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MONTHLY MACROECONOMIC REVIEW – SAUDI ARABIA

December 2017

Review of economic developments till end of November.

MACROECONOMIC MONTHLY

December 2017 2

Table of Content

A. Executive Summary and Review .......................................................................... 3

B. Chart Pack ................................................................................................................ 7

I. Macroeconomic Indicators......................................................................................... 7

II. Oil Indicators ................................................................................................................ 13

III. Stock Market Indicators ............................................................................................. 14

IV. Corporate earnings .................................................................................................... 15

V. Tadawul Sector Earnings Performance .................................................................... 16

C. Saudi Arabia Key Statistics ................................................................................... 17


December 2017 3

A. Executive Summary and Review

Executive Summary

The key highlights are:

1. Oil production – KSA marginally decreased oil production,

and produced 9.97 million barrels of oil per day (mbpd) in

November 2017, to maintain production limit.

2. Inflation – Deflation aggravated during Oct-17 to -0.2%,

extending the trend for the tenth straight month.

Consumer demand apparently continues to be weak in

key areas, led by weakness in transport prices.

3. Non-oil private sector growth – The Saudi PMI reached its

highest level in two years in November, at 57.5, supported

by strong export orders.

4. Credit growth – Bank credit declined by 1.8% in October

2017 on a YoY basis to SAR 1.409tn, recording the largest

drop in a decade, mainly attributable to decline in

private sector lending.

5. POS transactions – POS transactions increased 15.0% YoY

to SAR 16.4bn in October 2017, strongest growth in two

years. Cumulative YTD POS transactions till October have

increased 7.7% YoY to SAR163bn in 2017.

Oil prices move up, supported by extension

of oil production cut deal:

In the last week of November, OPEC and other non-member

allies agreed to prolong oil production cuts till the end of

2018, extending the efforts to bring back control of the global

oil market from the shale industry. The effort to cut supply

collectively by 1.72 mbpd (from October 2016 production

level as reference) was joined by Libya and Nigeria, which

were previously exempt from the agreement. Overall, the

extension of the deal will help alleviate uncertainty about

supply in 2018.

During November, the OPEC countries cut production by

another 80,000 bpd compared to last month, meeting the

overall production cut target of 1.176 mbpd. Total crude

output during November stood at 32.47 mbpd compared to

32.55 mbpd during October 2017. Angola and Kuwait

shouldered the most cuts, by cutting production by 100,000

bpd and 50,000 bpd, respectively. Iraq and Qatar offset

these efforts on the other hand by raising output by 40,000

and 30,000 bpd, respectively.

Data Releases

Indicator Data

Inflation (October

2017) -0.2%

PMI (November

2017) 57.5

SAMA Reserve

Assets Growth

MoM (October

2017)

1.7%

Bank Credit

Growth YoY

(October 2017)

-1.8%

Bank Deposit

Growth YoY

(October 2017)

0.5%

Loan to Deposit

Ratio (October

2017)

0.88

Money Supply

Growth YoY

(October 2017)

-0.6%

3M SAIBOR

(October 2017) 1.79%

ATM Withdrawals

Growth YoY

(October 2017)

1.3%

PoS Transactions

Growth YoY

(October 2017)

15.0%

Saudi Oil

Production

(November 2017)

9.97

mbpd

Saudi Oil Exports

(September 2017)

6.5

mbpd

OPEC Production

(November 2017)

32.5

mbpd

Global Oil Supply

– Demand

(October 2017)

0.7

mbpd

US Rig Count

(November 2017)

747


December 2017 4

Figure 1: OPEC Production Cuts (‘000s bpd) Figure 2: Non-OPEC Production cuts (‘000s

bpd)

Source: Bloomberg, As of November 2017 Source: Bloomberg, As of October 2017

Oil production in Saudi Arabia remained below the agreed production target, i.e., willingly

contributing more cuts than agreed. Saudi Arabia pumped 9.97mbpd during November,

marginally lower (-0.4%) than in October. Crude oil export data, which is released with a two

month lag, points at gradual reduction in exports from Saudi Arabia, amounting to -15% fall

on a YTD basis. This is a positive towards balancing the oil market, as Saudi Arabia is

offloading lesser inventory in the open market alongside reduced oil output.

Figure 3: Country wise production cut vs targets (‘000s bpd)

Source: Bloomberg, MEFIC Research

Among OPEC countries, Saudi Arabia, Venezuela, Kuwait, Angola and Algeria have

exceeded their production cut targets with deeper cuts in November as compared to June,

which was when oil prices began to rally. UAE and Iraq have scaled back their cuts, though

not by a large quantum. Among non-OPEC countries, Russia has met its target cuts in

October, while Mexico has exceeded the target by more than double the production cut.

The cooperation from leading non-OPEC countries like Russia and Mexico has increased the

conviction behind compliance to production cut strategy and is reflecting in rising oil prices.

