Research Department ARC Research Team Tel 966 11 211 9370, research@alrajhi-capital.com Saudi Arabian Economy - Liquidity easing Saudi Arabian economy Liquidity improving owing to the government initiatives such as the successful foray into international bond market. Moreover, SAMA reduced the size of weekly issuance of Treasury bills and also introduced 90-day repos. As a result the SAIBOR has declined lately. The IMF cut the Kingdom s 2016 non-oil GDP forecast growth to 0.3%, as against 1.6% predicted in May 2016, as government spending cuts negatively impacted business confidence. OPEC raised the 2016 global oil demand forecast to 1.24 mbpd, from 1.23 mbpd, due to higher demand in Asia. Brent crude December futures declined 3.8% m-o-m in October 2016 owing to uncertainty regarding the deal among oil producers to cut crude oil production. Bank claims on the private sector grew by 7.0% y-o-y in September, as against a 7.5% y-o-y rise in August. Meanwhile, deposits dropped at a faster pace in September (-4.3% y-o-y versus -2.8% in August), pushing the loan-to-deposit ratio beyond the 90% mark for the fourth consecutive month. On the equity front, TASI advanced 6.9% m-o-m in October, as compared to a 7.5% m-o-m drop in September 2016. Kingdom s International Bond Sale: Saudi Arabia, in its first ever international bond sale, raised US$17.5bn, surpassing Argentina s bond sale worth US$16.5bn this year. The sale received investor orders around four times the bond size, indicating investors confidence in the Kingdom s ability to cope with low oil prices. The bond sale is expected to serve as a launch pad for further issuances by the government and large Saudi Arabian companies with the establishment of a sovereign yield curve. The Kingdom sold bonds with three maturities US$5.5bn 5- year bonds, US$5.5bn 10-year bonds and US$6.5bn 30-year bonds, with a premium of 135bps, 165bps and 210bps, respectively above equivalent US Treasury bonds. A major part of the bonds was sold outside the Middle Eastern region, unlike Qatar s bond sale early this year. The bond sale is expected to help the Kingdom to manage the expected budget deficit as oil prices continue to remain low. The successful issuance is also expected to ease the pressure on Kingdom s foreign reserve assets. Meanwhile, Fitch has assigned AA- rating to the Kingdom s international bond. Crude price outlook: The US Energy Information Administration (EIA), in its October 2016 report, estimated Brent crude oil prices to average around US$43/barrel in 2016 and US$51/barrel in 2017. Table 1 Key macro indicators Variable Sep-16 Aug-16 2015 2014 Inflation Rate (2007=100) 3.0% 3.3% 2.2% 2.7% Average Oil Price (Arab Light) (US$/Barrel) 42.7 43.5 49.9 97.1 Money Supply (M3) -4.0% -2.5% 2.6% 11.9% Total Banking Sector Claims 14.5 14.7 10.5 11.3 Interbank Interest Rate (3 Month) (BP) 2.345 2.271 0.88 0.936 Repo Rate (BP) 2.00 2.00 2.00 2.00 Reverse Repo Rate (BP) 0.5 0.5 0.5 0.25 Source: SAMA, * Provisional Q2 2016* Q1 2016* 2015* 2014* GDP Rate at Constant Prices (2010=100) 1.4% 1.5% 3.5% 3.6% Current Account to GDP Ratio (current prices) -5.3% -12.9% -8.3% 9.8% Total Imports (fob) to GDP Ratio (current prices) 19.7% 22.6% 24.0% 21.0% Non-oil Exports to GDP Ratio (current prices) 7.1% 7.3% 7.6% 7.6% 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 1934 solely by Rosenblatt Securities, an SEC registered and FINRA-member broker-dealer. 1
The 90-day SAIBOR dropped 1.5bps in October to end at 2.34% Crude oil prices declined in October owing to uncertainty regarding the deal to cut output SAIBOR eases marginally The Saudi Arabia Interbank Offered Rate (SAIBOR) climbed to the highest level since January 2009 in the mid of October 2016 on account of a continued rise in issuance of domestic bonds by the government to finance its budget deficit. However, the SAIBOR dropped towards the end of October, owing to the steps taken by the government to decrease upward pressure on the rates. The Kingdom issued international bonds worth US$17.5bn thereby reducing the need for issuing domestic bonds. Further, the Kingdom s central bank, the SAMA, has decided to introduce 90-day repurchase agreements (repos), along with the present 1-day, 7-day and 28-day repos, to increase liquidity and reduce borrowing costs. It is also committed to lower the weekly issues of Treasury bills from SAR9bn to SAR3bn, to improve monetary conditions on the domestic front. Crude oil slips Crude oil prices (Brent December futures contract) dropped 3.8% m-o-m in October as compared to a 6.2% m-o-m rise in September 2016. The oil prices declined as Iraq expressed its unwillingness to participate in the OPEC member states