The Top 100 Arab Companies

The Top 100 Arab Companies

At first sight, the most obvious development in our survey of the Top 100 Arab Companies is the massive drop in the market capitalisation of the companies at the top end of the table. A large readjustment during the first quarter of 2006 saw stock market indices tumble and this has resulted in a large drop in the size of the region’s companies. Yet a more in-depth examination of our results reveals several causes for optimism, not least the fact that the number of substantial companies in the region is on the rise.

With the benefit of hindsight, some correction in share prices was almost inevitable after very rapid growth in 2005. Gulf markets grew by an average of 92% in 2005 on the back of rising oil prices, which not only boosted oil companies but provided plenty of investment for the industrial and property sectors, with almost all sectors benefiting from the surplus revenues. Although oil prices have fallen from their peak, they have proved fairly resilient, but it was always unlikely that the real value of Gulf stocks had almost doubled within the space of 12 months.

Analysts in the region admitted that they had overvalued many stocks, while the record number of Gulf initial public offerings (IPOs) during 2006 helped to absorb much of the surplus liquidity. The fall was most intense in March, when the biggest bourse in the region, the Saudi Tadawul All-Shares Index (TASI), lost almost 10% of its value in the space of two days. The Abu Dhabi Securities Market, the Bahrain Stock Market, the Dubai Financial market, the Kuwait Stock Exchange and Qatar’s Doha Securities Market were all similarly affected, and failed to regain their losses during the course of the year.

It is therefore no surprise to find this trend reflected in our findings. Saudi Basic Industries Corporation (SABIC) continues to head our table of the Top 100 Arab Companies by some distance, but its market capitalisation has fallen from $174.8bn in 2005 to $91bn. Saudi Telecom was also affected, declining from $75.6bn to $53.4bn, while the value of Emaar Properties dropped from $46.2bn to $23.2bn over the same period.

However, it would be wrong to paint a picture of universal decline among the region’s big hitters. Al Rajhi Banking & Investment Corporation has moved into second place in our table with market capitalisation of $55.9bn, up from $43.1bn in 2005, while Saudi British Bank has managed a slight increase from $16.9bn to $17.5bn, securing eighth place in the 2006 ranking. The top 10 companies continue to dominate our table, accounting for 44% of the total market capitalisation of the Top 100. However, it is important to note that some very large companies are not included in the survey because they have not sought a listing on any stock exchange at any stage. These include Saudi Aramco, National Commercial Bank of Saudi Arabia and Algeria’s oil and gas giant Sonatrach.

Despite the significant correction in the value of Gulf markets and the falling values of the largest companies, there is still plenty of evidence of economic growth and diversification in the table. In 2005, a market capitalisation of $1.67bn was required to gain a listing on our survey. Last year, that figure actually increased to $1.83bn. This rise is in line with long term trends and provides further evidence to support the idea that it was mainly at the top end of the market that stock values were overpriced.

The overall composition of the table by nationality has changed very little. Saudi Arabia continues to dominate, providing 35 of the Top 100 companies, and because the Saudi firms are generally highly ranked, the 35 companies have a total market capitalisation of $412bn, or 54% of the total. The UAE remains the second biggest player, with 21 companies and 17% of total market capitalisation, while Kuwait occupies third position with 13 companies and 9% respectively. Only 17 of the Top 100 Arab Companies are based outside the Gulf, with seven in Egypt, six in Morocco, three in Jordan and one in Lebanon.

As a result, while the table indicates the size of each economy in the region to some extent, it also reflects the extent to which each economy has been liberalised and the size of its capital markets. However, the key role that oil and gas revenues play in driving the regional economy is demonstrated by the presence of so many large companies in the oil-producing states. Many oil and gas companies have not sought a listing and so are not included in our survey, so the most popular sectors represented in the table are financial services and construction and real estate.

One area of particular growth, however, is the telecoms sector. There are now five telecoms companies in the top 20, up from just three in 2005. The newcomers are Maroc Telecom and Mobile Telecommunication Company of Kuwait, ranked 10th and 12th, while other telecoms operators have the potential to move up the table over the next few years. Many mobile markets in the Middle East are still a long way from reaching saturation point and even in the region’s more developed markets there is plenty of opportunity to introduce new services.

