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Global Research Sector-Petrochemical March 2011

GCC Petrochemical Sector 4Q10

GCC Petrochemical
Faisal Hasan, CFA Head of Research fhasan@global.com.kw Tel: (965) 2295-1270 Syed Taimure Akhtar Senior Financial Analyst sakhtar@globalinv.com.sa Tel: (966) 1 299-4105 Global Investment HouseSaudia www.globalinv.com.sa

   

OPEC crude oil average prices inched up to USD83.7/barrel in 4Q10 Steady QoQ growth; where profitability registered a growth of 15.3% in 4Q10 Commencement of new capacities in 1Q11 & price appreciation expected ‘Neutral’ stance on the sector

Positive price rally in 4Q10
The average prices of WTI crude oil remained on higher levels and recorded USD85.1/barrel, indicating QoQ gain of 11.9% in 4Q10. The positive movement in the prices, during 4Q10, was mainly based on increase in demand of refined oil products in winter season. However, the average prices of OPEC crude oil were recorded at USD83.7/barrel in 4Q10 as compared to our estimated range of USD78.0-USD83.0/barrel for the quarter.

Quarterly performance
The regional sector has registered balanced performance, during the quarter under review, which was mainly based on the growth in crude oil prices and volumetric growth. Based on our coverage, the regional sales revenue witnessed QoQ growth of 10.6% to reach at USD12.7bn in 4Q10, while gross margin inched up to 35.6% from 33.5% in 3Q10 and 34.1% in 4Q09. In addition, the regional profitability was recorded at USD2.4bn as compared to USD2.1bn in 3Q10 and USD1.6bn in 4Q09.

MENA unrest leads prices to remain on higher levels
Global Research believes average prices of crude oil will continue to show upward movement on the back of political unrest in North African region, where the key transportation routes are located. However, the recent events in Arabian peninsula i.e. Yemen, Bahrain and Oman is also alarming uncertainty in oil market. Hence, Global Research believes the average prices of all benchmark crude oil will remain above USD90/barrel in 1Q11. We, therefore, expect WTI crude oil average prices will register a gain of 14%-16%, while average prices of OPEC crude oil will remain in the range of USD97-USD107/barrel in 1Q11.

Outlook for 1Q11
We believe the regional petrochemical sector, based on our coverage, will register QoQ growth of 20.3% and 23.1% in sales revenue and net profit, respectively, in 1Q11. The expected growth in 1Q11 is mainly based on (i) the favorable prices of related products and (ii) 12.3% QoQ growth in production volume. It is noteworthy that we are not expecting any major improvement in capacity utilization, on back of slow economic recovery in European and US markets. Hence, the expected volumetric growth is mainly based on the start of commercial operations from new plants of major players i.e. IQ & SABIC in 1Q11. Furthermore, we believe the expected improvement in the average prices & production growth will lead to offset the increase in expansion & operating costs. Consequently, this will lead the regional expected gross & net profitability margins to remain at 36.7% and 19.7% in 1Q11, respectively.

Recommendation - Neutral
We have adjusted the valuation (i.e. risk premium) of sector in accordance with the ongoing unrest situation in the MENA region, which has led us to make downward revision in real worth of each complex under our coverage. Hence, we have made downward revision in our stance on the sector to ‘Neutral’ from ‘Positive’. Our top pick is SIPCHEM for the sector. Global Research Petrochemical Coverage
Ticker Country Mkt Cap (USDmn) SABIC SIPCHEM SAFCO YANSAB Advanced IQ KSA KSA KSA KSA KSA Qatar 80,000.0 2,040.0 11,800.0 6,825.0 1,082.0 20,666.2 Price* In (LC) 100.0 23.0 177.0 45.5 28.7 137.9 1m -3.6% -1.5% -8.1% -1.9% 0.0% -6.7% Stock Performance 3m -3.6% -16.2% 13.6% -2.6% 7.1% 2.1% 12m 7.0% -3.6% 20.4% 16.1% 26.7% 30.7% Div. Yield 2011e 2.9% 5.2% 6.6% 5.0% 1.7% 3.6% 2011e 10.3 10.6 10.9 10.1 10.1 9.4 P/E 2012e 9.2 10.6 10.8 9.6 9.5 7.6 2011e 2.2 1.5 5.4 3.5 1.9 2.8 P/BV 2012e 1.9 1.4 4.7 3.0 1.6 2.2 Earnings Grow th 2011e 34.6% 91.5% 25.0% 51.9% 23.0% 44.1% 2012e 12.8% 0.1% 1.0% 5.4% 5.7% 24.0%

Source: Tadawul, Zawya & Global Resercah *Market price as of 1 Mar 201 4th 1

Global Research – Saudi Arabia

GCC Petrochemical Quarterly Report

Quarterly Price Trend
The average prices of WTI crude oil in international market continued its upward movement, during 4Q10, and recorded at USD85.1/barrel as compared to our estimated range of USD83-USD88/barrel. The upward movement in crude oil was mainly based on the higher seasonal demand of refined products i.e. heating fuel. The average prices of UK Brent oil, OPEC oil basket and Dubai Light oil were recorded at USD87.6/barrel, USD83.7/barrel and USD87.7/barrel, respectively, during 4Q10. This indicates QoQ increase of 11.9%, 13%, 13.5% and 21.1% in the average prices of WTI, UK Brent, OPEC and Dubai oil, respectively, in 4Q10. Consequently, the average prices of naphtha (a feedstock for petrochemical) registered an increase of 18.4%, during the quarter under review, However, gas prices have witnessed negative movement and registered QoQ decline of 3.9% to settle at USD4.3/mmbtu, during 4Q10.

Feedstock, Basic Chemical & Fertilizer Products Prices - Quarterly US Crude Oil Prices OPEC Crude Oil Prices
120.0 38.6% 100.0 11.9% 80.0 15.1% 11.4% 3.6%
-1.1% 14.9%

50.0% 40.0%
30.0%

120.0 36.4% 100.0 13.5% 80.0 15.7% 9.6% 1.6% 1.6% 15.0%

45.0% 35.0%
25.0%

-2.3% 20.0% 10.0% 0.0%

-3.7% 15.0%

60.0

60.0

5.0%
40.0 -10.0% 20.0 -20.0% -30.0%

40.0 -5.0% 20.0 -15.0% -25.0%

-

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11e

WTI Crude Oil (USD per barrel) - LHS

QoQ Growth - RHS

OPEC Crude Oil (USD per barrel) - LHS

QoQ Growth - RHS

Source: Bloomberg & Global Research

Source: OPEC & Global Research

Naphtha Prices
800.0 13.1% 26.9% 18.4% 25.0% 700.0 4.3% 12.1% 600.0 9.6% 500.0
15.0%