deal to cut production, making it the fourth nation, others being Iran, Nigeria and Libya, to be exempt from these cuts. Further, non-opec members declined a commitment to cut or freeze their outputs until an agreement among the OPEC members was reached. However, the final agreement would be ratified in the OPEC meeting at the end of November. Meanwhile the US oil rig count increased from 425 as at end of September to 441 as at the end of October. WTI (December futures contract) and Arab light logged a monthly fall of 4.0% and 3.8%, respectively, in October. The Kingdom s crude oil production rose by 2.7% y-o-y in September 2016, its fastest rate since February 2016, as against a rise of 1.3% y-o-y in August 2016. Figure 1 Saudi crude oil production trend Figure 2 Crude oil prices trend 10.8 10.6 10.4 10.2 10.0 9.8 9.6 9.4 9.2 9.0 8.8 12.0% 8.0% 6.0% 4.0% 2.0% -2.0% -4.0% -6.0% 70 65 60 55 50 45 40 35 30 25 20 Source: Bloomberg, Al Rajhi Capital Saudi Crude oil production growth Source: Bloomberg, Al Rajhi Capital Brent WTI Arab Light Disclosures Please refer to the important disclosures at the back of this report. 2
Saudi Arabia s non-oil exports and nonoil imports dropped further in August 2016, although at a slower pace Non-oil foreign trade The Kingdom s non-oil exports fell, albeit at a slower pace, by 11.1% y-o-y in August 2016 versus a fall of 27.2% y-o-y and y-o-y in July and June, respectively. The slower pace of decline was owing to gains in exports of plastic and rubber (+6.2% y-oy), which constituted 35.4% of the total exports, which was offset by a decline in chemical products (-31.3% y-o-y), which account for 25.4% of the total exports. Meanwhile, the country s non-oil imports dropped 29.5% y-o-y in August from a 32.7% annual decrease in July 2016. The non-oil imports were dragged down, owing to a fall in machinery & electrical (-34.1% y-o-y) and transport equipment (-25.9% y- o-y), which together form 42.0% of the total non-oil imports. Meanwhile, the UAE was the top non-oil export destination (14.3% of the total exports), while China was the top destination for non-oil imports (15.9% of the total imports). Table 2 Non-Oil Exports Commodities (SAR mn) Jun-16 Jul-16 Aug-16 % y-o-y % m-o-m Plastics & Rubbers 4,393 4,445 5,123 6.2% 15.3% Chemical Products 4,113 3,338 3,679-31.3% 10.2% Ordinary Metals 1,116 989 1,231-4.4% 24.5% Transport Equipments 1,342 663 1,104-26.8% 66.5% Others 3,297 2,384 3,335 0.7% 39.9% Total 14,261 11,819 14,472-11.1% 22.4% Figure 3 Components of non-oil exports Figure 4 Export Destinations 8.7% 23.0% 35.4% 14.3% 7.6% 5.5% 8.5% 65.7% 5.9% 25.4% Plastics & Rubbers Chemical Products Ordinary Metals Transport Equipments Others China UAE Singapore India Others Disclosures Please refer to the important disclosures at the back of this report. 3
Table 3 Non-Oil Imports Commodities (SAR mn) Jun-16 Jul-16 Aug-16 % y-o-y % m-o-m Machinery & Electricals 10,448 8,275 10,198-34.1% 23.2% Transport Equipments 9,104 5,157 7,372-25.9% 43.0% Ordinary Metals 4,022 3,529 4,118-30.7% 16.7% Chemical Products 4,086 3,011 4,039-13.0% 34.1% Others 15,346 13,508 16,068-31.0% 19.0% Total 43,006 33,480 41,795-29.5% 24.8% Figure 5 Components of non-oil imports Figure 6 Source countries 15.9% 24.4% 38.4% 14.2% 58.2% 17.6% 6.0% 9.7% 9.9% 5.8% Machinery & Electricals Transport Equipments Ordinary Metals Chemical Products Others China USA Germany Japan Others Figure 7 Non-oil export trend (y-o-y) 7 6 5 4 3 2 - -2-3 -4 Figure 8 Non-oil import trend (y-o-y) 6 5 4 3 2 - -2-3 -4 Non-oil Export Non-oil Import Disclosures Please refer to the important disclosures at the back of this report. 4
Money supply (M3) in September 2016 rose on a monthly basis Monetary and credit indicators Money supply The broader money supply (M3) declined at a faster pace of 4.0% y-o-y in September 2016 as compared to a fall of 2.5% y-o-y in August 2016 to stand at SAR1,756bn. The drop can be attributed to a yearly fall in demand deposits. Meanwhile, M3 edged up 0.2% in September 2016 on a monthly basis, against a fall of 0.1% m-o-m in August 2016. Figure 9 Money supply growth (y-o-y) 25.0% 2 15.0% 5.0% -5.0% - -15.0% Figure 10 Deposits break-up 1,200 1,000 800 600 400 200 0 M1 M2 M3 Time and Saving Deposits Demand Deposits The loan-to-deposit ratio crossed the 90% mark for the fourth straight month in September Credit and deposit growth Total credit growth (banks claim on the private sector) rose by 7.0% y-o-y in September 2016, edged down from the yearly rise of 7.5% in August. Meanwhile, deposits dropped at a faster rate of 4.3% y-o-y in September 2016 against the fall of 2.8% y-o-y in August. Credit allocated to the private sector inched down 0.1% in September 2016 on a monthly basis, after a brief rise of 0.2% m-o-m in August, whereas deposits witnessed a rise (0.2%) in September, after posting a steady reading of 0.o% m-o-m in the previous month. The loan-to-deposit ratio edged down to 90.3% in September 2016, versus the reading of 90.8% in August. Figure 11 Credit and deposit growth Figure 12 Loans to deposits 2 15.0% 5.0% -5.0% - 92% 90% 88% 86% 84% 82% 80% 78% 76% 74% 72% Deposits Credit Loans to Deposit ratio Disclosures Please refer to the important disclosures at the back of this report. 5
