Saudi Aramco will raise $25.6 billion in world’s biggest I.P.O. This will be a bit bigger than the 2014 IPO of Alibaba.
Aramco made a net profit of $68 billion for the first nine months of the year. This is a $90 billion annual run rate. They are pricing a PE ratio of 19 for the $1.7 trillion valuation.
The shares will start trading on Wednesday. Once they are trading and assuming the price did not have a huge drop then Saudi Aramco will become the most valuable publicly-traded company in the world.
Saudi Arabia repaired its droned damaged refineries by October 14, 2019. They restored full production at 9.9 million barrels per day. The damage took about one month to repair.
Apple is currently the most valuable at $1.20 trillion. Microsoft ($1.15 trillion), and Google ($925 billion) have all traded around the $1 trillion level at various points over the last two years.
Apple surged 1.5% on the news that it might release a new budget iPhone ($400 iPhone SE) in the first half of 2020 and a higher-tier, “completely wireless” phone in 2021. The completely wireless phone would have no charging port.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.
Agree, the Yemen war is a disaster, and expensive. But the revenue as a whole isn’t the problem. It’s that not all the profits go into the treasury. Longer term there is a very big revenue story here. Their “small” IPO is actually pretty expensive as the expected dividend yield is far higher than the coupon on their 10 year bond (priced about 105 bp above UST10 year). Capital raising wise they are much better off raising debt than equity, but it’s not about the numbers.
petrochem. Cue scene from The Graduate. Aramco will soon be bigger outside KSA than inside and the downstream business is immense.
Not to worry, no one on this forum, I am pretty sure, can buy the shares anyway (I would really be surprised). Eventually they will list on the big board, but that is still a ways off. Just a reminder that it’s all about the downstream biz (petrochem) using really cheap feedstock COGS. Most people really don’t understand this business. Aramco will be the Google of energy and chemicals, they are already by far the biggest.
The story isn’t about oil and gas, those are not very attractive assets per se. It’s what these assets can produce, and that is the $4 trillion chemicals market that is expected to be $10-12 trillion in 10 years. If you want scale, then you need to target about 20% of market share and I would suspect Aramco to hit north of $1 trillion in sales in a few years. Most of this will be outside of KSA. And three guesses who is banking most of Korea’s hydrogen fuel cell program?
The challenge for Aramco will be figuring out how to manage the politics of being the global producer of nearly all things people need.
I suspect you are correct, but I’m not sure.
The Saudis are
1) Fighting a long running, and probably ruinously expensive war. With expenses such as rebuilding oil refineries.
2) Thought to be hurting as current oil revenue is less than simple yearly expenses.
Hence, they might be confident that their oil revenue is solid for years, and still be forced to cash some of it out just to avoid a short term squeeze.
Like I said, I think you have the right of it, but I wouldn’t be too surprised if it is legit.
Which has nothing to do with my willingness to be a minority shareholder trusting the Saudis to take care of me. I do not think so.
I wouldn’t take Aramco shares even if they were offered for free, unless I could sell them right away. What’s to stop S.A. from offering up any of the rest of the shares, or even just another 1.5%, and diluting the share values anytime they feel like it? This is not exactly a transparent or trustworthy regime.
But how are they going to reinvest the money to stay prosperous in the face of expected long term decline in petro revenues? I see them investing in tourism, building new cities, aluminum mining and renewable energy project. It is nice but has little in added value. They should invest in promoting a strong private sector, R&D and new and more profitable industries.
If the Saudis are selling then you should be selling too.
I can’t wait to find out who the suckers are.