  Raw Beta 6m 3yr Recent developments: In June 2010, the company received approval for the 0.57 N/A interim sale of 19 of its insurance products. In April 2010, Weqaya received Reuters code 8220.SE final approval from SAMA to conduct its business in Saudi Arabia and for the Bloomberg code WEQAYA AB sale and marketing of its products. Website www.weqaya.com.sa Company financials Weighting & free float (%) YoY CAGR (%) TASI (free float weight) 0.03 20072008 2009 1Q10 (%) (07-09) Free float 40.0 Net Insurance Premium SRmn NA NA NA NA NA NA Valuation multiples Total Revenues SRmn NA NA NA NA NA NA 08 09 TTM Net Income SRmn NA NA (11) (2) NA NA P/E (x) N/A NM NM Assets SRmn NA NA 190 188 NA NA P/B (x) N/A 2.1 2.1 Equity SRmn NA NA 181 178 NA NA P/Sales (x) N/A N/A N/A Investments SRmn NA NA 182 180 NA NA Div yield (%) N/A N/A N/A Technical Reserves SRmn NA NA NA NA NA NA

Source: NCBC Research Combined Ratio % NA NA NA NA NA NA Net Mgn % NA NA NA NA NA NA Share price performance ROE % NA NA NA NA NA NA

7,000 59 ROA % NA NA NA NA NA NA 6,500 49 Div Payout % NA NA NA NA NA NA 6,000 39 EPS SR NA NA (1.6) (0.6) NA NA 5,500 29 BVPS SR NA NA 9.1 8.9 NA NA 5,000 19 Jun-10Mar-10Dec-09Sep-09Jun-09 Source: Tadawul, Zawya, Company, NCBC Research TASI Weqaya (RHS

Source: Bloomberg

Top 5 shareholders (%) Al Oula Insurance Company 20.0 Beit Al Mal Investments 5.0

The sons of Abdulaziz Ajlan Al 5.0 Ajlan Company Al Suhaili Trading and 5.0 Development Rana Investments Company 5.0

Source: Tadawul, NCBC Research

JUNE 2010 WEQAYA TAKAFUL INSURANCE & REINSURANCE COMPANY 211 INSURANCE

Also known as Not Covered Al Rajhi Cooperative ARCCI

Current Price (SR) 37.4 Al Rajhi Company for Cooperative Insurance (ARCCI), established in

Pricing / Valuation as on 13 June 2010 1990 in Bahrain, is an Islamic insurance company. The company set up operations in Saudi Arabia in July 2008. ARCCI provides cooperative Stock details insurance and reinsurance services in compliance with Shariah principles 52-week range H/L (SR) 104.8/10 to individuals and corporate customers in and around KSA. Market cap ($mn) 199.4  Business brief: ARCCI’s product portfolio consists of property, marine (hull Shares outstanding (mn) 20 and cargo) & aviation, engineering, liability, casualty, life, health, travel, Price perf. (%) 1M 3M 12M Absolute (23) (31) NA motor and other miscellaneous insurances. The company operates through a Market (6) (5) 3 network of three branches in Riyadh, Jeddah and Dammam; its head office is Sector (16) (18) (18) located in Riyadh. Avg daily turn.(mn) SR US$ 3M 5.3 1.4  Financials: ARCCI’s gross written premium for 1Q10 was SR30mn and 12M 40.9 10.9 revenue was SR3mn. However, as the company is in its initial stage, the Raw Beta 6m 3yr operating expenses were high, resulting in a net loss of SR8.2mn. ARCCI’s 1.07 N/A total assets expanded to SR250mn in 1Q10 from SR193mn in 2009. Its Reuters code 8230.SE shareholder equity stood at SR164mn during the quarter. Bloomberg code ARCCI AB Website www.alrajhitakaful.com  Recent developments: On 18 April 2009, ARCCI launched its IPO, offering

Weighting & free float (%) 6mn shares (30% share capital), which was oversubscribed by 747 times. TASI (free float weight) 0.05 The company also received approval from SAMA in February 2010 to offer Free float 30.0 additional insurance products.

