Aramco will boost dividend payments this year even as 1Q earnings slump

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WHAT WE’RE TRACKING TODAY

THIS MORNING: Aramco isn’t slashing dividends. Plus: Saudi nationals don’t need appointments for French visa applications

Good morning, friends. It’s another very busy morning for news, but there’s one clear lead story: Aramco, which signaled it will pay higher dividends this year than last (when accounting for special dividends) despite dip in first-quarter profitability.

WEATHER-Riyadh will be windy today with a high of 35°C and a low of 24°C. Meanwhile, Makkah is going to see a hotter day with a high of 40°C and a low of 23°C. Al Taif will be nice and sunny with a high of 30°C and a low of 17°C

Riyadh’s drainage system now has seven new flood and rainwater drains, covering about 55% of the capital city, Aleqtisadiah quotes Riyadh Governor Faisal bin Bandar Al Saud and Riyadh Municipality official Al Walid Al Akrash as saying. The new arteries on the drainage system cost some SAR 2.4 bn and another 12 projects at an estimated cost of SAR 3.9 bn are underway.

HAPPENING TOMORROW-

Healthcare outfit Qomel will ring the bell on parallel market Nomu tomorrow to mark the first day of trading on its shares, Tadawul said in a statement yesterday. Qomel’s IPO was 2.75 oversubscribed earlier this month after qualified investors placed their orders on 21-25 April at a set price of SAR 80 apiece. Qomel is offering a 14.3% stake on Nomu.

Tadawul will host the Hong Kong edition of its flagship markets conference. The two-day event continues on Friday and will see a mix of plenary sessions and one-on-one sessions between investors and listed companies. Tap or click herefor the full rundown and a link to the agenda for the invite-only event.

DATA POINTS-

Remittances from expats living in the Kingdom rose 4% y-o-y to c.SAR 12 bn (USD 2.3) in March, hitting their highest level since June 2022, Argaam reports, citing Saudi Central Bank (SAMA) data. Meanwhile, remittances from Saudi nationals to other countries fell 9% y-o-y to SAR 5.1 bn during the month.

WATCH THIS SPACE-

#1- Crown Prince Mohammed bin Salman could visit Pakistan sometime this month, Pakistan’s Dunya News quotes Pakistan’s Deputy Prime Minister and Foreign Minister Ishaq Dar as saying. Dar was speaking as a delegation of senior Saudi officials wraps up a visit to Pakistan during which they attended a two-day investment conference. Meetings between private Saudi players and Pakistani counterparts were “very productive,” Dar is quoted as saying.

There’s been a lot of traffic between Riyadh and Islamabad of late: Foreign Minister Prince Faisal bin Farhan visited Pakistan last month nearly a week after Pakistan’s prime minister discussed a USD 5 bn investment package during a meeting in Makkah with the Crown Prince. Saudi has been among key backers of crisis-hit Pakistan, which is now struggling with depleted reserves. The Kingdom has extended the term of a USD 3 bn in deposit at the State Bank of Pakistan for an additional year, maturing in December this year. Pakistan also received last year USD 2 bn in financial assistance from the Kingdom to shore up finances.

#2- Fawry eyes Saudi expansion: EGX-listed fintech giant Fawry, the largest e-payments and digital financial solutions player in Egypt, is in talks with as many as six Saudi companies on a potential partnership as the firm looks to expand into the kingdom, Fawry CEO Ashraf Sabry told Asharq Business.

#3- Real estate developers can now apply for off-plan project licenses online through the e-platform for Wafi, the Municipal, Rural Affairs and Housing Ministry’s off-plan sales and leasing arm, the Real Estate General Authority said in a statement yesterday. Applicants should pass a qualification program, present a feasibility study on the project, as well as details on how it will be financed and delivery dates to obtain the license. They should also present proof of the project meeting requirements for building permits. The move aims to regulate the sector, reduce irregularities, and increase supply of offered real estate projects across the country.

IN CONTEXT- There’s growing interest in off-play sales: Some 47 off-plan sales projects were licensed in the first six months of 2023, a 50% increase over the same period a year earlier, according to Wafi figures. S&P Global said in March that a better regulated off-plan industry in Saudi would fuel demand.

#4- Hotel operator BWH — which owns the Best Western Hotels brand — is looking to add 40 hotels in the Kingdom to its portfolio by the end of 2028 and is eyeing franchise or management agreements to reach that target, Gulf News quotes EMEA Vice President Wytze van den Berg as saying on the sidelines of the ongoing Arabian Travel Market in Dubai. “We find there is still quite good demand for hotels especially in the western parts of the country. Riyadh continues to perform well as a destination, and we see that continuing given the government spending that’s backing it up.”

