Renaissance Capital

X January 2016

Strategy

Saudi Arabia

Figure 539: 3MADTV, $mn

Jul-15

Real GDP (% YoY)

GDP/Capita, $
Population, mn
CPI (year-end, %YoY)
C/A balance (% of GDP)
Government balance (% of GDP)

2015
2016
2017
3.4
2.2
2.9
20,139 20,093 21,269
31.4
32.0
32.7
2.1
2.3
2.9
-3.5
-4.7
-1.9
-21.6
-19.4
-17.6

Jan-16

Jul-14

Jan-15

Figure 538: Economic outlook

Figure 540: Valuations vs EM, 12M Fwd P/E (x)

Saudi Arabia 3M ADTV ($mn)

MSCI Saudi Arabia 3M ADTV ($mn)

3000

SASEIDX

18

Frontier

16

2500

14

2000

12

1500

10

1000

Cons.
Staples
Cons. Disc.

90

Utilities

70

Industrials

60

Jan-16

Dec-15

80

Nov-15

29%

100

Oct-15

48%

Sep-15

9%

110

Aug-15

Telecoms

2017

120

Jul-15

Materials

2016

Jun-15

3%

Apr-15

Financials

Mar-15

6%

2015

130

0%
2%

Feb-15

3%

Figure 542: Changes in consensus earnings estimates, past 12 mths

May-15

Figure 541: MSCI sector weights

Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
May-15
Sep-15
Jan-16

Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
May-15
Sep-15
Jan-16

500

Jan-15

3500

Jan-14

Jul-13

Jul-12

Jan-13

Jul-11

Jan-12

Jan-11

Jul-10

Jan-10

Figure 536: Key data

Figure 537: Performance, $ (31 Dec 09 = 100)
Local Currency
SAR
MSCI Saudi Arabia, $
MSCI FM, $
S&P / Moody's Rating
A+/Aa3
200
Weight in MSCI (%)
na
180
MSCI Index
MXSA
2016 P/E
10.5
160
2016 EPS Growth
8.6%
140
Trailing P/B
1.3
120
Beta to FM
0.4
MSCI Full MktCap, $bn
289.5
100
MSCI free float MktCap, $bn
111.3
80
No. of Companies
44
3M ADTV ($mn) MSCI cos
784.1
60
Local Index
SASEIDX
40
MktCap ($bn)
358.6
No. of Companies
171
3M ADTV ($mn)
1383.1
MSCI Saudi Arabia is a standalone index and not currently part of MSCI Frontier or EM

Sources for all tables and charts: MSCI, Bloomberg

115

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Strategy
Figure 543: Index and stock data
Ticker
MXSAD
RJHI AB
SABIC AB
NCB AB
STC AB
SAMBA AB
BSFR AB
ALINMA AB
SAVOLA AB
ALMARAI AB
MAADEN AB
RIBL AB
SECO AB
EEC AB
SAFCO AB
SABB AB
YANSAB AB
ARNB AB
JARIR AB
SACCO AB
ALTAYYAR AB
APPC AB
EMAAR AB
ALBI AB
ALARKAN AB
SOCCO AB
KAYAN AB
BUPA AB
AAAL AB
YACCO AB
SIIG AB
BJAZ AB
SIBC AB
YNCCO AB
SPC AB
QACCO AB
NIC AB
SIPCHEM AB
ALHOKAIR AB
CATERING AB
SGS AB
KINGDOM AB
PETROR AB
ZAINKSA AB
PETROCH AB
JOMAR AB
NSCSA AB
MCDCO AB
ARCCO AB
TAWUNIYA AB
TIRECO AB
SCCO AB
MOUWASAT AB
SPIMACO AB
AOTHAIM AB
EACCO AB
ADCO AB
Bloomberg

