Red Sea Global lines up SAR 2 bn for new luxury hotel

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WHAT WE’RE TRACKING TODAY

THIS MORNING: New real estate regulator could be in the works as Riyadh looks to pre-empt housing crunch ahead of Vision 2030 goal

This morning’s issue should be a brisk read. Mondays are slower news days, and today is no exception.

UP FIRST- We have a long weekend coming up — have you made plans yet? Markets will be closed on Thursday, 22 February, in observance of Founding Day, Tadawul said in a statement. Traders will be back at their desks on Sunday, 25 February. Look for banks to close next Thursday, too, while EnterpriseAM Saudi also takes a day off to bask in the glory of a three-day weekend.

We hope all of you are looking forward to the break as much as we are.

MEANWHILE- The Global Smart Cities Forum kicks off today in Riyadh and wraps up on Tuesday. The forum, organized by the Saudi Data and Artificial Intelligence Authority (SDAIA), features over 80 speakers from 40 nations worldwide for talks on strategies for fostering sustainable urban development.

The International Petroleum Technology Conference (IPTC) opens today in Dhahran and wraps up on Wednesday. It brings together the energy industry for discussions on advanced technologies in the sector.

Further afield: It’s day one of the three-day World Government Summit in Dubai. Panels today include forums on the future of work and of mobility. You can find the full agenda here.

WEATHER- Expect a breezy morning in Riyadh, with scattered clouds and sunshine throughout the day. Some hazy sun is in the cards for both Makkah and Madinah.

Riyadh: 24°C daytime / 12°C overnight
Makkah: 33°C daytime / 20°C overnight
Madinah:26°C daytime / 13°C overnight

WATCH THIS SPACE-

#1-The Kingdom could soon be getting a General Authority for Real Estate Development as policymakers look to better regulate the industry, improve transparency, and streamline procedures for investors and builders, state news agency SPA reports.

Why it matters: Riyadh’s population is expected to double by 2030, suggesting the capital city could be short as many as 2 mn homes.

#2- REGULATION WATCH- The government is reportedly holding public consultations with private-sector retail players to address their concerns about compliance standards and the size of fines imposed for non-compliance, Aleqtisadiah reports, citing an unnamed source who it says has knowledge of the proceedings.

Also in consumer / retail news: The Commerce Ministry has given retailers and online stores the green light to start reducing prices for Ramadan and Eid Al Fitr starting 20 February through 14 April, it said yesterday on X. The ministry said the move aims to stimulate early shopping. Applications for discount licenses can be submitted here.

#3-Acwa Power begins research on USD 4 bn green hydrogen + ammonia project in Egypt: Renewables giant Acwa Power has begun conducting feasibility studies to develop its large-scale, two-phase green hydrogen and ammonia project in Egypt’s Suez Canal Economic Zone, the company’s MD for Saudi Arabia, Raad Al-Saadi, told Asharq Al-Awsat.

In context: The potential investment would be part of the company’s plan to become a major exporter of green fuels to the Middle East and Europe, Al-Saadi added.

BACKGROUND- Acwa Power inked in December an agreement with the Egyptian government to develop the project, which could cost as much as USD 4 bn in phase one, when it will aim to produce some 600k tons of green ammonia each year. A second phase on the drawing board would boost output by 2 mn tons.

#4- Alistithmar Capital is preparing to list its Alistithmar AREIC Diversified REIT Fund on Tadawul after receiving clearance from the Capital Market Authority, the CMA said in a statement yesterday. No further information was provided.

Uh, Enterprise? What’s a REIT? A real estate investment trust is a mutual fund that owns, invests in, or manages income-generating real estate assets — commercial, residential, office, and other properties. Some will also invest in real-estate-related securities or private equity transactions that are directly related to the industry.

How do I make money on a REIT? Mechanics vary from REIT to REIT, but unit holders (the REIT version of shareholders) are entitled a share of profits (ie: dividends) and they can also see the value of their investment go up if the assets the REIT buys appreciate.

