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Kuwait Financial Centre S.A.K “Markaz” RESEARCH

October 2008

Down and Out: Saudi Stock Outlook 11,895

Expect the Worse

Current Index: 6175

2008 Year High 2008 Year Low 2008 Fair Value Index Current Value as on 07 Oct 08

6,175

6,175 5,804

2008 Earnings Growth 12%

P/E/G Expansion -6%

Fair Value Index 5804 Upside Potential -6%

Saudi Arabia Tadawul Index

Markaz Research is available on Bloomberg. Type “MRKZ” <Go>

M.R. Raghu CFA, FRM Head of Research +965 224 8280 rmandagolathur@markaz.com Amrith Mukkamala Senior Analyst +965 224 8281 amukkamala@markaz.com

Kuwait Financial Centre “Markaz” P.O. Box 23444, Safat 13095, Kuwait Tel: +965 224 8000 Fax: +965 242 5828 www.markaz.com

What has changed: In our January outlook report, we had expected the TASI Index to have an upside potential of 6%. The index in the YTD period has witnessed a 44% decline, which has wiped out all the gains made in the year 2007. Our expectations on a 6% upside was based on a 15% earnings growth with a PE discounting the 2007 earnings by 22x. Till H108, the aggregate earnings of Saudi Arabian companies have witnessed a YoY growth of 12% and our bottoms – up approach in earnings estimation points out to a similar growth for the full year 2008, which is a 200 bps reduction to our previous estimate. From a sectoral perspective, Chemicals earnings forms the bulk of the total earnings of Saudi Arabia at 39%, this segment is expected to witness a 20% growth in 2008E. Sabic forms 82% of the earnings in the chemicals segment is expected to grow at a rate of 13% for 2008 on a YoY basis, this indicates a decline in the rate of growth from 33% in 2007. The factor that has impacted the most to our index target call has been a significant contraction in the price to earnings. The markets have witnessed a contraction in Forward PE from 23x as at the end of 2007 to 12x at the current market prices. This lead to low premium over expected growth. As at the end of 2007, the Saudi Arabian markets were trading at a PEG (Forward earnings and growth) of 2.52, this has contracted significantly to 1.06 at the current market rates. We estimate the fair value PEG for emerging markets to be at 1 (base case - provides no premium over forward earnings growth), which provides to a down side risk of -6% and an index fair value of 5804.

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RESEARCH October 2008 1. Muted Earnings Growth Table: 1 – Earnings Trend & Outlook USD Mn Aggregate earnings growth for 2008E is expected to be at 12% for Saudi Arabia Inc.

Sabic is expected to provide to 31% of the aggregate 2008E Saudi Arabia therefore an earnings, earnings call on Sabic is a crucial determining factor on the aggregate Saudi Arabian corporate earnings.

2002

2003

2004

2005

2006

2007

2008E

839 1,949 4,108 5,779 6,265 8,333 10,019 Chemicals 2,202 2,514 3,549 5,847 7,738 6,449 6,858 Banks 945 2,272 2,483 3,044 3,602 3,582 3,820 Telecom 45 225 357 563 555 715 1,003 Real Estate 1,141 1,505 2,042 3,055 3,200 4,208 4,297 Others Total 5,173 8,465 12,538 18,287 21,360 23,287 25,997 Source: Thomson Reuters Knowledge, Zawya Investor, Markaz Research Chemicals: The Chemicals segment, accounted for 36% of total earnings in 2007 and 40% of 2008E earnings(Table: 1). The sector’s earnings are expected grow at a rate of 17% for 2008, which will result in a reduction in growth rate by 13pps. Sabic alone provides to 86% of the chemical sector earnings. For 1H08, Sabic posted a 14% YoY increase in earnings at USD 3.86 Bn. We are expecting the company to post USD 8.18 Bn in earnings for 2008, which will result in a full year growth of 13%, a decline in growth rate as compared to 2007 full year growth of 33%. Sabic – a crucial determining factor for aggregate earnings Sabic is expected to provide to 31% of the aggregate 2008E Saudi Arabia earnings, therefore an earnings call on Sabic is a crucial determining factor on the aggregate Saudi Arabian corporate earnings. Our call for a 13% earnings growth is based on the fact that there has been a softening in the gross margins of the company and the impact of which is more profound in its petrochemical segment, which is the main stay of the company. The overall gross margins has declined to 34.25% in 2Q08 as compared to 34.49% and 38.61% in 1Q08 and 2Q07 respectively. The petrochemical gross margins have declined from 39.06% in 1H07 to 30.61% in 1H08. This can be primarily attributed to the inclusion of SIP (erstwhile GE plastics) numbers. The net margin of the petrochemicals segment witnessed a significant decline to 6.21% in 1H08 as compared to 19.03% in 1H07. SIP produces high - end plastics (polycarbonates) for which the basic raw material is Bisphenol-A. Bisphenol-A produced from Phenol and Acetone, derived basically from Benzene. Benzene prices are impacted significantly by Naptha prices. Benzene, which is the key raw material has witnessed a 37% increase in the YTD period and on a YoY basis has increased by 22% (Benzene, Europe CIF Rdam Spot $/MT Prices), Naptha on the other hand has witnessed a 39% increase on a YTD period and 76% increase on a YoY basis (Naphtha Far East CFR Japan Prices). This has a negative impact on SIP. SIP does not have the similar cost advantage in feed stock as Sabic does. The rest of the segments - fertilizers and steel have performed exceptionally well in the current quarter. Steel revenues were up by 66% and net profits were up by 145% in 1H08 as compared on a YoY basis. Going forward, we see a negative impact on margins due to declining global margins and its impact on SIP. Natural gas prices and Naptha (Naphtha Far East CFR Japan) have increased by 76% and 39% respectively in the YTD period. This might have a slight negative impact the margins on the petrochemical segment. However, steel prices continue to hold up. (For a more detailed report on Sabic please refer our company report on www.markaz.com/research)

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% Change 2008E 20% 6% 7% 40% 2% 12%


