Saudi Basic Industries Corporation – SABIC Saudi Arabiamec.biz/term/uploads/SABIC_3011009.pdf ·...
Transcript of Saudi Basic Industries Corporation – SABIC Saudi Arabiamec.biz/term/uploads/SABIC_3011009.pdf ·...
HOLD
Saudi Basic Industries Corporation – SABIC
Saudi Basic Industries Corporation 1
Global Research - Saudi Arabia
Saud
i Ara
bia
Faisal Hasan, CFAHead of [email protected] No:(965) 22951270
Syed Taimure AkhtarFinancial [email protected] No:(966) 1 2199966 Ext.: 950
Umar FaruquiFinancial [email protected] No:(965) 22951270
Investment Update
Tickers:2010.SE (Reuters)SABIC AB (Bloomberg)
Listing:Saudi Stock Exchange (Tadawul)
Fair Value:SR83.1
CMP:SR80.5 (as on Nov. 22nd, 2009)
Investment Summary
• We believe that product prices and overall capacity utilization were the key factors for Saudi Basic Industries Corporation (SABIC) profitability growth during 2Q2009 and 3Q2009. However, on a 9M2009 basis the prices and capacity utilization are still low compared to the previous year as the financial crisis which started in 4Q2008 stretched into 1H2009 eroding oil prices and end-product demand.
• The company reported after tax profit of SR3.6bn in 3Q2009, a growth of 102.1% over the
previous quarter but a decline of 49.6% over the corresponding period last year. During 9M2009 tax after profit declined by 79.3% from SR21.7bn recorded in 9M2008.
• In view of the rise in oil prices in 3Q2009, we have changed our forecast for crude oil prices from US$60.0-65.0 per barrel to US$70.0-80.0 per barrel for the period 2009-12. Consequently, we have also raised our forecast for petrochemical prices.
• Going forward, we believe that the company capacity utilization will grow modestly to reach 77.0%-82.0% in 2012 compared to 60.0%-65.0% in 2009 due to an expected slow pace of economic recovery.
• Despite the uncertain economic environment, SABIC is consistently expanding its operational and production activities. Recently, SABIC announced two JVs with SINOPEC and Albemarle Corporation. SINOPEC will have a production capacity of 3.2mn tons of different petrochemical products and is expected to come on line in 1Q2010. Albemarle Corporation will have a production capacity of 6,000 tons of tri-ethylene aluminum (TEA), and is expected to come online in 2012.
• JV with SINOPEC is likely to give SABIC the ability overcome entry barriers and deal with competition effectively in the Chinese market. In addition, tie-up with a local producer will give the company the necessary support and knowledge to sail smoothly in the high growth Chinese market. The Chinese JV will increase the overall capacity of the company by 2.8%.
Global Research - Saudi Arabia Global Investment House
2 Saudi Basic Industries Corporation
• Long-term sustainable volumetric growth is largely associated with the revival in the world’s major economies, which are the major consumers of SABIC products. The stimulus measures in various countries have managed to jump-start the economies. However, so far the recovery has been “jobless” with unemployment still at historically high levels in many countries. Eventually private sector spending and consumer spending will have to overtake government spending to make economic growth sustainable. Thus, we are assuming a slow economic recovery.
• After incorporating all the recent updates in our financial model we have revised our fair value upwards to SR83.1. The stock at its current market price of SR80.5 (as on 22nd Nov 09) is trading at a discount of 3.2% to the fair value. We, therefore, recommend ‘HOLD’ for the stock.
Table 01: Investment IndicatorsMarket Price
(SR)
Shares in issue
(mn)
Market Cap
(SR mn)
52-week price range
(SR) High / Low
80.50* 3,000 241,500 84.7 / 34.1
Year
Revenues
(SR mn)
Net Profit
(SR mn)
EPS
(SR)
BVPS*
(SR)
ROE
(%)
P/E*
(x)
P/BV*
(x)
2010E 129,738 18,183 6.1 41.3 15.7 13.3 1.9
2009E 99,561 7,619 2.5 35.8 7.2 31.7 2.2
2008A 150,810 22,030 7.3 34.3 22.7 7.1 1.5
2007A 126,204 27,022 9.0 36.5 32.9 14.7 3.6Source: Annual Reports and Global Research *Historical P/E & P/BV multiples pertain to respective year -end prices, while those for future years are based on closing prices on the Tadawul as of November 22nd 2009.
Chart 01: Share Price Performance Chart
Source: Zawya & Saudi Stock Exchange (Tadawul)
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
Jan-
08
Feb-
08
Mar
-08
Apr
-08
May
-08
Jun-
08
Jul-0
8
Aug
-08
Sep-
08
Oct
-08
Nov
-08
Dec
-08
Jan-
09
Feb-
09
Mar
-09
Apr
-09
May
-09
Jun-
09
Jul-0
9
Aug
-09
Sep-
09
Oct
-09 35
55
75
95
115
135
155
175
TASI - LHS SABIC(SR) - RHS
Global Research - Saudi Arabia Global Investment House
3Saudi Basic Industries Corporation
GCC Petrochemical & Fertilizer Sector
Based on given data and our understanding, regional capacities reached 63.1mn tons by the end of 2008 and are further forecasted to reach at 73.5mn tons by the end of 2009. In CAGR terms, the regional capacity is expected to grow at 9.1% during 2009-12 to 89.4mn tons. It is worth mentioning that the forecasted growth in the regional capacity is based on timely completion of expansion plans.
