Saudi Arabian Mining Company (Ma'aden)

Size: px

Start display at page:

Download "Saudi Arabian Mining Company (Ma'aden)"

Alison Martin
5 years ago
Views:

1 Saudi Arabian Mining Company (Ma'aden) Recommendation Neutral Fair Value (SAR) Price as of May 07, Expected Return 5.52% Company Data Tadawul Symbol 1211.SE 52 Week High (SAR) Week Low (SAR) YTD Change 9.77% 3-Month Average Volume (Thousand Shares) 582 Market Cap. (SAR Million) 66,441 Market Cap. (USD Million) 17,718 Outstanding Shares (Million Shares) 1,168.5 Major Shareholders ( > 5% ) Public Investment Fund 49.99% General Organization for Social Insurance 7.98% Public Pension Agency 7.45% week Stock Price Movement Maaden Tadawul Index Quarterly Sales (SAR mn) and ROS Sales ROS Source: Tadawul 24.0% 18.0% 12.0% 6.0% 0.0% -6.0% -12.0% -18.0% Source: Company Filings, Albilad Capital Research Estimates Q Ma'aden reported robust earnings for the quarter ended March 31, 2018, with the bottom line surging 132% YoY from SAR 276 million to SAR 638 million. Moreover, the conglomerate recovered from a net loss of SAR 105 million in Q4 2017, which stemmed from an impairment charge of SAR 477 million. Maaden unveiled consolidated revenues of SAR 3,564 million in Q1 2018, leaping 32% YoY undergirded by higher selling prices, and a pickup in sales volume for all products except for primary aluminium and ammonia, with sales of the latter crimped by mounting internal use at the DAP unit of Waad Al Shamaal project. On a sectoral basis, fertilizers revenues edged up 23% buoyed by selling prices and increased DAP quantity, however the volume sold of ammonia plummeted by 24%. The top line of the aluminium sector inched up 26% underpinned by improved prices and increased alumina sales. Moreover, Ma'aden boosted gold sales by 69% to 118k ounces on higher production from Al-Duweihi mine. Regarding the global phosphate market, ammonium phosphate prices rebounded in H as China has pursued more stringent environmental policies, resulting in restrictions on production levels. Demand levels in India have increased after fertilizer subsidies surged 16% in Pressure on year-end price levels may be experimented factoring in new production capacities. Meanwhile, China's new anti-pollution policies have also reinforced aluminium and copper prices. Industry sources forecast a deficit of a million ton in the global aluminium market this year in spite of the surplus in China. The global demand for aluminium is expected to climb from 4.25% to 5% in Elsewhere, the copper market may be largely balanced in 2018 with a tiny oversupply of 40k, however projections show a deficit of 330k in With regard to gold, the global demand for the precious metal fell by 7% in Q coming in at tons, the lowest quarterly level since 2008, as investment demand shrank 15% with higher interest rates spurring a shift in investment positions while the jewellery demand for gold remained unchanged. On the other hand, central banks purchases rose by 42%, while the demand from the technology sector rose by about 4%, according to the World Gold Council. The ammonia unit in the Waad Al Shamaal project was commercially operated on January 1, 2017 and the ammonium phosphate unit commenced trial operations at the beginning of the second half, however the unit is scheduled to be commercially operational before the end of The DAP unit may weigh on selling prices as it kicks off operations factoring in the staggering production capacity of the project, however the addition will bode well for Maaden going forward through doubling production capacity of phosphate products, robust market position and highly competitive cost structure. To summarise, the first-quarter net profit beat our estimate of SAR 344 million as well as the market consensus of SAR 349 million. Factoring in the results of the quarter, our valuation is revised upward to SAR 60 per share. FY - Ending December 2015A 2016A 2017A 2018E Ahmed A. Hindawy, CFA Senior Financial Analyst AA.hindawy@albilad-capital.com For more information, please contact:: Turki Fadaak Research & Advisory Manager TFadaak@albilad-capital.com EV/EBITDA EV/Sales P/E n/a Dividend yield 0.0 % 0.0 % 0.0 % 0.0 % P/BV P/Revenue Revenue Growth 1.5 % % 27.2 % 25.1 % 1

2 Sales Summary Q Q YoY Diammonium Phosphate (DAP) % Ammonia % Alumina % Aluminum % Copper % Gold (000 Ounces) % Business segments (SAR mn) Phosphate Aluminum Gold and base metals Headquarters Total Q Sales 1,542 1, ,564 EBITDA (49) 1,947 EBIT (54) 1,172 Net income (103) 638 Total asset 46,106 39,668 4,258 4,838 94,869 Q Sales 1,250 1, ,708 EBITDA (50) 1,428 EBIT (55) 722 Net income (83) 276 Total asset 44,810 41,043 4,222 4,500 94,575 2