RESEARCH October 2008 Banking: The Saudi Arabian banking sector continues to witness low to negative earnings growth rates. In 2007, the aggregate bank earnings fell by 17%. This was mainly due to an increase in provisioning and lower value traded in the markets. Both these factors, spilled over into 2008. Four banks have announced their results for 9M ending September 2008. The aggregate The Saudi Arabian banking earnings of these four banks – Samba, BSF, Al Rajhi and ANB formed 68% of sector continues to witness the total earnings of banks in 2007 and the growth for 9M08 has been flat at low to negative earnings 1% on a YoY basis. growth rates. Going forward, we expect the depressed sentiment on the Tadawul exchange to negatively impact the banking earnings by reducing the fees and commissions incomes. Credit growth has till now been the driver of earnings growth. SAMA statistics as at the end of June 2008 points out to a credit growth of 32% on a YoY basis for the sector. Given the increasing control to tame the money supply growth which is currently at more than 20% levels by increasing reserve requirements for banks, we believe that credit growth will also witness a decline. We are expecting a 6% growth in earnings for the banking sector as compared to a -17% growth witnessed in 2007. Telecom: The telecom segment in Saudi Arabia comprises of three telecom listed companies with aggregate market capitalization and 2007 earnings of USD 38.35 Bn and 3.5 Bn respectively. The Saudi Telecom company (STC) with 2007 earnings of USD 3.21 Bn forms 89% of the total earnings of the segment. STC witnessed robust growth in earnings of 18% in 1H08 to USD 1.83 Bn. We expect the company to post an earnings growth rate of 4% for the full year 2008. Some of the major trends supporting the telecom segment earnings were the 33% YoY growth in subscribers and 18% increase in mobile Average Revenue Per User (ARPU) in 1H08. By the end of June 2008, the subscriber base in Saudi Arabia had increased to 30 Mn from 22.5 Mn. The mobile ARPU also increased from USD 24.9 in June 2007 to USD 29.5 in June 2008. However, with the Saudi government opening up the telecom sector, new telecom players like Saudi Mobile Telecommunications Company (Saudi Zain) have entered the Saudi market. This is likely to increase competition among players operating in the telecom space and push ARPU down. The earnings growth of telecom companies is likely to moderate in the second half of the year. We expect the sector to close the year with 7% growth in earnings. Real Estate: The real estate segment, which contributed 3% to 2007 Corporate earnings in Saudi earnings, is expected to record a strong 40% growth in earnings for 2008. Arabia are driven by the Companies in the real estate space reported healthy growth in earnings for performance of Large cap 1H08. The earnings of companies such as Taiba Holding Co., Dar Al Arkan stocks Real Estate Development Co. and Saudi Real Estate Company grew 90%, 27% and 17%, respectively, on YoY basis. Market Cap Segmentation Corporate earnings in Saudi Arabia are driven by the performance of Large cap stocks that accounts for 71% of total earnings (Table: 2). Earnings by large cap stocks grew at a rate of 13% in 2007. We expect large cap stocks to witness an increase in earnings by 10% in 2008E, the rate of growth is lesser as compared to 2007. Saudi Basic Industries Corporation and Saudi Arabia Fertilizers Co. are likely to drive large cap earnings in 2008. Saudi Basic

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RESEARCH October 2008 Industries Corporation is estimated to post 13% growth in earnings, while Saudi Arabia Fertilizers Co is set to record 55% growth in its bottom-line. Mid caps, which contributed 15% of Saudi Arabia’s corporate earnings in 2007, are expected to grow 9%. Saudi Hollandi Bank is expected to lead mid caps, in terms of earnings in 2008. The bank’s earnings increased 59% to Small caps are expected to USD 162 Mn in H108 compared to USD 102 Mn in 1H07. record 29% growth in earnings, but contribute just Small caps, accounting for a meager 11% of total earnings, are expected to 10% to overall earnings. record 29% growth in earnings. Companies such as Advanced Polypropylene Company and Emaar The Economic City are expected to lead small caps in terms of earnings growth in 2008. Table: 2 - Corporate Earnings Trend – Market Cap Segmentation Avg YoY Market Number Earnings 2004 2005 2006 2007 2008E Change Cap of (USD Mn) 2008 (USD Companies Mn) Large 9218 13105 14413 16292 17904 10% 24239 9 Mid

1650

2480

3691

3463

3792

9%

5464

16

Small

1151

1568

2236

2220

2853

29%

1745

21

Ultra Small 519 1134 1021 1312 1449 10% Total 12538 18287 21360 23287 25997 12% Earnings Note: Segment classification: Large: Market Cap >USD 11.5 Bn, Mid: Market Cap >USD 3.2 Bn & Market Cap< USD 10.1 Bn Small: Market Cap> USD 1.0 Bn & Market Cap < 3.2 Bn Ultra Small: Market Cap> USD 550 Mn & Market Cap < USD 1100 Mn Source: Thomson Reuters, Markaz Research

768

73 119

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RESEARCH October 2008 2. Economy – 2008

Saudi economy on a stronger growth path in 2008 due to buoyancy in oil revenues

A. Growth Saudi Arabia’s Oil GDP Nominal GDP is $340 b Nominal GDP expected to grow at 2008e 64% Growth a rate of 38.7% as compared to a $528b Non Oil GDP 7.1% growth in $188 39% Growth 2007. The GDP 8% Growth b estimate for 2008 has been revised upwards by 28% from the beginning of the year. This significant upward revision in GDP forecast can be primarily attributed to oil prices. At the beginning of the year, IIF had prepared 2008 forecasts based on Brent Oil prices at a rate of USD 74.25 per Bbl. As of September 2008, this has been revised to USD 116.41 per Bbl. This revision means an Oil GDP growth of 64% as compared to a non-oil GDP growth of 8.3% for 2008. B. Fiscal Situation

Fiscal and current account surplus to rise

The change in estimate for oil prices is Revenues 2008e expected to $294b carry a similar Surplus beneficial impact on the Expenditure $140b fiscal surpluses. $154b The fiscal surplus for 2008 has been revised upwards by USD 81 Bn or 1.38x the forecast at the beginning of the year. This significant change in estimates is due to a 15% change in estimate for government expenditure and a 53% change in estimates for government revenues. C. Current Account The change in estimate for Trade Balance Exports current Current Account $386.8b $276.6b Surplus 82% Growth account 2008e surplus is $197.5b Service Balance Imports expected to ($75.4)b 37.3% of GDP $110.2b result in the 37.7% Growth largest ever surplus for Saudi Arabia at USD 197.5 Bn. As at the beginning of 2008, IIF had forecasted a current account surplus of USD 90 bn, which was lower than the USD 95.7 Bn recorded in 2007.

