Saudi Basic Industries (2010:SAR85.80) hits four-month high, reports 19.6% sequential rise in Quarterly Revenue 31 May 2020

NEWS BITES - MIDDLE EAST & NORTH AFRICA

Dateline: Sunday May 31, 2020

Saudi Basic Industries Corp. (TASI:2010), Saudi Arabia's largest Petrochemical industries company by market cap, traded at its 124-day high of SAR86.50. Saudi Basic Industries' stock price has lifted SAR2.80 (3.4%) from its previous trading session to close at SAR85.80. Compared with the All Share Index (TASI) which rose 162.4 points (2.3%) in the day, the relative price increase was 1.1%. The volume was 0.9 times the average daily trading volume of 2.8 million shares. There were 2,541,572 shares worth SAR218.1 million (US$58.2 million) traded today. Today the stock traded between its 124-day high of SAR86.50 and ten-day low of SAR84.70.

Financial News

Quarterly Report (Q1/2020):

May 21, 2020

Quarterly Report Analysis Q1 2020: Saudi Basic Industries reports 19.6% sequential rise in Quarterly Revenue

Saudi Basic Industries (TASI:2010), announced total revenue of SAR5.3b ($US1.4b) for the quarter-ended 31 March 2020 [Q1/2020], up 19.6% from the previous quarter [Q4/2019] and down 85.9% from the year-earlier period [Q1/2019].

Compared with the previous corresponding period [PCP; Q1/2019], year-over-year [y.o.y.] Revenue was down 85.9%.

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Stock Summary

Currency1 USD = 3.75 SARDividend Yield5.1%
May 31 closeSAR85.80SectorPetrochemical Industries
Ave Daily Volume2,812,561 sharesShares Outstanding3,000,000,000
52-Week Range59.98 - 114.27Market CapSAR257.4 billion [USD68.6 billion]

Financials Summary:

+ Sales were down 43.5% from USD16 billion in FY2018 to USD9 billion in FY2019.

+ Net profit was down 74.1% from USD5.7 billion in FY2018 to USD1.5 billion in FY2019.

Year ended DecFY2019FY2018FY2017
Sales (USD B)91614.1
Pretax (USD B)26.45.6
Net (USD B)1.55.74.9

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INDEX

SECTION 1 News In The Past Two Months

SECTION 2 Corporate Profile and Independent Ratings

SECTION 3 Today's Bullish Signals

SECTION 4 Ongoing Bullish Parameters

SECTION 5 Today's Bearish Signals

SECTION 6 Ongoing Bearish Parameters

Click here to view the following

SECTION 7 Patents

SECTION 8 Tax & Dividend

SECTION 9 Financials Q1 2020, FY 2019

SECTION 10 Peer Group Analysis & Ranking

SECTION 11 News Archives (Jun 2018 - Dec 2019)

Glossary

SECTION 1 News In The Past Two Months

1.1 Financial News

Annual Report (FY 2019):

April 06, 2020

FY2019 Annual Report: Saudi Basic Industries profits hit by 74% fall

Saudi Basic Industries (TASI:2010) reported net profit for the year-ended 31 December 2019 [FY2019] of SAR5.6b ($US1.5b), down 74.1% from SAR21.5b ($US5.7b) in the previous year [FY2018].

Read more in SECTION 9 on Financials

1.2 Meetings

May 20: Saudi Basic Industries Corporation (SABIC) invites its shareholders to attend the Extraordinary General Meeting (First Meeting)

In the context of supporting the preventive and precautionary efforts conducted by relevant authorities to address the new Corona Virus (COVID-19), and a reference to the circular issued by the Capital Market Authority that includes the suspension of conducting General Assembly Meetings by physical attendance until further notice, and instead, conducting these meetings through modern technology means that enables shareholders to participate in its deliberations and voting on its decisions, The Board of Directors of SABIC is pleased to invite the Company's shareholders to attend the Extraordinary General Meeting (First Meeting) via modern technology means provided by Tadawulaty.

Source: FPT Securities

April 23: Saudi Basic Industries Corporation (SABIC) announces the results of the Ordinary General Meeting (First Meeting)

Saudi Basic Industries Corporation (SABIC) announces the results of the Ordinary General Meeting (First Meeting).

