SIPCHEM - Aljazira Capital
Saudi International Petrochemical Co. (SIPCHEM) Investment Update
September 2015
SIPCHEM: Q2-2015 earnings were impacted by maintenance shutdown, however; the company on track to benefit from commercial operations of new projects (EVA/LDPE & PBT); “Overweight” recommendation reiterated with lower PT. Mixed 2Q2015 results due to plant shutdown and slow recovery of products prices: Saudi International Petrochemical Company (Sipchem) Q215 earnings came below our expectation and showed a deviation of 12.5% from our estimates (SAR 125.7) and 11.9% from the Bloomberg market consensus of SAR 124.9mn. SIPCHEM posted a net income of SAR 110.0mn (EPS of SAR 0.30), indicating a 55.0% YoY decrease and a 36.6% QoQ increase. The high deviation in net income is ascribed primarily to decrease in production and sales quantities as a result of the shutdown of carbon monoxide (CO) plant and acetic acid plant during the quarter for regular scheduled maintenance works. Additionally, the sales prices of products decreased significantly, especially butanediol, vinyl acetate monomer, and ethylacetate. Nonetheless, the 2Q2015 revenue of SAR 1,006.9mn was ahead of our estimate of SAR 905.2mn, bolstered by the commencement of commercial operations at the ethylene vinyl acetate (EVA) and low-density polyethylene (LDPE) plants during the quarter. We believe the commencement of production from the downstream products (EVA and LDPE) would improve Sipchem’s revenue as well as margins going forward, which should contribute to around 12% of 2015 revenues. Average selling prices of Methanol declined 7.5%YoY and increased 21.3%QoQ. VAM prices fell 32.6% and remained flat QoQ. Butane prices fell 44.9%YoY and 3.4%QoQ. Acetic Acid (AA) decreased 15.5% and rose 3.2%QoQ. Phase-III expansion focusing on value added products Startup of polybutylene terephthalate plant: In April 2015, Sipchem announced the startup of the polybutylene terephthalate (PBT) plant of Sipchem Chemical Company (an affiliate of Sipchem). The plant would produce 63,000 metric tons of PBT, which is a highly specialized, thermal engineering polymer used in the automotive industry and the production of electrical and electronics materials. It is also utilized in the production of materials used in industries such as IT, polymers, and engineering plastics. We expect the company would announce the commencement of commercial operation and the financial impact at the end 2015. Sipchem buys additional stake in its subsidiaries for USD 100.2mn: Sipchem recently signed an agreement to buy additional stakes in its affiliates, International Acetyl Company and International Vinyl Acetate Company. Both companies operate Acetic Acid and Acetic Anhydride and Vinyl Acetate Monomer production plants. Sipchem would acquire the stake from Kuwaitbased Ikarus Petroleum Industries Co. Sipchem already owns 76% in each of the two companies; the company said its equity in each would rise to 87% after the deal. The company intends to finance the acquisition through its own resources in addition to Islamic Financing Facilities. The acquisition is expected be completed during 3Q2015. Our estimates and valuation: In 2015, we are reducing our year net profit forecast to SAR 462mn due to lower than expected rebounding of the products prices led by the recent downtrend in natural gas prices. Therefore, we adjust our valuation and decrease our 12-month price to SAR25.40/share; indicating a potential upside of 26.0% over current market price of SAR20.15/share (as of 03rd SEP 2015). We, also remain our ‘Overweight’ recommendation for SIPCHEM. The company is currently trading at a PE of 15.6x, against our 2015 forward PE of 15.98x and 2016 forward PE of 10.98x. Valuation Metrics: we adjusted some valuation methodology to reduce the sensitivity of our valuation to terminal value with the following key assumptions; 1. Terminal growth rate is taken at 2.8% from 3.0%. 2. Risk free rate is taken at 3.3% from 2.84%.