The almost complete domination of our table of the Top 100 Arab Companies by Gulf firms and countries could easily lead the casual reader to conclude that the Gulf is the Middle East in economic terms. While the most prosperous Middle Eastern states do lie in the Gulf, all five North African economies are achieving significant levels of economic growth. With the exception of Libya and perhaps Algeria, the other three states are developing more diverse economies than their counterparts in the Gulf and all five are well placed to benefit from trade with the European Union (EU).

Economic liberalisation is enabling the emergence of new industries, such as call-centres and export-orientated textile producers that are specifically designed to target EU markets. At the same time, a series of trade agreements with the EU should enable North Africa to share in more of the benefits of the world’s biggest single market. And Europe is providing by far the biggest market for North Africa’s gas exports. The combination of economic reform, strengthening ties with the EU and growing intra-regional trade should ensure the emergence of stronger North African companies.

The growing importance of North African companies is demonstrated by their increasing presence in our table. While there were only three Moroccan and five Egyptian companies in our 2005 survey, there are now six from Morocco and seven from Egypt–a remarkable increase in just one year. The lack of Libyan and Algerian companies in the Top 100 might be expected, to varying extents, because of continued state control of the main export sectors. However, the absence of a Tunisian representative is perhaps a little more difficult to understand and is perhaps attributable to the lack of the large conglomerates that are present elsewhere in the region.

Orascom Telecom of Egypt has lost its position as North Africa’s biggest company, despite seeing an increase in its market capitalisation from $10.68bn to $12.33bn over the past year. It has been overtaken by its Moroccan counterpart, Maroc Telecom, which recorded market capitalisation of $13.43bn, up from just $9.2bn in 2005. This underlines that fact that growth in equity values in North Africa has been more gradual and less erratic than in the Gulf. It is interesting to note that one of the most open and competitive sectors in Egypt is best represented here. No fewer than four Egyptian telecoms companies are listed among the biggest 70 companies in the whole of the Middle East. As the current Egyptian banking reforms may demonstrate, sector liberalisation and competition often succeed in promoting growth.

MASHREQBANK

Mashreqbank has moved rapidly up our table of the Top 100 Arab Companies. While the market capitalisation of most other financial services companies in the top half of our table fell over the past year, Mashreqbank has gone against the trend by boosting its capitalisation from $5.42bn in 2005 to $6.37bn, helping it to rise from 44th to 32nd in the table. Registered in the UAE, where it is the largest private bank, it also operates in Qatar. The company was originally established as the Bank of Oman in Dubai in 1967 and has a history of more gradual growth than other financial institutions in the region. However, profits for the third quarter of 2006 were 43% up on the previous quarter. The company’s chief executive, Abdul Aziz Al Ghurair, attributes the recent rapid growth to strong growth in the UAE economy as a whole. Around 50% of all households in the UAE now have an account with Mashreqbank and the bank’s management is now keen to expand its operations overseas.

Al Ghurair announced last August that the bank will set up an independent Islamic finance subsidiary, to be called Badr Al Islami. He said: “Badr Al Islami is committed to the framework and values of Shari’ah. It is an independently managed business comprising Badr Islamic Finance Company, majority-owned by Mashreqbank, and Badr Islamic Banking, a division of Mashreqbank. Islamic financial services are one of the fastest growing fields in the banking and finance industry. Badr Al Islami can bring Mashreqbank’s unparalleled track record in customer service and innovation to this field, thereby filling an important gap in the market.”

SABIC

Despite the fall in its capitalisation in 2006, Saudi Basic Industries Corporation (SABIC) remains the largest listed company in the Middle East by some distance. Although it is a central plank of the Saudi economy and society, it is now 30% owned by private investors from across the Gulf Cooperation Council (GCC) states. Perhaps as a result, it has begun to operate on a more commercial basis in recent years and develop many projects as joint ventures with other companies.