Why would I buy a REIT? If you like the underlying portfolio of real assets, it’s an easy way to get exposure to real estate at (a) a lower ticket price than buying the assets yourself and (b) a REIT is usually a heck of a lot more liquid. REIT units are much easier to buy or sell whenever you want than are the real estate assets themselves.

DATA POINTS-

#1-The Industrial production index dropped 10.5% y-o-y in December 2023from a year earlier, Gastat said in a report (pdf), yesterday. It attributed the drop to lower mining, quarrying, and manufacturing activity throughout the year. The slowdown has come since the rate at which the economy is expanding peaked in early 2022.

#2- Freight rates for exporters have risen by 20-50% thanks to attacks on shipping in the Red Sea by Houthi rebels, Gulf Aluminum Council Secretary General Mahmoud Al Dailami told Al Eqtisadiyah earlier this week.

REMEMBER- The months-long disruption of shipping in the Red Sea is the “the biggest diversion of international trade in decades,” according to Bloomberg. The Houthis are looking to put pressure on Israel, but their actions have started to have an impact on some Gulf markets.

PUBLIC SERVICE ANNOUNCEMENTS-

#1- Registration for this year’s hajj season opened for domestic pilgrims yesterday, the Hajj and Umrah Ministry said yesterday on X. Citizens and expats living in the Kingdom can apply through the Nusuk application or the ministry’s website. The cost of the four packages on offer ranges from SAR 4.1k to SAR 13.3k.

#2- Mussaned wants you to report household staff who go walkabout, it said in a post on X. The details:

File a report via Absher if the workers have a valid residency;
File a report at the General Directorate of Passports if they don’t.

SPORTS-

The national cricket team were crowned champions of the ACC T20 Men’s Challenger Cup in Thailand for the second time after beating Cambodia by five wickets yesterday.

Coming up: The national team’s T20i Quad Series 2024 schedule will see it playing against Maldives today at 9:30 am KSA. It will play next against host Thailand tomorrow at 5:30 am KSA and Bhutan on Thursday at 9:30 am KSA.

THE BIG STORY ABROAD-

It’s all war and technology in the global business press this morning.

War:

Nobody believes Benjamin Netanyahu, who said Israel is “working out a detailed plan” to evacuate civilians from Rafah after Joe Biden warned him that Israeli forces shouldn’t move into the area without a “credible and executable” plan to safeguard non-combattants.
Donald Trump is freaking out the Europeans with his suggestion that he’d be happy (if elected) to see Russia do “whatever the hell they want” to Nato allies that don’t meet minimum defense spending targets.

Tech:

Tech giants have laid off at least 34k people since the start of the year as they get their heads around what AI means to their businesses and prepare for what’s next. And it’s not just Big Tech that’s trimming staff.
OpenAI boss Sam Altman is still trying to raise as much as USD 7 tn (yes, tn, not bn) for a new AI chip and power production project, including from Arab investors.
Apple’s Vision Pro is still having a moment, with tech pundits variously talking about how it is really for work, an eventual (not now) iPad replacement, and changing social norms about walking around wearing a face computer.

ALSO- The Luddites are outin San Francisco.

CIRCLE YOUR CALENDAR-

The Saudi Capital Market Forum will open on Monday, 19 February and wrap up on Tuesday. Held under the theme “Powering Growth,” the event will bring together members of the global financial landscape for discussions on the capital markets and investment strategies.

The Diriyah Contemporary Art Biennale will kick off in Diriyah on Tuesday, 20 February and wrap up on Friday, 24 May. Headlined After Rain, it will be led by German curator Ute Meta Bauer and features 92 artists from 43 countries. It will see several new commissions, including a joint project documenting “Saudi futurism” since the 1940s by local artist Ahmed Mater and Berlin-based photographer Armin Linke.

The Future Investment Initiative (FII) will host a two-day priority summit in Miami starting Thursday, 22 February.

The annual tech event LEAP will open in Riyadh on Monday, 4 March and continue through Thursday, 7 March. Dubbed the “Digital Davos”, the event will bring together the global tech industry for discussions on the future of technology.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

Red Sea Global secures SAR 2 bn loan from Riyad Bank to develop a Four Seasons resort

Red Sea Global has lined up SAR 2 bn in financing from Riyad Bank, it said in a statement yesterday. The wholly-owned unit of the Public Investment Fund will use the facility to develop a Four Seasons resort at its landmark tourist destination, The Red Sea, it said.