Kingdom s foreign reserve assets further dropped in September 2016 Foreign reserve assets Foreign reserve assets fell by 15.2% y-o-y in September 2016, against a drop of 15.1% y-o-y in August, to stand at SAR2,081bn (~US$554.5bn). The Kingdom has been tapping its foreign reserves to plug budget deficit owing to low oil prices. Foreign reserves dropped at a fast pace, by 1.3% in September (-0.2% in August) on a monthly basis, while foreign deposits abroad fell 2.2% m-o-m in September (-3.7% m-o-m in August). Meanwhile, investments in foreign securities, too, registered a monthly drop of 0.9% in September 2016 after posting gains for two consecutive months (+1.5% m- o-m in August). Figure 13 Foreign reserves Figure 14 Major components of foreign assets 3,000 2,500 2,000 1,500 1,000 500 0 2 15.0% 5.0% -5.0% - -15.0% -2 2,500 2,000 1,500 1,000 500 0 Foreign Reserves Assets Foreign Currency & Deposits Abroad Investment in Foreign Assets Inflation in the food & beverages segment dropped for the 3 rd consecutive month in September 2016 Inflation dynamics The general index of cost of living witnessed a slow yearly rise of 3.0% in September 2016, as against a rise of 3.3% y-o-y in August. The slowdown in inflation was owing to a further drop in the food & beverage segment inflation by -1.3% y-o-y in September (-1.0% y-o-y in August). Further, the transport segment and the housing, water, electricity & gas segment grew by a slower pace of 7.8% y-o-y in September (8.5% y-oy in August) and 6.7% y-o-y in September (7.0% y-o-y in August), respectively. However, inflation in the furnishing, household equipment & maintenance segment grew by 2.3% y-o-y in September (2.0% y-o-y in August). On a monthly basis, overall inflation logged a neutral reading of in September, as compared to a drop of 0.1% m-o-m in August 2016. Disclosures Please refer to the important disclosures at the back of this report. 6
Figure 15 Inflation trend (y-o-y) Figure 16 Inflation drivers (y-o-y) 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 14.0% 12.0% 8.0% 6.0% 4.0% 2.0% -2.0% -4.0% General Index Food And Beverages Transport Furnishings, Household Housing, Water, Electricity, Gas TASI advanced in the month of October 2016 Stock market indicators The Tadawul All Share index (TASI) gained 6.9% m-o-m in October 2016, versus a drop of 7.5% m-o-m in September. The major advancing sectors were Industrial Investments, BFSI, Real Estate, Hotel and Transport which rose 14.1%, 12.3%, 11.0%, and 8.2%, respectively. National Commercial Bank was the top performer on the index, delivering a monthly return of 32.77% in October 2016. Figure 17 Tadawul index performance Figure 18 TASI one year historic 12-month forward P/E chart Index 6100 6000 5900 5800 5700 5600 5500 5400 5300 5200 5100 Million 300 250 200 150 100 50 0 14.0x 13.0x 12.0x 11.0x 10.0x 9.0x 8.0x Volume RHS TASI Source: Bloomberg, Al Rajhi Capital, Data from 29 th September 2016 to 31 st October 2016 Source: Bloomberg, Al Rajhi Capital Disclosures Please refer to the important disclosures at the back of this report. 7
Figure 19 Top 5 Sectors MoM Figure 20 Bottom 5 sectors MoM 16.0% 14.0% 12.0% 8.0% 6.0% 4.0% 2.0% 2.0% -2.0% -4.0% -6.0% -8.0% - Source: Tadawul, Al Rajhi Capital, MoM returns for October 2016 Source: Tadawul, Al Rajhi Capital, MoM returns for October 2016 Table 4 Top 5 Gainers for the month of October Name Monthly Return Market Cap (SAR Avg Volume (mn) Sector National Commercial Bank 32.8% 87.6 1.1 Banks & Financial Services Saudi Arabian Mining Co 28.6% 45.4 1.3 Industrial Investment Abdul Mohsen Al-Hokair Tourism and Devel 24.4% 1.6 1.0 Hotel & Tourism Saudi Kayan Petrochemical Co 21.4% 9.9 20.9 Petrochemical Industries Bank AlJazira 2 4.8 4.0 Banks & Financial Services Source: Bloomberg, Al Rajhi Capital, Companies with market cap more than SAR 1bn Table 5 Top 5 Losers for the month of October Name Monthly Return Market Cap () Avg Volume (mn) Sector Fawaz Abdulaziz Al Hokair & Co -30.8% 4.9 3.7 Retail Yanbu Cement Co -20.4% 4.2 0.3 Cement Yamama Cement Co -14.1% 3.4 0.3 Cement Saudi Ceramic Co -11.7% 1.2 0.3 Building & Construction