Al Rajhi’s share jump isn’t just another TASI rally

Al Rajhi’s share jump isn’t just another TASI rally
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Updated 11 October 2021

Al Rajhi’s share jump isn’t just another TASI rally

Al Rajhi’s share jump isn’t just another TASI rally

MOSCOW/RIYADH/CAIRO: When the Saudi stock market index sees a rally, usually most shares get an increase in value. However, this isn't the case for Al Rajhi Bank.

Al Rajhi Bank, whose shares on Sunday recorded their highest level since April 2006 at SR135.20 ($36.05), is in a league of its own among all Gulf Cooperation Council Islamic or Shariah-compliant banks.

"Al Rajhi Bank has been showing significant earning growth (double digit) despite the negative impact of economic lockdown last year, and many analysts still see the double digit growth continuing this year which explains the rise of the stock price ahead of the third quarter earnings announcement,” Mohammed Al-Suwayed, CEO of Razeen Capital told Arab News. 

Islamic banks and conventional banks usually have almost the same quality of assets in the GCC; non-performing loans (NPL) ratio in Islamic banks was 3.5 percent in 2020 compared to the slightly higher 3.8 percent for conventional ones according to S&P Global. This also applies to the coverage ratio. Thus, differences between the two types of banks as a whole are sometimes brushed off.

However, the Islamic Al Rajhi Bank has been experiencing a solid and steady performance compared to other banks in the Kingdom and the region as a whole. These strong fundamentals probably helped in its share’s jump to the highest price in more than 15 years.

In terms of the value of total assets, It is the largest Islamic bank in the Gulf region. As of June 30 2021, its total assets were valued at more than $146 billion which is also the fifth largest in the region when we include conventional banks in the comparison.

S&P Global Ratings predicts the bank’s NPL ratio to be 0.69 percent by the end of 2021. 

The bank’s selective process in providing loans means this is less than half of the other Saudi banks’ readings and the lowest among Saudi and other GCC countries where data were available: Kuwait, Qatar and the UAE. 

The bank’s return on assets ratio is similarly strong, forecast to be 2.32 percent for 2021 — higher than all of its competitors in both the Kingdom and the region. 

Not all the numbers are as positive, however. Al Rajhi did not have the best cost metric in 2019 and 2020.

But it is still expected to have the lowest ratio in the Kingdom in 2021, with S&P projecting it to be just 0.71 percent by the end of the year. This is marginally lower than other Saudi banks.

Al Rajhi shares traded with price-to-book value of 5, the highest multiple among Saudi bank stocks, analysts at KAMCO Invest pointed out in a report covering the GCC banking sector in Q2 2021. 

For example, Saudi National Bank shares traded with price-to-book multiple of 1.8, Riyad Bank 1.8, Saudi British Bank 1.3, Banque Saudi Fransi 1.4, Alinma Bank 1.7.

Al Rajhi stock traded with a dividend yield of 2.3 percent compared to 2.2% for Saudi National Bank. 

Its shares strongly outperformed the rest of Saudi banks in terms of growth since the beginning of 2021 till end of June.

The stock grew by 67 percent compared to 40 percent for Alinma, the second best performing banking stock at the time, according to KAMCO invest.

 

 


Billionaires’ wealth declines as shares fall

Billionaires’ wealth declines as shares fall
Updated 8 sec ago

Billionaires’ wealth declines as shares fall

Billionaires’ wealth declines as shares fall

RIYADH: Several top billionaires including Elon Musk have faced unexpected losses in their wealth as their companies’ shares have declined in an already volatile market. 

According to a Bloomberg report, Musk — the world’s richest person — lost 5.4 percent of his fortune, as Tesla shares slid almost 7 percent. Musk’s current wealth now is approximately $192 billion, his lowest since August 26.

According to the wealth index, his wealth last dipped below $200 billion in March. But markets, however, staged a rally lifting his net worth to $288 billion on April 4. Since then it declined again.

Meanwhile, Snap Inc.’s Evan Spiegel and Bobby Murphy also saw a considerable amount of their fortunes vanish. 

On May 24, Snap’s shares slid 41 percent in New York trading, which marked its biggest intraday decline ever. 

Some 30 percent of Speigel’s fortune, worth $1.4 billion vanished, while Murphy lost $1.8 billion or 36 percent of his wealth. 

