Maceen Capital ‘neutral’ on Rabigh, Kayan; places ‘buy’ on SIIG

In a ratings note on the Saudi Petrochemicals sector, Maceen Capital placed a neutral recommendation on Petro Rabigh, with a target price of SAR 14.80. The firm expects the refiner to post a SAR 645 million net loss in fourth quarter, and a net loss of SAR 397 million for 2015.

Petro Rabigh’s 50-day scheduled maintenance that started on Oct. 11, coupled with bearish global economic outlook and lower oil prices contributed to the negative forecasts.

Meanwhile, Saudi Kayan Petrochemical Co. was rated neutral with a target price of SAR 8.75. Maceen expects Kayan to narrow its fourth quarter’s losses to SAR 11 million on its agreement with SABIC to share the cost of marketing, as well as postponing maintenance work.

Saudi Industrial Investment Group (SIIG) was rated buy with a target price of SAR 20.25. Maceen forecast that SIIG’s fourth quarter profit would decline to SAR 51 million because of scheduled maintenance in fourth quarter, which will affect production and sales. Net profit in 2015 is expected to be SAR 723 million.

Petrochemicals accounted for 11.19 percent of Saudi Arabia’s total exports last year, compared to an average of 9.23 percent in the five previous years.

The total output of the 14 listed Saudi petrochemicals companies is 47 million tons. New and expansion projects are expected to add a capacity of 43.9 million tons.