NCB Capital affirms SIPCHEM’s ‘overweight’ rating

NCB Capital maintained an “overweight” rating on Saudi International Petrochemical Company (SIPCHEM), with a share target price of SAR 37.

“Although SIPCHEM reported weaker-than-expected results, improvement in operating rates in coming quarters, margins expansion, and start-up of the new projects remain key strength of the stock,” the brokerage arm of the National Commercial Bank said in a recent research note.

SIPCHEM’s net income dropped 55 percent year-on-year on weak prices and the shutdown at its Acetic Acid and Carbon monoxide units for 25 days each in the second quarter of 2015. The financial impact was SAR 18 million.

“We believe this shutdown has mitigated the positive impact of start-up of the new Phase III plants,” NCB Capital added.