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Sipchem posts $32.5 net profit for Q3.

Sipchem, a leading petrochemical and chemical manufacturing company in Saudi Arabia, has reported a net profit of SR122 million ($32.5 million) for the third quarter of the year.

"Though revenue was slightly lower than our expectation, improvement in operating leverage, lower than expected operating costs and possibly zakat as well were mainly responsible for the earnings beat," said Al Rajhi Capital, a leading financial services provider in the kingdom.

"The sharp improvement seen in q-o-q and y-o-y was mainly due to shutdowns in the respective past periods. Given the company's improving financial performance, we expect the company to reinstate dividends in 2H17 (last payment was in 1H15) - one of the key triggers for the stock.

"Other upside triggers are related to news on possible value accretive mergers, and further improvement in operating rates and efficiencies. We expect average 7 per cent y-o-y improvement in Methanol price in 2018 and factor in less than optimum operating rates for the plants (around 90 per cent in 2018) to arrive at EPS of SR1.2/share for 2018. Based on this EPS, current P/E stands at 12.6x. We maintain TP at SR16.6/share based on equal mix of relative and DCF valuation and rate the company OW (upside: 10.6 per cent)," it added. - TradeArabia News Service

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Publication:TradeArabia (Manama, Bahrain)
Article Type:Financial report
Date:Oct 29, 2017
Words:240
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