-1400

-1200

-1000

-800

-600

-400

-200

0

-1400

-1200

-1000

-800

-600

-400

-200

0

Jan

ua

ry

Feb

rua

ry

Ma

rch

Ap

ril

Ma

y

Jun

e

July

Au

gu

st

Se

pte

mb

er

Oc

tob

er

No

ve

mb

er

Reached Target

-800

-700

-600

-500

-400

-300

-200

-100

0

-800

-700

-600

-500

-400

-300

-200

-100

0

Jan

ua

ry

Feb

rua

ry

Ma

rch

Ap

ril

Ma

y

Jun

e

July

Au

gu

st

Se

pte

mb

er

Oc

tob

er

Reached Target

-600

-500

-400

-300

-200

-100

0

Sa

ud

i Ara

bia

Ira

q

UA

E

Ku

wa

it

Ve

ne

zue

la

An

go

la

Alg

eria

Qa

tar

Ec

ua

do

r

Ga

bo

n

Ru

ssia

Me

xic

o

Om

an

Aze

rba

ijan

Ka

zakh

sta

n

Ma

laysi

a

Ba

hra

in

S.S

ud

an

Bru

ne

i

Su

da

n

Target Production Cut

November (OPEC)/October (Non-OPEC) Production Cut

June Production Cut

OPEC Non-OPEC


December 2017 5

Oil prices are clearly on track towards beating 2017 estimates of USD 52 - 53 per barrel by

international organizations like the IMF and US EIA, which had forecasted them by mid of

2017. Since June 2017, oil prices have rallied as OPEC’s compliance to the production cut

deal picked up from 82% in June to 112% in November. Oil prices averaged USD 62.8 per

barrel in November compared to Q3 average of USD 52.16 per barrel and Q2 average of

USD 50.79 per barrel. Additionally, oil inventories are gradually falling towards their five year

average, which is one of OPEC’s key measures of success. According to member countries,

the goal to re-balance the market hasn’t been met in full yet, hence all countries are in favor

of extension to reach final goals.

Figure 4: Brent Crude Prices (USD/barrel)

Source: Bloomberg

Saudi Non-oil private sector growth strongest in over 2 years

Saudi Arabia Purchasing Manager’s Index (PMI) rose to 57.5 in November 2017, the highest

level since August 2015. The strong PMI reading was mainly attributable to the sharp rise in oil

prices from USD 57.6 in October to USD 62.8 per barrel in November 2017. The output and

new orders rose at the fastest rate in 2017, which points towards better non-oil sector growth

in the fourth quarter. New orders’ growth was fueled largely by export demand. Input costs

increased marginally, however average selling prices remained unchanged in November

compared to October. Overall, businesses remained optimistic about prospects over the

coming year, although the degree of optimism was slightly weaker than in October.

Inflation decelerates further to -0.2% in October

Headline CPI Inflation dipped further to -0.2% in October after recovering and stabilizing

at -0.1% during August and September 2017. In October, transport prices mainly dragged the

inflation lower (-2.2%) along with weakness in consumption related items like clothing and

footwear, furnishing and household equipment which recorded -3.2% and -1.9% respectively.

Food and beverage items, constituting 22% weight of the inflation general index, saw a

marginal improvement in prices, although still facing a deflationary environment (-1.2%).

Bank Credit growth continues to be negative

Bank credit declined by 1.8% YoY in October 2017 to SAR 1.409tn, recording the largest drop

in a decade, mainly attributable to decline in private sector lending. On a YTD basis, credit

grew 0.6% driven by a 0.8% growth in private sector credit and was broadly unchanged on a

40

45

50

55

60

65

Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17


December 2017 6

MoM basis. Banks remained cautious in lending even as Q3 corporate earnings (of listed

companies) improved 18.7% YoY and 28.4% QoQ. Banks cut credit exposure towards the

mining and quarrying sector by 10.8% on a QoQ basis. The manufacturing sector also

witnessed a 2.8% reduction in credit on a QoQ basis.

Figure 5: CPI Inflation (% YoY) Figure 6: Bank credit growth (% YoY)

Source: SAMA Source: SAMA

Money Supply records highest decline in the year

Money supply declined 0.6% YoY to SAR 1.768tn, highest decline in a year, mainly due to

11.3% YoY drop in time and savings deposits that peaked at SAR 498bn in October 2016. The

drop in time and savings deposits was attributable to both businesses and government

entities. Money supply declined 1.1% YTD due to a 10.1% drop in time and savings deposits by

businesses as well as government entities. Demand deposits grew 3.7% YoY to SAR 995bn

mainly driven by higher government entity deposits, although partly offset by lower business

deposits.

