Bahri Transport Sector NSCSA AB - 4030.SE October 19, 2016 National Shipping Company of Saudi Arabia (Bahri) Q3 2016 Recommendation Overweight Saudi National Shipping Company (Bahri) disclosed its key performance indicators Fair Value (SAR) 0.83 (KPIs) for the third quarter of 2016, with net profits sliding 38% to SAR 318 mil- Price as of October 18, 2016 688.2 lion compared to SAR 510 million for the same quarter of the previous year. The Expected Return 6.80% bottom line also shrank by 37% QoQ from SAR 504 million in the second quarter of 2016, thus the nine-month figure soared by 14.65% hitting SAR 1.43 billion , Company Data compared with SAR 1.25 billion in the same period of 2015. Tadawul Symbol 4030.SE 52 Week High (SAR) 51.50 The company attributed the slump in its bottom line in Q3 2016 in profits to 52 Week Low (SAR) 28.30 lower shipping rates compared with Q3 2015 and Q2 2016, as well as lower YTD Change -37.4% investment income from the 30.3%-owned Petredec Limited. 3-Month Average Volume (Thousand Shares) 96528 Market Cap. (SAR Million) 11,757 Bahri attributed the strong growth in the net profit of the nine months to the Market Cap. (USD Million) 3,135 following factors: Outstanding Shares (Million Shares) 393.75 The increase of the company's fleet to 83 vessels operating in various seg- Major Shareholders ( > 5% ) ments compared to 73 vessels in September 2015. Public Investment Fund 22.55% Higher operating income and net profit for general cargo transportation Saudi Aramco Development Company 20.00% sector as a result of improved operational efficiency and business perfor- 52-week Stock Price Movement mance of the sector. The rise in crude oil transportation rates in the spot market in the first half of Bahri Transport Sector Tadawul Index this year compared with the corresponding period in 2015. 120 110 The low cost of fuel for the current period. 100 The company's total revenues dwindled from SAR 1,917 million in Q3 2015 to 90 SAR 1,356 million, a decrease of 29%, hence the nine-month top line amounted 80 70 to SAR 5,147 million compared to SAR 5,370 million for 9M 2015, slumping 60 by 4%. 50 The operating profit margin for the third quarter of this year culminated at 17% versus 28.4% in the third quarter of 2015, while rising over the nine-month peri- Source: Tadawul od to 28.8% versus 25.8% in the same period last year. Quarterly Sales (SAR million) and ROS The net income of the third quarter missed our estimate of SAR 525 million and Sales ROS the analysts' average estimate amounting to SAR 461 million, thus factoring in 3,000 35% the results as well as the slump in shipping rates, the share is downgraded to 2,500 30% SAR 38 , however we still assign an “Overweight” recommendation. 2,000 25% 1,500 20% FY - Ending December 6396 6390 6392 6395 1,000 15% 500 10% EV/EBITDA 18.37 17.21 16.58 4.20 0 5% EV/Sales 6.59 5.86 5.39 1.57 P/E 23.33 15.63 22.02 6.47 Source: Company Filings, Albilad Capital Research Estimates Dividend Yield 3.3% 3.3% 3.3% 8.4% Turki Fadaak P/BV 2.05 1.90 1.44 1.21 Research & Advisory Manager [email protected] P/Revenue 4.77 4.13 3.24 1.57 Mohammad H. Atiyah Financial Analyst Current Ratio 1.14 1.05 0.39 1.55 [email protected] Revenue Growth 23.8% 15.5% 27.4% 106.9% Source: Company Filings, Albilad Capital Research Estimates 1 Bahri Transport Sector October 19, 2016 NSCSA AB - 4030.SE Income Statement (SAR mn) 6399 6396 2013 6392 6395 