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RESEARCH October 2008

Continued money growth in 2008

supply

D. Money Supply The growth in the economy has come at the cost of inflation triggered by high money supply growth. Money supply (as measured by M3) as at the end of June 2008 was at USD 229 Bn, which is a 3% increase on a QoQ basis and 21% increase on a YoY basis. M1 (Currency + Demand deposits), which forms 50% of M3, witnessed an increase of 29% on a YoY basis in Q208. The Saudi central bank has raised reserve requirements for banks, with a view to rein in the growth in money supply. SAMA increased the reserve requirement four times in a span of six months (from 7% to 13% by May 2008). Figure: 1 250 Other Quasi Deposits Time & Saving Deposits

200

M1

51

56

75

68

86

89

110 114 94 102

Q3 07

36

44

78

64

M3

54

59

72

2002

2003

2004

50

76

80

78

83

Q4 06

30

Q3 06

29

22

70

75

60

Q2 06

21

32

2005

100

28

31

33

40

Q2 07

23

29

32

34

Q1 07

150

31

33

Q2 08

Q1 08

Q4 07

0

Source: IIF, Markaz Research

E. Inflation

Saudi, like its GCC peers, is unprecedented witnessing inflation this year; CPI inflation at 10%

Following the robust growth in money supply, rising real estate rentals and food prices, inflation in KSA has reached levels not seen for the last 30 years. Historically, the Saudi inflation rate, as measured by the rise in consumer prices, has been extremely low at 0.3%. However, IIF estimates inflation at 10% in 2008, a sharp rise from its earlier estimate of 3.9%. Housing rentals inflation (13.6%), which has 18% weightage in the ‘cost of living index’ (for July 2007-June 2008 period), as per the figures available with SAMA, and food inflation (10.5%), having 26% weightage, may be catalytic to a general rise in prices this year.

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RESEARCH October 2008 120

12.0%

Figure: 2 115

10.0%

110

Price Index

8.0%

Inflation Rate

Jun-08

Feb-08

Oct-07

Jun-07

Feb-07

Oct-06

Jun-06

Feb-06

0.0% Oct-05

90 Jun-05

2.0%

Feb-05

95

Oct-04

4.0%

Jun-04

100

Feb-04

6.0%

Oct-03

105

Source: IIF, Markaz Research

The KSA government is taking several measures to rein inflation

The government has taken some key measures to curtail the steep rise in prices by reducing port fees and fees for certain licenses and permits, apart from cutting import duties and boosting subsidies. In addition, the government also plans to establish National Housing Agency for building low cost housing units and has allocated USD 2.7 Bn for the agency. In order to reduce the impact of rising prices for state employees, the government has introduced cost-of-living allowances. Also, Saudi Arabian Monetary Agency (SAMA) reduced the lending capacity of commercial banks by increasing the statutory reserve requirements of banks several times through 2008. SAMA increased the reserve requirement for the fourth time to 13% in May 2008 from 7% in November 2007. F. Exchange Rate

The KSA has pegged its currency to the US dollar for last two decades

The Saudi Riyal has been pegged to the US Dollar for the last two decades. KSA adopts the interest rate regime followed by the US in order to maintain the peg. However, due to weakening of the USD over the last two years, KSA has been importing inflation, adding to the recent price spikes.

0.2695

Figure: 3 USD/SAR

0.2685 0.2675 0.2665 0.2655 2000

2001

2002

2003

2004

2005

2006

2007

Source: Bloomberg

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RESEARCH October 2008 G. Interest Rates

Discount Rates

The KSA government maintains SAR-USD peg; mirrors interest rates in the US

Figure: 4 8% The Saudi monetary Saudi Discount Rate policy has 6% US Discount Rate remained Spread closely tied to 4% the US policy due to the currency peg. 2% Discount rates in the 0% Kingdom 01/03/2000 07/12/2001 12/11/2003 12/10/2005 12/09/2007 mirror the trend -2% followed by Source: Thomson Data Stream, Markaz Research the US, and spreads between the two have been narrow (generally within a percentage point).

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RESEARCH October 2008 3. Stock Market – 2008 A. Performance Stock markets reversed the upward trend seen last year until September this year. The Tadawul All Share Index (TASI) declined 33% after rising 41% last year. The Insurance (-46%), Banking (-45%) and Cement (-34%) sectors underperformed the TASI on YTD basis in 2008. Some of the sectors that outperformed the TASI, but yielded negative returns for investors were Agriculture (-8%) and Telecom (-21%). (Figure 5) Saudi stocks have been declining in 2008 after recording large gains last year

% change YoY

2002

2003

2004

2005

2006

2007

2008*

Agricultural

23%

81%

112%

285%

-61%

19%

-8%

50%

52%

-45%

7%

-21%

Electricity

6%

147%

32%

9%

-55%

13%

-29%

Industrial

0%

101%

150%

154%

-61%

79%

-32%

Services

19%

58%

70%

202%

-68%

17%

-33%

TASI**

4%

76%

85%

104%

-53%

41%

-33%

Cement

17%

28%

36%

87%

-46%

26%

-34%

Banking

-1%

30%

97%

105%

-43%

31%

-45%

Table 3: Performance trends

Telecom

Insurance -25% 62% -46% Source: Stock Exchange, SAMA and Markaz Research 2008 indices return have been calculated using market cap weighted returns on the constituents of the indices ** TASI 2008 value as on 28 Sep 2008

Historically (2001-2007 CAGR), the Industrial (44%) and Agricultural (43%) sectors have provided handsome returns to investors, surpassing TASI’s 29% gain. August 2008, close to 40 bn shares changed hands on the TASI. This is about 70% of the full year volumes on TASI in 2007.

B. Activity By August 2008, close to 40 bn shares changed hands on the TASI. This is about 70% of the full year volumes on TASI in 2007. Going by current trends, volumes for the full year are likely to remain almost in line with the levels seen last year.

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RESEARCH October 2008

70,000

Figure: 6

Volume Traded (Mn)

60,000

Overall liquidity levels moderate in 2008 compared 50,000 to last year

Others Agricultural Sector Insurance Sector

40,000

Telecom. Sector Electricity Sector

30,000

Services Sector Cement Sector

20,000

Industrial Sector Banking

10,000

0 2001 2002 2003 2004 Source: Saudi Stock Exchange 1 2008 figures are YTD figures till 31st Aug

2005

2006

2007

2008*

2008 figures are calculated by retaining the old sector classification The Telecom sector drew a lot of investor attention in 2008 as volumes traded in YTD 2008 were dominated by companies from this industry. In all, 4.5 bn Telecom shares (accounting for 11% of total volume) changed hands. On annualized basis, this works out to 6.8 bn shares, about 12 times higher than 2007 levels. The Banking sector also recorded a robust increase in trading Telecom, Banking show volumes relative to 2007. The sector accounted for 10% of total volumes growth. robust volume traded in 2008 relative to just 3% last year. Agricultural, Services were Trading volume declined across other sectors. For instance, the Agricultural laggards. sector (1.9 bn shares in 2008 – annualized) is set to witness a sharp decline in volume traded for 2008. The sector accounted for 14% of total trading volume in 2007, but may account for just about 3% in 2008. (Appendix 1)