What we know: A JV between RSG and Prince Al Waleed Bin Talal’s Kingdom Holding will co-develop the luxury resort, which RSG said last year could welcome guests as early as next year.

About the property: The 159-key resort is on Shura Island and part of a portfolio that The Red Sea says will be 11 luxury hotels, residences, a golf course, an 118-berth marina, and a retail dining and entertainment center in the first phase. The destination aims to be home to 50 resorts, 8k hotel rooms, and over 1k residential properties across 22 islands and six inland sites by 2030

What they said: “The Kingdom’s tourism potential is truly limitless and with our first two hotels now open, we are at the vanguard of putting Saudi Arabia on the global tourism map. This deal signifies the confidence of the private sector in the country, its people and in Red Sea Global. Riyad Bank has been with us since our first debt financing deal in 2021 and we’re honored to have them partner with us once again,” RSG CEO John Pagano said.

PIF’s mobility investment arm buys into Croatia-based Project 3 Mobility + eyes Recogni, Holon

PIF subsidiary Tasaru Mobility Investments was the lead investor in a series-A round raised by Croatia-based Project 3 Mobility (P3), the startup said in a press release. The signing happened on the sidelines of the PIF’s private sector forum in Riyadh last week, according to a post on social media platform X.

What we don’t know: While P3 says it has raised a total of EUR 100 mn from private investors, it hasn’t disclosed the size of the most recent round or of PIF’s commitment. It has also taken on a nearly EUR 180 mn grant from the European Commission to “research, develop and produce new mobility vehicles and supporting infrastructure.”

Use of proceeds: The company will use fund series A funding to fund R&D and expand its team, it said.

Tasaru has also inked agreementsthat will see it invest in:

US tech company Recogni, which develops low-energy AI products. Tasaru will be financing Recogni’s development of next-gen chips for autonomous vehicles.
Vehicle manufacturer Holon, a subsidiary of Austria’s Benteler Group. It plans to acquire a minority stake of up to 38% in Holon to back the development of the autonomous electric Mover shuttle. The nine-figure investment in Holon will be dispersed in multiple tranches with the first expected in April 2024.

Haven’t heard of Tasaru? That’s because it’s new. The investment company launched in October 2023 and is 100% owned by PIF. Its mandate is to develop domestic supply chain capabilities in the automotive, mobility and next-gen industries.

Here at home: The company launched a joint venture with Zamil Group Real Estate Company, Abdullah Ibrahim Alkhorayef Sons, and Dar Al-Himmah Projects to develop an automotive logistics hub in King Abdullah Economic City (KAEC), ultimately operating in the aftermarket parts industry, it said in a press release in October 2023.

Modon lines up investors for projects worth up to SAR 130 mn

TheSaudi Authority for Industrial Cities and Technology Zones (Modon) secured new investments worth SAR 130 mn aimed at the localization of military aviation manufacturing and drones, state news agency SPA reported yesterday. It did not disclose the identities of the firms with which Modon contracted during the World Defense Show (WDS) held in Riyadh last week.

What we know: Modon signed two contracts worth SAR 50 mn each that will see the building of factories specialized in manufacturing military aircraft, aircraft parts, and drones. It also signed an SAR 30 mn to allocate 3k sqm of land for the repair and maintenance of ships and the revamp of military vessels.

AND- Nadrah Trading Company has inked a SAR 1 bn agreement with India’s state-owned Munitions India Limited (MIL) to set up an artillery ammunition factory in the Kingdom, SPA separately reported. No further information was provided.

REMEMBER- The Kingdom has a target of localizing over 50% of its military equipment spending by 2030.

Gov’t set to unroll rules regulating official communications here and abroad in August

Government agencies will only be allowed to make formal communication with entities overseas or foreign missions in the Kingdom through the Foreign Ministry, new rules regulating official communications published in the official gazette Umm Al Qura showed last week. The rules, which will come into force in August, were approved by the Cabinet last month.

