november 2017 - mefic capital...oil production – ksa increased oil ... 4 november 2017 the energy...

MONTHLY MACROECONOMIC REVIEW – SAUDI ARABIA

November 2017

Review of economic developments till end of October.

MACROECONOMIC MONTHLY

November 2017 2

Table of Content

A. Executive Summary and Review .......................................................................... 3

B. Chart Pack ................................................................................................................ 9

I. Macroeconomic Indicators......................................................................................... 9

II. Oil Indicators ................................................................................................................ 15

III. Stock Market Indicators ............................................................................................. 16

IV. Corporate earnings .................................................................................................... 17

V. Tadawul Sector Earnings Performance .................................................................... 18

C. Saudi Arabia Key Statistics ................................................................................... 19


November 2017 3

A. Executive Summary and Review

Executive Summary

The key highlights are:

1. Q3 2017 Earnings – The latest earning season showed a

strong reversal in most sectors after dismal Q2 2017 results.

The bottom-line expanded by 20.0% (YoY) and by 28.1%

compared to the previous quarter (results till Nov 6).

2. Oil production – KSA increased oil production to pump

10.01 million barrels of oil per day (mbpd) in October

2017, which was just in line with production limit.

3. Inflation – Deflation remained unchanged during Sept-17

at -0.1%, however extending it for the ninth straight month.

Consumer demand continues to be weak in key areas.

4. ATM withdrawals – Saudi Arabian consumers spent less

during September as ATM withdrawals plummeted 13.4%

YoY after improving for the previous two months

5. Credit growth – Credit growth declined marginally by 0.7%

MoM in September, as total deposits fell at a similar rate.

Q3 Earnings Results:

So far, corporates accounting for about 93.7% of the market

capitalization on Tadawul have released their third quarter

earnings till November 06, 2017. The third quarter results of

Tadawul-listed stocks showed a healthy 20.0% and 28.1%

aggregate growth in profits when compared Q3 2016 and Q2

2017 respectively. This reflects a positive sign for the overall

economy after dismal Q2 2017 results, where profits were

down by 12.9% on a year on year basis.

TASI PAT and YoY growth (Quarterly) – Q3 till Nov 6

Over Q3 2017, several sectors saw turnarounds in earnings,

partly because of low base effect. Strong earnings were

mostly contributed by heavyweight sectors, but none the less,

smaller contributing sectors like Energy, Capital Goods and

Food Retailing saw large recovery in bottom line.

Data Releases

Indicator Data

Inflation

(September 2017) -0.1%

PMI (October

2017) 55.6

SAMA Reserve

Assets

(September 2017)

USD485

bn

Bank Credit

Growth YoY

(September 2017)

-1.5%

Bank Deposit

Growth YoY

(September 2017)

1.3%

Loan to Deposit

Ratio (September

2017)

0.88

Money Supply

Growth YoY

(September 2017)

1.0%

3M SAIBOR

(September 2017) 1.79%

ATM Withdrawals

Growth YoY

(September 2017)

-13.4%

Point of Sales

Transactions

Growth YoY

(September 2017)

6.4%

Saudi Oil

Production

(October 2017)

10.01

mbpd

Saudi Oil Export

(August 2017)

6.7

mbpd

OPEC Production

(October 2017)

32.6

mbpd

Global Oil Supply

– Demand

(September 2017)

0.6

mbpd

US Rig Count

(October 2017)

737

Q3 2017,

SAR 32.8bn 20.0%

(150)

(100)

(50)

-

50

100

150

-30-20-10

010203040

Q1

20

08

Q3 2

008

Q1

20

09

Q3

20

09

Q1

20

10

Q3

20

10

Q1

20

11

Q3

20

11

Q1

20

12

Q3

20

12

Q1 2

013

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

Q3 2

017

Profit (SAR Bn) -LHS Profit (% yoy) - RHS


November 2017 4

The Energy sector reported 547.3% jump in Q3 profits after posting 21.0% de-growth in Q2

2017 on a year on year basis. Capital Goods saw a 332.6% recovery in profits on a year on

year basis after falling by 84.1% in Q2 2017. The Food and Retailing sector similarly grew by

316.2% over last year’s third quarter and by 111.5% over the previous quarter. This was partly

offset by weakness in consumer durables and consumer services, which fell by 98.0% and

33.8% respectively on a year on year basis. Insurance companies posted weak results in Q3

2017, with profits plunging by 14.0% after they grew 59.6% in Q2 2017, on a year on year basis.

Sectoral Performance

Earnings (SAR million)

Market

Cap (SAR

mn)

Q3 2017 Q3 2016 Q2 2017 % YoY % QoQ

Materials 531,905 8,668.7 7,496.8 6,000.4 15.6 44.5

Banks 453,273 11,375.5 10,023.3 11,325.9 13.5 0.4

Telecommunication Services 150,597 2,449.5 1,784.7 2,195.3 37.2 11.6

Real Estate 109,097 268.6 330.7 203.4 -18.8 32.0

Utilities 103,997 5,300.7 4,958.4 2,269.8 6.9 133.5

Food, Beverage & Tobacco 87,657 1,580.3 960.3 997.6 64.6 58.4

Insurance 42,848 673.6 783.3 682.3 -14.0 -1.3

Diversified Financials 36,001 261.5 -400.5 227.2 165.3 15.1

Health Care 26,893 292.0 276.5 201.3 5.6 45.0

Retailing 25,762 304.5 251.8 238.1 20.9 27.9

Energy 25,660 784.4 121.2 487.2 547.3 61.0

Consumer Services 13,441 232.9 351.7 314.4 -33.8 -25.9

Transportation 12,813 286.7 347.9 244.5 -17.6 17.2

Capital Goods 10,636 38.1 -16.4 27.4 332.6 38.8

Commercial Services 7,740 125.8 127.7 118.2 -1.5 6.5

Food & Staples Retailing 7,103 150.6 36.2 71.2 316.2 111.5

Media 5,202 27.7 -103.2 8.3 126.8 233.7

Pharmaceuticals 3,498 NA NA NA NA NA

Consumer Durables &

Apparel 3,213 0.4 22.6 9.8 -98.0 -95.5

Total 1,657,337 32,822 27,353 25,622 20.0 28.1

Source: Tadawul, Bloomberg; MCap and results as of November 6, 2017, covering companies totalling 93.7% of total

market capitalization

Performance of Top 5 sectors by Market Capitalization

Materials Sector:

