Arab Today, arab today saudi petchem firms make sr 419 bn
Last Updated : GMT 00:29:58
Arab Today, arab today
Arab Today, arab today

Saudi petchem firms make SR 41.9 bn

Arab Today, arab today

Arab Today, arab today Saudi petchem firms make SR 41.9 bn

Jeddah - Arabstoday

Concerns on the global economy continue to hold back the performance of the Saudi petrochemical sector, said NCB Capital in its recent report. Rising propane and butane costs and operational inefficiencies at the new startups are contributing to the weak performance. In addition, pricing growth is restricted by weak demand. NCB Capital expects the total net income of the ten stocks under its coverage to decline by 16 percent YoY to SR 34.2 billion in 2012. \"This is mainly due to higher losses by Saudi Kayan Petrochemical Company, increased propane and butane prices and weakness in petrochemical demand,\" said Iyad Ghulam, equity research analyst at NCB Capital, commenting on the report. \"However, the 2013 net income is expected to grow 22.7 percent YoY to SR 41.9 billion benefiting from higher contribution from Saudi Kayan, Sahara and Petrochem. Moreover, we are confident on the sector\'s long-term growth backed by its proximity to the attractive Asian markets, strong project pipeline and ethane cost advantage.\" NCB Capital maintained Overweight rating on Saudi International Petrochemical Co. (Sipchem), Saudi Basic Industries Corp. (SABIC), Sahara Petrochemical Co. and Saudi Industrial Investment Group (SIIG), while remained Neutral on Tasnee, Yanbu National Petrochemical Company (Yansab) and APPC. \"Our top picks are SABIC and Sipchem as we believe the stocks offer a good entry point, firm pricing outlook, low production cost and good dividend yield. We maintain our Underweight rating on Petrochem,\" Ghulam added. NCB Capital downgraded SAFCO to Neutral as the stock offers limited upside at the current levels. Urea and ammonia oversupply concerns weigh heavily on the medium to long-term outlook. The stock price grew 8.6 percent since our last update in June 2012, outpacing TASI which increased 6.7 percent. \"We have also downgraded Saudi Kayan to Neutral on the back off ongoing operational issues and high debt levels. Lowering our 2012 and 2013 estimates has led to a downward revision in our PT to SR 16.1 from SR 18.4 earlier,\" Ghulam said. Economic indicators in the US, such as new homes, auto and retail sales, have improved in recent months, although slower restocking and little improvement in the unemployment data remain key concerns. The ongoing credit crisis is holding back demand in Europe, while Asian economies are struggling with lower export and domestic demand. The uncertain demand outlook is translating into need-based purchases, which exerts pressure on prices and operating rates. As demand for petrochemicals closely tracks economic growth, NCB Capital does not expect a strong recovery in near-term demand. Despite weak demand, high prices of naphtha (which closely tracks oil) are fueling petrochemical prices globally. On a QTD basis, petrochemical prices have increased 5-15 percent. MEG gained 25.1 percent and MTBE gained 23.6 percent while Methanol declined by 2.7 percent. In Q3, 2012, NCB Capital expects the average price of petrochemicals to move in the range of +/-5 percent QoQ. Among fertilizers, the pricing trend is mixed. The price of urea dropped 16.3 percent QTD while prices of ammonia were up 9.3 percent QTD, benefiting from tight supply and rising demand in Asia. On a QoQ basis, NCB Capital expects the benchmark average price of urea to decline 16 percent, while ammonia is expected to increase by 25.7 percent in Q3 2012. NCB Capital remains Overweight on SABIC with a revised PT of SR 121. The prevailing weakness in petrochemical demand and prices is expected to negatively impact SABIC\'s quarterly earnings in the near-term, despite a favorable outlook for fertilizers and metals. NCB Capital believes that the current stock price level offers a good entry point given SABIC\'s long-term positive growth outlook. NCB Capital maintains its Overweight rating on Sipchem with a revised PT of SR 25.8. It decreased its 2012 estimates as a result of the declines in petrochemical prices and lowered operating rates. However, NCB Capital remains optimistic on earnings growth in the medium and long-term. This is mainly due to the strong pricing outlook and benefits from the Phase 3 expansion. The stock looks attractive at current levels, offering an upside of 30.1 percent to the current market price. NCB Capital maintains its Overweight rating on SIIG with a revised price target of SR 27. The stock price has increased 11.4 percent since NCB Capital\'s initiation in June 2012 outperforming the TASI by 4.7 percent and in line with the Overweight rating. NCB Capital believes the commercial start-up of Petrochem is a key stock price catalyst in the near term. At current levels, the stock looks attractive given its long-term growth outlook which is fuelled by a diversified product mix and a strong project pipeline. NCB Capital downgrades Saudi Arabia Fertilizers Co. (SAFCO) to Neutral from Overweight with a PT of SR 210.9. Though ammonia prices are rising on tight supply, urea prices are under pressure due to increased supply from the ME. Anticipated increase in supply from Asia in 2013 onward is set to exert pressure on prices further. The company announced a 33 percent bonus issue (1 stock for every 3), which will increase the capital from SR 2.5 billion to SR 3.3 billion in July 2012 and reduce the nominal share price by 25 percent to around SR 140. NCB Capital remains Overweight on Sahara Petrochemicals with a revised PT of SR 16.8, down 7.9 percent on a downward revision to 2012 and 2013 estimates. Though the near-term outlook for earnings is weak due to rising production costs and maintenance shutdowns, an integrated product flow and diversified product mix will improve earnings in 2013. The stock price offers an attractive upside at current levels. However, operational inefficiencies remain the key risk. NCB Capital downgrades Saudi Kayan to Neutral from Overweight with a revised PT of SR 16.1. Decreased operating rates for H2 2012 and 2013, rising feedstock cost and weak demand outlook led NCB Capital to significantly lower its estimates for 2012 and 2013. While NCB Capital is confident on the company\'s long-term growth prospects given its well-diversified product mix, key risks in the short-term are high debt levels and anticipated weakness in the near term earnings. NCB Capital remains Neutral on Tasnee, with PT decreasing by 1.6 percent to SR 35.9. Prevailing demand weakness in end markets and rising raw material costs will exert pressure on Tasnee\'s margins in the near term. The stock price is down 6.9 percent since we downgraded it to Neutral in June 2011 underperforming TASI which is up 8.5 percent. NCB Capital remains Neutral on Yansab with a revised PT of SR 48. The company\'s exposure to Europe (second-largest end market) will continue to negatively impact earnings in the near term. Though a rise in PE and PP prices may improve sales, faster growth in propane feedstock prices and weaker demand will restrict the upside. Though a dividend announcement is the only strong stock price catalyst for Yansab, there is little likelihood of this happening until 2013, in our opinion. NCB Capital maintains its Underweight rating on Petrochem with PT falling by 1.6 percent to SR 19.1. NCB Capital does not expect revenues or positive earnings in Q3, 2012 as the company is still in trial mode, and commercial operations are likely to only start in December 2012. NCB Capital has assumed a one month contribution from commercial production in Q4, 2012. Timing of startup is concerning given weak demand and low petrochemical prices. NCB Capital believes the stock price lacks any strong catalyst in the near term and the downside risk is high. Arabnews

