Saudi Arabian stock report - Saudi Basic Industries

SAARAB

UPDATE: Saudi Basic Industries underperforms 85% of the market June 22, 2017 15:30 AST

NEWS BITES - MIDDLE EAST & NORTH AFRICA

Saudi Basic Industries Corp. (TASI:2010), Saudi Arabia's largest Petrochemical industries company by market cap, has decreased SAR1.73 (1.7%) from its last trading session of June 21 to close at SAR102.33. Compared with the All Share Index (TASI) which rose 90.8 points (1.2%) in the day, the relative price change was -2.9%. The fall was exacerbated by average volume of 1.1 times the average daily volume of 6.1 million shares. In the Saudi Arabian market of 167 stocks traded today, the stock has a 4-day relative price strength of 15 indicating it has underperformed 85% of the market. A price fall combined with a low relative strength is a bearish signal.

SECTION 1

SAUDI BASIC INDUSTRIES BEARISH SIGNALS

1.1 Fundamentals:

+ Total Liabilities/EBITDA of 5.1 which compares unfavourably with the Joseph Piotroski benchmark of 5.

+ Net profit margin has averaged 12.8% in the last 3 years. This is lower than the sector average of 13.8% and suggests a low margin of safety.

1.2 Overvaluation [compared with sector average]:

+ Price/Sales of 2.3 [2.0].

1.3 Low Performance Indicator:

DescriptionValueRank In Market
Price Change %-1.7In Bottom 4%

SECTION 2

SAUDI BASIC INDUSTRIES BULLISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 3.9%, divided by average yield of dividend yielding stocks in the All Share Index (TASI) of 3.0% is 130.3%. This suggests the stock is undervalued in dividend yield terms.

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 1. Compared with the rest of the market the stock is undervalued.

+ As per the Du Pont analysis, Return on Equity of 10.9% is better than sector average of 8.7%. This is computed as net profit margin of 13.4% times asset turnover [sales/assets] of 0.43 times leverage factor [total assets/shareholders' equity] of 1.9.

2.2 Undervaluation [compared with sector average]:

+ Return on Equity 10.9% [9.3%].

+ Return on Assets 5.6% [4.0%].

+ Return on Capital Employed 7.6% [5.7%].

2.3 Technicals:

+ The 2.9% discount to 12-month high of SAR105.40 against the 34.6% premium to 12-month low of SAR76.0 suggests the stock continues to push for new highs.

+ The present value of SAR1,000 (PV1000) invested one year ago in Saudi Basic Industries is SAR1,301, comprising a capital gain of SAR245 and dividend reinvested of SAR56.

PV10001-week1-month1-year
2010.TASI1,0341,0351,301
All Share Index (TASI)1,0891,0811,137

+ The present value of SAR1,000 (PV1000) invested ten years ago in Saudi Basic Industries is SAR1,388, including a capital loss of SAR90 and dividend reinvested of SAR478.

+ 10 years Multiplier in SAR = 1.388x

+ Compound Annual Growth Rate (CAGR) in SAR = 3.3%

Present Value of USD1,000 invested 10 years ago:

+ The present value of USD1,000 (PV1000) invested ten years ago in Saudi Basic Industries is $US1,386, including a capital loss of $US92 and dividend reinvested of $US478.

+ 10 years ago USD 1 equalled SAR 3.7509

+ 10 years Multiplier in USD = 1.386x

+ Compound Annual Growth Rate (CAGR) in USD = 3.3%

Jun 22, 2017: USD 1 equals SAR 3.76

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverSAR672 million (US$178.9 million)In Top 2%
Price/MAP501.04In Top Quartile
Price/MAP2001.09In Top Quartile

SECTION 3

PRICE VOLUME DYNAMICS

3.1 Momentum:

+ Volume: there were 6,566,984 shares worth SAR672 million (US$178.9 million) traded today. In the past week, volume was 1.2 times average and the shares were up 3.4%. The fall was exacerbated by average volume of 1.1 times the average daily volume of 6.1 million shares.

3.2 Moving Annual Return

2010Close (SAR)Dividends (SAR)Capital Gain / (Loss) %% YieldAnnual Return %
June 22102.33424.54.929.4
1 Yr ago82.175.5(18.2)5.5(12.8)
2 Yrs ago100.55.5(12.6)4.8(7.8)
3 Yrs ago115523.75.429.0
4 Yrs ago9351.15.46.5

3.3 Beta:

+ Beta: the Beta of Saudi Basic Industries stock is 0.6. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

3.4 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 33.7% (or a turnover period of 2 years 11 months). This average length of ownership of the stock at 1.7 times the average holding period of 1 year 8 months for stocks in the All Share Index (TASI) suggests a larger number of core investors, making a long-term investment safer.