October

2017,

-0.2%

-1

0

1

2

3

4

5

Jan

-12

Ma

y-1

2

Se

p-1

2

Jan

-13

Ma

y-1

3

Se

p-1

3

Jan

-14

Ma

y-1

4

Se

p-1

4

Jan

-15

Ma

y-1

5

Se

p-1

5

Jan

-16

Ma

y-1

6

Se

p-1

6

Jan

-17

Ma

y-1

7

Se

p-1

7

October

2017,

-1.8

-20

-10

0

10

20

30

40

50

Jan

-98

Ma

y-9

9

Se

p-0

0

Jan

-02

Ma

y-0

3

Se

p-0

4

Jan

-06

Ma

y-0

7

Se

p-0

8

Jan

-10

Ma

y-1

1

Se

p-1

2

Jan

-14

Ma

y-1

5

Se

p-1

6


December 2017 7

B. Chart Pack

I. Macroeconomic Indicators

Figure 1: GDP (Constant prices) growth

(quarterly -% YoY) Figure 2: GDP growth (annual - % YoY)

Source: General Authority of Statistics Source: General Authority of Statistics

Figure 3: Non-oil GDP growth (quarterly - %

YoY)

Figure 4: Non-oil GDP growth (annual - %

YoY)


Figure 5: Inflation (% YoY) Figure 6: Food inflation (% YoY)

Source: Saudi Arabia Monetary Authority (SAMA) Source: SAMA

Figure 7: PMI index Figure 8: Cement Sales (Mn tons)

Source: Bloomberg Source: Yamama Cement

Q2 2017,

-1.0%

(5)

-

5

10

15

Q1

20

11

Q3

20

11

Q1

20

12

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1 2

017

2016,

1.4%

-25

-15

-5

5

15

25

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

Q2 2017,

1.9%

(5)

-

5

10

15

20

Q1

20

11

Q3 2

011

Q1

20

12

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

2016,

1.3%

-5

5

15

25

35

451971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

October

2017,

-0.2%

-1

0

1

2

3

4

5

Jan

-12

Ma

y-1

2

Se

p-1

2

Jan

-13

Ma

y-1

3

Se

p-1

3

Jan

-14

Ma

y-1

4

Se

p-1

4

Jan

-15

Ma

y-1

5

Se

p-1

5

Jan

-16

Ma

y-1

6

Se

p-1

6

Jan

-17

Ma

y-1

7

Se

p-1

7

October

2017,

-1.2%

-6

-4

-2

0

2

4

6

8

Jan

-12

Ma

y-1

2

Se

p-1

2

Jan

-13

Ma

y-1

3

Se

p-1

3

Jan

-14

Ma

y-1

4

Se

p-1

4

Jan

-15

Ma

y-1

5

Se

p-1

5

Jan

-16

Ma

y-1

6

Se

p-1

6

Jan

-17

November

2017,

57.5

485052545658606264

Ma

y-1

4

Au

g-1

4

No

v-1

4

Feb

-15

Ma

y-1

5

Au

g-1

5

No

v-1

5

Feb

-16

Ma

y-1

6

Au

g-1

6

No

v-1

6

Feb

-17

Ma

y-1

7

Au

g-1

7

No

v-1

7 1

2

3

4

5

6

Ja

n

Fe

b

Ma

r

Ap

r

Ma

y

Ju

n

Ju

l

Au

g

Se

p

Oc

t

No

v

De

c

2012 2013 2014

2015 2016 2017


December 2017 8

Figure 9: Oil vs Non-oil revenues (% share) Figure 10: Annual fiscal balance (SAR bn)

Source: Saudi Arabia Finance Ministry, E- Estimate Source: Saudi Arabia Finance Ministry, E-Estimate

Figure 11: Current account balance -

quarter (USD bn)

Figure 12: Current account balance -yearly

(USD bn)


Figure 23: Current Account Balance (%GDP) Figure 34: Trade balance (SAR bn)


Figure 15: Trade balance change (% YoY) Figure 16: KSA breakeven oil price (USD/bl)

Source: SAMA Source: Ministry of Finance, Thomson Reuters, MEFIC

estimate

0%

20%

40%

60%

80%

100%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017E

Oil revenues Non-oil revenues

-15

-5

5

15

25

-400

-200

0

200

400

600

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017E

Fiscal Balance (SAR bn) - LHS Fiscal Balance (% GDP) - RHS

Q2 2017,

-2.7

-25-15-55

15253545

Q1

20

10

Q3

20

10

Q1

20

11

Q3

20

11

Q1

20

12

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

66.8

158.5 164.8

135.4

73.8

-56.7

-24.9

-100

-50

0

50

100

150

200

2010 2011 2012 2013 2014 2015 2016

Q2 2017,

-1.6

-15

-5

5

15

25

35

Q1

20

10

Q3

20

10

Q1 2

011

Q3 2

011

Q1 2

012

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

143

198

97

144

233 233

208

169

29 43

0

50

100

150

200

250

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

50.3%

-85

-65

-45

-25

-5

15

35

55

2008

2009

2010

2011

2012

2013

2014

2015

2016

69

.7

79

.4

74

.3

86

.0

10

4.8

88

.3

59

.5

67

.9

0

20

40

60

80

100

120

2010 2011 2012 2013 2014 2015 2016 2017F

Breakeven oil prices (USD) Average brent price (USD)