Valuation multiples Company financials 08 09 TTM YoY CAGR (%) P/E (x) N/A NM NM 20072008 2009 1Q10 (%) (07-09) P/B (x) N/A 4.06 4.26 Net Insurance Premium SRmn NA NA NA 3 NA NA P/Sales (x) N/A N/A N/A Total Revenues SRmn NA NA NA 3 NA NA Div yield (%) N/A N/A N/A Net Income SRmn NA NA (29) (8) NA NA

Source: NCBC Research Assets SRmn NA NA 193 250 NA NA Equity SRmn NA NA 173 164 NA NA Share price performance Investments SRmn NA NA 187 154 NA NA

7,000 110 Technical Reserves SRmn NA NA NA 28 NA NA 90 70 Combined Ratio % NA NA NA 505.9 NA NA 6,000 50 Net Mgn % NA NA NA (262.7) NA NA 30 5,000 10 ROE % NA NA (16.6) (19.5) NA NA Jul-09 Sep-09Dec-09Feb-10May-10 ROA % NA NA (14.9) (14.8) NA NA TASI ARCCI (RHS) Div Payout % NA NA NA NA NA NA EPS SR NA NA (1.4) (0.4) NA NA Source: Bloomberg BVPS SR NA NA 8.6 8.2 NA NA

Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research Al Rajhi Banking and 22.5 Investment Al Rajhi Insurance Co. Ltd. 22.5

Oman Insurance Company 10

Company Summit Alramtan 5 Alrmtan

Source: Tadawul, NCBC Research

JUNE 2010 AL RAJHI COMPANY FOR COOPERATIVE INSURANCE 212 INSURANCE

Not Covered ACE Arabia

Current Price (SR) 34.2 ACE Arabia Cooperative Insurance Company (ACE), headquartered in Al

Pricing / Valuation as on June 13, 2010 Khobar, is an associate company of ACE Limited and has a joint venture with Saudi partners. The company was established in July 2009. ACE Stock details provides customized property, casualty, financial, health and personal 52-week range H/L (SR) 94.8/33.3 insurance products to a diverse range of clients in Saudi Arabia. Market cap ($mn) 91.2 Shares outstanding (mn) 10.0  Business brief: ACE provides an array of customized insurance products Price perf. (%) 1M 3M 12M including health, fire & property, engineering, accidents, liability, car, Absolute (20) (28) N/A marine, aviation, energy and collective insurance. The company operates Market (6) (5) 3 through offices in Khobar, Riyadh, Jeddah and Al Hassan. Sector (16) (18) (18) Avg daily turn.(mn) SR US$  Financials: ACE’s assets totaled SR90.8mn, while its shareholders’ equity 3M 7.3 1.9 stood at SR89.8mn at the end of 1Q10. The company posted a net loss of 12M 26.1 7.0 SR0.6mn mainly due to its early stage of operations. Raw Beta 6m 3yr 0.84 N/A  Recent developments: In February 2010, ACE received approval from Reuters code 8240.SE SAMA for a majority of the insurance products it wishes to provide. In Bloomberg code ACE AB January 2010, SAMA granted the company the license to conduct insurance Website www.ace-mena.com business in Saudi Arabia. ACE had its IPO, offering 4mn shares (40% of Weighting & free float (%) company shares) in April 2009, and was listed on Tadawul in July 2009. TASI (free float weight) 0.03 Free float 40.0 Company financials YoY CAGR (%) Valuation multiples 20072008 2009 1Q10 (%) (07-09) 08 09 TTM Net Ins. Premium SRmn N/A N/A N/A N/A N/A N/A P/E (x) N/A NM NM Total Revenues SRmn N/A N/A N/A N/A N/A N/A P/B (x) N/A 3.8 3.8 Net Income SRmn N/A N/A (9) (1) N/A N/A P/Sales (x) N/A N/A N/A Assets SRmn N/A N/A 100 91 N/A N/A Div yield (%) N/A N/A N/A Equity SRmn N/A N/A 90 90 N/A N/A Source: NCBC Research Investments SRmn N/A N/A 98 80 N/A N/A Share price performance 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 7,000 82 % N/A N/A N/A N/A N/A N/A 72 Net Mgn 62 6,000 ROE % N/A N/A (10.6) (2.7) N/A N/A 52 42 ROA % N/A N/A (9.5) (2.5) N/A N/A 5,000 32 Jul-09 Oct-09 Dec-09 Mar-10 May-10 Div Payout % N/A N/A N/A N/A N/A N/A TASI ACE (RHS) 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

