Sipchem target price slashed to SAR 25.40: Aljazira capital

Aljazira Capital has maintained its “overweight” rating on Saudi International Petrochemical Company (Sipchem), but reduced its target share price to SAR 25.40 from SAR 37.70.

Although Sipchem’s Q2-2015 earnings were impacted by a maintenance shutdown at its carbon monoxide plant, it has benefited from the commercial operations of its new ethylene vinyl acetate, low density polyethylene, and polybutylene terephthalate projects, the brokerage firm said.

Sipchem’s management has announced a total dividend of SAR 0.6 per share in Q2-2015, resulting in an attractive dividend yield of 6.2 percent.

“Going forward, we believe a strong balance sheet and sustainable cash flows would be sufficient for the company to repay existing debt, maintain a robust dividend payout ratio, and manage future expansion plans,” Aljazira added.