Advanced’s best-ever quarterly net profit beat estimates: Al Rajhi Cap

Advanced Petrochemical Co. (Advanced) recorded its best-ever quarterly net profit since inception at SAR 253 million versus Al Rajhi Capital’s expectation of SAR 184 million and consensus estimate of SAR 200 million, the investment advisory firm said in an earnings review.

The positive performance was driven by lower propane costs, which led to improved margins, the report said, adding that the increase in income from Advanced’s Korean associate also helped.

“Advanced reported a remarkable second quarter with beat across all line items,” it said.

In Q2 2018, the company increased sales quantity by nearly 5 percent year-on-year (YoY), and its net price realization at +18 percent YoY was higher than Al Rajhi Capital’s expectation by 3 percent.

“Both combined, the company managed to increase revenue by 24 percent YoY to SAR 750 million (versus our expectation of SAR 678 million),” Al Rajhi Capital said.

The higher-than-expected sales volume is likely to have come from better efficiency or output following the replacement of production catalyst in the last quarter, it added.

“Based on our conservative estimates, we arrive at next 12 months EPS of SAR 4,” the report said.

“We revise our target price upwards to SAR 61 per share with key downside risk of decline in polypropylene price,” it added.