US Natural Gas Prices
30.0%

6.0
20.9%

1Q11e
50.0% 40.0% 30.0% 11.4% 20.0% 10.0% 0.0% -10.0%
-20.0%

2Q09

3Q09

4Q09

3Q10

4Q10

1Q10

2Q10

5.5

-0.6% -3.3%

20.0%

5.0 41.9%
4.5 -20.9%

10.0% 5.0%

-3.9%

400.0 0.0% 300.0 -5.0% 200.0 -10.0%

4.0

-28.8%

3.5

-11.6% -30.0%

3.0

-40.0%

2Q09

3Q09

4Q09

2Q10

3Q10

1Q11e

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

Naphtha Prices (USD per ton) - LHS

QoQ Growth - RHS

Gas Prices (USD per mmbtu) - LHS

QoQ Growth - RHS

Source: Bloomberg & Global Research

Source: Bloomberg & Global Research

Ethylene Prices
1,400.0 31.8% 10.5% 1,200.0 2.8% 12.9% -1.2% -5.5%
8.7%

Propylene Prices
35.0% 30.0% 25.0%

1,400.0 37.7% 1,200.0 45.7%
1,000.0 2.1%

1Q11e

1Q10

4Q10

50.0% 10.4% 9.2% -18.8% -10.4% 4.4% 20.0% 30.0% 40.0%

1,000.0

20.0% 800.0 3.6% 15.0% 10.0% 5.0% 400.0 0.0% 200.0 -5.0% -10.0%

800.0 10.0%

600.0

600.0 0.0% 400.0 200.0 -10.0% -20.0% -30.0%

-

1Q11e

2Q09

3Q09

4Q09

2Q10

4Q10

1Q10

3Q10

3Q10

4Q10

Ethylene Prices (USD per ton) - LHS

QoQ Growth - RHS

Propylene Prices (USD per ton) - LHS

QoQ Growth - RHS

Source: Bloomberg & Global Research

Source: Bloomberg & Global Research

March 2011

1Q11e

2Q09

3Q09

4Q09

1Q10

2Q10

2

Global Research - Saudi Arabia Methanol Prices
450.0 400.0 350.0 16.1% 300.0 250.0 200.0 150.0 -10.0% 100.0 50.0 -20.0%
200.0

GCC Petrochemical Quarterly Report MTBE Prices
40.0% 30.8%
7.3%
1,200.0 35.8% 11.9% 11.0% 10.2% -2.9% -5.4% 1.2% 40.0% 35.0%
30.0% 25.0%

30.0%
17.4%

1,000.0
-0.4%

20.0% 10.2% 7.8% -21.5%
8.7%
800.0

10.0%
600.0

20.0% 15.0% 10.0% 400.0 5.0% 0.0% -5.0%

0.0%

-30.0%

1Q11e

2Q09

4Q09

2Q10

3Q10

3Q09

1Q10

4Q10

-

-10.0%

Methanol Prices (USD per ton) - LHS

QoQ Growth - RHS

MTBE Prices (USD per ton) - LHS

QoQ Growth - RHS

Source: Bloomberg & Global Research

Source: Bloomberg & Global Research

Benzene Prices
1,200.0 12.0% -7.1% -2.5%
11.4% 60.0%

Butadiene Prices
2,500.0 10.0% 2,000.0
30.8%

1Q11e
100.0% 9.2% 80.0% 60.0% 40.0% 20.0% 0.0% -20.0% -40.0%

2Q09

1Q10

2Q10

50.0% 40.0%
30.0%
1,500.0 91.1% 1.3%

1,000.0 51.3% 14.9% 8.1%

10.8%

13.8% -18.8%

800.0

600.0

20.0%

10.0% 400.0 0.0% 200.0 -10.0% -20.0%

1,000.0

54.1%

500.0

-

2Q09

3Q09

1Q10

2Q10

3Q10

4Q10

3Q09

4Q09

3Q10

1Q11e

Benzene Prices (USD per ton) - LHS

QoQ Growth - RHS

Butadiene Prices (USD per ton) - LHS

QoQ Growth - RHS

Source: Bloomberg & Global Research

Source: Bloomberg & Global Research

Ammonia Prices
450.0 400.0 350.0 300.0 250.0 200.0 150.0 100.0 -10.0% 50.0 -15.0% -20.0% 7.2% 1.6%
24.3% 27.0% 12.1% 4.0%

Urea Prices
35.0% 30.0% 25.0%

450.0 400.0 25.4% 350.0 7.8% -10.3% 0.5% 4.2% -19.5%

25.6%

2.5%

1Q11e
40.0%
30.0%

4Q09

2Q09

3Q09

1Q10

2Q10

3Q10

14.4% -13.0%

4Q10

4Q09

20.0% 15.0% 10.0% 5.0% 0.0% -5.0%

4Q10

20.0% 10.0% 0.0%
-10.0%

300.0 250.0 200.0 150.0 100.0 50.0 -

-20.0% -30.0%

1Q11e

2Q09

3Q09

1Q10

2Q10

4Q10

4Q09

3Q10

Ammonia Prices (USD per ton) - LHS

QoQ Growth - RHS

Urea Prices (USD per ton) - LHS

QoQ Growth - RHS

Source: Bloomberg & Global Research

Source: Bloomberg & Global Research

March 2011

1Q11e

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

3

Global Research - Saudi Arabia DAP Prices
700.0
600.0

GCC Petrochemical Quarterly Report Phosphoric Acid Prices

45.0%

3.5% 12.7% 12.9% -0.4%

50.0% 40.0% 30.0% 20.0%

900.0 32.1% 800.0 700.0 600.0
-20.8%

6.5% 15.7% 0.4%

40.0%
30.0%

500.0 400.0 300.0

20.0% -14.1% 1.3% 10.0% 0.0%
-10.0%

-19.2%

7.3%

-0.8%

500.0

10.0%
400.0

0.0%
200.0

300.0 200.0 100.0 -20.0% -30.0%

-10.0% -20.0% -30.0%

100.0 -

1Q11e

DAP Prices (USD per ton) - LHS

QoQ Growth - RHS

Phosphoric Acid Prices (USD per ton) - LHS

QoQ Growth - RHS

Source: Bloomberg & Global Research

Source: Bloomberg & Global Research

Metal Prices - Quarterly Gold Prices
1,600.0 14.0% 1,400.0
9.8%

Silver Prices
16.0% 11.6% 1.2% 3.0% 14.0%
25.0 30.0 39.6% 2.5% 40.0% 35.0% 30.0% 2.0% 25.0% 20.0% 15.0% 10.0 10.0% 5.0% 45.0%