Name
MSCI Saudi Arabia
Al Rajhi Bank
Sabic
National Comm
Saudi Telecom Co
Samba
Banque Saudi Fr
Alinma Bank
Savola
Almarai Co
Saudi Arabian Mi
Riyad Bank
Saudi Electricit
Etihad Etisalat
Saudi Arabian Fe
Saudi British Bk
Yanbu National P
Arab Natl Bank
Jarir Marketing
Saudi Cement
Al Tayyar Travel
Advanced Petroch
Emaar Economic C
Bank Albilad
Dar Al Arkan Rea
Southern Provinc
Saudi Kayan Petr
Bupa Arabia
Saudi Hollandi
Yamama Cement Co
Saudi Ind Invest
Bank Al-Jazira
Saudi Investment
Yanbu Cement Co
Sahara Petrochem
Qassim Cement
Nic
Saudi Internatio
Fawaz Abdulaziz
Saudi Airlines C
Saudi Ground Ser
Kingdom Holding
Rabigh Refining
Mobile Telecommu
National Petroch
Jabal Omar Devel
National Shippin
Makkah Construct
Arabian Cement
Co For Cooperati
Taiba Holding C
Saudi Chemical C
Mouwasat Medical
Saudi Pharmaceut
Abdullah Al Otha
Eastern Cement
Arriyadh Develop

Sector
Financials
Materials
Financials
Telecoms
Financials
Financials
Financials
Cons. Staples
Cons. Staples
Materials
Financials
Utilities
Telecoms
Materials
Financials
Materials
Financials
Cons. Disc.
Materials
Cons. Disc.
Materials
Financials
Financials
Financials
Materials
Materials
Financials
Financials
Materials
Materials
Financials
Financials
Materials
Materials
Materials
Industrials
Materials
Cons. Disc.
Industrials
Industrials
Financials
Energy
Telecoms
Materials
Financials
Energy
Financials
Materials
Financials
Financials
Materials
Healthcare
Healthcare
Cons. Staples
Materials
Financials

MktCap FF Mkt Cap

($mn)
($mn)
289,469 111,331
20,858 15,441
54,700 13,197
21,282 8,251
32,035 6,383
10,534 5,571
7,847 3,743
5,368 3,647
5,886 3,246
10,751 2,941
9,118 3,163
8,993 3,082
15,601 3,110
4,791 3,069
7,507 2,896
8,821 2,543
4,958 1,815
5,214 1,792
3,150 1,576
2,057 1,603
2,555 1,493
1,626 1,410
2,897 1,438
2,839 1,397
1,408 1,321
2,525 1,241
1,936 1,222
2,465 1,218
4,054 1,152
1,487 1,152
1,456 1,151
1,311 1,076
2,702 1,036
1,636
921
939
825
1,492
809
1,482
792
1,082
732
2,506
738
2,170
643
1,958
581
11,079
549
2,201
524
911
492
1,833
352
12,202 7,778
4,068 3,254
3,778 2,685
1,148 1,013
1,858
992
1,330
916
871
871
1,468
697
931
619
992
595
652
582
604
573

3MADTV
($mn)
784.1
44.4
168.0
7.6
11.4
4.4
1.1
238.7
6.9
7.6
29.5
2.8
7.4
11.9
4.9
1.8
4.8
1.7
4.6
1.9
24.2
8.0
33.4
5.5
38.2
0.8
18.9
9.0
1.5
2.6
4.5
13.6
0.7
2.3
6.0
1.1
4.9
3.1
3.8
6.0
8.6
5.6
8.7
6.6
2.7
9.6
31.0
2.6
4.0
6.3
1.6
3.9
2.1
2.2
1.6
1.7
5.4

