Overweight on valuation mismatch vis-Ã -vis Petrochem
Reiterate Overweight; valuation gap gives c68% upside. At a 9.2x 2016e EV/EBITDA, the price of SIIG’s subsidiary Petrochem [Neutral l TP SAR16.0], implies that the market is assigning no value to SIIG’s other two subsidiaries. It also means that the market is overlooking the expected 11% y-o-y increase in 2016 net income mainly due to the 22% y-t-d styrene price hike, to which Petrochem is negatively exposed. Our target price of SAR21.5/share implies 2016e EV/EBITDA of 7.7x, 10% below the industry, to account for corporate structure complexity and limited disclosure.
Saudi Industrial Investment Group SJSC (SIIG) is a Saudi Arabia-based public shareholding company engaged in industrial investment activities. The Company focuses on the industrial base development in the Kingdom of Saudi Arabia, especially petrochemical industries, and opens its export areas to foreign countries, as well as allowing private sector to access other industries using petrochemical industries. The Company is primarily active in the petrochemicals industry. The Company's subsidiaries include National Petrochemicals Company (PetroChem), Saudi Nylon Company, Saudi Benzene Company, Saudi Parazylene Company and Saudi Cyclohexene Company, and its joint ventures included Saudi Chevron Phillips Company, Jubail Chevron Phillips Company and Petrochemical Manufacturing Company Ltd.
CI Capital is a diversified financial services group and Egypt’s leading provider of leasing, microfinance, and investment banking products and services.
Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that include global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors.
CI Capital leverages its full-fledged investment banking platform to provide market leading capital raising and M&A advisory, asset management, securities brokerage, custody and research. Through its subsidiary Corplease, CI Capital offers comprehensive leasing solutions, including finance and operating leases, and sale and leaseback, serving a wide range of corporate clients and SMEs. In addition, CI Capital offers microfinance lending through Egypt’s first licensed MFI, Reefy.
The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics.
CI Capital has been recognized as the “Best Investment Bank in Egypt” by EMEA Finance for four years running from 2013-2016, and by Global Finance in 2014 and 2015.
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