Despite a grim 2023, SABIC stock remains very popular among Saudia investors and top-performing international funds. While you can buy SABIC shares directly, sometimes it is worth considering an ETF with SABIC representation.
SABIC stock (Tadawul: 2010) has gained significant attention from investors due to the company's strong financial performance, diversified product portfolio, and strategic partnerships with major global companies.
SABIC's shares are also included in various global indices and exchange-traded funds (ETFs) that track the performance of the chemical sector, such as the iShares MSCI Saudi Arabic ETF (KSA).
SABIC Stock (Tadawul: 2010) - Research and Ratings
- Is SABIC stock undervalued compared to its fair value, analyst forecasts and its price relative to the market?
- What is the analyst's 12-month SABIC stock price forecast?
- What are SABIC’s future growth expectations?
- How has SABIC stock performed over the past 5 years?
- Should you buy SABIC shares or invest in ETFs with "2010" representation?
Understanding SABIC Stock: A brief history
SABIC, also known as Saudi Basic Industries Corporation, is a global chemical manufacturing company based in Saudi Arabia. Founded in 1976, SABIC has grown to become one of the largest petrochemical companies in the world. In 2021, SABIC's shares were listed on the Saudi Stock Exchange (Tadawul) under the ticker symbol "2010".
As one of the most valuable companies in the Middle East, SABIC stock is held by a diverse range of investors, including institutional and individual investors, as well as sovereign wealth funds.
70% of the company's shares are owned by Saudi Aramco, with the remaining 30% publicly traded on the Saudi stock exchange. Since its founding in 1976, SABIC has grown rapidly and now operates in around 50 countries with over 31,000 employees.
SABIC’s business activities are divided into three segments historically:
- Creation: SABIC was created by royal decree in 1976 to turn oil by-products into valuable commodities for export and local downstream industries, transforming wasted gas into eco-friendly materials.
- Development: During the late 1970s and early 1980s, Al-Jubail transformed into a modern industrial city. Joint ventures with Hadeed, Al-Bayroni, and Ar-Razi began production in 1983, followed by others in 1985. SABIC expanded globally in 2002 with the acquisition of DSM's petrochemical business, and later with the acquisition of Huntsman Petrochemicals (UK) and GE Plastics. Today, SABIC operates through three Strategic Business Units and one standalone organization, Metals (Hadeed), and continues to explore global investment opportunities.
- Emerge: SABIC's growth has never stopped since its inception. In 1985, the company's total production was 6.3 million metric tons, reaching 58 million metric tons in 2021. In the span of just 46 years, SABIC has become the second most valuable brand in the chemical industry*, with a vision to be the preferred world leader in chemicals.
SABIC shares are distributed among 4 categories:
- Public Companies: 70.0%
- General Public: 26.1%
- Institutions: 3.9%
- Individual Insiders: 0.00245%
The top 25 shareholders own 73.66% of the company, while the top 5 shareholders are:
- Saudi Arabian Oil Company (Aramco Co.) - 70%
- The Vanguard Group, Inc. - 1.21%
- BlackRock, Inc. - 1.0%
- Dimensional Fund Advisors LP - 0.36%
- Geode Capital Management, LLC - 0.2%
SABIC Stock - Fundamental Analysis and Financial Ratings
See the latest SABIC stock price analysis, including valuation, future growth, past performance, and more to help you make more informed investing decisions.
Valuation
Is SABIC stock undervalued compared to its fair value, analyst forecasts, and its price relative to the market?
- Significantly Below Fair Value: SABIC stock is trading below fair value by more than 20%.
- Price-To-Sales vs Peers: SABIC stock is good value based on its Price-To-Sales Ratio (1.7x) compared to the peer average (3x).
- Price-To-Sales vs Industry: SABIC stock is expensive based on its Price-To-Sales Ratio (1.7x) compared to the Asian Chemicals industry average (1.3x).
- Price-To-Sales vs Fair Ratio: SABIC stock is good value based on its Price-To-Sales Ratio (1.7x) compared to the estimated Fair Price-To-Sales Ratio (4.6x).
Future Growth
Saudi Basic Industries is forecast to grow earnings and revenue by 58.3% and 5% per annum respectively. EPS is expected to grow by 53.3% per annum. Return on equity is forecast to be 8.6% in 3 years.
- SABIC's forecast earnings growth (58.3% per year) is below the savings rate (14%).
- SABIC's earnings (58.3% per year) are forecast to grow faster than the Saudi market (6% per year).
- SABIC's earnings are expected to grow significantly over the next 3 years.
- SABIC's revenue (5% per year) is forecast to grow slower than 20% per year.
Past Performance
How has SABIC stock performed over the past 5 years?
- SABIC shares have a large one-off loss of SAR1.9B impacting its last 12 months of financial results to 31st December, 2023.
- SABIC shares' current net profit margins (2.9%) are lower than last year's (8.6%).