Chart 02: Regional Petrochemical Capacity Growth (mn ton)
Source: Zawya & Global Research
The regional fertilizer capacity is expected to increase at a 2008-12 CAGR of 24.0% to 31.6mn. The capacity includes all types of fertilizers. The major growth in regional fertilizer capacity is expected to take place in Saudi Arabia where it is expected to increase at a CAGR of 31.2% to 20.1mn tons. In turn, the major portion of growth in domestic fertilizer capacity is attributable to the upcoming capacity in Maaden Complex, which has a capacity to produce 10.0mn tons of different fertilizer products and SABIC has a 30.0% stake.
Chart 03: Growth in Regional Fertilizer Capacity (mn ton)
Source: Zawya & Global Research
0.1%9.6%
16.5%11.4%
4.5% 4.5%
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2007 2008 2009E 2010E 2011E 2012E0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Total Petrochemical Capacities Growth
28.2%
38.5%
27.4%4.7%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2007 2008 2009E 2010E 2011E 2012E-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
Total Fertilizer Capacities Growth
Global Research - Saudi Arabia Global Investment House
4 Saudi Basic Industries Corporation
Table 02: GCC Petrochemical Capacity Expansion Plan (tons)
Project Names Country
Cost US$
(mn)
Basic-
Olefins
Basic-
Aromatic
Basic-
Oxygenate
Expected
Completion
OSOS Petrochemical Project Saudi Arabia 1,000 - - - 2010
Sino-Saudi Petrochemical Project Saudi Arabia 5,000 1,700,000 - - 2010
Saudi Kayan Saudi Arabia 10,000 3,800,000 - - 3Q2010
SIPCHEM-Olefins Saudi Arabia 7,000 2,100,000 - - 3Q2012
Safra Yanbu Phase II Aromatics Expansion Saudi Arabia 400 - - - 2009
SIPCO-Yanbu Linear Alkyl Benzene (LAB) Plant Saudi Arabia - - - - 2010
Petrokemya-PVC and Offsite Saudi Arabia - - - - 2010
Sadaf-Styrene Plant-Saudi Petrochemical Saudi Arabia 600 - 600,000 - 2010
Dammam 7 - Butanol Plant Saudi Arabia 400 - - - 2010
Delta Oil Saudi Arabia 2,000 1,200,000 - - 2009
Arabian Chlor Vinyl Company Saudi Arabia 400 - - - 1Q2010
Saudi Polyolefin Company - SPC Saudi Arabia 560 - - - 2009
Sahara - Jubail Acrylic Complex Saudi Arabia - - - - 4Q2010
Al Rajhi - Jubail Complex Saudi Arabia 4,000 - - - 2011
Gulf Petrochemical Industries Company Bahrain 200 - - 1,728,000 2010
KFH - Petrochemical, Water, and Power Bahrain 1,500 - - - 2010
IBK - PTA/PET Complex Kuwait 300 - - - 2010
Salalah Methanol Plant Oman 900 - - 1,080,000 2Q2010
QAPCO Qatar 410 - - - 2Q2012
QP/Shell Qatar 2,500 1,500,000 - - 2011
QH/Honam - Qatar Petrochemical Complex Qatar 2,600 880,000 600,000 - 2012
QP/Exxon Mobil - Ras Laffin Petrochemical Qatar 3,000 1,300,000 - - 2012
QAFAC II - Ammonia & Methanol Complex Qatar - - - - 1Q2010
Borogue 2 UAE 5,500 39,000 - - 2Q2010
Borogue 3 UAE - - - - 2014
Takreer - Ruwais Gasoline and Aromatics UAE 1,000 - 600,000 - 2010
KGL – Petroleum UAE 2,000 - - - 2013
Total 52,122 12,519,000 1,800,000 2,808,000 Source: Zawya & Global Research
Table 03: GCC Fertilizer Capacity Expansion Plan (tons)
Project Name Country
Cost US$
(mn) DAP Ammonia Urea
Expected
Completion
Maaden Saudi Arabia 7,010 2,900,000 1,100,000 - 1Q2010
SIPCHEM Saudi Arabia - - 648,000 - 3Q2012
SAFCO-V Saudi Arabia 500 - 1,200,000 1,500,000 2Q2011
Ruwai UAE 1,500 - 720,000 1,260,000 3Q2011
Oman India Oman 1,000 - - 1,700,000 3Q2011
QAFAC II Qatar 400 - 360,000 - 1Q2010
QAFCO V Qatar 3,200 - 1,656,000 1,386,000 1Q2011
Total 13,727 2,900,000 5,684,000 6,087,200 Source: Global Research & Zawya
Global Research - Saudi Arabia Global Investment House
5Saudi Basic Industries Corporation
Regional Capacity Utilization
Based on our regional coverage, we expect regional average capacity utilization to improve slightly to 50.0%-60.0% during 4Q2009 as compared to the calculated utilization rate of 50.0%-55.0% during 3Q2009. On a yearly basis the 2009 regional petrochemical capacity (excluding fertilizer) is expected to average 57.0%-62.0%. Going forward, we expect a slow improvement in regional capacity utilization to reach 75.0%-85.0% by the end of 2012.