The materials sector saw an overall positive performance among stocks for the latest period.

Sectoral turnaround was led by MEPCO, which posted 873.6% higher year on year return.

SABIC, a sector heavy weight – contributing to roughly 20% of the sectoral market

capitalization and 44% of sector profits - showed a 10.7% improvement in the bottom-line in

Q3 2017(SAR 5.8 billion), on the back of higher selling prices and better sales volumes.

Compared to the previous quarter, profits rose 56.1%. Excluding SABIC, the material industry

resonated similar performance as ex-SABIC net profits improved by 30.3% in Q3 2017, after

plummeting 34.6% year on year during Q2 2017 on a year on year basis. Saudi Arabian

Mining, the second largest company in the sector and one of the top performers in terms of


November 2017 5

year-to-date returns, also reported 126.1% higher net profits year on year in Q3 2017 as its

doubled ammonia output and improved operation efficiency.

Cement companies across the sector reported sharp fall in earnings owing to slowdown in

project execution and delays in payments. Saudi Cement witnessed a 56.9% dip in Q3 2017

earnings on a year on year basis. During the same period Southern Cement, KSA’s second

largest cement producer, reported a 67.2% fall in profits as sales fell to a 10 year low.

(SAR Millions) Sector Market

Cap

Q3 17

Net

Income

Q3 16

Net

Income

Q2 17

Net

Income

YoY % QoQ %

Sector Leaders

SABIC Materials 301,200 5,790.0 5,230.0 3,710.0 10.7 56.1

MA'ADEN Materials 62,397 242.9 107.4 322.5 126.1 -24.7

Sector Laggards

Saudi Cement Materials 5,952 87.0 202.0 94.0 -56.9 -7.4

Southern Cement Materials 5,761 57.0 174.0 94.9 -67.2 -40.0

Source: Tadawul

Banks

The banking sector, the biggest contributor to earnings amongst Tadawul sectors, witnessed

a 13.5% pickup in overall net profits in Q3 2017 on a year on year basis. However, profits were

flat in comparison to the previous quarter. The gain was led by strong performance shown by

the top two banks. The retail segment and lower provisions lifted Al Rajhi Bank’s Q3 2017

profits by 12.7% year on year. Similarly, the retail segment in conjunction with treasury income

growth lifted National Commercial Bank’s bottom-line by 8.4% year on year. However, on a

quarter on quarter basis, the earnings were down by 12.1%. Riyad Bank outperformed the

sector as profits shot up by 47.7% on higher commission income. On the other hand, SAMBA

Financial Group and Banque Saudi Fransi reported 2.5% and 0.9% lower net income in Q3

2017 on a year on year basis as both banks faced higher operating expenses.


Cap

Q3 17

Net

Income

Q3 16

Net

Income

Q2 17

Net

Income

YoY % QoQ %

Sector Leaders

Al Rajhi Banks 104,813 2,265.0 2,009.5 2,181.7 12.7 3.8

NCB Banks 101,600 2,126.0 1,961.8 2,417.4 8.4 -12.1

RIBL Banks 35,700 1,077.0 729.4 847.9 47.7 27.0

Sector Laggards

SAMBA Banks 45,800 1,308.0 1,341.0 1,271.0 -2.5 2.9

Saudi Fransi Banks 35,257 1,001.0 1,010.0 1,005.0 -0.9 -0.4

Source: Tadawul

Telecommunications

The telecom sector witnessed a healthy overall 37.2% year on year growth in Q3 2017 on the

back of stable business fundamentals. The sector was one of the very few sectors that


November 2017 6

escaped the widespread deflationary forces. Saudi Telecom, the largest player in the

segment reported 18.2% higher net profits in Q3 2017 on a year on year basis, beating market

estimates. Profits rose in-spite of lesser revenue collections during the quarter as the company

sharply improved gross margins. Mobile Telecommunications (Zain KSA) grew its net income

by 101.1% during the same period on a year on year basis, after growing 102.4% in Q2 2017

on back of its cost saving initiatives and more exposure to the higher margin mobile data

segment. Etihad Etisalat, the second largest telecom provider continued to lose customer

base, resulting in further weakening of bottom-line, by 4.9% year on year during the period

Q3 2017.


Cap

Q3 17

Net

Income

Q3 16

Net

Income

Q2 17

Net

Income

YoY % QoQ %

Sector Leaders

STC Telecommunication

Services 136,000 2,621.0 2,217.0 2,377.0 18.2 10.3

ZAIN KSA Telecommunication

Services 3,654 3.0 -266.0 8.0 101.1 -62.5

Sector Laggards

Etihad Etisalat Telecommunication

Services 10,533.6 -174.5 -166.3 -189.7 -4.9 8.0

Source: Tadawul

Real Estate

Real Estate companies’ overall profitability declined by an aggregate 18.8% over Q3 2017 on

a year on year basis. However, profits improved by 32% in comparison with Q2 2017 earnings.