Southern Province Cement Co -11.6% 7.9 0.0 Cement Source: Bloomberg, Al Rajhi Capital, Companies with market cap more than SAR 1bn Kingdom s non-oil private sector PMI logged its record low reading in October Consumer spending indicators The Emirates NBD Saudi Arabia PMI declined, although remaining in the expansion territory, to 53.2 in October 2016, from 55.3 in September, owing to a slower rise in output and new orders. Point-of-sale (POS) transactions advanced 0.9% y-o-y in September 2016 as against a drop of 6.0% y-o-y in August. Meanwhile, ATM cash withdrawals witnessed a decline of 5.5% y-o-y in September as compared to a rise of 3.1% y-o-y in August 2016. Disclosures Please refer to the important disclosures at the back of this report. 8
Figure 21 Point-of-sale transactions (POS) trend Figure 22 ATM cash withdrawals trend 20.0 50% 80.0 50% 18.0 16.0 14.0 12.0 40% 30% 20% 70.0 60.0 50.0 40% 30% 20% 10.0 10% 40.0 10% 8.0 6.0 4.0 2.0 0% -10% -20% 30.0 20.0 10.0 0% -10% -20% - -30% - -30% POS ATM Cash withdrawals Figure 23 Emirates NBD Saudi PMI Index Figure 24 Consumer spending trend (POS and ATM cash Withdrawals) 64 62 60 58 56 54 52 50 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0-48 POS ATM Cash withdrawals Source: Bloomberg, Al Rajhi Capital Disclosures Please refer to the important disclosures at the back of this report. 9
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 1934, 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, 40 Wall Street 59th Floor, New York, NY 10005, a registered broker dealer in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Al Rajhi. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority ( FINRA ) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account. Ownership and Material Conflicts of Interest Rosenblatt Securities Inc. or its affiliates does not beneficially own, as determined in accordance with Section 13(d) of the Exchange Act, 1% or more of any of the equity securities mentioned in the report. Rosenblatt Securities Inc, its affiliates and/or their respective officers, directors or employees may have interests, or long or short positions, and may at any time make purchases or sales as a principal or agent of the securities referred to herein. Rosenblatt Securities Inc. is not aware of any material conflict of interest as of the date of this publication. Compensation and Investment Banking Activities Rosenblatt Securities Inc. or any affiliate has not managed or co-managed a public offering of securities for the subject company in the past 12 months, nor received compensation for investment banking services from the subject company in the past 12 months, neither does it or any affiliate expect to receive, or intends to seek compensation for investment banking services from the subject company in the next 3 months. Additional Disclosures This research report is for distribution only under such circumstances as may be permitted by applicable law. This research report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. Neither Al Rajhi nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or opinion in this research report or lack of care in this research report s preparation or publication, or any losses or damages which may arise from the use of this research report. Al Rajhi may rely on information barriers, such as Chinese Walls to control the flow of information within the areas, units, divisions, groups, or affiliates of Al Rajhi. Investing in any non-u.s. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities of non-u.s. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non-u.s. securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United States. The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related financial instruments. Past performance is not necessarily a guide to future performance and no representation or warranty, express or implied, is made by Al Rajhi with respect to future performance. Income from investments may fluctuate. The price or value of the investments to which this research report relates, either directly or indirectly, may fall or rise against the interest of investors. Any recommendation or opinion contained in this research report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein. No part of the content of this research report may be copied, forwarded or duplicated in any form or by any means without the prior consent of Al Rajhi and Al Rajhi accepts no liability whatsoever for the actions of third parties in this respect. 