3 Prices of Ma'aden's Products Diammonium Phosphate (DAP) Price (USD / Ton) Ammonia Price (USD / ton) Aluminum Price (USD / Ton) Gold - USD / Ounce 2,600 2,500 2,400 2,300 2,200 2,100 2,000 1,900 1,800 1,700 1,400 1,350 1,300 1,250 1,200 1,150 1,100 Copper (USD / Ton) 7,500 7,250 7,000 6,750 6,500 6,250 6,000 5,750 5,500 5,250 Source: Bloomberg 3

4 Income Statement (SAR mn) 2014A 2015A 2016A 2017A 2018E Sales 10,792 10,956 9,504 12,086 15,117 COGS 6,153 6,250 4,991 5,341 6,198 OPEX 1,079 1,063 1,374 1,460 1,165 EBITDA 3,560 3,643 3,139 5,285 7,754 EBITDA Margin 33.0% 33.2% 33.0% 43.7% 51.3% Depreciation, Amortization & Depletion 1,563 2,338 2,527 2,850 3,308 EBIT 1,997 1, ,435 4,446 EBIT Margin 18.5% 11.9% 6.4% 20.1% 29.4% Net Interest Income ,539-1,713 Investment Income Others Pre-Tax Income 1, ,759 Tax and Zakat Net Income 1, ,497 Minority NAI 1, ,114 ROS 12.6% 5.5% -0.1% 5.9% 14.0% Balance Sheet (SAR mn) 2014A 2015A 2016A 2017A 2018E Cash and Marketable Securities 12,497 5,207 7,081 6,592 7,137 Accounts Receivables 1,245 1,252 1,273 2,000 2,502 Inventory 2,441 2,942 3,069 3,436 4,225 Others Total ST Assets 16,416 10,370 11,563 12,184 14,060 Net Fixed Assets 38,376 36,682 51,706 53,549 76,678 Projects Under Implementation 27,259 40,636 29,185 26,409 1,512 Intangible Assets Others 2,032 1,273 1,315 2,629 2,752 Total LT Assets 68,125 79,008 82,580 82,933 81,260 Total Assets 84,541 89,378 94,143 95,117 95,320 Short Term Debt and CPLTD 1,574 2,131 2,753 3,195 2,205 Accounts Payable 2,035 1,810 2,202 2,316 2,897 Accrued Expenses 2,558 4,521 2,629 1,970 2,217 Others Total ST Liabilities 6,267 8,541 7,711 7,730 7,602 Total Long Term Debt 43,338 43,268 50,779 50,701 48,496 Other Noncurrent Liabilities 1,289 2,015 2,247 1,868 1,983 Minority 6,824 8,097 7,794 8,432 8,739 Equity 26,693 27,298 25,342 26,098 28,212 Total Liabilities and Equity 84,541 89,378 94,143 95,117 95,320 Presentation of financial statements may differ from the company s presentation. However, there is no impact on the final results. *The financial statements for the period ( ) are presented according to IFRS. Source: Company Filings, Albilad Capital Research Estimates 4

5 Albilad Capital Rating Methodology Al-Bilad Capital uses its own evaluation structure, and its recommendations are based on quantitative and qualitative data collected by the analysts. Moreover, the evaluation system places covered shares under one of the next recommendation areas based on the closing price of the market, the fair value that we set and the possibility of ascent/descent. Overweight: The Target share price exceeds the current share price by 10%. Neutral: The Target share price is either more or less than the current share price by < 10%. Underweight: The Target share price is less than the current share price by 10%. To be Revised: No target price had been set for one or more of the following reasons: waiting for more analysis, waiting for detailed financials, waiting for more data to be updated, major change in company`s performance, change in market conditions or any other reason from Albilad Capital Research. Albilad Capital Client Services Tel: Toll-free: Asset Management Tel: Custody Tel: Research & Advisory Tel: Website: Brokerage Tel: Investment Banking Tel: 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

Saudi Arabian Mining Company (Ma'aden)

Saudi Arabian Mining Company (Ma'aden) Recommendation Neutral Fair Value (SAR) 00.44 Price as of May 14, 2017 04.44 Expected Return 4.9% Company Data Tadawul Symbol 1211.SE 52 Week High (SAR) 43.80 52