December 2017 9

Figure 17: Total External Debt (SAR bn) Figure 18: SAMA Reserve Assets* (USD bn)

Source: SAMA Source: SAMA,*- includes special drawing rights

Figure 19: Reserve Assets (% MoM) Figure 40: Bank credit growth (% YoY)


Figure 51: Bank credit across major sectors

(SAR bn) Figure 62: Bank Deposits (SAR bn)


Figure 73: Loan-to-Deposit Ratio (%) Figure 84: NPL-to-Total Loans (%)


411.6

0

100

200

300

400

5002004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

October

2017,

493

400 450 500 550 600 650 700 750 800

Jan

-10

Jul-1

0

Jan

-11

Jul-1

1

Jan

-12

Jul-1

2

Jan

-13

Jul-1

3

Jan

-14

Jul-1

4

Jan

-15

Jul-15

Jan

-16

Au

g-1

6

Feb

-17

Au

g-1

7

October

2017,

1.7

-4-3-2-1012345

Jan

-10

Jul-10

Jan

-11

Jul-1

1

Jan

-12

Jul-1

2

Jan

-13

Jul-1

3

Jan

-14

Jul-1

4

Jan

-15

Jul-1

5

Jan

-16

Au

g-1

6

Feb

-17

Au

g-1

7 October

2017,

-1.8

-20

-10

0

10

20

30

40

50

Jan

-98

Ma

y-9

9

Se

p-0

0

Jan

-02

Ma

y-0

3

Se

p-0

4

Jan

-06

Ma

y-0

7

Se

p-0

8

Jan

-10

Ma

y-1

1

Se

p-1

2

Jan

-14

Ma

y-1

5

Se

p-1

6

0

150

300

450

600

Q1

19

96

Q2 1

997

Q3

19

98

Q4

19

99

Q1

20

01

Q2

20

02

Q3 2

003

Q4

20

04

Q1

20

06

Q2

20

07

Q3

20

08

Q4

20

09

Q1

20

11

Q2

20

12

Q3

20

13

Q4

20

14

Q1

20

16

Q2

20

17

Manufacturing and Processing Buiding and Construction Commerce Services

October

2017,

1,600.9

0

500

1,000

1,500

2,000

Jan

-93

Jan

-95

Jan

-97

Jan

-99

Jan

-01

Jan

-03

Jan

-05

Jan

-07

Jan

-09

Jan

-11

Jan

-13

Jan

-15

Jan

-17

October

2017,

88.0

0.5

0.6

0.7

0.8

0.9

1.0

Jan

-93

Jan

-95

Jan

-97

Jan

-99

Jan

-01

Jan

-03

Jan

-05

Jan

-07

Jan

-09

Jan

-11

Jan

-13

Jan

-15

Jan

-17

Q3 2017,

1.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Q1

20

09

Q4

20

09

Q3

20

10

Q2

20

11

Q1

20

12

Q4

20

12

Q3

20

13

Q2

20

14

Q1

20

15

Q4

20

15

Q3

20

16

Q2

20

17


December 2017 10

Figure 95: Money Supply/M3 growth (% YoY) Figure 106: Composition of M3 money

supply (% share)


Figure 27: Currency Outside Banks (% share

of M3)

Figure 28: Time & Savings Deposits/Total

Deposits (%)


Figure 29: 3M SIBOR (%) Figure 30: Short term interest rate curve (1w

to 52 w)


Figure 31: Inflation (major sub-indices) Figure 32: House Rent Index (100=2007)