Chart 04: Regional Petrochemical Capacity Utilization
Source: Global Research & Company Reports
On the other hand, the average regional fertilizer capacity is expected to remain in the range of 80.0%-90.5% during 4Q-2009 as compared to our calculated utilization rate of 80.0%-85.0% during 3Q2009. For the whole 2009 the utilization rate is expected to end up in the range of 85.0%-90.0%. Despite the decrease in fertilizer prices, capacity utilization levels remained high in 2009 due to a shortage of fertilizer globally. In addition, agriculture sector was more resilient to the economic crisis as the world is already facing a food shortage. Going forward, we assume regional fertilizer capacity utilization rate to increase to 90.0%-95.0% by 2012.
Feedstock Prices
Natural gas is the main feedstock for fertilizer sector and crude oil prices are used as a benchmark to set gas prices in international markets. However, gas prices are highly subsidized in certain regions of the world such as Middle-East, Northern Africa, and South Asia where pre-determined discounts exist which fix the price to US$0.75 per mmbtu (in Saudi Arabia) to US$2.5 per mmbtu (North Africa and South Asia). Average gas prices in international markets shot up by 79.5% from US$4.4 per mmbtu in 2001 to US$7.9 per mmbtu in 2008, due to higher average crude oil prices YoY. Crude oil price have recovered in 2Q-2009 and 3Q-2009 after falling by more than 50.0% in 3Q-2008. In view of the rise in oil prices in 2Q-2009 and 3Q-2009, we have changed our forecast for crude oil prices from US$60.0-65.0 to US$70.0-80.0 per barrel for the period 2009-12. Consequently, we have also revised international gas prices to US$4.0-5.0 per mmbtu during 2009-12.
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
2008 2009E 2010E 2011E 2012E85.0%
87.5%
90.0%
92.5%
95.0%
97.5%
100.0%
Capacity Utilization - Petrochemical Capacity Utilization - Fertilizer
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6 Saudi Basic Industries Corporation
Chart 05: Gas & Crude Oil Prices
Source: OPEC, EIA & Global Research
Products’ Prices
The upward revision in forecasted crude oil prices has led to an upward revision of 5.0%-10.0% of prices of petrochemical and fertilizer during 2009-12.
Chart 06: Basic Petrochemical & Fertilizer Products Prices (US$ per ton)
Source: OPEC, EIA & Global Research
55.0
60.0
65.0
70.0
75.0
80.0
85.0
90.0
95.0
100.0
2006 2007 2008 2009E 2010E 2011E 2012E3.0
4.0
5.0
6.0
7.0
8.0
9.0
Crude Oil Prices (US$ per barrel) Gas Prices (US$ per mmbtu)
500
700
900
1,100
1,300
1,500
1,700
3Q08
A
4Q08
A
1Q09
A
2Q09
A
3Q09
A
4Q09
E
1Q10
E
2Q10
E
3Q10
E
4Q10
E
1Q11
E
2Q11
E
3Q11
E
4Q11
E
1Q12
E
2Q12
E
3Q12
E
4Q12
E150
350
550
750
950
1,150
1,350
1,550
Ethylene Propylene Ammonia Urea
Global Research - Saudi Arabia Global Investment House
7Saudi Basic Industries Corporation
Saudi Basic Industries Corporation – Updated Financial Outlook
New Complexes & Expansion Plans
Despite the uncertain economic environment, SABIC is consistently expanding its operational and production activities. Recently, SABIC announced two JVs with SINOPEC and Albemarle Corporation. SINOPEC will have a production capacity of 3.2mn tons of different petrochemical products and is expected to come on line in 1Q2010. Albemarle Corporation will have a production capacity of 6,000 tons of tri-ethylene aluminum (TEA), and is expected to come online in 2012.
JV with SINOPEC is likely to give SABIC the ability overcome entry barriers and deal with competition effectively in the Chinese market. In addition, tie-up with a local producer will give the company the necessary support and knowledge to sail smoothly in the high growth Chinese market. The Chinese JV will increase the overall capacity of the company by 2.8%.
Chart 07: Overall Company’s Production & Growth
Source: Company Annual Accounts, Press Release, Zawya & Global Research
Going forward, we believe that the company capacity utilization will grow modestly to reach 77.0%-82.0% in 2012 compared to 60.0%-65.0% in 2009 due to an expected slow pace of economic recovery.
Sales Revenue
Based on the improvement in product prices and capacity utilization during 3Q2009, the company is expected to post sales revenue of SR99.5bn in 2009, which is 1.6% higher than our previous forecast. We have updated crude oil prices, capacity utilization and commencement dates of new capacities in 2010. We have also incorporated the delay in YASNAB plant which is not expected to come online in 2009. We now expect sales revenue to increase at a CAGR of 3.3% during 2009-12 against our previous estimate of negative CAGR of 1.5% during the same period.
5.0%
11.5%
0.4% 9.6%
4.9%
3.0% 0.9%
8,500
18,500
28,500
38,500
48,500
58,500
68,500
78,500
2006A 2007A 2008A 2009E 2010E 2011E 2012E0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Production (000 tons) Growth
Global Research - Saudi Arabia Global Investment House
8 Saudi Basic Industries Corporation
Chart 08: Sales Revenue (SR mn)
Source: Company Annual Accounts, & Global Research
CGS & Gross Margins
The company is expected to record cost of sales of SR62.3bn as compared to our previous estimate of SR71.3bn. The expected 2009 gross margin now is 27.0% as compared to our previous estimate of 27.2%. We have also lowered our 2009 EBITDA margin estimate to 30.3% from 32.0% due to upward revision in administration costs to SR8.9bn from our previous estimate of 8.7bn and decline in other income estimate by 31.1% to SR1.8bn from our previous estimate. Going forward, gross margins are expected to show improvement and remain in the range of 30.0%-33.0% during 2009-12 due to higher end-product prices and utilization levels.
