Saudi Tadawul Group Holding Co, a leading diversified capital markets group in the Mena region, saw its net profit after zakat fall 21.7% YoY from SR179.6 million to SR140.6 million ($37.48 million) in the first quarter of 2022. This is, however, a 27.3% increase from SR110.5 million in Q4 2021.
On the positive side, a record 11 IPOs were listed on the Saudi Exchange in Q1 2022, seven on the Main Market and four on the parallel market (Nomu), with a total offered value of SR13.3 billion as the Saudi Tadawul Group continued to strengthen its position as a global capital markets powerhouse.
Operating revenue decreased 11.6% YoY reaching SR293.9 million in Q1 2022 compared to SR332.4 million in Q1 2021, predominantly due to a decrease in trading and post trade services driven by normalisation of trading volumes which contracted 22.1%.
Increase in trading
Compared to SR257.5 million in in the previous quarter, the operating revenue increased 14.1%, predominantly due to an increase in trading and post trade services driven by a stronger trading environment.
Operating expenditure increased 1.8% YoY reaching SR140.2 million in Q1 2022 compared to SR137.7 million in Q1 2021, due to an increase in salaries and related benefits, the largest cost item driven by an increase in staff count.
Compared to SR146.7 million in the previous quarter, the operating expenditure decreased 4.4%, due to a decrease in the salaries and related benefits, the largest cost item.
EBITDA decreased 20.4% YoY reaching SR166.4 million in Q1 2022 compared to SR209.0 million in Q1 2021, due to the decrease in the group’s operating revenue against moderate growth in the group’s operating expenditure.
Compared to SR124.1 million in the previous quarter, EBITDA increased 34.1%, due to the increase in the group’s operating revenue and moderate decrease in operating expenditures.
Investment Income decreased 13.0% YoY reaching SR9.9 million in Q1 2022 compared to SR11.4 million in Q1 2021, which was attributed to a 9.0% decrease in the investment portfolio size.
Free Cash Flow
Free Cash Flow decreased 26.5% YoY reaching SR179.7 million in Q1 2022, compared to SR244.4 million in Q1 2021, mainly as a result of the lower EBITDA.
Compared to SR130.9 million in the previous quarter, the Free Cash Flow increased 37.3%, as a result of the increase in EBITDA.
Eng Khalid Al-Hussan, Group Chief Executive Officer at Saudi Tadawul Group, commented: “Following our transformational IPO and listing last year, we have been focused on delivering on our strategy and meeting our key strategic objectives to promote excellent value for investors and foster the development of the Saudi capital market in alignment with the pillars of Financial Sector Development Programme (FSDP) and the ambitious kingdom’s Vision 2030.”
He added: “During the first quarter, we continued to diversify the group’s services and enhance the operational efficiency, and we have recently announced the launch of various new market infrastructure enhancements – the largest in the history of the Saudi capital market – that will not only expand our offerings in line with expectations of local and international investors, but further consolidate our position as one of the largest and most sophisticated exchanges in the world.”
Eng Al-Hussan concluded: “We are in a strong financial position driven by our advanced and differentiated business model, in addition to our ambitious growth plans and disciplined capital allocation strategy. We are committed to pursuing a strategy of growth and diversification through the development and implementation of new asset classes, products and services, while strengthening inter-connectivity with other financial markets in the region and around the world to facilitate capital formation. This should in turn support the group’s commitment to ensuring maximum returns for shareholders as we strengthen our role as a global capital markets leader and a financial markets powerhouse.”
In March, the group announced its intention to launch on April 3 several new market enhancements across its three subsidiaries to develop post trade infrastructure.
The enhancements are the largest in the history of the kingdom’s capital market and aim to provide investors with increased investment opportunities and access to a diverse range of financial instruments and new products. These include:
*Saudi Exchange: The introduction of a more efficient handling of order flow by market participants, such as an enhanced mechanism for short selling activities.
*Muqassa: The extension of clearing services to cover all tradable securities, to adopt a more comprehensive risk framework and facilitate the introduction of new products and services for clearing members.
*Edaa: The introduction of a new central securities depository system and post-trade services, in alignment with international standards, to enhance the experience for Capital Market Institutions, custodians, settlement agents and investors.
Other significant updates include the approval of the new fees structure, effective April 3, 2022, for the services provided by the Saudi Exchange, Edaa, and Muqassa relating to the shares buy and sell commissions, the units of Real Estate Investment Traded Funds (REITs), Exchange-Traded Funds (ETFs), Closed-end Funds (CEFs), and Tradable Rights.
WAMID signed Memorandums of Understandings (MoUs) and non-disclosure agreements (NDAs) with multiple clients and vendors to further enhance market knowledge and provide value-adding products and services.
In March, the group also hosted the inaugural Saudi Capital Market Forum 2022, held under the patronage of Mohammed El-Kuwaiz, Chairman of the Capital Market Authority. The event brought together over 1,500 attendees including issuers, investors, private companies, government entities, and financial institutions to discuss the advancement of the Saudi capital market.
Tadawul All Share Index (TASI) reaches highest level since 2006, exceeding 13,000 points as solid stock price performance drives a 19.5% QoQ increase in total equity market capitalisation to SR11,963 billion as of March 31, 2022, from SR10,009 billion as of December 31, 2021.
Total market capitalisation on Main Market and Nomu ranked the Saudi Exchange 8th largest globally as of Q1 2022, according to the World Federation of Exchanges.
Total number of listed companies on the Main Market increased to 215 compared to 204 as of March 31, 2021, demonstrating the continued attractiveness of the Saudi Exchange.
Fixed income and funds markets continue to expand with 10 new government sukuk and bonds and one ETF added during Q1 2022.
Trading activity normalises from strong base, driving a 22.2% YoY decrease in the average daily traded value (ADTV) on the Main Market to SR8,481 million in Q1 2022 from SR10,895 million in Q1 2021. Compared to the previous quarter, the (ADTV) increased 23% QoQ on the Main Market which had achieved SR6,920 million in Q4 2021.
The group is organised into business segments based on services provided. The reportable segments of the Group are as below:
Capital Markets Segment: Capital Markets’ revenue, which includes trading services and listing fees, decreased 16.4% YoY, reaching SR121.3 million in Q1 2022.
*Trading services revenue decreased 22.0% YoY reaching SR99.7 million in Q1 2022 compared to SR127.8 million in Q1 2021, driven by normalisation of trading volumes which contracted 22.1%.
*Listing fees revenue increased 25.7% YoY reaching SR21.6 million in Q1 2022 compared to SR17.2 million in Q1 2021, mainly due to an increase in the number and size of listings.
Data & Technology Services Segment: Data and Technology services’ revenue increased 3.2% YoY reaching SR24.6 million in Q1 2022 compared to SR23.9 million in Q1 2021 driven by co-location service, which was activated in Q1 2022.
Post-Trade Segment: Post-Trades’ revenue decreased 9.4% YoY reaching SR148.1 million in Q1 2022 compared to SR163.5 million in Q1 2021, mainly driven by normalisation of trading volumes which contracted 22.1%.-- TradeArabia News Service