Middle East’s Best Companies Hold On

Global Finance releases its 2017 ranking of the Best-Performing Companies In The Middle East. There are some interesting changes at the top of the list, with Israel gaining position while oil-producing countries struggle with low oil prices.


In its third edition, the ranking looks again for the best among the 250 biggest nonfinancial public companies in the Middle East and highlights those that stand out for their economic results and their financial strength and those that are getting the recognition of the financial markets for it.

Although 16 out of this year’s top 25 companies were already ranked among last year’s best-performing 25, there have still been some relevant changes. Saudi Arabian Fertilizer moved to the top spot from last year’s seventh place. Despite a slight drop in return on assets, margins and solvency ratio, Saudi Arabian Fertilizer’s numbers are still top-rank worthy, and the market drove its price/earnings ratio in its last reported year from 8.6 to almost 14, an increase of more than 60%.

Most of last year’s top 25 companies have seen their results and margins drop. Price-to-earnings ratios have nevertheless evolved positively for most of them, so movements in the rankings this year are much more about the relative resilience of companies in a challenging
economic environment.

Check Point Software Technologies, last year’s top-ranked company, managed second position this year. The Israeli cybersecurity solutions provider saw modest gains in its return on assets and has also benefited from an increase in its p/e ratio, albeit not as spectacular as the one Saudi Arabian Fertilizer experienced.

SAUDI DOMINANCE CHALLENGED

Third and fourth positions in this year’s rankings go to Saudi Arabian companies Qassim Cement and Makkah Construction & Development, which held fifth and sixth place respectively last year. To see some real novelty in the list, we jump to fifth position. FMS Enterprises Migun, the highest-ranked newcomer, is an Israeli-based company that manufactures ballistic-protection products for both personal and vehicle armor. FMS is second in the returns-on-assets ranking, with an outstanding 34.7%, just behind Saudi Airlines Catering, which tops RoA with 37.7%.

Other newcomers to the top 10 are Saudi Ground Services at number seven and Jordanian Duty Free Shops at number eight, while Kuwait’s Humansoft, a group of enterprises working in the education sector, comes in at 10th position. Saudi Arabia is still the country that brings the most companies to the Top 25 Best-Performing Companies; but Israel is starting to challenge that hegemony, perhaps reflecting the difficulties that oil-producing countries have faced in recent years.

The ranking for 2015 included 15 names from Saudi Arabia, while in 2016 there were 12, and in 2017 the figure has dropped to 11. Meanwhile, Israel has managed to add two more names to this year’s list, bringing its participation from five companies to seven. The 2017 Best-Performing Companies in the Middle East list also includes two companies from Bahrain, two from Jordan and one company each from Iran, Kuwait and Qatar.

SHUFFLING POSITIONS

Looking at the main changes in the general rankings by sector—in chemicals, rubber, plastics and nonmetallic products—cement companies still hold the lead, with three companies among the top five; although in top place this year is Saudi Arabian Fertilizer. There are some changes in relative positions, but four of the top five were already there last year. Only City Cement is new, taking fifth place from Yamama Saudi Cement.

First and second place in the post, telecommunications and technology sector remain unchanged, but the three Israeli companies that follow are new to the top five: Ituran Location & Control, which manufactures and sells tracking devices; Silicom, a provider of networking and data infrastructure solutions; and CyberArk Software, an IT security company.

The education and training provider Humansoft enters the top five education and health companies for the first time, going straight to the top of the list, a particularly remarkable feat considering it is the only one among the top-ranked companies not to deal in the health sector.

Probably the sector with the most significant changes, metals and metal products, saw the first three positions in the top five taken by newcomers. At the top is Klil Industries, a manufacturer of aluminum systems for the construction industry. Al Yamamah Steel is in second place and Oman Cables third. Saudi Steel Pipe keeps its fourth position and last year’s second-ranked Aluminium Bahrain moves down to fifth position.

Economic forecasts for 2017 in the Middle East are modestly positive, but the price of oil remains low; and regional conflicts continue to place downside pressureon growth.

All countries in the region, except for Israel, saw their ratings by the major rating agencies in 2016 worsen. OPEC’s November agreement to cut oil production for the first time in eight years made way for some optimism; but despite Russia’s unexpected commitment and OPEC members’ efforts to comply, oil prices remain low. The International Energy Agency is forecasting a spike in oil prices by 2020; but in the short term this might not be enough to bring prices significantly higher.

Low oil prices have some upside, as government efforts shift to promote diversification and private capital participation in the economy. Nonetheless, as Giyas Gokkent, senior economist at the Institute of International Finance’s Middle East and North Africa department, told the Khaleej Times, “Lower public investment and appreciation of the US dollar, which is hurting non-oil exports of goods and services, are some of the factors weighing on the non-oil sector.”

