Saudi Arabia: Earnings Estimates Q2 2017

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1. July 6 , 2017 Earnings Estimates Q2 2017 Summary The report shows our second quarter 2017 earnings estimates for companies under coverage. The second quarter of 2017 coincided with periodic seasons which are the beginning of summer vacation and Ramadan, while at the end of this quarter coincided with Eid Al-Fitr, so we expect that many companies will be affected by previous factors and seasonality of each sector. In addition, the impact of government's decision to return back the allowances and financial benefits for state employees on consumer spending. On the other hand, starting from Q1 2017 listed companies started releasing their financial statements based on IFRS for the current period and reclassifying the corresponding period of last year. Banks We believe that the government's decision to return the allowances and the financial benefits to state employees will lead to an improvement in the demand of goods and services in whole economy .Also, thus going to reflect positively on the growth of deposits and loans compared to previous quarter and same quarter of last year. Total deposits of the banking sector are expected to increase slightly 0.83% YoY, while loans are expected to decline 1.6% YoY. Petrochemicals Petrochemical products prices have declined as well as oil prices in Q2 2017 compared to Q1 2017, while they are still considered high compared to the same period last year. Meanwhile, fertilizer products slightly decreased compared to the same period last year. Telecommunications The demand for telecommunications services increases for seasonal and social reasons during Ramadan and Eid Al-Fitr that coincided with Q2 2017. Cement Demand on cement is reduced significantly during the second quarter due to seasonality and high temperatures, in addition to the month of Ramadan that coincided with the second quarter in this year. Cement sales reached 9.2 million tons in April and May falling by 18% YoY due to lower demand compared to 2016. We expect cement sales to fall below 12 million tons in Q2 2017. On the other hand, clinker inventory levels improved slightly at the beginning of the second quarter, recording 28.5 million tons by the end of May 2017, compared to the levels recorded by the end of Q1 2017. Retail The second quarter of this year came at the peak demand for consumer products supported by Ramadan sales. We also expect some retail companies to be positively affected by the return of allowances and benefits to employees, which boosted the purchasing power of consumers. Health Care We expect that health care companies are negatively affected during Ramadan, which is mainly due to the reduction of official working hours, in addition to being adversely affected by the summer vacation. Average Commodity Prices (USD/Ton) Turki Fadaak Research & Advisory Manager TFadaak@albilad-capital.com Research Team Researchteam@albilad-capital.com Methanol (SE Asia) Q2 2017 Q2 2016 YoY Q1 2017 QoQ 192 136 13% 373 )12%) Polypropylene (SE Asia) 27377 27333 4% 27221 )3%) Polyethylene - HDPE (SE Asia) 27218 27266 )3%) 27285 )5%( Polyethylene - LDPE (SE Asia) 27135 27294 3% 27316 )7%) Polystyrene (SE Asia) 27162 27112 3% 27443 (12%) Ammonia (Middle East) 344 346 )2%( 322 22% UREA (Middle East) 139 124 )1%) 169 (22%) DAP (Morocco) 375 368 1% 362 4% Gold (USD/Troy ounce) 27158 27158 3% 27127 3% Aluminum (London Metal Exchange) 27934 27575 12% 27893 2% Copper (London Metal Exchange) 57661 47719 13% 57834 )3%( 1
2. Earnings Estimates Q2 2017 July 6 , 2017 The Following Table Illustrates our Estimates for the Second Quarter of 2017 Code / Sector– SAR mn Company Q2 2017E Q2 2016A YoY Q1 2017A QoQ 1020 Aljazira 197 178 11% 216 (9%) 1120 Al Rajhi 2,202 2,052 7% 2,221 (1%) 1150 Alinma 437 409 7% 421 4% 2010 SABIC 4,575 4,736 (3%) 5,240 (13%) 2020 SAFCO 278 299 (7%) 423 (34%) 2290 YANSAB 535 689 (22%) 608 (12%) 2330 Advanced - 291 )3%( 294 )4%( 3020 Yamama Cement 53 116 (54%) 51 4% 3030 Saudi Cement 144 249 (42%) 165 (13%) 3060 Yanbu Cement 95 159 (40%) 125 (24%) 1211 MAADEN 340 142 139% 276 23% 7010 STC 2,439 1,865 31% 2,527 (3%) 7020 Etihad Etisalat (178) 19 - (163) 9% 7030 ZAIN KSA 40 (329) - 45 (12%) Bahri 386 504 (23%) 379 2% Catering 131 145 (10%) 121 8% Herfy Foods 48 50 (3%) 53 (9%) 4003 Extra 19 12 52% 13 (6%) 4190 Jarir 160 129 24% 221 (28%) 4001 A. Othaim Market 65 50 29% 60 8% 4006 Farm Superstores 24 27 (12%) 23 7% 2050 Savola Group 117 230 (49%) 4.78 - 2280 Almarai 640 629 2% 328 95% 6010 NADEC 18 37 (51%) 4 - 4002 Mouwasat 73 62 17% 85 (14%) 4004 Dallah Health 67 54 24% 85 (21%) 4005 Care 19 58 (66%) 16 25% 4007 Al Hammadi 24 21 17% 28 (13%) Banks Materials Telecommunication Services Energy 4030 Commercial & Professional Svc 6004 Consumer Services 6002 Retailing Food & Staples Retailing Food & Beverages Health Care Equipment & Svc 2
3. Earnings Estimates Q2 2017 July 6 , 2017 Research & Advisory E-mail: research@albilad-capital.com Tel: +966-11-290-6250 Website: www.albilad-capital.com/en/research Turki Fadaak Research & Advisory Manager TFadaak@albilad-capital.com Ahmed A. Hindawy, CFA Senior Financial Analyst AA.hindawy@albilad-capital.com Abdulrahman S. Aljarboua, MSF Financial Analyst aaljarboua@albilad-capital.com Mohammed H. Atiyah Financial Analyst MH.Atiyah@albilad-capital.com Meshal H. Alghaylan Financial Analyst MHAlghaylan@albilad-capital.com Albilad Capital Client Services E-mail: Tel: clientservices@albilad-capital.com +966-11-203-9888 Toll-free: 800-116-0001 Brokerage E-mail: Tel: abicctu@albilad-capital.com +966-11-290-6230 Investment Banking Asset Management E-mail: Tel: E-mail: Tel: Custody abicasset@albilad-capital.com +966-11-290-6280 E-mail: Tel: investmentbanking@albilad-capital.com +966-11-290-6256 custody@albilad-capital.com +966-11-290-6259 Disclaimer AlBilad Capital exerted utmost efforts to ensure that the information included in this report is accurate and correct. However, AlBilad Capital Co., its managers, and staff bear no liability whether explicitly or implicitly for the content of the report and no legal responsibility, whether directly or indirectly, for any results based on it. This report should not be reproduced, redistributed, or sent directly or indirectly to any other party or published in full or in part for any purpose whatsoever without a prior written permission from AlBilad Capital. We would also like to note that this information in no way constitutes a recommendation to buy or sell banknotes or make any investment decisions. Any investment act taken by an investor based fully or partially on this report is the complete responsibility of the investor. This report is not meant to be used or seen as advice or an option or any other measure to be taken in the future. We recommend consulting a qualified investment advisor before investing in these investment tools. AlBilad Capital preserves all rights associated with this report. CMA Authorization Number 08100-37 3