1,200.0 1,000.0
800.0

12.0% 10.0% 8.0%
15.0

-0.3% 0.2% 4.3%
20.0 7.6% 9.0%
13.6%

11.3% -2.9%

6.0% 600.0 4.0% 400.0 200.0 2.0%
5.0

1Q11e

2Q09

3Q09

1Q10

2Q10

2Q09

3Q09

1Q10

2Q10

4Q10

4Q09

3Q10

4Q10

4Q09

3Q10

0.0% -5.0%

0.0% -2.0%
-

-10.0%

1Q11e

Gold Prices (USD per ton) - LHS

QoQ Growth - RHS

Silver Prices (USD per ton) - LHS

QoQ Growth - RHS

Source: Bloomberg & Global Research

Source: Bloomberg & Global Research

Aluminium Prices
3,000.0 26.3% 7.5% 2,500.0
9.3%

Copper Prices
30.0% 25.0%

10,000.0 9,000.0 8,000.0 34.7% 18.9% 4.8% -4.0%
1.5%

1Q11e
40.0% 35.0% 30.0%
25.0% 20.0% 15.0%

2Q09

3Q09

1Q10

2Q10

3Q09

4Q09

1Q10

2Q10

2Q09

3Q10

12.1% 4.6% -4.0% 2.0%

4Q10

20.0% 15.0%
10.0%

7,000.0

12.9%

4.6%

2,000.0

11.7%

29.1%
6,000.0 5,000.0

1,500.0

4,000.0
5.0% 1,000.0 0.0%
500.0

4Q10

4Q09

3Q10

10.0% 5.0% 0.0% -5.0% -10.0%

3,000.0 2,000.0 1,000.0 -

-5.0% -10.0%

3Q09

1Q10

2Q10

3Q10

4Q10

2Q09

4Q09

1Q11e

Aluminium Prices (USD per ton) - LHS

QoQ Growth - RHS

Copper Prices (USD per ton) - LHS

QoQ Growth - RHS

Source: Bloomberg & Global Research

Source: Bloomberg & Global Research

March 2011

1Q11e

2Q09

3Q09

1Q10

2Q10

3Q10

4Q10

4Q09

4

Global Research - Saudi Arabia Zinc Prices
2,500.0
28.7% 23.7% 25.9% 14.9%

GCC Petrochemical Quarterly Report Lead Prices
1.1% 35.0% 30.0%

3,000.0

33.5%

36.5% 1.2%

40.0%

-4.9% 2,000.0 -10.5%
2.2%

25.0%
20.0%

2,500.0

12.7% -10.5% -8.1%
5.1%

18.5%

30.0%

2,000.0
1,500.0 15.0% 10.0%

20.0%

1,500.0

10.0%

1,000.0

5.0% 0.0%

1,000.0

0.0%

500.0

-5.0% -10.0%

500.0

-10.0%

1Q11e

-15.0%

2Q09

3Q09

1Q10

2Q10

3Q10

4Q10

4Q09

1Q11e

-20.0%
2Q09 3Q09 1Q10 2Q10 3Q10 4Q10
4Q09

Zinc Prices (USD per ton) - LHS

QoQ Growth - RHS

Lead Prices (USD per ton) - LHS

QoQ Growth - RHS

Source: Bloomberg & Global Research

Source: Bloomberg & Global Research

Global Research believes average prices of crude oil will continue to show upward movement on the back of political unrest in North African region, where the key transportation routes are located. However, the recent events in Arabian peninsula i.e. Yemen, Bahrain and Oman is also alarming uncertainty in oil market. Hence, Global Research believes the average prices of all benchmark crude oil will remain above USD90/barrel in 1Q11. It is noteworthy that the uncertain Egypt remained the key supporting factor for the upward rally in crude oil market during first half of 1Q11. We, therefore, expect WTI crude oil average prices will register a gain of 14%-16%, while average prices of OPEC crude oil will remain in the range of USD97-USD107/barrel in 1Q11.

March 2011

5

Global Research - Saudi Arabia

GCC Petrochemical Quarterly Report

Full Year 2010 & 4Q10 Financial Results (Global Petrochem Universe)
Saudi Basic Industries Corporation (SABIC) profitability for 2010 was recorded at SAR21.6bn (EPS: SAR7.2), growth of 137.9% over 2009. In 2010, the company’s strong financial performance was mainly based on the strong prices of related products, improvement in demand around the globe and completion of major expansions. On a quarterly basis, the company posted after tax profit of SAR5.8bn (EPS: SAR1.9) in 4Q10 as compared to our estimates of SAR6.2bn (EPS: SAR2.1) and net profit of SAR4.6bn (EPS: SAR1.5) recorded in corresponding quarter last year. SABIC - 4Q10 Financial Indicators

Quarterly Gross Profit
14,000.0
12,000.0

Quarterly Net Profit
13.1% 19.5% -3.0% -3.0% 80.0% 70.0%
6,000.0

71.7%

7,000.0 9.1%
18.2%

150.0% 100.0% 50.0%
0.0% -50.0% -100.0%

19.4% 10,000.0 37.6% 8,000.0 6,000.0
4,000.0

60.0% 50.0% 40.0% 30.0% 20.0%
2,000.0

-7.7% 5,000.0 4,000.0 3,000.0 26.0%

6.2%

-150.0% -200.0% -250.0%

10.0% 2,000.0 0.0% -10.0%
1,000.0

-300.0% 3Q09 4Q09 1Q10 2Q10 4Q10
2Q09 3Q10

-350.0%

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

Gross Profit (SARmn)-LHS

QoQ Growth - RHS

Net Profit (SARmn)-LHS

QoQ Growth - RHS

Source: Company financial reports

Source: Company financial reports

Saudi International Petrochemical Company (SIPCHEM) successfully achieved the milestone with the commencement of fullfledged commercial operation from Acetyl complex in 2010. Moreoever, the inauguration of Acetyl complex has also enabled the company to strengthen its operational integration, which was translated into better gross margin of 42.9% in 2010 as compared to 28.4% recorded in 2009 and recorded net profitability margin of 19% in 2010. Moreoever, in real term, the impact of Acetyl complex and strong prices of related products were translated in to net profitability of SAR378mn (EPS: SAR1.1) in 2010, which indicates an impressive growth of 168.3% over the after tax profit recorded in 2009. On quarterly basis, the company’s bottom line was recorded at SAR125.1mn (EPS: SAR0.4) in 4Q10 as compared to our expectations of SAR149.3mn (EPS: SAR0.44) for the quarter under review. SIPCHEM - 4Q10 Financial Indicators

