Petrochem's Q4 broadly in-line with estimates: NCBC

National Petrochemical Co. (Petrochem) reported a net income of SAR 236 million in Q4 2018, broadly in-line with NCB Capital's and consensus estimates' of SAR 250 million and SAR 235 million, respectively, the brokerage said in an earnings review on Thursday.

However, the petchems major reported multiple one-offs, including an accelerated depreciation expense of SAR 236 million, and insurance claim proceeds of SAR 187 million.  Adjusting for that, the net income stood at SAR 285 million, beating NCB Capital's estimates by 14 percent, driven by higher spreads and operating rates.

Revenues stood at SAR2.2 billion, beating NCB's estimates of SAR 2.09 billion on the back of operating rates.

Additionally, gross margins stood at 20.5 percent, the lowest level since Q4 16 and compared to NCB's estimates of 30.8 percent.

"We believe the weakness in margin mainly attributed to accelerated depreciation of assets related to the polystyrene unit for SAR 236 million," the note stated.

Petrochem facilities were operating at 119 percent compared with the brokerage's estimates of 116 percent.

NCB Capital assigned "neutral" rating on the stock, setting the target price at SAR 30.8.

"We believe the sustainable improvement in operating rates and higher dividends (SAR 0.75 in 2018 vs SAR 0.5 in 2017) are the key catalysts for the stock," it added.