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RESEARCH October 2008

Figure: 7

1,600 1,400

Value Traded (USD Bn)

Others Agricultural Sector

1,200

Insurance Sector Telecom. Sector

1,000

Electricity Sector Services Sector

800

Industrial Sector Banking

400 200

Source: Saudi Stock Exchange 2 2008 figures are YTD figures till 31st Aug 2008 figures are calculated by retaining the old sector classification

2008*

2007

2006

2005

2004

2003

2002

2001

0

At USD 416 bn, the total value traded, till August this year is set to decline by 9% on full year basis, going by the trend seen so far. Value traded has seen a sharp drop of 51% during 2007. On YTD basis, the value of trade in Telecom and Banking stocks increased in 2008. On annualized basis, the Telecom sector is all set to record the maximum rate of growth in turnover (5 times to USD 50 bn in 2008). The Industrial sector dominated other sectors in terms of value traded with a share of 36% in 2007. Other sectors are set to decline this year. At 128%, turnover velocity in the Saudi market is lower compared to last year (161%). (Appendix 1) Figure 8: Turnover Velocity

270%

1,600

288%

1,400

234%

1,200

210%

220% 170%

1,000

161%

144%

128%

120% 70%

600 57%

400

20% -30%

800

200 2002

2003

2004

2005

Turnover Velocity(LHS)

2006

2007

2008*

0

Value traded

Source: Saudi Stock Exchange, Markaz Research

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Value Traded (USD Bn)

320%

Turnover Velocity

Value traded decline in 2008, Telecom, Banking buck the trend

600

Cement Sector


RESEARCH October 2008 Risk & Return From a sectoral perspective, Petrochemicals segment has been an outperformer in the last two years (2007-Sep 08), however, with a higher risk. The TASI index has generated a negative return of -6% during the same period. (Figure – 9) Figure 9: Risk-Return

Annualised Returns (2007-08)

20% 15%

Petrochemicals

10% Industrial Investment

5% 0% -5%

TASI

Bank & Financial Services

-10% -15% -20%

Agriculture

Real Estate

Telecom

-25% 33%

35%

37%

39%

41%

43%

45%

47%

49%

Risk

Source: Saudi Stock Exchange, Reuters, Markaz Research

D. Others IPO market and M&A transactions moderated in 2008, yet remain very active

Fund Raising

Saudi Arabian corporates, especially the banking space witnessed high level of activity in raising funds in the YTD 2008 period. Riyad Bank raised USD 3.5 Bn through a rights issue in May in order to boost its reserves (1/3rd of the total amount raised) and paid-up capital. In April, Alinma Bank raised USD 2.8 Bn, or 70% of the bank’s total capital, through an initial public offering (the biggest IPO in the Kingdom) that was oversubscribed by 1.74x. Mohammad Al Mojil Group, which is in the business of construction and maintenance of oil & gas facilities, raised USD 560 Mn through an IPO and has been oversubscribed by 3.14x. Methanol Chemical Company raised USD 193 Mn, or 50% of its share capital, through public offering in August. The IPO was oversubscribed 815 times. (See Appendix 4) Most IPOs have given excellent returns to investors in 2008 so far, despite the fact that the listing gains have been eroded a lot, given the bearish market sentiments that have prevailed this year. Notwithstanding the declining YTD trend, 8 out of the 13 new listings are still yielding double digit returns, while one stock (United Cooperative Assurance Co) is trading 182% higher than the issue price. (See Appendix 5) Expansionary & Green Field Projects Other major developments during the year include the approval of projects worth USD 17 Bn to produce over 3 Mn tonnes of aluminum per year. The five smelters being built are expected to turn the Kingdom into a net aluminum exporter. KSA currently meets its aluminum requirement through imports. The Insurance sector also recorded strong growth in 2008. Health insurance, accounting for 32% of the total insurance industry, stole the limelight.

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RESEARCH October 2008 Arabian Shield Cooperative Insurance Co estimated total volume in the Saudi insurance market at USD 1.9 Bn during 2007. It expects volumes to increase beyond 2.1 Bn in 2008. (See Appendix 2) Mergers & Acquisitions Mergers and acquisitions (M&A) in the Kingdom were witnessed in the Banking, Investment, Telecom and Oil & Gas sectors. Major M&A deals in 2008 include: Saudi Telecom’s acquisition of a 35% stake in Oger Telecom for over USD 2.5 Bn; Swicorp’s acquisition of 20% interest in Jordon Aviation for USD 180 Mn; and Global Investment House’s acquisition of 60% stake in retail firm Al Sawani Food & Industrial. In September, Dubai Group, a diversified financial services company of Dubai Holding, announced an investment of USD 135 Mn for 20% stake in Mazaya Saudi. (See Appendix 3)

SAMA raised reserve requirements to limit the ability of the lending Banking sector

Regulatory Developments Capital Market Authority (CMA) allowed foreigners to buy shares listed on the Saudi stock market through licensed intermediaries. The new directive took effect this August. The reclassification of Saudi indices to reflect the free float methodology is aimed at improving market efficiency and attracting investment. In the Pharmaceuticals sector a new regulation was passed which reduced prices of around 1,400 prescription drugs.

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RESEARCH October 2008 Blue Chip Analysis Company Vital Statistics (Refer note for abbreviations)

Return Potential

Saudi Basic Industries Corporation (SABIC)

CMP (Sar): 78.00 M.Cap: $62 bn Q208 Profit: $2.02 bn Q208 Gr: 17% 2008E Pr: $8.1 bn 2008E Gr: 13%

Medium

Saudi Telecom Company (STC)

CMP (Sar): 56.25 M.Cap: $30 bn Q208 Profit: $1.03 bn Q208 Gr: 24% 2008E Pr: $ 3.6 bn 2008E Gr: 12%

High

Al Rajhi Bank

CMP (Sar): 65 M.Cap: $26 bn Q208 Profit: $465 mn Q208 Gr: 8% 2008E Pr: $ 1.79 bn 2008E Gr: 4%

High

Samba Financial Group (SFG)

CMP (Sar): 56 M.Cap: $13 bn Q208 Profit: $327 mn Q208 Gr: 5.6% 2008E Pr: $1.20 bn 2008E Gr: -7%