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today saudi petchem firms make sr 419 bn Arab Today, arab today saudi petchem firms make sr 419 bn

 



Arab Today, arab today
Arab Today, arab today Hats, scarves add beauty to women

GMT 19:10 2017 Friday ,17 February

Hats, scarves add beauty to women
Arab Today, arab today Tourist guide reveals methods of tourist attractions

GMT 17:46 2017 Saturday ,18 February

Tourist guide reveals methods of tourist attractions
Arab Today, arab today To release new antiques collection

GMT 20:33 2017 Friday ,17 February

To release new antiques collection
Arab Today, arab today Leader Omar Abdel Rahman dies in US prison

GMT 19:00 2017 Sunday ,19 February

Leader Omar Abdel Rahman dies in US prison
Arab Today, arab today Murder of 2 reporters in Dominican Republic

GMT 22:45 2017 Thursday ,16 February

Murder of 2 reporters in Dominican Republic
View News in Arabic - Business: أخبار الشركات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Kidogo provides childcare for underserved

GMT 20:24 2017 Wednesday ,15 February

Kidogo provides childcare for underserved
Arab Today, arab today Tragic fluctuations of Bakhtiari's life revealed

GMT 06:50 2017 Wednesday ,15 February

Tragic fluctuations of Bakhtiari's life revealed
Arab Today, arab today London to tax old cars

GMT 14:06 2017 Friday ,17 February

London to tax old cars
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Competes Sweden and Germans by S90

GMT 22:36 2017 Thursday ,16 February

Competes Sweden and Germans by S90
Arab Today, arab today Porsche reveals new 2018 Panamera

GMT 17:31 2017 Wednesday ,15 February

Porsche reveals new 2018 Panamera
Arab Today, arab today Actress Nadeen Al Rassi views art as her entity

GMT 07:30 2017 Saturday ,18 February

Actress Nadeen Al Rassi views art as her entity
Arab Today, arab today Teach monkeys to recognize themselves in mirror

GMT 20:41 2017 Wednesday ,15 February

Teach monkeys to recognize themselves in mirror

GMT 07:05 2017 Friday ,17 February

Singer Diana Karzon will issue a new album soon

GMT 06:40 2017 Friday ,10 February

MP calls for removing text from Islamic story

GMT 13:16 2017 Tuesday ,14 February

First fashion model with Down syndrome

GMT 10:26 2017 Tuesday ,14 February

Emergency UN meeting in Harare

GMT 14:04 2017 Tuesday ,14 February

"Lagom" new Swedish concept in interior design

GMT 12:07 2017 Thursday ,16 February

Bite-mimicking malaria vaccine

GMT 09:03 2017 Thursday ,16 February

Tour guide praises women’s beaches

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 21:42 2017 Sunday ,12 February

Rania al-Ghazali designs candles of bubbles
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday