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Al Rajhi Stock (Tadawul:1120)

10 minutes
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al rahji stock
12 October 2023

Despite a grim 2022, Al Rajhi shares remain very popular among Saudia investors and top-performing international funds. While you can buy Al Rajhi shares directly, sometimes it is worth considering an ETF with Al Rajhi representation.

Al Rajhi Bank is a leading financial institution based in Saudi Arabia, providing a wide range of banking and investment services to individuals, businesses, and institutional clients. Established in 1957, Al Rajhi Bank has grown to become one of the largest Islamic banks in the world, with operations in Saudi Arabia, Kuwait, Jordan, and Malaysia.

The bank's shares are listed on the Saudi Stock Exchange (Tadawul) under the ticker symbol "1120" and are widely held by a diverse range of investors, including both domestic and international institutional investors, as well as individual investors. Al Rajhi Bank shares have also been included in various global indices and exchange-traded funds (ETFs), such as the iShares MSCI Saudi Arabic ETF (KSA), making them a popular choice among investors looking to gain exposure to the Middle Eastern banking sector. 

Al Rajhi Stock (Tadawul:1120) - Research and Ratings

  • Is Al Rajhi stock undervalued compared to its fair value, analyst forecasts, and its price relative to the market?
  • What is the analyst's 12-month Al Rajhi share price forecast?
  • What are Al Rajhi’s future growth expectations?
  • How has Al Rajhi stock performed over the past 5 years?
  • Should you buy Al Rajhi shares or invest in ETFs with "1120" representation? 

    

Understanding Al Rajhi Stock: A brief history 

Al Rajhi Banking and Investment Corporation, together with its subsidiaries, provides banking and investment services in the Kingdom of Saudi Arabia and internationally. The company operates through four segments: Retail, Corporate, Treasury, and Investment Services, and Brokerage.  

Some of the most important facts about Al Rajhi:    

  • Founded in 1957
  • The first branch opened in Aldirah in 1957
  • One of the largest banks in the world by market cap
  • The largest bank in the Middle East and Saudi Arabia
  • Total assets of SAR 710 billion
  • Paid-up capital of SAR 40 billion (US$ 10.66 billion)
  • Employee base of over 9,300+ associates
  • Various individual establishments merged into the umbrella 'Al Rajhi trading and exchange corporation' in 1978
  • Established as a Saudi joint stock company under the name of Al Rajhi Banking and Investment Corporation in 1988
  • Named Al Rajhi Bank in 2006
  • Deeply rooted in Islamic banking principles
  • Sharia-compliant banking group
  • Instrumental in bridging the gap between modern financial demands and Sharia intrinsic values
  • Spearheading numerous industry standards and development
  • A vast network of over 515 branches
  • 547,507 POS terminals installed with merchants
  • The largest customer base of any bank in the Saudi Arabia Kingdom
  • 205 remittance centers across the Saudi Arabia kingdom

Al Rajhi shares are distributed among 3 categories:  

  • General Public - 91.5%
  • Institutions - 6.2%
  • Individual Insiders - 2.3%

The top 25 shareholders own 7.85% of the company, while the top 5 shareholders are: 

  • Abdullah bin Al Rajhi - 2.18%
  • The Vanguard Group, Inc. - 1.95%
  • BlackRock, Inc. - 1.42%
  • FMR LLC - 0.48%
  • Geode Capital Management, LLC - 0.20%

Al Rajhi shares - Fundamental Analysis and Financial Ratings 

See the latest Al Rajhi stock price analysis, including valuation, future growth, past performance, and more to help you make more informed investing decisions. 

Valuation 

Is Al Rajhi Stock (Tadawul:1120) undervalued compared to its fair value, analyst forecasts, and price relative to the market? 

  • Al Rajhi "1120" is expensive based on its Price-To-Earnings Ratio (15.9x) compared to the Asian Banks industry average (8.7x).
  • Al Rajhi "1120" is expensive based on its Price-To-Earnings Ratio (15.9x) compared to the estimated Fair Price-To-Earnings Ratio (13.2x).
  • Al Rajhi "1120" is trading at (SAR66.5) which is above analysts' estimate of fair value (SAR39.65).