The company was originally set up in 1976 as a vehicle to reinvest Saudi Arabia’s large oil revenues. It is involved in many different sectors but its various subsidiaries have been grouped into five different sectors: basic chemicals; fertilisers and metals; intermediates; polyolefins; and PVC and polyester. One of the company’s main aims is to try to make use of synergies between its various businesses. As a result, it has developed three main industrial complexes at Dammam, Jubail Industrial City and Yanbu Industrial City, where various offshoots can feed off each other and all can be supplied by common power plants.

One of the most important joint ventures over the next decade is likely to be petrochemical sector cooperation with ExxonMobil Chemical of the US. Last November, the two companies began a feasibility study to examine how to expand their existing joint petrochemical ventures at Jubail and Yanbu. The first area of expansion is likely to be the development of carbon black and thermoplastic polymer production facilities to serve both local and overseas markets. SABIC is also currently considering expanding its steel production capacity.

ETISALAT

After Saudi Telecom, which benefits from a much larger domestic market, Emirates Telecommunications Corporation (Etisalat) is the largest telecoms company in the Middle East. Given the relatively limited size of the United Arab Emirates’ population, this is a remarkable achievement. However, the company will have to adapt, given that its domestic monopoly on telecoms services is to be ended by the creation of a major competitor.

Etisalat’s income for the first nine months of 2006 was AED 11.815bn ($3.216bn), up by 26% on the same period the previous year, while profits were up 36% to AED 4.15bn ($1.13bn). The company’s chairman, Mohammed Hassan Omran, commented: “The performance of the Corporation in the first nine months of 2006 brings us even closer to our ambition of being among the top 10 telecom operators in the world by 2010. We are committed to being the first and foremost choice for our customers in the UAE and overseas markets in which we operate. This can be achieved by equipping customers with most innovative and out-of-the-box services and solutions that enhance their reach experience in a more efficient and convenient way.”

His comments sum up the company’s two-pronged strategy. It has attempted to make the most of its domestic market by offering a very wide range of services, while simultaneously expanding its overseas operations. At home, it is the leading provider of fixed line, mobile and broadband services, while it is establishing itself as a regional player. In July, the Etisalat-led consortium won the licence for Egypt’s third mobile network, gaining a foothold in the most populous country in the Middle East. The network of its Nile Telecom subsidiary will be built by Ericsson of Sweden and China’s Huwai at a cost of $1.2bn.

NORTH AFRICAN COMPANIES HAVE AN

INCREASING PRESENCE IN OUR TABLE

LAST

YEAR’S

RANK RANKING COMPANY’S NAME COUNTRY

1 1 Saudi Basic Industries Corporation Saudi Arabia

2 4 Al Rajhi Banking & Investment Saudi Arabia

Corporation

3 2 Saudi Telecom Co. Saudi Arabia

4 6 Emirates Telecommunications UAE

Corporation (Etisalat)

5 3 Emaar Properties UAE

6 7 Samba Financial Group Saudi Arabia

7 5 Saudi Electricity [o. Saudi Arabia

8 10 SABB (Previously Saudi British Bank) Saudi Arabia

9 21 National Bank of Kuwait Kuwait

10 27 Maroc Telecom Morocco

11 14 Bank Al Saudi Al-Faransi Saudi Arabia

12 26 Mobile Telecommunication Co. Kuwait

13 9 Riyad Bank Saudi Arabia

14 22 Orascom Telecom Egypt

15 8 Industries Qatar Qatar

16 15 Arab Bank Jordan

17 20 SAVOLA Group Saudi Arabia

18 17 Arab National Bank Saudi Arabia

19 12 Ettihad Etisalat (Mobily) Saudi Arabia

20 18 Qatar National Bank Qatar

21 48 Bank Al Jazirah Saudi Arabia

22 24 Emirates Bank International UAE

23 33 Kuwait Finance House Kuwait

24 13 National Bank of Abu Dhabi UAE

25 16 Dubai Islamic Bank UAE

26 36 Orascom Construction Industries Egypt

27 23 Saudi Arabia Fertilizers Co. Saudi Arabia

28 11 Abu Dhabi Commercial Bank UAE

29 28 The Saudi Investment Bank Saudi Arabia

30 6 Emirates Integrated UAE

Telecommunications Company (DU)

31 39 Qatar Telecom Company (Q-Tel) Qatar

32 44 Mashreqbank UAE

33 19 Bank Al Bilad Saudi Arabia

34 new Yanbu National Petrochemical Saudi Arabia

Company (YANSAB)

35 41 Bank Al Saudi Al Hollandi Saudi Arabia

36 37 Public Warehousing Company Kuwait

37 55 Gulf Bank Kuwait

38 38 National Industrialization Co. Saudi Arabia

39 76 Attijariwafa Bank Morocco

40 53 Commercial Bank of Kuwait Kuwait

41 new Telecom Egypt Egypt

42 30 First Gulf Bank UAE

43 new Al Rayyan Bank Qatar

44 31 Qatar Commercial Bank Qatar

45 68 National Industries Group (Holding) Kuwait

46 43 Makkah Construction Saudi Arabia

47 29 Qatar Islamic Bank Qatar

48 65 Yamamah Cement Saudi Arabia

49 34 Saudi Industrial Investment Group Saudi Arabia

50 35 National Bank of Dubai UAE

51 new Hikma Pharmaceuticals Company Jordan

52 40 Doha Bank Limited Qatar

53 50 Vodafone Egypt Egypt

54 45 Union National Bank UAE

55 47 Southern Province Cement Co. Saudi Arabia

56 72 Aseer Trading, Toursim & Saudi Arabia

Manufacturing Co.

57 59 National Mobile Telecommunications Kuwait

Company

58 63 Almarai Co. Saudi Arabia

59 32 Abu Dhabi National Energy Co. UAE

60 25 Qatar Gas Transportation Co. Qatar

61 new Dana Gas PJSC UAE

62 42 Amlak Finance UAE

63 new Solidere Lebanon

64 52 Saudi Cement Saudi Arabia

65 56 Abu Dhabi Islamic Bank UAE

66 57 National Shipping Company Saudi Arabia

67 46 Dubai Investments UAE

68 80 Ahli United Bank $ Bahrain

69 75 Housing Bank Jordan

70 58 The Egyptian Company for Mobile Egypt

Services

71 49 Sahara Petrochemical Co. Saudi Arabia

72 new EFG Hermes Holding Egypt

73 92 ONA Morocco

74 61 Al Dar Properties UAE

75 67 The Investment Dar Kuwait

76 new Al Ezz Al Dakhila for Steel Egypt

77 54 Yanbu Cement Saudi Arabia

78 81 Global Investment House Kuwait

79 new Oman Telecommunications Company Oman

80 86 Qassim Cement Saudi Arabia

81 93 Al Ahli Bank of Kuwait Kuwait

82 new Sorouh Real Estate Co. UAE

83 new Lafarge Ciments Morocco

84 62 Commercial Bank of Dubai UAE

85 new Bank Muscat Oman

86 new Saudi Fisheries Saudi Arabia

87 71 Eastern Cement Saudi Arabia

88 100 National Company for Cooperative Saudi Arabia

Insurance (NCCI)