Source: Bloomberg Source: Tadawul, Zawya, Company, NCBC Research

Top 5 shareholders (%) Company that AT ACE 30.0 International Holding Limit General Company for the 5.0 development of technology Wahdan Lalla Investment 5.0 Commercial Co. Lalla Investment Commercial 5.0

Mediterranean & Arab 5.0 Investment Commercial Lalla

Source: Tadawul, NCBC Research

JUNE 2010 ACE ARABIA COOPERATIVE INSURANCE COMPANY 213 INSURANCE

Not Covered AXA Cooperative

Current Price (SR) 19.1 AXA Cooperative Insurance Company (AXA Cooperative) is a part of the

Pricing / Valuation as on June 13, 2010 AXA Group headquartered in France. AXA Cooperative, established in July 2008, is engaged in providing various insurance and reinsurance Stock details services for individual and institutional clients in Saudi Arabia. 52-week range H/L (SR) 49.7/17.5  Market cap ($mn) 101.8 Business brief: The Company provides Motor Insurance, Property Shares outstanding (mn) 20 Insurance, Golf Insurance, Relocation Insurance, Marine Insurance, and Price perf. (%) 1M 3M 12M Healthcare Insurance through its offices in Riyadh, Jeddah and Dammam in Absolute (24) (31) N/A KSA. AXA Group’s operations in Saudi Arabia can be traced back to 1985. Market (6) (5) 3  Sector (16) (18) (18) Financials: The Company reported a net loss of SR1.7mn in 1Q10. Gross Avg daily turn.(mn) SR US$ Written Premium for 1Q10 stood at SR10.5mn. AXA Cooperative commenced 3M 7.2 1.9 operations in February 2010. In 1Q 10, AXA Cooperatives’ assets were worth 12M 33.4 8.9 SR 216.mm, while its equity stood at SR193mn. Raw Beta 6m 3yr 1.15 N/A  Recent developments: In February 2010, AXA Cooperative received its Reuters code 8250.SE license from SAMA to practice cooperative insurance activities in Saudi Bloomberg code AXA AB Arabia. It also received a license for selling and marketing several insurance Website www.axa-gulf.com products. Trading of AXA Cooperative‘s stock started in June 2009 after an Weighting & free float (%) IPO. TASI (free float weight) 0.03 Free float 40.0 Company financials YoY CAGR (%) Valuation multiples 20072008 2009 1Q10 (%) (07-09) 08 09 TTM Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A P/E (x) N/A N/A N/A Total Revenues SRmn N/A N/A N/A N/A N/A N/A P/B (x) N/A 1.9 1.9 Net Income SRmn N/A N/A N/A (2) N/A N/A EV/EBITDA (%) N/A N/A N/A Assets SRmn N/A N/A 204 216 N/A N/A Div yield (%) N/A N/A N/A Equity SRmn N/A N/A 195 193 N/A N/A Source: NCBC Research Investments SRmn N/A N/A 204 205 N/A N/A Share price performance 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 7,000 50 Net Mgn % N/A N/A N/A N/M N/A N/A 40 ROE % N/A N/A 0.05 (3.5) N/A N/A 6,000 30 20 ROA % N/A N/A 0.05 (3.2) N/A N/A 5,000 10 Div Payout % N/A N/A N/A N/A N/A N/A Jul-09 Oct-09 Dec-09 Mar-10 May-10 EPS SR N/A N/A 0.1 (0.1) N/A N/A TASI AXA (RHS) BVPS SR N/A N/A 9.7 9.7 N/A N/A

Source: Tadawul, Zawya, Company, NCBC Research Source: Bloomberg

Top 5 shareholders (%) AXA Insurance Gulf 32.0 AXA Mediterranean Sea 18.0 Holding

Source: Tadawul, NCBC Research

JUNE 2010 AXA COOPERATIVE INSURANCE COMPANY 214 INSURANCE

Not Covered Also known as Gulf General GGI, GGCI

Current Price (SR) 26.4 Gulf General Cooperative Insurance Company (Gulf General), the entity

