This week, our MENA stock markets tour's destination is Saudi Arabia, the land of sand, "liquid gold," mandi, and (more recently) IPOs! The country's exchange, Tadawul, has been one of the busiest in recent times when it comes to new listings, foreseeing more this year. In particular, last year's inclusion of Tadawul in the MSCI emerging market index gave a big boost to its global ambitions and foreign investors' interest.
Its long-standing public companies are among MENA's largest top players — basically the region's VIPs. In fact, 37 of the Forbes' Top 100 Companies in the Middle East list are based in Saudi, with Saudi Aramco (ARAMCO) leading the gang at the top of the podium.
Saudi Arabia's stock exchange is particularly interesting these days because the country is undergoing a Financial Development Program, part of Saudi Vision 2030, the Kingdom's massive economic reform plan to expand and diversify its revenue sources. And so, Saudi is developing a more efficient and sustainable digital infrastructure across different sectors — clearly reflected in its public companies' strategies.
Without further ado, let's deep dive into the country's most flourishing industries and have a look at how companies in these sectors are doing.
Quite obvious since Saudi has basically more oil than water, but still worth mentioning. The country is among the world's leaders in energy production, and its flagship A+ student, Saudi Aramco (ARAMCO), made it through the pandemic better than anyone would have bet.
Last month, the oil giant posted a 30% net income rise for the first quarter of the year at $21.7b (up from $16.6b in Q1 last year) proving that it was able to withstand the oil markets’ crash in 2020. After listing on Saudi’s Tadawul only in late 2019, the company now has about 96,000 employees and retains its lead as the region's most valuable company for the second year in a row.
On the greener side, the country's leading producer of electricity and sole owner of the entire transmission and distribution network throughout the Kingdom is Saudi Electricity Company (SECO). The electric utility company is headquartered in Riyadh and manages 37,000 megawatts of power across some 45 generation plants. Last year, Saudi Electricity sold $1.3b of 5 and 10-year dollar-denominated green sukuk to finance green capital projects, the first of the world’s largest oil-exporting nation. A true milestone towards environment-friendly debt instruments — Saudi, green looks good on you!
The food industry
But now let's get to the important stuff – food! Tadawul boasts some of MENA's most renowned companies in the sector like Saudia Dairy & Foodstuff Co (SADAFCO), major poultry companies Al-Wataniia (WATANIA) and Fakieh Poultry Farms (PG), and food and agricultural products Tanmiah Food Company — which just recently kicked off its book building process to hit the public market by the end of the month.
The food and beverages company with the biggest market cap in the sector is Almarai (ALMARAI), headquartered in Riyadh — was anyone else obsessing over its strawberry-flavored milk back in the day? The company is currently expanding by acquiring other MENA-based food companies like Modern Food, of which it recently purchased an additional 15% stake, and told investors it plans to pour a massive $1.8b investment in expanding its poultry business, officially joining the chicken run — watch out, Colonel Sanders.
Before moving on (and we know you're getting hungry by now), we have to mention everybody's favorite local fast food restaurant chain Herfy Services Company (HERFY), one of the largest in the Middle East, which has recently expanded its chain of restaurants internationally. With a total of more than 380 restaurants and 5,000 employees throughout Saudi Arabia, the company is soon launching a new unit in Bangladesh and one in Nigeria. One of the pillars of the 2030 Vision is all about expanding Saudi’s borders — so, well done for taking notes
The banking sector
The Kingdom is all about banking too. At the top, we have household names like Al Rajhi Banking and Investment Corporation (RJHI), which has a vast network of over 570 branches, dedicated ladies branches, and the largest customer base of any bank in Saudi. Just recently, its outlook was revised to ‘Stable’ from ‘Negative’ — resilience might just per the word of the year!
Saudi National Bank (SNB) shines high on our list too as this year it’s set to surge and kick-start a cycle of consolidation in the country's banking system. The financial institution is the product of a merger between National Commercial Bank (NCB) and Samba Financial Group (SAMBA), and reported a 20% rise in Q1 2021 with a $907m net profit, pointing to economic recovery in the industry.
Other fellow, relevant Saudi banks worth bringing to your radar are Riyad Bank (RIBL), Saudi British Bank (SABB), Banque Saudi Fransi (BSFR), and the Arab National Bank (ARNB).