Quarterly Gross Profit
350.0 55.8% 180.0%
300.0

Quarterly Net Profit
200.0%

140.0
43.6% 120.0

48.8%

60.0% 40.0%

160.0% 250.0 200.0 150.0
100.0 184.0% 140.0%

8.0% 100.0 80.0 60.0
40.0

20.0% -4.1% 0.0% -20.0% -40.0% -60.0% -80.0%

27.0% 7.2%

6.4%

120.0% 100.0%

80.0% 60.0% 94.6% 40.0%

50.0 -

10.2%

20.0
20.0%

-100.0% -98.2% -120.0%
2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

0.0%
2Q09 3Q09 4Q10
4Q09 1Q10 2Q10 3Q10

-

Gross Profit (SARmn)-LHS

QoQ Growth - RHS

Net Profit (SARmn)-LHS

QoQ Growth - RHS

Source: Company financial reports

Source: Company financial reports

March 2011

6

Global Research - Saudi Arabia

GCC Petrochemical Quarterly Report

Advanced Petrochemical Company (Advanced) posted full year net income of SAR328.3mn (EPS: SAR2.3) in 2010, which indicates an impressive growth of 158.3% over the net profitability recorded in 2009. According to the company’s press release, the growth was mainly based on the improvement in prices and sales. Moreoever, based on our understanding, the company had taken some cost control measures which resulted the company to reduce operating cost. Consequently, this led the company’s operating profit to register the growth of 107.1% over operating profit of SAR172.9mn recorded in 2009. On quarterly basis, the company registered a decline of 26.2% in profitability from SAR121.1mn recorded in 3Q10. The decline in profitability, during 4Q10, was mainly due to lower gross margin of 25% as compared to 31.9% in corresponding quarter last year. Advanced - 4Q10 Financial Indicators

Quarterly Gross Profit
160.0
67.8%

Quarterly Net Profit
80.0%
140.0
85.6% 120.0

100.0% 80.0% 60.0% -26.2% 40.0% 24.1%
20.0%

140.0 60.0% 120.0 -21.2% 40.0% 100.0 17.8%
80.0

100.0 80.0

31.9% -4.1% -32.7% 27.9%

20.0%
60.0 82.9%
-19.2% 40.0

60.0 40.0

0.0% -20.0% -40.0% -60.0%

0.0%

-39.7%

37.6%

-20.0%

20.0 -40.0%

20.0 2Q09 3Q09 4Q10
4Q09 1Q10 2Q10 3Q10

2Q09

3Q09

Gross Profit (SARmn)-LHS

QoQ Growth - RHS

4Q10

4Q09

1Q10

2Q10

3Q10

Net Profit (SARmn)-LHS

QoQ Growth - RHS

Source: Company financial reports

Source: Company financial reports

Yanbu National Petrochemical Company (YANSAB) posted after tax profit of SAR1.7bn (EPS: SAR2.9) in 2010 as compared to net loss of SAR29.2mn (Negative EPS: SAR0.05) recorded in 2009. The remarkable improvement in the company’s bottom line was mainly attributed toward the inauguration of commercial production from newly built petrochemical complex with encouraging capacity utilization along with a healthy improvement in product prices. On quarter basis, the company posted after tax profit of SAR554.8mn (EPS: SAR0.98) in 4Q10 as compared to our expectation of SAR578.7mn (EPS: SAR1.0) and net income of SAR356.2mn (EPS: SAR0.6) posted in 3Q10. In addition, the major reasons of QoQ growth in the company’s bottom line, during 4Q10, were (i) better price of related products and (ii) technical anomaly in the company’s newly built complex in 3Q10. YANSAB - 4Q10 Financial Indicators

Quarterly Gross Profit
800.0 41.5% 700.0 600.0 500.0
400.0

Quarterly Net Profit
100.0% 94.2%
80.0%
600.0
500.0 93.6%

55.7%

100.0%
80.0%

60.0% -20.6% 40.0% 20.0%

400.0 300.0 200.0
100.0

-29.1%

60.0% 40.0% 20.0%
0.0%

300.0 200.0 100.0 0.0%

-20.0% -40.0%

(100.0)

-20.0% -40.0%

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

1Q10

2Q10

3Q10

4Q10

2Q09

3Q09

4Q09

Gross Profit (SARmn)-LHS

QoQ Growth - RHS

Net Profit (SARmn)-LHS

QoQ Growth - RHS

Source: Company financial reports

Source: Company financial reports

March 2011

4Q10

7

Global Research - Saudi Arabia

GCC Petrochemical Quarterly Report

Saudi Arabian Fertilizer Company (SAFCO) reported remarkable performance in 4Q10 and posted net income of SAR1.0bn (EPS: SAR4.1) as compared to PAT of SAR375.9mn (EPS: SAR1.5) in corresponding quarter last year. Company beat our expectations of SAR641.8mn (EPS: SAR2.6) for the quarter under review. Consequently, the company ended year 2010 a consolidated after tax profit of SAR3.2bn (EPS: SAR12.9), higher by 75.3% over 2009. Moreoever, the major factors which have enabled the company to register such enormous growth on an annual and quarterly basis were (i) improvement in gross margin, (ii) recognition of gain on sale of land, and (iii) effective cost control measures to keep other operating costs on lower levels. SAFCO - 4Q10 Financial Indicators

Quarterly Gross Profit
1,000.0 900.0 800.0 80.0%
700.0 600.0 500.0

Quarterly Net Profit
104.6% 68.4% 120.0% 100.0%
1,000.0 29.9% 60.0% 800.0 40.0% 20.0% -19.0%
0.0% 200.0

1,200.0
85.8% 69.8%

100.0%
80.0%

-11.2% -0.8% -0.4%
-30.3%

-3.7%

60.0%
40.0%
600.0 -33.4%

-8.4%

-3.4%

400.0 300.0

20.0%
400.0

0.0% 200.0 100.0 -20.0% -40.0%
2Q09 4Q09 1Q10 3Q10
3Q09 2Q10 4Q10

-20.0% -40.0%

1Q10

2Q10

3Q10

4Q10

2Q09

3Q09

4Q09

Gross Profit (SARmn)-LHS

QoQ Growth - RHS

Net Profit (SARmn)-LHS

QoQ Growth - RHS

Source: Company financial reports

Source: Company financial reports

Industries Qatar (IQ) recovered pretty well in 2010. The recovery was mainly based on the (i) revival in related products’ prices, (ii) improvement in capacity utilization and (iii) commencement of operation from QAFAC in 1Q10. Consequently, the company has registered YoY growth of 25.1% over the sales revenue of QAR9.9bn recorded in 2009 with a subsequent increase in 2010 net profit to QAR5.6bn (EPS: QAR10.1) as compared to PAT of QAR4.9bn (EPS: QAR9) in 2009. In addition, the company’s gross and operating margins in 2010 were recorded at 48.1% and 41.8%, respectively, as compared to the gross margin of 41.8% and operating margin of 34.2% in 2009.. IQ – 4Q10 Financial Indicators

Quarterly Gross Profit
2,000.0 1,800.0 1,600.0
1,400.0 1,200.0

Quarterly Net Profit
70.0% 23.1% 60.0% 3.1% 13.1% -7.8% 50.0% 40.0%
1,000.0 5.0%
0.0%

62.0%

1,600.0 1,400.0 -13.7% 1,200.0 7.4% -1.8% -5.5%

16.6% 0.5%

6.9%

20.0% 15.0% 10.0%

6.8%

30.0%
1,000.0
800.0

800.0 600.0 400.0 200.0 -

11.6%

20.0%
600.0 -5.0% -10.0% -15.0% -20.0%
2Q09 4Q09 1Q10 3Q10 4Q10
3Q09 2Q10

10.0% 0.0% -10.0% -20.0%
2Q09 4Q09 1Q10 3Q10 4Q10
3Q09 2Q10
400.0 200.0 -

Gross Profit (QARmn)-LHS

QoQ Growth - RHS

Net Profit (QARmn)-LHS

QoQ Growth - RHS

Source: Company press release & financial reports

Source: Company press release & financial reports

On quarterly basis, the company’s profitability was recorded at QAR1.5bn (EPS: QAR2.8) as compared to Global Research estimate of QAR1.6bn (EPS; QAR3.0). On the other hand, the company’s bottom line registered growth of 6.9% and 34.5% over the profitability recorded in 3Q10 and 4Q09, respectively. It is worth mentioning that the growth in 4Q10 was mainly based on improvement in operational activity with limited contribution from non-operational activities.