Pricing / Valuation as on June 13, 2010 created through the merger of Saudi General Insurance Co. (SGI) and Gulf Cooperation Insurance Co. (GCI) was established in December Stock details 2009. The company, headquartered in Jeddah, provides various general 52-week range H/L (SR) 33.3/22.0 insurance services in Saudi Arabia. Market cap ($mn) 140.8 Shares outstanding (mn) 20  Business brief: Gulf General Cooperative Insurance Co. will provide Price perf. (%) 1M 3M 12M insurance services in various segments, including Fire, Accidents, Property, Absolute (15) 15 N/A Engineering , Vehicle, Marine (Cargo and Hull), Health, Aviation as well as Market (6) (5) 3 Energy. Its offices are located in Jeddah, Riyadh and Dammam. Sector (16) (18) (18) Avg daily turn.(mn) SR US$  Financials: Gulf General does not report financials since it is yet to 3M 39.4 10.5 commence operations. 12M N/A N/A  Raw Beta 6m 3yr Recent developments: In April 2010, Gulf General received a license from 0.85 N/A the SAMA to proceed with activities in the general & health insurance sector, Reuters code 8260.SE the personal and commercial vehicle sector, and temporary sale of medical Bloomberg code GGCI AB insurance products. The company had won a license to conduct insurance Website www.ggi-sa.com business in Saudi Arabia in January 2010. Gulf General announced an IPO in Weighting & free float (%) October 2009 offering 40% (8mn shares) at a price of SAR 10 per share. The TASI (free float weight) 0.04 stock commenced trading in the stock exchange on 8 February 2010. Free float 40.0 Company financials Valuation multiples YoY CAGR (%) 08 09 TTM 20072008 2009 1Q10 (%) (07-09) P/E (x) N/A N/A N/A Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A P/B (x) N/A N/A N/A Total Revenues SRmn N/A N/A N/A N/A N/A N/A P/Sales (x) N/A N/A N/A Net Income SRmn N/A N/A N/A N/A N/A N/A Div yield (%) N/A N/A N/A Assets SRmn N/A N/A N/A N/A N/A N/A Source: NCBC Research Equity SRmn N/A N/A N/A N/A N/A N/A Share price performance Investments SRmn N/A N/A N/A N/A N/A N/A Technical Reserves SRmn N/A N/A N/A N/A N/A N/A 7,000 35 Combined Ratio % N/A N/A N/A N/A N/A N/A 30 6,000 Net Mgn % N/A N/A N/A N/A N/A N/A 25 ROE % N/A N/A N/A N/A N/A N/A 5,000 20 Feb-10 Mar-10 Apr-10 May-10 ROA % N/A N/A N/A N/A N/A N/A TASI Gulf General (RHS) Div Payout % 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 Source: Bloomberg BVPS SR N/A N/A N/A N/A N/A N/A

Top 5 shareholders (%) Source: Tadawul, Zawya, Company, NCBC Research Saudi General Insurance Co. 15.0 Gulf Company for Cooperative 15.0 Insurance Al Fadel Investments 5.0

Mohammad Al Said for 5.0 Commercial Investment Ibla International Real Estate 5.0 Development

Source: Tadawul, NCBC Research

JUNE 2010 GULF GENERAL COOPERATIVE INSURANCE COMPANY 215 INSURANCE

Not Covered Also known as Buruj Cooperative Buruj

Current Price (SR) 27.4 Buruj Cooperative Insurance Company (Buruj), a part of Kuwait’s Gulf Insurance Group, was established in October 2008 in Riyadh. Formerly Pricing / Valuation as on June 13, 2010 known as Saudi Pearl Insurance Company, it was re-established as Buruj