The rationale: The rules aim to regulate formal incoming and outbound communications between governmental bodies and between government and the outside world. It also aims to maintain the security of documents throughout the process.

Ironing out the details: The rules stipulate that only nationals who are trustworthy will be allowed to handle government documents, with every government entity obliged to take adequate measures to ensure the safety of their electronic documents. The rules also prohibit the use of language indicating “reverence” in formal government communications whether on paper or online.

The rules also entail:

Guidelines on how to write: A detailed description of the structure of a formal letter / email between government agencies;
The use of terms related to prioritizing urgency and confidentiality, with urgency categorized through “Immediate”, “Very Urgent” and “Urgent” depending on the level of importance;
Guidelines to protect documents from damage, including a ban on smoking, food and drinking during working hours;
Provisions on confidentiality of data.

Burgerizzr, Tanmiah, Tihama 2023 results are in

TANMIAH FOOD-

Main market-listed Tanmiah Food saw its net profit decline 59% y-o-y to SAR 76 mn in 2023 as a one-off gain of SAR 102 mn in 2022 from its strategic partnership with Tyson Foods made for a tough comparison. Revenues were up 21% y-o-y to SAR 2.1 bn last year, driven by improved sales driven of fresh poultry and a 3x increase in revenues from its fast food franchise business Popeys. Tanmiah opened 16 new Popeyes outlets in 4Q 2023.

BURGERIZZR-

The bottom line of Nomu-listed burger chain Burgerizzr rose 4.6x y-o-y to SAR 12.3 mn in 2023due to an increase in gross profit margin to 30%, up from 27%, and a rise in average sales per branch, according to a disclosure to Tadawul. The company also delivered good control of food, labor, and administrative expenses.

Burgerizzr saw revenues grow 12% y-o-y to SAR 281 mn last year as sales improved. The restaurant operated 102 branches last year, down from 105 in 2022.

TIHAMA-

Tihama, the advertising, public relations, publishing, and media group, saw its net income decline 54% y-o-y in 9M 2023 to SAR 32 mn on the back of a drop in gross income led by the advertising segment, according to a disclosure to Tadawul. Revenues were down 20.1% y-o-y to SAR 57 mn in the same period, dragged down by the advertising segment.

Natural Gas Distribution Co names new board

The Natural Gas Distribution Company (NGDC) named Abdulrahman bin Sulaiman (Linkedin) as its new chairman, it said in a disclosure to Tadawul yesterday. He has served as the company’s deputy chairman since 2020. It also appointed Abdullatif Al Abdullatif (bio) as deputy chairman.

Dussur + Baker Hughes opens chemicals manufacturing facility

MANUFACTURING-

Dussur, Baker Hughes inaugurate chemicals manufacturing facility: The Saudi Arabian Industrial Investments Co. (Dussur) opened with US oilfield services provider Baker Hughes a chemicals manufacturing plant in Jubail that will produce oilfield, power generation, and industrial chemicals, a statement by Baker Hughes read yesterday.

We knew this was coming: The facility is part of a JV announced between Dussur and Baker Hughes in 2022. Baker Hughes owns a 51% stake in the JV, while Dussur owns 49%. Dussur is owned by the PIF, Sabic, and Aramco.

HEALTHCARE-

National Medical Care is ready to expand Al-Malaz Hospital under a newly-acquired license from the Health Ministry, it said in a disclosure to Tadawul. The SAR 100 mn project would bring total capacity to 459 beds and 62 clinics.

FINANCE-

#1- Awaed Alosool Capital has received approval from the Capital Markets Authority (CMA) to manage and operate funds as well as hold securities on behalf of clients, according to a disclosure on Tadawul.

#2- Competitiveness Financial now has a fintech permit from the CMA that will allow it to invest in and promote debt instruments, the authority said in a statement yesterday.

EDUCATION-

The Culture Ministry opened the Kingdom’s first specialized college of arts at King Saud University in Riyadh, state news agency SPA reported yesterday. Departments include design, the performing arts, and visual arts with courses ranging from graphic design, fashion, theater, and cinema to music, printing, drawing, sculpture, and Arabic calligraphy.