BWH’s first hotel in Makkah is coming next year: The hotel group recently landed its first three hotel towers in Makkah, with 150 keys each. “The opening will likely be in 3Q 2025, and we will have three separate brands take care of the hotels,” van den Berg said.

#5- What’s missing from Saudi’s real estate market? Luxurious residential towers, Cheval Collection’s director of development and acquisitions, Daniel Johansson, told Argaam on the sidelines of the Future Hospitality Summit. Johansson pointed to “the fact that hotels in Riyadh are fully booked on event and conference days” as an indication that luxury residential towers are lacking in the market. Cheval Collection is set to open the doors to a luxury residential tower, Cheval Ladun Living, in Riyadh in 2027, Johansson said.

REMEMBER- S&P Global said earlier this week that real estate developers in the Kingdom need to ramp up supply to keep pace with growing market demand — particularly in the capital and Jeddah — as their populations grow. S&P expects that demand will outstrip supply in Riyadh in particular, where real estate supply is already tight.

#6- The government is looking to triple current polymer production levels and increase exports fivefold by 2035, Deputy Minister for Industry Affairs Khalil Ibrahim bin Salamah tells Argaam. The plans include using more than 4 mn bbl of oil for petrochemical production, “which will significantly boost local manufacturing,” Salamah is quoted as saying.

PSAs-

#1- Don’t have a Hajj permit? Steer clear of Makkah during the season unless you’re a resident of the city: Expats and citizens found in Makkah and designated areas within the city without providing a Hajj permit or proof of residency in the Holy City will face a SAR 10k fine, state news agency SPA reported. Expats will also be deported and banned from entering the Kingdom for an unspecified period of time. The rules will be in effect from Sunday, 2 June until Thursday, 20 June.

#3- Saudi citizens can now apply for a visa to France at VFS centers without booking an appointment, the French embassy said in a statement. The new walk-in service is available for Saudi nationals at VFS centers in Riyadh and Dammam, with 100 appointments available per day in Riyadh and 50 per day in Dammam. Applicants are admitted on a first-come, first served basis.

#2- Businesses can issue seasonal contracts for temporary workers during the Hajj seasons as part of the Human Resources and Social Development Ministry’s Ajeer Al Hajj service, reports state-run SPA. The service will also connect job seekers with available positions through an online portal.

SPORTS-

Al Hilal solidified its position at the top of the Saudi Pro League with a 2-1 victory against Al Ahli Saudi. A goal by Aleksandar Mitrovic reversed Al-Ahli’s lead in the first half, while Malcom sealed the victory with a decisive goal in the final minute.

Second-place Al Nassr is now 12 points behind Al Hilal in the standings, while Al Ahli Saudi is third in the league.

Matchday 31 of 34 kicks off tomorrow, with the following fixtures:

Al Feiha vs. AlFateh at 6pm;
Al Riyadh vs. Al Taawoun at 6pm;
Al Akhdoud vs. Al Nassr at 9pm.

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THE BIG STORY ABROAD-

It’s a busy morning on the front pages of the world’s business press. Truce talks between Hamas and Israel continue even as Israeli forces took over control of the Rafah crossing into Egypt, a key port of entry for humanitarian aid.

The Wall Street Journal is leading with Stormy Daniels’ “salacious details of her allegedtryst” with former US President Donald Trump, but gives more prominence to a deep look at The Line.

MEANWHILE- The US will no longer allow Intel and Qualcomm to sell chips to Huawei, the Dow has now posted its longest streak in the green since December, and Semafor reports on the pipeline that’s now driving Wall Street financial firms to load up on former military brass.

FOR OUR FELLOW TECH NERDS- Apple finally moved the iPad’s FaceTime camera to the long edge as it launched a redesign of the iconic gadget that also leapfrogged the M3 generation of processors straight to M4. The Verge notes that the tablet is super-thin and that the Pro’s new keyboard case aims to make it feel “just like a MacBook.”

AND- Google launched yesterday its Pixel 8A phone, a midrange device that packs most of the power of the Pixel 8 and 8 Pro into a package that will now include seven years of software updates.

FINALLY- OpenAI is getting into the AI search game, developing a product to rival Google, Bing, and Perplexity, Bloomberg reports. The ChatGPT maker is also reportedly poaching Google staff for the project, per the Verge.

CIRCLE YOUR CALENDAR-

Are you subject to withholding tax? You have until Sunday, 12 May to submit and pay withholding taxes for April, according to a Zatca statement. Late payers will face a fine equivalent to 1% of unpaid fees for every 30 days of delay.