$ Performance
12MF Trail 12MF # Analyst MSCI
1M
3M
12M P/E (x) PBV (x) RoE (%) Recs wgt (%)
-14.2
-16.8
-31.5
10.5
1.3
10.9
440
-8.5
-6.7
-15.1
10.7
1.7
15.5
13
13.6
-12.3
-17.2
-20.5
13.1
1.3
9.5
17
11.9
-22.1
-25.9
-32.5
8.2
1.6
18.8
10
7.4
-10.2
-6.3
-8.9
10.2
2.0
18.0
17
5.6
-13.0
-13.2
-28.0
7.5
1.0
11.8
16
5.0
-9.9
-14.1
-29.7
7.3
1.0
13.1
13
3.4
-11.3
-10.5
-38.1
11.2
1.1
10.2
8
3.3
-16.7
-21.3
-48.7
12.3
2.1
17.1
12
3.1
-13.4
-14.4
-19.7
18.4
3.3
18.2
20
2.8
-14.0
-1.7
-19.2
25.0
1.3
4.1
11
2.8
-7.5
-14.1
-35.7
7.8
0.9
11.1
12
2.7
-10.8
-17.3
-10.0
17.3
1.0
5.4
4
2.7
-16.8
-16.5
-36.7
62.2
1.2
4.3
12
2.7
-20.5
-19.5
-42.6
11.8
3.7
30.0
19
2.6
-6.5
-17.4
-39.8
7.1
1.2
15.4
12
2.3
-0.4
-21.8
-30.5
13.5
1.2
8.3
17
1.7
-14.0
-27.3
-41.6
5.9
0.9
14.0
12
1.6
-17.7
-19.0
-31.8
12.4
7.9
57.9
20
1.5
-23.5
-22.7
-49.0
8.6
2.4
26.7
13
1.4
-33.3
-26.6
-53.9
7.3
2.4
34.6
6
1.3
-2.9
-22.6
-20.7
10.0
2.4
23.3
13
1.3
-1.4
33.1
-13.7
11.4
1.3
7.9
2
1.3
-13.2
-4.1
-42.5
10.1
1.7
13.7
5
1.2
-20.5
-24.2
-51.6
10.0
0.3
2.5
9
1.2
-5.1
-9.5
-36.7
10.3
2.9
27.6
9
1.1
-32.1
-43.3
-60.4 135.3
0.6
-1.6
10
1.1
7.6
-0.6
40.6
15.1
5.5
33.3
2
1.1
-8.6
-5.9
-31.7
7.1
1.3
16.1
6
1.1
-16.2
-24.8
-45.3
9.5
1.5
15.4
12
1.0
-15.6
-29.1
-52.2
6.2
0.8
11.5
8
1.0
-25.7
-30.7
-55.4
7.0
0.7
8.0
5
1.0
-8.7
-13.9
-37.3
7.2
0.9
10.6
3
0.9
-10.9
-16.2
-44.6
8.8
1.7
17.8
13
0.9
-24.4
-34.2
-52.8
10.9
0.6
5.7
8
0.7
-13.5
-16.1
-32.4
11.6
3.0
24.1
9
0.7
-23.0
-31.7
-68.8
9.8
0.7
5.9
10
0.7
-24.6
-37.8
-63.0
7.3
0.7
7.6
10
0.7
-39.6
-30.6
-50.6
9.2
3.6
34.0
13
0.7
-19.8
-16.8
-46.7
11.2
6.2
52.1
9
0.6
-15.1
-31.3
-21.9
9.6
2.7
na
1
0.5
-30.0
-34.9
-37.9
na
1.5
na
1
0.5
-27.0
-35.4
-51.6
26.6
1.0
3.6
2
0.5
-31.0
-34.7
-55.7
na
0.7
-16.1
7
0.4
-20.1
-32.7
-42.0
8.5
1.2
12.2
9
0.3
-8.4
-17.3
-11.9
18.4
4.9
21.2
2
-15.9
-10.6
2.8
na
1.7
na
1
-5.9
23.9
5.1
na
1.6
na
0
-12.5
-13.4
-45.6
8.2
1.4
14.1
5
-7.1
-11.6
2.0
12.2
3.0
na
1
-5.6
-1.6
-19.7
na
1.3
na
1
-12.1
-13.5
-14.1
na
2.0
na
0
-6.9
-5.1
-12.4
18.9
4.8
22.4
12
-12.4
-16.9
-30.9
11.0
1.3
9.1
3
-5.8
-10.7
-24.9
14.5
3.7
22.3
14
-13.1
-18.8
-53.1
8.9
1.0
11.5
5
-4.1
-5.6
-25.3
12.4
1.2
10.2
1
Source: MSCI, Bloomberg

116

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Figure 544: Population, '000