The decline in the sector was led by the second and third largest companies - Makkah

Construction and Emaar The Economic City. Makkah Construction saw a 7.0% weakening in

quarterly result due to declining occupancy rates. Emaar the Economic City witnessed a

60.9% year on year decrease in profitability due to changes in cost of developing residential

projects and lower sales. Arriyadh Development, on the other hand, experienced more

favorable sales growth, which resulted in 22.9% improvement in the Q3 2017 bottom line.


Cap

Q3 17

Net

Income

Q3 16

Net

Income

Q2 17

Net

Income

YoY % QoQ

%

Sector Leaders

Arriyadh Development Real Estate 2,181 45.6 37.1 45.3 22.9 0.7

Sector Laggards

Makkah Real Estate 12,032 106.0 114.0 56.0 -7.0 89.3

Emaar E.C Real Estate 11,050 27.0 69.0 35.0 -60.9 -22.9

Taiba Real Estate 5,925 64.8 82.9 54.4 -21.8 19.1

Source: Tadawul

Utilities

Saudi Electricity’s strong performance lifted Utilities sector earnings as it improved operational

efficiency by 40% in Q3 2017 - a target which was scheduled to be achieved in 2020. Profits

soared 135.8% above Q2 2017 figures whereas year on year growth stood at 6.8%. Higher


November 2017 7

gas sales, higher profits from asset sales along with lower marketing expense helped improve

Q3 2017 profitability by 27.5% year on year at National Gas and Industrialization.


Cap

Q3 17

Net

Income

Q3 16

Net

Income

Q2 17

Net

Income

YoY % QoQ

%

Sector Leaders

Saudi Electricity Utilities 101,665 5,262.0 4,928.0 2,232.0 6.8 135.8

National Gas &

Industrialization Utilities 2,333 38.7 30.4 37.8 27.5 2.5

Source: Tadawul

Market-wide Top Performers

The best performers sorted by year on year growth in Q3 2017 profits, among companies with

market capitalization of USD 100 million/ SAR 375 million and above, yielded names across

sectors like materials, insurance, energy, and food, beverage and tobacco companies.

Middle East Paper outperformed as profits for Q3 2017 rose by 873.6% year on year.

Improvement was attributed to higher average selling prices, volumes and lower financing

costs. Sipchem was the other top performer from the materials sector, which benefitted from

higher selling prices and a 48% improvement in sales from the chemicals segment. Malath

Insurance’ Q3 2017 earnings improved by 730.9% year on year on the back of reduced

claims and administrative expenses. Petro Rabigh vastly beat consensus estimates as it

reported 434.6% higher quarterly gains as gross margins reached an unprecedented 12%.

Savola group posted 361.8% higher profits for the same period, benefitting from lower

operating expenses and a one off capital gain from sale of investment. Excluding this

extraordinary item, net income fell by 26.1% year on year.


Cap

Q3 17

Net

Income

Q3 16

Net

Income

Q2 17

Net

Income

YoY % QoQ

%

MEPCO Materials 936 22.2 2.3 18.2 873.6 22.2

Malath Insurance Insurance 750 11.1 1.3 5.0 730.9 120.4

Petro Rabigh Energy 12,492 706.0 -211.0 316.0 434.6 123.4

SAVOLA Group Food, Beverage &

Tobacco 20,879 829.0 179.5 229.3 361.8 261.5

Sipchem Materials 5,500 121.6 -49.4 59.8 346.2 103.3

Source: Tadawul

Market-wide Top Losers

Several materials sector companies featured in the biggest losers (among companies with

market capitalization of USD 100 million/ SAR 375 million or higher) during the most recent

earnings season. Takween Advanced Industries, which witnessed the most drastic fall in

earnings, was impacted mainly due to lower sales and large provisions for doubtful debt

amid higher other expenses. Saudi Steel Pipes similarly recorded large impairment losses,

resulting in a 377.5% fall in profits year on year during Q3 2017. National Metal Manufacturing

and Casting’s net profits fell by 395.4% year on year in Q3 2017 as raw materials and interest

costs escalated. Cement companies like Tabuk and Najran were the few names among the

big losers from the sector, as slowdown in cement sales hit almost all cement companies.


November 2017 8


Cap

Q3 17

Net

Income

Q3 16

Net

Income

Q2 17

Net

Income

YoY % QoQ %

Takween Materials 914 -49.1 4.3 -12.7 -1,229.6 -287.6

Maadaniyah Materials 553 -4.5 1.5 -6.4 -395.4 29.5

SSP Materials 791 -14.5 5.2 7.7 -377.5 -288.0

Tabuk Cement Materials 1,193 -12.2 7.9 1.3 -254.4 -1,038.5

Najran Cement Materials 1,459 -17.1 15.6 -4.2 -209.2 -303.9

Source: Tadawul


November 2017 9

B. Chart Pack

I. Macroeconomic Indicators

Figure 1: GDP (Constant prices) growth

(quarterly -% YoY) Figure 2: GDP growth (annual - % YoY)

Source: General Authority of Statistics Source: General Authority of Statistics

Figure 3: Non-oil GDP growth (quarterly - %

YoY)

Figure 4: Non-oil GDP growth (annual - %

YoY)


Figure 5: Inflation (% YoY) Figure 6: Food inflation (% YoY)

Source: Saudi Arabia Monetary Authority (SAMA) Source: SAMA

Figure 7: PMI index Figure 8: Cement Sales (Mn tons)

Source: Bloomberg Source: Yamama Cement

Q2 2017,

-1.0%

(5)

