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SABIC Deal Pushes Saudi Shares to Record Level

SABIC Deal Pushes Saudi Shares to Record Level
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SABIC Deal Pushes Saudi Shares to Record Level

SABIC Deal Pushes Saudi Shares to Record Level

Saudi Aramco's 70 percent purchase of Saudi Basic Industries Corp (SABIC) raised the weekly monetary value in the Saudi Stock Exchange to reach a historic level in which monetary liquidity recorded around SAR291.89 billion (USD77.83) on a weekly basis.

This coincided with the market index edging up for the fifth week in a row.

The Saudi Shares Exchange attained the longest series of weekly rises since the beginning of the year, in which the index made remarkable gains for five consecutive weeks. This occurred amid a positive performance of most trading firms and the start of the second tranche of the fifth phase of Saudi Arabia's inclusion of foreign funds affiliated to the FTSE Russell Emerging Market Index.

Saudi Shares Exchange’s trading saw a historic event last week which is Aramco’s acquisition of a 70 percent share of SABIC for SAR259.125 billion (USD69.1 billion). This deal reinforces Aramco’s strategy in diversifying its operations and income sources, and the fact that it isn’t an oil and gas firm only but also one of the biggest petrochemical companies worldwide.

Last week’s trading value recorded a sharp rise of SAR291.89 billion (USD77.83 billion) after sealing four SABIC deals for SAR259.1 billion (USD69.1 billion) compared to around SAR25.89 billion (USD96.90 billion) in the past week.

Saudi Aramco's weight in the FTSE Russell Secondary Emerging Markets index will increase from 0.51 percent to 0.77 percent on including the additional 450 million shares, which were allocated by Saudi Aramco to investors as bonus shares during the book-building process, FTSE Russell said in a statement.

In a related context, listed firms continued to declare fiscal results for Q1 of this year, in which 26 companies disclosed their quarterly outcomes last week bringing the total to 154 companies. A tally of 19 firms didn’t announce their results yet but will do by June 22 as a deadline.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.