Sales 1,991.1 2,464.6 2,846.7 3,626.4 7,502.1 COGS 1,277.1 1,500.9 1,801.2 2,355.3 4,485.1 SG&A 103.9 79.7 75.5 92.9 216.5 EBITDA 610.1 884.0 970.0 1,178.2 2,800.5 EBITDA Margin 30.6% 35.9% 34.1% 32.5% 37.3% Depreciation and amortization 0.382 20386 22885 23688 .6385 EBIT 229.5 453.8 500.4 575.4 1,980.0 Net interest income (51.9) (59.8) (60.4) (106.5) (132.2) Investment income 139.7 155.0 309.7 129.6 184.7 Others 20.6 12.8 89.3 1.3 10.7 Pre-Tax and Zakat Income 337.9 561.8 839.0 599.8 2,043.2 Tax and Zakat 25.5 36.3 49.9 37.4 181.4 Net Income Before Minority 312.4 525.5 789.1 562.3 1,861.8 Minority 24.6 21.5 36.9 28.5 44.2 Net Income 287.8 504.0 752.3 533.8 1,817.6 ROS 14.5% 20.4% 26.4% 14.7% 24.2% Balance Sheet (SAR mn) 6399 6396 2013 6392 6395 Cash and marketable securities 29880 08.80 02285 08389 9660888 Accounts Receivables 6..85 62688 2398. 2.688 9636883 Inventory 92583 90689 60089 06.85 63082 Others 9.885 0288. 6.082 20.89 02.89 Total ST Assets 3.264,5 3.365,3 3.675,2 3.:5:,7 4.:62,7 Net Fixed Assets .665688 .65308. .659686 9668.383 966.8.80 Projects Under Implementation 9660.89 969.683 2.285 9683 9638888 Investments in Affiliated Companies 52982 25683 .2683 8358. 9636.88 Goodwill - - - 83085 .2885 Others 56885 5898. 50889 53282 2.385 Total LT Assets ;.7:2,; ;.;3;,6 32.78;,9 37.527,; 38.478,3 Total Assets 32.845,4 33.284,8 34.244,9 39.366,6 3;.2;8,9 Short term debt and CPLTD 56383 26289 83980 2639.82 52.83 Accounts Payable 60586 9.280 63.8. 59.85 86.80 Accrued Expenses 0982 6.88 ..89 0088 0589 Others 95.82 9.28. 98283 9568. 06.85 Total ST Liabilities ;66,4 3.228,3 3.5:3,4 6.944,9 3.:5:,2 Total Long Term Debt 2668583 266508. 260.282 2695688 .65358. Other Non-Current Liabilities 6.89 ..83 ..85 .085 508. Equity 7.577,; 7.947,9 8.3:9,6 :.3:7,5 ;.8;;,3 Total Liabilities and Equity 32.845,4 33.284,8 34.244,9 39.366,6 3;.2;8,9 Cash Flow (SAR mn) 6399 6396 2013 6392 6395 Cash flow from Operations 08.80 2.282 2228. 82388 6686083 Cash flow from Financing 02382 )8685( .286 665..82 )22282( Cash flow from Investing )9620885( )25.85( ).2888( )062.28.( )9626889( Change in Cash ).3385( )2282( )5388( 208. .6885 Ending Cash 0.28. 06385 62882 09080 969268. Source: Company Filings, Albilad Capital Research Estimates Presentation of financial statements may differ from the company’s presentation. However, there is no impact on the final results. 2 Bahri Transport Sector October 19, 2016 NSCSA AB - 4030.SE Albilad Capital Rating Methodology Al-Bilad Capital uses its own evaluation structure, and its recommendations are based on quantitative and qualitative data collected by the analysts. Moreover, the evaluation system places covered shares under one of the next recommendation areas based on the closing price of the market, the fair value that we set and the possibility of ascent/descent. Overweight: The Target share price exceeds the current share price by ≥ 10%. Neutral: The Target share price is either more or less than the current share price by < 10%. Underweight: The Target share price is less than the current share price by ≥ 10%. To be Revised: No target price had been set for one or more of the following reasons: waiting for more analysis, waiting for detailed financials , waiting for more data to be updated, major change in company`s performance, change in market conditions or any other reason from Albilad Capi- tal Research. 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