-

5

10

15

Q1

20

11

Q3

20

11

Q1

20

12

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1 2

017

2016,

1.4%

-25

-15

-5

5

15

25

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

Q2 2017,

1.9%

(5)

-

5

10

15

20

Q1

20

11

Q3 2

011

Q1

20

12

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

2016,

1.3%

-5

5

15

25

35

451971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

September

2017,

-0.1%

-1

0

1

2

3

4

5

Jan

-12

Ma

y-1

2

Se

p-1

2

Jan

-13

Ma

y-1

3

Se

p-1

3

Jan

-14

Ma

y-1

4

Se

p-1

4

Jan

-15

Ma

y-1

5

Se

p-1

5

Jan

-16

Ma

y-1

6

Se

p-1

6

Jan

-17

Ma

y-1

7

Se

p-1

7

September

2017,

-1.4%

-6

-4

-2

0

2

4

6

8

Jan

-12

Ma

y-1

2

Se

p-1

2

Jan

-13

Ma

y-1

3

Se

p-1

3

Jan

-14

Ma

y-1

4

Se

p-1

4

Jan

-15

Ma

y-1

5

Se

p-1

5

Jan

-16

Ma

y-1

6

Se

p-1

6

Jan

-17

October

2017,

55.6

485052545658606264

Ma

y-1

4

Au

g-1

4

No

v-1

4

Feb

-15

Ma

y-1

5

Au

g-1

5

No

v-1

5

Feb

-16

Ma

y-1

6

Au

g-1

6

No

v-1

6

Feb

-17

Ma

y-1

7

Au

g-1

7 1

2

3

4

5

6

Ja

n

Fe

b

Ma

r

Ap

r

Ma

y

Ju

n

Ju

l

Au

g

Se

p

Oc

t

No

v

De

c

2012 2013 2014

2015 2016 2017


November 2017 10

Figure 9: Oil vs Non-oil revenues (% share) Figure 10: Annual fiscal balance (SAR bn)

Source: Saudi Arabia Finance Ministry, E- Estimate Source: Saudi Arabia Finance Ministry, E-Estimate

Figure 11: Current account balance -

quarter (USD bn)

Figure 12: Current account balance -yearly

(USD bn)

Source: SAMA Source: SAMA

Figure 23: Current Account Balance (%GDP) Figure 34: Trade balance (SAR bn)


Figure 5: Trade balance change (% YoY) Figure 16: KSA breakeven oil price (USD/bl)

Source: SAMA Source: Ministry of Finance, Thomson Reuters, MEFIC

estimate

0%

20%

40%

60%

80%

100%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017E

Oil revenues Non-oil revenues

-15

-5

5

15

25

-400

-200

0

200

400

600

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017E

Fiscal Balance (SAR bn) - LHS Fiscal Balance (% GDP) - RHS

Q2 2017,

1.1

-25-15-55

15253545

Q1

20

10

Q3

20

10

Q1

20

11

Q3

20

11

Q1

20

12

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

66.8

158.5 164.8

135.4

73.8

-56.7

-24.9

-100

-50

0

50

100

150

200

2010 2011 2012 2013 2014 2015 2016

Q2 2017,

0.65

-15

-5

5

15

25

35

Q1

20

10

Q3

20

10

Q1

20

11

Q3

20

11

Q1

20

12

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

143

198

97

144

233 233

208

169

29 43

0

50

100

150

200

250

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

50.3%

-85

-65

-45

-25

-5

15

35

55

2008

2009

2010

2011

2012

2013

2014

2015

2016

69

.7

79

.4

74

.3

86

.0

10

4.8

88

.3

59

.5

67

.9

0

20

40

60

80

100

120

2010 2011 2012 2013 2014 2015 2016 2017F

Breakeven oil prices (USD) Average brent price (USD)


November 2017 11

Figure 17: Total External Debt (SAR bn) Figure 18: SAMA Reserve Assets* (USD bn)

Source: SAMA Source: SAMA,*- includes special drawing rights

Figure 19: Reserve Assets (% MoM) Figure 40: Bank credit growth (% YoY)


Figure 51: Bank credit across major sectors

(SAR bn) Figure 62: Bank Deposits (SAR bn)


Figure 73: Loan-to-Deposit Ratio (%) Figure 84: NPL-to-Total Loans (%)