According to the wealth index, Spiegel and Murphy have now a net worth of $3.4 billion and $3.1 billion respectively. 

 


UAE’s Peninsula abandons $1bn London listing plan for ADX IPO: Bloomberg

UAE’s Peninsula abandons $1bn London listing plan for ADX IPO: Bloomberg
Updated 2 min 52 sec ago

UAE’s Peninsula abandons $1bn London listing plan for ADX IPO: Bloomberg

UAE’s Peninsula abandons $1bn London listing plan for ADX IPO: Bloomberg

RIYADH: UAE’s Peninsula Real Estate has opted for a stock listing on Abu Dhabi’s exchange, after abandoning plans to list in London, Bloomberg reported citing unnamed sources.

The company was initially exploring listing a real estate investment trust at a value of $1 billion on the London Stock Exchange.

Bloomberg’s sources noted that the developer ended London listing talks in light of the growing attractiveness of the Gulf’s capital markets.

Emirates NBD, First Abu Dhabi Bank, HSBC Holdings Plc, and Morgan Stanley have been selected to manage the initial share sale, the sources added.

Peninsula and Emirates NBD declined to comment to Bloomberg on the news. 


Projects amounting to $220m on track in the MENA region amid energy transition push: NRG matters

Projects amounting to $220m on track in the MENA region amid energy transition push: NRG matters
Updated 22 min 4 sec ago

Projects amounting to $220m on track in the MENA region amid energy transition push: NRG matters

Projects amounting to $220m on track in the MENA region amid energy transition push: NRG matters
  • Energy firms are also being urged to address windfall profits to ease the pain of rallying costs on consumers and further drive the green transition

RIYADH: Projects are being planned in the Middle East and North Africa region to advance the region’s energy transition journey. 

Namibia is considering green bonds for financing projects that are set to produce hydrogen. 

Energy firms are also being urged to address windfall profits to ease the pain of rallying costs on consumers and further drive the green transition. 

Elsewhere, Coal India announced it will launch the biggest mine in the country, while France’s TotalEnergies is on track to supply South Korea’s Hanwha Energy Corporation with liquified natural gas supply.

Looking at the bigger picture: 

·Several projects amounting to $220 billion are being planned across the MENA region in an attempt to further propel the energy transition journey, MEED reported. This comes as almost all countries in the region have pledged to significantly reduce greenhouse gas emissions by 2030. 

·Namibia is contemplating green bonds as a financing tool for projects that will use clean energy to produce hydrogen for export purposes. This comes as the South African country is on track to construct several plants to take advantage of the ideal conditions in the country for solar and wind powered energy, Bloomberg reported, citing the government’s green hydrogen commissioner James Mnyupe. The plants under construction are expected to start generating output in four years’ time.

·Energy firms have been told to carry the weight of the energy crisis by addressing the major windfall profits that they are currently making, Bloomberg reported, citing the EU’s climate chief Frans Timmermans. This comes as consumers are struggling to keep up with the rallying costs of living and surging energy bills. As it is, the situation is also hindering the path to green transition, the chief stressed. 

Through a micro lens:

·Indian government-owned coal mining and refining corporation Coal India is set to launch the biggest coal mine in the country in an attempt to combat the energy crisis, Reuters reported. Also referred to as the Siarmal mine, the mine — which is estimated to start operating between October and December — is projected to have a capacity of 50 million tons in five to seven years’ time, Reuters reported, citing Vinayak Jamwal, a spokesman from the corporation.

·French multinational integrated oil and gas company TotalEnergies has signed a long-term sale contract with South Korean comprehensive energy solutions firm Hanwha Energy Corporation to supply it with up to 600,000 metric tons of liquified natural gas a year, Reuters reported, citing the firm. For the upcoming 15 years, LNG will be sourced from TotalEnergies before being channeled to the South Korean firm. 

 


Oil Updates — Crude gains; TotalEnergies to buy stakes of Clearway; Petrobras shares drop following CEO ouster

Oil Updates — Crude gains; TotalEnergies to buy stakes of Clearway; Petrobras shares drop following CEO ouster
Updated 23 min 43 sec ago

Oil Updates — Crude gains; TotalEnergies to buy stakes of Clearway; Petrobras shares drop following CEO ouster

Oil Updates — Crude gains; TotalEnergies to buy stakes of Clearway; Petrobras shares drop following CEO ouster

RIYADH: Oil prices rose more than $1 on Wednesday, buoyed by tight supplies and the prospect of rising demand from the upcoming start of the summer driving season in the US, the world’s biggest crude consumer.

Brent crude futures for July rose $1.38, or 1.2 percent, to $114.94 a barrel by 0511 GMT. Brent futures gained 0.1 percent on Tuesday and are up for the fifth day.

US West Texas Intermediate crude futures for July delivery rose $1.35, or 1.2 percent, to $111.12 a barrel. The contract settled down 52 cents on Tuesday.

TotalEnergies to buy 50 percent of US renewables firm Clearway

TotalEnergies said on Wednesday it has agreed to buy 50 percent of Clearway Energy Group, the fifth-largest renewables company in the US, marking the French group’s largest US renewables energy acquisition.

TotalEnergies has been branching out into the fast-growing renewable energy sector and diversifying away from hydrocarbon-centered activities in recent years.

The company said the acquisition would see it team up with Global Infrastructure Partners. As part of the deal, GIP will receive $1.6 billion in cash and an interest of 50 percent minus one share in the TotalEnergies subsidiary that holds its 50.6 percent ownership in SunPower Corporation.

The transaction takes into account valuations of $35.1 per share for Clearway Energy and $18 per share for SunPower, TotalEnergies added.

“It allows TotalEnergies to scale up in the US market, one of the most dynamic in the world, benefiting from operating assets and a 25 GW high-quality pipeline, in wind, solar and storage, with a wide geographic coverage with a presence in 34 states,” said TotalEnergies Chairman and CEO Patrick Pouyanne.

Petrobras shares drop

Shares of Brazil’s state-run oil company Petrobras plunged on Tuesday after the government ousted its chief executive for the second time in two months and signaled plans to alter the company’s market-based fuel pricing policy.

President Jair Bolsonaro has railed against a series of fuel price increases by Petrobras, formally known as Petroleo Brasileiro SA, which have tracked a surge in global energy costs and added to double-digit inflation in Brazil.

While the company has limited political interference during much of Bolsonaro’s term, his government has adopted a far more aggressive stance on fuel prices as the war in Ukraine drags on and Brazil’s October presidential election approaches.

Preferred shares in the company fell 4.7 percent in Sao Paulo in afternoon trade, far worse than a 1.2 percent slide for Brazil’s benchmark Bovespa equities index.

Bolsonaro’s chief of staff Ciro Nogueira said on Tuesday that the president is “anguished” by rising fuel prices and the company’s pricing policy must now be aligned with the views of a new energy minister, who took office this month.

(With input from Reuters)


Futurous Founder wants to see Games of the Future taking place in Saudi Arabia

Futurous Founder wants to see Games of the Future taking place in Saudi Arabia
Updated 4 min 12 sec ago

Futurous Founder wants to see Games of the Future taking place in Saudi Arabia

Futurous Founder wants to see Games of the Future taking place in Saudi Arabia

DUBAI: Esports technology platform provider Futurous sees Saudi Arabia as an emerging destination for competitive multiplayer video games that will spur modernization in the region, said its CEO, Philippe Blanchard.

Speaking on the sidelines of the Top CEO event held in Dubai, Blanchard told Arab News that he saw Kingdom’s Vision 2030 blueprint and its leadership as a springboard that will propel sports beyond physical activity or an economic driver in the region.

“The crown prince of Saudi Arabia understands that sports are much more than physical activity, economic development, or health factors; sports can serve as a vector for modernizing a nation without becoming too Westernized,” said Blanchard.

Blanchard, the former director of the International Olympic Association, met Princess Reema bint Bandar in 2019 to understand the Kingdom’s vision for sports and has engaged with the government experts to harness the potential of esports and the like.

The company was initially slated to organize the first edition of “Games of the Future” in Russia in 2023. However, the tournament was called off due to the ongoing Russia-Ukraine crisis.

The idea was to launch a technological platform designed to link live and virtual sports using its dedicated social network and online video service.

According to a company statement, “Games of the Future” was meant to showcase over 15 high-tech disciplines, including esports, drone racing, mobility, exoskeletons, augmented and virtual reality.

Blanchard’s main objective is to introduce these games in the region and possibly relocate the activities and infrastructure they created in Switzerland to the Kingdom.