Al Rajhi Capital report on industrial companies listed on Tadawul

Published September 5th, 2010 - 05:58 GMT

Al Rajhi Capital, the investment banking subsidiary of Saudi Arabia's Al Rajhi Bank, has issued research reports on industrial companies listed on Tadawul. The reports cover Saudi Ceramic, in the Building and Construction sector, and Ma'aden, in the Industrial Investment sector.

According to the research on Saudi Ceramic, the only listed ceramics company in Saudi Arabia, the company has shown good growth over the last couple of years. The increase in production capacity of ceramic tiles and water heaters by the company, and the continuation of exporting activities should drive further growth over the next three years. The research further concludes that the company has high and sustainable profit margins, and a likely increasing focus on ceramic tiles should push margins higher. The report initiates coverage of Saudi Ceramic with an Overweight rating and a target price of SAR166.3, implying upside potential of 19%.

Similarly, Al Rajhi Capital sees strong prospects for the gold mining company Ma'aden, which according to its research is on a three year expansion plan. The report notes that while debt is likely to jump in 2010 as a result, investors should look six months ahead to 2011, in which year the report anticipates that revenues will leap fivefold after the launch of the phosphate operations. Aluminium will follow phosphate, and by the end of 2013 the report expects Ma'aden to be one of the leading diversified mine-to-metal companies in the world. Al Rajhi Capital's research sets a target price of SAR23.7 for Ma'aden, implying over 20% upside, and launches coverage of the company with an Overweight rating.

Commenting on the reports, Dr. Saleh Al Suhaibani, Head of Research at Al Rajhi Capital, said: "Our research continues to provide in-depth analysis of key sectors within the Saudi Arabian economy and notable companies within them. Our latest

research on the industrial segment of the market, covering Saudi Ceramics and Ma'aden, confirms expected ongoing growth in both the Kingdom's ceramics manufacturing industry, with Saudi Ceramic holding a very strong position as the major local player, as well as further anticipated growth in the mining sector, where Ma'aden continues to be a key player that should help drive Saudi Arabia's industrial and non-oil growth." 


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