411.6

0

100

200

300

400

5002004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

September

2017,

485

400 450 500 550 600 650 700 750 800

Jan

-10

Jul-1

0

Jan

-11

Jul-1

1

Jan

-12

Jul-1

2

Jan

-13

Jul-1

3

Jan

-14

Jul-14

Jan

-15

Jul-1

5

Jan

-16

Au

g-1

6

Feb

-17

Au

g-1

7

September

2017,

-0.5

-4-3-2-1012345

Jan

-10

Jul-1

0

Jan

-11

Jul-1

1

Jan

-12

Jul-1

2

Jan

-13

Jul-1

3

Jan

-14

Jul-1

4

Jan

-15

Jul-1

5

Jan

-16

Au

g-1

6

Feb

-17

Au

g-1

7 September

2017,

-1.5

-20

-10

0

10

20

30

40

50

Jan

-98

Ma

y-9

9

Se

p-0

0

Jan

-02

Ma

y-0

3

Se

p-0

4

Jan

-06

Ma

y-0

7

Se

p-0

8

Jan

-10

Ma

y-1

1

Se

p-1

2

Jan

-14

Ma

y-1

5

Se

p-1

6

0

150

300

450

600

Q1

19

96

Q2

19

97

Q3 1

998

Q4

19

99

Q1

20

01

Q2

20

02

Q3

20

03

Q4

20

04

Q1

20

06

Q2

20

07

Q3

20

08

Q4

20

09

Q1

20

11

Q2

20

12

Q3

20

13

Q4

20

14

Q1

20

16

Q2

20

17

Commerce Buiding and Construction Manufacturing and Processing Services

September

2017,

1,602.8

0

500

1,000

1,500

2,000

Jan

-93

Jan

-95

Jan

-97

Jan

-99

Jan

-01

Jan

-03

Jan

-05

Jan

-07

Jan

-09

Jan

-11

Jan

-13

Jan

-15

Jan

-17

September

2017,

87.9

0.5

0.6

0.7

0.8

0.9

1.0

Jan

-93

Jan

-95

Jan

-97

Jan

-99

Jan

-01

Jan

-03

Jan

-05

Jan

-07

Jan

-09

Jan

-11

Jan

-13

Jan

-15

Jan

-17

Q2 2017,

1.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Q1

20

09

Q4

20

09

Q3

20

10

Q2

20

11

Q1

20

12

Q4

20

12

Q3

20

13

Q2

20

14

Q1

20

15

Q4

20

15

Q3

20

16

Q2

20

17


November 2017 12

Figure 95: Money Supply/M3 growth (% YoY) Figure 106: Composition of M3 money

supply (% share)


Figure 27: Currency Outside Banks (% share

of M3)

Figure 28: Time & Savings Deposits/Total

Deposits (%)


Figure 29: 3M SIBOR (%) Figure 30: Short term interest rate curve (1w

to 52 w)


Figure 31: Inflation (major sub-indices) Figure 32: House Rent Index (100=2007)


September

2017,

1.0

-10

-5

0

5

10

15

20

25

30Ja

n-9

4

Jan

-96

Jan

-98

Jan

-00

Jan

-02

Jan

-04

Jan

-06

Jan

-08

Jan

-10

Jan

-12

Jan

-14

Jan

-16

0

20

40

60

80

100

Jan

-93

Jun

-94

No

v-9

5

Ap

r-9

7

Se

p-9

8

Ma

r-0

0

Au

g-0

1

Jan

-03

Jun

-04

No

v-0

5

Ma

y-0

7

Oc

t-0

8

Ma

r-1

0

Au

g-1

1

Feb

-13

Jul-1

4

De

c-1

5

Ma

y-1

7

Currency Outside bank Demand Deposits

Time and Savings Deposits Other Quasi Money Deposits

September

2017,

9.6

0

5

10

15

20

25

Jan

-93

Au

g-9

4

Ma

r-9

6

Oc

t-9

7

Ma

y-9

9

De

c-0

0

Jul-0

2

Feb

-04

Se

p-0

5

Ap

r-0

7

No

v-0

8

Jun

-10

Jan

-12

Au

g-1

3

Ma

r-1

5

Oc

t-1

6

15

20

25

30

35

40

45

Jan

-93

Jul-9

4

Jan

-96

Jul-9

7

Feb

-99

Au

g-0

0

Feb

-02

Se

p-0

3

Ma

r-0

5

Se

p-0

6

Ap

r-0

8

Oc

t-0

9

Ap

r-1

1

Oc

t-1

2

Ma

y-1

4

No

v-1

5

Ma

y-1

7

September

2017,

1.8

0

1

2

3

4

5

6

Jan

-07

Oc

t-0

7

Jul-0

8

Ap

r-0

9

Jan

-10

Oc

t-1

0

Jul-1

1

Ap

r-1

2

Jan

-13

Oc

t-1

3

Jul-1

4

Ap

r-1

5

Jan

-16

Oc

t-1

6

Jul-1

7

1.0

1.5

2.0

2.5

3.0

1M

3M

6M

12M

Sep-2017 Dec-2016 Sep-2016

-1.4

September

2017

-0.3

-1.6 -5

0

5

10

15

Jan

-12

Se

p-1

2

Ma

y-1

3

Jan

-14

Se

p-1

4

Ma

y-1

5

Jan

-16

Se

p-1

6

Ma

y-1

7

Food and beverages

Transport

Housing , Water, Electricity, Gas, and other fuels

161.5

167.8

174.4

168.7

155

160

165

170

175

180

2012 2013 2104 2015

September

2017, 29.3


November 2017 13

Figure 33: ATM Cash Withdrawals (SAR bn) Figure 34: Saudi unemployment rate (%)

Source: SAMA Source: Bloomberg

Figure 35: Competitiveness ranking/indicator Figure 36: FDI (accumulated, SAR billions)

Source: World Economic Forum (2016-2017) Source: SAMA

Figure 37: External debt-to-GDP (%) Figure 38: POS Transactions Sales (SAR bn)

Source: International Monetary Fund Source: SAMA

Figure 39: Mobile/Telecom Subscribers (mn) Figure 40: Automobile Sales (‘000s)