High

Rationale ƒ SABIC’s net income for Q2 2008 increased 17% YoY to USD 2.02 bn; on QoQ basis, it grew 9%. ƒ SABIC is the largest producer of chemicals, fertilizers, plastics and metals in Saudi Arabia. The company produced 54.8 mn tons in 2007. The company is expected to leverage its joint venture projects with Eastern Petrochemical Co (SHARQ 3rd expansion plant), Yanbu National Petrochemical Co (YANSAB) and Saudi Kayan Petrochemical Co (Saudi Kayan) to increase production capacity by 12.8 mn tons per annum by the end of 2010. ƒ SABIC enjoys a huge cost advantage over its global peers because of the low cost feedstock it sources from Saudi Aramco. The lower cost and increased output supported by the anticipated increase in demand for petrochemicals is expected to boost revenues and (consequently) profits. We expect SABIC’s net income to grow by 13% YoY in 2008. ƒ STC’s net income increased 24% YoY to USD 1.03 bn in Q2 2008; on QoQ basis, it grew 26%. ƒ Total operating revenues, including revenue from both the Wireless and Wireline businesses, grew 52% YoY to USD 3.21 bn. While revenue from the Wireline business grew 116% YoY to USD 1.09 bn, revenue from the Wireless business increased 32% YoY to USD 2.12 bn. STC’s Wireless business contributed 66% to it's total revenues during Q2 2008. ƒ On August 26, 2008, Zain launched its wireless service in Saudi Arabia, covering 95% of the country. We expect Zain’s entry to intensify competition for STC, going forward. ƒ STC had 18 mn subscribers at the end of June 2008 compared to Mobily’s (Etisalat) 8 mn subscriber base. We expect STC to benefit from the growing Saudi Wireless Phone industry and its dominant presence in the industry. The company’s net income is expected to grow 12% YoY in 2008. ƒ Al Rajhi Bank’s net income increased 8% YoY to USD 465 mn in Q2 2008. On QoQ basis, the net profit increased 9%, supported by the 50% QoQ growth in Banking Fees and Commissions (USD 120 mn) and a 47% QoQ increase in income from Murabahat (USD 27 mn). However, the QoQ growth in earnings was partially offset by the 47% QoQ increase in provisions to USD 74 mn. ƒ The bank’s net advances increased 14.7% YoY to USD 33.4 bn in Q2 2008, whereas deposits increased 17% YoY to USD 29 mn. On QoQ basis, growth in advances and deposits was a little sluggish with advances and deposits growing 2% and 7%, respectively, during Q2 2008 compared to 14% and 13% in Q1 2008. ƒ We expect the growth in advances to boost income from financing activities. The coupled with growing income from banking fees and commission are expected to boost overall profitability. We expect Al Rajhi Bank’s net income to increase 13% YoY in 2008. ƒ SFG’s net income declined 5.6% YoY to USD 326.8 mn in Q2 2008; on QoQ basis, it grew 2%. ƒ Net interest income for Q2 2008 declined 8.6% QoQ to USD 320.1 mn; however, on YoY basis, it increased a marginal 0.6%. Non-interest income grew 15.5% QoQ to USD 146.6 mn in Q2 2008 resulting in an overall QoQ growth in net income despite declining net interest income. On YoY basis, non-interest income declined 20.3% to USD 147.6 mn, offsetting the growth in net

Kuwait Financial Centre S.A.K. “Markaz” 14


RESEARCH October 2008 interest income and resulting in a YoY decline in net income. ƒ We expect SFG’s net income for 2008 to be affected by the YoY decline in non-interest income and record a moderate growth of 4%. Saudi CMP (Sar): 141 High ƒ SAFCO’s net income for Q2 2008 surged 125% YoY to USD 318 Arabian M.Cap: $9.4 bn mn; on QoQ basis, it grew 39%. Fertilizer Q208 Profit: $318 mn ƒ The extraordinary growth in net income can be primarily Company Q208 Gr: 125% attributed to rising prices of Urea and Ammonia and lower (SAFCO) 2008E Pr: $1.1 bn feedstock costs. Prices of Urea which accounts for almost 84% of 2008E Gr: 87% SAFCO’s total production almost doubled during Q208. ƒ The sudden hike in prices were largely due to the rising demand of fertilizer worldwide coupled with a hike in export tariffs on Urea to 135% in China (20 April 2008 to 31 September 2008), which accounts for almost 15% of global Urea trade. The increase in export tariffs in China is expected to be extended due to higher energy prices and power shortages. ƒ Natural gas which is the prime feedstock for production of Urea is currently priced at USD 11.4/MMBTU (million British thermal units) is sourced by SAFCO at USD 0.75/MMBTU based on a long term contract with Saudi Aramco. This low cost feedstock provides an absolute cost advantage to SAFCO against its global peers. ƒ SAFCO’s increased capacity (from 2.8 mn tons to 5.1 mn tons) due to the successful completion SAFCO IV in April 2007. However, the expected closure of SAFCO’s Dammam Urea plant in late 2008 is likely to reduce the overall production by 0.33 mn tons a year. ƒ The rising demand and prices of Urea, an increased production capacity and low feedstock cost is expected to boost the overall performance of SAFCO. We expect the bottom line of SAFCO to expand significantly with a YoY increase of 87% in 2008. 1. Note: Abbreviations used: CMP: Current Market Price (As on 08 Oct 08), MCap: Market Capitalization (As on 08 Oct Sep 08), Q108 Profit: First Quarter 2008 Profit, Q108 Gr: First Quarter 2008 Profit in comparison to First Quarter 2007 Profit, 2008E Pr: Expected 2008 Profits, 2008E Gr: Expected 2008 Profit Growth in comparison to full year 2007. 2. Note: USD numbers are conversion of SAR numbers at average exchange rates for the period.

Kuwait Financial Centre S.A.K. “Markaz” 15


RESEARCH October 2008 Appendix 1: Key data Indices

2001 22 7 7 6 2 1

TASI Banking Industrial Sector Cement Sector Services Sector Electricity Sector Telecom. Sector Insurance Sector Agricultural Sector 0 Others * 2008 data till 31 August 2008

Indices

2001 692 78 214 124 200 57

TASI Banking Industrial Sector Cement Sector Services Sector Electricity Sector Telecom. Sector Insurance Sector Agricultural Sector 18 Others * 2008 data till 31 August 2008

Indices TASI Banking Industrial Sector Cement Sector Services Sector Electricity Sector Telecom. Sector Insurance Sector Agricultural Sector

Value traded Market Cap (USD Bn) Turnover Velocity(LHS) * Annualized for 2008

2002 36 7 9 7 9 3

2003 159 10 46 6 39 29 28

1

2

2002 1,736 78 373 127 929 143

2003 5,566 87 1278 88 2304 1267 324

86

219

Value Traded (USD Bn) 2004 2005 473 1,103 14 64 167 494 12 45 146 260 56 49 43 79 16 36 96