The Saudi Giga Projects Summit will open next Monday, 13 May at the Hilton Riyadh Hotel and Residences. The Meed event will showcase Saudi’s USD 870 bn giga projects drive. It brings together contractors, suppliers and relevant stakeholders from the region and elsewhere for discussions on potential investments.

The MENA Construction Summit will kick off next Tuesday, 14 May at the Hilton Riyadh Hotel & Residences. Also organized by Meed, the one-day event will bring together developers, contractors, key executives and others to discuss the latest innovations in the construction industry.

Red Sea Fashion Week will make its debut on Thursday, 16 May and run until Saturday, 18 May at the St. Regis Red Sea Resort, according to state news agency SPA. The event, organized by the Saudi Fashion Commission, will feature an opening show on the first day, followed by two days of runway shows showcasing collections from both Saudi and international designers.

Aramco reports lower net income in 1Q 2024, but looks on track to boost this year’s dividend

Aramco’s net income fell 14.4% y-o-y to SAR 102.3 bn (USD 27.3 bn) in 1Q 2024, it said in an earnings release (pdf). The company’s revenues during the quarter dipped 3.7% y-o-y to SAR 402.0 bn (USD 107.2 bn), which it attributed to lower crude oil sales and falling refining and chemicals margins. The lower income was, however, “partially offset by lower production royalties and an increase in crude oil prices,” the company said.

Investors will be happy: Dividends will get richer: The oil giant will pay out SAR 76.1 bn (USD 20.3 bn) in base dividends on its 1Q 2024 earnings, as well as SAR 40.5 bn (USD 10.8 bn) as a performance-linked dividend, which will be paid out in 2Q 2024, it said in a disclosure to Tadawul. The company said it expects to pay SAR 466.2 bn (USD 124.3 bn) in dividends in 2024, including SAR 161.7 bn (USD 43.1) bn that will be performance-linked.

That’s a big shift: Profitability is down, but the company is now aiming to pay out total dividends worth about 30% more than last year, when it reported its second-highest net profit ever.

REMEMBER- The government relies heavily on Aramco’s dividend to bridge the budget deficit and finance its diversification away from oil — oil accounts for about 75% of government revenues at present.

Capex rose c.24% y-o-y in 1Q 2024 to SAR 40.6 bn (USD 10.8 bn), as Aramco continued to capitalize on “unique growth opportunities,” mainly in upstream liquids and gas, downstream liquids to chemicals, and new energies such as renewables, lower-carbon fuels, and blue ammonia and hydrogen.

Cashflow fell a bit more than 26%y-o-y to SAR 85.4 bn (USD 22.8 bn) in 1Q 2024 on the back of weaker earnings and “unfavorable movements” in its working capital. Expenditures increased by SAR 7.8 bn in the same period as the company looked to maintain a maximum sustainable capacity of 12 mn barrels per day (bbl / d), while maintaining output at 9 mn bbl / d.

More production incoming: The Marjan and Berri crude oil increments — expected to add crude oil production capacities of 300k bbl / d and 250k bbl / d — are on track and forecasted to be onstream by next year. Construction on the Dammam development project also remained on track and is expected to add 25k bbl / d to crude oil production in 2024, and 50k bbl / d come 2027. This means that Aramco will be adding more than 1 mn bbl / d in crude oil production capacity by 2025.

What they said: The company said it leveraged operational efficiency and an improved market to generate strong results despite lower sales volumes amid OPEC+ output cuts. “In the first quarter [Aramco] made significant progress on expanding our gas business and growing our globally-integrated downstream value chain, while maintaining our focus on consistently delivering value for our shareholders,” said President and CEO Amin Nasser.

SOUND SMART- Downstream operations refer to Aramco’s refining and marketing of their product, while upstream operations refer to exploration and production.

No material impact PIF increasing its stake: Sovereign wealth fund PIF doubled up its stake in Aramco to 16% back in March, which Aramco says did not affect its total number of issued shares nor its operations, strategy or dividend distribution policy, maintaining that the Saudi government holds its largest stake at 82.19% in direct shareholding.

OTHER 1Q HIGHLIGHTS-

Aramco increased VC funding for its Aramco Ventures by SAR 15 bn, half of which will be earmarked for non-energy “disruptive technologies,” while the other half will go towards larger late-stage investments in sustainability and digital domains. This brings the total investment funds in its VC programs to SAR 28.1 bn, including Wa’ed Ventures, which recently participated in a SAR 68 mn series A round for Robo-advisory Abyan Capital.