1
3. KSA total market risk premium is taken at 13.8% from Bloomberg from 12.09%.
© All rights reserved
Please read Disclaimer on the back
‘Overweight ’
Recommendation Previous Target Price (SAR)
37.70
Current Price* (SAR)
20.15
New Target Price (SAR)
25.40
Upside / (Downside)
26.0% *prices as of 2nd of September 2015
Key Financials SARmn (unless specified)
FY14
FY15E
FY16E
Revenues Growth % Net Income Growth % EPS
4,124 3.0% 606 -2.3% 1.65
3,927 -4.8% 462 -23.7% 1.26
4,609 17.4% 673 45.5% 1.83
Source: Company reports, Aljazira Capital
Key Ratios SARmn (unless specified)
FY14
FY15E
FY16E
Gross Margin EBITDA Margin Net Margin P/E P/B EV/EBITDA ROE ROA Dividend Yield
33.9% 42.6% 14.7% 16.81 1.28 7.47
28.4% 39.8% 11.8% 15.98 0.91 6.64
31.5% 40.9% 14.6% 10.98 0.87 6.36
7.9%
5.8%
8.1%
3.6%
2.7%
4.1%
4.5%
6.2%
6.2%
Source: Company reports, Aljazira Capital
Shareholders Pattern Holding Zamil Group Holding Company Public Pension Agency Olayan Financing Company Ikarus Petroleum Industries Company - KPSC KPSC Public
9.69% 7.74% 5.16% 8.16% 69.25%
Source: Company reports, Aljazira Capital
Key Sector Data SARmn (unless specified) Market Cap(bn) YTD% 52 week (High) 52 week (Low) Share Outstanding (mn)
7.04 -27.35% 43.40 18.85 366.70 Source: Bloomberg, Aljazira Capital
Analyst
Jassim Al-Jubran +966 11 2256248 [email protected]
Saudi International Petrochemical Co. (SIPCHEM) Investment Update
September 2015
Please read Disclaimer on the back
Sipchem’s GACI plant commences commercial operation: Sipchem announced the beginning of commercial operations at its Gulf Advanced Cable Insulation Company (GACI) plant located in its complex in Jubail Industrial City in early June 2015. The plant manufactures several types of insulation polymers, which are used for fabricating electrical cable insulation materials. The product would be marketed by GACI. Raw material required for the plant would be procured from Sipchem’s EVA/ LDPE unit. We believe cable insulation polymer production is one of the downstream industries that use feedstock produced by Sipchem. Growing demands for such downstream products in local and global markets would benefit Sipchem due to its forward integration. Well organized production flow strengthened operational integration: SIPCHEM is enjoying the benefit of having a sophisticated production process, which allows the company to generate most of its required feedstock from inhouse facilities. Acetyl complex played a crucial role in strengthening the company’s operational structure; where carbon mono oxide (CO) and methanol from International Gas Company (IGC) and International Methanol Company (IMC), respectively, are utilized to produce acetic acid (AA) & acetate anhydride (Aan) at International Acetyl Company (IAC). Furthermore AA is further utilized as a feedstock at International Vinyl Acetate Company (IVC) to produce vinyl acetate monomer (VAM). Hence, we believe the given production flow at complex played a vital role that led the company to secure a high level of economies of scale. Marketing arm to assist in global growth: Sipchem has a fully owned marketing company, Sipchem Marketing Company (SMC), to assist in marketing the company’s products across Europe and Asia; the two regions contribute around 32% and 29%, respectively, to Sipchem’s total sales (local sales currently stand at 34%). We believe Sipchem’s strategy to stay close to its customers offers it an ideal platform to provide better services and further expand its business in the region. SMC focuses primarily on the marketing and sales of EVA, LDPE, ethyl acetate and butyl acetate, methanol, butanediol, tetrahydrofuran, acetic acid, and vinyl acetate monomer in Europe and Asia. Recovery in methanol prices aids margins: Methanol (constitutes the largest portion of Sipchem’s revenue) prices were weak since the start of the year, but have recovered from March. China spot prices (August 2015) have increased to over USD 360/ton after falling to below USD 315/ton in February 2015. Demand for methanol in key markets, such as China, is expected to remain healthy in 2015, although adverse movement in natural gas prices and China’s economy could be key risks to the overall demand and price in the near term.
