Al Rajhi Capital revises petrochemical ratings; maintains ‘overweight’ on SABIC

Al Rajhi Capital said it has revised its ratings on several petrochemical producers due to volatile oil prices and macroeconomic conditions, but has kept its “overweight” rating on Saudi Basic Industries Corporation (SABIC).

The investment arm of Al Rajhi bank also upped the SABIC’s stock target price to SAR 125.50.

It said it expected fluctuating oil prices to eventually weigh on the company’s profit in the near term.

However, shale oil investments and Tadawul’s opening to foreign investments may bolster its earnings and the stock price in the middle term.

As for Saudi Arabian Fertilizer Co. (SAFCO), Al Rajhi downgraded its recommendation from overweight to neutral and set the stock’s target price at SAR 127.40. The rating was pushed by the delayed launch of SAFCO 5 commercial operations and pressures on urea prices.

The investment firm also cut its rating on Sahara Petrochemicals Co. from neutral to underweight, and adjusted the stock’s target price at SAR 14.10. The bourse-listed company appeared to have lagged in solving some restructuring problems.

Al Rajhi Capital maintained neutral recommendations on other companies.

Prices of petroleum products have lately risen due to higher oil prices.