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. Al Rajhi Capital makes no representations or warranties (express or implied) regarding the data and information provided and Al Rajhi Capital does not represent that the information content of this document is complete, or free from any error, not misleading, or fit for any particular purpose. This research document provides general information only. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment products related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek financial, legal or tax advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that the price or value of such securities and investments may rise or fall. Fluctuations in exchange rates could have adverse effects on the value of or price of, or income derived from, certain investments. Accordingly, investors may receive back less than originally invested. Al Rajhi Capital or its officers or one or more of its affiliates (including research analysts) may have a financial interest in securities of the issuer(s) or related investments, including long or short positions in securities, warrants, futures, options, derivatives, or other financial instruments. Al Rajhi Capital or its affiliates may from time to time perform investment banking or other services for, solicit investment banking or other business from, any company mentioned in this research document. Al Rajhi Capital, together with its affiliates and employees, shall not be liable for any direct, indirect or consequential loss or damages that may arise, directly or indirectly, from any use of the information contained in this research document. This research document and any recommendations contained are subject to change without prior notice. Al Rajhi Capital assumes no responsibility to update the information in this research document. Neither the whole nor any part of this research document may be altered, duplicated, transmitted or distributed in any form or by any means. This research document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or which would subject Al Rajhi Capital or any of its affiliates to any registration or licensing requirement within such jurisdiction. Disclosures Please refer to the important disclosures at the back of this report. 10
Disclaimer and additional disclosures for 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. Al Rajhi Capital makes no representations or warranties (express or implied) regarding the data and information provided and Al Rajhi Capital does not represent that the information content of this document is complete, or free from any error, not misleading, or fit for any particular purpose. This research document provides general information only. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment products related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek financial, legal or tax advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that the price or value of such securities and investments may rise or fall. Fluctuations in exchange rates could have adverse effects on the value of or price of, or income derived from, certain investments. Accordingly, investors may receive back less than originally invested. Al Rajhi Capital or its officers or one or more of its affiliates (including research analysts) may have a financial interest in securities of the issuer(s) or related investments, including long or short positions in securities, warrants, futures, options, derivatives, or other financial instruments. Al Rajhi Capital or its affiliates may from time to time perform investment banking or other services for, solicit investment banking or other business from, any company mentioned in this research document. Al Rajhi Capital, together with its affiliates and employees, shall not be liable for any direct, indirect or consequential loss or damages that may arise, directly or indirectly, from any use of the information contained in this research document. This research document and any recommendations contained are subject to change without prior notice. Al Rajhi Capital assumes no responsibility to update the information in this research document. Neither the whole nor any part of this research document may be altered, duplicated, transmitted or distributed in any form or by any means. This research document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or which would subject Al Rajhi Capital or any of its affiliates to any registration or licensing requirement within such jurisdiction. Contact us Al Rajhi Capital Research Department Head Office, King Fahad Road P.O. Box 5561, Riyadh 11432 Kingdom of Saudi Arabia Email: research@alrajhi-capital.com Al Rajhi Capital is licensed by the Saudi Arabian Capital Market Authority, License No. 37/07068. Disclosures Please refer to the important disclosures at the back of this report. 11