Stock details Cooperative Insurance Company due to the regulatory changes in KSA’s 52-week range H/L (SR) 42.0/26.0 insurance sector. Market cap ($mn) 95.0  Shares outstanding (mn) 13.0 Business brief: Buruj has not yet started its operations. However, it is likely Price perf. (%) 1M 3M 12M to mainly deal with insurance segments such as Motor, Property and Fire, Absolute (21) (20) N/A Marine, Engineering, Fidelity, and Money Insurance and Liability Insurance. Market (6) (5) 3  Financials: The Company did not report financials as it has not yet Sector (16) (18) (18) Avg daily turn.(mn) SR US$ commenced operations. 3M 25.4 6.8  Recent developments: Buruj received SAMA’s approval to sell insurance 12M N/A N/A products in KSA in June 2010. The company had its IPO in October 2009; it Raw Beta 6m 3yr 1.01 N/A had offered 5.2mn shares (40% of its capital) at a price of SAR 10 per share. Reuters code 8270.SE Buruj’s shares started trading on the stock exchange on 15 Feb 2010. Bloomberg code BURUJ AB Website www.burujinsurance.com Company financials YoY CAGR (%) Weighting & free float (%) 20072008 2009 1Q10 (%) (07-09) TASI (free float weight) 0.03 Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A Free float 40.0 Total Revenues SRmn N/A N/A N/A N/A N/A N/A SRmn N/A N/A N/A N/A N/A N/A Valuation multiples Net Income SRmn N/A N/A N/A N/A N/A N/A 08 09 TTM Assets Equity SRmn N/A N/A N/A N/A N/A N/A P/E (x) N/A N/A N/A Investments SRmn N/A N/A N/A N/A N/A N/A P/B (x) N/A N/A N/A Technical Reserves SRmn N/A N/A N/A N/A N/A N/A P/Sales (x) N/A N/A N/A Combined Ratio % N/A N/A N/A N/A N/A N/A Div yield (%) N/A N/A N/A Net Mgn % N/A N/A N/A N/A N/A N/A Source: NCBC Research ROE % N/A N/A N/A N/A N/A N/A Share price performance ROA % N/A N/A N/A N/A N/A N/A Div Payout % N/A N/A N/A N/A N/A N/A 7,000 40 EPS SR N/A N/A N/A N/A N/A N/A 30 6,000 SR N/A N/A N/A N/A N/A N/A 20 BVPS

5,000 10 Source: Tadawul, Zawya, Company, NCBC Research Feb-10 Mar-10 Apr-10 May-10 TASI Buruj (RHS)

Source: Bloomberg

Top 5 shareholders (%) Gulf Insurance Co. KSC 22.5 Yousef Mohammed Abdel 5.0 Wahab Nagy Nations Gulf Medical Co., Ltd. 5.0

Batterji Industrial Group Co. 5.0

Source: Tadawul, NCBC Research

JUNE 2010 BURUJ COOPERATIVE INSURANCE COMPANY 216 INSURANCE

Not Covered Al Alamiya

Current Price (SR) 24.0 Al Alamiya Cooperative Insurance Company (Al Alamiya) was established in Riyadh in June 2009. Al Alamiya is expected to provide Pricing / Valuation as on June 13, 2010 insurance services in various segments, including commercial, personal,

Stock details reinsurance, agency activities, representation, and correspondence. 52-week range H/L (SR) 43.0/22.7  Business brief: Al Alamiya Cooperative Insurance Co. has received approval Market cap ($mn) 128.0 Shares outstanding (mn) 20 for conducting operations as well as selling insurance products in KSA. The Price perf. (%) 1M 3M 12M company intends to acquire the insurance business of Royal & Sun Alliance Absolute (23) (23) N/A Insurance Co. and assets of Al Alamiya Trading & Services Co. Market (6) (5) 3  Financials: The company did not report financials as it has not yet Sector (16) (18) (18) Avg daily turn.(mn) SR US$ commenced operations. 3M 16.0 4.3  Recent developments: In April 2010, Managing Director and CEO of Al 12M N/A N/A Alamiya resigned from the membership of Board of Directors. On 14 Feb Raw Beta 6m 3yr 0.84 N/A 2010, the company received approval from SAMA to launch 23 insurance Reuters code 8280.SE products for a period of six months. Al Alamiya had its IPO in October 2009; Bloomberg code ALALAMIY AB it offered 6mn shares, i.e., 30% of the company’s capital at the price of SAR Website www.alamiyainsurance.com 10 per share. Al Alamiya started trading on the stock exchange on 8 Dec .sa 2009. Weighting & free float (%)

TASI (free float weight) 0.03 Company financials Free float 30.0 YoY CAGR (%) Valuation multiples 20072008 2009 1Q10 (%) (07-09) 08 09 TTM Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A SRmn N/A N/A N/A N/A N/A N/A P/E (x) N/A N/A N/A Total Revenues SRmn N/A N/A N/A N/A N/A N/A P/B (x) N/A N/A N/A Net Income Assets SRmn N/A N/A N/A N/A N/A N/A P/Sales (x) N/A N/A N/A Equity SRmn N/A N/A N/A N/A N/A N/A Div yield (%) N/A N/A N/A Investments SRmn N/A N/A N/A N/A N/A N/A Source: NCBC Research Technical Reserves SRmn N/A N/A N/A N/A N/A N/A Share price performance Combined Ratio % N/A N/A N/A N/A N/A N/A % N/A N/A N/A N/A N/A N/A 7,000 40 Net Mgn 6,500 30 ROE % N/A N/A N/A N/A N/A N/A 6,000 20 ROA % N/A N/A N/A N/A N/A N/A 5,500 5,000 10 Div Payout % N/A N/A N/A N/A N/A N/A Dec-09 Feb-10 Mar-10 May-10 EPS SR N/A N/A N/A N/A N/A N/A TASI Al Alamiya (RHS) BVPS SR N/A N/A N/A N/A N/A N/A