October

2017,

-0.6

-10

-5

0

5

10

15

20

25

30Ja

n-9

4

Jan

-96

Jan

-98

Jan

-00

Jan

-02

Jan

-04

Jan

-06

Jan

-08

Jan

-10

Jan

-12

Jan

-14

Jan

-16

0

20

40

60

80

100

Jan

-93

Jun

-94

No

v-9

5

Ap

r-9

7

Se

p-9

8

Ma

r-0

0

Au

g-0

1

Jan

-03

Jun

-04

No

v-0

5

Ma

y-0

7

Oc

t-0

8

Ma

r-1

0

Au

g-1

1

Feb

-13

Jul-1

4

De

c-1

5

Ma

y-1

7

Currency Outside bank Demand Deposits

Time and Savings Deposits Other Quasi Money Deposits

October

2017,

9.5

0

5

10

15

20

25

Jan

-93

Au

g-9

4

Ma

r-9

6

Oc

t-9

7

Ma

y-9

9

De

c-0

0

Jul-0

2

Feb

-04

Se

p-0

5

Ap

r-07

No

v-0

8

Jun

-10

Jan

-12

Au

g-1

3

Ma

r-1

5

Oc

t-1

6

15

20

25

30

35

40

45

Jan

-93

Jul-9

4

Jan

-96

Jul-9

7

Feb

-99

Au

g-0

0

Feb

-02

Se

p-0

3

Ma

r-0

5

Se

p-0

6

Ap

r-0

8

Oc

t-0

9

Ap

r-1

1

Oc

t-1

2

Ma

y-1

4

No

v-1

5

Ma

y-1

7

October

2017,

1.79

0

1

2

3

4

5

6

Jan

-200

7

Oc

t-2

00

7

Jul-2

00

8

Ap

r-2

00

9

Jan

-201

0

Oc

t-2

01

0

Jul-2

01

1

Ap

r-2

01

2

Jan

-201

3

Oc

t-2

01

3

Jul-2

01

4

Ap

r-2

01

5

Jan

-201

6

Oc

t-2

01

6

Jul-2

01

7 1.0

1.5

2.0

2.5

3.0

1M

3M

6M

12M

Oct-2017 Dec-2016 Oct-2016

-1.2

October

2017

-0.3

-2.2 -5

0

5

10

15

Jan

-12

Se

p-1

2

Ma

y-1

3

Jan

-14

Se

p-1

4

Ma

y-1

5

Jan

-16

Se

p-1

6

Ma

y-1

7

Food and beverages

Transport

Housing , Water, Electricity, Gas, and other fuels

161.5

167.8

174.4

168.7

155

160

165

170

175

180

2012 2013 2104 2015

October

2017, 27.6


December 2017 11

Figure 33: ATM Cash Withdrawals (SAR bn) Figure 34: Saudi unemployment rate (%)

Source: SAMA Source: Bloomberg

Figure 35: Competitiveness ranking/indicator Figure 36: FDI (accumulated, SAR billions)

Source: World Economic Forum (2016-2017) Source: SAMA

Figure 37: External debt-to-GDP (%) Figure 38: POS Transactions Sales (SAR bn)

Source: International Monetary Fund Source: SAMA

Figure 39: Mobile/Telecom Subscribers (mn) Figure 40: Automobile Sales (‘000s)

Source: Ministry of Communication and IT, Q3 2016

taken as average of Q2 and Q4 2016

Source: Car Sales Base

October

2017,

61.1

0

10

20

30

40

50

60

70

80Ju

l-9

6

Jan

-98

Jul-9

9

Jan

-01

Jul-0

2

Jan

-04

Jul-0

5

Jan

-07

Jul-0

8

Jan

-10

Jul-1

1

Jan

-13

Jul-1

4

Jan

-16

Jul-1

7

Q2 2017,

12.8

10.5

11.0

11.5

12.0

12.5

13.0

Q1

20

12

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

16 18

29

38

48

66

0

10

20

30

40

50

60

70

United

Arab

Qatar Saudi

Arabia

Kuwait Bahrain Oman

868.1

0

200

400

600

800

1000

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2016,

17%

0.0

0.1

0.1

0.2

0.2

0.3

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

0

5

10

15

20

Jan

-95

Au

g-9

6

Ma

r-9

8

Oc

t-9

9

Ma

y-0

1

De

c-0

2

Jul-0

4

Feb

-06

Se

p-0

7

Ap

r-0

9

No

v-1

0

Jun

-12

Jan

-14

Au

g-1

5

Ma

r-1

7

October 2017,

16.4

43.6

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2010

2011

2012

2013

2014

2015

Q1 2

016

Q2 2

016

Q3 2

016

Q4 2

016

Q1 2

017

Q2 2

017

679.5

0.0

200.0

400.0

600.0

800.0

1,000.0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016


December 2017 12

Figure 41: Electricity Generation (TWh) Figure 42: Electricity Generation - Quarterly

(TWh)

Source: Electricity and Cogeneration Regulatory

Authority

Source: Saudi Electric Company

Figure 43: Cement Prices (SAR, 50kg) Figure 44: Steel Prices (SAR/ton)


Figure 45: Expat Remittances (SAR bn)

Source: SAMA

287.4

0

50

100

150

200

250

300

3502007

2008

2009

2010

2011

2012

2013

2014

2015

2016

103.6

0

20

40

60

80

100

120

Q1

20

15

Q2

20

15

Q3

20

15

Q4

20

15

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

16

Q1 2

017

Q2

20

17

Q3

20

17

October

2017,

12.3

10

11

12

13

14

15

16

Jan

-07

Oc

t-0

7

Jul-0

8

Ap

r-0

9

Jan

-10

Oc

t-10

Jul-11

Ap

r-1

2

Jan

-13

Oc

t-1

3

Jul-1

4

Ap

r-1

5

Jan

-16

Oc

t-1

6

Jul-1

7

October

2017,

2,361

8

1,008

2,008

3,008

4,008

5,008

6,008

Jan

-07

No

v-0

7

Se

p-0

8

Jul-0

9

Ma

y-1

0

Ma

r-1

1

Jan

-12

No

v-1

2

Se

p-1

3

Jul-1

4

Ma

y-1

5

Ma

r-1

6

Jan

-17

October

2017

12.2

0

5

10

15

20

Jan

-95

Jan

-97

Jan

-99

Jan

-01

Jan

-03

Jan

-05

Jan

-07

Jan

-09

Jan

-11

Jan

-13

Jan

-15

Jan

-17


December 2017 13

II. Oil Indicators

Figure 1: Saudi Oil Production (mbpd) Figure 2: Saudi Domestic Consumption

(mbpd)