ALSO-

Aramco acquired a minority stake in MidOcean Energy in a USD 500 mn transaction and closed its acquisition of a 100% equity stake in Chile’s fuel distributor Esmax Distribución ;
The company awarded USD 7.7 bn in engineering, procurement and construction (EPC) contracts to expand its Fadhili gas plant in the Eastern Province;
It was also made FIFA’s Major Worldwide Partner after signing a four-year global partnership, securing rights to major tournaments including the Fifa World Cup 2025 and Fifa Women’s World Cup 2027.

MOVES-

New board members: Shareholders of Aramco approved the appointment of Economy and Planning Minister Faisal Alibrahim as a member of the board, according to a separate disclosure to Tadawul yesterday. Former BP CEO Bob Dudley will also join the board. The new board’s three-year term — which sees the reelection of PIF boss Yassir Al Rumayan and former cabinet member Ibrahim Al Assaf as chairman and deputy chairman — will begin on 1 July this year and end on 30 June, 2027.

PIF unit eyes controlling stake in Egypt’s leading education company with view to turning it into a regional platform

The Egypt unit of the Public Investment Fund is looking to acquire a controlling stake in Egypt’s leading private-sector education company with a view to turning it into its regional education platform. The transaction is the first investment by the Saudi Egyptian Investment Company (SEIC) since Egypt floated its currency earlier this spring.

What’s the transaction? SEIC, a wholly-owned PIF subsidiary, will buy into Social Impact Capital (SIC), the vehicle through which the founding El Kalla family holds a controlling take in EGX-listed CIRA Education, the nation’s leading private-sector education company. SIC will use the cash injection to launch a mandatory tender offer to buy CIRA shares at a price of EGP 14 each, the two companies said in a joint statement (pdf).

CIRA shares closed up 9.8% yesterday at EGP 14.00, giving the company a market cap of a bit under EGP 8.2 bn, by our math.

EnterpriseAM Egypt has the rundown on the transaction, a test case for how Egyptian officials will move on critical regulatory and other approvals on a high-profile transaction.

BACKGROUND- The PIF has already deployed substantial capital in Egypt. The fund — which ranked as the world’s highest-spending sovereign wealth fund in 2023 — invested over USD 1.3 bn via SEIC to acquire stakes in state-held EGX-listed companies in 2022. Its holdings here include a 25% stake in Mopco, a 19.82% stake in Abu Qir Fertilizers, a 27% stake in E-finance, and a 20% stake in Alexandria Container and Cargo Handling.

ADVISORS- Rothschild & Co is advising PIF, with Allen & Overy and our friends at Matouk Bassiouny doing legal duties. Our friends at EFG Hermes are advising El Kalla family, while White & Case is legal counsel, we’re told.

Horizon Educational sets IPO guiding price range ahead of booking investor orders next week

School operator Horizon Educational is guiding on a price range of SAR 48-54 apiece for its IPO on parallel market Nomu, according to a filing to the exchange. The company is taking a 20% stake to market by issuing 500k new shares. At the top of the range, that would give the company a post-IPO market cap of SAR 135 mn.

About Horizon Educational: Established in 2007, Horizon Educational provides pre-school, kindergarten, primary, middle and secondary education for male and female students at its two educational complexes in Riyadh’s Al Wurud and Al Olaya districts.

Proceeds + valuation: The price range could see the offering generate up to SAR 27 mn in proceeds, according to our calculations. Some SAR 2.3 mn of that figure will be used to cover the offering’s expenses, according to the prospectus (pdf). The remainder will be earmarked for financing the company’s expansion plan, which includes acquiring new branches and ramping up capacity for 1k additional students in Al Olaya campus and 2.5k additional students in Al Wurud.

What’s next? Qualified investors will be able to place orders starting from Sunday, 12 May through to Monday, 20 May, for a minimum of 10 shares and a maximum of 125k shares each. The final allotment will then follow on Sunday, 26 May.

A snapshot of its 2023 earnings: Horizon Educational’s net income grew 25% y-o-y to SAR 8.9 mn last year and revenues were up 13.7% y-o-y to SAR 36.8 mn in FY 2023, which ends on 30 June.

Post-IPO ownership structure + lock-up period: The ownership of the two substantial shareholders will settle at a combined 71.3% stake after the sale, down from 89.1%.Their shares will remain locked up for a period of 12 months from the first day of trading.

ADVISORS- Yaqeen Capital is quarterbacking the transaction as financial advisor and lead manager, while RSM is providing counsel. Receiving agents include Alistithmar Capital, Alinma Investment, SNB Capital, AlJazira Capital, Riyadh Capital, ANB Capital, Albilad Capital, Al Rajhi Capital, Derayah, and Saudi Fransi Capital.