390 370 350 330 310 290 Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Methanol price in USD/MT
Strong financials, solid dividend, and reasonable valuation offer upside potential: At the end of 2Q2015, Sipchem’s debt-to-equity ratio stood at 1.4 times, with gross debt at around SAR 7.8bn. The management announced a total dividend of SAR 0.6 per share in 2Q2015, resulting in an attractive dividend yield of 6.2%. Going forward, we believe a strong balance sheet and sustainable cash flows would be sufficient for the company to repay existing debt, maintain a robust dividend payout ratio, and manage future expansion plans. Based on our forecast estimate, the stock is currently trading at P/E of 10.98x for 2016, a marginal discount to the sector average of 13.0x.
2
© All rights reserved
RESEARCH DIVISION
AGM - Head of Research
Abdullah Alawi +966 11 2256250 [email protected]
Analyst
Sultan Al Kadi
+966 11 2256115 [email protected]
+966 11 2256374 [email protected]
General manager - brokerage services and sales
AGM-Head of international and institutional
AGM- Head of Western and Southern Region Investment Centers & ADC
Ala’a Al-Yousef
brokerage
Brokerage
+966 11 2256000 [email protected]
Luay Jawad Al-Motawa
Abdullah Q. Al-Misbani
+966 11 2256277 [email protected]
+966 12 6618400 [email protected]
AGM-Head of Sales And Investment Centers
AGM-Head of Qassim & Eastern Province
AGM - Head of Institutional Brokerage
Central Region
Abdullah Al-Rahit
Samer Al- Joauni
Sultan Ibrahim AL-Mutawa
+966 16 3617547 [email protected]
+966 1 225 6352 [email protected]
Jassim Al-Jubran +966 11 2256248 [email protected]
BROKERAGE AND INVESTMENT CENTERS DIVISION RESEARCH DIVISION
Talha Nazar
Analyst
+966 11 2256364 [email protected]
AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. 1.
RATING TERMINOLOGY
Senior Analyst
2. 3. 4.
Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by Aljazira Capital from sources believed to be reliable, but Aljazira Capital has not independently verified the contents obtained from these sources 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 report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children 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. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
Asset Management | Brokerage | Corporate Finance | Custody | Advisory Head Office: King Fahad Road, P.O. Box: 20438, Riyadh 11455, Saudi Arabia، Tel: 011 2256000 - Fax: 011 2256068
Aljazira Capital is a Saudi Investment Company licensed by the Capital Market Authority (CMA), license No. 07076-37
September 2015
SIPCHEM: Q2-2015 earnings were impacted by maintenance shutdown, however; the company on track to benefit from commercial operations of new projects (EVA/LDPE & PBT); “Overweight” recommendation reiterated with lower PT. Mixed 2Q2015 results due to plant shutdown and slow recovery of products prices: Saudi International Petrochemical Company (Sipchem) Q215 earnings came below our expectation and showed a deviation of 12.5% from our estimates (SAR 125.7) and 11.9% from the Bloomberg market consensus of SAR 124.9mn. SIPCHEM posted a net income of SAR 110.0mn (EPS of SAR 0.30), indicating a 55.0% YoY decrease and a 36.6% QoQ increase. The high deviation in net income is ascribed primarily to decrease in production and sales quantities as a result of the shutdown of carbon monoxide (CO) plant and acetic acid plant during the quarter for regular scheduled maintenance works. Additionally, the sales prices of products decreased significantly, especially butanediol, vinyl acetate monomer, and ethylacetate. Nonetheless, the 2Q2015 revenue of SAR 1,006.9mn was ahead of our estimate of SAR 905.2mn, bolstered by the commencement of commercial operations at the ethylene vinyl acetate (EVA) and low-density polyethylene (LDPE) plants during the quarter. We believe the commencement of production from the downstream products (EVA and LDPE) would improve Sipchem’s revenue as well as margins going forward, which should contribute to around 12% of 2015 revenues. Average selling prices of Methanol declined 7.5%YoY and increased 21.3%QoQ. VAM prices fell 32.6% and remained flat QoQ. Butane prices fell 44.9%YoY and 3.4%QoQ. Acetic Acid (AA) decreased 15.5% and rose 3.2%QoQ. Phase-III expansion focusing on value added products Startup of polybutylene terephthalate plant: In April 2015, Sipchem announced the startup of the polybutylene