TECH-

Solutions by stc (79% stc-owned) and Center3 (100% stc-owned) signed an agreement that will see Solutions design and build infrastructure for data centers owned by Center3, Solutions said in a disclosure to Tadawul. The agreement runs for three years and the price tag has a ceiling of SAR 150 mn.

TOURISM-

#1– Dan Company has signed an MoU with Abdulmohsen bin Abdulaziz AlJabr Trading Company that could see the two work together on lodges and farm stays, it said in a statement last week. No further information was provided. Dan is a wholly-owned subsidiary of the Public Investment Fund.

#2- The Saudi Tourism Authority and Switzerland Tourism signed an MoU to improve cooperation in the tourism industry, state news agency SPA reports.

IMF head lays out recipe to help Arab world withstand headwinds

Three courses of action could help the Arab world withstand economic headwinds and uncertainties resulting from geopolitical conflict and crises, IMF Managing Director Kristalina Georgieva said during her keynote speech at the World Government Summit in Dubai.

Phasing out energy subsidies could save the region USD 336 bn and help address pollution and improve social spending;
Implementing tax reforms and diversifying away from hydrocarbon revenues is also key;
and Improving state-owned companies’ performance.

Support from GCC countries — and the IMF — will also be crucial for the region moving forward, the IMF head said.

Remember- The IMF recently lowered its MENA growth outlook for the year by 0.5 percentage points, now expecting regional growth to pick up to 2.9% in 2024 from 2.0% the year before. The Fund pointed to temporary oil cuts in Saudi Arabia as the main driver behind the slashed outlook.

ELSEWHERE- More gains for the S&P 500 incoming? The S&P 500 is poised to hit fresh peaks and deliver returns in the double digits in the upcoming months after surpassing the 5,000 mark last week, the Financial Times reported. The blue-chip index has traditionally reached numerous all-time highs within a year of hitting a previous record in cases where over a year had elapsed since its last peak — and this pattern has held since 1950, Truist Advisory Services’ Keith Lerner told the salmon-colored paper.

Asian markets are quiet this morning — and will likely remain so for the week asChina is closed for a weeklong Lunar New Year holiday. Exchanges in Hong Kong, Shanghai, and Korea are all off today. The Nikkei is up slightly, and futures suggest a mixed open in Europe and on Wall Street.

TASI	12,209.06	+0.1% (YTD: +2%)
MSCI Tadawul 30	1,580.49	-0.03% (YTD: +1.9%)
USD : SAR (SAMA)	3.75 Sell	3.75 Buy
Interest rates	6% repo	5.5% reverse repo
EGX30	28,199.04	-0.8% (YTD: +13.3%)
ADX	9,344.05	-0.2% (YTD: -2.4%)
DFM	4,183.86	+0.6% (YTD: +3.1%)
S&P 500	5,026.61	+0.6% (YTD: +5.4%)
FTSE 100	7,572.58	-0.3% (YTD: -2.1%)
Euro Stoxx 50	4,715.87	+0.1% (YTD: +4.3%)
Brent crude	82.19	+0.7%
Natural gas (Nymex)	1.85	-3.7%
Gold	2,038.70	-0.5%
BTC	48,082.20	-0.02% (YTD: +120.6%)

THE CLOSING BELL-

The TASI rose 0.05% yesterday on turnover of SAR 7.9 bn. The index is up 2% YTD.

In the green: Atheeb Telecom (+10%), SAL (+10%) and APC (+10%).

In the red: Dallah Health (-3.4%), Care (-3.3%) and Saudi German Health (-3%).

CORPORATE ACTIONS-

#1- Mobily’s BoD has proposed a dividend of SAR 1.45 per share for eligible shareholders for FY 2023, it said in a disclosure to Tadawul yesterday. A distribution date will be determined following the approval of the general assembly, it added.

#2- Saudi Awwal Bank’s (SAB) BoD has proposed a dividend of SAR 0.98 per share for eligible shareholders for the second half of FY 2023,it said in a disclosure to Tadawul yesterday. A distribution date will be announced later. The amount is contingent upon general assembly approval.