Source: Bloomberg Source: Reuters Datastream

Figure 3: Saudi Oil Export (mbpd) Figure 4: OPEC Oil Production (mbpd)

Source: Ministry of Petroleum, JODI, Source: Bloomberg

Figure 5: Global Oil Supply/Demand (mbpd) Figure 6: US Oil Production (mbpd)

Source: Bloomberg Source: Bloomberg

Figure 7: US Oil Inventory (mb) Figure 8: US Rig Count

Source: Reuters Eikon Source: Bloomberg

November

2017, 9.97

0

2

4

6

8

10

12

De

c-7

0

Feb

-74

Ap

r-7

7

Jun

-80

Au

g-8

3

Oc

t-8

6

De

c-8

9

Feb

-93

Ap

r-9

6

Jun

-99

Au

g-0

2

Oc

t-05

De

c-0

8

Feb

-12

Ap

r-1

5

June 2016,

3.9

0

1

2

3

4

5

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

September

2017,

6.5

4

5

6

7

8

9

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Jan

-15

Jan

-16

Jan

-17

November

2017,

32.5

10

15

20

25

30

35

40

De

c-8

7

De

c-8

9

De

c-9

1

De

c-9

3

De

c-9

5

De

c-9

7

De

c-9

9

De

c-0

1

De

c-0

3

De

c-0

5

De

c-0

7

De

c-0

9

De

c-1

1

De

c-1

3

De

c-1

5

-6

-4

-2

0

2

4

Ma

r-9

5

Au

g-9

6

Jan

-98

Jun

-99

No

v-0

0

Ap

r-0

2

Se

p-0

3

Feb

-05

Jul-0

6

De

c-0

7

Ma

y-0

9

Oc

t-1

0

Ma

r-1

2

Au

g-1

3

Jan

-15

Jun

-16

October

2017,

0.7

October

2017,

9.55

2

4

6

8

10

Jan

-97

Jun

-98

No

v-9

9

Ap

r-0

1

Se

p-0

2

Feb

-04

Jul-0

5

De

c-0

6

Ma

y-0

8

Oc

t-0

9

Ma

r-1

1

Au

g-1

2

Jan

-14

Jun

-15

No

v-1

6

October

2017,

454.9

0

100

200

300

400

500

600

Au

g-8

2

Jan

-85

Jun

-87

No

v-8

9

Ap

r-9

2

Se

p-9

4

Feb

-97

Jul-9

9

De

c-0

1

Ma

y-0

4

Oc

t-0

6

Ma

r-0

9

Au

g-1

1

Jan

-14

Jun

-16

November

2017,

747

0

400

800

1200

1600

Jul-8

7

Au

g-8

9

Se

p-9

1

Oc

t-9

3

No

v-9

5

De

c-9

7

Jan

-00

Feb

-02

Ma

r-0

4

Ap

r-0

6

Ma

y-0

8

Jun

-10

Jul-1

2

Au

g-1

4

Se

p-1

6


December 2017 14

III. Stock Market Indicators

Figure 1: TASI and Oil Figure 2: TASI Price-to-Earnings Ratio (x)

Source: Bloomberg Source: SAMA

Figure 3: Stock Market Turnover (SAR bn) Figure 4: Domestic Shares held by Domestic

Investment Funds (SAR bn)

Source: Tadawul, SAMA Source: SAMA

Figure 5: Share Ownership Status Figure 6: Total Assets of Investment funds

(SAR bn)


63.6

November

2017,

7004.0

0

5000

10000

15000

20000

25000

0

50

100

150

Jun

-97

De

c-9

8

Jun

-00

De

c-0

1

Jun

-03

De

c-0

4

Jun

-06

De

c-0

7

Jun

-09

De

c-1

0

Jun

-12

De

c-1

3

Jun

-15

De

c-1

6

Brent - USD/bl (LHS) TASI (RHS)

