Daily Market Report Saudi Arabia Stock Exchange 10 August 2017

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1 27-Jul 30-Jul 31-Jul 1-Aug 2-Aug 3-Aug 6-Aug 7-Aug 8-Aug 9-Aug Thousands 10:00 10:15 10:30 10:5 11:00 11:15 11:30 11:5 12:00 12:15 12:30 12:5 13:00 13:15 13:30 13:5 1:00 1:15 1:30 1:5 15:00 10 August 2017 TASI Index 7, % Turnover (SAR mn) 3, % TASI Intra Day Movement Global commentary Research Department Tel: ,190 7,180 7,170 7,160 7,150 7,10 7,130 7,120 Intraday TASI Activity Trend (Last 10 Days) - 2 Turnover (LHS, SAR bn) Previous Close TASI Index (RHS) 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 US stock markets declined on Wednesday, dragged down by weakerthan-expected corporate earnings (Disney and Office Depot). Further, the geopolitical concerns in North Korea also weighed on the indices. The Nasdaq Composite Index slipped 0.3%, while the Dow Jones fell 0.2%. However, the S&P 500 ended the session on a flat note. European markets dropped on Wednesday, owing to prevailing tensions between the US and North Korea. The CAC 0 declined 1.% pushed down by financial and healthcare sectors, while the DAX slipped 1.1% led by banking stocks. Meanwhile, the FTSE 100 fell 0.6%. Most stock markets in the GCC region fell yesterday. Qatar declined 0.7%, dragged down by Industries Qatar, while Abu Dhabi dropped 0.7% pulled down by Dana Gas. Oman and Kuwait lost 0.2% and 0.1%, respectively, while Dubai edged down 0.1% led by Arabtec and DXB Entertainments. However, Bahrain remained broadly unchanged. Regional Indices Close 1D% WTD% YTD% KSA (TASI) 7, Qatar (DSM) 9, Kuw ait (KSE) 6, Abu Dhabi (ADSM), Dubai (DFM) 3, Oman (MSM30), Bahrain (BSE) 1, MSCI GCC Major Commodities / Currencies Close 1D % WTD % YTD % Gold Spot $/Oz 1, Silver Spot $/Oz Crude Oil (Brent) OPEC Basket Euro USD Index JPY Major Global Indices Close 1D % WTD % YTD % DJ Industrial 22, S&P 500 2, Nikkei , Hang seng 27, FTSE 100 7, CAC 0 5, MSCI World 1, MSCI EM 1, Most Asian markets are trading in the red zone this morning, tracking negative cues from the western countries. The Hang Seng Index is down 1.7% led by financial and real estate shares, while the KOSPI and the Shanghai Composite Index are down 1.2% and 0.7%, respectively. However, the Nikkei 225 is trading on a flat note. Brent crude gained 1.1% on Wednesday, as the EIA reported a larger-than-expected weekly drop in the US crude oil inventories. Key crude contracts Brent and WTI ended at US$ (+1.1%) and US$ 9.56 (+0.8%), respectively. Saudi commentary Tadawul All Share Index (TASI) gained 7.63 points or 0.11% to close at 7, Fourteen of the twenty sector indices closed higher. The advance decline ratio was 10/67. Trading turnover was around SAR 3.bn. Arabian Cement plans 10% dividend for H1-17: Arabian Cement Co. s board of directors has recommended a 10 percent cash dividend for the first half of 2017, at SAR 1 per share, amounting to SAR 100 million. (Tadawul) L Azurde H1 net profit falls by 35%: L Azurde Company for Jewelry, one of Saudi Arabia s biggest jewelers, reported a net profit of SAR 28. million for the first half of 2017, a 35. percent year-onyear (YoY) drop attributed to lower operating revenue and the SAR 12.5 million one-off FX gain last year. (Tadawul) Interest Rates 1M 3M 12M 3M Chg 1Y LIBOR (USD) SAIBOR EIBOR Data Sources: Bloomberg Updated as of 10/Aug/2017 7:23 AM Please see penultimate page for additional important disclosures. Al Rajhi Capital (Al Rajhi) is a foreign broker-dealer unregistered in the USA. Al Rajhi research is prepared by research analysts who are not registered in the USA. Al Rajhi research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 193 solely by Rosenblatt Securities, an SEC registered and FINRA-member broker-dealer. 1