Volume Traded (Mn) 2004 2005 10,298 12,281 95 272 2968 4159 119 266 4178 4094 1557 1403 294 420 112 1086 1555

2006 1,403 79 566 55 406 55 53 8 180

2006 54,437 1,135 18348 1067 20056 5193 894 130 7614

2007 682 30 249 10 222 8 10 52 101

2008* 416 33 206 6 82 5 34 36 12 2

2007 58,862 1,689 21532 527 21798 2205 564 2528 8019

2008* 39,928 4,050 16,041 268 10,030 1,282 4,538 2,213 1,289 216

Index Performance 2001 2,430 7,802 3,207 2,754 666 787

2002 2,518 7,742 3,221 3,228 795 838

2003 4,438 10,080 6,477 4,129 1,252 2,066 2,487

2004 8,206 19,867 16,189 5,633 2,132 2,725 3,738

468

575

1,041

2,206

2001 22 61.8

2005 16,713 40,766 41,105 10,561 6,429 2,969 5,667 1,948 8,496

2006 7,933 23,367 16,044 5,697 2,044 1,324 3,115 1,457 3,346

2007 11,176 30,612 28,683 7,159 2,397 1,502 3,323 2,355 3,980

2008

(31 Sep 08)

7,459 16,725 19,512 4,693 1,605 1,064 2,623 1,272 3,669

2002 36 63.6

2003 159 156.9

Turnover Velocity 2004 2005 473 1,103 293.3 648.9

2006 1,403 326.1

2007 682 521.4

2008* 623 452.6

57%

144%

210%

288%

161%

128%

234%

Kuwait Financial Centre S.A.K. â&#x20AC;&#x153;Markazâ&#x20AC;? 16


RESEARCH October 2008

Appendix 2: Key Market Developments in 2008 Month

Key Development Saudi manufacturing investment hit SR 306 b with chemical and plastic industries accounting for 59.2% of total investments

Jan-08

The Saudi Arabian Monetary Agency cut the reverse repo to 3.5% from 4% Saudi Arabia creates a new SR 22 b water company - the National Water Company (NWC)

Feb-08

Saudi Aramco and Jadwa Investment Company agreed with ExxonMobil to acquire ExxonMobil’s 30% interest in the Saudi Aramco Lubricating Oil Refining Company Saudi inflation hit 7% in January, its highest level in 25 years on the back of spurring rents and food costs

Mar-08

Apr-08

Saudi Arabia signed a SR 1.4 b agreement with a Turkish company to lay a water pipeline network to supply potable water A consortium that includes Verizon Business was awarded a license to provide public, fixed-line telecommunications services in Saudi Arabia Saudi Arabia loan defaults increased by SR 2 b in just one year A new Islamic bank - Imaar International Bank, announced plans to start operations in the fourth quarter after raising funds for its USD 11 b capital The Kingdom of Saudi Arabia announced intentions to set up an SR 20 b investment firm The Kingdom of Saudi Arabia announced plans to build a USD 426 m worth dockyard at the Islamic Port in Jeddah under a Saudi-Malaysian pact

May-08

The International Islamic Trade Finance Corporation (ITFC) signed agreements totaling approximately USD 129 m to finance three major deals in Morocco and Tunisia Saudi Oger won two contracts worth SR 1.57 b for the execution of the ministry of finance projects in Jeddah and Riyadh The volume of Saudi health insurance sector soared 62% over the past two years, reaching to over to SR 2.7 b at May 2008 Salah Al-Hujailan tied Up with the British law firm Freshfields Bruckhaus Deringer for mutual cooperation and legal consultancy Saudi Arabia signed a bilateral accession deal to give its consent for Russia to become a member of the World Trade Organisation Saudi Arabia’s Alshoula Holding Company has set up a USD 5.33 b real estate firm to tap into the Middle East construction boom

Jun-08

Total investment in the Saudi retail sector is estimated at around SR 220 b Intel Corporation and King Abdu Aziz City for Science and Technology signed an agreement to launch first wireless mobile services R&D lab in Saudi Arabia Saudi Aramco and Total signed a shareholders agreement and other deals to establish a joint venture — the Jubail Refining and Petrochemical Company Saudi Arabia planned more than USD 12 b worth of water and power projects

Jul-08

Saudi Arabia eyes sale of international airports and have plans to transform civil aviation into different sectors The General Authority for Civil Aviation signed contracts worth more than SR 16 b to develop Jeddah’s King Abdul Aziz International Airport Increases in food and housing costs pushed the Kingdom’s inflation to a 30-year high of 10.6%

Aug-08

Almajdouie Group and Sinotrans Ltd of China signed an agreement to operate a joint venture logistics company in Saudi Arabia Saudi Arabia announced plans to set up a new investment fund to buy agricultural land overseas

Sep-08

Saudi Arabia and India announced intentions to set up a joint investment fund with an initial capital of USD 1.5 b to invest in infrastructure and energy projects in South and Southeast Asia Saudi Arabia approved projects worth more than USD 17 b to produce over three million tonnes of aluminum per year

Source: Zawya and other news sources

Kuwait Financial Centre S.A.K. “Markaz” 17


RESEARCH October 2008

Appendix 3: M&As in 2008 Acquirer

Jan-08

May-08 Jun-08

Sep-08

Acquirer Country

Target Country

Value (USD mn)

Notes

Aref Investment Group Co

Makamin Saudi Co

Kuwait

Saudi Arabia

32

Acquired 10% stake

Saudi Telecom Co

Oger Telecom Ltd

Saudi Arabia

UAE

2850

Acquired 35% stake

Amwal Al Khaleej Investment

Dubai Contracting Co

Saudi Arabia

UAE

N/A

Acquired 49% stake

Al Khaznah Insurance Co

Sanad Insurance & Reinsurance

UAE

Saudi Arabia

Saudi Research And Marketing

University Bookshop

Saudi Arabia

UAE

Kuwait

Saudi Arabia

National Bank Of Kuwait Global Investment House

Aug-08

Acquired

Al-Futtaim Group

Al-Tala'a International Transportation Company Ltd Al Sawani Food & Industrial Futech Software Solutions