Cabinet approves tax exemptions for industrial inputs

Cabinet approved yesterday implementing tax exemptions for industrial inputs, state news agency SPA reports. The decision follows the Gulf Cooperation Council’s Financial and Economic Cooperation Committee’s adoption of a final draft of amended controls for the exemption of industrial inputs from tax in October last year. No further details were provided on the timeline for implementation or the scope of the exemptions.

And new names for two gov’t bodies: The Saline Water Conversion Corporation will now be known as the Saudi Water Authority, while the Water & Electricity Regulatory Authority will be renamed the Saudi Electricity Regulatory Authority.

Also approved at yesterday’s Cabinet meeting:

A cooperation agreement between the government and Jordan on energy;
An MoU between the Energy Ministry and its counterpart in Brazil;
An MoU between the Industry and Mineral Resources Ministry and Morocco’s Energy Transition and Sustainable Development and another similar MoU on mining with Japan’s Economy, Trade and Industry;
An MoU on cooperation between the Saudi Central Bank (Sama) and Qatar Central Bank;
Joining the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs.

Americana bottom line drops as boycott, Ramadan slowdown bite

Americana reports weaker 1Q earnings amid “geopolitical tensions” + Ramadan slowdown: Tadawul and ADX-listed MENA restaurants operator Americana Restaurants International reported USD 28 mn in net income in 1Q 2024, falling 51.8% y-o-y, according to its earnings statement (pdf). The company’s revenues also dropped 16.3% y-o-y to USD 493.5 mn during the quarter.

The culprits: The F&B giant attributed the lower earnings to “lower sales as a result of the geopolitical situation and onset of Ramadan, as well as higher depreciation charges and rent expenses on account of new store openings during the period.”

What we don’t know: It’s difficult to establish a comparison of how much of the hit is attributed to customer boycotts as opposed to the seasonality effect of Ramadan, because most of the holy month fell within 1Q 2024, while last year it was mostly in 2Q 2023.

Expansion plans: The company plans to open 37 more stores, with these locations currently under construction. Americana had opened 37 new stores in 1Q, bringing the total number of its stores at 2.5k as of the end of March 2024. The restaurant operator is set to open 200-225 new stores this year “in markets which are less impacted by the current regional macro-environment.”

The way forward: Americana will continue to deploy “revenue recovery initiatives such as smart pricing, targeting, promotion and marketing, with sharp focus on driving transactions through value, crave and familiarity.”

SAVOLA-

Savola Group’s net income was down 11.2% y-o-y to SAR 348.7 mn in 1Q 2024 on the back of lower income from its food processing segment due to Egypt’s currency devaluation, the leading food group said in a disclosure to Tadawul yesterday. The drop in net income was also attributed to higher operating expenses and a higher net finance cost due to the EGP devaluation and rising interest rates, among other factors. Meanwhile, Savola’s revenues were essentially flat during the quarter at SAR 7.8 bn.

Private equity veteran Abdalla ElEbiary named managing director at Alvarez & Marsal, will lead on services for SWFs

Professional services firm Alvarez & Marsal has welcomed our friend Abdalla ElEbiary (bio) as managing director for sovereign advisory, the firm said yesterday in a statement. He will be based in Dubai. ElEbiary, who has 30-years of experience working with sovereign wealth funds, private equity, investment banking, and corporate finance, will support the firm’s sovereign advisory services that it provides to governments, state-owned companies, sovereign wealth funds, central banks, and multilateral development banks.

ElEbiary was the first chief investment officer of the Sovereign Fund of Egypt, where he helped close more than 23 investments in sectors including infrastructure, banking, education, healthcare, and real estate, and helped lead sales of state-owned enterprises that collectively brought in USD 5 bn. He is also past chair of the Egyptian Private Equity and Venture Capital Association and was managing director at Qalaa Holdings, where he served for 14 years.

Alvarez & Marsal noted ElEbiary’s proven experience advising on a range of issues including “investment, the restructuring and IPO of state-owned enterprises, promotion of FDI, and interfacing with DFIs (such as the IMF, IFC, and EBRD) as well as international equity and sovereign debt investors.”

Aramco’s earnings drive the conversation for foreign press

Aramco is leading the conversation on Saudi in the foreign press this morning, with everyone taking note of the oil giant sticking to its promise to pay USD 31 bn in dividends despite lower earnings. We have the full rundown in the news well, above. (Reuters | Bloomberg | AFP | Wall Street Journal | The Telegraph)

Meanwhile, the Wall Street Journal is the latest to look at the buildout timeline for Neom, and suggests the real cost of developing Neom could be higher than initially anticipated.