2 Our Latest Reports: Saudi Cement sector: First y-o-y growth in a year dividend yield looks attractive Regional Supply and Demand: In the first 7 months of 2017, cement sales volume declined 19% y-o-y to 28.3mn tons, while clinker production fell 10% on an yearly basis to 29.3mn tons and inventories stood at 33.6mn tons. Looking at capacities, inventories and potential demand of each region, we believe that the Northern region remains the weakest as current inventories represent 118% of region producers dispatches in the last 12-months. Weak demand within the region has led companies to reach out to far away regions which have negatively impacted companies profit/ton due to the high transportation costs. The increase in competition has also, no doubt, reduced realized prices. For Western and Southern regions, recent capacity additions have added to existing over supply. For the Central region, Q2 selling prices were lower than in the Western region as it is most accessible to producers despite favorable location and low inventories compared to other regions. Eastern region s producers were impacted after implementing export fees on Bahrain exports, however, these exports are likely to re-start after the 50% discount on fees. In the near term, volatility and stiff competition on selling prices are likely to continue in the sector given the slowdown in construction activities and limited demand from mega projects. Click here to download attached English Report Savola Group Q2: Not out of the woods yet Savola s Q2 was marginally below estimates, weighed down by lower than expected revenue (down 5.6% y-o-y vs. estimate of 0.5% decline) and gross margins (down 180bps y-o-y vs. estimate of 120bps decline). Food segment of Savola (7% of revenue in 2016) has been relatively stable as compared to Retail segment (53% of revenue in 2016) in the past few quarters, and the same is likely to have been the case this quarter as well. Hence, we believe the revenue weakness is likely due to higher than estimated LFL sales decline in the retail segment, partly accentuated by weak consumer spending that has impacted most consumer companies in Q2. Pending release of detailed financials, our estimates undergo only a marginal revision to incorporate Q2 headline numbers. Our revised target price stands at SAR0.8 per share (earlier SAR39. per share). Our target price implies 8.9% downside from the current market price. Maintain Neutral rating. However, should investors choose to use the current market price of Almarai (SAR80 per share) instead of target price, then Savola s SoTP value increases to SAR9.1 per share. We continue to believe that the turnaround in retail segment s revenue performance, which has been under pressure in the previous few quarters, is key to Savola s re-rating. Click here to download attached English Report Disclosures Please refer to the important disclosures at the back of this report. 2

3 Energy Health Care Equipment & Svc Consumer Transport Food & Staples Retailing Diversified Financials Commercial & Professional Svc Pharma Consumer Durables & Apparel Media TASI Large Cap (>10% Index weight) Sectors Performance TASI Top Gainers / Losers TASI Materials Banks Real Estate Telecom Company Last Price Chg % Vol (mn) Value Trd (SAR mn) Nama Chemicals Saudi Printing & Pkg Aminatit Petro Rabigh Alujain Corp Company Last Price Chg % Vol (mn) Value Trd (SAR mn) Saudi Res and Mktg Saudi Marketing Saudi Indus Expo Thimar Ash-Sharqiyah Devt TASI Mid Cap (5-10% index weight) Sectors Performance TASI Top Index Movers / Losers (Heavy weight stocks) Food & Beverages Capital Goods Utilities Retailing Company Last Price Chg % Index Imp Value Trd (SAR mn) Savola NCB Sabb Petro Rabigh National Shipp Company Last Price Chg % Index Imp Value Trd (SAR mn) Al Rajhi Bk STC Jabal Omar Jarir Mktg Saudi Res and Mktg TASI Small Cap (<5% index weight) Sectors Performance TASI Volume Leaders Company Last Price Chg % Vol (mn) Value Trd (SAR mn) Dar Al Arkan Alinma Bk Saudi Kayan Sabic Amana Coop Ins Solidarity Saudi Zain Saudi Saudi Indl Devt Al Tayyar Al-Ahlia Coop Ins TASI Stocks Closer to 52 Week High TASI - Stocks Closer to 52 Week Low Company Last Price 52Wk High % Diff Value Trd (SAR mn) Sanad Coop Ins % 00 Weqaya For Takaf % 00 Sadafco % Bupa Arabia % Saudi Elec %.653 Company Last Price 52Wk Low % Diff Value Trd (SAR mn) Sanad Coop Ins % 00 Weqaya For Takaf % 00 Saudi Inv Bk % Safco % Riyad Bank % Disclosures Please refer to the important disclosures at the back of this report. 3