Source: Ministry of Communication and IT, Q3 2016

taken as average of Q2 and Q4 2016

Source: Car Sales Base

September

2017,

51.3

01020304050607080

Jul-9

6

De

c-9

7

Ma

y-9

9

Oc

t-0

0

Ma

r-0

2

Au

g-0

3

Jan

-05

Jun

-06

No

v-0

7

Ap

r-0

9

Se

p-1

0

Feb

-12

Jul-1

3

De

c-1

4

Ma

y-1

6

Q2 2017,

12.8

10.5

11.0

11.5

12.0

12.5

13.0

Q1

20

12

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

16 18

29

38

48

66

0

10

20

30

40

50

60

70

United

Arab

Qatar Saudi

Arabia

Kuwait Bahrain Oman

868.1

0

200

400

600

800

1000

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2016,

17%

0.0

0.1

0.1

0.2

0.2

0.3

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

0

5

10

15

20

Jan

-95

Au

g-9

6

Ma

r-9

8

Oc

t-9

9

Ma

y-0

1

De

c-0

2

Jul-0

4

Feb

-06

Se

p-0

7

Ap

r-0

9

No

v-1

0

Jun

-12

Jan

-14

Au

g-1

5

Ma

r-1

7

September 2017,

15.1

43.6

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2010

2011

2012

2013

2014

2015

Q1 2

016

Q2 2

016

Q3 2

016

Q4 2

016

Q1 2

017

Q2 2

017

679.5

0.0

200.0

400.0

600.0

800.0

1,000.0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016


November 2017 14

Figure 41: Electricity Generation (TWh) Figure 42: Electricity Generation - Quarterly

(TWh)

Source: Electricity and Cogeneration Regulatory

Authority

Source: Saudi Electric Company

Figure 43: Cement Prices (SAR, 50kg) Figure 44: Steel Prices (SAR/ton)


Figure 45: Expat Remittances (SAR bn)

Source: SAMA

287.4

0

50

100

150

200

250

300

3502007

2008

2009

2010

2011

2012

2013

2014

2015

2016

78.4

0

20

40

60

80

100

120

Q1

20

15

Q2

20

15

Q3

20

15

Q4

20

15

Q1

20

16

Q2

20

16

Q3 2

016

Q4

20

16

Q1

20

17

Q2

20

17

September

2017,

12.2

10

11

12

13

14

15

16

Jan

-07

Oc

t-0

7

Jul-0

8

Ap

r-0

9

Jan

-10

Oc

t-1

0

Jul-1

1

Ap

r-1

2

Jan

-13

Oc

t-1

3

Jul-1

4

Ap

r-1

5

Jan

-16

Oc

t-1

6

Jul-1

7

September

2017,

2,314

8

1,008

2,008

3,008

4,008

5,008

6,008

Jan

-07

No

v-0

7

Se

p-0

8

Jul-0

9

Ma

y-1

0

Ma

r-1

1

Jan

-12

No

v-1

2

Se

p-1

3

Jul-1

4

Ma

y-1

5

Ma

r-1

6

Jan

-17

September

2017

8.5

0

5

10

15

20

Jan

-95

Au

g-9

6

Ma

r-9

8

Oc

t-9

9

Ma

y-0

1

De

c-0

2

Jul-0

4

Feb

-06

Se

p-0

7

Ap

r-0

9

No

v-1

0

Jun

-12

Jan

-14

Au

g-1

5

Ma

r-1

7


November 2017 15

II. Oil Indicators

Figure 1: Saudi Oil Production (mbpd) Figure 2: Saudi Domestic Consumption

(mbpd)

Source: Bloomberg Source: Reuters Datastream

Figure 3: Saudi Oil Export (mbpd) Figure 4: OPEC Oil Production (mbpd)

Source: Ministry of Petroleum, JODI, Source: Bloomberg

Figure 5: Global Oil Supply/Demand (mbpd) Figure 6: US Oil Production (mbpd)

Source: Bloomberg Source: Bloomberg

Figure 7: US Oil Inventory (mb) Figure 8: US Rig Count

Source: Reuters Eikon Source: Bloomberg

October

2017, 10.01

0

2

4

6

8

10

12

De

c-7

0

Feb

-74

Ap

r-7

7

Jun

-80

Au

g-8

3

Oc

t-8

6

De

c-8

9

Feb

-93

Ap

r-9

6

Jun

-99

Au

g-0

2

Oc

t-05

De

c-0

8

Feb

-12

Ap

r-1

5

June 2016,

3.9

0

1

2

3

4

5

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

August 2017,

6.7

4

5

6

7

8

9

Jan

-02

No

v-0

2

Se

p-0

3

Jul-0

4

Ma

y-0

5

Ma

r-0

6

Jan

-07

No

v-0

7

Se

p-0

8

Jul-0

9

Ma

y-1

0

Ma

r-1

1

Jan

-12

No

v-1

2

Se

p-1

3

Jul-1

4

Ma

y-1

5

Ma

r-16

Jan

-17

October

2017,

32.6

10

15

20

25

30

35

40

De

c-8

7

De

c-8

9

De

c-9

1

De

c-9

3

De

c-9

5

De

c-9

7

De

c-9

9

De

c-0

1

De

c-0

3

De

c-0

5

De

c-0

7

De

c-0

9

De

c-1

1

De

c-1

3

De

c-1

5-6

-4

-2

0

2

4

Ma

r-9

5

Au

g-9

6

Jan

-98

Jun

-99

No

v-0

0

Ap

r-0

2

Se

p-0

3

Feb

-05

Jul-0

6

De

c-0

7

Ma

y-0

9

Oc

t-10

Ma

r-1

2

Au

g-1

3

Jan

-15

Jun

-16

September

2017,

0.6

September

2017,

9.56

2

4

6

8

10

Jan

-97

Jun

-98

No

v-9

9

Ap

r-0

1

Se

p-0

2

Feb

-04

Jul-0

5

De

c-0

6

Ma

y-0

8

Oc

t-0

9

Ma

r-1

1

Au

g-1

2

Jan

-14

Jun

-15

No

v-1

6

September

2017,

464.9

0

100

200

300

400

500

600

Au

g-8

2

Jan

-85

Jun

-87

No

v-8

9

Ap

r-9

2

Se

p-9

4

Feb

-97

Jul-9

9

De

c-0

1

Ma

y-0

4

Oc

t-0

6

Ma

r-0

9

Au

g-1

1

Jan

-14

Jun

-16

October

2017,

737

0

400

800

1200

1600

Jul-8

7

Au

g-8

9

Se

p-9

1

Oc

t-9

3

No

v-9

5

De

c-9

7

Jan

-00

Feb

-02

Ma

r-0

4

Ap

r-0

6

Ma

y-0

8

Jun

-10

Jul-1

2

Au

g-1

4

Se

p-1

6


November 2017 16

III. Stock Market Indicators

Figure 1: TASI and Oil Figure 2: TASI Price-to-Earnings Ratio (x)