SECTION 4

RANKING

4.1 Global Rank [out of 47,401 stocks] and Rank in the Middle East & Africa Region [out of 2,287 stocks]

DescriptionValueGlobal RankIn MEA Region
MCap (US$)81.7B1212
Total Assets (US$)84.4B52510
Revenue (US$)36.1B3295
Net Profit (US$)4.7B1754
Return on Equity %10.911,356721
Net Profit Margin %13.48,423661
Price to Book1.918,8781,199
Yield %3.85,925559
PV$1000 (1Year) US$*1,29912,033364
US$* Change (1Year) %26.512,868391

* 1 year ago USD 1 = SAR 3.75

Jun 22, 2017: USD 1 equals SAR 3.76

4.2 Independent Ratings

Saudi Basic Industries Corp. was ranked 81 in the Industry Week list of the world's largest 1000 manufacturers by Revenues in 2015; an improvement over a year from rank 88 in 2014.

It is a new entrant in PwC's list of Top 100 Global companies; ranked 85th by MCap as at March 31, 2015.

It is the 102nd largest by revenue in the FT Global 500.

It is the 176th largest by revenue in the Forbes Global 2000.

It was ranked 415 by Newsweek and Corporate Knights Capital in the World's 500 Greenest Companies 2016. It had outstanding scores of 10.4% in Water productivity, 2.1% in Energy productivity and 1.7% in Carbon productivity.

It is placed 29/163 in BSS News Bites' ranking of Saudi Arabian performers in the past year, a percentile ranking of 82.

SECTION 5

SAUDI BASIC INDUSTRIES FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)36.140.150.7
Pretax (USD B)5.55.66.8
Net (USD B)4.756.2

5.2 Annual Report for the year ended December 31, 2016 (year-on-year comparisons with previous corresponding period)-

Saudi Basic Industries Net Profit down 5.0%

Favourable Changes:

+ EBIT Margin up from 14.1% to 15.7%.

+ EBIT to total assets up from 6.4% to 6.6%.

+ Cost of Goods Sold to Sales down from 70.9% to 69.2%.

+ Profit before tax to Sales up from 14.1% to 15.7%.

+ Total liabilities to Total assets down 5.6% from 0.4 to 0.3.

+ Other non-current assets to Total Assets up from 6.5% to 6.8%.

Unfavourable Changes:

+ Net profit down 5% from SAR18.8b ($US5.0b) to SAR17.8b ($US4.8b)

+ Total revenue down 9.8% from SAR150.6b ($US40.1b) to SAR135.8b ($US36.2b).

+ Total revenue to total assets down from 0.5 to 0.4.

+ Administration expenses to Sales up from 9.3% to 9.5%.

+ Current ratio down 4.1% from 2.2 to 2.1.

+ Working capital to total assets down from 15.2% to 14.0%.

+ Total current assets to Total Assets down from 28.2% to 26.9%.

+ Non-current inventory to Total Assets down from 7.5% to 7.3%.

+ Total Liabilities to EBITDA of 5.1 compares unfavourably with the Joseph Piotroski benchmark of <5. However, it has improved by 9.9% from the previous year's ratio of 5.7.

Note:

+ Tax expenses to Sales up from 1.4% to 2.3%.

+ Total non-current assets to Total Assets up from 71.8% to 73.1%.

+ Fixed Assets to Total Assets up from 52.8% to 53.6%.

5.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (SAR)
22 Jun 20174
22 Jun 20165.5
22 Jun 20155.5
22 Jun 20145
22 Jun 20135

SECTION 6

SAUDI BASIC INDUSTRIES PROFILE

6.1 Activities

Saudi Basic Industries (SABIC) is a petrochemical company that operates in the non-oil industrial sector worldwide. SABIC operates six core business units. The Basic Chemicals unit products include methanol, ethylene, propylene, benzene, xylene, styrene, crude industrial ethanol, butadiene and butadiene-1. The Intermediates unit produces ethylene glycol, ethylene dichloride, and vinyl chloride monomer and dioctyl phthalate. The polyvinyl chloride (PVC) and Polyester unit provides polymeric materials and allied products. Its main products include polyester, melamine, polypropylene, PVC and polystyrenes. The Fertilizers unit offers ammonia and urea, phosphate and liquid fertilizers. The Metals unit is a supplier of flat steel, long steel and aluminum products. The Polyolefins business unit is a producer of polyethylene (PE), polypropylene (PP) and their by-products.

6.2 Top Management

The chairman is Saud Bin Thenayan Al-Saud and the chief executive officer is Yousef Abdullah Al-Benyan.

6.3 Issued Capital

Based on 3,000,000,000 issued shares the market capitalisation is SAR307 billion (US$81.7 billion).

SECTION 7

STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

June 21: Saudi Basic Industries announces dividend

June 12: SABIC announces its sustainability report for 2016

June 05: Sabic backs Madinah education academy

May 10: Saudi's SABIC 'very positive' on 2017 despite oil market uncertainty

May 01: Saudi Basic Industries Corp. announces the interim financial results for the period ending on 31-03-2017 (Three Months)

Contact: 2258000-2259701

Physical Address: PO Box 5101

Riyadh 11422

State/Province/Country: Saudi Arabia

Exchange: Saudi Stock Exchange (Tadawul)

ISIN: SA0007879121

SA:2010; SAU:2010; AB:2010; 2010.SE

PermID: 4295887293

Source: www.BuySellSignals.com