reports
- Iyad KhalidÊGhulam
Advanced Petrochemicals: Q4 22 Result Analysis | First Quarterly losse...
Advanced reported its first losses on record in Q4 22, with a net loss of SAR6mn compared to net profits of SAR27mn and SAR162mn in Q3 22 and Q4 21 respectively. This compares to the SNB Capital and consensus estimates of profits of SAR25mn and SAR28mn, respectively. Although revenues were in-line with our estimates, we believe the variance is mainly due to 1) higher than expected production cost, 2) higher losses from SK Advanced which came in at SAR46mn in Q4 22, the highest on record. * R...
- 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
Advanced Petrochemicals: Q3 22 Results Analysis | Gross margin at a de...
Advanced reported a Q3 22 net income of SAR27mn, down 87.6% yoy (-75.4% qoq). This is lower than the SNB Capital and consensus estimates of SAR47mn and SAR69mn respectively. The yoy decline in profits were mainly due 1) lower revenues due to a decline in selling prices, 2) lower gross margins and 3) increase in share of losses from SK Advanced. Although revenue came in-line with our estimates, the variance was mainly due to lower-than-expected gross margins. * Revenues came in at SAR657mn, d...
- Iyad KhalidÊGhulam
Advanced: Earnings call summary – Q2 22
OPERATING OVERVIEW * Sales was driven by a 13% yoy increase in sales volume which was partly offset by a decline in realized prices. * PP prices begun declining since May 22; Average PP prices were in the range of US$1050-1100 in Indian subcontinent. In Q2 22, average PP prices were down 2.8% yoy (-2% qoq). * In Q2 22, demand was low from Europe, Turkey and LatAM. * Advanced recorded higher netbacks in India and Asia as compared to Europe and Turkey due to the lower logistic c...
- 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...
ADVANCED PETROCHEMICALS reduced its risk exposure resulting in an upgr...
ADVANCED PETROCHEMICALS (SA), a company active in the Commodity Chemicals industry, reduced its market risk and raised its general evaluation. The independent financial analyst theScreener awarded an improved star rating to the company, which now shows 2 out of 4 possible stars; its market behaviour has improved and can be considered as defensive. theScreener believes that this new assessment merits an overall rating upgrade to Slightly Positive. As of the analysis date January 21, 2022, the clo...
- Iyad KhalidÊGhulam
Advanced Petrochemicals: Record-high Q2 21 results, despite one-off ch...
Advanced reported record-high results in Q2 21 with a net income of SAR265mn, up 71% yoy and 55% qoq. This is compared to the NCBC and consensus estimates of SAR247mn and SAR225mn, respectively. We believe the better than expected result is attributed to lower cost of production, which led to a record gross margin of 42.9%, mitigating the impact of a one-off zakat charge of SAR30mn. Adjusting for that, net income would be SAR295mn. * Revenues grew 48.2% yoy (+21.7% qoq) to SAR769mn, the high...
- Iyad KhalidÊGhulam
Advanced Petrochemicals: Positive outlook vs oversupply concerns
We remain Neutral on Advanced with a PT of SAR70.1. Advanced is one of our preferred stocks in the sector given its sustainable DPS of SAR2.6 (3.9% yield), unparalleled operating efficiency and the major expansions. However, increasing PP supply is the key risk in the short-term. The stock is trading at 2021f PE and EV/EBITDA of 23.4x and 19.2x, higher than the sector’s average of 20.5x and 12.0x, respectively. We believe the premium is justified given the major expansion project but leaves l...
- Walid Khalid Bamhair
Advanced: Weak results on higher expenses
Advanced reported a weaker-than-expected set of Q4 20 results with a net income of SAR180mn, lower than the NCBC and consensus estimates of SAR205mn and SAR197mn, respectively. This is a decline of -6.1% yoy and a growth of +15.2% qoq. Although sales were inline with our estimates, we believe the variance is due to lower margin, higher opex and other expenses. Based on our last published update in June 2020, we are Neutral on Advanced with PT of SAR46.5. Since then, the stock recorded a stron...
- Iyad KhalidÊGhulam
Petrochemical Tracker: December 2020 — China demand drives petchem mar...
In November, strong demand from China (a key petrochemicals market) supported petrochemical products prices. Industrial activity recovered strong in China, with manufacturing PMI increased to more than 3 year high at 52.1. HDPE and PP prices increased +2.1% mom and +8.8% mom, respectively, while urea prices fell -0.7% mom to US$265. The PP-propane and PP-naphtha spreads increased +2.5% mom and +14.3% mom to US$614 and US$666, respectively. * In November, China’s manufacturing PMI reached 52...
- Iyad KhalidÊGhulam
Advanced: Weak results on lower sales and margins
Advanced reported a weak set of Q3 20 results, with a net income of SAR156mn (down -26.8% yoy and broadly flat qoq). The results are significantly lower than the NCBC and consensus estimates of SAR179mn and SAR184mn, respectively. We believe lower than expected results are driven by lower operating rates and higher production cost. We believe higher production cost is mainly due to larger contribution of external sourced propylene feedstock. Based on our last published update in June 2020, we...
- 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....
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...
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