Source: Bloomberg Source: SAMA

Figure 3: Stock Market Turnover (SAR bn) Figure 4: Domestic Shares held by Domestic

Investment Funds (SAR bn)

Source: Tadawul, SAMA Source: SAMA

Figure 5: Share Ownership Status Figure 6: Total Assets of Investment funds

(SAR bn)


61.4

October

2017,

6934.4

0

5000

10000

15000

20000

25000

0

50

100

150

Jun

-97

De

c-9

8

Jun

-00

De

c-0

1

Jun

-03

De

c-0

4

Jun

-06

De

c-0

7

Jun

-09

De

c-1

0

Jun

-12

De

c-1

3

Jun

-15

De

c-1

6

Brent - USD/bl (LHS) TASI (RHS)

September

2017,

15.7

0

20

40

60

80

100

120

Au

g-0

5

Jun

-06

Ap

r-0

7

Feb

-08

De

c-0

8

Oc

t-0

9

Au

g-1

0

Jun

-11

Ap

r-1

2

Feb

-13

De

c-1

3

Oc

t-1

4

Au

g-1

5

Jun

-16

Ap

r-1

7

September

2017,

50.2

0

200

400

600

800

1,000

Jan

-04

No

v-0

4

Se

p-0

5

Jul-0

6

Ma

y-0

7

Ma

r-0

8

Jan

-09

No

v-0

9

Se

p-1

0

Jul-1

1

Ma

y-1

2

Ma

r-1

3

Jan

-14

Oc

t-1

4

Au

g-1

5

Jun

-16

Ap

r-1

7

0

20

40

60

80

100

Q1

19

98

Q2

19

99

Q3

20

00

Q4

20

01

Q1

20

03

Q2

20

04

Q3

20

05

Q4

20

06

Q1

20

08

Q2

20

09

Q3

20

10

Q4

20

11

Q1

20

13

Q2

20

14

Q3 2

015

Q4

20

16

0%20%40%60%80%

100%

Jul-2

01

5

Se

p-2

01

5

No

v-2

01

5

Jan

-201

6

Ma

r-2

01

6

Ma

y-2

016

Jul-2

01

6

Se

p-2

01

6

No

v-2

01

6

Jan

-201

7

Ma

r-2

01

7

Ma

y-2

017

Jul-2

01

7

Se

p-2

01

7

Individuals Institutions Govt. Related Entities GCC Investors Foreign Investors

87.8

0

50

100

150

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Q2 2017,

18.9


November 2017 17

IV. Corporate earnings

Figure 1: TASI Revenue and YoY growth

(Quarterly)

Figure 2: TASI Revenue and YoY growth

(Annual)

Source: Reuters Eikon Source: Reuters Eikon

Figure 3: TASI EBITDA and YoY growth

(Quarterly)

Figure 4: TASI EBITDA and YoY growth

(Annual)


Figure 5: TASI PAT and YoY growth

(Quarterly) Figure 6: TASI PAT and YoY growth (Annual)


Figure 7: TASI EBITDA and PAT margin (%) -

Quarterly

Figure 8: TASI EBITDA and PAT margin (%) -

Annual

Q2 2017,

161.3

-2.7%

(20) (10) - 10 20 30 40

050

100150200250

Q1

20

08

Q4

20

08

Q3

20

09

Q2

20

10

Q1

20

11

Q4

20

11

Q3

20

12

Q2

20

13

Q1

20

14

Q4

20

14

Q3

20

15

Q2

20

16

Q1

20

17

Rev (SAR bn)- LHS Rev (%yoy) - RHS

682.5

4.4

(10)

-

10

20

30

0

200

400

600

800

2008

2009

2010

2011

2012

2013

2014

2015

2016

Rev (SAR bn)- LHS Rev (%yoy) - RHS

Q2 2017

53.1 (4.63)

(40)

(20)

-

20

40

60

0

20

40

60

80

Q1

20

08

Q4

20

08

Q3

20

09

Q2

20

10

Q1

20

11

Q4

20

11

Q3 2

012

Q2

20

13

Q1

20

14

Q4

20

14

Q3

20

15

Q2

20

16

Q1

20

17

EBITDA (SAR bn) - LHS EBITDA (%yoy) - RHS

208.7

4.9

(20)

(10)

-

10

20

30

0

50

100

150

200

250

2008

2009

2010

2011

2012

2013

2014

2015

2016

EBITDA (SAR bn) - LHS EBITDA (%yoy) - RHS

Q2 2017

25.6 (12.85)

(200)

(150)

(100)

(50)

-

50

100

150

-40

-20

0

20

40

Q1

20

08

Q4

20

08

Q3

20

09

Q2

20

10

Q1

20

11

Q4

20

11

Q3

20

12

Q2

20

13

Q1 2

014

Q4

20

14

Q3

20

15

Q2

20

16

Q1

20

17


100.0

0.2

(20)

(10)

