Falcom retains Petro Rabigh’s ‘Neutral rating, revises TP to SAR 18.8

Falcom Financial Services revised Rabigh Refining and Petrochemical Co.’s (Petro Rabigh) target price to a fair value of SAR 18.8 per share and retained its “Neutral” rating on the stock.

Petro Rabigh’s net profit jumped 61.9% year-on-year (YoY) to SAR 394.2 million in Q3 2019, compared to SAR 243.4 million in Q3 2018, as the refined products segment swung to operating profit of SAR 391.1 million from operating losses of SAR 314.4 million last year, Falcom said in a report.

This helped contain overall losses at the company level even as the operating profits from the Petrochemical segment declined.

The brokerage further noted, “Though the company managed to reduce its financial charges in Q3 2019, they still remain considerably above the last fiscal’s average level, adding to the concern.”

On the other hand, the company stands to benefit from the successful completion of the reliability test at the Petro Rabigh Phase 2 facility, as it reaffirms the consistent production of high-quality products without suspending operations, the report added.