Chart 09: Gross & EBITDA Margins
Source: Company Annual Accounts, & Global Research
Profitability Growth
Despite the upward revision in sales revenue for 2009, we expect the company to post profitability of SR7.6bn in 2009, a downward revision by SR3.3bn from our previous estimate. The major reasons for such a downward revision are (i) downward revision in other income by SR0.8bn from our previous estimate (ii) expected higher depreciation, which has pushed up our cost of sales estimate by SR1.3bn, (iii) higher minority interest to SR7.1bn from previous estimate of SR6.6bn, (iv) increase in administration and general expenses estimate by SR0.2bn to SR8.9bn from our previous estimate (v) increase in financial cost to SR3.1bn from our previous estimate of SR3.0bn.
10.3%
46.2%
19.5%
-34.0%
30.3%
14.2%
16.2%
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2006A 2007A 2008A 2009E 2010E 2011E 2012E-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Sales Revenue (SR mn) Growth
25.0%
27.0%
29.0%
31.0%
33.0%
35.0%
37.0%
39.0%
41.0%
43.0%
2006A 2007A 2008A 2009E 2010E 2011E 2012E
30.0%
32.0%
34.0%
36.0%
38.0%
40.0%
42.0%
44.0%
46.0%
Gross Margin - LHS EBITDA Margin - RHS
Global Research - Saudi Arabia Global Investment House
9Saudi Basic Industries Corporation
Chart 10: Profitability (SR mn) & ROAA
Source: Annual Reports & Global Research
Chart 11: Profitability (SR mn) & ROAE
Source: Annual Reports & Global Research
We now expect profitability to increase at a 2008-12 CAGR of 5.6% as compared to previous estimate of 1.8% for the same period. The major reasons of upward revision in the company’s future profitability are (i) improved capacity utilization (ii) higher long term price range from our previous estimate and (ii) commencement of Chinese JV, which is expected to operate at 100.0% utilization levels. The company’s ROAA and ROAE are expected remain in the average range of 5.0-6.0% and 14.0%-15.0% during 2009-12.
13.4%12.9%
8.4%
2.7%
5.9%
6.4%
7.5%
-
5,000
10,000
15,000
20,000
25,000
30,000
2006A 2007A 2008A 2009E 2010E 2011E 2012E0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
PAT ROAA
30.0%32.9%
22.7%
7.2%
15.7%
16.2%
17.8%
-
5,000
10,000
15,000
20,000
25,000
30,000
2006A 2007A 2008A 2009E 2010E 2011E 2012E0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
PAT ROAE
Global Research - Saudi Arabia Global Investment House
10 Saudi Basic Industries Corporation
Valuation and Recommendation
We have used Discounted Cash Flow methodology to value the Company. Under this method, we have used 4-year (FY2009-FY2012) explicit forecast period for the Free Cash Flows (FCF) of SABIC. The terminal value is estimated by using a constant terminal growth rate for the Company. The forecasted cash flow and the terminal value is then discounted at the company Weighted Average Cost of Capital (WACC). In order to value the FCF of SABIC, we have used the following assumptions:
1. Risk Free Rate (RFR) of 5.5%. 2. Equity risk premium of 6.0%.3. Beta of 1.2 4. A terminal growth rate of 3.0%.5. A target cost of debt of 7%.
Using the above assumptions, we have derived a cost of equity for the company at 12.5% through Capital Assets Pricing Model, and a WACC of 10.7%, resulting in a fair value of SR83.1 per share.
Table 04: DCF Calculations(SR Mn) 2009 (E) 2010 (E) 2011 (E) 2012 (E)
FCF (2,243) 9,864 14,836 26,310
Discounted Cash Flow (2,187) 8,688 11,804 18,910
Terminal Value 352,118
Primary Value 37,214
Terminal Value (discounted) 253,081
Total Enterprise Value 290,295
Debt (101,623)
Add: Investments & Cash Equivalents 52,836
Total Equity Value 241,509
Shares Outstanding (mn) 3,000
Fair Value Per Share 83.1 Source: Global Research
Sensitivity Analysis
We provide below a sensitivity analysis table, which shows the probable value given different growth rate assumption and WACC. The shaded area represents the most probable outcomes.
Table 05: Sensitivity Analysis Terminal Growth Rates
1.5% 2.5% 3.0% 4.5% 5.5%
WA
CC
8.7% 93.7 110.0 120.3 165.9 220.1
9.7% 79.4 91.5 98.9 129.6 162.3
10.7% 68.3 77.6 83.1 105.1 126.7
11.7% 59.4 66.7 71.0 87.4 102.7
12.7% 52.1 58.0 61.4 74.0 85.4Source: Global Research
Global Research - Saudi Arabia Global Investment House
11Saudi Basic Industries Corporation
Key Risk
The major risks to our valuation are (i) long-term crude oil prices and (ii) long-term capacity utilization rate. In order to facilitate investors, we have run sensitivity on the company’s valuation at different levels of crude oil and capacity utilization with respect to our base assumptions. The following table shows the impact of these two factors on the company’s valuation.
