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Al Rajhi Capital issues Q2 forecasts; SABIC to rise 4%
Al Rajhi Capital on Tuesday issued its Q2 2017 earnings forecasts for the Tadawul-listed companies under its coverage.
The petrochemical sector is expected to see weak earnings due to lower seasonal product prices and several plant shutdowns.
SABIC is likely to post Q2 earnings at SAR4.9 billion, 4 percent higher year-on-year (YoY), while Saudi International Petrochemical Co.’s (Sipchem) profitability will be affected by shutdowns at its acetic acid and carbon monoxide plant, and vinyl acetate monomer (VAM) plant.
Yansab’s operating income in Q2 is expected to be affected by weak product prices and maintenance shutdowns in its monoethylene glycol (MEG) and olefins plants.
SAFCO’s profit will drop on the back of a 20 percent quarter-on-quarter (QoQ) decline in urea prices and a 20-day shutdown at SAFCO III, the report said.
Meanwhile, Tasnee’s chemical segment (Cristal) will likely report a healthy operating performance in Q2, supported by higher Tio2 prices. However, its net profit could be impacted, mostly due to lower equity income from associates.
For Advanced Petrochemical Co., higher sales volume and lower propane prices are expected to drive profitability in Q2, compared to the previous quarter.
Elsewhere, the retail sector’s performance is likely to improve in Q2 2017 due to the reinstatement of public sector employees’ allowances, and a boost in consumer spending ahead of Ramadan.
Net profit of all retailers is expected to grow YoY, Al Rajhi Capital said.
Electronics retailers such as Jarir and eXtra will continue to benefit from the market share gains driven by the mandatory Saudization of mobile shops.
Al Othaim Market is expected to post 16 percent revenue growth YoY due to its focus on non-discretionary products and aggressive store expansions.
Meanwhile, the cement sector is unlikely to see an improvement in sales volume due to the slowdown in construction and the stiff competition.
Revenue of cement companies under coverage is expected to drop by 33 percent YoY, whereas earnings are likely to fall by 48 percent.
In the telecom sector, Saudi Telecom Co.’s revenues will pick up in Q2, due to the reinstatement of public sector allowances.
Meanwhile, the food sector will benefit from Ramadan falling in Q2, with Almarai and Savola expected to see healthier revenue.
However, Q2 is comparatively weak for healthcare firms due to seasonality for the sector, Al Rajhi Capital said.
Most healthcare companies continue to struggle with rising outstanding except for Dallah, which reported receiving payments on its outstanding receivables.
|
Al Rajhi Capital Q2 Estimates (SAR mln) |
||||
|
YoY Variation |
Q2 2017 estimates |
Company |
||
|
Petrochemical Sector |
||||
|
%4 |
4890 |
SABIC |
||
|
62% |
42 |
Sipchem |
||
|
(19%) |
241 |
SAFCO |
||
|
(8%) |
96 |
Tasnee |
||
|
(25%) |
516 |
Yansab |
||
|
7% |
200 |
Advanced |
||
|
Cement Sector |
||||
|
(48%) |
74 |
Arabian Cement |
||
|
(49%) |
59 |
Yamama Cement |
||
|
(45%) |
138 |
Saudi Cement |
||
|
(42%) |
67 |
Qassim Cement |
||
|
(39%) |
97 |
Yanbu Cement |
||
|
(63%) |
99 |
Southern Province |
||
|
Telecommunications Sector |
||||
|
30% |
2,429 |
STC |
||
|
-- |
(145) |
Mobily |
||
|
-- |
30 |
Zain |
||
|
Agriculture & Food Industries |
||||
|
5% |
661 |
Almarai |
||
|
(15%) |
210 |
Savola |
||
|
(2%) |
49 |
Herfy |
||
|
(10%) |
130 |
Airlines Catering |
||
|
Retail Sector |
||||
|
32% |
170 |
Jarir |
||
|
35% |
288 |
Al Hokair* |
||
|
32% |
66 |
Al Othaim |
||
|
83% |
22 |
eXtra |
||
|
Healthcare Sector |
||||
|
26% |
68 |
Dallah |
||
|
16% |
72 |
Mouwasat |
||
|
(66%) |
20 |
Care |
||
|
19% |
25 |
Hammadi |
||
|
Other Sectors |
||||
|
198% |
393 |
Maaden |
||
|
(54%) |
22 |
Al Hassan Shaker |
||
|
(58%) |
210 |
Bahri |
||
*Q1 2017. Fiscal year ends March 
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