Kayan reported a net income of SAR 265 million--its highest ever-- which came above the NCB Capital and consensus estimates of SAR 121 million and SAR 118 million, respectively, the brokerage said in an earnings review.

 

Gross margin were at a record high at 27.2 percent, higher than the estimated 18.6 percent, it said.

 

NCB Capital believes operational efficiency increased following the major 48-56 days shutdown in H1-16.

 

“We believe higher than expected operating rates and operational efficiency mitigated the impact of lower PP-naphtha spread (up 5.7 percent YoY) on gross margin in 1Q17.”

 

Although operational improvement at Kayan is a key positive, a major 31-56 days shutdown at the facilities in H2 2017 is a key risk to the stock, the brokerage added. 

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