4 -Jul 5-Jul 1 DSM Bank Telecom Consumer Transport Real Estate -Jul 1 ADSM Real Estate Energy Telecome Banks Fin. Industrial Consumer -Jul 1 DFM Bank Reality Investment Transport Telcom Performance of Regional markets Country Last Index Change (%) MCap Volume Turnover P/E (x) P/E (x) P/E (x) P/B (x) Div Yld Close 1D 1M YTD US$ bn mn shr US$ mn 12M 2016E 2017E Current 12M (%) Saudi Arabia 6, , Qatar 10, , Dubai 3, , Abu Dhabi, , Kuw ait 5, , Oman 5, , Bahrain 1, NA NA 0..6 Dubai Activity Trend (Last 10 Days) Dubai Sector Performances Dubai Top Gainers / Losers Turnover (LHS, AED bn) DFMGI Index (RHS) 3,500 3,50 3,00 3,350 3,300 3,250 3,200 3, DIB Dubai Invest Damac Properties Drake & Scull Intl ENBD Marka Gulf Navigation Aramex Dubai Parks Shuaa Capital Abu Dhabi Activity Trend (Last 10 Days) Abu Dhabi Sector Performances Abu Dhabi Top Gainers / Losers 0.5 Turnover (LHS, AED bn) ADSMI Index (RHS) 5,000,500, AD Nat (TAQA) Etisalat ADIsB Methaq Takaful Dana Gas Intl Fish Farming ADCB Bank Of Sharjah Alkhaleej Investment Sharjah Islamic Bk Qatar Activity Trend (Last 10 Days) Qatar Sector Performances Qatar Top Gainers / Losers 0.3 Turnover (LHS, QAR bn) DSM Index (RHS) 10,00 10,000 9,600 9, Qatar Ooredoo Ezdan Hold Mazaya Qatar Barw a Real Est Qatar Navigation Al Meera Consumer Disclosures Please refer to the important disclosures at the back of this report.

5 -Jul 5-Jul 1 BSE Banks Hotel & Tourism Industries -Jul 1 -Jul 1 Thousands KSE Technology Investment Industrial Real estate Bank Fin. Parallel Telecom Consumer Basic material Oil&Gas Healthcare Kuwait Activity Trend (Last 10 Days) Kuwait Sector Performances Kuwait Top Gainers / Losers Turnover (LHS, KWD mn) KWSEIDX Index (RHS) 5,395 5,390 5,385 5,380 5,375 5,370 5,365 5,360 5,355 5, United Real Estate Automated Sys Safw an Trading Injazzat Real State Soor Fuel Market Burgan Co For We Kw t Real Estate Hldg Arkan Al Kuw ait Osoul Investment Sultan Center Fd Oman Activity Trend (Last 10 Days) Oman Sector Performances Oman Top Gainers / Losers 8 0 Turnover (LHS, OMR mn) MSM30 Index (RHS) 5,950 5,900 5,850 5,800 5,750 5,700 5, MSM 30 Bank Industry Sembcorp NBO Gulf Invest Svcs Oman Fisheries Galfar Engineering Ominvest Al-Anw ar Ceramic Bahrain Activity Trend (Last 10 Days) Bahrain Sector Performances Bahrain Top Gainers / Losers Turnover (LHS, BHD mn) BHSEASI Index (RHS) 1,180 1,160 1,10 1,120 1,100 1, BBK Seef Properties Aluminium Bahrain Ahli United Bk Bahrain Telecom NBB Disclosures Please refer to the important disclosures at the back of this report. 5

6 IMPORTANT DISCLOSURES FOR U.S. PERSONS This research report was prepared by Al Rajhi Capital (Al Rajhi), a company authorized to engage in securities activities in Saudi Arabia. Al Rajhi is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution to major U.S. institutional investors in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 193, as amended (the Exchange Act ). Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only through Rosenblatt Securities Inc, 20 Broad Street 26th Floor, New York NY 10005, a registered broker dealer in the United States. 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7 Disclaimer and additional disclosures for Equity Research Disclaimer This research document has been prepared by Al Rajhi Capital Company ( Al Rajhi Capital ) of Riyadh, Saudi Arabia. It has been prepared for the general use of Al Rajhi Capital s clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of Al Rajhi Capital. Receipt and review of this research document constitute your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this document prior to public disclosure of such information by Al Rajhi Capital. The information contained was obtained from various public sources believed to be reliable but we do not guarantee its accuracy. 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"Neutral": We expect the share price to settle at a level between 10% below the current share price and 10% above the current share price on a 12 month time horizon. "Underweight": Our target price is more than 10% below the current share price, and we expect the share price to reach the target on a 12 month time horizon. "Target price": We estimate target value per share for every stock we cover. This is normally based on widely accepted methods appropriate to the stock or sector under consideration, e.g. DCF (discounted cash flow) or SoTP (sum of the parts) analysis. Please note that the achievement of any price target may be impeded by general market and economic trends and other external factors, or if a company s profits or operating performance exceed or fall short of our expectations. Contact us Al Rajhi Capital Research Department Head Office, King Fahad Road P.O. Box 5561, Riyadh 1132 Kingdom of Saudi Arabia research@alrajhi-capital.com Al Rajhi Capital is licensed by the Saudi Arabian Capital Market Authority, License No /37. 7