Future Growth 

Al Rajhi Banking and Investment are forecasted to grow earnings and revenue by 10.6% and 11% per annum respectively. EPS is expected to grow by 9.6%. Return on equity is forecast to be 20.2% in 3 years.

  • Al Rajhi's forecast earnings growth (10.6% per year) is above the savings rate (9.1%).
  • Al Rajhi's earnings (10.6% per year) are forecast to grow faster than the Saudi market (2.8% per year).
  • Al Rajhi's earnings are forecast to grow, but not significantly.
  • Al Rajhi's revenue (11% per year) is forecast to grow faster than the Saudi market (1.9% per year).
  • Al Rajhi's revenue (11% per year) is forecast to grow slower than 20% per year.
  • Al Rajhi's Return on Equity is forecast to be high in 3 years time (20.2%).

Past Performance 

How has Al Rajhi Stock performed over the past 5 years? 

  • Al Rajhi has a high-level quality earnings.
  • Al Rajhi's current net profit margins (2.9%) are higher than last year (64.1%).
  • Al Rajhi's earnings have grown significantly by 22.8% per year over the past 5 years.
  • Al Rajhi's earnings growth over the past year (3.3%) is below its 5-year average (22.8% per year).
  • Al Rajhi's earnings growth over the past year (3.3%) did not outperform the Banks industry by 20.4%. 

Financial Health  

How is Al Rajhi's financial position?  

  • Al Rajhi's Assets to Equity ratio (7.6x) is low.
  • Al Rajhi has a sufficient allowance for bad loans (225%).
  • 96% of Al Rajhi's liabilities are made up of primarily low-risk sources of funding.
  • Al Rajhi has an appropriate level of Loans to Assets ratio (74%).
  • Al Rajhi's Loans to Deposits ratio (89%) is appropriate
  • Al Rajhi has an appropriate level of bad loans (0.6%).

Dividend 

Al Rajhi Banking and Investment, a company that pays dividends, currently offers a yield of 3.46% which is well covered by earnings.

  • Al Rajhi's dividend payments have been volatile in the past 10 years.
  • Al Rajhi's dividend payments have increased over the past 10 years.
  • Al Rajhi's dividend (3.46%) isn’t notable compared to the bottom 25% of dividend payers in the Saudi market (1.76%).
  • Al Rajhi's dividend (3.46%) is low compared to the top 25% of dividend payers in the Saudi market (4.64%).

Al Rajhi Stock Price Forecast 

What is the analyst 12-month Al Rajhi shares price forecast, and do we have any statistical confidence in the consensus price target from analysts? 

Al Rajhi Stock Price Forecast

Source: simplywall.st 

According to simplywall.st, the Rajhi stock 12-month target price is less than 20% higher than the current share price.

Wallet investor site suggests that the price of Al Rajhi stock will increase in 2023 compared to the current price, ending the year at an average price of 78.578 SAR. And it reaches 137.336 SAR in 2028. 

Important: When considering Al Rajhi's fundamental analysis, financial rating and price predictions, it’s important to remember that high market volatility and changing economic environment makes it difficult to give long-term estimates. As such, analysts and algorithm-based platforms can and do get their ratings and predictions wrong. Always do your own research before making an investment decision. And never trade or invest more than you can afford to lose. 

Al Rajhi Stock - Technical Analysis  

Al Rajhi shares are in a steady downtrend since May 2022 as seen in the daily Al Rajhi stock chart below.

Al Rajhi Stock - Technical Analysis 

The 0.618 Fibonacci retracement level holds special importance for technical traders. This level usually indicates the end of a correction cycle, as shown in the Al Rajhi stock price chart above. There are indications of a possible trend reversal. If the price is able to maintain this Fibonacci level, which corresponds to the support level at 65.9 Saudi riyals, it paves the way for a return to the resistance levels at 74.50 and 85.00 Saudi riyals, reaching the 100-day closing moving average.

How to Invest in Al Rajhi Stock 

Some investors want to take an active hand in managing their investments, while others prefer to set it and forget it. Your preference may change but decide on an approach to get started. 

For most people, stock market investing means choosing among these two investment types: 

Individual Al Rajhi shares  

If you’re after a specific company, you can buy a single share or a few shares to dip your toe into the stock-trading waters. Building a diversified portfolio out of many individual stocks is possible, but it takes significant investment and research. 

