NCB likely to go limit-up for a few sessions
12/11/2014 22:44 AST
Shares in Saudi Arabia's biggest lender, National Commercial Bank, jumped their daily 10 percent limit upon listing on Wednesday after a $6 billion IPO, the largest ever in the Arab world and the second-biggest globally this year.
Completing the initial public offer last week, state-owned NCB said the $3.6 billion portion for retail investors was 23 times subscribed, with a total of 1.25 million subscribers - roughly one in every 16 Saudi citizens - taking part.
Demand for the IPO, at a fixed price of 45 riyals per share, was huge partly because Saudi authorities tend to price initial offers of equity cheaply, using them to spread corporate wealth among citizens.
Institutional investors were not allowed to take part in the offer and will have to buy the stock, which looks certain to become a staple in most Saudi Arabia-focused portfolios, on the secondary market.
The stock opened on Wednesday at 49.5 riyals, with a massive amount of unfilled buy orders that came close to equalling the bourse's total trading volume on a normal day.
Bahrain-based Securities & Investment Co rated NCB a "high conviction buy" with a target price of 72 riyals, citing its outlook for strong balance sheet growth and sustainable margins. Based on listed Saudi banks' median price to 2013 earnings ratio, NCB would be worth about 76 riyals.
Most IPO investors are likely to wait until the stock trades at higher levels before selling, which will take three or four days, said Maged Ali Hasan, head of brokerage services at EFG-Hermes in Riyadh.
The Saudi market as a whole fared much less well on Wednesday. The main index was almost flat as a number of stocks pulled back, including several other banks; Saudi British Bank lost 2.1 percent and Samba Financial fell 0.8 percent.
UAE, EGYPT
Elsewhere in the region, markets in the United Arab Emirates slipped after posting strong gains in the last few sessions.
Dubai's index edged down 0.2 percent as contractor Arabtec Holding, the most traded stock, gave up early-session gains and fell 0.2 percent.
Abu Dhabi state fund Aabar Investments raised its stake in Arabtec to 34.93 percent from 18.94 percent with an off-market trade on Tuesday. It bought the shares from former Arabtec chief executive Hasan Ismaik, who resigned abruptly in June.
The deal is positive for Arabtec by confirming the deep-pocketed fund's commitment to helping the construction company grow, and it removes uncertainty over Ismaik's stake, which some investors had feared could end up being dumped on the market.
But although the deal was done at 5.00 dirhams per share, a big premium to Tuesday's closing price of 4.26 dirhams, the sale was conducted off-market, so other investors were not able to offload their stock at the same price, as some had hoped.
Abu Dhabi's index slipped 0.1 percent amid a mixed performance by blue chips. Shares in Abu Dhabi National Energy Co (TAQA) fell 1.0 percent after it reported a 27 percent decrease in third-quarter net profit on Wednesday, citing a higher effective tax rate.
Qatar's benchmark fell 0.2 percent as heavyweights Industries Qatar and Qatar National Bank lost 1.0 and 0.3 percent respectively.
Egypt's index fell 1.6 percent, largely because of Commercial International Bank which dropped 3.4 percent despite reporting a 5.6 percent rise in third-quarter net profit, in line with analysts' forecasts.
"The stock had a very good run before the results announcement and everyone was expecting very good numbers," said Harshjit Oza, banking and property analyst at Naeem brokerage in Cairo.
Global Telecom tumbled 5.6 percent after its nine-month net loss widened 66 percent year-on-year.
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