Saudi Electricity secures USD 1 bn murabaha loan from SNB. Plus: M&A, trade and aviation

DEBT WATCH-

Saudi Electricity has lined up a five-year USD 1 bn murabaha facility from the Saudi National Bank (SNB) to “finance its capital expenditures and general corporate purposes,” it said in a disclosure to Tadawul yesterday. The fresh facility — in which SNB is marked as a related party — is subject to renewal for up to two years.

CONSTRUCTION-

China’s geotechnical engineering service provider Geoharbour was awarded nine contracts worth SAR 150 mn in Saudi this year, its regional director for the Middle East Tom Bi told Aleqtisadiah. Geoharbour has completed the first phase of Jeddah’s stadium foundations, which is set to host Fifa World Cup 2034 games, at a cost of SAR 15 mn. Work on the second phase is set to begin after four months, he added.

A busy pipeline: The projects awarded to the Shanghai-based company include work for the Red Sea development project, The Square in Riyadh, the upgrade of Aramco’s Jafurah gas field and Yanbu Refinery, Neom’s Oxagon, Riyadh’s Saad 2 Solar PV Park, Acwa Power’s Shuaibah, and soil improvement for schools in Jubail in collaboration with the Royal Commission for Jubail and Yanbu.

M&A WATCH-

#1-Healthcare supplier Lana Medical signed an MoU to acquire a 50% stake in Belarusia’s Solar Laser Systems, it said in a disclosure to Tadawul yesterday. The MoU is valid for three months or until a binding agreement is signed. The acquisition — which is internally funded by Lana — is aimed at boosting Lana’s market share as a supplier of medical lasers in the Kingdom. It also aims to transfer the medical laser industry and related technologies to Saudi. No financial details were disclosed.

Background: Riyadh-based Lana Medical has been supplying Solar Laser Systems’ medical lasers to the local market since 2015, according to the disclosure.

#2- Tihama inked an investment agreement with the Saudi Film Fund valued at SAR 37.5 mn in exchange for a 10% stake in the fund’s SAR 375 mn capital, it said in a disclosure to Tadawul yesterday. The six-year agreement, with a possibility of a one-year extension, was reached after Tihama’s board explored potential investments in the film industry following its financial reorganization. It examined the terms and conditions of the fund back in July 2023, the disclosure says. Tihama — an advertising, public relations, publishing, and media group — said it was the “first public joint stock company to participate in this type of investment.”

ALSO- The Saudi Film Fund plans to distribute 6% dividends semi-annually starting from the third year of operation. It is penciling in a total return of 17% as set in its subscription memorandum, according to the disclosure.

ENERGY-

Modon partners with China’s Arctech for solar tech initiative: The Saudi Industrial Cities and Technology Zones Authority (Modon) and Chinese solar equipment maker Arctech Solar will develop a facility for the production of smart solar trackers and building-integrated solar photovoltaic systems in Jeddah's Second Industrial City, according to a press release.

About the facility: The factory will manufacture the SkyWings solar tracking systems with a 3 GW capacity for the regional market and a 10 GW local delivery capacity. It will span about 97k sq meters, according to the press release.

AVIATION-

New routes + loyalty programs for Riyadh Air: The Public Investment Fund’s second flagship carrier Riyadh Air signed an MoU with the Saudi Tourism Authority that will see the two launch new air routes, loyalty programs, and global sponsorships, the authority said on LinkedIn. The agreement was sealed on the sidelines of the ongoing Arabian Travel Market in Dubai.

Riyadh Air is expanding — and wants to be known for its experience: The carrier is looking to “sell experiences,” not just airline tickets, Riyadh Air’s Vice President for Marketing and Corporate Communications Osamah Alnuaiser told Skift at the travel trade show. Riyadh Air CEO Tony Douglas told Bloomberg earlier this week that the airline is also planning to make follow-up aircraft orders to meet its fleet needs ahead of its planned 2025 debut. The move would add to the airline’s order for up to 72 Boeing Dreamliners in March, according to the business information service.

FINANCE-

Kuwait-based Arab Fund for Economic and Social Development has joined the International Finance Corporation (IFC) co-lending platform Master Cooperation Agreement (MCA), according to a statement by the World Bank’s private investment arm. As part of the agreement, the Arab Fund will pour USD 500 mn to support private sector growth and job creation in the fund’s member countries. The Kuwait-based fund is the third signatory from the region after Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD) and Dammam-based Arab Petroleum Investments Corp (Apricorp).

