reports
- Iyad KhalidÊGhulam
SIIG: Highest losses on record
SIIG reported a disappointing set of Q4 22 results with a net loss of SAR296mn, vs profits of SAR122mn and SAR55mn in Q4 21 and Q3 22 respectively. This is the highest losses on record. This compares with the SNB Capital and consensus estimates of profits of SAR69mn and SAR76mn, respectively. We believe the variance is due 1) a longer than expected shutdown at SPC and 2) lower selling prices which led to losses from the JVs. We highlight that SIIG had a 58-day turnaround at SPC during Q4 22. ...
- Iyad KhalidÊGhulam
SIIG: Another shutdown at SPC
Summary SIIG announced an unplanned shutdown at its SPC facility due to cooling issues at the ethylene unit. The company expects the commercial operation to restart gradually by Friday, 3 February 2023. As the shutdown is unplanned, we expect the return to full operating rates to take longer. Based on our assumptions and the current product prices, we expect the financial impact to exceed SAR11mn (c2.0% of SIIG 2023f net income). Key points * SIIG announced an unplanned shutdown at its SPC f...
- Iyad KhalidÊGhulam
Saudi Petrochemicals Sector | Q4 Update | A difficult year ahead
Following a challenging H2 22, major headwinds are expected in the near-term for the Saudi petrochemicals sector. The expected global recession, high inflation levels and the commissioning of new capacities will test the sector’s dynamics, exerting pressure on product margins. However, we believe the full removal of COVID-19 restrictions in China by H2 23f is a key positive and will drive demand over the medium term. Valuations are generally attractive over the LT, but given the major headwin...
- Iyad KhalidÊGhulam
SIIG: Q3 22 Results Analysis | Weak Petrochemicals sector earnings con...
SIIG reported a Q3 22 net income of SAR55mn down 73.0% yoy (-80.6% qoq). This is lower than the SNB Capital and consensus estimates of SAR173mn and SAR229mn, respectively. The operating income came in at SAR58mn (-82.9% yoy, -80.6% qoq), lower than our estimate of SAR180mn. The yoy decline in net income is due to the decrease in SIIG’s share of profits in the JVs which we believe is due to higher production cost, similar to the Q3 22 results of other Saudi producers. * In Q3 22, SIIG’s share...
- Iyad KhalidÊGhulam
SIIG: Profits rise qoq with Petrochem’s acquisition
SIIG reported a Q2 22 net income of SAR284mn, down 43.8% yoy (+20.9% qoq). This is slightly higher than the SNB Capital estimates of SAR267mn. Although operating income was in-line with our estimates, we believe the variance was due to lower than expected non-opex. We believe the yoy decline in net income is due to the decrease in SIIG’s share of profits in jointly managed projects because of high feedstock prices, while the qoq increase in net income reflects a higher share of SIIG’s profits...
- Iyad KhalidÊGhulam
Saudi Petrochemicals Sector | Q2 22 Sector Update | Challenges and opp...
The Saudi petrochemicals sector is going through an interesting period, as it is simultaneously facing major headwinds and attractive opportunities. Slowing global economic growth, supply-chain disruptions, new capacities and high feedstock prices are the sector’s main challenges. On the other hand, the ease of China’s lockdown has improved sentiments and will support outlook. We prefer companies with 1) favourable product mix, 2) feedstock advantage 3) low debt levels and 4) attractive divid...
SAUDI INDUSTRIAL INV.GP. with less fundamental stars is reduced to Neu...
SAUDI INDUSTRIAL INV.GP. (SA), a company active in the Commodity Chemicals industry, loses a star(s) at the fundamental level and sees its general evaluation downgraded. The independent financial analyst theScreener just removed a fundamental star(s) for a 2 over 4-star rating. As such, market behaviour remains unchanged and is evaluated as moderately risky. theScreener believes that the loss of a star(s) merits downgrade to the general evaluation of the title, which passes to Neutral. As of the...
- Iyad KhalidÊGhulam
SIIG: Q2 – Better JV performance reduce losses
SIIG reported a better than expected set of Q2 20 results, with a net loss of SAR55mn in Q2 20 vs the NCBC estimated net loss of SAR299mn. This compares to a profit of SAR205mn in Q2 19 and a loss of SAR174mn in Q1 20. The earnings are impacted by SIIG’s share of the write-off of Petrochem’s polystyrene unit of SAR127mn. Adjusted for that, the net reported net income would be a net income of SAR72mn. We believe the variance is attributed to better than expected results at the JVs. Revenues d...
- Iyad KhalidÊGhulam
Saudi Petrochemical Sector: Q2 20 update – Covid-19 is not the only ...
The COVID-19 pandemic has resulted in major supply and demand shocks to the petrochemicals sector, pushing prices to their lowest levels in more than 10 years. It also resulted in major uncertainty on the sector’s 2020f earnings outlook. Beyond the negative impact of COVID-19, we believe the sector outlook remains muted, due to increasing supply, trade tensions and weak demand. We believe the sector is currently pricing-in a full recovery for the global economy, leaving limited attractive inv....
- Rita Guindy
Downgrade rating to Neutral post rally
Stock is up 53% since 1 Nov 16, outperforming market. However further catalysts are limited to a sizeable oil price recovery, in our view. The valuation gap between SIIG and Petrochem, its listed subsidiary [Neutral l TP SAR20], has narrowed to 24% on 2017e EV/EBITDA which can be explained by the lack of visibility on SIIG’s loss-making joint venture PCC, in our view. We revise our forecasts to reflect higher oil prices (2017: USD57.8/bbl), raising our TP by 5% to SAR22.5/share and cutting our r...
Ford Equity International Rating and Forecast Report
Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...
- Rita Guindy
Overweight on valuation mismatch vis-Ã -vis Petrochem
Reiterate Overweight; valuation gap gives c68% upside. At a 9.2x 2016e EV/EBITDA, the price of SIIG’s subsidiary Petrochem [Neutral l TP SAR16.0], implies that the market is assigning no value to SIIG’s other two subsidiaries. It also means that the market is overlooking the expected 11% y-o-y increase in 2016 net income mainly due to the 22% y-t-d styrene price hike, to which Petrochem is negatively exposed. Our target price of SAR21.5/share implies 2016e EV/EBITDA of 7.7x, 10% below the indust...
- Youssef Tawfick
Initiate at OW: Market values non-listed subsidiaries at a c37% discou...
Naturally hedged. SIIG has a 50% stake in 3 integrated operations: Saudi Chevron Philips (SCP), Jubail Chevron Philips (JCP) and the publicly traded Petrochem [PETROCH AB | UW | TP SAR30.0]. JCP sources its benzene requirements from SCP, while Saudi Polymers (Petrochem’s operating arm) receives its styrene needs from JCP, so SIIG’s operations are intertwined in such a way that renders the holding level naturally hedged to price changes in benzene and, to a lesser extent, styrene; together 34% of...
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