Table 06: Key Risk Analysis Long - Term Crude Oil Price
Long-Term
Capacity
Utilization
-25.0% -12.5%
Base
Assumption* +12.5% +25.0%
-10.0% 34.3 46.5 57.1 70.9 83.1
-5.0% 44.8 57.9 70.9 84.0 97.0
Base Assumption** 55.2 69.2 83.1 97.1 111.0
+5.0% 65.6 80.5 95.3 110.1 124.9
+10.0% 76.0 91.8 109.1 123.2 138.9Source: Global Research*In the range of US$70.0-80.0 per barrel**In the range of 77.0%-80.0%
We have incorporated all the recent developments in our financial model. Consequently we have revised our fair value by 10.1% to SR83.1 from SR75.6. The stock at its current market price of SR80.5 (as on 22nd Nov 09) is trading at a discount of 3.2% to its fair value. We, therefore, recommend ‘HOLD’ for the stock.
Global Research - Saudi Arabia Global Investment House
12 Saudi Basic Industries Corporation
BA
LA
NC
E S
HE
ET
Saud
i Bas
ic I
ndus
trie
s C
orpo
rati
on (
SAB
IC)
SR’0
00’
2006
A20
07A
2008
A20
09E
2010
E20
11E
2012
EC
urre
nt A
sset
s
Cas
h an
d E
quiv
alen
t39
,556
,764
45
,876
,795
51
,027
,586
52,
835,
846
52,1
90,4
71
5
2,62
4,00
8
55
,880
,202
A
ccou
nt R
/A16
,475
,589
25
,977
,943
16
,104
,204
12
,942
,990
16
,866
,001
20,
001,
203
23,2
33,5
14
Inve
ntor
ies
13,6
58,2
45
22,3
05,9
59
24,3
59,7
50
23,0
81,5
32
24,3
65,4
18
2
6,20
4,13
6
26
,502
,987
O
ther
R/A
& P
repa
ymen
ts4,
283,
843
4,14
4,56
8 3,
963,
434
10,0
67,1
22
10,1
67,7
94
1
0,26
9,47
2
10
,372
,166
T
otal
Cur
rent
Ass
ets
73,9
74,4
41
98,3
05,2
65
95,4
54,9
74
98,9
27,4
91
103,
589,
683
1
09,0
98,8
18
115
,988
,869
Non
-Cur
rent
Ass
ets
In
vest
men
ts3,
531,
839
6,02
0,87
7 8,
695,
833
7,82
6,25
0 8,
217,
562
8,6
28,4
40
9,05
9,86
2 O
ther
Non
-Cur
rent
Ass
ets
4,01
7,91
5 3,
327,
361
3,18
9,91
5 3,
349,
411
3,51
6,88
1
3
,692
,725
3,
877,
362
Tot
al N
on-C
urre
nt A
sset
s7,
549,
754
9,34
8,23
8 11
,885
,748
11
,175
,660
11
,734
,443
12,
321,
166
12,9
37,2
24
Fix
ed A
sset
s
Plan
t & P
rope
rty
79,9
70,6
22
123,
113,
574
141,
440,
177
158,
852,
881
184,
402,
038
1
97,2
52,9
81
210
,840
,414
In
tang
ible
Ass
ets
5,09
4,00
3 22
,964
,004
22
,979
,090
23
,950
,854
28
,372
,380
33,
678,
212
40,0
45,2
10
Tot
al F
ixed
Ass
ets
85,0
64,6
25
146,
077,
578
164,
419,
267
182,
803,
735
212,
774,
418
2
30,9
31,1
93
250
,885
,624
T
otal
Ass
ets
166,
588,
820
253,
731,
081
271,
759,
989
292,
906,
887
328,
098,
545
3
52,3
51,1
77
379
,811
,717
Lia
bilit
ies
& O
wne
rs’
Equ
ity
C
urre
nt L
iabi
litie
s
Acc
ount
P/A
11,0
65,4
22
14,9
65,3
92
8,26
1,24
6 9,
357,
378
9,13
7,03
2
10
,309
,824
10,
797,
513
Shor
t-T
erm
Ban
k Fa
cilit
ies
607,
622
1,39
9,18
8 1,
235,
542
1,85
3,31
3 2,
223,
976
2,6
68,7
71
3,20
2,52
5 C
urre
nt P
ortio
n O
f L
ong-
Ter
m L
oans
5,52
1,17
4 3,
272,
036
3,0
53,2
74
4,41
8,37
3 5,
302,
048
6,3
62,4
57
7,63
4,94
9 A
ccru
ed L
iabi
litie
s &
Pro
visi
ons
8,52
9,86
8 11
,660
,325
11,
244,
500
9,3
57,3
78
22,8
42,5
79
2
1,47
8,80
0
22
,576
,619
D
ivid
end
P/A
2,74
8,98
5
618
,677
619,
882
7
43,8
58
89
2,63
0
1
,071
,156
1,
285,
387
Zak
at P
/A
1,
767,
020
2,1
65,5
63
2,38
2,11
9 2,
620,
331
2,8
82,3
64
3,17
0,60
1 T
otal
Cur
rent
Lia
bilit
ies
25,7
24,0
86
33,6
82,6
38
2
6,58
0,00
7
28
,112
,420
43
,018
,596
44,
773,
372
48,6
67,5
94
Non
-Cur
rent
Lia
bilit
ies
L
ong-
Ter
m L
oans
33,6
11,6
28
75,4
37,5
95
88,3
67,4
62
101,
622,