Source: Tadawul, Zawya, Company, NCBC Research Source: Bloomberg

Top 5 shareholders (%) Royal & Sun Alliance 50.0 Insurance Riyad Bank 19.9

Source: Tadawul, NCBC Research

JUNE 2010 AL ALAMIYA COOPERATIVE INSURANCE COMPANY 217 INSURANCE

Also known as Not Covered Solidarity Saudi SSTC, SOLIDARITY

Current Price (SR) 12.0 Solidarity Saudi Takaful Company (Solidarity) was listed on TASI on 8

Pricing / Valuation as on 13 June 2010 June 2010. The company intends to provide insurance services in segments like property, medical, marine (cargo and hull), general Stock details accident and motor. Solidarity is headquartered in Riyadh and has 52-week range H/L (SR) N/A offices in Jeddah and Khobar. Market cap ($mn) 176.8  Business brief: Solidarity, with a paid up capital base of SR555mn, plans to Shares outstanding (mn) 55.5 offer insurance products in the KSA in various categories, including property, Price perf. (%) 1M 3M 12M Absolute N/A N/A N/A medical, marine (cargo and hull), general accident, and motor. The company Market (6) (5) 3 was listed on the stock exchange in June 2010. Sector (16) (18) (18)  Financials: Solidarity does not report financials as it is yet to commence Avg daily turn.(mn) SR US$ 3M N/A N/A operations. 12M N/A N/A  Recent developments: Solidarity launched an IPO in March 2010, offering Raw Beta 6m 3yr 22.5mn shares at SR10 each. Approximately 1.25mn investors subscribed to N/A N/A Reuters code 8290.SE the IPO, which was oversubscribed three times. The company’s stock started Bloomberg code SOLIDARI AB trading in stock exchange from 8 June 2010 at the opening price of SR 12.5. Website www.sstc.com.sa Company financials Weighting & free float (%) YoY CAGR (%) TASI (free float weight) 0.05 20072008 2009 1Q10 (%) (07-09) Free float 40.00 Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A SRmn N/A N/A N/A N/A N/A N/A Valuation multiples Total Revenues 08 09 TTM 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 P/E (x) N/A N/A N/A Equity SRmn N/A N/A N/A N/A N/A N/A P/B (x) N/A N/A N/A Investments SRmn N/A N/A N/A N/A N/A N/A P/Sales (x) N/A N/A N/A Technical Reserves SRmn N/A N/A N/A N/A N/A N/A Div yield (%) N/A N/A N/A Combined Ratio % N/A N/A N/A N/A N/A N/A Source: NCBC Research Net Mgn % N/A N/A N/A N/A N/A N/A Share price performance 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 7,000 13 6,500 12 Div Payout % N/A N/A N/A N/A N/A N/A 6,000 5,500 11 EPS SR N/A N/A N/A N/A N/A N/A 5,000 10 BVPS SR N/A N/A N/A N/A N/A N/A 8-Jun-10 9-Jun-10 12-Jun- 13-Jun- 10 10 Source: Tadawul, Zawya, Company, NCBC Research TASI Soliraity (RHS)

Source: Bloomberg

Top 5 shareholders (%) Solidarity Company 27.5

Source: Tadawul, NCBC Research

JUNE 2010 SOLIDARITY SAUDI TAKAFUL COMPANY 218 INSURANCE

Not Covered Also known as Wataniya Insurance Wataniya

Current Price (SR) 42.9 Wataniya Insurance Company (Wataniya) was listed on the TASI on 6

