Bankers say Aramco would accept valuation 1.6 Trillion to 1.8 Trillion

[Jabbar + 465]

Still too high.

Buying into Saudi Arabia not an Oil Company.

THE GOVERNMENT CAN CHANGE ANYTHING AT ANYTIME.

WHAT THE BANKERS ARE NOW SAYING:

1. They say Saudi Aramco would settle for valuation of $1.6 to $1.8 Billion.  If they agree to $1.6 valuation do they still keep dividend payout at 75 Billion Dollars.  

2. They say the Saudi citizens will be given interest free loans to buy shares , PLUS if they agree to lock up for 6 months before they can sell they get 1 extra share for each 10 bought. These Saudi retail investors plus forced purchases by Saudi's Billionaire Elite is expected to make up 60% of the initial purchases. Imagine the selling panic when the 6 month lock up expires.

3. Saudi's settle for issuance of 2% and agree to not sell additional share offerings internationally for one year. With a lot of stock under lock up (can't sell) they are limiting any sell ing for a period of time. This allows for easy manipulation of Aramco stock price.

(a) Aramco doesn't even own the reserves. The Monarchy own the reserves. Saudi has often let other OilMajors develop reserves pr joint refineries.  All Aramco decisions are as much political decisions , as business related .

(b) True the government wants to open up their economy and even modernize their society. BUT THIS IS NOTHING MORE THAN AN EXPERIMENT. If it fails to materialize what is your Aramco investment worth ? Its failed so far. 

(c) Aramco pays royalties, taxes, dividends and special dividends.  Tax rate now changed from 50% to 15%. Dividend changed to 75 Billion dollars (but only guaranteed for 5 years). Can always be changed and probably will . Tax rates, royalties, dividends can be changed at the Sandi's whims or needs.

(d) Aramco sells 30% of their production as a subsidy to local power, gasoline and business/government at 6 dollars a barrel.  IS THAT GOING TO CONTINUE ? 

(e) Aramco has never published financial statements. Really.  Can you imagine what they would look like.  How can you go public ?

(f) Last month Aramco CEO said they produce what the government tells them to produce.

Is this really a public company ?

What is its true valuation given lack of transparency, multitude of risk factors and no financial statements.  

After issue settles down the stock will trade like a bond for a given dividend yield for given level of risk factors.

Edited November 5, 2019 by Jabbar