SABIC’s Q3 figures miss forecasts, says Aljazira Cap

Saudi Basic Industries Corporation (SABIC) posted net income of SAR 830 million, which missed Aljazira Capital’s and market consensus estimates of SAR 2.35 billion and SAR 2.16 billion, respectively, Aljazira Capital said in an earnings review.

The weak performance is mainly attributed to an impairment provision of SAR 1.51 billion, as SABIC reassessed the carrying value of its 24.99 percent stake in Clariant AG; lower average sales prices and products spreads, the brokerage noted.

The report added that the company’s Q3 result is also attributed to weak performance of listed subsidiaries -- Kayan’s earnings came above market estimates, while SAFCO and Yansab reported performance below expectations, with a net profit of SAR 414.2 million and SAR 212.1 million respectively.

“We remain “Neutral” on the stock with a revised target price of SAR 98.50/share,” the brokerage added.

During Q3 2019, pressure on the company’s top line and margins was mainly due to the significant decline in most main products prices such as MEG, PE and PC.

This was driven by muted global growth and new capacity coming on-stream. The global economy is experiencing a slowdown with Asia as the main point on the bearish trends affecting consumption and exports.