Saudi Arabia: Earnings Estimates Q3 2017

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1. October3 , 2017 Earnings Estimates Q3 2017 Banks Summary The report shows our third quarter 2017 earnings estimates for companies under coverage. We believe the banking sector will witness a shift in operating conditions, which is likely to improve the sector's profitability margins. According to our analysis, total deposits are expected to expand 2.8% YoY and 0.47% QoQ. Loans portfolio are expected to decline slightly 0.49% YoY while growing 0.33% QoQ. Petrochemicals Petrochemical products prices have improved in Q3 2017 compared Q2 2017 due to the rise in oil prices. However, the prices of feedstock have also increased. The trends of fertilizers deferred YoY and QoQ. Cement Demand for cement is significantly reduced during the third quarter due to high temperatures, in addition to the Hajj season as well as summer vacation that coincided with the third quarter in this year. Cement sales reached 7.2 million tons in July and August falling 4% YoY resulting from lower demand compared to 2016, despite the addition of the sales of Umm Al-Qura Cement and United Cement during the current period. Therefore, we expect cement sales to fall below 10.5 million tons in Q3 2017. Meanwhile, clinker inventory reached recoded level of 33.4 million tons by the end of August 2017, compared to 31.2 million tons at the end of Q2 2017. Retail The new academic year starts in the Q3 2016 and thus will reflect positively on retail companies that sell school supplies. As for food and consumptions goods retailers, the situation will be different taking into account that lengthy summer vacations, and the coincidence of the second quarter with Ramadan. Agriculture and Food sector In this year, Ramadan fully coincided with Q2, therefore the second quarter acquired all the robust Ramadan sales. On the other hand, in the summer session, the demand level of dairy and juices products increase. Health Care The Hajj season and summer vacation is expected to negatively affect the results of health care companies during the third quarter, as the summer period witnesses a slowdown in demand for health services due to travel and long vacation. Telecommunications The demand for telecommunications services increase significantly during the pilgrimage session with the number of pilgrims edging up 26% this year to 2.35 million, including 1.75 visitors from outside the kingdom. This bodes well for the sector, however the third quarter also coincided with lengthy summer vacations and holidays, thus heavy travel outside the kingdom which has negative impacts on the demand for telecom services. Average Commodity Prices (USD/Ton) Methanol (SE Asia) Research Team Researchteam@albilad-capital.com Q3 2017 Q3 2016 YoY Q2 2017 QoQ 307 236 30% 291 6% Polypropylene (SE Asia) 1,125 1,034 9% 1,077 4% Polyethylene - HDPE (SE Asia) 1,145 1,150 (0.4%) 1,128 2% Polyethylene - LDPE (SE Asia) 1,208 1,189 2% 1,235 (2%) Polystyrene (SE Asia) 1,370 1,191 15% 1,261 9% Ammonia (Middle East) 220 246 (10%) 344 (36%) UREA (Middle East) 221 193 14% 209 6% DAP (Morocco) 355 346 3% 375 (5%) Gold (USD/Troy ounce) 1,279 1,335 (4%) 1,258 2% Aluminum (London Metal Exchange) 2,005 1,622 24% 1,904 5% Copper (London Metal Exchange) 6,343 4,772 33% 5,662 12% 1
2. Earnings Estimates Q3 2017 October3 , 2017 The Following Table Illustrates our Estimates for the Third Quarter of 2017 Code / Sector– SAR mn Company Q3 2017E Q3 2016A YoY Q2 2017A QoQ 1020 Aljazira 224 161 40% 220 2% 1120 Al Rajhi 2,219 2,009 10% 2,182 2% 1150 Alinma 515 312 65% 488 6% 2010 SABIC 3,937 5,224 (25%) 3,710 6% 2020 SAFCO 177 181 (2%) 204 (13%) 2290 YANSAB 472 608 (22%) 346 37% 2330 Advanced 198 188 5% 195 2% 3020 Yamama Cement 16 56 (71%) 12 34% 3030 Saudi Cement 81 200 (60%) 94 (14%) 3060 Yanbu Cement 67 93 (28%) 80 (16%) 1211 MAADEN 378 84 350% 356 6% Bahri 150 318 (53%) 154 (3%) Catering 146 150 (3%) 131 11% Herfy Foods 58 59 (1%) 43 34% 4003 Extra 31 7 325% 43 (83%) 4190 Jarir 240 220 9% 148 62% 4001 A. Othaim Market* 143 37 290% 71 101% 4006 Farm Superstores 17 23 (27%) 20 (16%) 2050 Savola Group** 808 173 366% 229 253% 2280 Almarai 603 655 (8%) 674 (11%) 6010 NADEC 19 30 (37%) 26 (27%) 4002 Mouwasat 74 50 46% 76 (4%) 4004 Dallah Health 68 61 12% 70 (3%) 4005 Care 22 29 (26%) 20 11% 4007 Al Hammadi 28 21 30% 26 9% 7010 STC 2,280 2,147 6% 2,377 (4%) 7020 Etihad Etisalat (182) (168) 9% (190) (4%) 7030 ZAIN KSA 15 (267) (106%) 8 88% Banks Materials Energy 4030 Commercial & Professional Svc 6004 Consumer Services 6002 Retailing Food & Staples Retailing Food & Beverages Health Care Equipment & Svc Telecommunication Services * Including a capital gain of SAR 97 million. ** Including a capital gain of SAR 694 million. 2
3. Earnings Estimates Q3 2017 October3 , 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