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Stock Market Liberalization Boosts Saudi Brand Values

16 May 2016
This article is more than 4 years old.

· KSA has more brands in the Middle East’s top 50 than any other nation

· STC is Saudi Arabia’s most valuable brand, despite a 1% decline

· IPO of Saudi Aramco could finally reveal the Middle East’s most valuable brand

Every year, leading brand valuation and strategy consultancy Brand Finance puts thousands of the world’s top brands to the test to determine which are the most powerful and most valuable. The top 50 brands from the Middle East are featured in the Brand Finance Middle East 50.

STC is Saudi Arabia’s most valuable brand, valued at US$5.6 billion. Brand value dipped slightly this year. As a result of failing to make up expenses and losses on investments, the company reported a 21% profit drop in the third quarter of 2015 which has affected its overall brand value.

Al-Rajhi Bank has had a more successful year, its brand value increasing 13% to US$2.3 billion, as has third-placed Almarai, which has risen 7% to US$2.3 billion. It has been able to increase production capacity to meet the growing consumer demand, whilst seeing a growth in cash flow metrics, profitability and sales. Almarai’s Board clearly understand the importance of brand investment; they have approved a US$5.6bn capital investment plan over the next five years, which is likely to have a significant positive impact on brand value in the coming years.

The opening of the stock market as part of Mohammad bin Salman’s Saudi Vision 2030 plan has positively impacted Saudi Arabian brands. All KSA bank brands in the table have, like Al-Rajhi, experienced double digit percentage growth in brand value. The combination of continuing regulatory barriers to entry for competitors and a new raft of foreign investment bodes well for brands in the banking industry in particular, but brands from other sectors are set to benefit too.

The most notable of Mohammad bin Salman’s reforms has been the much-publicised IPO of Saudi Aramco. Valuations have varied significantly, however this could create the world’s most valuable public company. In turn, this would reveal one of the most valuable brands, not just in the Middle East but worldwide. For now, Aramco’s private status means that Brand Finance has been unable to value its brand, however, this would change following the IPO.

Oil & Gas is sometimes assumed to be a sector in which brands play a limited role, however this complacency is misplaced. This, combined with the huge revenues involved, means that for those in the industry who invest in and manage their brands, there is major scope to command price and volume premiums and to gain competitive advantage. Saudi Aramco has the potential to control the world’s most valuable brand, however with oil prices under pressure and with reserves facing long-term decline, careful investment, monitoring and management will be required.

ENDS

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Konrad Jagodzinski
Konrad Jagodzinski
Communications Director
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Florina Cormack-Loyd
Florina Cormack-Loyd
Senior Communications Manager
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