March 2011

8

Global Research - Saudi Arabia

GCC Petrochemical Quarterly Report

4Q10 Regional Performance (Consolidated)
The sector performance during 4Q10 is based on our coverage of 6 major regional companies i.e. SABIC, SIPCHEM, SAFCO, YANSAB, ADVANCED and IQ, out of which five are from Saudi Arabia and one is from Qatar. These companies contribute more than 75.0% of the regional capacities and production.

Regional Operational Performance - Quarterly
During 4Q10, the regional petrochemical sector’s capacity utilization remained higher and inched up to 75.8% as compared to 74.7% calculated in 3Q10. Based on our calculations, the QoQ improvement in capacity utilization has led the regional petrochemical production to reach at 11.5mn tons in 4Q10. Moreover, SIPCHEM has witness major improvement in capacity utilization of more than 100%, which was mainly based on the full quarter impact of full fledge commencement of acetyl complex.

Capacity Utilization - Petrochem Complexes
140.0%

Capacity Utilization - Fertilizer Complexes
113.0%

3Q10 4Q10 1Q11e

4Q10 1Q11e

120.0%

108.0%

103.0%

3Q10

100.0%

2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11e

80.0%

2Q09 3Q09 4Q09 1Q10 2Q10

2Q09 3Q09 4Q09 1Q10 2Q10

2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11e

3Q10 4Q10 1Q11e

98.0%

93.0%

60.0%

88.0%

40.0%

83.0%

20.0%
SABIC-Petrochem YANSAB SIPCHEM Advanced IQ-Petrochem

SAFCO

IQ-Fertilizer

Source: Company Reports & Global Research * SABIC, SIPCHEM, SAFCO, YANSAB, Advanced & IQ

Source: Company Reports & Global Research * SABIC, SIPCHEM, SAFCO, YANSAB, Advanced & IQ

Fertilizer wing of the sector has registered the remarkable volumetric growth; where average capacity utilization was calculated at 105% in 4Q10 as compared to 92.8% calculated in 3Q10. Furthermore, we are expecting the regional capacity utilization will remain on higher level in the range of 105% to 110% in 1Q11.

Regional Financial Performance - Quarterly
The regional petrochemical sector has registered an impressive QoQ growth of 10.6% in sales revenue to reach at USD12.7bn in 4Q10. The top-line growth, during the quarter under review, was mainly based on the production growth and favorable prices. However, we cannot ruled out full quarter impact of (i) operational resumption at YANSAB complex, which was stopped due to technical glitches in 3Q10 and (ii) full fledge commencement of Acetyl complex. In addition, the regional 4Q10 petrochemical sector sales revenue has registered YoY increase of 33.4% over the revenues recorded in 4Q09, which was mainly due to the higher YoY sales volume and prices. Going forward, the expected improvement in prices of related products and additional production from the new capacities in 1Q11 will lead QoQ growth of 20.3% in sector’s overall sales revenue to USD15.2bn.

Regional Sales Revenue
16,000 14,000 17.3% 12,000 10,000
8,000 16.7% 12.5%

Gross Profit & GP Margins
20.3% 10.6% -0.8% 15.0% 4,000 25.0% 6,000

38.2%

36.7%

39.0%
37.0%

20.0% 5,000

35.6% 34.1% 32.6% 34.1%
33.5%

8.1% 11.6%

35.0% 33.0% 31.0%

10.0% 3,000

6,000 5.0% 4,000
0.0%

2,000

27.7%
29.0%

1,000

2,000 0 -5.0%

27.0% 25.0%

0

1Q11e

2Q09

3Q09

4Q09

3Q10

4Q10

1Q10

2Q10

Sales Revenue (USDmn)-LHS

QoQ Growth - RHS

Gross Profit (USDmn) - LHS

QoQ Gross Profit Margin - RHS

Source: Company Reports & Global Research *SABIC, SIPCHEM, SAFCO, YANSAB, Advanced & IQ

Source: Company Reports & Global Research *SABIC, SIPCHEM, SAFCO, YANSAB, Advanced & IQ

March 2011

1Q11e

3Q09

1Q10

3Q10

2Q09

4Q09

2Q10

4Q10

1Q11e

4Q10

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

9

Global Research - Saudi Arabia

GCC Petrochemical Quarterly Report

On the other hand, the regional consolidated gross profit registered a growth of 17.5% in 4Q10 over gross profit of USD3.8bn recorded in 3Q10. Consequently, the regional gross margin inched up to 35.6% in 4Q10 as compared to 33.5% recorded in 3Q10. Global Research believes the major reason of improvement in the regional gross margin in 4Q10 was mainly based on improvement in capacity utilization coupled with the higher average prices of related products. On the other hand, the regional gross margin registered YoY growth of 39.4% over gross profit of USD3.2bn recorded in corresponding quarter last year. We expect the regional gross profit will register an increase of 24% to reach at USD5.6bn in 1Q11, indicating a gross profit margin of 36.7%. The mentioned growth in gross profit during 1Q11 is mainly based on the expected increase of 12.3% in overall production (petrochemical & fertilizer) and higher prices of related product prices. Regional Profitability & Net Profit Margin
3,500 20.2%
3,000 19.3% 19.7%

21.0% 20.0% 19.0% 18.0% 17.0% 16.0% 13.0% 15.0% 14.0%

18.5% 18.5% 2,500 17.4% 2,000 1,500
1,000

16.9%

500 0

13.0% 12.0%

Net Profit (USDmn) - LHS QoQ Net Profit Margin - RHS Source: Company Reports & Global Research *SABIC, SIPCHEM, SAFCO, YANSAB, Advanced & IQ

The regional sector’s profitability has registered QoQ growth of 15.3% to reach at USD2.4bn in 4Q10, which has lifted the net profit margin to 19.3% from 18.5% in 3Q10. Moreoever, the profitability has registered an impressive YoY growth of 47.6% over the net income of USD1.7bn in 4Q09. Based on our expectations, the regional profitability will register QoQ growth of 23.1% to reach at USD3.0bn in 1Q11 with the net profit margin of 19.7%.