terephthalate (PBT) plant of Sipchem Chemical Company (an affiliate of Sipchem). The plant would produce 63,000 metric tons of PBT, which is a highly specialized, thermal engineering polymer used in the automotive industry and the production of electrical and electronics materials. It is also utilized in the production of materials used in industries such as IT, polymers, and engineering plastics. We expect the company would announce the commencement of commercial operation and the financial impact at the end 2015. Sipchem buys additional stake in its subsidiaries for USD 100.2mn: Sipchem recently signed an agreement to buy additional stakes in its affiliates, International Acetyl Company and International Vinyl Acetate Company. Both companies operate Acetic Acid and Acetic Anhydride and Vinyl Acetate Monomer production plants. Sipchem would acquire the stake from Kuwaitbased Ikarus Petroleum Industries Co. Sipchem already owns 76% in each of the two companies; the company said its equity in each would rise to 87% after the deal. The company intends to finance the acquisition through its own resources in addition to Islamic Financing Facilities. The acquisition is expected be completed during 3Q2015. Our estimates and valuation: In 2015, we are reducing our year net profit forecast to SAR 462mn due to lower than expected rebounding of the products prices led by the recent downtrend in natural gas prices. Therefore, we adjust our valuation and decrease our 12-month price to SAR25.40/share; indicating a potential upside of 26.0% over current market price of SAR20.15/share (as of 03rd SEP 2015). We, also remain our ‘Overweight’ recommendation for SIPCHEM. The company is currently trading at a PE of 15.6x, against our 2015 forward PE of 15.98x and 2016 forward PE of 10.98x. Valuation Metrics: we adjusted some valuation methodology to reduce the sensitivity of our valuation to terminal value with the following key assumptions; 1. Terminal growth rate is taken at 2.8% from 3.0%. 2. Risk free rate is taken at 3.3% from 2.84%.
1
3. KSA total market risk premium is taken at 13.8% from Bloomberg from 12.09%.
© All rights reserved
Please read Disclaimer on the back
‘Overweight ’
Recommendation Previous Target Price (SAR)
37.70
Current Price* (SAR)
20.15
New Target Price (SAR)
25.40
Upside / (Downside)
26.0% *prices as of 2nd of September 2015
Key Financials SARmn (unless specified)
FY14
FY15E
FY16E
Revenues Growth % Net Income Growth % EPS
4,124 3.0% 606 -2.3% 1.65
3,927 -4.8% 462 -23.7% 1.26
4,609 17.4% 673 45.5% 1.83
Source: Company reports, Aljazira Capital
Key Ratios SARmn (unless specified)
FY14
FY15E
FY16E
Gross Margin EBITDA Margin Net Margin P/E P/B EV/EBITDA ROE ROA Dividend Yield
33.9% 42.6% 14.7% 16.81 1.28 7.47
28.4% 39.8% 11.8% 15.98 0.91 6.64
31.5% 40.9% 14.6% 10.98 0.87 6.36
7.9%
5.8%
8.1%
3.6%
2.7%
4.1%
4.5%
6.2%
6.2%
Source: Company reports, Aljazira Capital
Shareholders Pattern Holding Zamil Group Holding Company Public Pension Agency Olayan Financing Company Ikarus Petroleum Industries Company - KPSC KPSC Public
9.69% 7.74% 5.16% 8.16% 69.25%
Source: Company reports, Aljazira Capital
Key Sector Data SARmn (unless specified) Market Cap(bn) YTD% 52 week (High) 52 week (Low) Share Outstanding (mn)
7.04 -27.35% 43.40 18.85 366.70 Source: Bloomberg, Aljazira Capital
Analyst
Jassim Al-Jubran +966 11 2256248 [email protected]
Saudi International Petrochemical Co. (SIPCHEM) Investment Update
September 2015
Please read Disclaimer on the back
Sipchem’s GACI plant commences commercial operation: Sipchem announced the beginning of commercial operations at its Gulf Advanced Cable Insulation Company (GACI) plant located in its complex in Jubail Industrial City in early June 2015. The plant manufactures several types of insulation polymers, which are used for fabricating electrical cable insulation materials. The product would be marketed by GACI. Raw material required for the plant would be procured from Sipchem’s EVA/ LDPE unit. We believe cable insulation polymer production is one of the downstream industries that use feedstock produced by Sipchem. Growing demands for such downstream products in local and global markets would benefit Sipchem due to its forward integration. Well organized production flow strengthened operational integration: SIPCHEM is enjoying the benefit of having a sophisticated production process, which allows the company to generate most