MCA? It is a co-lending platform that allows borrowers in developing countries to obtain loans from multiple development institutions under a single package. The IFC acts as lead arranger for the platform which has provided some USD 12 bn under the framework.

ENVIRONMENT-

Ten MoUs and investment contracts focused on developing plant cover and related infrastructure across the Kingdom were signed during the inaugural National Greening Forum, Al Riyadh reported yesterday. The signatories of agreements include the Zakat, Tax and Customs Authority (Zatca), National Housing Company, PIF-owned Red Sea Global, Riyad Bank, Estidamah and others. No further details were provided.

TECH-

Multinational IT services player Cognizant and Google Cloud will work together on generative AI and data in Saudi Arabia as part of a new strategic partnership, according to a joint press release. The two companies plan to focus on generative AI through Google Cloud’s Gemini platform and data modernization as well as investments in local businesses, as they look to “unlock the transformative potential of AI, empowering businesses to enhance operational efficiency, elevating customer experiences, and driving growth throughout Saudi Arabia and the wider region,” said Google Cloud’s Saudi Country Manager Bader Almadi.

Saudi’s tilt toward Silicon Valley is nearly complete. Plus: SRMG to restructure some of its holdings.

Saudi’s tilt fully toward Silicon Valley looks nearly complete as Bloomberg reports this morning that Alat, the PIF’s advanced technologies platform, would divest from China if it were asked to do so by the United States.

“So far the requests have been to keep manufacturing and supply chains completely separate, but if the partnerships with China would become a problem for the US, we will divest,” the business information service quotes Amit Midha, CEO of the USD 100 bn platform, as saying.

Two partnerships with US companies are now in the pipeline, Midha said, and could be announced by the end of the year. “The US is the number one partner for us and the number one market for AI, chips and semiconductor industry,” he said.

AND- The Biden administration has told Intel and Qualcomm to stop selling chips to Huawei that the Chinese company needs for its phones and laptops, the Financial Times reports. in an exclusive.

IN CONTEXT- The US has been on a years-long drive to contain China’s emergence as a significant technology rival. Officials in DC are asking Riyadh to agree to limit the use of some Chinese technologies as part of a pact on AI and advanced tech that the two sides hope to sign. They’re simultaneously negotiating agreements on defense and nuclear power as part of a wider process that Washington hopes will see us normalize relations with Israel.

It’s going to be a delicate balancing act: Riyadh and Beijing have been on a drive to build deeper ties. China is a critical crude oil market for Aramco, which is looking to invest more in Chinese refining capacity and petchems. The first China-based ETF of Saudi shares started trading late last year, Tadawul will host tomorrow the Hong Kong edition of its flagship capital markets conference. Gigaprojects are in play, too: Neom was on the road in China a few weeks ago and it’s courting Chinese bankers to help finance work there.

MARKETS THIS MORNING-

Asian markets are mixed this morning as investors sift through earnings reports, CNBC reports, while US stock futures are largely unchanged after the Dow yesterday hit its longest stint in the green since December. European equities futures were also little changed in overnight trading.

TASI	12,358	-0.1% (YTD: +3.3%)
MSCI Tadawul 30	1,548	-0.1% (YTD: -0.2%)
NomuC	26,741	-0.2% (YTD: +9%)
USD : SAR (SAMA)	3.75 Sell	3.75 Buy
Interest rates	6% repo	5.5% reverse repo
EGX30	26,429	+1.2% (YTD: +6.2%)
ADX	9,071	+0.4% (YTD: -5.3%)
DFM	4,156	+0.01% (YTD: +2.4%)
S&P 500	5,188	+0.1% (YTD: +8.8%)
FTSE 100	8,314	+1.2% (YTD: +9.1%)
Euro Stoxx 50	5,016	+1.2% (YTD: +10.9%)
Brent crude	USD 83.04	-0.4%
Natural gas (Nymex)	USD 2.21	+0.6%
Gold	USD 2,324.20	-0.3%
BTC	USD 63,141.70	-0.3% (YTD: -49.3%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.1% yesterday on turnover of SAR 7 bn. The index is up 3.3% YTD.

In the green: Batic (+6.4%), DWF (+5.4%) and EIC (+5%).

In the red: Al Akaria (-7.6%), Al Baha (-7.1%) and Americana (-5.1%).

THE CLOSING BELL: NOMU-

The NomuC fell -0.2% yesterday on turnover of SAR 25.7 mn. The index is up 9% YTD.