October

2017,

15.0

0

20

40

60

80

100

120

Au

g-0

5

Jun

-06

Ap

r-0

7

Feb

-08

De

c-0

8

Oc

t-0

9

Au

g-1

0

Jun

-11

Ap

r-1

2

Feb

-13

De

c-1

3

Oc

t-1

4

Au

g-1

5

Jun

-16

Ap

r-1

7

October

2017,

66.6

0

200

400

600

800

1,000

Jan

-04

No

v-0

4

Se

p-0

5

Jul-0

6

Ma

y-0

7

Ma

r-0

8

Jan

-09

No

v-0

9

Se

p-1

0

Jul-11

Ma

y-1

2

Ma

r-1

3

Jan

-14

Oc

t-1

4

Au

g-1

5

Jun

-16

Ap

r-1

7

0

20

40

60

80

100

Q1

19

98

Q2

19

99

Q3

20

00

Q4

20

01

Q1

20

03

Q2

20

04

Q3

20

05

Q4

20

06

Q1

20

08

Q2

20

09

Q3

20

10

Q4

20

11

Q1

20

13

Q2

20

14

Q3

20

15

Q4

20

16

0%20%40%60%80%

100%

Jul-2

01

5

Se

p-2

01

5

No

v-2

01

5

Jan

-201

6

Ma

r-2

01

6

Ma

y-2

016

Jul-2

01

6

Se

p-2

01

6

No

v-2

01

6

Jan

-201

7

Ma

r-2

01

7

Ma

y-2

017

Jul-2

01

7

Se

p-2

017

Individuals Institutions Govt. Related Entities GCC Investors Foreign Investors

87.8

0

50

100

150

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Q3 2017,

19.2


December 2017 15

IV. Corporate earnings

Figure 1: TASI Revenue and YoY growth

(Quarterly)

Figure 2: TASI Revenue and YoY growth

(Annual)

Source: Reuters Eikon Source: Reuters Eikon

Figure 3: TASI EBITDA and YoY growth

(Quarterly)

Figure 4: TASI EBITDA and YoY growth

(Annual)


Figure 5: TASI PAT and YoY growth

(Quarterly) Figure 6: TASI PAT and YoY growth (Annual)


Figure 7: TASI EBITDA and PAT margin (%) -

Quarterly

Figure 8: TASI EBITDA and PAT margin (%) -

Annual

Q3 2017,

169.2 3.5%

(20) (10) - 10 20 30 40

050

100150200250

Q1

20

08

Q4

20

08

Q3

20

09

Q2

20

10

Q1

20

11

Q4

20

11

Q3

20

12

Q2

20

13

Q1

20

14

Q4

20

14

Q3

20

15

Q2

20

16

Q1

20

17

Rev (SAR bn)- LHS Rev (%yoy) - RHS

682.5

4.4

(10)

-

10

20

30

0

200

400

600

800

2008

2009

2010

2011

2012

2013

2014

2015

2016

Rev (SAR bn)- LHS Rev (%yoy) - RHS

Q3 2017

61.1 9.12

(40)

(20)

-

20

40

60

0

20

40

60

80

Q1

20

08

Q4 2

008

Q3

20

09

Q2

20

10

Q1

20

11

Q4

20

11

Q3

20

12

Q2

20

13

Q1

20

14

Q4

20

14

Q3

20

15

Q2

20

16

Q1

20

17

EBITDA (SAR bn) - LHS EBITDA (%yoy) - RHS

208.7

4.9

(20)

(10)

-

10

20

30

0

50

100

150

200

250

2008

2009

2010

2011

2012

2013

2014

2015

2016

EBITDA (SAR bn) - LHS EBITDA (%yoy) - RHS

Q3 2017

32.9 18.75

(200)

(150)

(100)

(50)

-

50

100

150

-40

-20

0

20

40

Q1

20

08

Q4

20

08

Q3

20

09

Q2

20

10

Q1

20

11

Q4

20

11

Q3

20

12

Q2

20

13

Q1

20

14

Q4

20

14

Q3

20

15

Q2

20

16

Q1

20

17

Profit (SAR Bn) -LHS Profit (% yoy) - RHS

100.0

0.2

(20)

(10)

-

10

20

30

40

0

50

100

150

2008

2009

2010

2011

2012

2013

2014

2015

2016

Profit (SAR Bn) -LHS Profit (% yoy) - RHS

Q3 2017,

36.1

19.44

-40

-20

0

20

40

60

Q1

20

08

Q3

20

08

Q1

20

09

Q3

20

09

Q1

20

10

Q3

20

10

Q1

20

11

Q3

20

11

Q1 2

012

Q3

20

12

Q1

20

13

Q3

20

13

Q1

20

14

Q3

20

14

Q1

20

15

Q3

20

15

Q1

20

16

Q3

20

16

Q1

20

17

Q3

20

17

EBITDA margin Net profit margin

35.5 31.5 31.9 30.9 29.1 29.9 29.5 30.4 30.6

11.7 15.6 16.8 16.9 16.5 16.9 17.2

15.3 14.6

0

10

20

30

40

2008

2009

2010

2011

2012

2013

2014

2015

2016

EBITDA margin (%) PAT margin (%)


December 2017 16

V. Tadawul Sector Earnings Performance

Earnings (SAR mn) Market

Cap (SAR

mn)