Kuwait

Saudi Arabia

Saudi Arabia

UAE

N/A 20

Acquired 51% stake

N/A

Acquired 40% stake

N/A

Acquired 60% stake

N/A

Fitaihi Holding Group

Oriental Weavers

Saudi Arabia

Egypt

28

Swicorp

RAK Ghani Glass LLC

Saudi Arabia

Saudi Arabia

N/A

Swicorp

Jordan Aviation

Saudi Arabia

Jordan

Dubai Group

Mazaya Saudi

UAE

Saudi Arabia

180 135

Acquired a 5% stake Acquired a 20% interest Acquired a 20% interest

Source: Zawya and other news sources

Kuwait Financial Centre S.A.K. “Markaz” 18


RESEARCH October 2008 Appendix 4: New Funds, Issuances and Initiatives

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Company Rabigh Refining and Petrochemical Company

Initiative IPO represented a 25% capital of Rabigh - a joint venture between Saudi Aramco and Japans Sumitomo Chemicals

Abu Dhabi Investment House

Opened its first European office in Geneva, Switzerland Right issue for 100% of its stake

600

IPO comprising a 50% of the company's capital

1867

Saudi International Petrochemical Company

Listed its 66.7% capital right issue

534

Saudi Reinsurance Company BUPA Arabia for Cooperative Insurance Company

IPO for 40% of the share capital

107

IPO representing a 40% of the company's capital

43

Bakheet Investment Group

Bakheet IPO Fund

EFG Hermes

EFG-Hermes Saudi Arabia Equity Fund

Jadwa Investment

Jadwa Conservative Allocation Fund

Jadwa Investment

Jadwa Balanced Allocation Fund

Jadwa Investment

Jadwa Aggressive Allocation Fund

Alinma Bank Saudi Aramco

IPO comprising a 70% of the Bank's capital Planned to bolster the number of wells drilled to 248, compared with an original target of 187

National Industrialization Company

Right issue of 32% stake

533

Basic Chemical Industries

IPO of 30% of the company's stake

53

Riyad Bank

Right issue with capital increase by 140%

HSBC Saudi Arabia Limited

HSBC Saudi Construction and Cement Equity Fund

2800 13700

3505

Mohammad Al Mojil Group

IPO representing a 30% of the company's capital

560

Halwani Brothers Company

IPO representing a 30% of the company's capital.

46

Abdullah Al Othaim Markets Company

IPO, which represents 30% of Al Othaim's capital

72

NCB Capital

Al-Ahli Saudi Mid-Cap Equity Fund

Saudi Mada Gypsum Company

308

UBS

To increase production by 260% with new plant facilities Launched its first local currency sukuk to finance projects in Malaysia Secured license to open an investment banking branch in Saudi Arabia

Saudi Industrial Services Company

Right issue of 70% stake

86

Methanol Chemicals Company

Completed its IPO for 50% of share capital

193

Arbah Global Gulf

Arbah Global Gulf to open branches in Asia

Saudi BinLadin Group

Investment in Indonesia’s agriculture sector

4300

Al-Rajhi Steel Industries

To more than double its production capacity by 2012 Issuance of a privately placed Saudi riyal sukuk with 5-year maturity

1070

Islamic Development Bank

Sep-08

1228

Saudi Industrial Investment Group Mobile Telecommunications Company Saudi Arabia

Jul-08

Aug-08

Amount (USD m)

The Saudi Binladin Group Source: Zawya and other news sources

267

Kuwait Financial Centre S.A.K. “Markaz” 19


RESEARCH October 2008 Appendix 5: IPO listing and since floatation gains Returns Oversubscription

1st Day (a)

Since Floatation (b)

Benchmark since Floatation (c)

% Chg post 1st day (b-a)

21Jun08

12.56 x

193%

182%

-24%

-11%

Listing Date

United Cooperative Assurance Company Mobile Telecommunications Company Saudi Arabia

Issuer

22Mar08

2.70 x

110%

88%

-21%

-23%

Rabigh Refining and Petrochemical Company

27Jan08

3.48 x

149%

84%

-20%

-65%

Alinma Bank

03Jun08

1.74 x

60%

47%

-22%

-14%

BUPA Arabia for Cooperative Insurance Company

17May08

9.22 x

258%

40%

-24%

-218%

Mohammad Al Mojil Group

26May08

3.14 x

17%

27%

-23%

10%

Methanol Chemicals Company

16Sep08

6.01 x

17%

25%

3%

8%

Basic Chemical Industries

16Jun08

9.30 x

283%

23%

-23%

-260%

Halwani Brothers Company

16Jul08

9.38 x

54%

16%

-18%

-38%

Saudi Reinsurance Company

24May08

3.66 x

105%

9%

-23%

-96%

Saudi Arabian Mining Company

5%

-17%

-48%

28Jul08

2.00 x

53%

Abdullah Al Othaim Markets Company

14Jul08

6.56 x

73%

0%

-18%

-72%

Astra Industrial Group

18Aug08

3.25 x

12%

-22%

-11%

-34%

Source: Zawya

Kuwait Financial Centre S.A.K. â&#x20AC;&#x153;Markazâ&#x20AC;? 20


RESEARCH October 2008 Appendix 6: Economic Indicators Saudi Arabia: Economic Indicators