89 51 Union Properties UAE

90 79 Qatar Electricity & Water Company Qatar

91 85 Saudi Pharmaceutical Industries and Saudi Arabia

Medical Appliances Corporation

92 new Burgan Bank Kuwait

93 new Societe Les Cement du Maroc CIMAR Morocco

94 new Banque Maracaine Commerce Exterieur Morocco

95 new Al Baraka Banking Group Bahrain

96 new Sudan Telecommunications UAE

97 new Investcorp Bank Bahrain

98 new Bank of Kuwait and the Middle East Kuwait

99 70 Arabian Cement Saudi Arabia

100 84 Saudi Arabian Amiantit Saudi Arabia

MARKET NET PROFIT

MAIN CAP 9M 2006

RANK SECTOR US$M US$M

1 Oil and Gas 91,011 3,787.14

2 Financial Services 55,987 1,392.71

3 Telecoms and IT 53,473 2,670.47

4 Telecoms and IT 24,033 1,194.42

5 Real Estate 23,242 1,268.47

6 Financial Services 23,163 1,138.81

7 Power and Utilities 21,391 508.33

8 Financial Services 17,502 654.75

9 Financial Services 14,487 659.83

10 Telecoms and IT 13,439 899.40

11 Financial Services 13,277 646.75

12 Telecoms and IT 12,789 774.62

13 Financial Services 12,460 588.07

14 Telecoms and IT 12,332 601.82

15 Oil and Gas 12,107 701.33

16 Financial Services 11,626 241.85 *

17 Agriculture and Food 10,781 244.16

18 Financial Services 10,206 518.73

19 Telecoms and IT 9,935 N/A

20 Financial Services 9,316 441.27

21 Financial Services 9,046 472.59

22 Financial Services 8,890 N/A

23 Financial Services 8,676 430.62

24 Financial Services 8,500 445.89

25 Financial Services 8,235 277.77

26 Construction 7,854 353.77 **

27 Basic Materials 7,814 223.17

28 Financial Services 7,647 424.91

29 Financial Services 7,252 454.72

30 Telecoms and IT 6,666 N/A

31 Telecoms and IT 6,659 344.07

32 Financial Services 6,377 N/A

33 Financial Services 5,941 47.42

34 Oil and Gas 5,926 N/A

35 Financial Services 5,205 176.82

36 Transport 5,175 442.62

37 Financial Services 5,134 264.26

38 Conglomerates 4,972 129.08

39 Financial Services 4,764 116.85 **

40 Financial Services 4,651 260.35

41 Telecoms and IT 4,516 324.46 *

42 Financial Services 4,425 310.72

43 Financial Services 4,349 28.96

44 Financial Services 4,318 183.33

45 Conglomerates 4,235 357.98

46 Real Estate 4,088 N/A

47 Financial Services 3,929 200.18

48 Construction 3,898 130.52

49 Financial Services 3,856 103.75

50 Financial Services 3,849 445.89

51 Conglomerates 3,776 64.41 *

52 Financial Services 3,774 166.97

53 Telecoms and IT 3,772 225.09 **

54 Financial Services 3,583 227.02

55 Construction: 3,360 130.15

56 Financial Services 3,583 61.61

57 Telecoms and IT 3,308 173.95

58 Agriculture and Food 3,294 89.32

59 Power and Utilities 3,108 70.60

60 Oil and Gas 3,094 10.87

61 Oil and Gas 3,058 213.50

62 Financial Services 2,994 62.91

63 Construction 2,987 77.81 **

64 Construction 2,965 128.84

65 Financial Services 2,962 110.31

66 Transport 2,955 N/A

67 Financial Services 2,897 N/A

68 Financial Services 2,867 N/A

69 Financial Services 2,823 67.68 **

70 Telecoms and IT 2,803 204.72

71 Oil and Gas 2,780 N/A

72 Financial Services 2,756 91.74 **

73 Conglomerates 2,729 91.38

74 Real Estate 2,725 222.47

75 Financial Services 2,711 N/A

76 Construction 2,609 N/A

77 Construction 2,548 108.28

78 Financial Services 2,547 190.97

79 Telecoms and IT 2,492 N/A

80 Construction 2,451 65.88

81 Financial Services 2,398 156.21

82 Real Estate 2,335 130.55

83 Construction 2,320 847.60 **

84 Financial Services 2,304 120.06

85 Financial Services 2,300 115.93

86 Agriculture and Food 2,134 (3.25)

