Shutdowns to weigh on Saudi petchems' Q2 profit: SICO

04/06/2017 Argaam

Saudi petrochemical producers are expected to report weak results for Q2-2017, due to lower product prices, sales volumes and multiple shutdowns across the sector, SICO Investment Bank said in a report Sunday.

 

Five companies would be hurt by temporary closures during the quarter, including Yanbu National Petrochemicals Co (Yansab) which expects a financial impact of SAR 110 million in the second quarter, following a 21-day scheduled maintenance at its ethylene glycol plant starting April 21, 2017.

 

Saudi Industrial Investment Group (SIIG) would be impacted by a 35-day maintenance at its 50 percent-owned subsidiary Saudi Chevron Philips (SCP) starting April 1. The shutdown could materially impact income from associates during 2Q17.

 

SIIG is also forecast to be hurt by a two-week shutdown at Petrochem’s Saudi Polymers unit. Petrochem is 50 percent-owned by SIIG.

 

Saudi International Petrochemical Co. (Sipchem) would be also impacted by a five-week and three-week shutdowns at its carbon monoxide and VAM plants, respectively.

 

Alujain is expected to post poor Q2 earnings, hurt by a 25-day production halt at its subsidiary NATPET.

 

“We keep our crude price assumptions unchanged for 2017/18 at $55/60 per bbl, and consequently keep our product price estimates also unchanged with the exception of

Methanol,” the report added.

 

The Bahrain-based investment bank lowered methanol price estimate from $350/357 to $300/325 for 2017/2018.

 

SICO revised down its profit estimates for 2017 by 0.6 percent but raised expectations for 2018 earnings by the same ratio.

 

Meanwhile, Saudi Kayan would see its profit higher by 4 percent/43 percent in 2017/2018, backed by higher-than-expected earnings in Q1-2017 along with higher utilization rates assumption to 85 percent from 80 percent.

 

SICO Ratings

Company

Target Price

Rating

Previous

Current

Previous

Current

Yansab

60

60

Neutral

Neutral

Advanced

46.5

46.5

Neutral

Neutral

SABIC

105

105

Neutral

Neutral

Petrochem

21

20

Sell

Neutral

SIIG

22.5

21

Neutral

Neutral

Sipchem

22

16

Neutral

Neutral

Safco

65

65

Sell

Sell

Tasnee

18

16

Neutral

Neutral

Alujan

20

20

Neutral

Sell

Kayan

8

9

Sell

Neutral

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