Real GDP

2003

2004

2005

2006

2007f

637.23

686.04

722.17

762.61

786.35

813.09

882.60

861.50

7.7%

5.3%

5.6%

3.1%

3.4%

8.5%

6.0%

182.8

192.4

203.2

209.5

216.6

235.1

229.5

7.7%

5.3%

5.6%

3.1%

3.4%

8.5%

6.0%

214.4

250.1

315.2

355.8

381.1

412.5

528.5

13.8%

16.7%

26.0%

12.9%

7.1%

8.3%

38.7%

221.6

236.5

251.2

249.3

250.5

253.5

263.8

17.2%

6.7%

6.2%

-0.8%

0.5%

1%

5.3%

59.0

63.0

66.9

66.4

66.7

67.5

70.3

17.2%

6.7%

6.2%

-0.8%

0.5%

1%

5.3%

464.5

485.7

511.4

537.1

562.8

629.1

597.7

3.7%

4.6%

5.3%

5.0%

4.8%

12%

6.2%

119.4

123.7

129.4

136.2

143.1

149.9

167.6

159.2

3.7%

4.6%

5.3%

5.0%

4.8%

12%

6.2%

7,550

8,790

9,020

9,450

9,200

8,800

8,800

9,350

6%

-20.50

36.00

107.09

217.40

280.30

176.50

220.50

525.71

138%

213.00

293.00

392.29

567.80

678.80

642.80

720.80

1103.91

53%

38%

34%

45%

20%

-5%

12%

72%

257.00

285.20

350.40

398.50

466.30

500.30

578.20

10%

11%

23%

14%

17%

7%

24%

-20.50

36.00

107.09

217.40

280.30

176.50

220.50

525.71

-10%

12%

27%

38%

41%

27%

31%

48%

209.60

264.20

371.10

589.90

899.80

1170.90

NA

304.79

348.49

391.50

354.83

296.02

242.80

NA

390.40

417.50

496.10

553.70

660.60

789.80

NA

7%

19%

12%

19%

20%

0.2%

0.6%

0.3%

0.7%

2.3%

4.2%

3.9%

10.0%

6%

72.4

93.1

126.2

180.8

211.3

234.3

240.9

386.8

61%

29.6

33.9

41.1

54.5

63.9

82.7

84.5

110.2

30%

21.92

22.48

23.05

23.61

24.17

24.75

26.00

25.34

-3%

USD Bn

Nominal GDP

USD Bn

Hydrocarbons real GDP

SAR Bn

169.8

188.4

189.1

% change USD Bn

50.4

% change Non-hydrocarbons real GDP

SAR Bn

448.1

% change Non-hydrocarbons real GDP

USD Bn

% change Oil prodn ('000 bpd; avg Central government balance Central government revenue

SAR Bn SAR Bn

% change Central government spend

SAR Bn

233.50

% change Central government surplus

SAR Bn

% of revenues Net foreign assets Domestic credit Broad money

SAR Bn SAR Bn SAR Bn

% change Consumer prices % change Merchandise exports Merchandise imports

USD Bn USD Bn

Population (million) % change Per capita GDP

-2%

2002

SAR Bn

% change

Hydrocarbons real GDP

% Deviation From Sep 07

Unit % change Real GDP

2008f - Sep 08

2008f - Sep 07

USD

2.6

2.6

2.5

2.4

2.4

2.4

2.9

2.4

8,613

9,558

10,875

13,379

14,755

15,434

15,904

20,903

-2%

28%

16%

138%

31%

Source: IIF

Kuwait Financial Centre S.A.K. “Markaz” 21


RESEARCH October 2008

Disclaimer This report has been prepared and issued by Kuwait Financial Centre S.A.K (Markaz), which is regulated by the Central Bank of Kuwait. The report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinion of Markaz and are subject to change without notice. This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is historical and is not necessarily indicative of future performance. Kuwait Financial Centre S.A.K (Markaz) does and seeks to do business, including investment banking deals, with companies covered in its research reports. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of Markaz, Markaz has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz’s own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through this report or Markaz’s website shall be at your own risk.

Kuwait Financial Centre S.A.K. “Markaz” 22


RESEARCH October 2008

Markaz Research Offerings Strategic Research Kuwait Stocks: Fair Value Not Far Away (Sept-08) Mr. GCC Market-Manic Depressive (Sept-08) Global Investment Themes (June-08) To Yield or Not To Yield (May-08) The Golden Portfolio (Apr-08) Banking Sweet spots (Apr-08) The “Vicious Square” Monetary Policy options for Kuwait (Feb-08) Outlook 2008: GCC (Jan-08) China and India: Too Much Too Fast (Oct-07) A Potential USD 140b Industry: Review of Asset Management industry in Kuwait (Sep-07) A Gulf Emerging Portfolio: And Why Not? (Jun-07) To Leap or To Lag: Choices before GCC Regulators (Apr-07)

Periodic Research

Sector Research

GCC Asset Allocation & Volatility (Monthly Since Jul-07) GCC Equity Funds (Monthly since May-07) Markaz Daily Morning Brief KSE Weekly Snapshot KSE Technical Analysis (Weekly) Private Equity Update International Market Update

Real Estate ƒ Abu Dhabi (July-08) ƒ Algeria (Mar-08) ƒ Jordan (Mar-08) ƒ Kuwait (Feb-08) ƒ Lebanon (Dec-07) ƒ Qatar (Sep-07) ƒ Saudi Arabia (Jul-07) ƒ U.S.A. (May-07) ƒ Syria (Apr-07)

Infrastructure ƒ Power ƒ Water ƒ Airports ƒ Seaports ƒ Roadways ƒ Railways ƒ ICT

Company Research Saudi Arabia • Saudi Kayan Petro Co. (Aug-08) • Al Rajhi Bank (Aug – 08) • Arab National Bank (July-08) • Saudi Telecom Co. (Jun-08) • SAFCO (Jun-08) • Banque Saudi Fransi (Jun-08) • Riyad Bank (Jun-08) • Samba Financial Group (May-08) • Sabic (May-08)

UAE • Aldar Properties (Sept-08) • Union National Bank (Aug-08) • Dubai Financial Market (July-08) • Emaar Properties (July-08) • Dana Gas (July-08) • FGB (July-08) • DP World (July-08) • ADCB (Jun-08) • Etisalat (Jun-08) • NBAD (May-08)

Qatar • Doha Bank (Aug-08) • Qatar National Bank (Aug-08) • QEWC (July-08) • QISB (July-08) • Masraf Al-Rayan (Jun-08) • Commercial Bank of Qatar (Jun-08) • Industries Qatar (May-08) Oman • Oman Telecommunications (Sept-08) • Bank Muscat(Sept-08) • Oman cement (Sept-08) • Raysut Cement Company (Aug-08) • National Bank of Oman (Aug-08) • OIB (July-08)

Bahrain • Esterad Investment Company (Aug-08) • Bahrain Islamic Bank (Aug-08) • Ithmaar Bank (July-08) • Tameer (July-08) • Batelco (July-08) Egypt • Commercial Int’l Bank (Oct-08) • Orascom Telecom (Sep-08) • Mobinil (Sep-08) • Telecom Egypt (Aug-08) • EFG-Hermes (Jun-08)

Markaz Research is available on: Bloomberg Type “MRKZ” <GO>, Thomson Financial, Reuters Knowledge, Zawya Investor & Noozz. To obtain a print copy, kindly contact: Kuwait Financial Centre “Markaz” Client Relations & Marketing Department Tel: +965 2 224 8000 Ext. 1804 Fax: +965 22414499 Postal Address: P.O. Box 23444, Safat, 13095, State of Kuwait Email: info@markaz.com markaz.com

Kuwait • Commercial bank of Kuwait (Oct-08) • Kipco (Sept-08) • Global Investment House (Sept-08) • The Investment Dar (Sept-08) • Zain (Sept- 08) • NBK (Sept-08) • Gulf Bank (Sept-08) • Burgan bank (Sept-08) • Kuwait Finance house (Sept-08) • Al Safat (Sept-08) • Automated Systems (Sept-08)

Down and Out: Saudi Stock Outlook  

Down and Out: Saudi Stock Outlook

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