In the green: Enma Alrawabi (+6.9%), Al Mohafaza For Education (+4.6%) and Future Care (+3.8%).

In the red: Group Five (-4.9%), Alnaqool (-4.7%) and Ghida Alsultan (-4.5%)

CORPORATE ACTIONS-

The board of media giant Saudi Research Media Group (SRMG) approved a plan to restructure a number of its non-operating and wholly owned subsidiaries here and overseas, it said in a disclosure to Tadawul yesterday. The move, which it said would help streamline operations, will see it restructure 26 subsidiaries via voluntary liquidation, deregistration, or turning them into branches. This represents more than half of SRMG’s portfolio of 40 companies.

The list of subsidiaries includes Arab Media, the News Hub, Numu Media, Sayidaty Products Co, Kuwaiti Group for Publishing and Distribution Co, Moroccan Printing and Publishing Co and many others, according to a list (pdf) provided by the company.

A snapshot of SRMG’s results last year: SRMG’s net income fell 14% y-o-y to SAR 560 mnin FY 2023 on the back of losses by the Saudi Printing and Packaging Company (SPPC), of which SRMG owns a majority 70% stake. Its revenues grew 1% y-o-y to SAR 3.7 bn. It is yet to release its results for Q1 2024.

CALENDAR

MAY

4-11 May (Saturday-Saturday): Saudi Smash 2024.

6-9 May (Monday-Thursday): Saudi Smart Manufacturing, Riyadh.

6-9 May (Monday-Thursday): Saudi Smart Logistics, Riyadh.

9-11 May (Thursday-Saturday): The Icon Show, Jeddah.

12 May (Sunday): Bookbuilding starts for Rasan’s Tadawul IPO.

13 May (Monday): Saudi Giga Projects, Riyadh.

13-15 May (Monday-Wednesday): Smart Future Expo, Riyadh.

13-15 May (Monday-Wednesday): Poultry Expo Riyadh.

14-15 May (Tuesday-Wednesday): Saudi Great Futures, Riyadh.

15-16 May (Wednesday-Thursday): Arab Forum of Anti-Corruption, Riyadh.

16-18 May (Thursday-Saturday):Red Sea Fashion Week, The St. Regis Red Sea Resort.

19-21 May (Sunday-Tuesday): Saudi Energy Convention, Riyadh.

20-21 May (Monday-Tuesday): Future Projects Forum, Four Seasons Hotel, Riyadh.

20-22 May (Monday-Wednesday): Future Aviation Forum 2024, Riyadh.

21-23 May (Tuesday-Thursday): The Saudi Food Show, Riyadh.

25 May (Saturday): Bidding deadline for Duba’s seawater reverse osmosis desalination plant in Tabuk.

27-28 May (Monday-Tuesday): Smart Data & AI Summit Saudi, JW Marriott Hotel, Riyadh.

Signposted to happen sometime in May:

Global Trade Review (GTR): KSA
Saudi Energy Convention

JUNE

2-3 June (Sunday-Monday): Global Project Management Forum, Riyadh.

4-7 June (Tuesday-Friday): Saudi Sports Show, Riyadh.

4-7 June (Tuesday-Friday): Aqarat Expo, Riyadh.

5 June (Wednesday): World Environment Day.

14-22 June (Friday-Saturday): Banks and capital markets closed for Eid Al Adha holiday.

AUGUST

12-15 August (Monday-Thursday): The Saudi Food Expo, Riyadh

SEPTEMBER

11-12 September (Wednesday-Thursday): The Saudi Event Show, Riyadh.

17-19 September (Tuesday-Thursday): EV Auto Show, Riyadh.

24-26 September (Tuesday-Thursday) Saudi Infrastructure Expo, Riyadh International Convention and Exhibition Center, Riyadh.

23 September (Monday): National Day (national holiday)

NOVEMBER

2-9 November (Saturday- Saturday): WTA Finals, Riyadh.

26-28 November (Tuesday-Thursday): Saudi Electricity Expo, Riyadh.

11-14 November (Monday-Thursday): Cityscape Global, Riyadh.

25-27 November (Monday-Wednesday): World Investment Conference, Riyadh.

26-28 November (Tuesday-Thursday): Saudi Electricity Expo, Riyadh.

DECEMBER

2-13 December (Monday-Friday): Conference of the Parties (COP16) to the United Nations Convention to Combat Desertification, Riyadh.

Signposted to happen sometime in 2024:

The AFC Champions League Elite

2025

FEBRUARY 2024

10-13 February (Monday-Thursday): Leap 2025, the Kingdom’s premier tech investment conference.

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