Pricing / Valuation as on 13 June 2010 June 2010. The company is expected to provide a range of insurance services in segments such as property, medical, marine, aviation, Stock details engineering, fire, general accident, motor and liability insurance. The 52-week range H/L (SR) N/A company has offices in Jeddah, Riyadh and Khobar. Market cap ($mn) 114.4 Shares outstanding (mn) 10.0  Business brief: Wataniya, a newly started company, intends to offer a wide Price perf. (%) 1M 3M 12M range of insurance products in KSA. It has strategic partnerships with New Absolute N/A N/A N/A Re Company (Part of Munich Re Group) and Saudi Hollandi Bank, which will Market (6) (5) 3 help the company sell its insurance products. Wataniya was recently listed in Sector (16) (18) (18) the stock exchange. Avg daily turn.(mn) SR US$ 3M N/A N/A  Financials: Wataniya does not report financials as it is yet to commence 12M N/A N/A operations. Raw Beta 6m 3yr N/A N/A  Recent developments: The Company’ stock began trading on the stock Reuters code 8300.SE exchange on 6 June 2010. Wataniya announced its IPO in March 2010, Bloomberg code WATANIYA AB offering 3mn shares (30% of its capital) at SR10 each. The IPO was twenty Website www.wataniya.com.sa times oversubscribed and 1.14mn investors subscribed for it. Weighting& free float (%) TASI (free float weight) 0.03 Company financials Free float 30.0 YoY CAGR (%) 2007 2008 2009 1Q10 (%) (07-09) Valuation multiples Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A 08 09 TTM Total Revenues SRmn N/A N/A N/A N/A N/A N/A P/E (x) N/A N/A N/A Net Income SRmn N/A N/A N/A N/A N/A N/A P/B (x) N/A N/A N/A Assets SRmn N/A N/A N/A N/A N/A N/A P/Sales (x) N/A N/A N/A Equity SRmn N/A N/A N/A N/A N/A N/A Div yield (%) N/A N/A N/A Investments SRmn N/A N/A N/A N/A N/A N/A Source: NCBC Research 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 Share price performance Net Mgn % N/A N/A N/A N/A N/A N/A 7,000 50 ROE % N/A N/A N/A N/A N/A N/A 6,500 40 ROA % N/A N/A N/A N/A N/A N/A 6,000 30 5,500 20 Div Payout % N/A N/A N/A N/A N/A N/A 5,000 10 EPS SR N/A N/A N/A N/A N/A N/A 6-Jun-10 8-Jun-10 12-Jun-10 SR N/A N/A N/A N/A N/A N/A TASI Wataniya (RHS) BVPS Source: Tadawul, Zawya, Company, NCBC Research

Source: Bloomberg

Top 5 shareholders (%) Saudi National Insurance Co. 27.5 Saudi Hollandi Bank 20.0 New Rianshor Limited Company 10.0

Ibrahim Al Juffali & Bros. Co. 5.0

Source: Tadawul, NCBC Research

JUNE 2010 WATANIYA INSURANCE COMPANY 219 INSURANCE

Not Covered Also known as Amana Cooperative Amana

Current Price (SR) 13.6 Amana Cooperative Insurance Company (Amana), listed on 13 June

Pricing / Valuation as on June 13, 2010 2010 on the TASI, is expected to provide various insurance products for corporates as well as individuals. The company, headquartered in Stock details Riyadh, also has branches in Jeddah and Khobar. 52-week range H/L (SR) N/A  Market cap ($mn) 116.0 Business brief: Amana provides insurance services in segments like Health, Shares outstanding (mn) 32.0 Fire, Car, Property, Marine and Land Shipments, and Engineering, besides Price perf. (%) 1M 3M 12M other Miscellaneous Insurance. The company was recently listed on the stock Absolute N/A N/A N/A exchange. The company’s equity paid up capital stands at SR320mn. Market (6) (5) 3  Sector (16) (18) (18) Financials: Amana does not report financials since it is yet to commence Avg daily turn.(mn) SR US$ operations. 3M N/A N/A  Recent developments: The Company’s stock started trading on the stock 12M N/A N/A Raw Beta 6m 3yr exchange on 13 June 2010. The company had its IPO in March 2010 and N/A N/A offered 12.8mn shares (40% of its capital) at SR10 each. The IPO was Reuters code 8310.SE oversubscribed by 4.5 times and 1.01mn investors subscribed for the IPO. Bloomberg code AMANA AB Website www.amana-coop.com.sa Company financials YoY CAGR (%) Weighting & free float (%) 20072008 2009 1Q10 (%) (07-09) TASI (free float weight) 0.04 Net Insurance Premium SRmn N/A N/A N/A N/A N/A N/A Free float 40.0 Total Revenues SRmn N/A N/A N/A N/A N/A N/A Valuation multiples Net Income SRmn N/A N/A N/A N/A N/A N/A 08 09 TTM Assets SRmn N/A N/A N/A N/A N/A N/A P/E (x) N/A N/A N/A Equity SRmn N/A N/A N/A N/A N/A N/A P/B (x) N/A N/A N/A Investments SRmn N/A N/A N/A N/A N/A N/A SRmn N/A N/A N/A N/A N/A N/A P/Sales (x) N/A N/A N/A Technical Reserves % N/A N/A N/A N/A N/A N/A Div yield (%) N/A N/A N/A Combined Ratio Net Mgn % N/A N/A N/A N/A N/A N/A Source: NCBC Research ROE % N/A N/A N/A N/A N/A N/A Top 5 shareholders (%) ROA % N/A N/A N/A N/A N/A N/A Amana Gulf Insurance Co. 18.3 Div Payout % 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