581
103,
655,
033
1
04,6
91,5
83
105
,215
,041
O
ther
Non
-Cur
rent
Lia
bilit
ies
6,76
2,86
9 10
,114
,576
10,
170,
907
11,0
86,2
89
12,0
84,0
55
1
3,17
1,62
0
13
,303
,336
T
otal
Non
-Cur
rent
Lia
bilit
ies
40,3
74,4
97
85,5
52,1
71
9
8,53
8,36
9
112
,708
,870
11
5,73
9,08
8
117
,863
,203
1
18,5
18,3
77
Tot
al L
iabi
litie
s66
,098
,583
11
9,23
4,80
9
125
,118
,376
1
40,8
21,2
90
158,
757,
683
1
62,6
36,5
75
167
,185
,970
Shar
ehol
ders
’ E
quit
y
Shar
e C
apita
l25
,000
,000
25
,000
,000
30,
000,
000
30,0
00,0
00
30,0
00,0
00
3
0,00
0,00
0
30
,000
,000
St
atut
ory
Res
erve
s11
,445
,362
12
,500
,000
14,
702,
984
14,7
02,9
84
14,7
02,9
84
1
4,70
2,98
4
14
,702
,984
R
esea
rch
& T
echn
olog
y R
eser
ves
1,29
1,69
1 1,
291,
691
1,2
91,6
91
1,29
1,69
1 1,
291,
691
1,2
91,6
91
1,29
1,69
1 G
ener
al R
eser
ves
20,6
31,5
58
28,8
94,7
05
4
2,36
0,94
0
44
,646
,541
50
,101
,541
56,
590,
088
64,8
34,4
09
Ret
aine
d E
arni
ngs
14,5
14,5
48
23,4
67,6
35
1
4,57
6,85
9
16
,861
,059
27
,769
,658
40,
745,
351
54,4
84,4
86
Tot
al S
hare
hold
ers’
Equ
ity
72,8
83,1
59
91,1
54,0
31
102
,932
,474
1
07,5
02,2
75
123,
865,
874
1
43,3
30,1
14
165
,313
,569
M
inor
ity I
nter
ests
27,6
07,0
78
43,3
42,2
41
4
3,70
9,13
9
44
,583
,322
45,
474,
988
46,3
84,4
88
4
7,31
2,17
8 T
otal
Lia
bilit
ies
& S
hare
hold
ers’
Equ
ity
166,
588,
820
253,
731,
081
2
71,7
59,9
89
292
,906
,887
32
8,09
8,54
5
352
,351
,177
3
79,8
11,7
17
Sour
ce:
Com
pany
Ann
ual A
ccou
nts
& G
loba
l Res
earc
h
Global Research - Saudi Arabia Global Investment House
13Saudi Basic Industries Corporation
INC
OM
E S
TA
TE
ME
NT
Saud
i Bas
ic I
ndus
trie
s C
orpo
rati
on (
SAB
IC)
SR ‘
000’
2006
A20
07A
2008
A20
09E
2010
E20
11E
2012
ESa
les
8
6,32
7,86
2
126
,204
,404
1
50,8
09,5
96
99,5
61,4
63
129
,738
,466
1
48,1
57,0
58
172
,100
,105
C
ost o
f Sa
les
(
51,4
15,4
77)
(7
8,25
4,22
8)(1
05,0
46,3
15)
(72,
673,
373)
(
89,8
32,0
97)
(100
,928
,937
)(1
13,4
13,9
55)
Gro
ss P
rofi
t
34,
912,
385
4
7,95
0,17
6
45
,763
,281
26
,888
,090
39
,906
,369
47
,228
,121
58
,686
,150
Im
pair
men
t of
Goo
dwill
-
-
-
(1,1
81,2
50)
-
-
-
Se
lling
, Gen
eral
& A
dmin
istr
ativ
e E
xpen
ses
(4,0
26,2
65)
(6,9
03,6
53)
(9,1
71,9
92)
(8,9
25,8
18)
(1
1,67
6,46
2)(1
3,33
4,13
5)(1
5,48
9,00
9)In
com
e F
rom
Ope
rati
ons
3
0,88
6,12
0
41,
046,
523
36,5
91,2
89
16,7
81,0
22
2
8,22
9,90
7
33
,893
,985
43,
197,
140
Oth
er I
ncom
e
2,
552,
369
4,2
30,2
35
4,54
4,64
9 1,
760,
104
4,1
75,2
38
4,20
9,92
1
4
,470
,416
Fi
nanc
ial C
harg
es(1
,567
,042
)(2
,869
,168
)(3
,800
,927
)(3
,111
,992
)
(2,
645,
192)
(2,7
05,3
97)
(2,6
90,3
58)
Pro
fit
Bef
ore
Zak
at &
Min
orit
y In
tere
st
31,
871,
447
4
2,40
7,59
0
37
,335
,011
15
,429
,135
29
,759
,953
35
,398
,509
44,
977,
198
Min
ority
Int
eres
t(1
0,52
7,50
5)(1
3,58
5,31
8)(1
3,90
5,16
8)(7
,132
,119
)(1
0,41
5,98
4)(1
2,38
9,47
8)(1
5,74
2,01
9)P
rofi
t B
efor
e Z
akat
21,3
43,9
42
28,8
22,2
72
2
3,42
9,84
3 8,
297,
016
19,3
43,9
69
23,0
09,0
31
29,2
35,1
79
Zak
at
(1,
050,
000)
(1,8
00,0
00)
(1,4
00,0
00)
(678
,348
)(1
,160
,638
)(1
,380
,542
)(1
,754
,111
)P
rofi
t A
fter
Zak
at/N
et I
ncom
e
20,
293,
942
2
7,02
2,27
2
22
,029
,843
7,
618,
668
18,1
83,3
31
21,6
28,4
89
27,4
81,0
68
P&
L A
ppro
pria
tion
A/C
Ope
ning
Bal
ance
14,0
43,7
17
14,5
14,5
