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TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED

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Aramco shares slip on day of MSCI, Tadawul inclusion

12/18/2019 | 08:39am EDT
FILE PHOTO: A view shows branded oil tanks at Saudi Aramco oil facility in Abqaiq

Saudi Aramco shares fell almost 3% on Wednesday as investors pocketed profits on the day it was included in the MSCI Emerging Markets Index <.MSCIEF> and the Saudi Tadawul index <.TASI>.

State-owned Aramco listed on the Saudi exchange last week having raised $25.6 billion in the largest initial public offering (IPO) on record.

The oil giant's shares, which were originally priced at 32 riyals, slipped from Tuesday's close to open at 37.5 riyals ($10.00). After shedding further value during the day, they eventually closed 2.8% lower at 36.7 riyals.

Inclusion in a benchmark index attracts inflows from passive investors who track those indexes but can lead to some initial profit taking, especially if funds or retail investors bought in advance of a company being added.

"It's common after the addition to the MSCI, lots of profit taking," said a Saudi banker.

Index compiler MSCI said last week Saudi Aramco would have an estimated weight of 0.16% in its emerging market index and an estimated weight of 6.03% in the MSCI Saudi Arabia Index.

On the Tadawul all-share index it had a 12% weighting, the largest after Al Rajhi Bank at almost 14%, Refintiv data showed. A cap of 15% limits the risk from a single security representing a large percentage of the index, as well as limiting correlation to the oil price.

The Saudi index, down 0.25% in early trade, closed up 0.7%.

Dubai-based Arqaam Capital calculated Aramco's inclusion in the MSCI index would attract about $710 million in passive inflows to the company's shares, with a further $400 million likely when Aramco joins the global FTSE benchmark on Thursday.

Despite its size, Aramco's weighting in MSCI's emerging markets index is less than companies such as Alibaba Group at 5.84% and Taiwan Semiconductor Manufacturing at 4.25%, according to an MSCI report dated the end of November.

"Saudi Aramco’s listing and its inclusion in global indices reflects the significant reform progress that the Kingdom of Saudi Arabia continues to implement," said Edward Evans, portfolio manager, emerging markets equity at Ashmore Group, an emerging markets investment firm.

MOMENTUM

Aramco's IPO is the centerpiece of Saudi Crown Prince Mohammed bin Salman's vision for diversifying the kingdom away from its oil dependency by using the $25.6 billion raised to develop other industries.

Despite some scepticism about the firm's worth, it hit the $2 trillion market valuation long-sought by the prince on its second day of trading, only losing momentum on Tuesday.

Analysts at Jefferies this week initiated coverage of the stock with an "underperform" rating, estimating Aramco's value at $1.6 trillion and citing governance concerns due to the close relationship between the firm and the Saudi government.

But Ashmore's Evans said Aramco can attract a wider institutional investor base going forward as it builds a track record with investors and weathers the pressure of equity markets.

($1 = 3.7500 riyals)

By Davide Barbuscia and Tom Arnold


© Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
AL RAJHI BANKING AND INVESTMENT CORPORATION 0.19% 108.2 End-of-day quote.47.01%
ALIBABA GROUP HOLDING LIMITED -3.51% 206.53 Delayed Quote.-11.26%
ASHMORE GROUP PLC 1.06% 381 Delayed Quote.-11.64%
AT HOME GROUP INC. -0.08% 36.99 Delayed Quote.0.00%
BASE CO., LTD. 1.75% 4935 End-of-day quote.-19.76%
BASE, INC. -3.36% 1525 End-of-day quote.-21.88%
BYD COMPANY LIMITED 1.52% 227.2 End-of-day quote.11.81%
LONDON BRENT OIL 0.87% 74.19 Delayed Quote.42.40%
MSCI EMERGING MARKETS -1.14% 1311.302 Real-time Quote.2.72%
MSCI TAIWAN (STRD) -0.43% 698.8 Real-time Quote.16.79%
SAUDI ARABIAN OIL COMPANY -0.29% 34.9 End-of-day quote.-0.29%
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED -1.02% 585 End-of-day quote.10.38%
THE LEAD CO., INC. -0.15% 662 End-of-day quote.-21.19%
VISION INC. 4.76% 1079 End-of-day quote.4.15%
WTI 0.50% 72.059 Delayed Quote.48.80%
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Financials
Sales 2021 1 574 B 56 134 M 56 134 M
Net income 2021 580 B 20 687 M 20 687 M
Net cash 2021 250 B 8 930 M 8 930 M
P/E ratio 2021 26,1x
Yield 2021 1,89%
Capitalization 15 169 B 541 B 541 B
EV / Sales 2021 9,48x
EV / Sales 2022 8,21x
Nbr of Employees 48 752
Free-Float 93,6%
Chart TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
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Taiwan Semiconductor Manufacturing Company Limited Technical Analysis Chart | 2330 | TW0002330008 | MarketScreener
Technical analysis trends TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
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Mean consensus BUY
Number of Analysts 30
Last Close Price 585,00 TWD
Average target price 737,89 TWD
Spread / Average Target 26,1%
EPS Revisions
Managers and Directors
Che Chia Wei Vice Chairman & Chief Executive Officer
Li Mei Ho Senior Vice President-Europe & Asia Sales
Jen Chao Huang Chief Financial Officer
Renzhao Huang Chief Financial Officer
Te Yin Liu Chairman
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