Source: Tadawul, Zawya, Company, NCBC Research

Source: Tadawul, NCBC Research

JUNE 2010 AMANA COOPERATIVE INSURANCE COMPANY 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

JUNE 2010 THE SAUDI FACTBOOK 222 APPENDIX

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 (%) 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 -

JUNE 2010 THE SAUDI FACTBOOK 223 APPENDIX

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 (%) 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

JUNE 2010 THE SAUDI FACTBOOK 224

IMPORTANT INFORMATION AND DISCLAIMERS

In the issue of timeliness, the stock prices throughout the report are based on last traded prices (and thus may differ from the adjusted prices provided by the exchange post closing).

The authors of this document hereby certify that the views expressed in this document accurately reflect their personal views regarding the securities and companies that are the subject of this document. The authors also certify that neither they nor their respective spouses or dependants (if relevant) hold a beneficial interest in the securities that are the subject of this document. Funds managed by NCB Capital and its subsidiaries for third parties may own the securities that are the subject of this document. NCB Capital or its subsidiaries may own securities in one or more of the aforementioned companies, or funds or in funds managed by third parties The authors of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. The Investment Banking division of NCB Capital may be in the process of soliciting or executing fee earning mandates for companies that are either the subject of this document or are mentioned in this document.

This document is issued to the person to whom NCB Capital has issued it. This document is intended for general information purposes only, and may not be reproduced or redistributed to any other person. This document is not intended as an offer or solicitation with respect to the purchase or sale of any security. This document is not intended to take into account any investment suitability needs of the recipient. In particular, this document is not customized to the specific investment objectives, financial situation, risk appetite or other needs of any person who may receive this document. NCB Capital strongly advises every potential investor to seek professional legal, accounting and financial guidance when determining whether an investment in a security is appropriate to his or her needs. Any investment recommendations contained in this document take into account both risk and expected return. Information and opinions contained in this document have been compiled or arrived at by NCB Capital from sources believed to be reliable, but NCB Capital has not independently verified the contents of this document and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this document. To the maximum extent permitted by applicable law and regulation, NCB Capital shall not be liable for any loss that may arise from the use of this document or its contents or otherwise arising in connection therewith. Any financial projections, fair value estimates and statements regarding future prospects contained in this document may not be realized. All opinions and estimates included in this document constitute NCB Capital’s judgment as of the date of production of this document, and are subject to change without notice. Past performance of any investment is not indicative of future results. The value of securities, the income from them, the prices and currencies of securities, can go down as well as up. An investor may get back less than he or she originally invested. Additionally, fees may apply on investments in securities. Changes in currency rates may have an adverse effect on the value, price or income of a security. No part of this document may be reproduced without the written permission of NCB Capital. Neither this document nor any copy hereof may be distributed in any jurisdiction outside the Kingdom of Saudi Arabia where its distribution may be restricted by law. Persons who receive this document should make themselves aware, of and adhere to, any such restrictions. By accepting this document, the recipient agrees to be bound by the foregoing limitations.

NCB Capital is authorised by the Capital Market Authority of the Kingdom of Saudi Arabia to carry out dealing, as principal and agent, and underwriting, managing, arranging, advising and custody, with respect to securities under license number 37-06046. The registered office of which is at Al Mather street in Riyadh, P.O. Box 22216, Riyadh 11495, Kingdom of Saudi Arabia.

JUNE 2010 THE SAUDI FACTBOOK