87 Construction 2,087 89.34

88 Financial Services 2,084 97.35

89 Real Estate 2,067 N/A

90 Power and Utilities 2,053 135.28

91 Healthcare 2,032 21.49

92 Financial Services 2,001 149.53

93 Construction 1,987 39.66 *

94 Financial Services 1,970 92.56 *

95 Financial Services 1,928 33.109

96 Telecoms and IT 1,899 1,262.97

97 Financial Services 1,880 N/A

98 Financial Services 1,877 108.05

99 Construction 1,840 73.19

100 Construction 1,833 N/A

SHARE-

HOLDERS TRAILING

RANK EQUITY P/E

1 17,359.34 18.91

2 4,376.08 30.46

3 9,112.06 15.03

4 5,049.68 17.682

5 7244.52 16.251

6 3,647.37 17.24

7 12,269.89 54.93

8 2,368.51 21.08

9 2,634.62 16.601

10 N/A N/A

11 2,115.60 17.19

12 4,212.68 15.397

13 2,812.00 15.99

14 1,868.04 N/A

15 N/A 13.51

16 3,517.45 N/A

17 1,453.05 29.61

18 1,849.76 16.71

19 N/A —

20 N/A 17.5

21 988.32 17.24

22 2158.93 16.409

23 2,118.46 17.64

24 0.00 3.949

25 1676.70 N/A

26 1,264.05 N/A

27 1,070.41 24.59

28 0.00 12.34

29 1,506.95 13.93

30 1053.27 N/A

31 N/A 16.5

32 1,831.68 13.59

33 811.00 272.53

34 N/A —

35 1,010.93 20.31

36 2,061.32 9.63

37 1,181.00 15.64

38 1,380.66 40.88

39 N/A N/A

40 1,339.71 13.69

41 N/A N/A

42 N/A 12.14

43 N/A N/A

44 N/A 18.14

45 2,292.91 8.75

46 581.78 82.44

47 N/A 19.66

48 512.02 23.00

49 688.40 30.98

50 1342.75 14.57

51 N/A N/A

52 N/A 15.54

53 675.79 N/A

54 N/A 30.31

55 660.30 20.49

56 N/A 47.20

57 759.37 18.70

58 437.69 29.39

59 N/A 13.54

60 N/A N/A

61 N/A N/A

62 488.66 80.65

63 1,759.40 N/A

64 563.13 19.75

65 N/A 21.98

66 759.08 23.31

67 863.98 10.91

68 N/A N/A

69 1,102.06 N/A

70 312.64 N/A

71 535.85 25.13

72 1,246.94 N/A

73 N/A N/A

74 N/A N/A

75 778.79 9.80

76 N/A N/A

77 510.00 18.61

78 712.75 10.64

79 N/A N/A

80 304.19 29.50

81 810.57 12.14

82 0.00 N/A

83 N/A N/A

84 843.25 15.25

85 N/A N/A

86 63.99 N/A

87 458.47 22.19

88 413.84 19.13

89 N/A 10.00

90 N/A 10.51

91 578.48 81.11

92 773.97 11.55

93 776.10 N/A

94 N/A N/A

95 N/A N/A

96 N/A 1.38

97 N/A N/A

98 730.75 12.58

99 441.52 19.32

100 313.80 364.02

Source: All GCC Data compiled by the Global Investment House.

Data is for End of Sept 2006 unless stated otherwise. All

figures quoted in USD. Other data compiled by The Middle

East magazine. N/A means no reliable data was available at time

of print. * Full year 2005. ** 6 Months 2006

TOP NORTH AFRICAN COMPANIES

Regional Overall Company’s Country

rank rank name

1 10 Maroc Telecom-IAM Morocco

2 14 Orascom Telecom Egypt

3 26 Orascom Construction Industries Egypt

4 39 Attijariwafa Bank Morocco

5 41 Telecom Egypt Egypt

6 53 Vodafone Egypt Egypt

7 70 The Egyptian Company for Egypt

Mobile Services

8 72 EFG Hermes Holding Egypt

9 73 ONA Morocco

10 76 Al Ezz Al Dakhila for Steel Egypt

11 83 Lafarge Ciments Morocco

12 93 Societe Les Ciment du Maroc Morocco

CIMAR-CDM

13 94 Banque Marocaine Commerce Exterieure Morocco

Market

Regional Main capitalisation

rank sector ($)

1 Telecoms and IT 13,439,237,082

2 Telecoms and IT 12,331,946,880

3 Construction 7,853,836,637

4 Financial Services 4,764,414,971

5 Telecoms and IT 4,515,959,995

6 Telecoms and IT 3,771,878,400

7 Telecoms and IT 2,802,715,200

8 Financial Services 2,755,780,654

9 Conglomerates 2,728,909,486

10 Construction 2,609,170,690

11 Construction 2,319,919,316

12 Construction 1,986,991,111

13 Financial Services 1,970,302,733

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