Petro Rabigh’s revenue to grow 8% until 2021, says Falcom

Falcom Financial Services expects Rabigh Refining and Petrochemical Co.’s (Petro Rabigh) revenue to grow at a CAGR of 8 percent until 2021.

Petro Rabigh’s profit margins are also estimated to slightly improve in H2 2018 and 2019 thanks to the Rabigh II debottlenecking project, Falcom stated.

However, Falcom maintained Petro Rabigh’s target price at SAR 23.7 and reiterated a “neutral” rating on the stock, as high leverage may weigh on profitability.

The Saudi petrochemicals producer’s net income dropped 25.7 percent year-on-year (YoY) and 20.8 percent quarter-on-quarter (QoQ) to SAR 235 million in Q2 2018, Falcom said in a report.

The profit miss was driven by decreased margins and lower operating profit, the brokerage said, adding that the growth in sales volumes was offset by a decline in refining profit margins

The second-quarter revenue increased by 21.5 percent YoY and 9 percent QoQ to SAR 10.7 billion, driven by higher prices of petrochemicals and increased sales volumes.