- SABIC shares earnings have grown by 0.3% per year over the past 5 years.
- SABIC shares have had negative earnings growth over the past year, so it can't be compared to its 5-year average.
- SABIC shares had negative earnings growth (-91.7%) over the past year, making it difficult to compare to the Chemicals industry average (-63.5%).
- SABIC shares Return on Equity (1.9%) is considered low.
Financial Health
What is SABIC's financial position?
- SABIC's short-term assets (SAR100.6B) exceed its short-term liabilities (SAR52.8B).
- SABIC's short-term assets (SAR100.6B) exceed its long-term liabilities (SAR46.3B).
- SABIC has more cash than its total debt.
- SABIC's debt-to-equity ratio has reduced from 21% to 14.3% over the past 5 years.
- SABIC's debt is well covered by operating cash flow (87.4%).
- SABIC earns more interest than it pays, so coverage of interest payments is not a concern.
Dividend
SABIC is a company that pays dividends and currently offers a yield of 4.06%.
- SABIC's dividend (4.06%) is higher than the bottom 25% of dividend payers in the Saudi market (1.56%).
- SABIC's dividend (4.06%) is in the top 25% of dividend payers in the Saudi market (4.79%).
- SABIC's dividend payments have been volatile in the past 10 years.
- SABIC's dividend payments have fallen over the past 10 years.
SABIC Stock Price Forecast
What is the analyst 12-month SABIC stock price forecast, and do we have any statistical confidence in the consensus price target from analysts?
Source: simplywall.st
According to Simplywall.st, the SABIC stock 12-month target price is less than 20% higher than the current share price.
Wallet investor site suggests that the price of SABIC stock will decline in 2024 compared to the current price, ending the year at an average price of 79.701 SAR.
There are no 5-year SABIC shares price forecasts and price predictions.
Important: When considering SABIC's fundamental analysis, financial rating and price predictions, it’s important to remember that high market volatility and changing economic environment makes it difficult to give long-term estimates. As such, analysts and algorithm-based platforms can and do get their ratings and predictions wrong. Always do your own research before making an investment decision. And never trade or invest more than you can afford to lose.
SABIC Stock Price - Technical Analysis
SABIC's stock price has been trading within a sideways channel since May 2022, as depicted in the weekly chart below, despite multiple attempts to breach the 0.236 Fibonacci retracement level.
Nonetheless, there are indications that the price has finally formed a double bottom pattern at the key support level of 75.3 Saudi riyals. If this level holds and the price successfully surpasses the 91.10 Saudi riyal mark, it may prompt breach speculators to target the resistance levels at 100.60 and 108.4 Saudi riyals, respectively!
How to Invest in SABIC Stock
Some investors want to take an active hand in managing their investments, while others prefer to set it and forget it. Your preference may change but decide on an approach to get started.
For most people, stock market investing means choosing among these two investment types:
Individual SABIC shares
If you’re after a specific company, you can buy a single share or a few shares to dip your toe into the stock-trading waters. Building a diversified portfolio out of many individual stocks is possible, but it takes significant investment and research.
If you go this route, remember that individual stocks will have ups and downs. If you research a company and choose to invest in it, think about why you picked that company in the first place if jitters start to set in on a down day.
Traditional stockbrokers allow you to invest in local stocks. However, you might not be able to invest in international stocks listed on the major stock exchanges, global ETFs, and other assets.
ETFs with SABIC holdings
SABIC stock (or any single stock, for that matter) can be a very volatile investment. You can manage the risk you see extreme highs and lows by diversifying your investment holdings. An ETF, for instance, contains a basket of individual stocks. When you invest in a fund, you also own small pieces of each of those companies.
If you want an ETF with Alahli representation, you might consider iShares MSCI Saudi Arabia ETF (KSA). BlackRock's iShares is the largest provider of ETFs as calculated by assets under management.
Why invest in SABIC Stock via KSA?
The iShares MSCI Saudi Arabia ETF seeks to track the investment results of a broad-based index composed of Saudi Arabian equities. With net assets of almost $1B, The iShares MSCI Saudi Arabia ETF (KSA) is the largest exchange-traded fund that seeks to track the investment results of an index composed primarily of frontier market equities along with select emerging market equities.
- Access to the Saudi Arabian stock market, which has historically been closed to foreign investors.
- Targeted exposure to a country with growth potential. with One click accesses to a virtually untapped investment portfolio, including Saudi Stock Exchange and TASI index exposure.
- Use to seek long-term growth and diversification.
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- Place your order. Click on the "Search" icon located in the left panel or by clicking on "ETFs" and then select the instrument, such as "iShares MSCI Saudi Arabia ETF”.
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Sources:
Saudi Basic Industries Corporation (SASE:2010) Stock Valuation - Simply Wall St
Saudi Basic Industries Corporation (2010.SR) Stock Price, News, Quote & History - Yahoo Finance