-

10

20

30

40

0

50

100

150

2008

2009

2010

2011

2012

2013

2014

2015

2016


Q2 2017,

32.92

15.88

-40

-20

0

20

40

60

Q1

20

08

Q3

20

08

Q1

20

09

Q3

20

09

Q1

20

10

Q3

20

10

Q1

20

11

Q3

20

11

Q1

20

12

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

EBITDA margin Net profit margin

35.5 31.5 31.9 30.9 29.1 29.9 29.5 30.4 30.6

11.7 15.6 16.8 16.9 16.5 16.9 17.2

15.3 14.6

0

10

20

30

40

2008

2009

2010

2011

2012

2013

2014

2015

2016

EBITDA margin (%) PAT margin (%)


November 2017 18

V. Tadawul Sector Earnings Performance

Earnings (SAR mn) Market

Cap (SAR

mn)

Q3 2017 Q3 2016 Q2 2017 % YoY % QoQ

Materials 531,905 8,668.7 7,496.8 6,000.4 15.6 44.5

Banks 453,273 11,375.5 10,023.3 11,325.9 13.5 0.4

Telecommunication Services 150,597 2,449.5 1,784.7 2,195.3 37.2 11.6

Real Estate 109,097 268.6 330.7 203.4 -18.8 32.0

Utilities 103,997 5,300.7 4,958.4 2,269.8 6.9 133.5

Food, Beverage & Tobacco 87,657 1,580.3 960.3 997.6 64.6 58.4

Insurance 42,848 673.6 783.3 682.3 -14.0 -1.3

Diversified Financials 36,001 261.5 -400.5 227.2 165.3 15.1

Health Care 26,893 292.0 276.5 201.3 5.6 45.0

Retailing 25,762 304.5 251.8 238.1 20.9 27.9

Energy 25,660 784.4 121.2 487.2 547.3 61.0

Consumer Services 13,441 232.9 351.7 314.4 -33.8 -25.9

Transportation 12,813 286.7 347.9 244.5 -17.6 17.2

Capital Goods 10,636 38.1 -16.4 27.4 332.6 38.8

Commercial Services 7,740 125.8 127.7 118.2 -1.5 6.5

Food & Staples Retailing 7,103 150.6 36.2 71.2 316.2 111.5

Media 5,202 27.7 -103.2 8.3 126.8 233.7

Pharmaceuticals 3,498 NA NA NA NA NA

Consumer Durables &

Apparel 3,213 0.4 22.6 9.8 -98.0 -95.5

Total 1,657,337 32,822 27,353 25,622 20.0 28.1

Source: Tadawul, Bloomberg; MCap and results as of November 6, 2017, covering companies totalling 93.7% of total

market capitalization


November 2017 19

C. Saudi Arabia Key Statistics

Data 2011 2012 2013 2014 2015 2016 2017E 2018F

Economic Output

Nominal GDP (USD bn) 669.5 734.0 744.3 753.8 653.2 639.6 659.7 699.6

Nominal GDP YoY (%) 27.1 9.6 1.4 1.3 -13.3 -2.1 3.1 6.1

Real GDP YoY (%) 10.0 5.4 2.7 3.6 3.4 1.2 0.1 1.1

Budget

Revenue (SAR bn) 1117.8 1247.4 1156.4 1044.4 615.9 528.0 692.0 820.6

Oil Revenue (SAR bn) 1034.4 1144.8 1035.0 913.3 446.4 329.0 480.0 552.5

Non-oil Revenue (SAR bn) 83.4 102.6 121.3 131.0 169.5 199.0 212.0 268.1

Expenditure (SAR bn) 826.7 873.3 976.0 1109.9 978.1 930.0 890.0 998.0

Surplus/(Deficit) (SAR bn) 291.1 374.1 180.3 -65.5 -362.2 -297.0 -198.0 -177.4

Surplus/(Deficit) (% GDP) 11.6 13.6 6.5 -2.3 -15.0 -11.0 -7.7 -6.4

Gross Public Debt (SAR bn) 135.5 83.8 60.1 44.3 142.3 316.5 412.5 529.5

Gross Public Debt (% GDP) 5.4 3.0 2.2 1.6 5.9 12.3 15.5 19.0

Oil statistics

Production (mbpd) 9.3 9.8 9.6 9.7 10.2 10.5 9.6 9.7

Exports (mb) 2634.6 2783.8 2763.3 2611.0 2614.5 2799.0 2557.9 2584.6

Domestic consumption (mb) 1321.4 1408.6 1423.8 1516.8 1586.5 1535.1 1583.2 1609.1

Trade & External sector

Exports (US$ bn) 364.7 388.4 375.9 342.4 203.6 183.6 239.8 242.2

Oil Exports (US$ bn) 317.6 337.5 321.9 284.6 152.9 136.2 136.3 147.3

Imports (US$ bn) 131.6 155.6 168.2 173.8 174.7 140.2 204.3 208.1

Trade surplus/(deficit) (US$ bn) 233.1 232.8 207.7 168.6 28.9 43.4 35.5 34.1

Current Account (US$ bn) 158.5 164.8 135.4 73.8 -56.7 -24.9 10.8 15.1

Current Account (% GDP) 23.7 22.4 18.2 9.8 -8.7 -3.9 1.5 2.0

SAMA forex reserves (US$ bn) 544.0 656.6 725.7 732.4 616.4 535.8 NA NA

Inflation (%) 3.7 2.9 3.5 2.7 2.2 3.5 1.0 1.7

Demographics

Population (mn) 28.4 29.2 30.0 30.8 31.4 31.7 32.7 33.3

Saudi unemployment rate

(% population) 12.4 12.1 11.7 11.7 11.5 12.3 12.7 12.5

Source: SAMA, General Authority of Statistics, Reuters, IMF, MEFIC Research


November 2017 20

Notes

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