Itqan Cap expects SABIC’s profitability to remain under pressure in medium-term

22/06/2020 Argaam

 

Itqan Capital initiated coverage of Saudi Basic Industries Corp (SABIC) with an “Underweight” recommendation and a target price of SAR 77.4 per share.

 

Despite SABIC’s strong financial position in terms of assets and liquidity, the brokerage firm expects the company’s profitability to remain under pressure given the lowered demand and prices, amid the coronavirus pandemic.

 

SABIC’s revenues from all operating segments continued to decline due to the pressure in selling price and lower demand since 2019, which was further exacerbated by COVID-19 this year.

 

“The key growth catalysts are SABIC’s ambitious investment strategy and its stake in Clariant AG,” Itqan said.

 

The firm also pointed out that the key risk factors for SABIC include the negative impact of the coronavirus pandemic and the US-China trade dispute.

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