48
23,
467,
635
14,5
76,8
59
16,8
61,0
59
27,
769,
658
40,
745,
351
Div
iden
d(9
,750
,000
) (
8,75
0,00
0)(1
0,25
0,00
0)(3
,047
,467
)(1
,818
,333
)(2
,162
,849
)(5
,496
,214
)B
oD R
emun
erat
ion
(1,
400)
(1,
400)
(
1,40
0)(1
,400
) (
1,40
0)
(1,
400)
(
1,40
0)T
rans
fer
to g
ener
al r
eser
ves
(3,0
42,3
17)
(8,
263,
147)
(13
,466
,235
)
(2,
285,
600)
(5,
454,
999)
(6
,488
,547
)
(8,2
44,3
20)
Tra
nsfe
r to
Sta
tuto
ry r
eser
ves
(2,0
29,3
94)
(1,
054,
638)
(2
,202
,984
) -
-
-
-
In
crea
sed
in C
apita
l(5
,000
,000
)
-
(5,0
00,0
00)
-
-
-
-
End
ing
Bal
ance
14,5
14,5
48
23,4
67,6
35
14,
576,
859
16
,861
,059
27
,769
,658
4
0,74
5,35
1 5
4,48
4,48
6 So
urce
: C
ompa
ny A
nnua
l Acc
ount
s &
Glo
bal R
esea
rch
Global Research - Saudi Arabia Global Investment House
14 Saudi Basic Industries Corporation
CA
SH F
LO
WS
STA
TE
ME
NT
Saud
i Bas
ic I
ndus
trie
s C
orpo
rati
on (
SAB
IC)
SR ‘
000’
2006
A20
07A
2008
A20
09E
2010
E20
11E
2012
E O
PE
RA
TIN
G A
CT
IVIT
IES
P
rofi
t Bef
ore
Zak
at
21,
343,
942
28,8
22,2
72
2
3,42
9,84
3 8
,297
,016
19,
343,
969
2
3,00
9,03
1
29,
235,
179
Dep
reci
atio
n &
Am
ortiz
atio
n
6,1
19,2
36
7,6
06,0
10
1
0,05
1,99
9 10
,290
,853
13,
690,
166
1
5,01
3,73
8
15,
254,
743
Oth
er O
pera
ting
Act
iviti
es
10,
330,
531
12,6
74,9
62
1
2,78
0,57
9 8
,482
,607
8,8
84,5
38
1
0,88
3,55
5
13,
960,
562
Zak
at P
aid
(81
3,02
8) (
2,00
1,95
1) (
1,12
2,92
8)
(678
,348
)
(1,
160,
638)
(
1,38
0,54
2)
(1,
754,
111)
Cha
nge
in W
orki
ng C
apita
l (
2,24
5,77
5) 1
,508
,245
1,
090,
352
(2,1
14,7
14)
8
,344
,271
(4,
826,
026)
(
1,54
5,88
2) G
oodw
ill I
mpa
irm
ent L
oss
-
1
,181
,250
-
-
-
Net
Cas
h F
low
Fro
m O
pera
ting
Act
ivit
ies
34,
734,
906
4
8,60
9,53
8
46,2
29,8
45
2
5,45
8,66
2
49,1
02,3
07
42
,699
,756
55,1
50,4
92
IN
VE
STIN
G A
CT
IVIT
IES
A
dditi
on to
Pro
pert
y, P
lant
& E
quip
men
t (
18,7
52,6
40)
(30,
859,
807)
(2
6,59
5,51
2)(2
7,70
3,55
6)
(39,
239,
323)
(2
7,86
4,68
2)
(28,
842,
176)
Inv
estm
ents
2,5
63,2
33
(
20,6
35)
(
1,55
0,36
7)
869
,583
(
391,
312)
(41
0,87
8) (
431,
422)
Oth
er N
on-C
urre
nt A
sset
s
(1,0
33,0
45)
(1,
246,
557)
(52
4,42
3)(2
,312
,510
)
(4,
588,
997)
(
5,48
1,67
6)
(6,
551,
634)
Oth
er I
nves
ting
Act
iviti
es
(644
,554
)(4
3,68
3,16
8)
(1,
136,
307)
1,7
60,1
04
4
,175
,238
4,2
09,9
21
4
,470
,416
C
ash
Flo
ws
Fro
m I
nves
ting
Act
ivit
ies
(17
,867
,006
)
(75,
810,
167)
(29
,806
,609
)
(27,
386,
378)
(40
,044
,394
) (
29,5
47,3
15)
(31
,354
,816
)
F
INA
NC
ING
AC
TIV
ITIE
S
Lon
g-T
erm
Fin
anci
ng
9
,763
,358
39
,423
,079
12,
711,
105
14,6
20,2
18
2
,916
,126
2,0
96,9
60
1
,795
,949
S
hort
-Ter
m F
inan
cing
2
55,9
27
7
91,5
66
(16
3,64
6)
617
,771
3
70,6
63
444
,795
5
33,7
54
Div
iden
d Pa
id
(9
,701
,643
) (
8,79
6,10
5)
(10,
281,
634)
(3,0
47,4
67)
(
1,81
8,33
3)
(2,
162,
849)
(
5,49
6,21
4) M
inor
ity I
nter
est
(5
,801
,347
) 2
,102
,120
(
13,5
38,2
69)
(8,4
54,5
46)
(1
1,17
1,74
3)
(13,
097,
810)
(1
7,37
2,97
2) C
ash
Flo
ws
Fro
m F
inan
cing
Act
ivit
ies
(5,
483,
705)
3
3,52
0,66
0 (
11,2
72,4
44)
3,7
35,9
76
(9
,703
,287
) (
12,7
18,9
04)
(20
,539
,482
)
I
ncre
ase/
Dec
reas
e In
Cas
h 1
1,38
4,19
5 6
,320
,031
5,
150,
792
1,8
08,2
60
(645
,375
) 4
33,5
37
3
,256
,194
C
ash
Beg
inni
ng B
alan
ce
28,
172,
569
39,5
56,7
64
4
5,87
6,79
5 51
,027