** PSA- All dividends paid out by Mobily and SAB to non-resident investors are subject to a 5% withholding tax upon transfer.

#3- Al Etihad Cooperative Insurance received approval from the Ins. Authority to raise its capital by 11.1% to SAR 500 mn, it said in a disclosure to Tadawul yesterday.

#4- Shares of the Arab National Bank (ANB) and units of Alkhabeer REIT Fund went ex-dividend yesterday for 2H 2023 and 4Q 2023, respectively, according to Argaam.

Kingdom deposits second USD 250 mn tranche to support Yemen’s battered economy

Saudi Arabia has deposited a second USD 250 mn tranche of the USD 1.2 bn grant to Yemen’s Presidential Council, state news agency SPA reported yesterday. The assistance is directed towards “addressing the budget deficit, paying salaries and operating expenditures and food security.” Yemen’s central bank governor Ahmed bin Ahmed Ghaleb Al Maabqi told Reuters he expects the bank to receive the installment by yesterday or today. The grant is part of a one-year USD 1.2 bn grant announced in August for the struggling Yemeni economy.

A worsening situation: Al Maabqi said the crisis in the Red Sea has aggravated the war-torn country’s economic crisis. “The situation is already hard as a result of the war going on for more than eight years. With Houthi attacks on oil facilities [in Yemen] and exports halting, the Red Sea attacks have exacerbated the situation,” he said.

CALENDAR

FEBRUARY

13 February (Tuesday): The Global Smart Cities Forum wraps up, Riyadh Arena, Riyadh.

14 February (Wednesday): The International Petroleum Technology Conference (IPTC) wraps up, Dhahran.

14 February (Wednesday): Filipino exporters wrap up a business-matching tour in town.

18-21 February (Sunday-Wednesday): Restatex Riyadh Real Estate, Riyadh International Convention and Exhibition Center, Riyadh.

19 February (Monday): The Future of Business 2024 Forum, Eastern Chamber’s HQ, Dammam.

19-20 February (Monday-Tuesday): Saudi Capital Market Forum, King Abdullah Financial District, Riyadh.

19-21 February (Monday-Wednesday): Makkah Expo for Hotels and Restaurants, Makkah.

19-21 February (Monday-Wednesday): Future of Media Exhibition (FOMEX), Riyadh.

20 February-24 May (Tuesday-Friday): Diriyah Contemporary Art Biennale, Diriyah.

22 February (Thursday): Founding Day (Public Holiday)

26 February (Monday): OTSEC Summit, Dammam.

26-29 February (Monday-Thursday): Big 5 Construct Saudi, Riyadh.

26-29 February (Monday-Thursday): FM EXPO SAUD

26-29 February (Monday-Thursday): Stone and Service Saudi Arabia, Riyadh.

MARCH

2 March (Friday): end of Noor Riyadh show, segment “Refracted Identities, Shared Futures”, Riyadh.

4-6 March (Monday-Wednesday): International Conference on Sand and Dust Storms in the Arabian Peninsula, Riyadh.

4-7 March (Monday-Thursday): LEAP 2024, Riyadh.

11 March (Monday): Flag Day (national holiday)

Wrapping up 23 March (Saturday): Desert X ALUla.

Signposted to happen sometime in March:

Ramadan

APRIL

14-21 April (Sunday-Monday): IMF and World Bank spring meetings, Washington, DC

28-29 April (Sunday-Monday): World Economic Forum’s Special Meeting, Riyadh.

29 April-1 May: Future Hospitality Summit at Al Faisaliah Hotel, Riyadh.

Signposted to happen sometime in April:

Eid Al-Fitr (national holiday)

MAY

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

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

Signposted to happen sometime in May:

Global Trade Review (GTR): KSA
Saudi Energy Convention

JUNE

5 June (Wednesday): World Environment Day.

30 June (Sunday): ZATCA tax exemption scheme expires

Signposted to happen sometime in June:

Eid Al-Adha (national holiday)

AUGUST

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

SEPTEMBER

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

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

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:

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