https://arab.news/27625
CAIRO/MOSCOW: The valuation of the Saudi PIF-backed US electric vehicle company, Lucid, increased to over $91 billion last week, surpassing Ford and General Motors.
A recent stock market rally added over $17 billion to its valuation, up 24 percent, Bloomberg reported.
The increase in shares comes after Lucid’s announcement to produce 20,000 vehicles in 2022.
This happened amid the growing demand for EVs, as more consumers consider adopting the technology.
Earlier, the stocks of the US automaker company, Rivian, jumped 15 percent, surpassing Volkswagen’s market value, while Tesla gained 4.1 percent.
Rivian has become the third-largest car company in terms of market capitalization, according to Bloomberg. Its value reached $150 billion. These two companies, along with Tesla, are among the top 10 largest automakers by market capitalization.
As of last Wednesday, Tesla, which is almost in a league of its own, took the lead with a market valuation of $1.06 trillion, significantly higher than the second-placed Toyota, which had a market cap of 29.66 trillion yen ($260 billion), according to data obtained from the Wall Street Journal.
Looking at their growth year-to-date, Tesla’s share price went up by 49 percent to close at $1,089 on Nov. 17, 2021, data from the New York Stock Exchange website showed.
Meanwhile, Lucid’s share skyrocketed by over 400 percent year-to-date to reach $52.55.
Rivian, which was recently listed in Nasdaq, saw its share price rise from $100.7 on Nov. 10 to $146 a week later, according to NYSE.
In another notable development for these companies, sales of EVs will almost double next year to 5.6 million, according to calculations made by BloombergNEF in collaboration with the COP26 conference.
Observing debt-equity ratios, Tesla and Lucid had much lower ratios when compared to their traditional counterparts, as they stood at 0.3 and almost zero in the case of Lucid respectively as of Sept. 30, 2021. Toyota and Volkswagen were more leveraged as their indicators were 0.97 and 1.45 respectively.
Meanwhile, American carmakers, General Motors, and Ford had even higher values as they reached 1.81 and 3.94 respectively.
The debt-equity ratio was calculated as total interest-bearing liabilities divided by total equity.
Hence, these two EV manufacturers did not rely as much on debt to obtain their assets. Concerning production levels, EV companies are also seeing some significant improvements in their operations and deliveries. Tesla’s total production for the nine months of 2021 rose year-on-year by 89 percent to reach 624,582 vehicles, the company’s latest quarterly report showed. This was more than double the comparable output level in 2019.
In addition, the number of deliveries experienced a stronger trend, going up by a yearly rate of 97 percent in the first three quarters of 2021 to stand at 627,572 automobiles.
Tesla’s market share was also nearing 2 percent by the third quarter of 2021 in the US and Canada following a market share of around 1 percent in the period between 3Q 2019 and 1Q 2020, a graph in the company’s latest quarterly earnings report showed.
Lucid is similarly experiencing an upturn in its operations. Reservations were greater than 13,000 by the end of this year’s third quarter but went up even further to be greater than 17,000 by Nov. 15, 2021. The company also had estimated bookings that exceeded $1.3 billion in value by the end of 3Q, Lucid said in a recent report.
The PIF-backed EV maker is also expected to expand its retail and service network into different regions to pursue a more globalized demand. The company wants to enter the Canadian market in the fourth quarter of this year, the European, Middle Eastern, and African market in 2022, and the Chinese market by 2023, the company added in its report.
However, in terms of profitability, EV companies still have some catching up to do with the other traditional automakers.
While Tesla’s net income surged six-fold to $3.2 billion for nine months of 2021 compared to the same period last year, this was still a lower profit when compared to other market leaders.
Volkswagen’s earnings after taxes for this period reached a much higher €11.4 billion ($12.9 billion). Moreover, General Motors’ net income attributable to stockholders was $8.28 billion while Ford’s net income was $5.7 billion.
Toyota, in a shorter period, made a higher net income when compared to Tesla as its net income reached 1,565 billion yen ($13.7 billion) in the six months ending on Sept. 30.
On the other hand, Lucid made a net loss of $1.53 billion for the nine months ending on Sept. 30, as it continued to grow its core operations.
Moreover, Tesla had a very high estimate for its price-earnings ratio, PER, for 2021, valued at 265.61 which might mean that either the company is overvalued or that investors are predicting high growth for the company. Due to its losses, Lucid had a negative PER ratio of -30.03.
Traditional automobile manufacturers that Arab News examined had much lower PERs. General Motors and Ford’s estimated values for 2021 were 9.89 and 10.85 respectively while Toyota’s actual PER for 2021 was a higher 12.42.
Data concerning PERs were obtained from Nasdaq’s website.
Therefore, it seems that EV companies are becoming more attractive for stock market investors, evident through their skyrocketing share prices, but they are still relatively young companies that need some time to achieve their counterparts’ profitability positions.
BEIJING: China’s daily coal output has stabilized at 12 million tons, amid a raft of measures to ramp up power production, the country’s state planner said on Sunday.
Beijing has been trying to cool a red-hot market for coal, China’s main fuel for power generation, after shortages led to electricity rationing for industry in many regions, adding to factory gate inflation in the world’s second-biggest economy.