,586
52,
835,
846
5
2,19
0,47
1
52,
624,
008
Cas
h E
ndin
g B
alan
ce
39,
556,
764
4
5,87
6,79
5
51,
027,
587
52,8
35,8
46
5
2,19
0,47
1
52,
624,
008
5
5,88
0,20
2 So
urce
: C
ompa
ny A
nnua
l Acc
ount
s &
Glo
bal R
esea
rch
Global Research - Saudi Arabia Global Investment House
15Saudi Basic Industries Corporation
FA
CT
SH
EE
TSa
udi B
asic
Ind
ustr
ies
Cor
pora
tion
(SA
BIC
)
2006
A20
07A
2008
A20
09E
2010
E20
11E
2012
EL
iqui
dity
Rat
ios
C
urre
nt R
atio
(x)
2
.9
2
.9
3
.6
3
.5
2
.4
2
.4
2
.4
Cas
h R
atio
(x)
1
.5
1
.4
1
.9
1
.9
1
.2
1
.2
1
.1
Pro
fita
bilit
y R
atio
s
Gro
ss M
argi
n 40
.4%
38.0
%30
.3%
27.0
%30
.8%
31.9
%34
.1%
EB
ITD
A M
argi
n 43
.4%
40.8
%32
.8%
30.3
%34
.4%
34.8
%35
.5%
EB
IT M
argi
n 38
.7%
35.9
%27
.3%
18.6
%25
.0%
25.7
%27
.7%
Net
Pro
fit M
argi
n 23
.5%
21.4
%14
.6%
7.7%
14.0
%14
.6%
16.0
%R
OA
E30
.0%
32.9
%22
.7%
7.2%
15.7
%16
.2%
17.8
%R
OA
A13
.4%
12.9
%8.
4%2.
7%5.
9%6.
4%7.
5%
L
ever
age
Rat
ios
D
ebt t
o E
quity
(x)
0.4
6
0
.83
0.8
6
0
.95
0.8
4
0
.73
0.6
4 D
ebt t
o A
sset
39
.5%
51.6
%53
.7%
55.6
%48
.7%
45.3
%41
.9%
Lia
bilit
ies/
Tot
al A
sset
s (x
)
0
.40
0.4
7
0
.46
0.4
8
0
.48
0.4
6
0
.44
Gro
wth
Rat
es
Rev
enue
Gro
wth
Rat
e10
.3%
46.2
%19
.5%
-34.
0%30
.3%
14.2
%16
.2%
Net
Inc
ome
Gro
wth
Rat
e5.
9%33
.2%
-18.
5%-6
5.4%
138.
7%18
.9%
27.1
%E
quity
Gro
wth
Rat
e16
.9%
25.1
%12
.9%
4.4%
15.2
%15
.7%
15.3
%T
otal
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et G
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R
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PS (
SR)
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Mar
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Mar
ket C
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Mn)
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0
241,
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24
1,50
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241,
500
24
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0 E
V (
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535
42
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7
292,
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EV
/EB
ITD
A
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6.6
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Rat
io
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*H
isto
rica
l P/E
& P
/BV
mul
tiple
s pe
rtai
n to
res
pect
ive
year
-en
d pr
ices
, whi
le th
ose
for
futu
re y
ears
are
bas
ed o
n cl
osin
g pr
ices
on
the
Tada
wul
as
of N
ovem
ber
22nd
200
9.So
urce
: C
ompa
ny A
nnua
l Acc
ount
s &
Glo
bal R
esea
rch
Global Research - Saudi Arabia Global Investment House
16 Saudi Basic Industries Corporation
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Disclosure Checklist
Saudi Basic Indusrties Corporation
Company Recommendation
Hold
Ticker
2010.SE (Reuters)SABIC AB (Bloomberg)
Price Disclosure
1, 10SR80.5
Global Research: Equity Ratings Definitions
Buy
Hold
Reduce
Sell
Global Rating Definition
Fair value of the stock is >10% from the current market price
Fair value of the stock is between +10% and -10% from the current market price
Fair value of the stock is between -10% and -20% from the current market price
Fair value of the stock is < -20% from the current market price