of its required feedstock from inhouse facilities. Acetyl complex played a crucial role in strengthening the company’s operational structure; where carbon mono oxide (CO) and methanol from International Gas Company (IGC) and International Methanol Company (IMC), respectively, are utilized to produce acetic acid (AA) & acetate anhydride (Aan) at International Acetyl Company (IAC). Furthermore AA is further utilized as a feedstock at International Vinyl Acetate Company (IVC) to produce vinyl acetate monomer (VAM). Hence, we believe the given production flow at complex played a vital role that led the company to secure a high level of economies of scale. Marketing arm to assist in global growth: Sipchem has a fully owned marketing company, Sipchem Marketing Company (SMC), to assist in marketing the company’s products across Europe and Asia; the two regions contribute around 32% and 29%, respectively, to Sipchem’s total sales (local sales currently stand at 34%). We believe Sipchem’s strategy to stay close to its customers offers it an ideal platform to provide better services and further expand its business in the region. SMC focuses primarily on the marketing and sales of EVA, LDPE, ethyl acetate and butyl acetate, methanol, butanediol, tetrahydrofuran, acetic acid, and vinyl acetate monomer in Europe and Asia. Recovery in methanol prices aids margins: Methanol (constitutes the largest portion of Sipchem’s revenue) prices were weak since the start of the year, but have recovered from March. China spot prices (August 2015) have increased to over USD 360/ton after falling to below USD 315/ton in February 2015. Demand for methanol in key markets, such as China, is expected to remain healthy in 2015, although adverse movement in natural gas prices and China’s economy could be key risks to the overall demand and price in the near term.
390 370 350 330 310 290 Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Methanol price in USD/MT
Strong financials, solid dividend, and reasonable valuation offer upside potential: At the end of 2Q2015, Sipchem’s debt-to-equity ratio stood at 1.4 times, with gross debt at around SAR 7.8bn. The management announced a total dividend of SAR 0.6 per share in 2Q2015, resulting in an attractive dividend yield of 6.2%. Going forward, we believe a strong balance sheet and sustainable cash flows would be sufficient for the company to repay existing debt, maintain a robust dividend payout ratio, and manage future expansion plans. Based on our forecast estimate, the stock is currently trading at P/E of 10.98x for 2016, a marginal discount to the sector average of 13.0x.
2
© All rights reserved
RESEARCH DIVISION
AGM - Head of Research
Abdullah Alawi +966 11 2256250 [email protected]
Analyst
Sultan Al Kadi
+966 11 2256115 [email protected]
+966 11 2256374 [email protected]
General manager - brokerage services and sales
AGM-Head of international and institutional
AGM- Head of Western and Southern Region Investment Centers & ADC
Ala’a Al-Yousef
brokerage
Brokerage
+966 11 2256000 [email protected]
Luay Jawad Al-Motawa
Abdullah Q. Al-Misbani
+966 11 2256277 [email protected]
+966 12 6618400 [email protected]
AGM-Head of Sales And Investment Centers
AGM-Head of Qassim & Eastern Province
AGM - Head of Institutional Brokerage
Central Region
Abdullah Al-Rahit
Samer Al- Joauni
Sultan Ibrahim AL-Mutawa
+966 16 3617547 [email protected]
+966 1 225 6352 [email protected]
Jassim Al-Jubran +966 11 2256248 [email protected]
BROKERAGE AND INVESTMENT CENTERS DIVISION RESEARCH DIVISION
Talha Nazar
Analyst
+966 11 2256364 [email protected]
AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. 1.
RATING TERMINOLOGY
Senior Analyst
2. 3. 4.
Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by Aljazira Capital from sources believed to be reliable, but Aljazira Capital has not independently verified the contents obtained from these sources 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 report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children 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. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
Asset Management | Brokerage | Corporate Finance | Custody | Advisory Head Office: King Fahad Road, P.O. Box: 20438, Riyadh 11455, Saudi Arabia، Tel: 011 2256000 - Fax: 011 2256068
Aljazira Capital is a Saudi Investment Company licensed by the Capital Market Authority (CMA), license No. 07076-37