Coal stocks at ports and power plants have been picking up quickly, with stocks in power plants hitting 129 million tons as of Nov. 14 and expected to hit 140 million tons by the end of November, said state media CCTV.
“Energy prices including coal prices have fallen significantly lately,” the report said, citing National Development and Reform Commission official Zhu Xiaohai.
The fall in coal prices has pushed down prices for steel, aluminum, pulp, PVC and coal chemical products, and pricing pressure on those raw materials has eased, Zhu, a deputy director of NDRC’s Department of Prices, said in the report, which the commission reposted.
Thermal coal futures have plunged more than 60 percent to around 800 yuan ($125) a ton from a historic high of nearly 2,000 yuan in mid-October, Zhu said.
The state planner last month set an initial target of 1,200 yuan in its most direct intervention yet to cool the market for the key power-generating fuel amid the severe power crunch.
JEDDAH: The Saudi capital is witnessing a surge in business activities since multinational companies announced moving their regional bases to the city.
So far, over 40 multinational companies in sectors including IT, food and beverages, consulting and construction have announced plans to set up headquarters in Riyadh and many more planning to make their move.
Paul Arnold, managing director of Sovereign Saudi Arabia, said the announcement has caused a sudden increase in business activities in the Kingdom.
“From our perspective, foreign direct investment is coming into Saudi Arabia. The regional HQ announcement has got people talking. So the amount of interest in activity and questions that we’re building around the necessity to have an HQ in Riyadh, it’s been significant,” Arnold told Arab News.
In February this year, the Kingdom gave foreign firms until the end of 2023 to set up headquarters in the country or risk losing out on government contracts. This move has given a new momentum to the economic activities in the Kingdom, particularly in the capital.
Arnold said several ongoing giga-projects are obviously attracting a lot of foreign companies to do business in the Kingdom.
“As the regulatory environment changes here and improves, it means that foreign businesses are registering here in numbers we’ve never seen before,” he added.
Stuart D’Souza, co-founder and director of Arabian Enterprise Incubators, told Arab News that most of the companies operating in the Kingdom already had a significant footprint.
“The fact that they are joining this very high-profile program is good news.”
D’souza said the Saudi Investment Ministry has done very well in attracting foreign companies and in retaining those firms in the Kingdom.
“The direction is very clear. If you want to do business in Saudi Arabia, you need to be registered in the Kingdom. If you’re a significant business, and so much of your regional revenue comes from the Kingdom, you should have your regional headquarters here in the country,” he said.
Pointing to the investment landscape in the Kingdom, he said the existence of a professional services company such as Sovereign in the Kingdom will help foreign businesses in setting up their offices.
“Opportunities for all sorts of other companies have significantly increased in Saudi Arabia in the last couple of years,” he said.
“All of that is driven by these giga-projects, whether it’s NEOM, be it the Red Sea project, AlUla, Qiddiya, Soudah or projects in the Eastern Province. The fact that those projects are spread all over the Kingdom means our clients are actually all over Saudi Arabia and we’re supporting them with our services,” said D’Souza.
He added: “These projects are all happening. In Riyadh, you can drive down and see what is happening in Qiddiya in terms of the lower plateau development, and (to witness) upper plateau development, go to the Diriyah Gate Development Authority and you’ll see all the construction underway.”
RIYADH: Top Saudi real estate developers have formed a tripartite alliance to establish a housing project in Riyadh, the Saudi Press Agency reported.
The alliance will build 580 villas spread over 300,000 sq. m. Al-Othman Group, Tamimi Real Estate, Isam Khairi Kabbani allied under Tilal Properties will develop the project in Aljwan, north of Riyadh.
The project will benefit members of the Saudi Housing Ministry’s Sakani program, which aims to increase housing ownership for Saudis to 70 percent in line with the Saudi Vision 2030.
Saudi PIF-owned National Water Company (NWC) announced on Sunday the signing of two contracts at SR579 million ($154 million) to manage the operation of water treatment services in the Central and Eastern clusters.
The first SR358 million contract was signed with Saudi Al-Khorayef Alliance and French Veolia to provide operation and maintenance for the Riyadh region.
The other SR221 million contract was signed with the Saudi Miahona Alliance, the French group Saur and the Philippine company Manila Water for the operation and maintenance of the Eastern Cluster.
“One of the most important foundations of Saudi Arabia’s Vision 2030 is the well-being of citizens and the quality of services provided, which gave rise to the National Water Strategy 2030,” NWC’s CEO, Mohammed bin Ahmed Al-Mowkely, said.
“Based on this, the NWC strategy has been adopted and detailed plans have been developed to improve water services in the Kingdom with the participation of the private sector,” he added.
Al-Mowkely said that the company is currently working on awarding management contracts for the remaining clusters, namely western, southern and northern ones, which will be completed by the end of December 2021.
RIYADH: Bank AlJazira has opened up its tier 2 sukuk worth SR2 billion ($5.3 million), the bank said in a statement.
The launch began on November 21, 2021 and will run until December 31, 2021.
AlJazira Capital and HSBC Saudi Arabia were appointed as the joint lead managers and bookrunners for the offer, the bank said.