Q3 2017 Q3 2016 Q2 2017 % YoY % QoQ

Materials 544,281 8,702.4 7,908.4 6,077.1 10.0 43.2

Banks 456,991 11,374.1 9,951.1 11,324.0 14.3 0.4

Telecommunication Services 155,386 2,390.0 1,664.4 2,203.6 43.6 8.5

Real Estate 109,896 381.0 288.0 351.1 32.3 8.5

Utilities 103,876 5,300.6 4,434.4 2,269.4 19.5 133.6

Food, Beverage & Tobacco 91,005 1,585.0 952.1 1,011.0 66.5 56.8

Insurance 40,929 740.9 851.9 287.9 -13.0 157.3

Diversified Financials 33,989 261.5 134.3 227.2 94.7 15.1

Health Care 26,910 292.0 274.4 277.1 6.4 5.4

Retailing 26,689 295.9 348.3 275.6 -15.1 7.3

Energy 26,046 784.9 118.9 486.8 560.4 61.2

Consumer Services 13,311 285.8 341.6 243.8 -16.3 17.2

Transportation 12,918 232.9 355.7 314.2 -34.5 -25.9

Capital Goods 9,250 0.4 -33.9 28.2 -101.1 -98.7

Commercial Services 7,523 125.9 137.7 118.2 -8.6 6.5

Food & Staples Retailing 7,413 152.8 63.1 89.0 142.3 71.6

Media 5,388 17.9 -69.3 -16.0 -125.8 -212.1

Pharmaceuticals 3,479 7.9 6.8 46.6 17.3 -83.0

Consumer Durables &

Apparel 3,157 -53.7 -40.5 -6.6 32.5 711.3

Total 1,678,435 32,878 27,687 25,608 18.7 28.4

Source: Bloomberg, MCap and results as of December 5, 2017, covering companies over 93.7% of total market

capitalization


December 2017 17

C. Saudi Arabia Key Statistics

Data 2011 2012 2013 2014 2015 2016 2017E 2018F

Economic Output

Nominal GDP (USD bn) 669.5 734.0 744.3 753.8 653.2 639.6 659.7 699.6

Nominal GDP YoY (%) 27.1 9.6 1.4 1.3 -13.3 -2.1 3.1 6.1

Real GDP YoY (%) 10.0 5.4 2.7 3.6 3.4 1.2 0.1 1.1

Budget

Revenue (SAR bn) 1117.8 1247.4 1156.4 1044.4 615.9 528.0 692.0 820.6

Oil Revenue (SAR bn) 1034.4 1144.8 1035.0 913.3 446.4 329.0 480.0 552.5

Non-oil Revenue (SAR bn) 83.4 102.6 121.3 131.0 169.5 199.0 212.0 268.1

Expenditure (SAR bn) 826.7 873.3 976.0 1109.9 978.1 930.0 890.0 998.0

Surplus/(Deficit) (SAR bn) 291.1 374.1 180.3 -65.5 -362.2 -297.0 -198.0 -177.4

Surplus/(Deficit) (% GDP) 11.6 13.6 6.5 -2.3 -15.0 -11.0 -7.7 -6.4

Gross Public Debt (SAR bn) 135.5 83.8 60.1 44.3 142.3 316.5 412.5 529.5

Gross Public Debt (% GDP) 5.4 3.0 2.2 1.6 5.9 12.3 15.5 19.0

Oil statistics

Production (mbpd) 9.3 9.8 9.6 9.7 10.2 10.5 9.6 9.7

Exports (mb) 2634.6 2783.8 2763.3 2611.0 2614.5 2799.0 2557.9 2584.6

Domestic consumption (mb) 1321.4 1408.6 1423.8 1516.8 1586.5 1535.1 1583.2 1609.1

Trade & External sector

Exports (US$ bn) 364.7 388.4 375.9 342.4 203.6 183.6 239.8 242.2

Oil Exports (US$ bn) 317.6 337.5 321.9 284.6 152.9 136.2 136.3 147.3

Imports (US$ bn) 131.6 155.6 168.2 173.8 174.7 140.2 204.3 208.1

Trade surplus/(deficit) (US$ bn) 233.1 232.8 207.7 168.6 28.9 43.4 35.5 34.1

Current Account (US$ bn) 158.5 164.8 135.4 73.8 -56.7 -24.9 10.8 15.1

Current Account (% GDP) 23.7 22.4 18.2 9.8 -8.7 -3.9 1.5 2.0

SAMA forex reserves (US$ bn) 544.0 656.6 725.7 732.4 616.4 535.8 NA NA

Inflation (%) 3.7 2.9 3.5 2.7 2.2 3.5 1.0 1.7

Demographics

Population (mn) 28.4 29.2 30.0 30.8 31.4 31.7 32.7 33.3

Saudi unemployment rate

(% population) 12.4 12.1 11.7 11.7 11.5 12.3 12.7 12.5

Source: SAMA, General Authority of Statistics, Reuters, IMF, MEFIC Research


December 2017 18

Notes

Disclaimer

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whom it is addressed and may not be reproduced, further distributed to any other person or published,

in whole or in part, for any purpose.

This document is based on data sources that are publicly available and are thought to be reliable.

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its advisors, directors or employees can guarantee the accuracy, reasonableness or completeness of

the information received from any sources consulted for this publication, and neither MEFIC Capital nor

its advisors, directors or employees accepts any liability whatsoever (in negligence or otherwise) for any

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does not provide individually tailored investment advice. It has been prepared without regard to the

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The investments referred to in this document may not be suitable for all investors.

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