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Saudi Arabian Mining Co. -Equity Report -18-01-2012

Source: Al Rajhi Bank

Ammonia sales boosted Q4 performance

Ma’aden announced Q4 preliminary results with a net profit of SAR280mn, significantly higher than our estimate of SAR36mn. According to the company, sales of excess ammonia coupled with strong ammonia prices boosted both top and bottom lines. On the other hand, zakat provision seems to have fallen from the level seen last quarter and same period last year, resulting in better net profit. That said, we await full results in order to have a better understanding of the Q4 performance. For the moment, we remain Overweight with an unchanged target price of SAR31.0.

Valuation & conclusion: The major reason behind this significant jump in net profits is the revenues earned through ammonia sales which were exported in September 2011. We suspect that top line (not disclosed yet) has been strong supported by the ammonia sales and higher gold production, as stated by the company. Hence, we await full results in order to understand and incorporate Q4 results in our model. We are currently overweight with a target price of SAR31.0.

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