Advanced Petrochemical Q4 misses estimates: Al Rajhi Cap

Advanced Petrochemical Co.’s fourth-quarter net profit of SAR 164 million came in below Al Rajhi Capital’s estimates of SAR 198 million, the brokerage said in an earnings review on Monday.

Revenue stood at SAR 750 million, beating the brokerage's estimates of SAR 737.

"Though Q4 revenue came slightly higher than our expectation, costs were even higher at both feedstock and operating level, leading to lower than expected bottom-line. Overall, despite the miss in results, we believe the company’s operating performance continues to be healthy," it noted.

According to the report, the new PP plant in South Korea, which will start commercial production in H1 2021, will improve Advanced's bottom-line by SAR24 million annually.

Meanwhile, Al Rajhi Capital assigned a "neutral" rating on the stock, revising the target price lower to SAR 57 a share.

"The key upside trigger might be attributed to an increase in dividends (expect an increase in DPS to SAR 3 a share for 2019) while further weakness in product spreads may act as the key downside trigger," the report added.