Sector Outlook & Recommendations
Although Egypt has witnessed some level of political certainty but we cannot ignore the ongoing political crisis in the MENA region, which has re-ignited political ambiguity. This indicates, the regional sector could face new risk of logistics along with the already existing challenge of slow global demand recovery. During the 4Q10, the petrochemical sector has shown improvement, which was mainly associated with the (i) higher average prices, (ii) full quarter impact of start of operation from newly completed complexes and (iii) higher sales of non-traditional petrochemical and fertilizer products. Based on the presence of possible logistic threats on key trading routes i.e. Suez Canal and Gulf, we believe the primary impact will be on crude oil price, which might force the average prices to deviate from our expected range. Hence, this could lead to effect the recovery in global demand, going forward, and could hit the capacity utilization of petrochemical complexes in the region. However, on secondary level, any mishap at these trading routes could lead to inflate the shipment cost i.e. transportation & insurance. Moreoever, we are not anticipating any decline in regional volumetric sale, at present, but we cannot rule out the impact of time lag, in case of taking longer trading route. It is worth mentioning that Global Research believes this threat is mainly associated with KSA petrochemical sector. Since most of petrochemical (excluding fertilizer products) exports are heading towards Western markets as compared to Qatar. On the other hand, we believe the fertilizer segment of the sector will continue to grow, since most of fertilizer products are heading towards Asian and Far Eastern markets; indicating immunity against any possible mishap at the canal. Moreoever, we cannot ignore any unprecedented event at Gulf. Based on the given expansion plans, the regional petrochemical (including fertilizer) capacity is expected to increase by 12.0% and reach at 16.9mn tons in 1Q11. The expected increase in the regional capacity in 1Q11 is mainly based on the (i) forecasted start of commercial operation from Saudi Kayan Petrochemical Company (Saudi Kayan), where SABIC has 35% stakes and (ii) planned commencement of Ras Laffin Olefins Cracker (RLOC), a project of IQ. Moreoever, the expected commencement of

March 2011

1Q11e

3Q09

1Q10

3Q10

2Q09

4Q09

2Q10

4Q10

10

Global Research - Saudi Arabia

GCC Petrochemical Quarterly Report

operation from Ma’aden Phosphate Company (MPC), SABIC & Ma’aden JV, has delayed till 4Q11. Hence, we are not expecting any impact of MPC on regional sector in 1Q11. It is worth mentioning that we have adjusted the valuation (i.e. risk premium) of sector in accordance with the ongoing unrest, which has led us to make downward revision in real worth of each complex under our coverage. Hence, we have made downward revision in our stance on the sector to ‘Neutral’ from ‘Positive’. Our top pick is SIPCHEM for the sector.

March 2011

11

Global Research – Saudi Arabia

GCC Petrochemical Quarterly Report

Regional Company’s 2010 Financial Performance
Company Names Country Major Basic Chemicals Ethylene, Propylene, Benzene, Paraxylene, Butadiene, MTBE, Styrene Methanol Major Intermediaries, Polymers& Value Added Products Polypropylene, MEG, DEG, TEG, BTX, HDPE, LLDPE, PVC, 2-Ethyl Hexanol (2-EH), Di-Octyle Phthalate (DOP), VCM, Industrial Gases BDO, VAM and Acetic Acid Fertilizers Ammonia, Urea, Melamine, Sulphuric Acid Ammonia, Urea, Melamine, Sulphuric Acid Acrylic Steel Wires SAR40.7 SAR34.5 SAR(27.3) SAR(49.58) NM NM Steel & Metal Reinforcing Bars, Wire Rids and Other Long Steel Products, Hot Rolled, Cold Rolled and Galvanized Products, Ferroalloy Smelter, Aluminum 2010 PAT (mn) SAR21,590 SAR378.9 SAR3,232 SAR1672.8 SAR1465.2 SAR519.5 182% SAR328.3 SAR6 SAR(29.2) SAR127.1 SAR22.1 NM 158.3% -72.8% 2009 PAT (mn) SAR9,070 SAR140.9 SAR1,804 YoY Change 138% 168.3% 79.3%

SABIC SIPCHEM

KSA KSA

SAFCO YANSAB Advanced CHEMANOL Industrialization Alujain

KSA KSA KSA KSA KSA KSA

Ethylene, Propylene, Benzene and MTBE Propylene Basic Methanol Propylene, Ethylene Propylene

Ethylene Glycol (MEG, DEG, TEG), Polypropylene, Polyethylene, BTX Polypropylene Formaldehyde, Amino Resins Super Plasticizers

Polypropylene, Polyethylene, Acid and Derivative Polypropylene

Nama Chemicals

KSA

SIIG SAHARA Petro Rabigh

KSA KSA KSA

Benzene, Cyclohexane, Aromatic Gasoline, Styrene, Propylene, Ethylene Propylene , Ethylene Benzene, Ethylene, Propylene

Caustic Soda Pills, Epoxy Resins, Chlorine, Hydrochloride Acid, Calcium Chloride and Industrial fiber products

SAR403 Polyethylene, Polystyrene Polypropylene, SAR329.2 SAR208.7

SAR306

31.7%

Saudi Kayan Petrochem

KSA KSA

Ethylene, Butene-1 Ethylene

Propylene,

Polypropylene, Polyethylene Polyethylene, Polypropylene, Ethylene Glycol, Propylene Oxide Aminoethanols, Aminomethyls, Dimethylformamide, Choline chloride, Dimethylethanol, Dimethylethanolamine, Ethoxylates, Phenol, Cumene Polycarbonate, Polyethylene , Ethylene glycol (EG) Polyethylene, Polypropylene and Poly Styrene

SAR76.5 SAR(1,433.1)

330.5% NM

SAR(14.7) Ammonia, Urea, Melamine SAR(42) Sponge Iron, Molten Steel, Billet, Bar and Wire Rod Coil QAR5,577.8 NA** KWD(1.9)

SAR(16.8)

NM

SAR(60.6) QAR4,961.1 KWD (0.99) KWD7.1

NM 12.4% 126.8%

IQ Ikarus* Qurain

Qatar Kuwait Kuwait

Ethylene, Methanol, MTBE, Sulphur -

Polyethylene -

Source: Zawya, Company Reports & Global Research *Investor in regional oil & gas and petrochemical industries **Not announced