Source: mubasher.info

1.3 Press Releases

May 06: Saudi Basic Industries Corporation (SABIC) Hosted an Earnings Call to Discuss the Results of the 1st Quarter of 2020 with Financial Analysts

Saudi Basic Industries Corporation (SABIC) hosted an earnings call to discuss the results of the 1st quarter of 2020 with financial analysts on Monday, 4th of May 2020.

Source: mubasher.info

May 06: Saudi Basic Industries Corp. announces its Interim Financial Results for the Period Ending on 2020-03-31 ( Three Months )

Source mubasher.info

SECTION 2 Corporate Profile and Independent Ratings

2.1 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.

2.2 Contact Details

Websitehttp:// www.sabic.com
Physical AddressPO Box 5101 , Riyadh 11422
Phone2258000-2259701
Fax2259000
Emailshares@sabic.com

2.3 Independent Ratings

+ Fortune 500:

Saudi Basic Industries Corp. was ranked 299 by total revenues in the Fortune 500 annual list for 2017; a deterioration over a year from rank 247 in 2016.

+ Industryweek 1000:

It is a new entrant in the Industry Week list of the world's largest 1000 manufacturers by Revenues in 2016, ranked 94.

+ Newsweek 500:

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.

+ Forbes 2000:

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

+ FT 500:

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

SECTION 3 Today's Bullish Signals

3.1 Momentum Up 10.1% Past Week

It outperformed the All Share index (TASI) in 4 out of 5 days. The price ranged between a low of 77.9 on Sunday, May 17 and a high of 83.0 on Thursday, May 21.

DaySaudi Basic IndustriesClose price [SAR]Price change %Relative change %Comment
ThursdayContinues significant uptrend; increases 1.2%83.01.21.2VI*=3.9
WednesdayConsolidates near five-month high82.00-0.1Price rise on beating relative strength
TuesdayAdds SAR8 billion (US$2 billion) in MCap, top heavyweight rise in Petrochemical industries sector82.03.11.4Top Rise; VI*=1.3
MondayHits three-month high79.52.10.6Rises for a second consecutive day
SundayAdds SAR6 billion (US$2 billion) in MCap, top heavyweight rise in Petrochemical industries sector77.92.50.9Week-low of 77.9

[Volume Index (VI); 1 is average]

3.2 Rank in the top 16% by Price Performance in the Saudi Arabian market

DescriptionValueRank
% Prem to Vol Wtd Price12.5In Top 6%
1-month Price Change %22.2In Top 10%
Price/MAP501.19In Top 10%
1-week Price Change %10.1In Top 16%

3.3 Uptrend

The stock traded at a six-month high of SAR86.50 today.

- The stock lifted SAR2.80 (or 3.4%) from its last traded date of May 21, 2020 to close at SAR85.80.

Beta > 1 combined with price rise. The Beta of the stock is 1.1.

Exponential Moving Average Price of 1.1 and positive MACD:

- The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 79.13 minus the 26-day EMA of 76.12 is positive, suggesting a bullish signal. Both the 12-day EMA as well as the 26-day EMA are rising, another bullish signal.

- The price to 50-day EMAP ratio is 1.1, a bullish indicator. The 50-day EMAP has increased to SAR75.02. An increase is another bullish indicator.

Past Month:

- Rises to Falls: In the past month the number of rises outnumbered falls 12:3 or 4:1.

3.4 Undervaluation

Dividend Yield of 5.1% > Index avg of 1.7%:

- The relative yield of the stock, defined by its yield of 5.1%, divided by average yield of dividend yielding stocks in the All Share Index (TASI) of 1.7% is 301.8%. This suggests the stock is undervalued in dividend yield terms.

MCap/Total Assets:

- Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.8. Compared with the rest of the market the stock is undervalued.

3.5 Other Bullish Signals

- Return on Equity of 13.1% versus sector average of 3.2%.

- As per the Du Pont analysis, Return on Equity of 13.1% is better than sector average of 3.2%. This is computed as net profit margin of 4.0% times asset turnover [sales/assets] of 0.11 times leverage factor [total assets/shareholders' equity] of 7.3.