Figure 545: Export destinations, total $333bn

0-19

30,000

20-64

65+

% of total exports

Value ($bn), 2014, RHS

0.14

25,000

50
45
40
35
30
25
20
15
10
5
0

0.12
0.1

20,000

0.08
15,000

0.06

10,000

0.04

5,000

0.02

France

Taiwan

Singapore

India

Euro Area

Korea

EU

USA

China

2050

2045

2040

2035

2030

2025

2020

2015

2010

2005

2000

1995

1990

Japan

0
0

Source: UN
Figure 546: CPI avg %, C/A % of GDP
CPI (average % YoY)
-10
-5

10

15

20

25

2018E

2017E

2016E

2015E

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

30

2004

SAR vs $
7

SAR vs EUR

Saudi REER (Dec 07 = 100)

60

Weaker

70

80

90

100

110
120

130

Source: IMF
Figure 548: Bank lending growth vs GDP

150

Source: Bloomberg, Bruegel

Figure 549: Real GDP % change, YoY

Change in lending as % of GDP

14

140

Stronger

Jan-00
Dec-00
Nov-01
Oct-02
Sep-03
Aug-04
Jul-05
Jun-06
May-07
Apr-08
Mar-09
Feb-10
Jan-11
Dec-11
Nov-12
Oct-13
Sep-14
Aug-15

Current account balance (% of GDP) RHS

Source: IMF
Figure 547: Saudi Arabia - riyal

Real GDP (% YoY)

12

12

10

10

10.0
8.6
7.3

-4000
5.6

-2000

8.4
6.0

5.4

4.8

2.7

3.5 3.4
2.2

1.8

-6000
-8000

2.9 3.0

-10000
-12000

2018E

2017E

2016E

2015E

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2016E

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2015E

Source: IMF

2004

-2

Source: IMF

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Figure 550: CPI, %YoY

Figure 551: Credit growth

Credit growth, % YoY

CPI, % YoY

4.5

50%

40%

3.5
3

30%

2.5

20%

2
1.5

10%

0%

0.5

Jan-05
Aug-05
Mar-06
Oct-06
May-07
Dec-07
Jul-08
Feb-09
Sep-09
Apr-10
Nov-10
Jun-11
Jan-12
Aug-12
Mar-13
Oct-13
May-14
Dec-14
Jul-15

Dec-15

Sep-15

Jun-15

Mar-15

Dec-14

Sep-14

Jun-14

Mar-14

Dec-13

Sep-13

Jun-13

Mar-13

Dec-12

-10%

Sep-12

Source: Bloomberg

Source: Bloomberg

Source: IMF
Figure 552: Manufacturing PMI

Figure 553: International reserves

International reserves, $mn

Manufacturing PMI (50= no change)

65

800,000
700,000

60

600,000
500,000

55

400,000
50

300,000
200,000

45

100,000

Dec-15

May-15

Oct-14

Mar-14

Jan-13

Source: Bloomberg

Aug-13

Jun-12

Apr-11

Nov-11

Sep-10

Jul-09

Feb-10

Dec-08

Oct-07

May-08

Mar-07

Aug-06

Jan-06

Dec-15

Sep-15

Jun-15

Mar-15

Dec-14

Sep-14

Jun-14

Mar-14

Dec-13

Sep-13

Jun-13

Mar-13

Dec-12

Sep-12

40

Source: Bloomberg

erg, Bruegel
Figure 554: Trade balance

Figure 555: Consumer confidence index

Trade balance, EUR mn

Trade balance, $mn

700

Consumer confidence index

650

-2000

600
-4000

550

-6000

500
450

-8000

400
-10000

350

Source: Bloomberg

Jan-08
Jun-08
Nov-08
Apr-09
Sep-09
Feb-10
Jul-10
Dec-10
May-11
Oct-11
Mar-12
Aug-12
Jan-13
Jun-13
Nov-13
Apr-14
Sep-14
Feb-15
Jul-15

Jul-15

Feb-15

Apr-14

Sep-14

Nov-13

Jun-13

Jan-13

Mar-12

Aug-12

Oct-11

May-11

Dec-10

Jul-10

Feb-10

Sep-09

300

Apr-09

-12000

Source: Bloomberg

Source: IMF

118