If you go this route, remember that individual stocks will have ups and downs. If you research a company and choose to invest in it, think about why you picked that company in the first place if jitters start to set in on a down day. 

Traditional stockbrokers allow you to invest in local stocks. However, you might not be able to invest in international stocks listed on the major stock exchanges, global ETFs, and other assets. 

ETFs with Al Rajhi holdings 

Al Rajhi stock (or any single stock, for that matter) can be a very volatile investment. You can manage the risk you see extreme highs and lows by diversifying your investment holdings. An ETF, for instance, contains a basket of individual stocks. When you invest in a fund, you also own small pieces of each of those companies. 

If you want an ETF with SNP representation, you might consider iShares MSCI Saudi Arabia ETF. BlackRock's iShares is the largest provider of ETFs as calculated by assets under management. 

ETFs with Al Rajhi holdings
 

The fund can be suitable for Arab and foreign investors who want liquid and diversified exposure to the top 10 companies listed on the Saudi Stock Exchange:

Al Rajhi BankAlAhli Bank
Aramco - Saudi Arabian OilSaudi Arabian Mining
SABICSaudi Telecom
Riyad BankAlinma Bank
Saudi ElectricityBank Albilad

Why invest in Al Rajhi Shares via KSA? 

The iShares MSCI Saudi Arabia ETF seeks to track the investment results of a broad-based index composed of Saudi Arabian equities. With net assets of almost $1B, The iShares MSCI Saudi Arabia ETF (KSA) is the largest exchange-traded fund that seeks to track the investment results of an index composed primarily of frontier market equities along with select emerging market equities.

  1. Access to the Saudi Arabian stock market, which has historically been closed to foreign investors. 
  2. Targeted exposure to a country with growth potential. with One click accesses to a virtually untapped investment portfolio, including Saudi Stock Exchange and TASI index exposure. 
  3. Use to seek long-term growth and diversification. 

How to Get Started with CAPEX.com 

Here is how to buy and trade stocks, ETFs and other assets with an international, highly regulated broker like CAPEX.com: 

  • Choose which type of account you want to use. Your first concern should be your risk appetite and time horizon. If you want to buy and hold shares, open an Invest account. If you want to speculate on price movements (including falling prices) with zero commission and leverage, open a trading account. 
  • Create an account. Regardless of your chosen account, you need to register and complete the KYC process to verify your identity. 
  • Fund your account with fiat money. Before buying and trading stocks and ETFs, you need to fund your exchange account with U.S. dollars, Euros, or other currencies. 
  • Place your order. Click on the "Search" icon located in the left panel or by clicking on "ETFs" and then select the instrument, such as "iShares MSCI Frontier and Select EM ETF”.

    

When trading stocks, the margin contracts are stored in your account and are more liquid than the underlying asset.  

However, you should be aware that margin contracts trading is fast-moving and requires close monitoring. As a result, traders should be aware of the significant risks when trading margin contracts. There are margins you need to maintain; if you cannot cover reductions in values, your position might be closed, and you'll have to meet the loss no matter what subsequently happens to the underlying asset. 

With CAPEX, you can trade margin contracts on +2.000 stocks and invest in +5.000 stocks and ETFs with ownership. 

Free trading tools and resources

Before you start investing in shares, you should consider using the educational resources we offer like CAPEX Academy or a demo trading account. CAPEX Academy has lots of free trading courses for you to choose from, and they all tackle a different financial concept or process – like the basics of analyses – to help you to become a more informed trader. 

Our demo account is a great place for you to learn more about leveraged trading, and you’ll be able to get an intimate understanding of how margin contracts work – as well as what it’s like to trade with leverage – before risking real capital. For this reason, a demo account with us is a great tool for investors who are looking to make a transition to leveraged trading. 

Sources:  

About alrajhi bank | Alrajhi Bank 

Al Rajhi Banking and Investment Corporation (1120.SR) Stock Price, News, Quote & History - Yahoo Finance 

Al Rajhi Bank Stock Forecast: 1120 Stock Price Prediction, Long-Term; Short-Term Share Revenue - Walletinvestor. 

Al Rajhi Banking and Investment Corporation (SASE:1120) Stock Valuation - Simply Wall St 

FAQs about Al Rajhi Shares

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