SECTION 4 Ongoing Bullish Parameters

4.1 Rank in the top 2% by Size in the Saudi Arabian market

DescriptionValueRank
Ave daily TurnoverSAR218.1 million (US$58.2 million)In Top 2%
MCapUSD68.6 billionIn Top 2%
Annual RevenueSAR33.9 billion (US$9 billion)In Top 2%

4.2 Present Value of SAR1000 Invested in the Past [3 Mo, 3 Yrs]; The Best Periods with PVSAR1000 > 1,081

PVSAR1,0003 mo ago3 yrs ago
2010.TASISAR1,082SAR1,088
Petrochemical Industries sectorSAR1,058SAR941
All Share Index (TASI)SAR951SAR1,050

4.3 Past quarter: price rise of 4.8%

3-Month price change of 4.8% for Saudi Basic Industries outperformed the change of -5.4% in the All Share index (TASI) for a relative price change of 10.2%.

Price Change %Quarter
Saudi Basic Industries4.8
Petrochemical Industries sector5.8
All Share index (TASI)-5.4

4.4 Increased VWAP, up 23% in 5 years

In the past five years Volume Weighted Average Price (VWAP) has increased by 22.7% to SAR88.80. .

Past five years, 12 months ended May 31 (SAR)

YearHigh PriceVWAPLow Price
2020114.2788.859.98
2019122.15114.2198.76
2018121.2296.8686.62
201791.6779.3767.97
201695.9272.3853.21

4.5 Satisfies one criteria of Benjamin Graham

-"Current ratio of two or more"; current assets are 3.2 times current liabilities.

SECTION 5 Today's Bearish Signals

5.1 Rank in the bottom 9% by Relative Valuation in the Saudi Arabian market

DescriptionValueRank
Price to Book Value6.1In Bottom 9%

5.2 Downtrend

Trailing Relative Strength (6 months) at 45 percentile:

- The stock has a 6-month relative strength of 45 in the Saudi Arabian market of 176 stocks which means it has underperformed 55% of the market.

5.3 Overvaluation

Price to Book of 6.1 > Sector average of 3.4:

- The Price to Book of 6.1 is higher than average of 3.4 for the Petrochemical Industries sector.

5.4 Other Bearish Signals

- Total Liabilities/EBITDA of 12.9 is more than or equal to 5, this compares unfavourably with the Joseph Piotroski benchmark of 5.

- Net profit margin has averaged 9.7% in the last 3 years. This is lower than the sector average of 34.8% and suggests a low margin of safety.

5.5 Overbought/Bearish/Resistance Signals:

- At SAR85.80 the price has risen above the upper Bollinger band resistance of SAR85.40, indicating a downside risk for it to fall back within the band.

- The Relative Strength Index (RSI) of 90.8 has penetrated the overbought line of 70, suggesting the price gain of 21% in the last 14 days is unusually high.

- The stock is overbought according to the Williams % R indicator of -4.2, suggesting the price is close to its 14-day high of SAR86.50.

- The Money Flow Index [MFI] is 90 suggesting an overbought 14-day trend, being above 80. The Money Ratio of 9 suggests positive money flow was 9 times negative money flow.

SECTION 6 Ongoing Bearish Parameters

6.1 Rank in the bottom 19% by Performance in the Saudi Arabian market

DescriptionValueRank
Net Profit Margin %4.0In Bottom 19%
EBITDA Margin %5.5In Bottom 18%

6.2 Rank in the bottom 22% by Productivity in the Saudi Arabian market

DescriptionValueRank
Return on Capital Employed [ROCE] %2.8In Bottom 22%

6.3 Annualised Period-based Total Shareholder Returns [TSR %]: The Worst Periods with TSR < 3.3%

TSR %1 yr3 yrs5 yrs10 yrs
2010.TASI-14.62.833.2

6.4 Present Value of SAR1000 Invested in the Past Year; The Worst Period with PVSAR1000 < 855

PVSAR1,0001 yr ago
2010.TASISAR854
Petrochemical Industries sectorSAR784
All Share Index (TASI)SAR847

6.5 The Worst Periods [1 Yr, 3 Yrs] with Price Change % < -3.1

3-Year price change of -3.2% for Saudi Basic Industries underperformed the change of 5% in the All Share index (TASI) for a relative price change of -8.1%.

