(MENAFN - Arab News) JEDDAH, 22 October 2007 — Dr. Abdul Rahman Al-Tuwaijeri, chairman of the Capital Market Authority (CMA), on Saturday disclosed plans to transform the Saudi bourse into a joint stock company and sell part of its shares through an initial public offering.
"We have already completed formation of Tadawul's board of directors and a proposal in this regard has been presented to the Council of Ministers for approval," he said.
Speaking to reporters on the occasion of the launch of the new trading system in Riyadh, Tuwaijeri said the new system would meet the market's future requirements.
Meanwhile, the Saudi stock market continued its upward movement on the second day of trading yesterday after the Eid Al-Fitr holiday break last week. The Tadawul All-Share Index (TASI) increased 7.96 points to 8,122.57 after surging over 200 points on Saturday.
The telecom stocks made hefty gains yesterday. Etihad Etisalat shares jumped 6.67 percent to SR74.50 yesterday after the Kuwait-based Global Investment House (Global) forecasted a fair value for Mobily of SR76.8, given a current market price of SR65.5 on Oct. 9, 2007.
The Global report said the stock is currently trading at 17.3 percent below the fair value and initiated coverage on Mobily's stock with a "buy" recommendation.
Saudi Telecom Co. (STC) shares also surged 1.89 percent to SR67.25.
Mobily recorded revenues of SR6.2 billion for 2006, increasing by 272 percent over SR1.7 billion reported in the period from Dec. 14, 2004 to Dec. 31, 2005.
According to the Global report, the company reported net income of SR700.4 million in 2006 compared to a loss of SR1.2 billion in the previous period, with a net profit margin of 11.3 percent. Return on equity stood at 15.5 percent in 2006, while return on assets stood at 4 percent.
Earlier this month, the Jeddah-based BMG Financial Advisors also has issued a "buy" recommendation for Mobily. BMG has estimated a target value per share of SR83.77, implying an upside potential of 26 percent. The BMG study said Mobily should reach 8.5 million subscribers by the end of 2007 and its revenues should reach SR8.55 billion (2.28 billion), implying a growth of 38.2 percent at the end of FY07. The net income is projected at SR1.26 billion (336 million) at the end of FY07, reflecting an annual growth of 80.0 percent.
In the banking sector, shares of only Saudi Hollandi Bank (SHB) and Samba Financial Group surged while all other banks were in the red yesterday. Shares of SHB increased by 7.52 percent to SR50.
The top gainers in the insurance sector yesterday were The Mediterranean & Gulf Insurance & Reinsurance Co. and Gulf Union Cooperative Insurance Company. MedGulf shares jumped by 9.87 percent to SR44.50 and Gulf Union by 8.58 percent to SR53.75. SAAB Takaful shares, however, continued to plunge and closed 9.87 points lower at SR146 after dropping 4.70 percent on Saturday.
The value of traded shares dropped to SR5.31 billion yesterday as compared to SR6.16 billion on Saturday. Shares of 67 companies were down while 26 companies were in positive territory yesterday.
BMG Index Loses 0.56 Points
The BMG Saudi Index could not maintain its upward movement yesterday, with the index declining marginally by 0.1 percent to close at 440.83 points. The value of the market turnover also declined from Saturday's level by 24.1 percent, to reach SR2.22 billion (592 million).
Most of the sectors witnessed losses, with the exception of the insurance sector, which advanced by 0.3 percent. The agricultural sector was the worst performing sector, registering a 0.8 percent decrease from its close in Saturday's trading session. The services sector followed, moving down by 0.3 percent, while the industrial sector recorded a marginal 0.1 percent drop.
Seventeen shares in the BMG Index closed on a negative note, while 9 increased, and 4 remained unchanged. Saudi Basic Industries Corp. (SABIC), the index's largest stock by market capitalization, along with Maadaniyah, Tihama, and Emaar's shares, were the shares that did not change from their close in yesterday's session. The worst performing share in the BMG Index was Walaa Insurance, which saw a share price fall of 9.9 percent.