Uncertainty about Brexit and EU growth and doubts about the extent of president Donald Trump’s reforms of trade, tax and immigration policies are not helping to improve prospects. “Even in an optimistic scenario for the world economy, it is highly unlikely oil prices will return to anything close to their 2010–2014 averages,” state the authors of the Q4 2016 Economic Insight: Middle East report published by the Institute of Chartered Accountants in England and Wales.

The same report notes that the strain that low oil prices are putting on government budgets is likely to increase the burden on companies in the region through increased taxes, subsidy reforms and spending cuts. Efforts in some countries to “nationalize” the workforce and potential moves toward more-flexible exchange rates could also contribute to increased costs and limit competitiveness for companies in the region.

 

METHODOLOGY

The Middle East Best-Performing Companies ranking highlights the companies with the best performance among publicly traded nonfinancial companies in the Middle East. We include in our analysis the top 250 companies in the region, based on market capitalization. Performance is determined by looking at their return on assets, profit margin, solvency ratio and price/earnings ratio. We then assign a rank from 1 to 250 on each indicator—the lower the number, the higher the rank. The countries covered by the ranking include Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, the Palestinian territory, Qatar, Saudi Arabia, Syrian Arab Republic, United Arab Emirates and Yemen. Data is accurate as of March 31, 2016.


MIDDLE EAST – TOP 25 BEST-PERFORMING COMPANIES

RANK

COMPANY

COUNTRY

RETURN ON ASSETS %

PROFIT MARGIN %

PRICE / EARNINGS RATIO

SOLVENCY RATIO %

MARKET CAPITALIZATION ($US 000,000)

1

Saudi Arabian Fertilizer

Saudi Arabia

23.64

61.30

13.99

84.29

7,859

2

Check Point Software Technologies

Israel

13.53

53.61

25.45

69.66

16,487

3

Qassim Cement

Saudi Arabia

20.05

50.50

13.21

87.91

1,403

4

Makkah Construction & Development

Saudi Arabia

4.60

80.06

48.37

96.48

3,990

5

FMS Enterprises Migun

Israel

34.70

33.15

14.40

79.85

277

6

Taro Pharmaceutical Industries

Israel

24.72

66.98

9.40

88.53

4,964

7

Saudi Ground Services

Saudi Arabia

19.11

25.21

15.95

83.21

2,532

8

Jordanian Duty Free Shops

Jordan

31.43

29.69

10.88

92.52

265

9

Informatics Services

Iran

28.85

64.03

8.78

86.17

1,644

10

Humansoft

Kuwait

24.97

41.80

21.15

54.47

1,203

11

Bahrain Duty Free Shop Complex

Bahrain

16.41

29.03

12.28

88.45

288

12

Medicare Group

Qatar

13.96

29.62

13.42

84.82

622

13

Ituran Location & Control

Israel

17.59

23.66

25.62

61.84

676

14

Yanbu Cement

Saudi Arabia

13.29

42.57

10.85

88.36

1,549

15

Mouwasat Medical Services

Saudi Arabia

11.16

23.73

32.63

64.35

1,866

16

City Cement

Saudi Arabia

10.95

45.33

10.40

92.29

665,819

17

Klil Industries

Israel

13.78

16.16

22.04

73.84

249

18

Silicom

Israel

11.80

21.47

16.77

80.60

282

19

CyberArk Software

Israel

7.71

19.74

62.19

73.76

1,733

20

Arab Potash

Jordan

12.87

30.76

10.87

87.59

2,054

21

Southern Province Cement

Saudi Arabia

23.61

51.92

9.46

73.38

2,594

22

Al Hammadi Development And Investment

Saudi Arabia

7.30

26.63

30.65

71.60

1,115

23

Saudi Cement

Saudi Arabia

20.83

49.61

10.06

72.13

2,508

24

Saudi Airlines Catering

Saudi Arabia

37.79

30.90

10.50

71.32

1,972

25

Gulf Hotel Group

Bahrain

11.15

27.78

11.61

87.53

332


BEST-PERFORMING COMPANIES BY SECTOR

RANK

COMPANY

COUNTRY

LATEST
REPORTING YEAR

TOTAL SCORE

MARKET CAPITALIZATION
($US 000)