Price Change %Year3 Years
Saudi Basic Industries-19.3-3.2
Petrochemical Industries sector-21.6-6.5
All Share index (TASI)-15.35

6.6 Moving Annual Return of -15.2% in the past year:

Moving Annual Return was -15.2% in the past year. Based on a dynamic start date of 5 years ago, the real rate of return has averaged 4.1%. The Moving Annual Return has been negative in 3 out of 5 years.

2010Close (SAR)Dividends (SAR)Capital Gain / (Loss) %% YieldAnnual Return %
May 3185.84.4(19.3)4.1(15.2)
1 Yr ago106.332.2(2.2)2(0.2)
2 Yrs ago108.764.222.84.727.5
3 Yrs ago88.6417.25.322.5
4 Yrs ago75.575.5(19.7)5.8(13.9)

Close 5 years ago SAR94.13

6.7 Past 5 years Annual Net Profit growth:

Average Annual Compounded rate of growth in Net Profit for the 5 years was -24.9%. There have been two rises and three declines in the past 5 years.

FYNet Profit (B SAR)Growth %
20195.56-74.1
201821.5216.8
201718.433.3
201617.84-5.0
201518.77-19.6

6.8 Declining Volume, down 62% in 5 years

In the past five years, Average Daily Volume of Trading (ADVT) has decreased 62.3% to 2.8 million shares.

Avg. Daily Volume Traded 12 months ended May 31, million shares

YearADVT
20202.8
20193.5
20184.3
20174.3
20167.5

6.9 Declining share turnover, down 58% in 5 years

In the past five years, average daily share turnover has decreased 57.5% to SAR223.7 million (US$59.7 million). This suggests decreased liquidity.

Past five years, 12 months ended May 31 (SAR million)

YearAverage Daily Turnover
2020223.7
2019386.4
2018417.7
2017328.2
2016526.9

6.10 Quarterly Trend in Revenue, Net Profit and Net Profit Margin:

- Revenue growth has been negative in recent quarters. [All figures in %]

Qtr-endedRevenue GrowthNet Profit GrowthNet Profit Margin
Dec 19 [Q4 vs Q3]-46.2--2.2
Sep 19 [Q3 vs Q2]-16.6-60.62.5

6.11 Revenue and EBITDA:

- Revenue growth rate has shown signs of deterioration in recent years. [compared with previous year, all figures in %]

FYRevenue GrowthEBITDA Growth
2019-44-68
20181315
2017211

6.12 Satisfies 3 out of 9 criteria of Joseph Piotroski [pass mark 5]:

- Positive net income.

- Positive operating cashflow.

- Good quality of earnings [operating cashflow exceeds net income].

Glossary

ADVT: Average Daily Volume of shares Traded

Annual Return: Dividends Paid In a 12-Month Period/Price at the Beginning of the Period + Capital Gain or Loss over 1 Year/Price 1 Year Ago (%)

Current Ratio: Current Assets/Current Liabiliites (times)

Dividend Yield: Dividend Per Share/Share Price (%)

EBIT Margin : Earnings Before Interest and Tax/Revenue (%)

Income during the n years (3/2/1): Dividends received during the Period

Moving Average Price (n periods): Sum of Prices for each Period/Number of Periods

PCP: Previous Corresponding Period

PV1000: Present value of 1000 invested 1 year/'n' years ago

Price Close/Moving Avg Price: Latest Price/Moving Average Price

Price/NTA: Closing Share Price/Net Tangible Assets Per Share (times)

Price/Sales: Share Price/Sales Per Share (times)

Relative Price Change [RPC]: Relative price change is price change of stock with respect to Benchmark Index

Relative Strength (6 Months): Price close today/Price close 6 months ago, then ranked by percentile within the entire market.

Return on Assets: Net Profit/Total Assets (%)

Return on Equity (Shareholders' Funds): Net Profit/Net Assets (%)

TSR: Total Shareholder Returns is expressed as an annualized rate of return for shareholders after allowing for capital appreciation and dividend

TTM: Trailing 12 Months

Total Liabilities/Total Assets: Total Liabilities/Total Assets

Volume Index (VI): Number of shares traded in the period/Average number of shares traded for the period

Volume Weighted Average Price (VWAP): The Volume Weighted Average Price (VWAP) is the summation of turnover divided by total volume in the same period.

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