March 2011

12

Global Research – Saudi Arabia

GCC Petrochemical Quarterly Report

Disclaimer
This material was produced by Global Investment House - Saudia, a firm regulated by the Capital Market Authority of KSA. This document is not to be used or considered as an offer to sell or a solicitation of an offer to buy any securities Information and opinions contained herein have been compiled or arrived by Global –Saudia from sources believed to be reliable, but Global- Saudia has not independently verified the contents of this document. Accordingly, no representation or warranty, express or implied, is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this document. Global – Saudia accepts no liability for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. Global shall have no responsibility or liability whatsoever in respect of any inaccuracy in or omission from this or any other document prepared by Global- Saudia for, or sent by Global- Saudia to any person and any such person shall be responsible for conducting his own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved in the securities forming the subject matter of this or other such document. Global investment house- Saudia is authorized and regulated by the Capital Market Authority (CMA) in the Kingdom of Saudi Arabia. License Number 07067-37”. This material was also produced by Global Investment House KSCC (‘Global’),a firm regulated by the Central Bank of Kuwait. This document is not to be used or considered as an offer to sell or a solicitation of an offer to buy any securities. Global may, from time to time to the extent permitted by law, participate or invest in other financing transactions with the issuers of the securities (‘securities’), perform services for or solicit business from such issuer, and/or have a position or effect transactions in the securities or options thereof. Global may, to the extent permitted by applicable Kuwaiti law or other applicable laws or regulations, effect transactions in the securities before this material is published to recipients. Information and opinions contained herein have been compiled or arrived by Global from sources believed to be reliable, but Global has not independently verified the contents of this document. Accordingly, no representation or warranty, express or implied, is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this document. Global accepts no liability for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. This document is not to be relied upon or used in substitution for the exercise of independent judgment. Global shall have no responsibility or liability whatsoever in respect of any inaccuracy in or omission from this or any other document prepared by Global for, or sent by Global to any person and any such person shall be responsible for conducting his own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved in the securities forming the subject matter of this or other such document. Opinions and estimates constitute our judgment and are subject to change without prior notice. Past performance is not indicative of future results. This document does not constitute an offer or invitation to subscribe for or purchase any securities, and neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever. It is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. Neither this report nor any copy hereof may be distributed in any jurisdiction outside Kuwait where its distribution may be restricted by law. Persons who receive this report should make themselves aware of and adhere to any such restrictions. By accepting this report you agree to be bound by the foregoing limitations.

March 2011

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Global Investment House Website: www.globalinv.net Global Tower Sharq, Al-Shuhada Str. Tel. + (965) 2 295 1000 Fax. + (965) 2 295 1005 P.O. Box: 28807 Safat, 13149 Kuwait

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...Scope of Glass Solution in the Middle East Countries Objective: The objective of the research is to know about the market that is prevailing in the Gulf Co-operation Council (GCC) countries and to know about the scope of the glass in these countries in the near future. Executive Summary: It is inevitable that infrastructure is one of the main criteria for a country’s GDP growth. Infrastructure includes construction of airports, ports and rails. Real Estate is a booming market in Middle East especially in Dubai and Saudi Arabia in recent years since 2008when the market crashed. This research includes the study about architects, builders and Glass installers who have their base in UAE, Saudi Arabia and Qatar. In most of the countries glass is considered as one of the main structural material for both exteriors and interiors. Due to the financial crisis in the year 2008 many of the projects were put on-hold in the GCC countries. After five years, the market is on a move as many projects have been announced and on-hold projects have started to resume its process. This is very much clear from the fact that as much as $35billion contracts have been awarded to the civil construction sector by the end of year 2013. It is expected that spending in the construction sector is expected to remain in the range of $25billion-$35billion in the upcoming years. Civil construction is one of the major sectors which are awarded the most number of contracts. Almost $15billion worth of......

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Free Essay

Russian Petrochemical

.... Provide a critical analysis of the risk factors RDS faced in making this investment. First and foremost, the most critical risk was the political risk in this case. Political risk arises from uncertainty about the host country’s political conditions and government policies that are critical to the profitability of an actual or proposed business arrangement (Root 1987, 130). Oil and gas industry is very sensitive to any economy, in Russia it considers the dominant contributor factor in their economy. The risk aroused due to the Production-Sharing Agreement (PSA) that made many effective domestic firms against such agreement. They considered it as unfair, because it favored foreign firms. Furthermore, Custom officers were against the agreement that affected RDS in importing project materials. So, RDS stated to defend with all they got to defend the PSA because they were challenged by some members from the Russian Parliament. The second risk was the delay of the second phase of Sakhalin, because the governance had become decentralized it led to a pending of approvals of launching the project. For instance, it would be so risky to commit $10 billion to Sakhalin 2 without getting the approval for TEOC. Therefore, it is crucial to have a profound understanding of the political dynamics of the host county before launching a major project and to know how to deal with it legally. Another major risk which is environmental risk. Sakhalin is differentiated by its natural......

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Premium Essay

Gcc Is Happening

...AD P1). GCC is happening. P2). We will have economic catastrophes. P3). We will have disease epidemics. P4). The government will collapse. CC). Something needs to be done to stop GCC. When listening to this argument the arguer commits several fallacies. The first fallacy that was committed was appeal to unqualified authority. He is a science teacher not someone who specializes in GCC, so how can he know if any of these events will happen? This is not his area of specialty. The second fallacy that was committed was appeal to ignorance. I chose this fallacy because he has presented no evidence besides his chart with the columns and rows. This is not enough information to go on to say that GCC is happening or not. The third fallacy committed was false cause. I say he committed this fallacy because what does GCC have to do with bread baskets of the USA and Russia turning to dust bowls causing catastrophic famines, or sea levels rising 10-20 feet. How can he be sure of this kind of catastrophes? Another fallacy that is committed is slippery slope. This fallacy is committed when the arguer commits this fallacy by saying of we don’t take action against GCC the end results are negative or undesirable. Basically a cause and effect event. The arguer has no evidence that GCC is happening or will happen so how can he be sure that it will or won’t happen. I also would say that the arguer is using the fallacy of appeal to emotion. I say this fallacy is being used because he asks...

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Premium Essay

Qatar

...Industries Qatar Co. (IQCD) | Commercial Bank of Qatar (CBQK) | Medicare Group (MCGS) | | Al Khaleej Takaful Group Co. (AKHI) | Mazaya Qatar Real Estate Development Co.(MRDS) | | Qatari Investors Group (KHCD) | Doha Bank(DHBK) | Qatar Cinema & Film Distribution Co. (QCFS) | | Qatar Islamic Insurance Co. (QISI) | | | Qatar Electricity & Water Co. (QEWS) | Qatar International Islamic Bank (QIIK) | Qatar Fuel Co. (QFLS) | | | | | Mannai Corporation (MCCS) | Al Ahli Bank QSC (ABQK) | Widam Food Co. (WDAM) | | | | | Aamal Holding Co. (AHCS) | Masraf Al Rayan (MARK) | Al Meera Consumer Goods Co. (MERS) | | | | | Gulf International Services Co. (GISS) | Al Khalij Commercial Bank (KCBK) | | | | | | Mesaieed Petrochemical Co. (MPHC) | National Leasing Holding Co.( NLCS) | | | | | | | Dlala Brokerage and Investment Holding Co.( DBIS) | | | | | | | Qatar & Oman Investment Co.( QOIS) | | | | | | | Islamic Holding Group (IHGS) | IV. Performance: As shown in the above chart, QE All shares index showed an increase from the beginning of 2007 to around 2050 in first quarter of 2008. However, a sharp decrease in the second half of 2008 to reach a minimum of 900 in 2009. We attribute this to the financial crisis. After 2009, the index started recovery and the uptrend continued till mid 2014 in which it started fluctuating until today. The price fluctuations that occurred last year is more probably due to oil prices......

