Aljazira Cap says Yansab Q1 2021 profit ‘positive surprise’, raises TP to SAR 68

Logo of Yanbu National Petrochemical Co.

Yanbu National Petrochemical Co. (Yansab) reported a strong set of results, with profit reaching SAR 420.3 million in Q1 2021, beating AlJazira Capital and market estimates’ of SAR 278 million and SAR 275 million, respectively.

The company’s results were a “positive surprise” for the market and reflected the strong improvement in production efficiency despite periods of plant maintenance and higher feedstock cost, AlJazira Capital said in a new report.

The deviation of Q1 2021 earnings from AlJazira Cap’s estimates is mainly due to higher-than-expected revenue and other income.

Yansab’s short-term outlook is primarily driven by coronavirus vaccines, tight global supply and bullish downstream markets.

Going forward, products prices are expected to stabilize around the current level with the pick-up in the global economic activities.

However, the brokerage doesn’t expect a significant improvement in 2021 due to expected global additional new capacities and supply tightness likely to ease in Q2 2021.

AlJazira Capital remains positive on the company’s short-term growth prospects, given its operating efficiency amid improving market dynamics and strong cash flows.

Yansab is projected to post a net profit of SAR 1.844 billion and distribute dividends at SAR 3.5 per share in 2021, compared to SAR 2.5 per share in 2020.

Aljazira Capital maintained its “Neutral” recommendation on the stock, raising the share target price (TP) to SAR 68 from SAR 56.80.