Petro Rabigh revenue seen to grow on higher prices, says FALCOM

Rabigh Refining and Petrochemical Co.’s (Petro Rabigh) revenue growth is expected to continue in-line with higher petrochemical prices, FALCOM Financial Services said in a report.

“However, profitability may be impacted by the company’s high level of debt and shrinking refining margins,” the report said.

Delays in integration of Rabigh Phase I and Phase II projects within the Petro Rabigh Industrial Complex are expected to impact the company’s performance in the current financial year, it added.

Petro Rabigh’s revenue jumped 31.7 percent year-on-year (YoY) and 12.1 percent quarter-on-quarter (QoQ) to SAR 12 billion, mainly due to higher petrochemical prices and growth in volumes.

Gross profit declined 44.9 percent YoY and 8.5 percent QoQ to SAR 607 million due to lower refining margins. As a result, gross margin dropped from 12.1 percent in Q3 2017 to 5 percent in Q3 this year.

Selling and marketing expenses tripled ( by 217 percent YoY) to SAR 62 million in Q3, while general and administrative expenses declined 26 percent YoY to SAR 202 million.

Operating profit (excluding other income) declined 57.6 percent YoY to SAR 344 million.

Net profit dropped 65.5 percent YoY to SAR 243 million, mainly due to lower refined products margins.

The research firm maintained a “Neutral” rating on the stock but revised the target price to SAR 19.8 per share from SAR 20.2 per share.