Words: 3215 - Pages: 13

Premium Essay

Gravity Model at Gcc

...42-56 The Trade Potential of the Arab Gulf Cooperation Countries (GCC): A Gravity Model Approach Dr. Houcine Boughanmi Sultan Qaboos University Abstract The GCC region has recently witnessed the creation of a customs union between the countries of the region as well as the signature of many free trade areas with countries/blocs outside the region (i.e. US and EU). The purpose of this paper is to investigate the potential of trade of the GCC countries within the context of the old and the emerging preference trade arrangements in the region of Middle East and North African Countries (MENA). A gravity trade model was estimated based on pooled time series-cross-sectional data of bilateral trade of the MENA countries with their major trading partners. The results indicate that in spite of the fact that the share of GCC intra-trade is too small in absolute terms, it is actually higher than expected on the basis of underlying trade determinants. However the level of the GCC intra-trade has not changed significantly over the years and had probably reached its full potential during the first decade of the GCC creation. Trade with the Mashreq countries are more than expected, while it is less than expected with the Maghreb countries despite the implementation of the GAFTA a decade ago. The GCC trade with the European Union and the US was found to be quite intensive although no formal trade arrangement existed between the GCC and both blocs for the time-period used in the analysis.......

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Premium Essay

Technology

...CEPCO (Civil and Electrical Projects COntracting) is a leading construction company with corporate headquarters in Jeddah, Saudi Arabia, and offices throughout Saudi Arabia and the Middle East. CEPCO has been in business since 1977 and provides construction services in the fields of Civil & Infrastructure, Electrical, Electromechanical, Oil, Gas & Power. CEPCO executes projects for civil and electrical projects in Saudi Arabia and in GCC countries, especially in the field of 69 up to 380 kV Cable Systems, Delivery, Installation and Testing of 110 kV Transformers and Substation Construction. They are qualified Turnkey-General Contractors with Saudi Electricity Company – Western, Eastern, Southern and Central Regions. CEPCO has executed a number of projects and had a turnover in excess of $150 million in 2007, and $500 million until end of 2008. In addition to construction services, CEPCO is an authorized agent for world class manufacturers and provides related support and field services. As a privately owned company, CEPCO's current strategy is to enhance its growth by building the company's resources and depth of services provided. Contents [hide] 1 Project fields 1.1 Civil and Infrastructure 1.2 Electrical 1.3 Electromechanical 1.4 Oil, Gas and Power 2 Trade 2.1 Authorized agents 2.2 Associates/Partners 3 References Project fields[edit] Civil and Infrastructure[edit] Specialized for turn-key contracts for water distribution, rainwater evacuation......

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Premium Essay

International Business

...privileges pave way to bigger market for the members' products which results to more sales, more jobs and better economic growth. More than 75% of the members are ranked as developing countries. Through their membership with WTO, they can easily penetrate the market of developed countries at lower tariffs. At the same time, developing countries are also lessening tariffs in their import market. By doing this practice, developing countries are using the chance to develop their corporations and industries into more mature and sophisticated kind until they become competitive to the market of developed countries. The United Arab Emirates has been a member of WTO since 10 April 1996 UAE has 0 case of dispute. The UAE's applied tariff, based on the GCC common external tariff, is low, at an average of some 5%; most of the UAE's applied MFN tariffs (except on alcohol and tobacco) are zero or 5% . http://www.wto.org/english/tratop_e/tpr_e/tp263_crc_e.htm 4. What are online intermediaries? How do focal firms use the Internet to carry out international activities? Intermediary Online is Computershare’s purpose built web portal for intermediaries, including custodians, nominees, non-broker participants, portfolio administrators, portfolio aggregators and select financial advisors. This innovative solution has been designed with consultation from the market to transform back office interaction between intermediaries and Computershare, thereby enhancing the speed and quality of......

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Premium Essay

Rent Caps in Gcc

...RENT CAPS IN GCC Rent caps are basically price control imposed in housing by government rules and policies. When there is a huge demand for housing the rent used to increase considerably. The people could not afford this sudden increase in the price. Hence, there was government intervention in form of rules and regulations stating that rents could not be increased more than a certain amount/percentage. Rent caps are based on the argument that housing is inelastic i.e. increase in demand will not increase the supply in short period of time. When the demand for housing rises the rent used to increase without any constraints. So, the government introduced rent caps to regulate the increase in price of housing rents. Rent caps is still an ongoing debate as most economists think it as the second best way to destroy a city. They claim that due to rent caps there is low motivation for landlords to construct or maintain their housing. The landlords find themselves with low profit or even losses due this price control scheme. The tenants who are protected by this scheme are reluctant to leave their old buildings and use space wastefully. The landlords or owners who construct new buildings impose a higher rent than they would have in a free market. Economists also claim that if proper incentive to landlords are provided then supply would not be less in a long run of time. Thus, housing being inelastic is wrong assumption in the long run. The rent caps......

Words: 683 - Pages: 3

Premium Essay

Mena, Gcc & Eu Energy Security

...share of natural gas to Europe. The Gulf Cooperation Council (GCC) members (Kuwait, UAE, Saudi Arabia and Qatar) play an important role as well in supplying Hydrocarbons like petroleum and natural gas. GCC states hold 45% of the world oil reserves. And according to the last statistical review of BP (one of the world’s leading international oil and gas companies) in June 2015, the whole Middle East oil reserves estimated to be 77.8% of the whole world reserves. The GCC developed sub-objectives that work together to provide energy security to the members of the GCC and the wider international environment. They try to maintain the freedom of navigation in the Arabian Gulf including the Strait of Hormuz (strait between the Gulf of Oman and the Persian Gulf) which ensure steady supply of hydrocarbons to the international marketplace. 20% of the world’s oil traverse the Gulf in order to reach international markets and the GCC is preventing repetition of closures and attacks against maritime traffic through the strait as occurred during the Iraq-Iran war. Since the strait is a vital passage of international energy security, US, China, Russia and all EU members support that objective. The EU values its relations with the GCC and Iran as they are an important provider of energy though most of the Gulf oil and gas not exported to the EU, yet many European energy companies show interest in purchasing LNG from the GCC. 2. The 2008-09 dispute pre the Arab Spring In the......

Words: 6903 - Pages: 28