CHEMICALS, RUBBER, PLASTICS, NON-METALLIC PRODUCTS

1

Saudi Arabian Fertilizer

Saudi Arabia

2015

157

7,859,166

2

Qassim Cement

Saudi Arabia

2016

173

1,403,653

3

Taro Pharmaceutical Industries

Israel

2015

195

4,964,483

4

Yanbu Cement

Saudi Arabia

2016

225

1,549,417

5

City Cement

Saudi Arabia

2015

242

665,819

CONSTRUCTION & REAL ESTATE

1

Makkah Construction & Development

Saudi Arabia

2016

176

3,990,203

2

Sakhit Ajand

Iran

2016

294

409,243

3

Arriyadh Development

Saudi Arabia

2016

346

755,369

4

Emaar Properties

UAE

2015

440

14,776,025

5

National Marine Dredging

UAE

2015

579

340,331

EDUCATION & HEALTH

1

Humansoft

Kuwait

2015

215

1,203,724

2

Medicare Group

Qatar

2015

224

622,195

3

Mouwasat Medical Services

Saudi Arabia

2015

233

1,866,472

4

Al Hammadi Company For Development And Investment

Saudi Arabia

2015

253

1,115,564

5

Dallah Healthcare

Saudi Arabia

2015

275

1,597,167

FOOD, BEVERAGES & TOBACCO

1

Saudia Dairy & Foodstuff

Saudi Arabia

2015

274

1,090,777

2

A’Saffa Foods

Oman

2015

274

249,353

3

Herfy Food Services

Saudi Arabia

2015

283

1,006,911

4

Oman Flour Mills

Oman

2016

331

335,458

5

Kerur Holdings

Israel

2015

353

361,820

GAS, WATER & ELECTRICITY

1

National Gas & Industrialization

Saudi Arabia

2015

355

727,220

2

Dana Gas

UAE

2015

463

854,769

3

Acwa Power Barka

Oman

2015

567

299,224

4

Al Suwadi Power

Oman

2015

589

361,846

5

Al Batinah Power

Oman

2015

595

341,830

MACHINERY, EQUIPMENT, FURNITURE & RECYCLING

1

FMS Enterprises Migun

Israel

2015

182

277,433

2

Caesarstone

Israel

2015

262

1,191,190

3

Maytronics

Israel

2015

284

394,416

4

Mellanox Technologies

Israel

2015

288

2,384,096

5

United Wire Factories

Saudi Arabia

2015

315

280,731

METALS & METAL PRODUCTS

1

Klil Industries

Israel

2015

244

249,250

2

Al Yamamah Steel Industries

Saudi Arabia

2016

410

392,079

3

Oman Cables Industry

Oman

2015

500

375,113

4

Saudi Steel Pipe

Saudi Arabia

2015

527

242,020

5

Aluminium Bahrain

Bahrain

2015

543

1,085,205

POST, TELECOMMUNICATIONS & TECHNOLOGY

1

Check Point Software Technologies

Israel

2015

162

16,487,976

2

Informatics Services

Iran

2015

206

1,644,281

3

Ituran Location & Control

Israel

2015

224

676,109

4

Silicom

Israel

2015

247

282,811

5

CyberArk Software

Israel

2015

247

1,733,512

PRIMARY SECTOR

1

Arab Potash

Jordan

2015

253

2,054,963

2

Al-Jouf Agriculture Development

Saudi Arabia

2015

290

267,614

3

Isramco Negev 2

Israel

2015

345

2,201,264

4

Avner Oil Exploration

Israel

2015

394

2,133,531

5

Delek Drilling

Israel

2015

406

1,886,714

TRANSPORT

1

Saudi Ground Services

Saudi Arabia

2015

196

2,532,109

2

Saudi Airlines Catering

Saudi Arabia

2015

260

1,972,978

3

Jazeera Airways

Kuwait

2015

334

386,611

4

Aramex

UAE

2015

365

1,917,375

5

Qatar Navigation

Qatar

2015

435

2,764,608

TRAVEL, TOURISM & HOSPITALITY

1

Gulf Hotels Group

Bahrain

2015

261

332,558

2

Kuwait National Cinema

Kuwait

2015

286

456,257

3

Dur Hospitality

Saudi Arabia

2016

324

613,182

4

Abdulmohsen Al-Hokair Group
For Tourism And Development

Saudi Arabia

2015

442

472,883

5

Dan Hotels

Israel

2015

453

554,754

WHOLESALE & RETAIL TRADE

1

Jordanian Duty Free Shops

Jordan

2015

198

265,738

2

Bahrain Duty Free Shop Complex

Bahrain

2015

218

288,295

3

Emaar Malls

UAE

2015

277

9,389,834

4

Jarir Marketing

Saudi Arabia

2015

329

3,093,075

5

Al Meera Consumer Goods

Qatar

2015

376

2,278,893

Data Source: Orbis by Bureau Van Dijk

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